Italy: "I Say No"

"Today saying No is the most beautiful and glorious form of politics....Whoever doesn't understand that can go screw themselves." It could have been Donald Trump before the US election two weeks ago, or Boris Johnson during the Brext campaign in Britain last June, but it was actually Beppe Grillo, founder and leader of Italy's populist Five Star Movement.

Grillo unhesitatingly compares his movement to "Trumpismo" in the United States, and the Five Star Movement (M5S) is currently running neck-and-neck with Prime Minister Matteo Renzi's Democratic Party in the opinion polls. Moreover, if Renzi loses the referendum on changing the Italian constitution that takes place this Sunday, there may be an election in Italy quite soon.

Matteo Renzi wanted to replace the elected Senate with a smaller appointed body and make other changes to streamline the process of passing laws in Italy. He got his proposal through both houses of parliament last April - but with such a slim majority that the results had to be confirmed by a referendum. At the time Renzi was confident that he would win it easily.

But that was before the Brexit vote in the United Kingdom and the irresistible rise of Donald Trump in the United States put wind in the sails of the Five Star Movement. Now the M5S's "Io Dico No" (I Say No) campaign is drawing huge crowds as it tours Italian cities, and the final opinion polls before the vote on 4 December gave the "No" a five-point lead in the referendum.

"Italian cities don't look as devastated as the U.S. Rust Belt, but the same processes that brought Donald Trump to the presidency have been at work in Italy."As the polls began to turn against his constitutional reforms, Renzi warned that he would resign if the vote went against them. But all that did was to turn it into a referendum on his own popularity, which is turning out to be considerably less than he imagined. And if M5S comes to power, it is pledged to hold another referendum - this time on pulling Italy out of the euro "single currency".

At the moment a large majority of Italians still want to keep the euro, but that could change. Italian cities don't look as devastated as the U.S. Rust Belt, but the same processes that brought Donald Trump to the presidency have been at work in Italy. Average family income is still less that it was before the 2008 crash, and unemployment among the young is close to 40 percent.

An estimated quarter of Italian industry has closed down in the past decade, and the country is staggering under the burden of a public debt that amounts to 132 percent of GDP. If uncertainty about the euro crashes Italy's economy (the third-largest economy in the Eurozone), then all 19 countries that use the euro, some 340 million people, are in deep trouble.

And the Italian economy could go belly up, because Italian banks are now as vulnerable as American banks were before 2008. They are stuffed with "non-performing loans" that have not been written off, but stay on the banks' books at around 45-50 percent of their original value. But they are really only worth about 20 percent of the original price.

"A lot of Italians are so angry that they just want to punish 'the elites.'"If Italian banks marked these loans down to their true market value, it would wipe out their capital and they would all go bankrupt overnight. It is an accident waiting to happen - and a "No" victory in the referendum could be that accident, because it might open the Five Star Movement's road to power.

In theory, it's a long road from a "No" in Sunday's constitutional referendum to an M5S government and a referendum on the euro. If Renzi resigns, and if no other combination of parties in parliament can form a government (probably not), there would be an election. But then M5S would have to win a majority, which is a long way from its current 30 percent support.

"[T]he entire 60-year-old project of European unity could crumble by the end of next year."In practice, it might be quite a short road. A lot of Italians are so angry that they just want to punish "the elites." If both M5S and the right-wing Lega Nord (which also wants to quit the euro) did well in the election, they might be able to form a coalition government, and then the fat would be in the fire.

Technically, only the single currency would be at risk, but in the current febrile atmosphere in Western politics, with support for populist parties surging everywhere, things can change very rapidly.

It is no longer inconceivable that the National Front, which wants to leave not just the euro but the European Union, could win the French presidential election in April. With Britain on its way out, a French government that wants to follow suit, and an Italian government that at least wants to leave the euro, the entire 60-year-old project of European unity could crumble by the end of next year.

That's a lot of ifs, and the likelihood of such a calamity is still very small. But we do live in interesting times.