Not what he expected.

Photographer: Alessia Pierdomenico/Bloomberg

Don't Confuse Italy With Brexit or Trump

Therese Raphael writes editorials on European politics and economics for Bloomberg View. She was editorial page editor of the Wall Street Journal Europe.
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Matteo Renzi came to power promising to change Italy or change his job. On Sunday, Italians made that choice for him, rejecting the constitutional reform on which he'd staked everything.

It's tempting to plot a continuous line from the U.K.'s June vote to leave the European Union through to the election of Donald Trump to the Italian referendum on Sunday that ended Renzi's government and his hopes of changing politics in Italy. In each, populists won and establishment power was rejected. But Tolstoy's famous observation about families can be applied to elections: All victories are alike, but each loss is a failure in its own way.

QuickTake Q&A: What's Next for Italy

The populist side likes the Brexit-Trump narrative. French National Front leader Marine Le Pen tweeted Sunday night that "Italians have disavowed the EU and Renzi." She was only half right. Italians support the EU and the euro, even if the main opposition party, the Five Star Movement, wants out of the single currency. Unlike Americans who voted for Trump, Italians elected to keep the current political system.

Le Pen was on target when she pinned the loss on Renzi. He had explicitly made the vote a referendum on his leadership. Once a popular outsider himself, he showed a flair for both reform and popular appeal as a mayor of Florence and became Italy's youngest prime minister at 39 when, as Democratic Party leader, he used a political maneuver to muscle out Prime Minister Enrico Letta in February 2014.

Once in power, he enacted changes to the electoral system and made it easier for employers to hire and dismiss workers through his hard-fought Jobs Act. He forced out chief executives of some of Italy's biggest companies and appointed the first female chief executive of a state-owned Italian company. In a move rich in symbolism, he sought to auction off a fleet of luxury state-owned cars. Many of his efforts were watered down or only half-completed. But by Italian standards, this wasn't business as usual.

His ultimate goal was to change the constitutional setup that Renzi believed was responsible for a lot of governing gridlock. His key proposal was to reduce the size of the Senate, the upper house of parliament, weaken its powers and change its composition. Renzi spent a lot of his political capital getting parliamentary approval for his changes.

Meanwhile, Italy's economy barely grew and the banking crisis worsened. Italian youth, which as a group has among the lowest employment rates in Europe (over 37 percent are without a job), grew disenchanted. Among the 18-to-34 age group, support for a yes vote trailed other age groups in polls leading up to the referendum.

When he became prime minister, Renzi's approval rating was 74 percent; a year later it was just over 35 percent. Support for his constitutional referendum declined in parallel to his personal support. As Italy's economy stagnated and its banking crisis deepened, Renzi began to look like less the reformer and more like what postwar Italy has grown used to: an embattled, ineffective leader of a weak government in a divided parliament.

His constitutional reforms were also poorly drafted and confusing to many. There was a grant of parliamentary immunity senators, for example, a politically expedient idea that stretched credulity in a country where corruption is rife. There were also worries that his electoral reforms gave the sitting government too much power. (They were, in fact, probably what Italy needed -- a system that was more like that of the U.K. or Germany.)

For some, I suspect, the reforms disrupted a cozy working order. Italians have grown used to the small-scale criminalization of daily life, the myriad ways in which rules, often inscrutable, are bent or evaded to get things done. It is messy and often unfair, but like a highly functional drunk, Italy largely works. Renzi's threat to that ecosystem pitted him against a lot of the Italian establishment.

The triumph of the populist Five Star Movement does share some striking similarities with the winning side of the Brexit vote and with Trump's victory. In each, a populist, non-conformist, irreverent outsider -- Nigel Farage in Britain, Trump in America, the comedian Beppe Grillo in Italy -- mastered social media. And all ran campaigns that peddled falsehoods as often as cited facts.

Speaking after the results were clear, Renzi once again adopted the mantle of the outsider. Italy's political leaders aren't interested in reform, he charged. "They don't change their habits and they will never change their seats." It will now be up to President Sergio Mattarella to appoint a caretaker government and decide on new elections. Italy has been here before.

It's also worth noting that Renzi took 40 percent of a high-turnout vote even though every major party was against him and though many in his own party either opposed his reforms or were lukewarm in their support. That is a vocal minority for concrete change that the next government will ignore at its peril.

Unlike the Brexit vote and the U.S. presidential election, both the yes and no votes in Italy were for a change to the system; the difference was how each side defined the status quo it wanted to upend.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Therese Raphael at traphael4@bloomberg.net

To contact the editor responsible for this story:
Jonathan Landman at jlandman4@bloomberg.net