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Italian PM Resigns After 'Extraordinarily Clear' Referendum Defeat


Italian Prime Minister Matteo Renzi announces his resignation following the results of the vote in Rome on December 4.

Italian Prime Minister Matteo Renzi has resigned after conceding what he called the "extraordinarily clear" defeat of his attempt to reform the country's constitution, tipping the eurozone's third-largest economy into turmoil and sending the common currency briefly downward.

The euro fell as low as $1.05 -- a 20-month low against the dollar -- as Asian markets opened on December 5 to worries the political instability could pile new pressure on Italy's fragile banking sector and usher in anti-euro and anti-EU parties that campaigned hard to defeat the pro-EU Renzi.

The currency later rebounded above $1.06 again as markets stabilized.

"I take full responsibility for the defeat," Renzi said in a televised address to the nation early on December 5, saying he would hand in his formal resignation to President Sergio Mattarella later in the day.

Preliminary results from Italy's December 4 referendum on constitutional changes showed close to 60 percent of voters rejecting Renzi's proposals to implement economic reforms by limiting the powers of the Senate and regional officials.

Renzi had vowed ahead of the referendum to step down if his proposals were rejected, saying his proposed reforms were necessary to give him the power to push through reforms to strengthen Italy's sluggish economy.

However, opposition parties successfully campaigned against the changes by charging they would concentrate too much power in Renzi's hands.

'Not Positive' Development

Renzi’s decision to step down after just 2 1/2 years in office deals a blow to the European Union as it already reels from multiple crises and struggles to overcome antiestablishment forces that have gained ground across the West this year, including Britain's Brexit vote to leave the union.

German Foreign Minister Frank-Walter Steinmeier called the situation in Italy "not a positive development in the case of the general crisis in Europe."

Speaking on December 5 during a visit to Greece, he said Renzi's government had been moving in the right direction and that Germany hoped the new Italian government would continue along the same path.

NATO chief Jens Stoltenberg said he did not expect Italy's role in the Western military alliance to change "in any way" with a new government.

But he said he had worked well with Renzi in addressing "both the challenges NATO face to the south, addressing the challenges that we see in North Africa and Middle East, but also in adapting the way NATO responds to a more assertive Russia in the east."

A diplomat from a Central European country told RFE/RL in Brussels that Renzi's resignation could make it "easier" to renew EU sanctions against Russia for another six months at a December 15 summit.

The diplomat, who is closely involved in EU discussions on sanctions against Russia over its interference in Ukraine, spoke on condition of anonymity because he is not authorized to speak to the media.

Under Renzi, Italy has often dragged its feet on renewing sanctions against Russia, an important trading partner. Rome insisted in March there should be no automatic extensions of sanctions without full discussion each time.

Populists See Their Chance

Renzi's vow to leave office creates uncertainty because it could now offer anti-EU parties the chance to enter a caretaker government or compete with renewed strength in early elections.

Standing to gain from the political crisis could be Italy’s populist Five Star Movement, which regularly polls 30 percent voter support, putting it in second place behind Renzi’s ruling Democratic Party.

The Five Star Movement, headed by comedian and blogger Beppe Grillo, courts both right- and left-leaning Italians as it calls for a referendum on Italy’s membership in the eurozone but not on leaving the EU.

The party taps into widespread Italian frustration with the euro because the single currency prevents Italy from stimulating its export economy by devaluing its money, something it frequently did when it had its own lira.

Since Italy joined the eurozone, the Italian economy has not grown by more than 1 percent in any one year.

Immediately after Renzi announced he would resign, the Five Star Movement called for new elections early in 2017 -- a year ahead of schedule.

Also standing to gain from new elections is Italy's other populist party, the Northern League, which has around 12 percent voter support, is fiercely nationalist and anti-immigrant, and pledges to take Italy out of the EU.

Still another contender in the political arena is the mainstream Forza Italia party of former Prime Minister Silvio Berlusconi, which polls around 15 percent and is pro-Brussels.

The Italian president now has two options in the face of Renzi's decision to step down.

He can give the task of forming a new government to Renzi or another member of the ruling Democratic Party. Or the president can schedule early elections as soon as possible.

If anti-EU parties come to power in Italy, their success could bolster populist parties within the bloc that are questioning the value of the union.

"If there is a new election in Italy next year, if there is a success of such groups and parties, this could have another spillover effect,” says Marco Incerti, an EU policy analyst with the Brussels-based Center for European Policy Studies.

"There is a momentum that has started already with the vote in the United Kingdom, notably in the Brexit referendum, and there could be more momentum for parties which are against the European Union in different countries, which is relevant because next year is an electoral one."

"It is bad news for Europe because Italy is one of the founding members of the EU," said Judy Dempsey, policy analyst with the Carnegie Europe think tank, speaking to RFE/RL.

"Secondly, it supported [EU] integration and was absolutely supportive of the euro," said Dempsey. "And thirdly, as a very major European country, the fact that there were anti-euro movements inside Italy wanting to pull Italy out -- this is very damaging for the fabric of Europe and it increases the fragmentation of the EU."

Elections are scheduled for next year in France, Germany, the Netherlands, and the Czech Republic.

Despite Renzi's defeat in the referendum and resignation, there are few reasons to expect they spell the end of his political life.

The same polls that last month predicted he might lose the referendum also suggested that his Democratic Party, under his leadership, would still win an election if it were held the day after the referendum’s defeat.

The resignation of pro-EU Renzi comes as voters in Austria on December 4 rejected a nationalist candidate for president in the third round of a hard-fought electoral contest there.

Voters chose independent candidate Alexander Van der Bellen, who is supported by the Green Party, over far-right candidate Norbert Hofer, who had vowed to put strict border controls in place against migrants.

The leader of the European Conservatives and Reformists group in the European Parliament -- which includes members of Britain's Conservative Party and Poland's ruling Law and Justice party, among others -- said on December 5 that the events in Italy and the fact that Hofer took some 40 percent of the votes in the Austrian election should serve as a "wake-up call" for Europe's leaders over the rising tide of antiestablishment populism in EU states.

With reporting by RFE/RL's Brussels correspondent Rikard Jozwiak, Reuters, AP, and AFP
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