Populists celebrate ‘people’s victory’ as Renzi packs his bags

Italian Prime Minister Matteo Renzi said his goodbyes on Monday after a ruinous referendum defeat that was cheered by populist leaders and sent shockwaves rippling around Europe.

Populists celebrate 'people's victory' as Renzi packs his bags
Photo: Gabriel Buoys/AFP

“My experience of government finishes here,” said a downcast Renzi after accepting a defeat of almost 60-40 percent over his constitutional reform bid.

The result, coming on the coattails of Brexit and Donald Trump's US election win, has plunged Italy into a period of political uncertainty and cast a shadow over the short- and long-term future of the eurozone's third-largest economy.

After a first meeting with President Sergio Mattarella to discuss his departure, Renzi posted a link on his Facebook page defending his record since he came to power in February 2014.

“1,000 difficult but wonderful days. Thanks to everyone. Viva l'Italia,” he wrote.

Renzi, 41, was expected to formally tender his resignation to Mattarella after a final cabinet meeting set for 6.30 pm (1730 GMT).

Mattarella will then be charged with brokering the appointment of a new government or, if he is unable to do that, ordering early elections.

Traders not panicking yet

Initial market reaction was subdued. The euro briefly sank to a 20-month low as investors fretted that political instability could scupper efforts to resolve a long-running banking crisis, and over the possibility of an election that could see anti-EU parties challenge for power.

Italy's FTSE MIB stock index fell 2.0 percent at the opening before clawing back some ground, underperforming other European markets. Italian bond yields rose slightly, having already edged up prior to Sunday's vote.

Traders were reassured in part by the result of Europe's other crucial vote this weekend, which saw Austria reject a far-right candidate for president.

“The next steps are far from clear for Italy and traders are not panicking yet”, said Craig Erlam, senior market analyst at Oanda.

Some analysts said the referendum could come to be seen as a landmark moment.

Holger Schmieding, at the Berenberg private bank, said the risk that Italy could choose to leave the euro, while still remote, had increased.

Capital Economics said: “Italy has taken the first step along a path that could lead it out of the eurozone.”

'A people's victory'

Populists across Europe rejoiced at Renzi's downfall, with the founder of Italy's own anti-establishment Five Star movement Beppe Grillo calling for an election “within a week”.

Grillo said a snap election should be held on the basis of a recently adopted electoral law designed to ensure the leading party has a majority in the Chamber of Deputies, despite having previously called for this to be changed.

Observers varied widely in their interpretation of the vote.

Britian's eurosceptic Nigel Farage, who spearheaded the “Brexit” campaign, said it looked “more about the euro than constitutional change”.

But former Bank of Italy economist Lorenzo Codgno insisted: “The outcome of the referendum is much more complex and nuanced than 'just another wave of protest across the globe'.”

Giovanni Orsina, Professor of Politics at Rome's Luiss university, said four out of five voters had cast their vote politically rather than on the merits of the reform.

“The vote has broad similarities with the Brexit and Trump phenomenona,” he said. “The electorate voted against the establishment, against Brussels. They didn't get into the subtleties.”

READ MORE: Why Italy's referendum is not the same as Trump or Brexit

Early election unlikely

Poll data showed the No vote was strongest in areas with high unemployment, in the relatively poor south of the country and amongst youth, pointing to a correlation with levels of disaffection.

Most analysts see immediate elections as unlikely, partly because all the main political parties have already begun discussions on revising the country's electoral laws.

As things stand the two houses of parliament would be elected by two different systems, which is seen as a recipe for a post-vote stalemate nobody wants.

The most probable scenario is a caretaker administration dominated by Renzi's Democratic Party taking over to complete the electoral reform before an election that has to take place by March 2018.

The new administration's most pressing priority will be finalizing the country's 2017 budget, which the European Commission has threatened to reject as too expansionary given Italy's debt levels.

Finance Minister Pier Carlo Padoan is the favourite to succeed Renzi as prime minister and the outgoing leader may stay on as head of his party – which would leave him well-placed for a potential comeback to frontline politics at the next election, whenever it is.

Padoan cancelled a trip to Brussels on Monday.

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Berlusconi’s bad break-up with Putin reveals strained Italy-Russia ties

The chummy relationship between former Italian Prime Minister Silvio Berlusconi and Russian President Vladimir Putin goes back decades. The invasion of Ukraine has put it under pressure.

Berlusconi's bad break-up with Putin reveals strained Italy-Russia ties

After a tycoon bromance, Italy’s Silvio Berlusconi is struggling to break up with Russia’s Vladimir Putin over the Ukraine war — like many in his country, where ties with Moscow run deep.

The billionaire former premier’s unwillingness to speak ill of Putin is echoed by other leading Italian politicians, while in the media, there are concerns that pro-Russian sentiment has warped into propaganda.

Prime Minister Mario Draghi is committed to NATO and the EU, strongly backing sanctions against Moscow, and at his urging a majority of Italy’s MPs approved sending weapons to help Ukraine defend itself.

But much of Draghi’s coalition government — Berlusconi’s Forza Italia, Matteo Salvini’s League and the once anti-establishment Five Star Movement (M5S) — has long pursued a “special relationship” with Moscow.

Italy used to have the largest Communist party in the West, and many businesses invested in the Soviet Union in the 1960s, while Russians in turn sought opportunities here.

Barely a month before the February 24 invasion, Putin spent two hours addressing top Italian executives at a virtual meeting.

Beds, hats, parties

Berlusconi, 85, has been out of office for more than a decade but remains influential both in politics and through his media interests, as founder of the Mediaset empire.

He was an ardent admirer of the Russian leader, and a close chum — they stayed in each other’s holiday homes, skied together and were snapped sporting giant fur hats.

“They were two autocrats who mutually reinforced their image: power, physical prowess, bravado, glitz,” historian and Berlusconi author Antonio Gibelli told AFP.

Putin gave Berlusconi a four-poster bed, in which the Italian had sex with an escort in 2008, according to her tell-all book. He in turn gave Putin, 69, a duvet cover featuring a life-sized image of the two men.

In the months before the Ukraine war, Berlusconi continued to promote his close ties, including a “long and friendly” New Year’s Eve phone call.

It was not until April, two months after Russia’s invasion, that he publicly criticised the conflict, saying he was “disappointed and saddened” by Putin.

He has struggled to stay on message since then.

Speaking off the cuff in Naples last week, he said he thought “Europe should… try to persuade Ukraine to accept Putin’s demands”, before backtracking and issuing a statement in Kyiv’s support.

“Breaking the twinning with Putin costs Berlusconi dearly: he has to give up a part of his image,” Gibelli said.

Meanwhile, the leader of the anti-immigration League, Salvini, who has proudly posed in Putin T-shirts in the past, has argued against sending weapons to aid Ukraine.

The League did condemn Russia’s military aggression, “no ifs and no buts”, on February 24 when Russia invaded.

But an investigation by the L’Espresso magazine earlier this week found that, in the over 600 messages posted by Salvini on social media since Russia invaded, he had not once mentioned Putin by name.

He did so for the first time on Thursday, saying “dialogue” with Putin was good, and encouraging a diplomatic end to the war.

‘Biased media’

Many pro-Russian figures are given significant airtime in the media, which itself is highly politicised.

“Italy is a G7 country with an incredibly biased media landscape,” Francesco Galietti, founder of risk consultancy Policy Sonar, told AFP.

TV talk shows are hugely popular in Italy, and “one of the main formats of information” for much of the public, notes Roberta Carlini, a researcher at the Centre for Media Pluralism and Media Freedom at the European University Institute.

But she warns they often “obscure facts”.

Italy’s state broadcaster RAI is being investigated by a parliamentary security committee for alleged “disinformation”, amid complaints over the frequent presence of Russian guests on talks shows.

Commercial giant Mediaset is also in hot water after airing an interview with Russia’s Foreign Minister Sergei Lavrov in which highly polemical claims went unchallenged.

It defended the interview, saying good journalism meant listening to “even the most controversial and divisive” opinions.

“RAI is a reflection of the political landscape, with its many pro-Russian parties. And Mediaset… well, Berlusconi is an old pal of Putin’s, so what do you expect?” Galietti said.

He also points to a decades-long culture in Italy of allowing conspiracy theories — particularly on the interference of US spies in Italian politics — to circulate in the media unchallenged.

“You end up with a situation where Russia Today (RT) is considered as authoritative as the BBC,” he said.