The Italian referendum explained: Si or No, why it matters
A referendum on a constitutional reform that could change the role and structure of the Italian senate, while also changing the distribution of competences between the State and the regions. Cutting the number of senators from 315 to 100 and reducing their powers to ease political gridlock, is an idea the Italians will be debating in this important vote on the 5th of December, 2016.
The “Si” , propagated by Matteo Renzi aims to make the government agile, requiring proposed laws to seek approval from only the lower house instead of the two houses: The Chamber of Deputies (Camera dei deputati) with its 630 members would then decide on most federal laws while the Senate would be by passed leading to a more reactive government during these uncertain economic times.
Beppe Grillo from the 5 Star Movement, advocates a “No”, citing that the reforms would lead to having party appointed bureaucrats in the parliament instead of people elected.
The 64th Italian government since inception faces an other potential change, as Matteo Renzi has himself annouced resignation if the vote leads to a “No”. The Italian bicameral legislature has been designed with checks and balances after the downfall of fascism, which may have definitely helped in curbing radical political parties from gaining strength, but it results in the other unfavorable result in the form of policy paralysis.
The “No” would lead to a change in government, leading to further uncertainty for the Italian banks that are in need of critical recapitalization. A contagion effect on other European banks is expected. The 5SM also advocates leaving the Euro zone. Loss of Renzi could very well be followed by a new government with radical ideas. Real Investors like always hate uncertainty.
Considering the dramatic changes in the world, with Brexit, Trump, Modi Demonetization, Italy could very well use this opportunity to make a crucial reform that could lead to more political stability and long term planning. The effects of a “No” goes farther than a refusal to adapt. A delay in reforms, even for a couple of years would lead to another generation of Italian brain-drain all due to paralyzed bureaucracy.
Read the Italian blog lo stagista parlante for real behind the scenes opinion of an Italian youth.
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