Italy’s PM Resigned After Voters Rejected His Constitutional Reforms

Italy’s PM Resigned After Voters Rejected His Constitutional Reforms

Italy’s PM Resigned After Voters Rejected His Constitutional Reforms

The EU’s embattled elite political establishment lost another round Sunday, as Italian Prime Minister Matteo Renzi resigned after voters rejected his constitutional reforms.

Beppe Grillo, called the most dangerous man in Europe, started to make headlines at the leader of Italy’s biggest protest party more than 6 years ago.

But by Y 2013, the laughing subsided, and 3 years later, he is living up to that description, his critics fear.

Mr. Grillo’s left-leaning and anti-establishment Five Star Movement has become a powerful opposition party which forced Italian Prime Minister Matteo Renzi to resign, following Sunday’s referendum.

The thorough rejection of PM Renzi’s referendum to streamline lawmaking was a significant boost for the country’s surging populist forces just weeks after Donald Trump prevailed in the United States.

Mr. Renzi’s loss also risks unleashing financial upheaval in Europe’s 3rd-largest economy as Italy’s weak banks struggle to contain the fallout.

A populist takeover of Italy is still uncertain prospect, Mr. Renzi’s center-left Democratic Party remains in control of Parliament and national elections do not have to be called until Y 2018. But much will depend on the makeup of the next government and how anti-immigrant, Euroskeptic parties capitalize on their success.

“I have not managed to reach victory,” an emotional Renzi said early Monday, conceding defeat at the Palazzo Chigi, his official residence. “My government ends today.”

Sunday’s vote was actually in favor of the status quo, since the constitution will now remain unchanged.

But the referendum to streamline the political system and diminish the role of the Senate long ago turned into a broader vote of confidence in Mr. Renzi, the youthful leader who portrayed himself as a lone warrior against Euroskeptic forces. Mr. Renzi always struggled to budge unemployment and improve the economy.

The lead opposition to Mr. Renzi, the insurgent Five Star Movement, ran a spirited campaign against the PM’s reforms, joining forces with an unlikely cross-section of allies, including some in his own party. Some said the changes were poorly written and, by removing checks on the PM’s power, could actually enable populists should they ever win the country’s top job.

Italy, which has had 63 governments in the past 70 years, is no stranger to political chaos.

What comes next will depend partially on Italian President Sergio Mattarella, who is charged with picking a new person to try to form a government, as well as with deciding whether to hold early elections.

Elections are a Key demand from the Five Star Movement, which is running a close 2nd to Mr. Renzi’s party in the polls.

There may also be economic consequences, with Italy’s shaky banks teetering amid the uncertainty.

The EUR dropped 1% Vs USD in early Asian trading following PM Renzi’s resignation, but many financial analysts cautioned against panic.

PM Renzi’s anti-establishment opponents were trying to capitalize on a wave of skepticism about the ability of elites to deal with globalization and the long, painful effects of the economic crisis that started 10 years ago.

Donald Trump’s victory last month bolstered the Five Star Movement, an insurgent anti-Euro force that has support on the left and the right.

“Today the arrogance that’s remained in power these last 10 years has lost,” said Luigi Di Maio, who is expected to be the party’s candidate for PM in the next election. “So ends the era of shortcuts and tweets.”

Sunday’s votes in Austria and Italy captured the extent to which Europeans are as politically polarized as Americans, split on issues including immigration and free trade.

In Austria, the far-Right Freedom Party’s Norbert Hofer conceded the election on his Facebook (FB) page less than 30 mins after polls closed; projections showed a surprisingly strong lead for independent Alexander Van der Bellen. The 72-year-old statesman and former Green Party politician was winning by 53.3% to 46.7% with nearly 100% of the votes counted.

The result was an unexpectedly clear victory for Austria’s political establishment.

Far-right leaders in France and the Netherlands have called Donald Trump’s victory part of a new “World Order” they hope to join in elections next year.

Mr. Hofer’s campaign in Austria seemed to echo Donald Trump’s, with far-Right outlets spreading damaging fake news and Mr. Hofer and his surrogates taking aim at “red herrings” such as his opponent’s health.

There were more allegations of dirty tricks on election day.

Sunday, Austria’s domestic intelligence service launched an investigation into a mass text message that stated that only Hofer voters should show up because polling stations were overcrowded.

Van der Bellen supporters, the text said, should instead vote Monday according to the Austrian daily Der Standard.

The race was perhaps more important as a bellwether of post-Trump voter trends in Europe, where nationalists are poised to stage potent Y 2017 campaigns in France, Germany and the Netherlands.

The Freedom Party’s powerful Chairman, Heinz-Christian Strache, accused Mr. Hofer’s opponents of running a “massive fear campaign,” saying Green Party supporters of Mr. Van der Bellen had painted Mr. Hofer as “a Nazi.”

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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