Italy’s Renzi Brought Referendum Mess on Himself

Italy’s center-left leader thought a constitutional referendum would strengthen him. It could prove his undoing.

Italian prime minister Matteo Renzi is seen as his residence in Rome, July 2
Italian prime minister Matteo Renzi is seen as his residence in Rome, July 2 (Palazzo Chigi)

After Brexit, the Dutch “no” to the European Union’s association agreement with Ukraine and the election of Donald Trump, Italy’s constitutional referendum in December is being portrayed as the next battle in the war between populists and the powers that be.

There is something to this. The Italian referendum campaign pits a center-left leader, Matteo Renzi, who is very much in line with the European consensus against an assortment of insurgents, from the populist Five Star Movement on the left to the anti-immigrant Northern League on the right and some of Renzi’s nemeses in the ruling Democratic Party in between for good measure.

But the story of the plebiscite, and how it could end in Renzi’s downfall, is more about a young prime minister’s hubris than it is about transnational political trends.

What is the referendum about?

Nominally, Italians will asked to approve several constitutional changes, the most important being a proposed makeover of the Senate. Now a body with equal lawmaking power to the lower chamber of parliament, it would be transformed into a relatively weak assembly of regional deputies.

The goal is to make Italy more governable by reducing the need for broad and unwieldy coalition governments.

Renzi’s center-left Democratic Party currently has a comfortable majority in the Chamber of Deputies. But the right won nearly as many Senate seats in the last election, raising the specter of divided government.

The reform bill also contains measures to streamline regional administration.

These issues have been overshadowed, however, by broader questions about Italy’s political future and specifically Renzi’s.

As a result, the polls now show a tight race whereas “yes” was firmly in the lead eight months ago, when parliament approved the constitutional changes.

Two mistakes

Much of this is Renzi’s own fault.

He could have avoided a referendum by working harder to secure a supermajority for his reforms in both chambers of parliament. That would have meant doing a deal with the very opposition parties that are now campaigning against him — which may well have been impossible.

But Renzi instead welcomed the plebiscite as a chance to shore up his political support.

I’ve argued before that complicated political issues don’t lend themselves to simple “yes” or “no” answers. The point of parliamentary democracy is to elect people who can weigh the pros and cons of a policy; who can think through the long-term consequences and make sure one part of the electorate isn’t disproportionately affected over another.

When referendums are called, too many voters will use it as an opportunity to express their general approval or discontent with the incumbent government, the “establishment” or the status quo.

Renzi’s second mistake was to personalize the referendum by vowing to resign if Italians voted against him.

That galvanized the opposition, which is keen to oust him.

Sluggish

Underlying Italians’ discontent is a sluggish recovery.

Renzi, who came to power in 2014 by toppling the former Democratic Party leader, Enrico Letta, has failed to live up to his grand promises of economic revitalization.

His signature labor reforms, while making it easier for firms to hire and fire workers, had two major caveats: the changes did not apply to anyone already in work and tax breaks to incentivize hiring under the new contract were planned to be scaled back at the end of this year.

Renzi’s government hasn’t even tried to lift excessive licensing requirements and other types of restrictions that make it nearly impossible for young Italians to start a career as a lawyer, notary, pharmacist or taxi driver.

Nor has it managed to improve the enforcement of contracts or speed up Italy’s court procedures, two long-standing impediments to growth.

Bogged down

To be fair, this isn’t all Renzi’s fault.

Italian prime ministers have a history of passing landmark reforms that look good on paper but are seldom implemented in full, if they are implemented at all.

The reason is that implementation would require civil servants to spring into action. When they don’t, reforms linger. But even when they do, there is a chance lower-level bureaucrats or local officials will stall or simply pretend the reforms didn’t happen — and public-sector workers at all levels are impossible to lay off.

So it made sense for Renzi to prioritize political reforms and try to streamline the whole process, but now even those changes could get bogged down.

If that happens, Italy will have made little progress since the start of Renzi’s tenure, with unemployment still over 11 percent and an economy that is barely growing at all.

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