December 8, 2016 / 9:59 AM / 8 months ago

Renzi has time for one last gamble

3 Min Read

Italian Prime Minister Matteo Renzi leaves at the end of media conference after a referendum on constitutional reform at Chigi palace in Rome, Italy, December 5, 2016.Alessandro Bianchi

LONDON (Reuters Breakingviews) - Matteo Renzi gambled with the electorate and lost. Italy’s prime minister resigned on Wednesday after losing a referendum on political reforms. Yet that may not be the end. A quick election could bring him back.

True, voters slapped down Renzi’s proposal to cut back the powers of Italy’s senate on Dec. 4. In one sense, though, they gave him a thumbs-up. The young Florentine got the backing of 41 percent of voters amid a turnout of 66 percent. That’s more votes in favour of his reforms than his party’s coalition received last time Italy voted in a government. Replicate that in a general election and he would be in power.

The next step is for Italy’s president, Sergio Mattarella, to pick a government. Renzi might want to stay on the sidelines. Whoever takes the job will be Italy’s fourth unelected prime minister in a row, and is likely to preside over a period of uncertainty and stagnation. That may explain why Renzi is saying he will only back the new government if all other major parties do too. Because that is unlikely, an election could take place after January, when a court rules on whether the voting system for Italy’s lower house needs to be tweaked.

Time is critical. The longer a technocratic government runs Italy, the more Renzi’s stock could fall. The European Commission might insist the new regime cuts spending; reforms helpful for growth may go undone. As the leader of Italy’s biggest party, he may get some of the blame.

Meanwhile, Renzi’s opponents may strengthen. Comedian Beppe Grillo’s anti-establishment 5-Star party, the second most popular faction according to recent polls, could get more credible if the economy suffers. A vote at any time would be an opportunity for 5-Star to take power. But the chance rises as time goes on.

It wouldn’t be easy to call a vote. Even if the lower house’s rules don’t need to be changed, those in the upper house still might, which would take time. And Renzi would need the support of his own party, which can’t be taken for granted. Yet even though Renzi looks like a loser, Italy has no other credible would-be leaders. There is little to lose from taking a second roll of the dice.

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