Referendum 'no' vote could trigger crisis in Italy

Significance Renzi's government will fight two existential battles in the coming weeks: winning the constitutional reform referendum on December 4, and obtaining from the Commission the necessary fiscal flexibility to implement the 2017 budget and avoid an excessive deficit procedure. Impacts A resignation by Renzi would probably lead to political chaos as there is no obvious alternative to him. Renzi's PD is divided over the proposed constitutional reforms and may split in case of a 'no' vote in the referendum. Forming a national unity or technocratic government in case of a 'no' vote may be impossible owing to M5S's unwillingness to compromise. The centre-right is fragmented and no political leader is emerging to fill the void left by former Prime Minister Silvio Berlusconi.

Subject Outlook for constitutional reform. Significance About 18 months after a presidential election and nine months after securing a parliamentary majority, the 'national unity government' of President Maithripala Sirisena and Prime Minister Ranil Wickremasinghe has begun the process of debating a potential new constitution. After some delay, a resolution in parliament was agreed upon by all parties, creating a special committee comprising all MPs to debate the reform. These sessions began in April, and reforms are expected to be agreed by year-end. Impacts The government is unlikely to push anti-graft probes aggressively, somewhat reducing the uncertainty surrounding China-funded projects. Failure to appease moderate Tamil leaders on devolution could embolden Tamil hardliners, sowing seeds for long-term political rifts. Economic reforms will be slow, especially those involving unpopular fiscal austerity measures.


Significance The debate over constitutional reform will be enlivened by the upcoming election of a constituent convention in Chile on the same day as the Peruvian elections. Impacts Constitutional change may become a banner for the left elsewhere in Latin America. Future constitutional reforms may reconsider the status of indigenous communities in the Amazon. Workers’ rights, include labour stability, may be strengthened.


Significance A fragmented parliament and party policy divisions mean there are no straightforward government coalition options. Some of the six parties with fewer than ten seats are likely to be involved in any new government line-up, as Spain's now-four substantial parties will find it hard to produce a government among themselves. Impacts Prime Minister Mariano Rajoy's leadership of the PP may be coming to an end. The PP is the party least suited to the new era of coalition politics: adapting will be a challenge for it. Podemos' strong showing in Catalonia and the Basque Country will force pro-independence parties there to reconsider their positions. Even if other parties agreed on constitutional reform, the PP's majority in the Senate could block it. Uncertainty about the next government and reform prospects will hit international confidence and could push up debt-servicing costs.


Significance President Maithripala Sirisena’s Sri Lanka Freedom Party (SLFP) and Prime Minister Ranil Wickremesinghe’s United National Party (UNP), which form the National Unity Government (NUG), performed poorly in last month’s local elections, in which former President Mahinda Rajapaksa’s Sri Lanka Podujana Peramuna (SLPP) -- popular among Sinhalese Buddhist nationalists -- swept to victory. Sri Lanka’s next presidential and parliamentary elections are due in 2020. Impacts Tourism and foreign direct investment are likely to be adversely impacted by frequent communal clashes. Amid concern over social media’s use to orchestrate violence, Sri Lanka could introduce legislation that curbs free speech. Further violence would increase friction between Sirisena and Wickremesinghe, threatening the NUG’s stability.


Subject Political instability in Sri Lanka. Significance Parliament resumed early last month after being prorogued by President Maithripala Sirisena. Sri Lanka’s National Unity Government (NUG), formed after the 2015 legislative elections, is a coalition between Sirisena’s Sri Lanka Freedom Party (SLFP) and Prime Minister Ranil Wickremesinghe’s United National Party (UNP). Former President Mahinda Rajapaksa’s Sri Lanka Podujana Peramuna (SLPP) leads the Joint Opposition (JO). According to the constitution, a two-thirds parliamentary majority would be required for Sirisena to bring forward the next legislative elections due in 2020. Impacts The breakdown in party discipline in parliament suggests instability will be a long-term feature of Sri Lankan politics. Judicial campaigns against the Rajapaksa family will intensify, despite its sustained political influence. Political uncertainty will cause the Sri Lankan rupee to fall further against the dollar.


Significance This came after Sirisena dissolved the National Unity Government (NUG) that included his Sri Lanka Freedom Party (SLFP) and Wickremesinghe’s United National Party (UNP). Sirisena unseated Rajapaksa in the January 2015 presidential election and Rajapaksa’s Sri Lanka Podujana Peramuna (SLPP) splintered from the SLFP after the latter joined the NUG following the August 2015 parliamentary election. The SLPP, popular among Sinhalese Buddhist nationalists, wants 2020 parliamentary polls brought forward, for which two-thirds of lawmakers would need to be in favour. Impacts The crisis could derail efforts to promote reconciliation between ethnic Sinhalese and Tamil communities. A sustained Rajapaksa prime ministership would likely see Sri Lanka court more investment from China. Joint development projects involving India are likely to slow further, raising concerns in Delhi.


Subject Prospects for Israel in 2020. Significance The political scene is currently in deadlock after a second inconclusive election in September; Benny Gantz, leader of the opposition Blue and White alliance, currently has the mandate to form the next coalition after incumbent Prime Minister Binyamin Netanyahu failed. Talks are ongoing around how to form a national unity government.


Significance In April, both Honduras and the Dominican Republic moved to introduce constitutional reforms that would allow presidential re-election. This is controversial in both countries but particularly so in Honduras, where a similar proposal in 2009 led to a military coup and a prolonged period of diplomatic isolation. Impacts Political attention in Honduras is now set to focus on constitutional reform, potentially undermining efforts to crack down on violence. Opposition to the reform may bring protests and strikes in Honduras, weighing on business productivity. In the Dominican Republic, the reform would allow incumbent President Danilo Medina to run again when his term finishes in 2016.


Subject Political and economic outlook. Significance The national unity government of President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe completed its first year in July. After a phase of poor cohesion and unpopular decisions, the government is regaining public support. Sirisena, leader of the Sri Lanka Freedom Party (SLFP), and Wickremesinghe, leader of the United National Party (UNP), have extended their alliance to 2020, boosting political stability. Yet significant economic and political challenges remain. Impacts Dependence on Chinese investment is unavoidable, but Colombo will seek new partners. Rajapaksa will remain the most important political challenge for the government. Ethnic reconciliation is a distant dream, but overt tensions are subsiding.


Subject Constitutional reform in Singapore. Significance Parliament is expected in August to receive recommendations on electoral and constitutional changes that will affect opposition politics and executive powers. The government raised the initiatives in parliament in January; Prime Minister Lee Hsien Loong said they would be beneficial to Singapore and its government. However, the measures are also likely to benefit the People's Action Party (PAP), which has ruled Singapore since independence in 1965. Impacts Presidential elections are unlikely to become more competitive. Opposition parties would gain parliamentary exposure if the reform recommendations are enacted. Government scrutiny of corporations' activities in the community and local politics will intensify.


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