Europe risks collapse as Italian PM defeated

Down and out: Renzi was Italy’s seventh prime minister this century. © PA

Now an anti-establishment party could take Italy out of the euro. Serious voices are asking: is this the beginning of the end of the European Union? Others are calling for a calmer reaction.

In June the UK voted to leave the EU. Last month Donald Trump was elected US president. And last night came another seismic shock to the established political and economic system.

The Italian people rejected a complex set of constitutional reforms in a referendum. Matteo Renzi, the prime minister, hoped a ‘Yes’ vote would empower him to make major changes to Italy’s economy. Instead, the centre-left leader has resigned.

And there is now demand for an election to choose his replacement – which may cause a chain reaction with far-reaching consequences. This morning, says Wolfgang Munchau of the Financial Times, ‘Europe could wake up to the immediate threat of disintegration’.

The anti-establishment Five Star Movement is polling well in advance of the election. Five Star is no ordinary opposition: its leader, former comedian Beppe Grillo, says Europeans have ‘entrusted our lives to people who know nothing about life’. It would attempt a wholesale overhaul of Italy’s political and economic institutions.

And, like Italy’s other two major opposition parties, it favours leaving the euro – which no country has ever done before. A referendum on euro membership would severely damage its fragile economy. If the eurozone’s third largest economy votes to leave, it will trigger the biggest debt default in history. Many continental banks could go bankrupt.

Next year nationalist right-wing candidates could also seize power in states including France and the Netherlands. If France voted to leave the EU, Munchau says, the EU and euro ‘would be finished the next morning’.

European voters cite many reasons for their anger. Grillo rails against the ‘corruption’ of the current system. The eurozone has witnessed debt crises, controversial bailout deals, economic stagnation and high youth unemployment. Some fear the impact of the refugee and migration crisis across the Mediterranean.

None of these issues will be fixed easily. So is the pan-European dream which began in 1957 under threat?

Grilled

Yes, say some. The pattern is clear: a wholesale rejection of centrist politics and economics. There has already been a powerful message in the UK and Italy – two of the four biggest economies in Europe. The continent is stagnating economically and bitterly divided socially. At some point, the masses will remove their leaders.

That is hysterical, respond others. Just last night, Austria’s far-right presidential candidate Norbert Hofer lost an election he was expected to win. Popular insurgencies have often threatened the established order, but Europe’s institutions and politicians are strong enough to absorb their best aspects. This short-term revolt will burn out.

You Decide

  1. Who are the leadership figures in your life? Would you rather give them lots of power or not too much?
  2. Is Europe at risk of disintegration?

Activities

  1. Write a list of five questions you would like to ask an Italian voter about yesterday’s referendum. In pairs discuss why you chose the questions.
  2. Choose a country in Europe which interests you. Prepare a one-page memo on the current political situation there. Who is in charge, what anti-establishment movements could threaten them and why? Return to class and discuss what you can learn in groups of four.

Some People Say...

“Revolutions always sound better than they really are.”

What do you think?

Q & A

So the prime minister of a country I do not live in is going to resign. Doesn’t that happen all the time?
This referendum result is part of a pattern across much of the Western world. The votes for Brexit and Donald Trump had similarities to — though also some differences from — the Italian people’s decision yesterday. The forces at work in this referendum are similar to those affecting people in your country. And this vote could have wider implications, such as Italy leaving the euro.
But does that really matter?
Italy trades heavily with other countries both in and outside Europe. If it leaves the euro, those relationships would change significantly. And other countries may follow it — meaning the wealth and resources people have access to around the world could change significantly.

Word Watch

Empower
The reforms would have weakened the Italian Senate, making it easier for Renzi to make laws. Italy’s Parliament has been deliberately strong since the days of Mussolini’s dictatorship, to check prime ministerial power. Oddly, some opponents of the change wanted to check anti-establishment parties’ power if they got into office.
Five Star
The movement’s five stars stand for public water, sustainable transport, sustainable development, the right to internet access and environmentalism.
People
Grillo has been particularly scathing about Angela Merkel, the chancellor of Germany, and Jean-Claude Juncker, the president of the European Commission.
Euro
The single currency shared by 19 EU member states. It was first used in 2002.
Default
A failure to pay debts. Creditors in Germany – the eurozone’s economic centre – would be hardest hit of all.
Youth unemployment
According to the European Commission, 36.4% of young people are unemployed in Italy.
1957
The year the Treaty of Rome was signed, creating the European Economic Community (a common market). This became the EU in 1993.

Subjects

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