The aftermath of the Italian referendum was greeted by both Italian and international media as another sign of the inevitable rise of populism and anti-establishment in the Western world. Given the prominent role of Prime Minister and leader of the center-left Democratic Party, Matteo Renzi, in leading the “yes” camp, it would not be incorrect to assume that the 59 percent of Italians who voted against the reform did so in order to send a strong anti-establishment message.
Exceeding expectations, Italian stocks and bonds didn’t witness marked volatility in the aftermath of the defeat. This was partly because the markets had already adjusted to polls predicting the no victory, and partly because state-aid was anticipated in order to rescue the country’s ailing banking institutions. Either the markets were resigned to the victory of the supposedly populist vote, or they were less worried about the impact of the Italian populist front on the rest of the globe compared to post Brexit or the US Presidential election.
Fifty-nine percent of Italians who voted against the reform did so in order to send a strong anti-establishment message.
Against the backdrop of a muted response from international markets, the Italian political establishment immediately sprang into a paroxysm of media activity, speculating as to what the vote might mean for the future political landscape of the country.
But the question of whether the victory of the “no” vote was a victory for the global populist anti-establishment requires a post-mortem of the votes of 19 million Italians.
The political angle of the ‘no’ vote
As soon as the referendum date was announced, the Italian political establishment became quickly polarized. At the beginning of the campaign, PM Renzi hinted that he would resign if the referendum failed, despite his allies warning him against personalizing the vote. Instead, he doubled down on his promise, citing the country’s need for bold structural reforms. Instead of rallying political forces around the “yes” camp, the move had the opposite effect.
Anti-establishment voters and the opposition were solidly against the referendum.
An analysis of the vote along party lines by Instituto Cattaneo, a leading political think tank, shows: in six out of the cities covered in the study, over 90 percent of people who voted for the Five Star Movement (the upstart political movement led by former comedian Beppe Grillo) voted against the referendum. A quarter of people who voted for Renzi’s party in the previous elections, as well as over 50 percent who voted for Berlusconi’s center-right party, also voted against the referendum.
The political reading of the vote is clear — anti-establishment voters and the opposition were solidly against the referendum. Voters traditionally affiliated with establishment parties were split, highlighting widespread dissatisfaction that has the potential to be intercepted by the Five Star Movement in the future.
The geographic angle of the ‘no’ vote
The ‘no’ vote won in 17 out of 20 regions, with the “yes” vote winning only in Tuscany (PM Renzi’s home region), Emilia Romagna (a left-wing stronghold) and the Trentino-Alto Adige (where the strong support of the German linguistic minority for more devolution of power tilted the vote in favor of Renzi’s camp).
Only 35 percent of overseas voters rejected the referendum, compared with 59.95 percent of voters in Italy.
Sensing a narrowing margin for victory, Renzi invested heavily in engaging Italians residing outside the country, which generated a previously unseen amount of controversy, especially around the issue of unfair access to voters’ lists on the part of the “yes” camp. Whether intentional or not, the controversy resulted in one of the highest turnout rates for constituents abroad and, in line with predictions, Italians living abroad responded overwhelming in favor of the reform, with only 35 percent of voters rejecting the referendum, compared with 59.95 percent of voters in Italy.
The reasons for such an overwhelming vote in favor of the referendum are hard to discern. If my Facebook feed were to be used as a representative sample, it is the angst, disappointment and utter sadness of those Italians who, like myself, have emigrated in recent years of crisis, that perhaps made them more receptive to the optimism and reform-oriented messaging of PM Renzi.
In countries like Brazil, the US and Egypt, 85 percent, 58 percent and 56 percent of Italian emigrants voted in favor of the reform.
A complementary reading, however, is that in constituencies with a historic presence of Italians, emigrant associations have traditionally been able to mobilize the vote effectively and these associations have usually been affiliated with moderate, established parties, both on the center-left and center-right. In countries like Brazil, the United States and even Egypt, 85 percent, 58 percent and 56 percent of Italian emigrants voted in favor of the reform. In countries where the number of Italians has increased exponentially in recent years because opportunities back home languished during the crisis, the “no” vote prevailed. This was the case in countries like the United Arab Emirates and Qatar, where 53 percent and 57 percent of Italians voted against the reform.
The geographic analysis of the vote shows that as Italians have become politically engaged in a more atomized fashion, Italian parties have lost their ability to mobilize votes through local party sections.
The generational angle of the ‘no’ vote
Over 80 percent of Italians aged 18-30 voted against the referendum. The fact that the same generation has been heavily affected by unemployment and lack of opportunity is the obvious driving force behind this choice. One complementary explanation is that young voters, being the highest users of digital content, have been disproportionately exposed to what appears to be a commercial enterprise of (dis)information run by internet outfits loosely or directly affiliated with the Five Star Movement and, possibly, Russian-funded.
The socio-economic angle of the ‘no’ vote
A McKinsey study has shown that, over the past two decades, real incomes have declined across the entire income distribution in Italy, more so than other major industrialized economies. The decline has been particularly sharp for less wealthy households. The referendum vote clearly reflected this reality. Regardless of how the overall city vote went, the “no” camp did better in poorer districts on the outskirts of large Italian cities than in more affluent and central areas. Similarly, in the 100 municipalities with the highest number of people unemployed, the “no” vote won 66 percent of the vote against 41 percent of “no” votes in the 100 municipalities with the lowest number of people unemployed.
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Analysis shows that the victory of the “no” vote happened on the back of widespread dissatisfaction with political engagement with established parties on both sides of the political spectrum, coupled with anaemic growth that is well below that of other euro economies.
Even the direct involvement of PM Renzi in the campaign was not enough to salvage the results. This is particularly relevant as Renzi’s campaign had embodied the hopes of the Democratic Party and its voters, breaking with the past.
Renzi has expended a lot of energy and personal capital to mark a clear break from the past.
The youngest PM in Italian history, Renzi also presided over the youngest and most diverse cabinet Italians have ever seen. He is media savvy, and his Twitter account has often stolen the limelight from most other Italian political twitterati. Within the parameters of tight spending controls imposed by Brussels, he has also pushed policies that one could have easily classified as populist: a 500 euro voucher for Italians who turn 18 (and thus become eligible to vote) to spend on culture, books and movies, continuity with Berlusconi’s policy to exempt first-home owners from paying real estate tax (Italy has some of the highest rates of home ownership in Europe), and an 80 euro monthly tax cut for Italians earning between 8,000 and 26,000 euros a year.
Both on messaging and content, Renzi has expended a lot of energy and personal capital to mark a clear break from the ways of the past. Perhaps the downfall of his government stems from its two original sins of being born out of a grand-coalition compromise with former PM Silvio Berlusconi, whose party is part of the government coalition, and wide gyrations between vocal support for the EU and angry denunciations that the EU is actively working against Italian interests.
The grandiose fall of the leader of the Democratic Party, who had won a record 40 percent of the popular vote as early as May 2014, should pave the way for an election victory for the Five Star Movement. The party is the only major party (if one excludes the relatively small parties of the xenophobic right and the extreme left) that has constantly held a line that Europe is the source of Italy’s woes. Infighting, lack of coherence and a relatively shallow bench of seasoned policy advisors could be the three major things standing in the way of landslide victory for the upstart party led by former comedian and blogger Beppe Grillo.
The figurehead of the party, Beppe Grillo, has reiterated his commitment not to run for office. This leaves the open question of which of the party grandees will be crowned to lead the party to victory.
Thirty year-old Luigi Di Maio, the current vice president of the Chamber of Deputies, is rumored to be the favorite candidate. However, if the Five Star Movement is to stick to its practice of allowing for a plebiscite by party members, one can expect outsiders to enter the race, given the supposedly leaderless movement’s history of infighting.
The policy platform for the future election is currently being put to an internet vote. If the previously approved policy platform is any indication, it will be a platform based on environmental sustainability, rejection of austerity policies, access to free healthcare (currently healthcare in Italy is almost free at the point of delivery, but it requires copays) and guaranteed minimum income. On this aspect of their platform, the movement is much closer to the anti-establishment parties on the extreme left.
The Italian center-left might just have enough time to regroup and mount a fierce offensive against the Five Star Movement.
Regarding anti-establishment policies closer to European parties on the right, the position of the Five Star Movement is harder to discern. Its position on issues of European integration, economic growth and migration are a lot more ambiguous. For instance, the party disavowed earlier promises to call for a referendum on EU membership, claiming it intends to put membership of the euro to a referendum vote instead (Italian constitutional law does not allow for a referendum to be called on laws ratifying international treaties).
With the timeline for a general election slipping to mid-2017 at the earliest, the Italian center-left might just have enough time to regroup and mount a fierce offensive against the Five Star Movement. The progressive aspects of the Movement could easily be intercepted by a leftist coalition. This would have the double impact of stealing the monopoly of the Five Star Movement on these issues and highlighting the inherent difficulty of reconciling progressive policies with other policies, for which the movement will have to rely on support from the extreme right without alienating potential voters.
Effectively, the center-left could overcome the threat of a Five Star Movement government by highlighting its incoherence and the risk of amateurism by a Movement in which all MPs have not completed their first full parliamentary term and have never held cabinet positions. The Movement also runs on a platform of stamping out clientelism and corruption.
Recent events in the cabinet of Virginia Raggi, the Mayor of Rome and most high-profile publicly elected member of the movement, have included the arrest this week of Raffaele Marra, a close aide, on accusations of corruption. The more visibility the movement gains, the more it will have to face structural issues of corruption in Italy (the country ranks 57th on the Corruption Perception Index, the second-lowest of all EU countries). As episodes like this occur, the electorate might start doubting whether the movement is immune to the same old practices it vehemently accuses the establishment parties of.
Whether a broader center-left front is a viable option remains to be seen. Matteo Renzi is clearly weighting his options to run as leader of the party in the future political election, now that he will not be tainted by having to preside over a care-taking government in the interim.
Whichever way this evolves, we can expect rocky times ahead.
The Italian political establishment seemed widely unimpressed by the move of Giuliano Pisapia, the outsider that led an umbrella leftist coalition to break the monopoly of the center-right in Milan’s mayoral election in 2011, calling for the creation of a party on the left that could side with the center-left Democratic Party in the upcoming election. Again this week, Giuseppe Sala, the mayor of Milan, suspended himself from the mayorship, as he learned that he is under investigation for irregular tendering practices linked to the Milan 2015 Expo.
By the end of January, the Italian constitutional court is expected to reach a verdict on the validity of the current electoral law. The results will most likely require the transitional government approve a new electoral law before the elections can take place. The contours of this electoral law might provide incentives for parties to regroup in coalitions, or might award parties that are able to rally votes around their agenda, and leave the task of forming a government (with or without coalitions) until after the vote.
Tilting the system in favor of coalition-making will put the Five Star Movement at a disadvantage, but will also mark a return to a more proportional electoral formula which might make the system more prone to government crisis. Whichever way this evolves, we can expect rocky times ahead.
Note: The views expressed in this article are those of the author and are not reflective of his employer.