Italy: Prime Minister's Fate Hinges on Upcoming Referendum

Italy: Prime Minister's Fate Hinges on Upcoming Referendum
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For months, Italy has been preparing for a constitutional referendum that will decide whether to limit the role of the Senate and shift more power from regions to the central government. On Dec. 4, that vote will finally take place. Prime Minister Matteo Renzi hopes that the electorate approves the reform measures, insisting that they would yield stronger and more stable governments.

Polls, however, suggest that a large number of voters oppose them. According to a weekly EMG poll published Nov. 14, 34.9 percent of those who planned to vote are in favor while 39.2 percent oppose with 25.9 percent still undecided and a total of 40.2 percent of the electorate as a whole abstaining. A similar poll by Tecne says 23.2 percent of Italians would approve the measures and 25.3 percent would not, with 51.6 percent undecided or abstaining. The consistently high share of undecided voters, although decreasing slightly, makes the outcome of the referendum hard to predict. Renzi has staked his political future on the outcome of the constitutional reforms, saying he would resign if the people reject his reforms. However, most opposition parties and part of Renzi's own Democratic Party, are campaigning against the reforms in hopes of ousting the prime minister. Should the referendum fail, Italian President Sergio Mattarella could ask the parliament to appoint a new government without having to call new elections.

The Italian government, trying to counter declining approval ratings for its rule and its reform proposals, has announced economic incentives in recent weeks. The 2017 budget proposal also includes higher spending than originally planned — a measure that has already fueled tension between Italy and the European Commission. The Italian government has rejected EU criticism, saying the spending is due to Italy's difficult position amid the migrant crisis and in the wake of recent earthquakes. For its part, the European Commission has delayed making a decision on doling out punishment until early 2017 to avoid worsening Renzi's already fragile position.

But the Italian government has issued critical statements about the European Union as it tries to counter Euroskeptic opposition parties. On Nov. 15, Italian EU Affairs Minister Sandro Gozi threatened to veto the Continental bloc's 2014-2020 budget revision because it fails to increase funding for Italian priorities such as migration, security, youth unemployment and research. Renzi also said that Italy does not want to see its EU contributions used to build walls across Europe. EU leaders replied that the budget revision does consider Italian priorities and that negotiations will continue. At this point Gozi's statement does not have any serious consequence, though Italy could present a real veto in December. This back and forth over EU spending goes on as Italy's prime minister fights for his post, which might be in jeopardy in the coming weeks.

A Stratfor Intelligence Report.
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