Italy's Rebuff of Renzi's Referendum

The NO vote on the Constitutional referendum was a personal rebuke to Matteo Renzi's policy, and a new proof of the anti-establishment stance prevalent in the EU.

Surveys prior to the referendum on constitutional reform in Italy showed a slight prevalence of opponents. This time, unlike the referendum on Brexit, the polls have not been formally proven wrong, but in fact they have not been able to grasp the avalanche that buried Renzi’s proposal: 59.95% against (NO), 40,05% in favour (YES). The turnout
percentage (68.48%) was significantly higher than expected by pollsters.

It seems that 68% of voters say they voted on the government and its leader, while 32% voted on the content of the proposed constitutional reform, that is, on the referendum questions. The percentages appear realistic, and confirm, as  pointed out by Lettieri’s article (From Trump to the Euro Crisis), that it is another case of an European government defeated when the electors are called to express their opinion through a popular referendum. There are considerable similarities between Renzi and Cameron.

If we look at the distribution of votes between YES and NO in the Italian Regions, we can see that, as in UK, per-capita income and unemployment rate fit results very well. In the northern Regions SI votes were higher than average, and you notice that the percentages in chief towns are always a little higher. But the phenomenon stops in Rome; here YES  prevailed in the central districts, the richest, while in the rest of the city NO has clearly dominated. This is the same phenomenon that occurred in the spring municipal elections, which led to the Government of the City of Rome the 5 Stars Movement (M5S).
In all Regions of the South, the percentages do not show significant difference between the Regions and chief towns, as neither the per-capita income or the unemployment rate differ.
                                                The votes for the YES

Regions                                                 Chief town                    %

Valle d'Aosta               43.3                       Aosta                          45.4
Piedmont                     43.5                       Turin                           46.4
Lombardy                    44.5                        Milan                          51.1
Province of Trento*     45.7                       Trento                         49.0
Province of Bozen*     68.5                        Bozen                         63.7
Friuli                            39.0                        Trieste                        36.5
Veneto                        38.1                         Venice                       40.9
Emilia-Romagna         50.4                         Bologna                    52.2
Tuscany                      52.5                         Florence                    56.3
Marche                       44.9                          Ancona                     46.5
Umbria                        48.8                         Perugia                     51.0
Lazio                           36.7                         Rome                        40.6
Abruzzo                      35.6                         L'Aquila                      35.5
Molise                         39.2                         Campobasso             39.4
Campania                   31,5                         Naples                       31.7
Apulia                         32.8                         Bari                            31.7
Basilicata                    34.1                         Potenza                     33.1
Calabria                      33.0                         Catanzaro                 30.3
Sicily                           28.4                         Palermo                     27.7
Sardinia                      27.8                         Cagliari                      30.3
*The Trentino-Alto Adige Region is splitted in the two autonomous provinces components.

There are two exceptions in the North: in Trieste and Bozen, the percentages are lower than in the Friuli Region or Bozen Province. But if we take the most populous city of Friuli, Udine, we see that the percentage of SI is 44.9, much higher. The Province of Bolzano is a special case, because in Bolzano city the presence of residents of Italian language is far higher than in the Province, where it is almost nothing. That the division is linguistic is shown by the fact that in the Province of Trento NO won. The plausible interpretation is that the German-speaking electorate has been attentive to the constitutional proposal that led to their Region a veto on any changes that relate to them.

Le Pen, Farage and other "populist" leaders have hailed the victory of NO as another battle won against Europe. Now it is certainly true that Northern-League and Brothers of Italy (a small extreme-right formation) are xenophobic and anti-European movements, but the M5S, the main force that pushed NO to the victory, while is opposed to the euro, does not have an explicitly anti-European position. As well as on issues of migrants and refugees the M5S is totally silent, because it is aware that his constituents are very divided.

However, the interest of the Democratic Party and Forza-Italia (Berlusconi’s party) converges in trying to draw up an electoral law that prevents the M5S to prevail in the elections. Paradoxically, the fall of the proposals for constitutional reform wil lget stuck the existing electoral system (i. e. Italicum, intended only for the Chamber of Deputies) that represented the other leg of the constitutional reform. That system, providing for a runoff between the top two parties, would have allowed the M5S to obtain a majority in the House.

Now the issue is to equalize the electoral systems of the House and Senate and, not coincidentsally, Berlusconi has particularly insisted on the homogeneity of electoral systems. Bearing in mind that the Constitution, confirmed by the favourable vote of nearly twenty million Italians, specifies that the senators are elected on a regional basis, to emphasize the uniformity means essentially bet on a proportional electoral system.

Very likely Italy will join France and Germany in 2017 going to the general election. In Germany the main doubt is about how many votes will get Alternative fur Deutschland, xenophobic and anti-euro movement. But the almost certain outcome will be a grand coalition; Instead the outcome of the French elections is more uncertain. Le Pen and Fillon should go to the runoff, and it is not at all obvious why the left-wing electorate should vote for a hyper-liberal right-wing candidate, Thatcher’s admirer. A repeat of what happened in the run-off between Chirac and Le Pen's father in 2002 is not at all easy.

To Mario Draghi could happen to have to see the end not only of the euro but the EU itself, before the end of its mandate. For a person who declared himself ready to "whatever it takes", it would be a very sad conclusion; the culprit, however, is easily identifiable: it is not Marine Le Pen, but Angela Merkel.

Ruggero Paladini

Economist - Professor of "Scienza delle Finanze" at University "La Sapienza" Roma; Member of the Economic Board of Insight -