December 02, 2016

NEED TO KNOW

Too Big To Fail

Italy’s Prime Minister Matteo Renzi is the next world leader going into battle with anti-establishment voters – and the results could be grim for the eurozone.

On Sunday, Italy will hold a public referendum on constitutional reforms designed by Renzi and his government. But after working on the measure for two years and promising to resign if voters reject it – and possibly even if they don’t – Renzi has inadvertently energized Italy’s anti-establishment Five Star Movement.

That’s turned the referendum on his constitutional reforms into a referendum on Renzi. Symbolically, at least, it’s also a Brexit-style thumbs-up or thumbs-down on the European Union, with the Five Star Movement aiming to force early elections and then attempt to take Italy out of the common currency, Bloomberg said.

The actual reforms would abolish Italy’s Senate and replace it with a chamber of regional representatives with much less power, explains the Irish Times. The central government is also proposing taking back some key decision-making powers from the regions.

Renzi failed to get the two-thirds majority needed to push through the constitutional changes, however, so he was forced to seek the support of regular voters.

It’s not clear whether Renzi will win or lose.

Final polls last week suggest voters could deliver a resounding “No.” But Renzi did secure a confidence vote win in the lower house of parliament last week that allowed him to push through a Brussels-defying budget aimed at boosting deficit spending to stimulate growth, notes Reuters.

Even if Renzi loses, President Sergio Mattarella is likely to ask him to delay resigning long enough to allow for talks with the speakers of both houses of parliament and the leaders of political parties in a bid to resurrect Renzi or settle on a replacement without triggering snap polls.

That might be possible if Renzi’s measure loses by a slim margin. But if he takes a beating, his center-left Democratic Party will face its greatest challenge yet from the Five Star Movement, says the Wall Street Journal.

A “No” vote might stop investors from participating in troubled bank Monte dei Paschi di Siena’s €4.3 billion ($4.6 billion) debt-to-equity swap offer due to fears of political instability. That would force the state to step in to avert a collapse that could damage confidence in the entire banking system and trigger a full-blown crisis. That, in turn, would impact the stability of the eurozone.

Italy, after all, is too big to fail.

Meanwhile, the Five Star Movement itself could make life pretty interesting.

With the support of about one-third of Italians, according to one recent poll, the Five Star Movement calls for repudiating Italy’s European Union fiscal commitments, renegotiating part of its €2 trillion debt ($2.1 trillion) and even printing up a second currency if Italy remains in the eurozone.

But ordinary Italians may not be that radical, notes the Irish Times.

Another recent poll found 71.1 percent of Italians thought leaving the euro would make the economy worse and only 16.7 percent thought it would make things better. Meanwhile, 67.4 percent indicated they still support the EU.

Of course, this has not been a very good year for pollsters.

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WANT TO KNOW

Vote for Power

As Italy preps for a vote that could abolish its Senate, Turkey may be on the road to a more ominous referendum this summer.

Prime Minister Binali Yildirim said on Thursday that the ruling Justice and Development party (AKP) was planning to present a proposal to change the constitution to parliament as early as next week, Reuters reported.

To achieve the majority needed to trigger a referendum, President Recep Tayyip Erdoğan would need the support of the Nationalist Movement Party (MHP). The leader of the nationalist block signaled earlier this month they may support the move, the Guardian reported.

The proposed changes would allow Erdogan to remain in power until 2029, the paper said. The post of prime minister would be abolished, the president would get more power to enact executive policies and he would no longer be required to disavow links to his political party once he assumes office.

Shock Treatment

France’s François Fillon may be the country’s best hope to stave off the rise of Marine Le Pen’s far-right Nationalist Front, but he’s banking on a painful economic regimen of “shock treatment” to get the job done.

Fillon aims to loosen France’s labor laws, cut government bureaucracy and shift the tax burden from business to consumers, the Wall Street Journal reported. That puts his plan in direct opposition to the populist program promised by Le Pen. But it could well alienate voters, critics within Fillon’s Républicains party worry.

That prescription helped Fillon win the conservative primary last Sunday, as his ideological compatriots agreed that the country “needs an electroshock,” as one supporter told the Journal. But voters in the general election might see more appeal in Le Pen’s pledge to defend France’s generous welfare system and boost spending power for low-income earners.

The King and You

The Thai crown prince long dismissed as a playboy ascended to the throne late Thursday, marking a new era in Thailand’s history.

Maha Vajiralongkorn accepted an invitation to ascend to the throne presented by the president of the Thai National Legislative Assembly President, Voice of America reported.

The date of his coronation has not been set, but he will henceforth be known as His Majesty King Maha Vajiralongkorn Bodindradebayavarangkun.

His late father, Bhumibol Adulyadej, who died in October, ruled Thailand for 70 years. After the 1932 revolution overturned the absolute monarchy, he played an important role as mediator between the country’s squabbling political factions and the military – which has periodically usurped power in coups like the one staged by General Prayuth Chan-ocha in 2014.

Prior to the late king’s death, Prayuth’s government, which has promised to hold elections in 2017, relied on the monarch for its legitimacy, the Telegraph noted. It remains to be seen if the new king can attain the same clout.

DISCOVERIES

A Monumental Ban

Dictators, tyrants, strongmen and megalomaniacs may soon have to pay more for huge statues of themselves.

Even though the latest round of UN-imposed sanctions on North Korea mainly targets its coal exports, the resolution also chips away at a bizarre pillar of the hermit nation’s economic arsenal: the export of giant monuments.

Such exports generate tens of millions of dollars for the regime, said the US Ambassador to the United Nations Samantha Power. And that money is used to fund its nuclear program.

The Mansuadae Art Studio in Pyongyang – dedicated to producing both domestic and foreign monuments, murals and tapestries – employs some 4,000 workers.

Its artworks have made North Korea internationally renowned for the production of ostentatious, nationalist monuments – primarily among African dictatorships, the BBC reported earlier this year.

Samora Machel in Mozambique has one. So does Laurent Kabila in the Democratic Republic of Congo. Robert Mugabe of Zimbabwe reportedly has two big ones waiting to be unveiled after his death.

Why are the North Korean monuments so appealing? Price, for one, say experts. North Korean contractors built the controversial, 160-foot African Renaissance Monument in Senegal for a bargain price of $27 million, for instance.

But the style – colossal communist chic – is the main selling point.

“The Russians and Chinese don’t make that kind of stuff anymore,” art critic William Feaver told the BBC. “The appeal is in the statement of the obvious – and of course size is everything.”