With Brexit and the U.S. presidential election, 2016 has already contributed its share of major political upsets. Yet another upset may be in the making. The upcoming Italian referendum on constitutional reform could possibly have disastrous consequences for Europe and the world. It may seem strange that a national constitutional referendum could have global consequences. The reason it may have larger implications has to do with the euro zone — the club of European Union members that share a common currency. As political scientists like Mark Blyth have noted, the euro zone is badly designed. Although it has a common currency, it does not have a central fiscal authority to make financial transfers across states to balance out shocks and assure shared economic growth and prosperity. This means that over the past eight years of economic crisis, it has destabilized European politics, driving a political wedge between poor southern European states and richer northern European states. This, together with the refugee crisis, has encouraged nationalist parties to mobilize against E.U. institutions across the continent and pro-integration mainstream parties to try to fight back. It also means that a shock in one country can possibly have broader reverberations for Europe and the world.Full Article: Italy is having a referendum next week. It may spark a major European crisis. - The Washington Post.
Nov 30 2016