As Italians prepare to vote, observers prepare for what might be another referendum shock. From the election of Donald Trump to Brexit and the initial referendum on the Colombian peace deal, national votes have had some surprising results in 2016. While the upcoming vote in Italy has some similarities to these other contentious votes, its underlying characteristics also set it apart.

On the ballot is a major set of constitutional reforms that would dramatically change how the legislature works, with the hope of increasing the stability and efficiency of the Italian government. While the vote itself would have dramatic consequences for the Italian government, the outcome might have important implications for the rise of populism in the west and financial stability in the Eurozone. Prime Minister Matteo Renzi has already staked his job on the outcome of the vote and ongoing debt issues faced by Italian banks could worsen with little hope of a political fix in the short term.

What is the Referendum?

The reform package involves several major changes to the way the government functions. It would significantly change the nature and size of Italy’s upper chamber–going from 315 senators to 100 lawmakers from a mix of sources. Members of the upper chamber would no longer be elected directly, with 74 councilmen and 21 mayors elected by regional governments and the president appointing the remaining five senators. The chamber would also have significantly less power, as it would lose the ability to conduct votes of no confidence, which dissolve the government and force new elections, and would serve in more of an advisory role for new legislation. The lower chamber, the Chamber of Deputies, would gain much more influence and most new laws could be passed without approval from the other chamber, as is currently required.

While even some critics argue that major reforms are necessary, they take issue with the specific measures that have been proposed. Italy has the second largest parliament in Europe with 950 seats and the current system of “perfect bicameralism” requires both houses to agree on legislation before it is passed. The resulting gridlock has made it particularly difficult for the country to pass new legislation, even when it comes to noncontroversial laws. But those who oppose the referendum contend that these fixes are not the reforms that Italy needs, and may make the government vulnerable to authoritarian or populist takeovers.

The current checks and balances were put in place for a reason, as the post-World War II government was established in part to prevent the rise of another authoritarian figure like Mussolini. But the system remains particularly unstable, as the country has gone through 65 governments in 70 years, with only one serving the full five-year term. Critics may agree that the system is not particularly stable, but they argue that the proposed changes to the Senate go against democratic values and put more power in the hand of local governments that have had issues with corruption.

Immediate Consequences

The outcome of the referendum vote may spread beyond Italy. Some speculate that a “no” vote could lead to a crisis in the euro zone. Although there is a two-week polling blackout before the vote, polls conducted before the deadline show that the “no” vote had a sizable lead, although a considerable percentage of voters remained undecided.

If the referendum fails and Prime Minister Renzi resigns, it will likely lead to the appointment of a caretaker government to implement electoral changes for the 2018 election. The current election system uses different rules for both chambers–the new Italicum system essentially guarantees a governing majority to the largest party, but only applies to the Chamber of Deputies–that could result in two different majorities.

Other fears involve the rise of populism in the absence of Prime Minister Renzi. The anti-establishment Five Star Star movement led by former comedian Beppe Grillo has been gaining in popularity and could continue to gain popular support in the power vacuum. The movement has called for a vote to leave the euro and has been very skeptical of Italy’s EU membership in general.

The Looming Banking Crisis

Similarly, the country has had a looming banking crisis for several years that is now starting to peak. Italy was one of the hardest hit countries during the European downturn, with a seven-year recession hitting many important industries. Poor economic conditions and bank mismanagement led to a situation where one-fifth of all loans in the Italian banking system are considered troubled. While the crisis is potentially solvable, any solution requires dealing with some very difficult political decisions. Recent EU banking reforms prevent countries from bailing out their banks without “bailing-in” bondholders and shareholders to ensure that investors bear some of the losses. These laws present a significant challenge because Italian banks’ bondholders include a mix of institutional investors and retail investors. That means that bailing investors in would involve forcing losses on everyday citizens, which would create a significant political problem.

Some argue that a “no” vote would not necessarily lead to a crisis in the euro zone because the European Central Bank will be able to help in the event of a monetary crisis. However, Renzi’s resignation would make it harder for the Italian government to help its ailing banks. While a “yes” vote would put some momentum behind Renzi and his Democratic Party, the government still has a lot of political challenges ahead of it.

Kevin Rizzo

Kevin Rizzo is the Crime in America Editor at Law Street Media. An Ohio Native, the George Washington University graduate is a founding member of the company. Contact Kevin at krizzo@LawStreetMedia.com.

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On Friday, August 1, Moody’s Investor Service upgraded Greece’s government bond rating, indicating subtle economic growth for a country hit hard by the 2008 economic crisis. Plagued by structural weakness, along with a decade of mounting financial deficits, the Greek economy floundered from the outset of the 2008 recession, afflicting the Eurozone system until it was saved from the brink of bankruptcy in 2010. Eurozone countries and the International Monetary Fund have pumped 240 billion euros ($308 billion) in the Greek economy, floating the feeble country on the promise of exacting austerity measures including drastic cuts to public spending that have triggered unprecedented levels of poverty, decimating incomes and pushing the unemployment rate to 27 percent.

Moody’s recent vote of confidence in the Greek economy may however mark at turning point for the credit-strapped country, since the Moody’s upgrade is corroborated by other reputable credit agencies. On May 23, 2014 Standard & Poor and Fitch raised their ratings of Greece from B- to B, while Moody’s predicted a gradual decline of its massive national debt. While this credit rating remains at “junk” status, or below investment grade, Greece’s economy is projected to grow by 1.2 percent, the first significant uptick in seven years signaling that the country is near the end of its dismal recession.

If graffiti in Athens can tell us anything about this recent optimism, it is that Greece’s impending resuscitation has not come without its social costs. Moreover, the capitalist “invisible hand” is not the only hand of consequence. In July, preceding Moody’s report of Greece’s economic health, iNO, a Greek graffiti muralist, unveiled his latest piece. The mural, called “Wake UP,” portrays one hand saving another that lets go of a coin. “While the economic situation in Greece remains unsettled [ne s’arrange pas],” explained the French graffiti blog ALLCITY, “iNO made a blind wall in Athens with the theme of resurrection, the hand of God bringing to life a man fascinated by money.” The black and white mural cast against dense cream concrete buildings, prescribes a redemption that necessitates letting go of money, perhaps suggesting a return to more humanitarian, social, and fiscal policies in Greece. Since the outset of the 2008 economic crisis, iNO has been at the forefront of Greek political graffiti; his murals have illuminated the social consciousness of the recession. 

“People in Greece are under pressure,” iNO told The New York Times in April. “They feel the need to act, resist and express themselves… If you want to learn about a city, look at its walls. Take a walk in the center of Athens, and you will get it.” Nearly all of iNO’s murals contain a social message, whether implicitly or explicitly expressed. “No Future,” for example, depicts two faces of a baby: one searching the sky desperately, the other stares blankly at the viewer, or at the absence of future and economic promise in Athens. “System of Fraud,” shows the heads of two hellenistic statues, the bottom melting away, perhaps critiquing Athens tourism industry, or the mismanagement of its revenue. “Wake Up” in contrast, is a hopeful message, but also an admonishment against the abuses of capital.

Political graffiti has been a mainstay of dissent in Greece since the outset of the 2008 economic crisis. Activists against the government have plastered Athens’ city walls, banks, kiosks, trains, and cars with political messages like  “Their Wealth is Our Blood;” commenting on international bailouts to save Greece, “Wake Up! Fight Now!;” and even sardonic graphics advertising democracy, “Super Democracy (as seen on TV)” with a figure giving a middle finger.

Graffiti has functioned as “counter-propoganda” for the Greek people who have been devastated by austerity measures and no longer trust the government. Going forward, however, graffiti will mean more than a statement of protest; as a voice of the people, political graffiti will play a role in discussions about the restoration of the Greek economy and society. The upgrade of Greece’s credit rating marks a turning point for the Greek economy. Will Greece resume the self-destructive path of government corruption and financial mismanagement, or will the country espouse more humanitarian policies, shifting emphasis from boosting private investors to a more robust welfare for its people? If anything is clear, it is that Graffiti will remain part of the equation.

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Ryan D. Purcell (@RyanDPurcell) holds an MA in American History from Rutgers University where he explored the intersection between hip hop graffiti writers and art collectives on the Lower East Side. His research is based on experience working with the Newark Public Arts Project and from tagging independently throughout New Jersey and New York.

Featured image courtesy of [aesthetics of crisis via Flickr]

Ryan Purcell

Ryan D. Purcell holds an MA in American History from Rutgers University where he explored the intersection between hip hop graffiti writers and art collectives on the Lower East Side. His research is based on experience working with the Newark Public Arts Project and from tagging independently throughout New Jersey and New York. Contact Ryan at staff@LawStreetMedia.com.

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