Full disclosure of the author’s present feelings: I would have voted yes. I tried to vote. I sent the appropriate forms well within the deadline but my absentee ballot never came. And, on top of that, of course, the “Yes” camp lost. Big time. We lost 40–60.

To keep my feelings out of my writing, I will stick to answering four, basic questions, Buzzfeed style.

First question: What was this about? First answer: a referendum. Italians voted on a constitutional reform proposed by the current government, led by center-left Prime Minister Matteo Renzi. The most important parts of the reform included abolishing Italy’s perfect bicameralism (two chambers with equal legislative powers) and shifting power from the regional bodies to the central government (Italy is a unitary state, not a federation).

Second question: What was this actually about? Not the reform, but an increasingly unpopular PM. Early this year, Renzi strongly personalized the vote: He said he would step down if he lost. While many considered this as a political mistake, and Renzi himself dodged the matter as the vote approached, it’s not clear how he could have avoided it. Renzi never won a general election and got to power through a cabinet reshuffling (think “House of Cards”). His mandate was based on a reform-oriented program with the constitutional project as its centerpiece. It makes sense that he should now step down.

Indeed, the 60–40 split is indicative. At the 2014 European elections, Renzi won 40.8 percent of the vote. On Sunday, he won that same 40.8 percent, which had been a great victory in a multiparty election but doomed him in a yes-or-no vote. The opposition coalesced successfully against Renzi.

And what is the potential fallout? Everything — from kicking the can down the road to imminent disaster.

The most likely scenario is a technocratic government charged with changing the electoral law. This would lead to elections in six to 12 months.

The less likely positive scenario is that the current legislature runs its full course. However, this entails finding a government with the strength and legitimacy to follow through with much needed structural reforms, hence the “less likely” status.

The less likely negative scenario is snap elections. Much of the opposition that ran the “No” campaign is asking for new elections, planning to capitalize on the recent win. This would require an unobvious application of the current electoral law. As polls stand, the center-left party would face a second turn with the anti-establishment Five Star Movement. And if the Five Star Movement wins, Italy would become the first large European nation led by a populist, euroskeptic government, which may call for a vote on the euro. Or in other words, Italy could break the eurozone.

Now, for the big question: Who decides? Technically, the President Sergio Mattarella, who will first ask the center-left to try and form a new government. So really, the matter rests in the hands of Renzi’s party. And their congress is convening on Wednesday.

Still, such political uncertainty comes at a critical moment for the Italian economy.

First, Italy has embarked on a long and difficult path of structural reforms to boost productivity and gain global competitiveness. A full-stop or a turnaround would hinder recovery and accentuate capital flight.

Second, the Italian banking system is in a very delicate situation, with eight banks undergoing recapitalization to cover some 360 billion euros of nonperforming loans. Foreign private participation is key to these efforts, and gloomy economic prospects could lead investors to pull out.

Third, Italian public finances are in bad shape, with a ballooning public debt at 132 percent of the country’s gross domestic product. Uncertainty over reforms might eventually make Italian debt unsustainable. Given limited EU bailout capabilities, an Italian default could spell one word: “Italexit” (though “Outaly” or “Quitaly” are smoother on the tongue). “Quitaly” would probably trigger a general collapse of the euro, not to mention the global fallout of an Italian sovereign default. This nightmare scenario would equate to nothing short of a new global recession.

So, finally, does this fit the global 2016 pattern? Well, yes and no. Probably not yet.

The Italian vote does not exactly fall in line with the other upsets of Western polities (i.e., Brexit and Trump). First, it was not an upset: Pollsters saw it coming. Second, it was more about Renzi than anything else. Part of the “No” campaign relied on a familiar narrative: social inequality, corrupted or incompetent elites, big business meddling with popular sovereignty and the like. However, this was more of a stepping-stone for populist parties. The ball is still in the establishment’s court, and all hinges on their next move.

Simone Paci is a senior in Pierson College. Contact him at simone.paci@yale.edu .

  • CharlieWalls

    Nice summary: short, catching important details, very acceptable conclusion.

  • ShadrachSmith

    Nobody likes Soros losers.