On Sunday, Italians resoundingly rejected the constitutional changes put to them by Italian Prime Minister Matteo Renzi. Formally, the referendum sought to curtail the powers of the Senate (Italy’s upper house). But despite arguments to the contrary, the real question was: ‘How much pain are you willing to suffer for the privilege of buying your groceries in euros?’
Italians are angry and hurting. The jobless rate runs at 12.5%; for those under 25 it's an eye-watering 40%.
Many blame the euro, since the introduction of which almost fifteen years ago growth has been virtually non-existent. It's the anvil on which Italian politics has broken for half a decade. Some 40% of Italians want out, the highest in the euro zone.* The rising force of Italian politics, Beppe Grillo’s euro sceptic and anti-establishment Five Star Movement, wants a referendum on withdrawing from it. If Italy left, the single currency could be history.
Known as ilrottomatore (the ‘demolitionman’) in his native Florence, Renzi is a centrist in a country not known for its moderation. Sworn in as prime minister in February 2014, Renzi persuaded Italy’s faction-ridden parliament to implement a program of liberalizing reforms designed to allow Italy to return to growth, service its debts(currently 132% of GDP) and demonstrate Rome’s commitment to shoring up the euro’s long-term viability.
In Italy’s 2013 elections, Renzi’s left-of-centre coalition won just more than 29% of the popular vote. But Renzi himself has never stood for national election.
The referendum was not only the country’s first chance to have its say on his reforms. Had they been approved, the constitutional changes would theoretically have given Renzi the power to transform the country.
A sweeping program of spending cuts, labour market liberalisation, pension reform and a crackdown on tax evasion has been talked about ever since the bond markets first began to really worry about Italian sovereign debt in 2011. It seems Italians remain unconvinced.
I was in Rome when, under pressure from the markets, European Commission and German Chancellor Angela Merkel, Prime Minister Silvio Berlusconi resigned. I cheered over my copy of Corriere dellaSera when the same parties succeeded in replacing him with the impeccably decent Mario Monti, a former European Commissioner (and Goldman Sachs investment banker). Parachuted into parliament by a provision that allows the President of the Republic (then Giorgio Napolitano, a pillar of public rectitude) to appoint life senators, Monti was to lead a ‘technocratic’ government (as if economic policy could magically cease being political) that would introduce reforms to avert the debt emergency threatening the euro.
Advised to go to the polls to secure a mandate, Monti dithered. As his programme was revealed over the following months, the unions, the parliament and eventually the public turned against him. In elections in 2013, his coalition won just 11% of the vote. The revolution was stillborn.
Since then, Italy has had two more prime ministers and is now poised to get a third.
Historians may one day conclude that Renzi’s budding liberal revolution (and with it perhaps the euro) fell victim to the same things that killed off Monti’s: the 1947 Italian constitution (which Renzi sought in vain to change) and Italy’s own distinctive political culture (which would have had to change had he succeeded).
To forestall the emergence of another Duce, the post-war Italian constitution was weighted in favour of the legislature; executive powers were weakened and divided. It also laid down an unusually ‘pure’ system of proportional representation, with parties winning as little as2% of the vote gaining parliamentary representation.
The electoral law has since changed. But it still favours regional and sectional interests over national ones. Monti’s programme calling for sacrifices from a host of vested interests was always going to be an easy target, and so proved Renzi’s referendum.
The other factor is the status of liberalism, which came to much of the peninsula as a foreign creed during the Risorgimento, its emphasis on the individual upending established forms of collective authority: Church, family, town and region, class.
Among many Italians, there’s still little consensus that a natural ‘harmony of interests’ exists and exceptionally little faith in Smith’s invisible hand (the same is true, mutatis mutandi, of much of southern Europe, from Spain and Portugal to Greece). Italy’s constitution addresses unemployment by enshrining a ‘right to work’ (diritto al lavoro).
To say the past hangs heavily over Italy isa truism. It’s why almost 50 million people visit it every year. But it’s not always picturesque.
During the Cold War Italy teetered between the soft authoritarianism of the Catholic centre-right and open sympathy for the Soviet bloc among Communists on the left. The Communist threat was viewed so seriously that Italy’s immediate post-war Christian Democratic governmentslet most Mussolini-era public administrators remain at their posts; all but themost egregious fascist-era laws remained on the books.
Even today Italian society remains remarkably polarised, and the liberal centre weak.
Unable to generate the consensus for reform, Italian governments have traditionally responded to industrial conflict and declining competitiveness through debt and devaluation. But globalization and above all the euro have made old solutions redundant. Italy no longer has a currency of its own to devalue, nor a central bank obliged to buy its debt. Reform, while unavoidable, will be exceptionally painful (imagine the Hawke-Keating reforms had been carried out in an era of fixed exchange rates).
Liberal-minded Italians have always seen in European integration a way out of Italy’s ideological confrontations.
But in their enthusiasm or the euro, they underestimated the strength of the historical andcultural forces in contention: membership of the euro assumed the existence inItaly of a liberal consensus regarding the management of public finances that in reality is too weak to bear the monetary and fiscal discipline that the euro demands.
Talk to a taxi driver and as often as not Mussolini (whose tomb remains a place of pilgrimage for thousands every year) will emerge as an object of praise. Esteemed historian and essayist Ernesto Galli della Loggia has described the hard left elements within Renzi’s ownparty that campaigned against his proposed reforms as representative of that ‘culture of anti-reformist radicalism, of an almost extremist character, that has dominated so many aspects of our society'.
Prudence would take such sharp political cleavages as part of Italian (and European) social reality. But the single currency disregarded such realism. It ignored the diversity of national conditions, which has fuelled anti-EU sentiments across the continent. Sold as a celebration of European unity in diversity, the euro is today experienced as an instrument of brutal homogenisation.
In the wake of Italian unification, the nineteenth-century statesman Massimo d’Azeglio is said to have declared: Abbiamo fatto l’Italia. Dobbiamo addesso fare gli Italiani ('We have madeItaly. Now we must make Italians'). Regionalism is a fact of life in Italy. Aunified Italian state only appeared in 1861. This October, the Veneto observed the sesquicentenary of its incorporation into the new state without a single public celebration.
If Italy’s history since unification teaches those looking to create a European ‘demos’ anything, it’s that you don’t create either a people or a shared sense of the common good by imposing it by threats from above.
Regular readers will be aware of my Euroscepticism. Italy is one of the great reasons for it.
(By Matthew Dal Santo, an expert at the Lowy Institute)
A single purchase
