The Next Brexit? Italy ‘No’ Vote Empowers Populist Revolt Against Establishment

By Josh Siegel

Daniel Hannan, a British politician and a leading campaigner of Brexit, recognizes the forces that he says inspired Sunday’s referendum result in Italy, where the center-left prime minister resigned after voters rejected his proposed reforms.
“The obvious parallel with these elections is you carry a tremendous handicap if you are associated with the old regime in any sense,” Hannan told The Daily Signal. “Voters understandably feel patronized and lied to and ignored and disdained and they responded in this way.”
In a year when Britons voted to leave the European Union and Americans chose Donald Trump as president, the global populist movement claimed its latest victim Sunday when Prime Minister Matteo Renzi resigned after Italian voters rejected constitutional changes backed by his government.
Renzi had proposed to reduce the power of the Senate, the upper house of Parliament, to streamline the political system, create more stability, and accelerate growth in Europe’s fourth-largest economy. Italy has had 63 governments in 70 years.
But critics, empowered by an opposition campaign waged by the upstart, euroskeptic Five Star Movement party, said Renzi’s plan would put too much power in the prime minister’s hands.
The opposition capitalized on similar discontent that fueled the results in Britain and the U.S.
Italy is plagued by low growth, and its banking system has been in crisis for a decade. The country’s youth unemployment rate is around 35 percent, and young people soundly rejected Renzi’s reforms.
Italy is also contending with a tide of refugees and migrants from North Africa (more than 170,000 people have arrived in Italy so far in 2016).
While Renzi’s fall will not lead to the immediate takeover of Italy by a populist figure or party like the Five Star Movement, experts say the result of the election will reverberate across a European Union already shaken by anti-establishment anger.
“I certainly think there are common elements here,” said Robert Kahn, a senior fellow for international economics at the Council on Foreign Relations, in an interview with The Daily Signal, adding:

This populist wave we are seeing—by which I mean frustration, alienation, and rejection of mainstream politicians and institutions—was certainly part of the ‘no’ vote. While there are a constellation of factors, part of this is Italians using the referendum to lodge a protest vote against their government and policies. In that sense, it does rhyme with Brexit.

Change in Italy will be slow in coming since Renzi’s center-left Democratic Party remains in control of Parliament and national elections do not have to be called until 2018.
Though the Five Star Movement—which leans left, not right—advocates a referendum to determine whether Italy should give up its eurozone membership, observers say it would be difficult for the party to gain the power to make that happen. That’s because Italy’s mainstream political parties may aim to change voting laws to make it tougher to rule without a wide coalition.
The Five Star Movement and its leader, Beppe Grillo, a comedian-turned-politician, have said they won’t govern in a coalition government with traditional political parties.
Yet even without an immediate shake-up in Italy, 2017 promises to be an important year in determining the future of the European concept of integration.
European Union members Germany, France, and the Netherlands have elections next year with euroskeptic and populist candidates in the running.
Last week, President Francois Hollande of France, a socialist, said he won’t seek re-election in 2017, opening up the race to succeed him, which will include Marine Le Pen of the rising far-right populist National Front party.
German Chancellor Angela Merkel, who has presided over Europe’s strongest economy since 2005, will run for a fourth term in next year’s election. But she and her Christian Democratic Union party are under siege because of her decision to accept almost 1 million refugees and migrants from Syria, Afghanistan, Iraq, and other countries.
“In France and even in Germany, you have alternative parties that have extremely different visions of what Europe should be,” Kahn said. “It’s dramatic, it’s scary, and it’s threatening to the current union.”
Some say there are limits to the influence of anti-establishment anger.
They point to another election result on Sunday, where a center-left presidential candidate in Austria easily defeated his far-right challenger.
Andrea Montanino, director of the Global Business and Economics Program at the Atlantic Council and a former board member of the International Monetary Fund, says talk of Italy leaving the euro and the downfall of the union is premature.
“It’s important to differentiate this event from the rest,” Montanino told The Daily Signal in an interview. “This is part of the Italian normal legislative process. It will of course impose some instability for a while, but this is not a Brexit.”
On Monday, the day after the referendum in Italy, financial markets recovered from an initial scare that Renzi’s departure would lead to political stability, with stocks and the euro both rebounding in value.
Hannan, one of the architects of Brexit, said “there are too many uncertainties” to predict Italy will leave the euro.
But he said voters, like in Britain, sent a powerful message.
“The lesson is if you give people a choice between corporatist euro technocrats and angry populists, you aren’t going to like their verdict,” Hannan said.