MNI Exclusive: Italian Referenda Boost Stability Threats

-Stronger regional requests fuelled by a 'weakening' government

By Silvia Marchetti

     ROME (MNI) - Italy's two recent victories in regional referendums in

Lombardy and Veneto are set to fuel political tensions and instability ahead of

the next general election, with the risk of creating a domino-effect for other

regions seeking greater autonomy from a "weakened" government, several top

politicians told Market News. 

     These politicians worry that the country's national unity could be at stake

in the future. Even though neither of the two referendums aimed for independence

purely and simply in the way Catalonia's did the high voter turnout risked

boosting separatist stances in the long run and turning "local autonomy" into a

core national electoral issue for many years ahead.

     "We're facing Spain's same political dynamics, even if on a smaller scale

at the moment. Rising populist stances across Europe are fuelling localisms that

want a greater role of smaller, local communities within nations to have more

freedom to handle taxes as they wish and approve their own laws", said Democrat

deputy Emanuele Fiano, member of the Lower House constitutional affairs

committee.

     The ultimate goals of the governors of Veneto, Luca Zaia, and Lombardy,

Roberto Maroni, are to have a Catalonia-style autonomy or at the very least be

granted a "special statute" like that of other five Italian frontier regions

that due to their greater law-making freedom are net beneficiaries of state

finances, explained Fiano.

     Fiano agued that if former premier Matteo Renzi's constitutional reform

referendum had passed last year, dangerous claims for autonomy would have been

blocked.

     "The whole point of our reform was to boost the efficiency of the central

government by reducing the number of provinces and local bodies, by scraping the

Senate of its legislative function but at the same time making it the

representative House of Regions, the perfect place to solve any issue between

centre and periphery", he explained.

     "We're moving quite in the opposite direction, towards a fragmentation of

power", added Fiano.

     The referendums' "fiscal" issue has been manipulated by northern populist

parties and voters have been misled into believing that greater autonomy

translates into not paying taxes to the state, argued Democrat Maria Spilabotte,

vice president of the Senate's welfare and labour committee.

     Lombardy, Italy's productive system hub, is a net contributor to state

finances and makes up a big slice of national GDP. Its GDP pro capita (E30,600)

makes it the third richest region in the European Union. It claims a E56 billion

fiscal bonus from the state, while Veneto demands that 90% of its taxes stay

within the territory.

     Other than Lombardy and Veneto other 4 Italian regions out of a total 20

are net contributors to public coffers, which entitles them to requests of

greater autonomy "yet depriving the state of its revenues goes against the

constitutional rule of national solidarity and burden-sharing among regions",

said Spilabotte.

     "Voters have been fooled, but now the long negotiations between the two

regions and the state to hand over more legislative freedom in certain areas

will raise their hope that their money will stay at home", she said, noting that

the process could take even a year and that the new state-regions relationship

would need to be approved by a parliamentary decree.

     The referendums come at a bad time, as Italy heads towards the end of its

5-year legislature and is facing, among other issues, the approval of the 2018

budget law and the critical appointment of the next Bank of Italy governor.

     Sergio Fabbrini, head of the School of Government at Rome-based LUISS

University, warned that the country was treading on dangerous ground.

     "Asking that tax revenues stay at home, given this would be

unconstitutional, translates into an indirect request for a Catalonia-style

independence. Regionalist drives will have a domino-effect on other regions

wanting to replicate Veneto and Lombardy's move", warned Fabbrini.

     But the real risk is that Italy's next government might not be strong

enough to deal with such requests, as handling separatist stances requires

having a tough central government as interlocutor.

     "Renzi's constitutional reform would have boosted government stability by

ensuring a wide ruling majority at the Lower House and by speeding-up the

law-making process", said Fiano.

     Fabbrini expressed concern that "whatever government will come out of the

ballot boxes, I fear it will not be a strong one. We might not be in Spain, but

the Catalonia scenario is not that far-fetched", he said.

     Fiano also warned that the referendums were revitalising a thorny electoral

issue that has always been latent in Italy ever since the country's national

unification back in 1861: the ever-lasting clash between the 'hard-working'

northern voters and the 'lazy' southerners who are accused of living-off the

welfare state.

     "All constitutional reforms so far approved since the birth of Italy's

state have never succeeded in filling the gap between the poorer south and the

richer north. It remains an unsolved problem", he said.

     The two referendums stand as a dangerous precedent other regions are

already exploiting.

     Negotiations for greater autonomy between the central government and the

northern Emilia Romagna region have just kicked-off. The region is another net

contributor to public finances, and even though it has opted for dialogue rather

than a referendum, its softer strategy might push other "virtuous" regions to

follow its example.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

[TOPICS: MFIBU$,M$E$$$,M$I$$$,M$X$$$,MX$$$$]