Is Italy the next domino to fall in the European Union?
The perennial sick man of Europe – where growth has been slower than Japan for over 15 years – the country may be finally getting fed up with business as usual.
Its young and telegenic prime minister, Matteo Renzi, is desperately trying to reform the system, but it may be too late.
At the heart of the matter is a new constitutional referendum that is intended to streamline decision-making authority. It would shift power from the chaotic regional governments to the national executive branch.
Originally seen as way to reform Italian politics, the referendum instead has become a proxy for the status quo of Pan-European unity. And it is quickly losing support among the fed-up populace.
|Euros could become collectors’ items if Italy joins Great Britain in exiting the European Union.|
Much like in America, the populist uprising in Italy has seized upon this proposal as just another force-fed solution from the elites. And it’s been met with vociferous opposition by two Euroskeptic political parties – the conservative Northern League and the Five Star Movement.
The ever-colorful leader of the Five Star party, the former comedian Beppe Grillo, proudly noted: “We are the barbarians! The real idiots, populists and demagogues are the journalists and the establishment intellectuals.”
It is this sour sentiment that Mr. Renzi now faces as he desperately tries to save not only this initiative but also his political future as well. A loss on the referendum would no doubt trigger a no-confidence vote relatively quickly for Renzi’s Democratic Party, which could bring the Euroskeptic bloc to power. Never one to shy away from the fight, Mr. Renzi has tried to flip the tables on the opposition by casting himself as the agent of change and noting that a vote for no “means nothing changes.”
Whether he can turn his fortunes around remains to be seen. For now, Mr. Renzi’s “yes” side is behind in all the polls. But he still has time to rally the troops by December 5, when voting takes place.
|“If the forces of Euroskepticism take over Rome, there is no way that the euro could maintain its status as the single currency for 500 million European citizens.”|
The vote could have powerful consequences in the currency market. A “no” win isn’t going to trigger an instant exit out of the euro, but it could lay down the foundation for such a move.
Italy is the third-largest economy in the eurozone, and if the forces of Euroskepticism take over Rome, there is no way that the euro could maintain its status as the single currency for 500 million European citizens.
So, we will be watching with bated breath as December 5 comes around. Divorce Italian-style may be the latest salvo against the post-World War II economic order and it could be a bigger headache than anyone imagined.