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Italy and Austria head to polls

Italians and Austrians headed to the polls in closely watched votes on Sunday that will gauge the strength of Europe’s populist and extreme right political parties.

Italy’s constitutional referendum on Sunday will determine the political future of prime minister Matteo Renzi and test anti-establishment parties in the eurozone’s third-largest economy. 

The plebiscite on Mr Renzi’s flagship overhaul — which would shrink the powers of the Italian senate and regional governments to ease political gridlock and remove red tape — has consumed the country’s politics for most of 2016 and divided a population which is struggling to recover from a bruising triple-dip recession. 

On his Facebook page, Flavio Arzarello, field director of the Yes campaign, said that the turnout data showed the race was “very close” and urged followers to “call everyone”.

Turnout was highest in the north of Italy, with Emilia-Romagna, traditionally a bastion of the left, recording the highest figure. But voter turnout was low across Italy’s south, where opposition to Mr Renzi’s reforms was expected to be strongest

In Austria, the camp of the far-right Freedom party’s Norbert Hofer conceded defeat in his pursuit of the presidency against Alexander Van der Bellen, a Green politician who campaigned as an independent.

A victory for Mr Hofer would have capped a wave of political upsets in western industrial countries this year following the UK vote to quit the EU and Donald Trump’s election as US president. It would buoy the hopes of France’s Marine Le Pen, the National Front leader who is expected to poll strongly in next year’s French presidential elections.

After the Brexit vote in the UK and Donald Trump’s upset win in the US election, the Italian vote is also being watched with concern across Europe — given that the opposition to Mr Renzi’s proposals is being led by Eurosceptic political parties, including the Five Star Movement and the Northern League.

The importance of Sunday’s referendum has been compared to other pivotal votes in Italian history, from the 1946 vote on whether to end the monarchy and establish a republic, to a 1974 vote allowing divorce, to a 1987 poll on nuclear energy. 

Markets have also been on edge about the Italian referendum, and the impact a No vote could have on Italy’s vulnerable banking system. There are fears that a rejection of Mr Renzi’s reforms could jeopardise plans by Monte dei Paschi di Siena, Italy’s struggling third-largest lender, to raise up to €5bn in capital by the end of the year. 

According to the latest polls, published on November 18, Mr Renzi’s Yes camp was trailing by more than 5 percentage points, meaning he would have to perform a remarkable upset in order to clinch victory. 

© EPA

If he loses the vote, Mr Renzi has threatened to resign, plunging Italy into a new period of political instability. Italy has already had four different prime ministers since 2011. At that point, the fate of Italy’s government would be in the hands of Sergio Mattarella, the president, who would launch a round of consultations to see if it is possible to form a government, or move straight to new elections.

Although Mr Renzi’s reforms were widely expected to be approved earlier this year, consensus for the measures dropped substantially after all the main opposition parties united to defeat them.

Mr Renzi’s popularity has dropped substantially since he took office in 2014 as a young, energetic, centre-left reformist, with Italians growing disenchanted with the slow pace of economic progress, and anxious about the migration crisis which has brought more than 170,000 people to the country’s southern shores this year — a record annual figure. 

After a tour of southern Italian cities late last week, Mr Renzi held his final campaign rally in his home town of Florence on Friday night saying that Italy would return to being a “leader” in Europe if the reforms passed. “It’s a very difficult challenge, but it’s an open race. It’s on a knife’s edge and we can win,” he said. “We can bring home this spectacular comeback,” he added.

Beppe Grillo, the leader of the Five Star Movement, the leading opposition party, held a gathering in Turin. “Whether the Yes wins or the No wins, it’s the same thing. The country is torn,” Mr Grillo said. On Saturday, political leaders were not allowed to campaign, in a silent prelude to today’s vote. Polls are open on Sunday from 7am to 11pm local time.

Mr Hofer campaigned on an “Austria first” platform of tougher controls on immigration and beefed-up security in response to European terrorism threats — as well as for the upending of Austrian politics which has been dominated since the second world war by the centre-left Social Democrat and centre-right People’s parties.

Mr Hofer had said he wanted to “shake up the old dust,” in Austrian politics.

In response, Mr Van der Bellen portrayed himself as a candidate of stability, who would work with European partners on the continent’s economic integration.

The election is a re-run of a contest first held in May, when Mr Van der Bellen won by just 31,000 voters. That contest was declared invalid by the country’s constitutional court after irregularities in the counting of postal votes. Originally scheduled for October, the re-run was then delayed when faults were found in the glue used to seal postal votes.

Former Italian Premier Silvio Berlusconi casts his ballot at a polling station in Rome © AP

In the meantime, nationalist politicians across Europe have cheered the UK vote to leave the EU, whileit had been feared Mr Trump’s election would have made it easier for Austrians to vote for Mr Hofer.

Earlier this year, “the prospect of a far-right head of state in Austria was viewed as a huge event, whereas later the same year it’s just one more small domino falling,” said Heather Grabbe, European politics expert at the Open Society European Policy Institute in Brussels.

The impact of the UK and US votes is unclear, however, and they may have encouraged Austrians to vote against political radicalism.

Since May, Austrian election officials have tightened up election procedures.

Austria is among Europe’s most affluent economies but has underperformed rivals in recent years, with the federal coalition in Vienna failing to agree growth-boosting reforms. Squabbling within the government of Christian Kern, the Social Democratic chancellor, has added to the Freedom party’s appeal as an anti-establishment movement.

Austria was on the frontline during last year’s European refugee crisis as thousands fled wars in countries such as Syria. About 700,000 refugees and migrants passed through the country, mostly on their way to Germany and Sweden. But about 90,000 asylum seekers remained, mainly from Afghanistan, Iraq and Syria.

Despite criticism from Germany, Austria agreed steps with neighbours to close the so-called western Balkans route — but not before coming under fierce criticism from the Freedom party for allegedly losing control over inflows.

Via FT