On Sunday, Italians will go to the polls on a constitutional referendum. An event which, some observers speculate, could set the stage for Act Three of the populist revolt against the political establishment/ The very same revote that made Brexit a reality in the UK and brought Donald Trump to power here in the United States. The Trump victory has galvanized right-leaning populist movements across Europe. Since early November, political analysts have been looking around and wondering what nation will be next. The smart money is been on France, and with a presidential election coming in 2017 it is a good a good bet.
With that in mind, it would be irresponsible to dismiss what is happening in Italy at the moment. Sunday’s vote will determine whether or not the Italian constitution is amended to reform the Italian parliament, and the way which governments are formed. The referendum is not cut-and-dried the way Brexit was. The opposite holds true, in fact. It is a complex package of reforms that will change how democracy functions in Italy if successful. The core of the referendum is a proposed reformation of the legislative process which is famously chaotic and debilitated. It takes power away from the regions and Senate, thus making it far easier to pass government reforms. Supporters point to this as their most powerful argument. Detractors, on the other hand, point to the referendum as a slippery slope towards authoritarianism and the death knell for representative democracy.
The results of Sunday’s vote will be especially consequential, in that Prime Minister Matteo Renzi’s political future will be determined by it. His position will be strengthened if the Senate is stripped of most of its power. Renzi has gone all in, even making it known that he will resign if the “no” vote wins. Beyond Italy’s borders, world financial markets are watching events closely. A negative vote makes it more problematic for Italian banks to recapitalize, and the state of those financial institutions is fragile enough already. Then there is the European Union. The EU has taken a keen interest in the referendum, naturally. To be precise, the EU’s main focus is Renzi. The prime minister is viewed as the EU’s best weapon to counter the rising wave of populism. A “yes” vote will put Renzi in a position where he can emerge as a new, powerful leader for Europe in the future. A leader with political beliefs more in line with EU values and in direct contradiction to the type of politicians being backed by populist groups both in Italy and across Europe.
A ‘no’ victory on Sunday will not cause a collapse of the euro and the EU. However, with the Brexit wounds still fresh and anti-establishment sentiment still surging, it will make life more difficult for the embattled supranational union.