Thursday, October 20, 2016

4 December: NO to RENZI’S P2 Constitutional Reform

On 4 December 2016 Italian electors will be called to vote on a Referendum on Constitutional reform and a new electoral law. The question posed to electors is: “Do you approve the text of the constitutional law concerning ‘norms for overcoming perfect bicameralism, the reduction in the number of parliamentarians, the containment of the costs of institutions, the abolition of CNEL [the advisory National Council for Economy and Labour] and the revision of Title V of Part II of the Constitution’ approved by the Italian Parliament and published in the Official Gazette n. 88 of 15 April 2016?" YES/NO. Being a confirmation and not an abrogation Referendum no quorum is required for its validity.
Such a question is tendentious. The constitutional law in question does not abolish the Senate, it simply transforms perfect bicameralism into asymmetric (and less directly democratic) bicameralism, turning the Senate into a Chamber elected by a selectorate of mayors and regional councillors among themselves, instead of being elected directly by “the people” as art. 1 of the 1948 Constitution provides. What the new law abolishes is the Senate’s power to bring down the government in a confidence vote, while retaining for the proposed Senate dual legislative powers on a broad range of questions, from local issues to European directives. The number of senators is reduced from 395 to 100 (21 mayors, 74 regional councillors and 5 nominated by the President) but there is almost no reduction in cost; far from the €500mn boasted of by Renzi, it is officially estimated at €50mn a year – equivalent to one day of Italian military expenditure, or a fraction of the tax that FIAT avoids by moving its headquarters to the Netherlands. And even that tiny cost reduction in keeping the Senate at all is matched by the only part time involvement (two days per month) of the new senators most of whose time naturally is taken up by their local administrative duties. The 630 members of the lower Chamber with their generous salaries, golden pensions and handshakes, bonuses, allowances and expenses entitlements, remain untouched.  
Il Fatto Quotidiano (11 October) proposes spelling out and unbundling the long mixed question drafted by the government asking specifically whether electors approve:
·  the abolition of elections for the Senate, which will be made up of mayors and regional councillors nominated by regional Councils i.e. by parties, not elected by the electorate, and empowered to legislate in the face of popular sovereignty;
·  the concession of parliamentary immunity (from surveillance, arrest and prosecution) to mayors and regional councillors nominated as senators without ever having been elected as legislators and therefore not entitled to that privilege;
·  the complication of methods for law approval, passing from 2 to 10, or to 7, 9 or 13 according to the interpretation given to the incomprehensible text of the reform;
·  the trebling, from 50,000 to 150,000, of the number of signatures needed to introduce a law by popular initiative;
·  the survival of a Senate that will be able to or be compelled to – according to the subject matter – re-vote and modify all the laws approved by the Chamber of Deputies, replicating and complicating the bicameralism (even in its reformed asymmetry rather than current parity) that is alleged to be abrogated;
·  the expropriation of the powers of Regions to protect their populations, territories, security and environment from useless large-scale, costly and polluting public works (such as the Turin-Lyon TAV, the Third Crossing [Valico], the bridge on the Messina Strait, oil drilling on land and at sea, regasification plants, etc.) which will be decided by the Prime Minister in Rome alone and in command.
In order to raise YES support falling behind in the South and on the Right Matteo Renzi has just resurrected the multibillion euro project of the longest suspension bridge in the world connecting Sicily with the mainland, associated with Silvio Berlusconi’s premiership, and which Renzi had fiercely opposed in 2012. The project was abandoned in 2013 because of its high costs and dubious benefits, it being a long-term mafia objective, and the strait’s vulnerability to earthquakes. There are more pressing needs and better growth-promoting projects in anti-seismic investment, rail and road transport improvements, and environmental protection and reclamation. Tony Barber in the Financial Times spoke of Renzi’s reforms as the “constitutional bridge to nowhere” – nicely put were it not for the fact that opening to the mafia does not lead to nowhere but to the further criminalisation of the Italian state.

On 16 October Andrea Camilleri, Gustavo Zagrebelsky, Nadia Urbinati, Paolo Flores d’Arcais and Tomaso Montanari, Why we vote NO, posed the question that is really being asked in the referendum:

“Do you want to count less, to have less democracy, to give a free hand?”.

“We will answer NO,” they write, “… We do not want to give a free hand to this or to any other government. An inept and often corrupt political class tries to convince us that the Constitution is at fault, but this is not true. To those who tell us that to make Italy work it is necessary to change the rules we answer: we, instead, want to change the players”.

The present Parliament was elected on the strength of electoral law 270 of 21 December 2005, named after its Lega proponent, Roberto Calderoli, and better known as the Porcellum from the name (una porcata, a pig’s breakfast) attached to it by the proponent himself, which in January 2014 was declared unconstitutional by the Constitutional Court (Sentence 1/2014). Continuity of state power required that Parliament should continue to be legitimate in its functioning, but it is highly questionable whether the current Parliament should have done anything other than at most pass a new electoral law before being dissolved by the President, who was himself elected by the current unconstitutional Parliament, moreover for a second mandate not envisaged (although not specifically forbidden) by the Constitution. Instead of which the unconstitutional Parliament with Napolitano’s prodding launched itself at a major constitutional reform changing one third of our Constitution.

Moreover, since its unconstitutional election in February 2013 the Italian Parliament has achieved the unenviable record of containing 246 turncoats (voltagabbana in Italian) Members of Parliament changing sides, many of them more than once reaching a total of 325 crossings of the floor, equivalent to about one third of the combined membership of the Lower Chamber and the Senate (and rising weekly). Berlusconi, a pioneer in establishing a market for parliamentarians, purchased support that was decisive in toppling the Prodi government. With this kind of tradition there is no way even the majority premium envisaged by the new Constitution can guarantee a stable majority.

So the new Constitution dice are loaded in favour of an authoritarian regime, where the leader of the party enjoying a guaranteed 55% majority in the Lower Chamber, who will be mostly his own nominees under the party list electoral system, in addition to his and his party’s new-Constitution Senate nominees, can play an exceptionally powerful role in appointing: the Head of State, the members of the Constitutional Court, the members of the Higher Council of Magistrates (CSM), the leading Authorities responsible for sectoral functions, the RAI Board of Directors etc.; as well as legislating and exercising executive power without having to face any real opposition. And, as the UK has found, the collapse of the Labour Party and its subsequent failure to realise a real opposition has adverse consequences for the country, and for Europe.

Gustavo Zagrebelsky, the former President of the Constitutional Court, states that the combination of the new electoral law (the so called Italicum, whereby 2/3 of deputies will be nominated by party leaders), and the reforms linked to it by a YES in the Referendum would remove the checks and balances so judiciously introduced in the post-Fascist 1948 Constitution to prevent any return of authoritarianism of any kind, and create the conditions for “a shift from democracy to oligarchy”. Indeed, under Italicum a party commanding only 20%-25% of the votes in the first ballot might access a second ballot and beat the only other remaining competitor, thus gaining the winner’s premium to end up with a statutory 55% majority.

The concept of oligarchy must not be confused with that of minority. Government is always necessarily exercised by a minority, but whether or not this is an oligarchy depends on whether power is exercised for the benefit of that ruling minority and its goals, or for the collective benefit of society, in which case it is not an oligarchy but a representative democracy – as the historian Emilio Gentile observed in his rebuttal of Eugenio Scalfari, the Repubblica editorialist’s crass claim that oligarchy is the only possible form of democracy. Moreover – as Gentile pointed out – any democracy is intensely vulnerable to the oligarchic globalisation of economic and financial powers interfering with national policy-making, a major constituent of the “post-democracy” theorised by Colin Crouch. The risk is of a democracy in which the people are only comparse (extras) acting an insignificant part on the political stage at the time of the election leaving the exercise of power to party and government oligarchies, demagogic leaders, a corrupt political class, a degraded political culture and the method of populist slogans and announcements.

Renzi is simply the current mouthpiece and tool for the implementation of the Piano di Rinascita Democratica (Plan for Democracy Reborn), an authoritarian project initiated in Italy by Licio Gelli of the P2 secret Masonic Lodge (drafted around 1976, published in 1982), and pursued by Craxi, Cossiga, Berlusconi, Napolitano, with the blessing of international financial circles such as JP Morgan (2013), not to mention the support obtained through undue interference by the US Ambassador and Barack Obama in his role as the President of the US.

JP Morgan claimed that in Europe “Constitutions tend to show a strong socialist influence, reflecting the political strength that left wing parties gained after the defeat of fascism. Political systems around the periphery typically display several of the following features: weak executives; weak central states relative to regions; constitutional protection of labor rights; consensus building systems which foster political clientalism [sic]; and the right to protest if unwelcome changes are made to the political status quo. The shortcomings of this political legacy have been revealed by the crisis.”  The Renzi regime’s attempted scrapping of the Italian 1948 Constitution is custom-tailored to JP Morgan’s specifications. 

For my part, I will vote a convinced NO, and encourage all my readers who have a vote to do the same on 4 December next.

Saturday, October 1, 2016

Unpacking CETA

This Guest Post on CETA - the Canada-EU Trade Agreement scheduled to be signed at the end of October - was contributed by Peter Rossman, Director of Campaigns and Communication for IUF (the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations). After thorough reading he wrote this contribution, which originally appeared in the Global Labour Column edited by CSID (Corporate Strategy and Industrial Development, University of the Witwatersrand, Johannesburg). We are grateful for his permission to reproduce it here. An earlier extended paper on “Trade Deals That Threaten Democracy” is also available. (DMN)

‘The Parties hereby establish a free trade area…’ CETA Article 1.4.

‘Trade, like Religion, is what every Body talks of, but few understand: the very Term is dubious, and in its ordinary Acceptation, not sufficiently explain’d.’ Daniel Defoe, A Plan of the English Commerce (1728).

The Canada-EU Comprehensive Economic and Trade Agreement (CETA), like other looming mega-treaties, is a comprehensive vehicle for expanding the scope of transnational investment by rolling back the capacity of governments to regulate in the public interest. The attack on democratic governance is not restricted to the notorious Investor-State Dispute Settlement (ISDS) mechanism, which privileges transnational capital by creating a parallel legal system exclusive to transnational investors. The invasive claims of transnational investors permeate the entire treaty. 

'Free Trade' and the expanding investor universe. Canada and the EU are already among the world’s most open economies. Tariffs are at a historic all-time low. CETA’s primary mission is to eliminate ‘non-tariff barriers’ – namely the laws and regulations constructed over decades of struggle to limit corporate power and support the services and policies needed to defend workers, citizens and the environment. CETA is an investment treaty embedded in a comprehensive deregulatory project.

The treaty leaves existing regulations and policies in Canada and the EU vulnerable to investor challenges – directly through ISDS, or indirectly through corporate-driven state-to-state dispute mechanisms. It also forecloses the use of essential policy tools which progressive governments will need to reverse the social destruction which is feeding an authoritarian, nationalist and xenophobic right.

The treaty builds on an expansive definition of investment which broadens its scope beyond existing treaties between Canada and the EU. It is virtually identical to the leaked draft investment chapter in the Transatlantic Trade and Investment Partnership (TTIP).

The ‘legally scrubbed’ official CETA text states, tautologically: ‘Investment means every kind of asset that an investor owns or controls, directly or indirectly, that has the characteristics of an investment.’ (CETA, 2014: 39). Characteristics of an investment include ‘the expectation of gain or profit.’ In addition to direct investment in an enterprise, ‘investment’ includes stocks, shares, bonds and other debt instruments; concessions, ‘including to search for, cultivate, extract or exploit natural resources’; intellectual property rights and ‘other moveable property, tangible or intangible, or immovable property and related rights’, and ‘claims to money or claims to performance under a contract’ (CETA 2014: 39ff) A corporation need only demonstrate a ‘legitimate expectation’ of profit to challenge regulatory obstacles to realising that expectation.

The market access and national treatment provisions set out in the investment chapter apply to governments at every level, erasing all restrictions in the name of ‘non-discrimination’. The treaty prohibits governments from managing foreign investment for distinct objectives, and prohibits any restrictions on profit repatriation.

‘Indirect expropriation’. The investment chapter ‘reaffirms’ governments’ rights to regulate in the public interest, but investors are guaranteed expanded ‘fair and equitable treatment’ and protection against ‘indirect expropriation’ of anticipated profits through the adoption of new laws and regulations. The dispute settlement body will determine whether indirect expropriation has occurred through a ‘fact-based inquiry that takes into consideration, among other factors: the extent to which the measure or series of measures interferes with distinct, reasonable investment-backed expectations’ (CETA, 2014: 331; emphasis added). Indirect or ‘regulatory expropriation’ has enabled a growing number of successful investor challenges to public interest laws, regulations and court decisions through investor-to-state lawsuits.

Public services are exempted from market access, national treatment and performance requirements and the most-favoured-nation provisions of the investment chapter only to the extent that they are ‘carried out neither on a commercial basis nor in competition with one or more economic operators’. This is the phantom public sector carve-out established in the World Trade Organisation’s (WTO) General Agreement on Trade in Services (GATS) agreement. As there are pockets of private business in most public services, few meet these criteria. Parties must explicitly reserve the services they wish to exclude – the negative list approach – based on the United Nations’ 1991 Central Product Classification, whose thousands of entries blur the distinction between public and private and manufacturing and services. Standstill and ratchet clauses freeze current levels of privatisation, making it difficult, and costly, for governments to take privatised services back into public hands.

CETA’s Domestic Regulation chapter is not restricted to services. Governments must ensure that any regulatory restrictions they maintain or adopt ‘do not unduly complicate or delay the supply of a service, or the pursuit of any other economic activity’ (CETA, 2014: 91; emphasis added). Article 2 of the chapter on Technical Barriers to Trade reinforces limits on regulation by stipulating that technical regulations must ‘not be more trade-restrictive than necessary to fulfill a legitimate objective’[1].

The chapter on Government Procurement widens corporate penetration into governments at every level by generalising ‘national treatment’ and prohibiting ‘offsets’, defined as ‘any condition or undertaking that encourages local development’.

The Financial Services chapter allows for loosely-defined ‘prudential measures’ but weakens the potential to restrict the size or market share of financial institutions even where such measures are ‘non-discriminatory’ with respect to foreign and national investors. Governments seeking to restrict the introduction of new financial ‘products’, or limit the size of financial corporations, will find that financial corporations have, through CETA, insured themselves against regulatory risk.

The chapter on Regulatory Cooperation commits signatories to ‘remove unnecessary barriers to trade and investment’ and ‘enhance competitiveness’ through an unaccountable Regulatory Cooperation Forum, which institutionalises corporate lobbying. The Forum is tasked with reducing compliance costs, exploring ‘alternatives’ to regulation, and promoting the ‘recognition of equivalence and convergence’ – a blunt instrument for levelling protection. Governments will share ‘non-public information’ with their Forum counterparts before the information is shared with lawmakers or the public – all ‘without limiting the ability of each Party to carry out its regulatory, legislative and policy activities’!

Regulatory approaches are to be ‘technology-neutral’ – a requirement at odds with the vague promise in the chapter on Trade and the Environment in which the parties ‘commit to cooperate in means to promote energy efficiency and the development and deployment of low-carbon and other climate-friendly technologies’.

How important is investment (and its proxy ‘trade in services’) compared with trade in goods in CETA? The treaty provisions cease to apply 180 days after notice of intention to terminate. However Chapter 8 (Investment) remains in force for a full twenty years (CETA 2014: Article 30.9).

Labour’s agenda? After the Brexit vote, the European Commission announced that CETA – scheduled to be signed at the EU-Canada summit in late October – would be treated as a ‘mixed agreement’, requiring approval by the national parliaments of EU member states as well as by the main EU institutions. But the Commission proposes that the treaty enter immediately into ‘provisional’ force following approval by the European Council and European Parliament, meaning that its investment provisions would apply for some years before full ratification, and even if one or more member state voted to sink the deal.

Unions and our civil society allies are unanimous in calling for the removal of ISDS from the treaty. The European Commission’s rebranding of ISDS as an investment court fails to eliminate its fundamental toxicity (See for example Eberhart, 2016) and should be rejected on similar grounds.

But ISDS is only one element, albeit a major one, in CETA’s comprehensive corporate power grab. Transnational investors can press their claims through state-to-state dispute mechanisms, as the WTO’s Dispute Settlement Body demonstrates. The expansive claims of transnational investors are systematically built into the treaty; corporate confiscation of democratic governance links the chapters. ISDS cannot be surgically excised, leaving a text which then somehow serves as a vehicle for a progressive trade agenda. Nor can a sweeping charter of investor claims be ‘balanced’ by inserting stronger provisions to defend labour rights or protect the environment. CETA is fundamentally hostile to democracy and the labour movement; it has to be scrapped, not ‘improved’.

Behind CETA, or course, lurks the Transatlantic Trade and Investment Partnership (TTIP). Should TTIP fail, many of its ambitions can be realised through CETA. The majority of US transnationals have Canadian subsidiaries with activities and ‘expectations of profit or gain’ in the EU. They can use ISDS and other provisions to feed their growing appetites. EU corporations can sue the government of Canada, but also use Canadian subsidiaries to attack European regulations they find inconvenient, reinforcing the EU’s current retreat from regulation.

For long decades, labour has been fighting purely defensive battles against the neo-liberal trade and investment agenda; we lack an agenda of our own. Lost ground will not be reclaimed on what is fundamentally hostile territory. Crisis, stagnation and the longest investor strike in recent history will not be reversed through stronger doses of neo-liberalism. Substantial programs of public investment are needed to address mass unemployment, inequality, disintegrating public services and climate change. CETA and its flanking treaties effectively preclude them.

[1] The leaked TTIP draft chapter on Technical Barriers to Trade makes creative use of most-favoured-nation to establish that ‘Each Party shall allow persons of the other Party to participate in the development of standards, technical regulations, and conformity assessment procedures,’ and ‘Each Party shall permit persons of the other Party to participate in the development of these measures on terms no less favorable than those it accords to its own persons.’


CETA (Comprehensive Economic and Trade Agreement) 2014.

Eberhart, P. (2016) The Zombie ISDS, Brussels: Corporate Europe Observatory.

Our Italian readers will find useful these links on the subject: on the Trojan horse nature of CETA in the event of TTIP not going through, and on the European Commission decision, last July, to treat CETA as a “mixed” issue, thus requiring the necessary unanimous approval by all 36 European Parliaments (some member states have more than one). The decision was taken under pressure from Austria, Germany and France, whereas Italy had originally supported treating CETA as a “European only” issue requiring only qualified majority of heads of state and government, and subsequent ratification by the European Parliament without possibility to introduce changes. However, as Peter argues in his guest post above, CETA will be provisionally implemented from approval by the European Parliament.

For an earlier discussion of CETA ìn Italian see also