Matteo Renzi has put Italy's future—and that of the euro—at stake in a referendumby Bill Emmott / November 18, 2016 / Leave a comment
Published in December 2016 issue of Prospect Magazine
A time-bomb is ticking away in the heart of Europe, carrying a label marked “Made in Italy.” It could yet be defused. But if it goes off, it would make Brexit look like a lot of fuss about nothing.
The time-bomb has been laid by Italy’s young, reformist Prime Minister, Matteo Renzi. The potential trigger is the referendum he has called for 4th December on reforms to the country’s constitution. The explosive content is that his fiercest and strongest opposition, the Five Star Movement, is also young, reformist, and wants a referendum held on Italy’s membership of the euro. And it is running neck and neck with Renzi’s party in national polls.
The stakes couldn’t be higher. Populism and Euroscepticism are all the rage, throughout Europe. But that matters most when a party pursuing such anti-establishment goals has a serious chance of entering government. That is where Italy comes in: if a general election were held tomorrow, the Five Star Movement would have a serious chance of winning. If it were to do so, the mere hint of a referendum on the euro would send financial markets haywire.
A general election does not have to be held tomorrow: the next one is not due until 2018. However, that is not far away, and an early election is conceivable if Renzi were to lose his referendum.
On the arguments, he doesn’t deserve to do so. The December referendum—which is required under Italy’s constitution—concerns a set of changes to the country’s political institutions that are designed to make it more governable, and to open the way to liberalising, pro-growth reforms that are long overdue.
Quite reasonably, Renzi proposes to abolish the elected upper house, the Senate, and replace it wit…