Tomorrow, Italians will go to the ballot, for a referendum on a constitutional reform promoted by the government led by Mr Renzi. The referendum is widely supposed to be likely--were the anti-Renzi side to win--to trigger financial turbulence. A "no" vote is read by many as an event comparable to the British people going for Brexit. This is a bit curious: what is considered potentially devastating, this time, is a vote that would in fact secure the status quo.
To be fair, fear-mongers do have a point. Italy is widely (and rightly) perceived as a country that needs extensive reforms. If Italians vote for the status quo, the impression that the country is indeed irreformable--that is, that in Italy there is such an intricate nexus of corporate interests that it is impossible to disentangle it--may consolidate, ultimately driving investments away.
In actual fact, the constitutional reform we're going to vote on implies by no means a drastic change in our political governance. It changes the role and the composition of the Italian Senate, without sweeping it away; it re-centralizes powers from regional governments; it fine tunes the legislative process to fit the new context. It doesn't increase the powers of the prime minister, or give him the power to dissolve parliament. Mr Renzi claims the new reform will allow for faster and thus more productive law making, but it's hard to argue that Italy has a shortage of laws.
The astonishing fact is that for reforms of the kind that only law scholars could feel passion about, one way or the other, Italians have engaged in basically five months of hectic electoral campaigning.
This is because the referendum has by now little to do with the essence of the constitutional modifications approved by Parliament and now put to the voters: Italians will be voting for or against the Renzi government.
Mr Renzi became prime minister in 2014, after winning the leadership of his own party in an in-party contest open to all voters. Although he did not win an election running for head of government, after his appointment, his party scored an impressive 40% in the European election of May 2014, which gave him legitimacy. But the very fact that Mr Renzi wasn't anointed by a popular election may explain his eagerness to personalise the referendum vote, making it a "take-it-or-leave-it" vote on his government. This strategy also made sense in view of the nature of a constitutional reform: a foggy and obscure matter that voters find of little interest, whereas a referendum on Mr Renzi himself offers a much more exciting electoral battle.
Pools predict a victory for the "no" side, but you never know these days.
What I personally find more problematic is the sort of political equilibrium that would emerge after the referendum's result. Mr Renzi has approved, during his tenure, a new electoral law with a majority bonus system. However, this electoral law applies only to the House of Deputies, on the assumption that the Senate was changed by the constitutional reform into an indirectly elected organ, representing local governments.
If the "no" side wins the referendum, then Italy will have two very different electoral laws, an old one for the Senate and a new one for the House. Both the chambers are supposed to give the government a confidence vote. This is why, if the no wins, there would be no immediate elections before a new electoral law, applicable to both the chambers, is enacted.
If the no side wins, moreover, this will be widely considered a triumph of the populist Five Stars Movement, a heterogeneous political force that brings together an emphasis on transparency and the fight against corruption with a strong anti-business and anti-capitalism attitude.
Even Renzi's enemies will freak out at the perspective of the Five Stars Movement winning the next election. This is why it is very likely that the new electoral law that "establishment" parties are more likely to agree on is a pure proportional representation system. Is that a brilliant idea? As the likelihood of any party winning a clear majority of the votes is astonishingly small, this would make Italy a country run by a permanent grand coalition between the right and the left, with the sole purpose of keeping the Five Stars at bay. In such a context, however, everybody tries to avoid the negatives for their own constituency, instead of forgoing vetoes and negotiating reforms. This would decrease and not increase the likelihood of reforms being approved, with perhaps the unintended consequence of strengthening the Five Stars Movement even further.
This said, I think the Economist nails it, when it writes that "Mr Renzi has already wasted nearly two years on constitutional tinkering" and argues for the no side. Writes the British newspaper:
the fact that the struggle to pass laws is not Italy's biggest problem. Important measures, such as the electoral reform, for example, can be voted through today. Indeed, Italy's legislature passes laws as much as those of other European countries do. If executive power were the answer, France would be thriving: it has a powerful presidential system, yet it, like Italy, is perennially resistant to reform.
Mr Renzi's economic reform record is not exciting so far, if you maintain that what Italy needs is supply side reforms to ease wealth creation.
The Wall Street Journal has been likewise critical of Mr Renzi, arguing that European partners should be afraid not so much of the referendum reform but of the fact that "after years of stagnation, the eurozone's third-largest economy can claim as its most promising reformer a politician whose main project is a constitutional reform of debatable value". The Financial Times ran an op-ed by Francesco Giavazzi of Bocconi University, one of Italy's most distinguished economist. Giavazzi takes Renzi's side ("Were Mr Renzi to resign, the dream of a generational change among Italian politicians would vanish. And with it, I fear, the chances of Italy remaining in the euro").