Renzi and the Italian Referendum: Disruption Potential Minimized

Italian Prime Minister has set the date for the constitutional referendum
as late as practically possibly. 
It will be held on December 4.   The issue is the perfect
bicameralism that gives as much power to the Senate as the Chamber of Deputies.

 Renzi’s argument is that the political
reform is necessary to make Italy governable
.  Italy has had 63
governments since the end of WWII.  In
order to
address the economic challenges the country faces, political
reform is necessary.  

The referendum took on extra significance
because Renzi had suggested he would resign if the referendum were not approved.
  This is significant because his resignation
could see the center-left PD replaced by the second largest party in Italy, the
5-Star Movement, which wants drop out of the monetary union.  

Many observers continue to play up this
scenario even though Renzi has backed off from this threat/pledge.
admits that it was a mistake to link the government’s tenure to the referendum,
and says he meant to underscore the importance of the political reform. 
  He has subsequently indicated he would not resign, and that
parliamentary elections would take place as scheduled in 2018.   

Walking back the resignation talk is also
tactically important.
  It increases the chances that the referendum
can be held on the merits of the reform rather than on Renzi himself, which the
opposition parties seemed to be doing.   There is genuine opposition to
the constitutional reform that is based
on the concern that it would concentrate too much power in the hands of the
prime minister.  There is an underlying fear of another Mussolini, and,
arguably, a more immediate antipathy to another Berlusconi.  

All the main opposition parties in Italy are
opposed to the referendum, as is the largest trade union. 
Other trade
unions and the industry association
(Confindustria) favors the referendum.  The polls show that it remains a
close contest with a large number of undecided voters.  

Setting the referendum late in the year may
also increase the chances of success. 
First, the 5-Star Movement,
vocal in its opposition, may see its own
position compromised by the difficulty in transitioning from an opposition
party to a governing party.  In local elections earlier this year, it
carried the municipal government of Rome and is having a rough time of things,
with internal divisions and resignations.  

Second, it allows Renzi to focus on the 2017
budget that is due in a few weeks. 
   In recent weeks, he
has taken on a more antagonistic stance to the EC in general and Merkel and
Hollande in particular.  Given the refugee crisis and the damage from the
earthquakes, he is seeking greater fiscal flexibility that the EC may be prepared to grant.  Confronting the EU
will cost Renzi no support while stealing
some of the thunder of the opposition.  

Tomorrow the government will also update its
economic forecasts.  Reports suggest the government will
forecast 1% growth this year and 1.2% growth next year. 
are in line with the central bank’s forecasts (1.1% and 1.2% respectively),
they are about Confindustria’s forecasts of 0.7% and 0.5%

Third, the later the referendum, the longer
Renzi can personally campaign for the referendum.  He is more enthusiastic
than the opposition.
  Reportedly, he has committed to an extensive
grass root campaign.  

The important takeaway
that many observers have seemed to play down is that Renzi is no longer talking
about resigning if the referendum loses. 
This removes much of the disruptive potential of the
referendum.  This is not to say that
Italy does not have its challenges.  Growth remains poor, and the
woes have not been convincingly


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