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As expected, Matteo Renzi lost. Rather more surprisingly, he did keep his word and resign. So where is Italy standing at the moment?
There is turmoil in the immediate aftermath of the vote, which the outgoing Italian Prime Minister had called in a bid to push through an overhaul of the Italian system. In the wake of defeat eaders of the opposition parties are racing to declare victory. The Five Star Movement (M5S) has announced it will start working on a governmental programme as soon as possible, but M5S and lower chamber vice-president Luigi Di Maio is not the only one with presidential ambitions.
In the next few days it is likely more faces will fight for the limelight. Look out for Silvio Berlusconi, who just a few weeks ago resurged from what many hoped was definitive retirement (it is about time) to announce he’s ready to make a comeback. Not to mention Marco Salvini, the Italian Farage, and lite-fascist Giorgia Meloni, all up in arms and calling for a snap election the moment the polls closed on Sunday.
What is really going to happen – an election is unlikely – is a different matter altogether, and will likely become more clear in the next few days. Let’s not forget that the final decision is for Sergio Mattarella, the President of the Republic, to make. He will ultimately ask someone to form a government. The previous President, Giorgio Napolitano, was the one who invited Mario Monti to form a technocratic government in 2013 to deal with a very messy hung-parliament after a vote of no-confidence in Berlusconi’s government.
Something similar may happen again, and not just because it would be the most sensible thing to do to ensure stability. The problem is that Italian electoral law is not up to scratch: indeed, it was deemed unconstitutional a year after it passed in 2015. Passing a new electoral law was Renzi’s next step, had he won the referendum he has just lost. Now his government has fallen, and electing a new parliament may not be that easy. Of course, snap elections could be held using a cleaned up version of the most recent electoral law; but it is rather ironic that the very people who opposed said electoral law so ferociously – such as the M5S, the Northern League – are now urging it to be used to hold an election it as soon as possible.
There is of course a further complication in that, if a new government is established without a general election, the Five Star Movement and the far right’s anti-establishment message will only gain more momentum, and in all likelihood cost the centre-left the 2018 election. Italy’s position in the EU will certainly be threatened, although it is unlikely to see a Brexit-style referendum anytime soon, regardless of who is in government.
An EU exit is possible, if not by 2018, at least by 2025.
Meanwhile, panic is spreading through the already fragile Italian financial system. It could be the end for the Monte Paschi di Siena, which would bring down thousands of Italian households that are riddled with debts. Has the ECB planned accordingly? Neither Italy nor the EU could cope with a banking crisis leading into another Greek-style debt meltdown in the next month. One thing is certain though: without new policies Italy is heading for another decade of stagnation.