Summary
The lower house of the Italian parliament adopted a controversial electoral law May 4, in the hopes of making the government more effective. Called Italicum, the law will concentrate more power in the hands of future Italian governments by making it easier for a party to win a majority in the lower house. After a referendum in early 2016, a constitutional reform is expected to complement Italicum. In the short run, the current government will change the Italian political system to give more power to the next government.
Meanwhile, Rome will postpone reforms that would help revitalize the country's economy until the next elections, as the ruling Democratic Party will want to remain popular among voters. Prime Minister Matteo Renzi will probably call for early elections after Italicum enters into force, hoping to get a clear mandate in order to better implement his reformist agenda. However, the Constitutional Court will likely challenge the legality of the electoral law. The legal process would take several years, but the final ruling will create a new stage for political instability in Rome.
Analysis
Since his appointment in February 2014, Renzi has made reforming the Italian political system one of his priorities. The adoption of Italicum was the first step toward this goal. The bill will enter into force in July 2016 and will provide more power to future Italian governments by automatically giving 55 percent of parliamentary seats to the party winning 40 percent of the vote. If no party gets 40 percent of the vote, the bill has provisions for a runoff between the two leading parties in which the winner would be awarded 55 percent of the seats. The law also allows the parties to present closed lists at elections, meaning that party leaders can handpick the lead candidates in parliamentary elections.
In addition to Italicum, the government is moving its constitutional reform through the legislative process. If both chambers of parliament approve the new constitution during the debates later this year, the reform will require a referendum in early 2016. The new constitution will reduce the legislative powers of the higher chamber - the Senate - and strengthen the central government at the expense of the regions in certain strategic sectors, such as energy and transport.
As a result, political power will be centered in the lower chamber - the Chamber of Deputies - and the Senate will not be allowed to block laws or to promote confidence votes against the government. The link between the electoral reform and the constitutional amendments is clear: In 2013, the general elections led to Democratic Party control of the lower chamber but not the Senate, forcing Italian parties into complex alliances, constant horse-trading and a cumbersome decision-making process.
Once implemented, both reforms are designed to make the Italian political system more efficient by giving future governments more power to implement their programs. For Italians, who have seen more than 60 governments since the end of World War II and the fall of Benito Mussolini, this efficiency would be a marked change. Influenced by the fear of a strong centralized power, Rome created a political system that resulted in long-standing instability in the government. The only government that completed its five-year-term during these 70 years was Silvio Berlusconi's government between 2001 and 2006.
Moreover, since 1993, the Italians have changed their electoral system twice. In 2013, the Constitutional Court declared the 2005 law adopting the first-past-the-post system - which gave the coalition of parties that won the most votes an automatic majority - illegal because it did not reflect the citizens' choice. This decision demonstrated the need to reform the way Italians elect their representatives once more.
Opposition to Constitutional Reforms
Both Italicum and the constitutional reform incited furious reactions from the opposition parties, which view the reforms as an attempt by the ruling Democratic Party to seize more power at a time when the opposition is weak and fragmented. On April 30, the opposition parties threatened to organize a popular referendum against the electoral law, but constitutional constraints make such threats unlikely.
The electoral reform has also created dissent within the Democratic Party. 40-50 deputies rebelled against their own party, though they have no interest in bringing the government down while Renzi's popularity is high. The act would also lead to early elections, enabling Renzi to keep the rebels out of the next legislature. Renzi subsequently called for confidence votes - a tool Italian governments use frequently to accelerate the legislative process - on the bill April 29 and 30. While some of the rebels voted against the electoral law, others chose to abstain, making it easier for Renzi to survive the confidence votes.
But the real threat to the electoral law comes from the Constitutional Court, which could declare the law unconstitutional. A legal process in the court can take several years, with several warnings to the Italian parliament preceding a final judgment. The new bill has the potential to feed the traditional Italian fear of concentrated power, because it is meant to give more power to single parties instead of coalitions. As a result, a new stage of political instability will emerge from the court's decision.
Hurdles to Economic Reforms
In spite of the political reforms, Italy will continue to face structural economic problems. The economy is expected to slip out of a three-year recession this year with a timid growth of 0.7 percent, according the latest forecasts. Rome will probably keep its budget deficit under the 3 percent threshold requested by the European Commission as well. However, the Italian debt (now worth 132 percent of GDP) will keep growing. Even if the European Central Bank's quantitative easing program has made borrowing easier for Rome, the country's structural competitiveness problems are not being addressed. Italy is one of the only countries where labor costs continued to rise during the crisis.
The key measures Renzi promised when he was appointed in February 2014 included an overhaul of Italy's tax system, a revision of the Italian labor market legislation and public administration reform. But the government has struggled to implement this program because of resistance from powerful Italian unions, a fragmented parliament and growing dissent within the Democratic Party, whose left-wing rebels consider the measures too close to center-right policies. Meanwhile, despite passing the Jobs Act that instilled a greater flexibility in the Italian labor market, unemployment has returned to 13 percent in March, with youth unemployment rising to 43.1 percent.
After two difficult reforms, Rome recently announced the government would ease austerity measures in the coming years. On April 10, Renzi promised there would be no more tax hikes or fiscal measures this year, after he had previously announced another 10 billion euro (roughly $11.2 billion) plan to cut public spending. Instead, the government revealed it would introduce new fiscal stimulus measures totaling 1.8 billion euros.
With the electoral reform entering into force in July 2016 and the constitutional reform expected to be implemented by then, the next government will be able to get a clear mandate to implement its programs. This mandate will enable Renzi to call for early elections and benefit from the Democratic Party's comfortable lead in opinion polls. In the meantime, the Italian government will avoid introducing unpopular spending cuts and controversial reforms.
When he took office, Renzi identified two major problems facing Italy: one was economic, the other political. For the past year, he has focused on the latter, spending a great deal of time and energy to pass the electoral law. This reform will work efficiently in the short run, but it will leave many questions about the country's future open, including the constitutionality of the law and, consequently, the stability of the Italian political system.
