In December 2016, Italian voters rejected a referendum on stripping one of the country’s
two parliamentary chambers of most of their powers.
In advance of the referendum, Italy’s Prime Minister, Matteo Renzi promised he would step
down if it failed.
Now that it has failed, and he has announced his resignation, many fear for Italy’s future,
especially its membership in the Eurozone.
So, could we soon see something of an Italexit or a Quitaly?
The referendum, put forth by Prime Minister Renzi, was intended to make the government
function more efficiently, by reducing the bureaucratic power of the Senate.
But an opposing populist party, known as the 5-Star Movement, campaigned for voters to
vote “No”, arguing that the decision would give the PM and half the Parliament too much
power.
The incredibly high voter turnout and failure of this referendum points to the growing popularity
of the 5-star-movement, which was started by an Italian comedian, and supports issues
such as public water, sustainable transportation and development, environmentalism, and a right
to internet access.
The resignation has opposition parties calling for parliament to be dissolved, and snap elections
to be undertaken, which could push the 5-star movement to power using populist momentum.
Members of the party have already entered parliament, and one became the first female
mayor of Rome earlier in 2016.
The party has repeatedly called for a referendum on dropping the Euro as the country’s currency,
citing restrictive budget rules from the EU.
Instead they’d prefer a national currency, like the former Italian lira, which was fully
replaced by the Euro in 2002.
But even if the 5-star-movement does secure a majority in parliament, and is able to hold
such a referendum, would that be enough to get rid of Italy’s Euro?
Probably not immediately.
The first issue is that the Italian constitution, while allowing referendums, does not allow
them on international treaties.
This would not only include dropping the Euro, but also separating from the European Union,
if it came to that.
For a referendum on international treaties to be valid, the party would need either a
two-thirds majority in parliament to change the constitution, or an equivalent coalition.
At the same time, polls show that only about 15% of Italians are even interested in leaving
the Euro, so changing the constitution for this reason could end up being a waste of
effort.
And finally, even if the constitution is changed, and if the referendum to leave the Euro passes,
it could still be blocked by the Constitutional Court.
So while the failure of December’s referendum has led to the PM’s resignation, few are
worried about losing the Euro.
In the meantime, the country will probably have a caretaker government, likely run by
the finance minister, until the next election in 2018, or until possible snap elections.
The changes in government also pave the way for the Five-Star Movement, and it has plenty
of other anti-establishment plans.
While now talks concern leaving the Euro, should the country continue on its current
path, some believe Italy may eventually try to withdraw from the EU entirely.
In any case, there’s no doubt Italy will be seeing major shifts in the coming years.
If you’re like me and love history, science and exploration, you should check out Discovery
Go where you can binge watch all seasons - current and past - of your favorite Discovery channel
shows!
Check out the link in the description below to learn more.
If Italy does successfully leave the Euro, it would likely have volatile consequences
for the currency in financial markets.
The less stable a currency is, the less likely people are to use it.
So why did the EU decide on a multinational currency, and just how powerful has it been?
Find out in this video.
Countries whose currencies were already stable were given the opportunity to replace them
with the unified currency, which they called the Euro.
This transition occurred on January 1st of 1999.
However, in the year since, nine non-Eurozone countries have maintained their pre-European
Union currencies.
For many, this is due to the loss of control over interest rates or currency policies.
Thanks for watching Seeker Daily.
Don't forget to like and subscribe for new videos every day.