December 12, 2016    10 minute read

Why Italy Can(‘t) Change

Italy Passes On Progress    December 12, 2016    10 minute read

Why Italy Can(‘t) Change

Following the Brexit referendum and American presidential elections, the Italian referendum was seen as the last piece of the 2016 incredibly upsetting political puzzle. A week ago, an almost unprecedented share of Italian voters (almost 70%) gathered to pronounce on the constitutional referendum proposed by now resigned Prime Minister Matteo Renzi and his government. As a comparison, less than half voted in the previous 2013 general elections.

The referendum, which was meant to provide an opportunity for citizens to confirm or reject the constitutional reforms proposed by the government, had often been advertised as the last battlefront between reformers and defenders of the status quo in the country and, accepting this metaphor, the latter won with a clear 60% of the votes. This referendum showed that Italian people still care about politics, and this is good, but it is also clear that the large majority were still driven by emotions rather than cast a fully conscious vote, and this is bad.

The outcome of last week’s vote was not only the latest alarm for the European Union, but it was also the definitive proof that politics is no more about left-wing/right-wing polarisation than it is about politics and non-politics. With the first week after the vote ending, the dust is starting to settle and, with President Mattarella giving the okay to public consultations, one has the opportunity to analyse why this government crisis happened and what is likely to follow in the weeks and months after this historical turning point.

The Price Of Reforms

For those unfamiliar with Italian politics, stability is not something common. Renzi’s cabinet, however, proved to be one of the most long-lasting, ranking fourth out of the 63 that rotated in the 70 years since the establishment of the Republic. Renzi showed a remarkable desire and willingness to tackle the deadly paralysis of the country from the very beginning, despite the difficult economic and political landscape in which he inherited his role. However, his power was diminished from the beginning, due to the need of creating coalitions with political parties driven by competing interests.

After reaping little success from the several laws passed under his tenure, he wrongly decided to tie his future to the outcome of the constitutional reforms enacted by his cabinet, promising he would resign if people did not appreciate his strategy to make Italy move again.
Not so surprisingly, Renzi was only the last prime minister to fail in the effort of erasing redundant and worthless public bodies with his effort. After Berlusconi, Monti and Letta, Renzi is the last one to try to erase provinces and other authorities that will keep weighing on public spending. Despite the recent efforts to diminish powers and resources allotted to them, provinces will be back in the Italian political landscape and so will the €3bn that could have been expensed to other productive sectors each year.

As far as the political system is concerned, Italy will keep its 952 deputies (the US has 535) divided by a lower and upper house with mirrored, inefficient powers. Prime Minister Matteo Renzi resigned after acknowledging the results of the referendum on the measures he had personally sponsored.

The Power Of Lies

The personalisation of the referendum opened the floor to a nauseatingly diversified side of anti-Renzi political figures, that cared little about the design of the constitutional reform but focused more on the opportunity to show resentment against Renzi’s tenure and force him to resign in case of defeat. This side included minorities within Renzi’s party, the Northern League, Forza Italia and the Five Star Movement. The year-long campaign enacted by the latter deserves further comments.

Just like Brexit and Trump earlier this year, inexperienced and demagogic politicians from the Five Star Movement revealed how easy it is to make politics just by appealing to the guts of voters instead of their brains. Certainly, the assist provided by the former prime minister sure helped to ride the general dislike, but it was incredibly upsetting to see how easily the leaders of the self-proclaimed anti-establishment party proved appealing to voters.

The Five Star Movement

The electoral campaign proposed by the Movement was built on the general ignorance displayed by Italian voters with regards to internal politics. The sickening lullaby against the so-called establishment and traditional parties deemed indistinctly responsible for the current economic austerity and stagnation was enough to reach the large share of less-educated/politically savvy electorate.

Hopping from one side of the political spectrum to the other, the Five Star Movement managed to collect consensus from disillusioned leftists and right-wingers that still fail to identify with existing traditional parties. The Movement’s proposals are, nevertheless, everything and the opposite of everything. With an incredibly “establishment-like” move, the party leaders are now opting for immediate elections with the electoral law in force, despite deeming it unconstitutional and corrupted only a few weeks ago. Now that they feel they could ride the referendum effect and gain the majority premium granted to the winner, they no longer want to push for any change whatsoever. Of course, their supporters seem to care little about it.

What The Referendum Was Really About

Most of them knew little about the Constitution itself and cared more about “sending home Renzi”. This was particularly evident in the days following the result, with major exponents of the Movement such as Alessandro Di Battista calling for a “No-Euro Referendum”, showing utter indifference to the fact that referenda regarding international treaties cannot be called at all (article 75 of the Constitution). Few, however, seem to be aware of it or make any effort to know whether the claims made by the Movement are true or not.

The public ignorance is further inflated by the online presence and strategy of the party. The main communication outlet is thus represented by Beppe Grillo’s blog, with a strategy that voluntarily parts from more traditional channels, considered propaganda of traditional parties. Social media techniques are used to attract readers and magnify the number of views and revenues generated by the website. What’s more, the news is often advertised to exploit the potential gullibility on the audience, in the fashion typical of the post-truth phenomenon, with little interest in the truth.

Like the satirical website Il Deboscio recognised a few days ago, “only the resentful comment online”. Five Star Movement supporters increase their audience through a particularly vigorous and direct internet participation and word of mouth that annihilates the counterpart with violent dialectics and the denial of any logical discussion. They believe themselves to be an outer force in politics and respond to whichever sort of critics as if pronounced by so-called hidden powers that in their opinion shape the world economy and politics.

The milder and democratic campaign methods deployed by the Yes side were insufficient to offset the anger-riding and populist dialectics enforced to attract inexperienced voters.

A Stagnating Economy

The underlying rationale of the rejected measures attempted by Renzi is also to be linked to the features of the Italian economy and other reforms made in the past by the same cabinet. Renzi’s wider plan to tackle the country’s immobility probably needed more time than what he had already spent building on it. The Italian economy is dangerously stagnating and is losing the pace of peer economies and developing countries. The persistent low productivity and excessively high social protection towards unionised jobs also resulted in the fostering and protection of government-subsidised and public-sector jobs, that prevented competitors from entering the market and entailed an enlargement of public expenditure in less productive sectors.

This phenomenon, paired with the country-wide technological divide and outrageous bureaucracy, blocked the country from reacting to the constantly changing economic scenario; due to the relatively low share of service jobs in the economy, the openness of markets and globalisation was particularly harsh to low-value-added sectors. The financial crisis and austerity measures did the rest. The country has lost at least 25% of its industrial production since 2008. On top of that, Italy is one of the EU countries with the lowest university completion rates and a perhaps too high share of graduates in law or humanities, sectors that cannot fully sustain the kind of growth needed in today’s extremely competitive global marketplace. As 40% of young Italians are currently unemployed, it is safe to say that they were those paying the highest price of an ageing economy.

Renzi’s bravery against the typically Italian opposition to progress was not rewarded, and he had eventually to fall on his (s)word. 80% of young Italians, especially in the poorer regions of the South, voted “No” to the reforms, showing little understanding of the desired plan or simply anger for being left behind during the design of future economic plans. Whether the proposed reforms, designed to speed up legislation and lighten the bureaucratic burden that suffocates this country, would have effectively represented a step forward for the future of Italy or not, it is clear that the vile, content-lacking and demagogic rhetoric put in place by populist parties were enough to offset any trial and error.

The Political Crisis: What’s Next?

The resignation of Mr Renzi opened the door to the government crisis, and it is difficult to say what’s going to happen in the next months. From an economic point of view, public markets seemed to have digested the panicking referendum effect in a very short time, mainly thanks to the lessons learnt in the previous months and had probably already priced the likely outcome in the months preceding the vote. However, all eyes are still pointed towards Italian banks, with particular attention to Monte dei Paschi di Siena, still waiting for equity injections and suffering from the uncertainty. From a political perspective, the referendum marked a turning point for the country.

In a typically “Italian” way, uncertainty reigns all over the place, with all major political parties avoiding any responsibility with the historical exception of Matteo Renzi, who admitted his defeat in a manly way and stepped down. The choice that now needs to be made is between a technocratic government in the months preceding the next general elections or going to vote straight away. The general lack of coordination and backup plans from the No camp showed the real objective of the referendum boycott, but once again their supporters seemed only interested in finding a scapegoat.

Conclusion

Renzi has shown once again that a large share of the Italian voters neglected his plans to revitalise the country and seek different, although not specified, measures. The difficult task for him is to capitalise on the popular vote and take his faith in his hands. He now needs to decide whether to abandon politics, keep his role as the Democratic Party leader and clean out internal dissidents or build on the (less than) 40% preferences that he solely earned to create a new party. 2017 is going to be a turning point for both Italy and Europe.

The likely date of the next general election might be set and it could see Italy host the celebrations for the 60th anniversary of the Rome Treaties and the G7 in the Maddalena Island. Next year, France and Germany will both see elections. Voters in all Europe will face a choice: follow the anti-European bubbles (of the Northern League and Five Star Movement in the case of Italy) or trust once again pro-European parties.
What seems obvious is that the latter will have to bring to the table tangible results to convince common about the advantages of the Union, or the Altiero Spinelli’s dream will dissolve under the unfulfilled promises made by both supporters and enemies of the European Union.

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