MOSCOW (Sputnik) — The opposition has framed the referendum as a de-facto plebiscite on Prime Minister Matteo Renzi. With bookmakers odds suggesting high probability of the "No" vote, main questions upon the referendum are whether the head of the government will step down in case of defeat and whether eurosceptic Five Star Movement (M5S) will win in the snap election that might follow.
The major focus of reforms proposed by the center-left prime minister in 2014 is put on the Senate, the upper house of Italy’s Parliament. Under the proposed reform, the Senate would lose its current power over the budget and its right to topple the government by passing a motion of no confidence, as well as see the number of senators dramatically reduced from current 315 to just 100.
Besides, all future senators – in case the reform is approved – would be picked by the government rather than elected directly at the same time with lawmakers of the Chamber of Deputies, the Parliament’s lower house.
Proponents of the reform, that include the majority of Renzi’s ruling centre-left Democratic Party (PD) and moderate parties of the center, say that these changes would speed up the legislation process. Under the current system of the so-called perfectly symmetric bicameralism, draft laws must be passed in the same text by both houses in potentially endless process of parliamentary shuttle.
With Italy having more than 60 governments in seven decades, supporters of the constitutional changes hope that new electoral system and stripping Senate of its equal law-making powers with the Chamber of Deputies will put an end to deadlocked governments and political paralysis and make the country easier to govern.
"We are dealing with a reform that is simple but extremely important. It does not go beyond what is necessary to avoid conflicts between the two chambers of legislation doing the same things (that is a unique case in Europe) and to avoid conflicts between the central government and the regions. An institutional and political system that works better (more rapid in deciding, more transparent, more responsible) is the necessary condition to do the work and deliver on the real challenges that face us," Alessandro Maran, a PD member of Senate’s constitutional affairs committee, told Sputnik.
ECONOMY FOR CHANGES
Most evident supporters of the government’s reform are economists. They argue that Italy desperately needs to streamline its government in the interest of growth needed to support huge debt burden and to fight with unemployment.
Italy’s unemployment rate was 11.4 percent in August and, according to the outlook by the Organization for Economic Cooperation and Development, it will stay at 11 percent in 2017. Italian national debt now stands at more than 130 percent, the second highest level in the whole European Union after Greece.
Economists fear that rejection of the constitutional reform and political uncertainty that may follow it could place already heavily-indebted Italian banks in further peril. According to the International Monetary Fund, Italian banks hold about $400 billion in troubled loans while some other financial institutions estimate the amount of problematic loans at $510 billion.
Early this week, the Financial Times newspaper predicted that eight Italian banks risked total collapse in the coming months if the nation votes "No" on Sunday referendum as further drop in confidence among investors could hinder the banks from getting the external financial support they desperately need.
No wonder that ahead of the referendum government top officials tried to dispel the market fears. On Monday, Italian Finance Minister Pier Carlo Padoan said that "Italy's fundamentals are strong," while Italy's Foreign Minister Paolo Gentiloni suggested the same day "not to fasten your seat belts because it is not the case of tremendous turbulence", adding that "No" vote would lead to "a weaker and more unstable country," but would not be a threat for the European economy.
"There's no doubt that the No camp, rather than discuss the substance of the proposed reform, is campaigning against Renzi's overall policies. And in so doing, they put together an heterogeneous coalition that points to exploit discontent and ride the current populist wave produced by deep structural changes in European societies," Maran said.
Italian Senator Francesco Palermo, a member of Senate's constitutional affairs committee from For Autonomies parliamentary group, also suggested that had the reform be put to a popular vote two years ago, it would have been approved by an overwhelming majority.
"Also due to the complexity of the changes, most people have very little knowledge of the contents of the reform and the vote will be on the government rather than on the merit," Palermo told Sputnik ahead of the referendum.
At the same time, opponents of the constitutional changes, including such major parties as Forza Italia, Lega Nord and the Five Star Movement (M5S), as well as smaller parties of the left and numerous PD dissidents, raise concerns that the reform would undermine the system of democratic checks and balances, introduced in the 1948 Italian constitution to avoid dictatorship similar to the one the country experienced in 1922-1943 under Benito Mussolini.
The proposed changes cancel real autonomy of local governments and allow the leader of winning party to gather all powers in his hands with just 30 or even 25 percent of the votes, thus not being matched by a wide popular support, senator Lucio Malan from Forza Italia explained Sputnik back in August, when the Constitutional Court gave green light to the referendum.
Vincenzo Vita from Comitato per il No (the Committee for No Vote), one of the two major activists organizations lobbying for rejection of the proposed changes, told Sputnik that the new system would not simplify the formation of laws, as has been declared by the government.
"The text would lead Italy to have ten legislative procedures, as there are those that require an active role of New Senate," he said.
The representative of another organization from the No camp — Io voto No (I vote No), that has started active campaign abroad among some 4 million Italians living oversees — called the proposed changes "a horrible work on constitutional rights."
"No seats to overseas constituencies, a very cloudy system of indirect vote for the Senate, and the transformation from a representative, parliamentary, system to another one," Giovanni Savino, a coordinator of Io voto No in Russia, where some 2,500 Italians live, told Sputnik, explaining the reasons behind his discontent with Renzi's proposed reform.
He added that other concerns were linked to limitations to democracy that changes to the Constitution would bring. Under the proposed rules, initiating a referendum would require 800,000 signatures instead of 500,000, while for presenting a so-called popular law citizens would need 150,000 signatures instead of current 50,000.
"No one knows. The data suggest the NO camp, but referendums and elections have become more difficult to predict, and the data does not take into account the Italians living abroad who have voted by now. In any case, I would predict a victory for the NO camp," Daniele Albertazzi, postgraduate research director at the Department of Political Science and International Studies at the University of Birmingham, told Sputnik asked about the possible outcome.
If No camp wins, the main question that arise is whether Renzi would step down and what awaits Italy if he really does.
Italian newspapers speculate on two most probable scenarios. Under the first one, Renzi is suggested to seek re-appointment after his potential resignation in order to form a new government with a broader majority within the current parliament. Renzi though has repeatedly said that he is not interested in accepting a role in any technocratic government.
"I know that the influential newspaper the Economist considers that ‘Italy could cobble together a technocratic caretaker government, as it has many times in the past.’ But this is exactly what we don't want. I wouldn't turn the clock back. Moreover, another technocratic government is not such a good idea to combat populism," Maran said.
The second scenario that raises concerns of many not only in Italy, but also in the European Union is that if Renzi resigns with no new stable government in place Italy will have a snap election to decide a new government with high probability of M5S, now polling at 31.2 percent, winning the elections on a euro-exit platform, thus triggering an EU-wide crisis.
At the same time, early elections are not possible before legislation — new electoral law called Italicum, currently reviewed by the Constitutional Court — is put in place to give effect to the way members of the new Senate are to be selected.
Italicum, closely linked to the constitutional referendum, suggests to abandon proportional representation that helped smaller political parties to get into the Parliament and saw Italian governments dominated by multi-party coalitions. The new law introduces the principle of the so-called "majority bonus": a party or a coalition that wins at least 40 percent of votes automatically gets 55 percent of seats in the Parliament. If no party or coalition gets 40 percent than the two top parties are to hold a run-off.
The verdict on Italicum is expected in January, but well ahead of the Court's decision, many politicians already suggest that this electoral law, proposed by Renzi last year when his party topped the polls, now would be rewritten.
"It is very likely that the electoral law will be amended, for a number of reasons… How this will be done is still unpredictable and it will depend on two factors: a) the outcome of the referendum; b) the ruling of the constitutional court in January," senator Palermo said.
M5S has also expressed concerns that the initial law would be changed to prevent the party from getting the majority. In early November, a lawmaker from M5S, Alessandro Di Battista, told reporters that PD would change Italicum "because surveys are in favor of M5S."
Last week, Italian former Prime Minister Silvio Berlusconi, who is the head of Forza Italia party, also expressed his hope that President Sergio Mattarella would prevent elections from being held under a new election law. If not, the risk would be that "we might find ourselves with the Five Star Movement (M5S) and [its leader Beppe] Grillo in the government," Berlusconi warned.
"The most likely scenario is that Renzi resigns, there is no election… So, there will be a 'technocratic government' like many in the past with the last one being the one led by Mario Monti and this government will pass measures on the economy and also get Parliament to approve a new electoral law. New elections will not be held for a while. The president will choose a prime-minister that is credible and the financial markets will calm down very quickly. The EU will not collapse, nothing major will happen in my view (but I haven't got a crystal ball, of course)," Albertazzi suggested, asked about the possible political developments in case of No vote.
More than 50 million Italians are eligible to vote with no minimum turnout threshold to validate the vote. Turnout is expected to be at around 60 percent.