The lessons of the “no” vote in the Italian referendum


Chief economist at the Cassa Depositi e Prestiti

The Italians rejected last December the constitutional reform proposed and defended by the Prime Minister, Mateo Renzi. What can we learn from this defeat? What can it mean for democracy in Europe?

Renzi Constitutional Reform was rejected with 59% of “no”. Renzi’s defeat was much larger than expected and since he strongly personalized the Referendum, it was transformed into the political defeat of his Government.  Renzi’s resigned and in a couple of weeks a new government lead by former foreign Minister Gentiloni was formed.

On the issue I wish to make three brief observations.

Three observations

The first has to do with the short and medium future political perspective. Mr. Renzi, a large part of center right parties (with the expectation of  Berlusconi’s Forza Italia) and M5S are pushing for early elections in April. A snap election scenario, however, is not really on the cards.  First of all because a new  Electoral  Law should be voted before new election.  Today, the House of Deputies has a majority electoral law versus the Senate, sitting on a pure proportional system on a regional basis. The latter stems from the previous electoral law (so-called Porcellum) disempowered by the ruling of the Court in January 2014 in what remains a proportional system now. The need to harmonize the two houses probably based on a proportional system looks inevitable before calling any election. It is not going to be an easy or quick exercise to find convergence on a new electoral law after such a large defeat for the Yes campaign and given the variety of the No campaign constituencies. Each party’s interest will prevail and set constraints versus the others, so that we expect a bumpy road before a new electoral system will be in place.

Plan B

Moreover. each party needs time: PD in order to digest the defeat and find a new equilibrium between the pro No minority destined to gain weight and the pro Yes Renzi majority in search of a new action plan; Forza Italia to try and re-aggregate a center-right coalition around Berlusconi waiting for the European Court of Justice to rule on his eligibility (expected in June next year) ; and M5S  only now start the online consultation with its 130 thousand registered members on the government agenda. No one seems ready to go for elections. The most probably scenario now seems to go to the natural end of legislature and vote in spring 2018 under Gentiloni’s Cabinet. Rumors in Rome, and elsewhere in Europe, talk about a plan B for Italy with Mario Draghi becoming Premier in 2018. A proportional system could naturally prepare the ground for an external technocrat appointment well supported by a large majority of Parliament. This is a possible scenario in 2018, when Draghi will have clarified the path of his QE program and could eventually resign a few months before the natural end of his mandate.

Ni fiscal autonomy

The second point has to do with the nature of the Constitutional reforms proposed by Renzi’s Government. It can be broken down in two parts. The first had to do with bringing back to the State some of the powers and tasks, which had been transferred to local authorities with the strong 2001 Federalist Law (Titolo V). The problem is that tasks and competences were transferred without fiscal real autonomy. At the time, the Federalist Law was written rather too quickly to counteract the growing political force of the Northern League. Then the reform was not completed creating a much weaker administrative system in some sectors – one among many, structural funds and the planning and management of strategic infrastructure. Moreover, very different legislations in various sectors were drafted in each one of the 22 Regions making very difficult to invest and do business (and attract foreign investments) in the country. On this part of the Reform probably there was wide consensus nationally that the changes were necessary and were going in the right direction.

Slow process, false argument

The second part was the attempt to move from a bicameral to a mono-cameral system – transforming the Senate in a sort non-elected local assembly with voice only on some selected issues. The populist point was to cut the cost of politics (weak argument) and to speed up the legislative process (stronger argument).  However, the second point is only partly true. The problem is not the “coming and going” in the drafting of the laws from one chamber to the other (known as “la navetta”) which slows down the Government action. Today most of the laws go through the so-called Law Degree, which have the blessing of urgency. Law degree have two drawbacks: first, they have much less space for discussion and changes in the Parliament (they are just passed with a general majority vote); second, they often just guiding lines which then the bureaucratic power in the various Ministers have to put in place (with the so-called “Decreti attuativi”). Here quite often the process slows down, sometimes dramatically, becoming the locus of a real power game between Government and Ministerial bureaucracy. This said the second part of the Renzi Constitutional Reform had very good intentions, but poor quality and weak potentials to make a substantial change.

Risk of dictatorship

In my third and last point I will try to propose a conjecture on theory of democracy in Western liberal countries. Those countries which have had in the past much lower risk of dictatorship (such as the US and the UK) can afford strong executives and two parties systems; those countries which instead have had in the past risk of dictatorship (such as Italy and Germany) and have, moreover a more corporatist tradition (and a mean it here in the positive sense) may function much better with a proportional and multi-party system.

Continental Europe has bought in the Anglo-Saxon hegemony in many sector of European life – not always, it has worked well. Let us start to look at the cultural, political and legal tradition of each EU MCs a bit more carefully. At this point of the game – if we want to save the EU – and we certainly do – we should take a stronger federalist. This is one of the lesson I have learned from twenty years of failed attempts to introduce two party system and strong presidential power in Italy. The Renzi defeat being just the last one out of many previous failed attempts.

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