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on geopolitics

Dec 20, 2018 | 10:00 GMT

10 mins read

Weighing the Wrath of the Referendums

VP of Global Analysis, Stratfor
Reva Goujon
VP of Global Analysis, Stratfor
Yellow vest protesters gather at the Place de l'Opera in Paris on Dec. 15, 2018.
(JEFF J MITCHELL/Getty Images)
Highlights
  • Referendums are a compelling tool to engage the public when it has lost faith in the ability of political institutions to uphold a social contract. It is little wonder, then, that referendums have seen a resurgence alongside the rise of populism in parts of the world.
  • Referendums come with considerable risk: Power-hungry leaders can use them to consolidate their authority while well-intentioned democratic leaders can see their moves spectacularly backfire when nuance is lost in popular debate.
  • Even as the chaos of Brexit is seen as a cautionary tale, a recent ruling by the European Court of Justice may have the effect of encouraging more referendums by EU states looking to bargain on matters of national sovereignty.
  • Mexico's new president will rely heavily on referendums to pursue an aggressive populist agenda at the cost of souring the country's investment climate.
  • America's Founding Fathers insulated the country from the volatility that comes with national plebiscites, but shutting off such populist valves could have bigger unintended consequences for the republic.

When, where, under whose authority and under what circumstances is it politically sanitary to allow ordinary citizens to vote directly on massively impactful policies? While many Brexit-brooding Brits today could use a definitive answer to this question, the truth is, nobody really knows. This is a debate that has been ongoing for roughly 2,500 years, from the ancient Greek ecclesia to republican Rome to the rise of modern representative democracies on both sides of the Atlantic, many of which now find themselves in intense political turmoil. For all the academic literature on the topic, there is no equation to find the "right" balance of direct versus representative democracy, only a checkered list of historical and contemporary examples that can be either romanticized or vilified depending on the agenda and personality of the day.

The Big Picture

Stratfor has written at length about how the rise of populism and anti-establishment sentiment in many parts of the world stems from a number of deeper, structural forces that have been building for decades. A critical manifestation of this trend is the rising use of referendums to bypass institutional checks and shore up credibility with the masses. But political leaders who flirt with this potent tool can end up creating a bigger crisis of confidence for their governments, leading to more volatility for citizens and businesses to navigate.

The referendum is perhaps the most potent manifestation of this debate. Is the referendum "a device of dictators and demagogues," as postwar British Prime Minister Clement Attlee warned, or is it the purest expression of popular will in an age when global trade, demographic stress and technological change have collectively conspired to crater the public's trust in elected institutions? Referendum champions will often point to Switzerland, whose 8.4 million citizens has been frequently called upon in recent years to vote on everything from capping executive salaries to banning the dehorning of livestock, to argue that direct democracy with healthy turnouts is not only a feasible, but also a responsible path to ensuring that the people's voice is heard.

But the world is not Switzerland. Referendum critics will just as easily point to a long line of power-hungry heavyweights from Italy's Benito Mussolini to Germany's Adolf Hitler to Romania's Nicolae Ceausescu to Turkey's Recep Tayyip Erdogan to demonstrate how referendums can serve as convenient political tools for illiberal leaders to consolidate their authority and smother democracy in the act.

The Bargaining Power of the Referendum

Not every referendum has to be wrapped in a sinister context, either. The number of referendums in Europe has swollen from the 1990s to today, as post-Cold War independence and integration efforts have inevitably come to clash with Euroskeptic-fueled populism demanding a resurrection of sovereign rights. Several establishment elites under fire have turned to the referendum as a way to cut short acrimonious debates and shore up credibility, only to see their plans spectacularly backfire. Former British Prime Minister David Cameron's call for a popular vote in 2016 was designed to put the Brexit debate to bed, not shake the European continent to its core. Former Italian Prime Minister Matteo Renzi lost his job when a 2016 referendum on constitutional reform morphed into a referendum on his leadership. Besieged French President Emmanuel Macron has plenty of reason to fear the wrath of the referendum from these examples, but he will not be able to ignore calls by yellow vest protesters for a "Citizens' Initiative Referendum" that would allow voters to approve government policies, a la the referendum-embracing Swiss model.

A number of European states have also seen the utility of referendums as a bargaining tactic when trying to balance sovereign interests with the more grandiose and politically indigestible features of European integration. When Danish voters in 1992 first rejected the Maastricht Treaty, which created the European Union, the Danish government used a second referendum to win exceptions on the monetary union, defense policy, and justice and home affairs. Taking their cue from the Danes, Austria, Finland and Sweden used referendums on joining the European Union to negotiate opt-outs (Sweden rejected euro adoption, while Finland and Austria secured more autonomy in running their foreign policy). Ireland also learned the value of voter rejection when it used a second referendum to extract concessions from the European Union on military neutrality (in the case of the Nice Treaty) and on taxation, neutrality, abortion and workers' rights (in the case of the Lisbon Treaty). And when the European Constitution was up for debate in 2005, a rash of referendums was held — or, in several cases, simply threatened — to secure concessions, like gaining higher vote shares in the European Council of Ministers.

The United Kingdom's shambolic path to exiting the European Union may lead many to assume that Brexit will be the cautionary tale of the century to other European states weighing the cost of divorce by a majority, and arguably ill-informed, vote. But the trend of referendums used as potent bargaining tools in Europe is far from over. In fact, the European Union may have inadvertently given this tactic more potency. A recent ruling by the European Court of Justice on how to legally interpret the politically loaded, 262-word Article 50 of the Lisbon Treaty concluded that the United Kingdom has the right to withdraw from the process that allows a member state to exit the union. In other words, governments that vote to leave the European Union are legally entitled to flip right back around and say "never mind" or "we'll get back to you when we have a better plan" so long as they employ a democratic process — that is, a parliamentary vote, election or another referendum — to justify the reversal. That gives food for thought to Euroskeptic parties that are all too eager to tell voters that the bureaucrats in Brussels are holding them back but are legitimately fearful of absorbing the economic and political costs of overseeing a messy divorce. If EU withdrawals can more easily be threatened via referendums now that they come with an "abort" button, Euroskeptic leaders along with mainstream elites under fire from populist critics could employ the referendum to bargain for better terms with the Continent.

Referendum Fever Takes Hold in Mexico

Meanwhile, in the Western Hemisphere, Mexico's new president, Andres Manuel Lopez Obrador, is making a masterful demonstration of how to rapidly legitimize populist credentials through the power of the referendum. The man better known as AMLO is a populist icon: He rode to his inauguration in an ordinary white Jetta with supporters on bicycles weaving through a chaotic motorcade to shake his hand. He peppered his exhaustingly long yet impassioned inauguration speech with egalitarian imagery, like selling off the presidential jet and eschewing the presidential mansion as his residence, turning it into a public museum instead.

Referendums are to AMLO what Twitter is to U.S. President Donald Trump — a straight shot to the disgruntled masses who would rather fall under the spell of an ideological agenda than fret over a mess of inconvenient details.

Referendums are to AMLO what Twitter is to U.S. President Donald Trump — a straight shot to the disgruntled masses who would rather fall under the spell of an ideological agenda than fret over a mess of inconvenient details. Before he was even officially inaugurated as president, AMLO slapped together a haphazard referendum to halt a corruption-ridden airport project. It didn't matter that only around 1 percent of registered voters participated in a vote plagued by multiple claims of irregularities. AMLO was more intent on demonstrating that he is a man of his word, with a plan to set more referendums in motion.

Among the first items on AMLO's lengthy and detailed to-do list is a plan to change the Mexican Constitution to make it easier to hold referendums in the first place. The constitution currently bars plebiscites on matters of public finance, armed forces and elections. AMLO's referendum agenda intends to give the public a say on a much wider range of topics, like reversing energy reform in the name of making Mexico more self-sufficient, giving local populations a direct say in investment projects affecting their communities, increasing social spending, giving real teeth to anti-corruption measures and creating a national guard to police the country's grotesquely violent drug war. And AMLO wants these reforms to stick, with a specific goal to have national referendums become legally binding for Mexico's powerful state legislatures. When Mexico's Supreme Court tried to shoot down an AMLO measure to cap public wages (including a 40 percent pay cut for himself) as part of his austerity drive, his political allies quickly fought back with a proposal to subject federal judges to a direct popular vote and with a not-so-subtle threat to hang federal judges on corruption charges. As AMLO put it, this is not "just another political circus." He is plowing ahead with an aggressive agenda to purge Mexico of the rot created by a "neoliberal economic" agenda and bring forth what he has dubbed the Fourth Political Transformation of Mexico. AMLO is answering a legitimate popular cry to overhaul a corrupt system, but no amount of political wizardry can reconcile big policy ambitions with a severe austerity drive, especially as his moves are bound to depress energy revenues and scare off foreign investment.

Battling the 'Tyranny of the Majority'

It is precisely this kind of rhetoric and behavior that America's Founding Fathers sought to expunge from their democratic laboratory. They studied the direct democracy of ancient Greece in contrast to the republican form of government that arose in Rome. The Greek model represented what John Adams called the "tyranny of the majority" — a turbulent political model that had proven, in James Madison's view, to be "as short in their lives as they have been violent in their deaths." The Founding Fathers modeled their democratic enterprise instead on the concept of a more lasting republic — one in which the mercurial whims of the masses would be cooled by wiser and even-tempered aristocrats. Educated, propertied white men would be elected to institutions in a system of checks and balances designed, as Madison articulated, "to counteract ambition."

As a result, national referendums are deliberately not part of the U.S. political tradition; presidents are selected through an Electoral College rather than a majority take-all vote; power is distributed between the federal government and states; and no branch of the federal government can overwhelm the other without breaking the system. The blueprint of the republic has since evolved to allow for the direct election of senators and to expand universal suffrage, though many will still take issue with the lack of direct democratic channels to elect the chief executive or to hold national plebiscites.

For better or for worse, the United States is by design insulated from the growing referendum risk afflicting other parts of the world. But it is by no means immune to the structural forces gripping parts of the globe, as slow wage growth, rising inequality, soaring debt levels, aging populations, growing trade pressures, rapid technological change, creeping xenophobia and political complacency are altogether stressing many governments' social contracts with their citizens. In this climate, big political personalities will offer big promises of big change to come. But with those promises will also come big letdowns, creating a volatile cycle of discontent that will test the very foundation of even the most expertly engineered republic.

Reva Goujon is a leading global strategic analyst who keeps her finger on the pulse of emerging trends across the world. Ms. Goujon leads Stratfor's team of analysts and plays an integral role in applying a forward-looking, strategic lens to Stratfor's coverage of global events. She is also a prominent speaker, regularly addressing executives and investors at events across the world in a variety of industries, including energy, finance, commercial real estate and agriculture.

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