Renzi's High Stakes Poker Europe Holds Its Breath Ahead of Italian Vote

Italian Prime Minister Matteo Renzi may be facing defeat in a game of high-stakes poker with the electorate. If the Dec. 4 constitutional referendum fails, there are dark clouds on the horizon for Europe's future. The country is in poor economic shape and financial markets are alarmed.

REUTERS

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The photo montage on the stage behind the Italian leader looks more like a wanted poster: It depicts seven sinister looking men frowning, some of them well advanced in years. They look like mafia godfathers.

Italian Prime Minister Matteo Renzi uses the images to show who his adversaries are. Late in the evening at a trade fair in Bari, he is railing against those who would buck progress and vote against his planned constitutional reforms on Dec. 4. At the head of the pack are these seven elderly signori, including four former prime ministers, a former Constitutional Court president, a former government minister and the leader of the strongest opposition party.

The prominent rebels have divergent reasons for their objection to the upcoming national reform referendum. But they are united in their verdict that the new constitution, promoted as the key to slimming down the state, would damage Italy's democratic foundation.

The fact that Renzi is publicly attacking his critics betrays his nerves as the vote approaches. Recent polls show opponents leading, prompting the prime minister to increasingly invoke the country's "silent majority." Even if the ballot may show that the vote is a simple choice between "yes" and "no," in reality, Renzi has said, it's "now or never." The opportunity to set the course for a better future for Italy after decades of paralysis won't come around again soon, he says.

The 'Mother of all Battles'

The prime minister has said he will step down if he loses the referendum. Back in January, he declared the constitutional reform to be the "mother of all battles" and unnecessarily tied his own future to its outcome. It was an act of hubris that has transformed the referendum into a vote on his leadership. Those who want to see the back of the prime minister must merely vote "no" in the referendum.

If the government were to fall, it would hit highly indebted Italy, a core EU member state, at a sensitive time. The Italian central bank in Rome has already registered a "strong increase in uncertainty" on financial markets. The risk premium on Italian sovereign bonds relative to the interest rate Germany must pay its creditors has doubled since the beginning of the year, as trust in Italy had declined among investors. Economists like Nobel laureate Joseph Stiglitz and Germany's Hans-Werner Sinn are already speculating over the possibility Italy will leave the eurozone.

Soaring debt
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Soaring debt

The pro-European Renzi, 41, had until recently been considered a bulwark against that scenario. But what happens if he falls? A referendum on whether Italy should remain a member of the common currency could follow. If Italy, the third-largest economy in the currency union, were to leave, it would mean doom not only for the euro. It could put the entire European Union at risk.

This domino-effect theory has been useful to the prime minister and his allies -- and flanked by the Financial Times newspaper -- as a warning against the dangers of a "no" vote. Ever since the EU-critical, populist Five Star Movement (M5S), under the leadership of former comedian Beppo Grillo, has been closing in on Renzi's party in the polls, the prime minister, a talented speaker, has subtly been presenting the vote as a choice between stability and disaster.

With his late-night appearance in Bari, where he evoked "change for the years to come," Renzi ended his 1,000th day as prime minister. Earlier in the day, he had enjoyed a meal with US President Barack Obama and German Chancellor Angela Merkel in Berlin and, after returning to Italy, spoken to the press in Rome, where he detailed his achievements in office before doing a live TV appearance and ending his day with a speech in the port city of Bari at 10 p.m.

It was a busy day if not particularly effective. At lunch in Berlin, the recalcitrant Italian was seated at the greatest possible distance from the chancellor and speaking to journalists in Rome, he said his ambition for his country was not to "end up like Greece, but to do better than Germany." Then, upon arrival in Bari he learned that even his most important party ally in the region had defected to the opposition. The president of the Apulia region skipped Renzi's appearance to attend an event held by reform critics.

Renzi's Worst Crisis

In the run-up to the referendum, Renzi is experiencing the worst crisis of his tenure. As government leader and chairman of the center-left Democratic Party (PD), Renzi has become enmeshed in an exhausting war on three fronts: against the European Institutions, against a large segment of the Italian opposition and against the left wing of his own party.

One PD senator says that a "bunker mentality" now characterizes the Renzi camp and those close to him. And it does indeed seem that the youthful and dynamic Matteo, who shoved his predecessor out of office in 2014 and was seen across Europe as a man ready to pull up his sleeves and get to work, has now lost his calm, lost his willingness to listen and lost his way. He is increasingly closing himself off out of annoyance that his achievements aren't being appreciated enough.

Renzi's government has introduced a monthly welfare payment of €80 ($84) for low-wage earners; it has liberalized the labor market and created hundreds of thousands of jobs, even though some of them are temporary; it has improved the country's sluggish judicial system; and it has ended Italy's seven-year period of decline. Though growth has been extremely meager, the economy is expanding again.

Why, then, is a majority of Italian voters ready to throw him out of office? Is it because Italians are "defeatists who are prepared to the point of self-flagellation to say 'no' to everything," as claimed by Paolo Sorrentino, director of the Oscar-award winning film "The Great Beauty?"

It's not just that, Renzi's critics argue. The prime minister is his own worst enemy. After all, they say, a man who, after just 23 days in office and despite an ongoing recession, announces that he wants Italy to play the "leading role in Europe it deserves" may very well become a victim of his own ego and loose tongue.

One who might know is Ugo De Siervo. The constitutional law professor at the University of Florence once had Renzi in class. Ever since his former student made the constitutional reform into a referendum on his own political future, the professor has taken to the barricades. Together with 56 other law professors, he signed an open letter of protest pointing out the deficiencies in Renzi's pet project and castigating him for the "flood of slogans" that came along with it.

Slow growth
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Slow growth

De Siervo doesn't shy away from television cameras or large stages. In Florence on Nov. 10, he railed against the plans to reframe Italy's constitution in front of 2,000 listeners and warned against a "recentralization of the kind we haven't experienced since the 1940s," the country's fascist era. He says the argument that the Senate must be stripped of some of its power so that laws can be passed more swiftly is bogus. "What we need," he says, "are fewer, but better laws."

Under the reforms, Italy's upper house of parliament would be trimmed from its current 315 members to 100. Furthermore, they would no longer be directly elected and their rights would be limited. For Renzi, the weak executive branch combined with a sluggish bi-cameral legislative procedure is a thorn in his side. But the constitutional reform, in combination with the planned new election law, would grant the country's strongest party and its prime minister an unknown amount of power. The fears of the constitutional law experts appear to be justified.

Only after Grillo's Five Star Movement secured the city halls of Rome and Turin in June did Renzi and his backers begin rethinking the matter. Though he exuded confidence on the day after the municipal elections and claimed that mayoral elections "are not predictive of national politics," the elephant had nevertheless suddenly entered the room: What would happen if the extended powers created by the constitutional reform and a new election law fell into the wrong hands?

Renzi's Most Toxic Opponents

Grillo's M5S backers count today as Renzi's most toxic opponents. They travel across the country campaigning against the reforms on market squares. They're also going on the offensive in parliament with ideas like that of halving the salaries of parliamentarians rather than slashing the Senate, which would result in comparably less savings.

M5S finds itself in diverse company, part of an Anti-Renzi front that extends far beyond the limits of party loyalty. The prime minister is right when he derides his opponents' camp as a "hodgepodge" and accuses them of being driven by motives ranging from the most noble to the basest. But that doesn't make his mission any easier.

He faces massive opposition from a radical left that has never warmed to Renzi, who was raised in a middle class, conservative Christian Democratic family. There's also opposition on the far right, ranging from the right-wing populist camp of Lega Nord to that of right-wing extremist Casa Pound. Then there's the educated middle class, which at best views Renzi as a "talented boor," as Ferruccio de Bortoli, the former editor in chief of the respected Italian daily Corriere della Sera, puts it.

Speaking from his office in Milan, Bortoli says the Dec. 4 vote should not have become a referendum on the government's work. But he also takes the liberty of pointing out that, "under Renzi, the remarkable deterioration of government finances has been cheerfully ignored. In 2015 alone, the debt has grown by 36 billion euros." If the European Central Bank (ECB) stops holding a protective hand over Italy, Bortoli adds, "when, for example, Mario Draghi steps down in 2019, things here could come to a rapid end."

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pwells1066 11/30/2016
1. Maybe a lesson will be learned (for now)
If an individual's income is less than their expenditure or a company's income is less than its income then lenders may look at their 'fundamentals' and make an assessment of likelyhood of repayment of a loan with interest: likewise with nations. In the case of Italy (within the Euro whose value is determined basically by how lenders view the German economy, the situation is much complicated) In all probability, there are no options available to Italy whilst in the Euro. Outside it, both Greece and Italy stand a chance of being able to devalue their economies and so increase the quantity of good they sell out and so increase their incomes. They could well also need the freedom to raise tarriffs to protect those sections of their economies which are the ones they depend on to increase sales. In other words they now need to do what India, China and others have done in order to build up their incomes. Free trade (to which Britain has long been committed) is best operated between nations/blocks at sufficient economic and social levels. Some major changes are coming....
turnipseed 11/30/2016
2. Italian political leaders
Has there been a successful "Italian" leader since Roman times? Perhaps the most promising one was Benito Mussolini, at least many Italians and many non-Italians thought so. For about 15 years he seemed the fulfillment of the promises of the Risorgimento, but his foolishness concerning Hitler doomed him. Had he not been so blind to who his real friends were -- France and Britain and even the Soviet Union -- he might have emerged as a victor instead of an executed loser., But since then no Italian leader, leaving aside some popes, has been very successful in any respect. A mystery why this talented and humane Italian people cannot run their own affairs successfully.
Inglenda2 11/30/2016
3. A common market of independent nations is needed
There is nothing to complain about, when Italian Prime Minister Matteo Renzi tries to make the best out of a bad job, but were Italy to leave the EU, it would be the most sensible thing to do, both for that country and the European Union. The biggest peacetime mistake Europe ever made, was to introduce a common currency before harmonising taxes and social insurance within the member countries and to dispense with border controls, before an efficient European police force had been formed. Greece would also be better off without the Euro, a medium of exchange, which was introduced into the EU without a general ballot and against the will of most Europeans.
sylviamartin007 12/01/2016
4. Capitalism is more powerful than Democracy.
1% of the world's population is wealthy and the rest are struggling. We have global warming; over-population; animals, birds, fish and plants dying out; our seas destroyed; our forests burning; and why? Because the few rich are controlling our lives. They control the press, the media, our jobs, our governments, our environment, and they don't care if they destroy the world, as long as they enrich themselves for the next few years. The Trumps pay no tax for 20 years and the poor pay everything, income tax, consumption tax, property tax, etc, etc. Yet the media lie to people so much that they vote for their inhumane exploiters. Democracy is going backwards. International corporations are larger, stronger and more powerful than countries' governments. That's why the Hillary's suck up to them. This world is doomed.
JeffPage 12/01/2016
5. Time To Start Listening To The People!
This will be a turning point if the Italian people choose to change direction. Other European leaders will need to take note. Just like Britain, many are fed up with the EU and it's silly policy towards in some cases very dangerous immigrants! People don't want to live in fear of attack by extremists, they don't want to have to see extra security because of threats. When will the stupid politicians catch on? They are so arrogant and at times ignorant of what is happening in their countries it is astonishing that the people haven't risen up and thrown them out of office!
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