- Matteo Renzi and other Italian party leaders are pressing for early elections
- However, rise of Five Star Movement may force establishment to play for time
- The caretaker government has good ideas but not enough clout to fix the economy
- Without economic improvement, Beppe Grillo’s populists could gain or even win power
On December 4, Italian Prime Minister Matteo Renzi lost the constitutional referendum he had cast as a proxy confidence vote on his cabinet. Many predicted that Italy was bound to enter a phase of turbulence, destined to result in a new government led by the populist Five Star Movement (M5S). But so far the Italian system has proven resilient.
Italy is the third largest economy in the eurozone and a pillar of the single currency, so political stability is seemingly good news for its European partners. The scenario of comedian Beppe Grillo’s populist movement taking power in Italy entails gloomy financial consequences, and politically, a Five Star triumph would boost similar insurgencies all over Europe.