Article / 09 June 2016 at 15:00 GMT

Beyond the Brexit, Europe is riven with faultlines

Managing Partner / Spotlight Group
United Kingdom
  • Public votes in the EU have the potential to create chaos
  • Ireland waited nine weeks after its election to form a new government
  • Six months on, there is no government in Spain
  • Rome could be controlled by Eurosceptics, Italy could face political meltdown
Jean-Claude Juncker
European Commission president Jean-Claude Juncker may delight in advising EU leaders to ignore voters, but there's a degree of whistling past the graveyard in all that. Photo: iStock

By Stephen Pope

For many, the vote with the most potential to cause chaos within the European Union is the UK referendum on its membership. If a “Brexit” were to occur, could it lead to other nations demanding their own say on the EU?

I would argue that while the referendum is a powerful plebiscite, there are other elections that have been or are to be held by superficially more committed EU members that have the potential to corrode the union from within.

Let me examine the political flux that exists within Ireland, Spain and Italy.

Difficulties in the Dáil

The Republic of Ireland held its latest general election on February 26 2016 electing 157 members (Teachtaí Dála) of parliament, the Dáil, to represent 40 constituencies.

Following the inconclusive election, the prime minister or Taoiseach Enda Kenny led the largest party – Fine Gael – in the Dáil even after it lost 26 seats.

The principal opposition party Fianna Fáil, which suffered its worst-ever election result of 20 seats in 2011, increased its representation to 44. Sinn Féin made gains to become the third-most numerous party with 23 TDs.

The real loser in the 2016 campaign since that of 2011 was Labour. It had served as the junior party in a coalition with Fine Gael and just as with the UK’s Liberal Democrats in 2015, it suffered large loses.

Labour went from 37 seats in 2011 to just seven. Put it this way, Labour lost 81.1% of its representation. A mixture of smaller parties and independent politicians claimed the remaining 34 seats.

Irish politics reveal that clean-cut elections in Europe are a thing of the past: Photo: iStock

On March 10 Enda Kenny formally resigned as Taoiseach, but remained in office as a caretaker until a new government could be formed. The political arithmetic is set so that 80 seats are required to forge a majority in the Dáil.

Kenny used his parties 50 seats to seek an understanding with Fianna Fáil (44 seats) to form a coalition government of 94 seats by holding long negotiations through April until an agreement was reached on April 29 some nine weeks after the election. The Dáil formally re-elected Enda Kenny as Taoiseach on May 6.

In the Dáil, there are nine parties with representation, and with a splintered level of public opinion one has to wonder if clean-cut election results, where the outcome is known the day after polling, are becoming a thing of the past?

Iberian indecision

The 2016 Spanish general election will be held on June 26 when it will seek to elect the 12th Cortes Generales of the Kingdom of Spain. At stake will be all 350 seats in the Congress of Deputies and 208 of 265 seats in the Senate. To form a majority in the Congress of Deputies 176 seats are needed.

This new election comes 189 days or 27 weeks after Spain went to the polls on December 20 2015. In December no party was able to secure sufficient votes and seats to form a majority.

Indeed, the result of the 2015 poll saw six parties win representation in the Congress of Deputies and created the most splintered parliament since 1977.

The leading parties were People’s Party (PP, centre right) 123 seats, Socialist (PSOE, centre left 90 seats) and Unidos Podemos (Podemos, broad left) 70 seats.

The ensuing negotiations led to a political gridlock. Not even the left wing views of PSOE and Podemos could break the deadlock.

So Spain, the fourth largest economy of the Eurozone and fifth largest in the EU, has been essentially held together by a series of supply and confidence measures with Mariano Rajoy serving as an overseer as against a political leader.

At least in Ireland a deal could be reached as cool heads realised that there was more to agree on than disagree about. Such level-headedness has not usually prevailed in Spain.

In fact, the election of June 26 will he first ever in the nation’s history that has been brought about because of the failure in the process of government formation.

Not the Rome of Caesar

Last Sunday, cities the length and breadth of Italy went to the polls. Rome, however, was where the main focus was placed.

The capital of the Eurozone’s third- (and the EU’s fourth-) largest economy merited special attention as the election of a new mayor was held against a backdrop of corruption. This office has been vacant after Ignazio Marino left the post on October 31, 2015.

Shortly after his victory in the elections of June 2013 he was approached by an organised crime network which had rigged public contracts and embezzled funds. In trying to do the right thing Marino took the case to prosecutors, starting the 2014 Rome corruption scandal.

However, he resigned on October 12 2015 as he was embroiled in an expense scandal. Just 17 days later he withdrew the resignation, but after another two days, in October 2015, he was obliged to leave office as 26 of the 48 members of the City Council resigned. He was replaced by a government-appointed commissioner.

The challenges facing the next Roman mayor will find little of the glamour or glory of the Senate or Forum. They will have to swiftly find a solution to overcome the massive debts of the city that sum to €13 Billion ($15 Billion).

That is over twice the city’s annual budget and this is before the new official has found a way to correct the sagging infrastructure of potholes, piles of rubbish and inadequate public transport and housing. 

The first round of voting saw five main candidates stand; Centre-Left Coalition, Meloni for Mayor, Five Star Movement, Alfio Marchini Mayor and the Italian Left.

The anti-establishment Five Star Movement took a large lead in the first round of voting as Virginia Raggi won 35.25% of the vote and Roberto Giachetti of the Democratic Party (part of the Centre-Left Coalition) had 24.87%.

Raggi and Giachetti, now head to a run-off vote on June 19 which she is expected to win.
Raggi told her supporters in the early hours of Monday.

“…The wind is changing; this is the moment. We are facing a historic moment… Romans are ready to turn a page and I am ready to govern this city and to restore Rome to the splendour and beauty that it deserves…”

If Italy begins to see its EU membership as a brake on its economic recovery, 
the result would be a significant fracture in the union. Photo: iStock 

The fact that the Eurosceptic Five Star Movement led the candidate from the ruling national coalition has served to place the prime minister, Matteo Renzi, under great pressure.

A victory in Rome would hand Euroscepticism in Italy its biggest win yet and deal a massive blow to the prime minister’s efforts to convince Italians he can deliver on his pledge to end years of economic stagnation.

The Italian GDP growth rate in Italy has averaged 0.60% from 1960 until 2015.

His only comfort from last weekend was to look to Milan and Turin where his Democratic Party candidates Giuseppe Sala and Piero Fassino were in the lead in Milan and Turin respectively.

The next general election is due no later than May 23 2018. Currently the Democratic Party of Mr Renzi is still the most popular of the political movements, however the lead it has enjoyed is narrowing.

An opinion poll by the Ixe Institute in May estimated the Democratic Party having 30.5% of the vote, compared with the 40.8% it won in the 2014 European election. Five Star Movement had 28.1% while the anti-immigration Northern League had 14.8%.

However, Italy may go to the polls earlier than 2018 as Renzi has staked his political future on a referendum in October over a contested constitutional reform. The objective is to create a period of economic and political stability and bring to end the farcical situation of the revolving-door government that has blighted Italy for so long.

Mr Renzi has said he would resign if he loses the referendum. Oh my… he has taken a huge gamble. Italy or maybe Spain will create an internal rift inside the Eurozone that could match any carnage a “Brexit” decision causes outside it in the wider EU.

— Edited by Adam Courtenay and Michael McKenna

Stephen Pope is managing partner at Spotlight Ideas. Follow Stephen or post your comment below to engage with Saxo Bank's social trading platform.


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