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Italy: Going Nowhere Two Years After Berlusconi’s Downfall

It’s nearly two years since Silvio Berlusconi was deposed in favour of technocrat Mario Monti back in November 2011. Monti’s reign made quite a promising start and then faded fast.

Much needed radical reforms are still nowhere to be seen and Italy is still being run by the very same people who couldn’t solve Italy’s many problems in the first place: just ask Mario Monti.

Ironically, it was Berlusconi who toppled Monti precipitating Italy into elections in February of this year.

The elections were little more than a disaster which led to Italy being half-run by a wobbly coalition government made up of arch rivals, the Berlusconi led PdL and the centre left PD party. The PD ended up leader-less shortly after the elections and still has no leader today.

Without the unholy coalition, Italy risked not having any government at all. In the midst of a recession, now the longest recession in Italy’s history, this would not have been good. Not that what eventually happened – the odd bod coalition – has proved to be much use at extricating the Boot from its economic difficulties.

In many respects, the current government is making a bad situation even worse. No radical reforms are appearing and the recent and much lauded (by Italy’s politicians) stability law is facing loud criticism from unions, trade and employers’ associations alike. In fact, the so-called stability law has caused Italy’s unions to threaten a general strike.

The Unconvincing Stability Law

Few seem to believe that the new law will actually lead to stability, let alone economic growth. The situation is grim.

I know of a few expats who have abandoned Italy in favour of friendlier economic climes. I’m not the only one who knows expats who are jumping the Italian ship either. I bumped into an English friend the other day here in Milan. She said she also knew of expats who had left Italy.

While it is slightly more difficult for Italians to leave, some are doing just this. Many probably do not want to leave Italy but the situation here really leaves them no option if they want to have something approaching a future. The chances are that these Italian expats will return to Italy when they retire or when they have enough cash put away to not have to worry about finding work in Italy.

Disillusioned Companies

Italy’s companies don’t seem to have much hope either. Some are upping sticks and moving to more welcoming nations such as Poland or Austria.

Austria openly encourages bright young entrepreneurs whereas Italy tends to do the opposite. Take for example, the Eataly case which should be creating jobs in Italy but isn’t because the warped Italian system is standing in its way.

The Eataly Fiasco

Eataly owner Oscar Farinetti wants to set up a big store in Milan, but cannot because reams of green, white and red tape are tying his initiative in knots. The opening of the Milan Eataly store probably won’t occur until 2014, although the store could have been up and running, and boosting the economy this coming November. It’s not only Milan which is stuffing spanners in Eataly’s works. Farinetti faced major problems when trying to open a store down in Bari in Italy’s depressed south. The Bari Eataly store is now open, but only has permission to operate for 6 months. Farinetti’s problems with green, white and red tape, and unions, are far from over.

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The Eataly case is one of many situations where Italy continues to shoot itself in both feet, repeatedly. Not only does Eataly provide jobs for Italians directly, it also helps to keep Italian food and wine producers going. Anyone with an ounce of sense would welcome a business such as Eataly, well, one would imagine so, and especially in the midst of a deep recession. Common sense does not abound in Italy though. Here’s another example.

Italy Throws €3.5 billion Opportunity Away

Shortly, Italy will have returned the grand total of €3.5 billion in unused EU funding for cultural projects. Why did this enormous sum go unused? Simple, Italy’s politicians spent, and still spend, far too much time bickering over how the money should be used that the deadline for allocating the funding passed. Now the EU wants the unspent cash back. Meanwhile, Pompei and other natural assets continue to crumble.

The chances are the very same handsomely paid politicians who messed up the culture funding opportunity will most probably be re-elected. It’s really no wonder at all why Italy keeps sliding downhill. How the heck did Italy’s central government not notice that the nation was about to throw €3.5 billion down the pan? Too busy frequenting bunga bunga parties? One wonders.

Culture Can be Self-Financing, Italy

Italy’s ever arguing political leaders seem to be totally unaware that cultural projects can become self-financing. Indeed, in terms of tourism generation (combined with intelligent cross promotion of local products), cultural attractions can provide a whole host of economic benefits for the areas in which they are located. Such benefits could persist long after tourists have caught planes home.

The €3.5 billion Italy will now have to give back to the EU could have been used as seed-funding for a whole range of projects, except it wasn’t. Ludicrous, is it not? Typical Italy, alas. Italy has culture in abundance, yet does very little to exploit this valuable asset. Why? It’s not that Italy’s leader of leaders, the president, is setting a great example either, sadly.

Odd Presidential Priorities

One would expect that preventing the decline of one’s nation would be something of a priority for Italy’s president, and in part, it is, or so he says. But one would not expect prison overcrowding to be such a huge priority for the very same president, except for some reason, it is. Yes, Italy’s prison system is just about bursting at the seams, but sorting out the issue via an amnesty and pardons, which is what Italy’s president wants, is not the way to go. All that is needed is early parole, though for reasons unknown such a simple solution is not even being considered.

The whole prison issue with associated pardons and amnesties smacks of nothing other than a covert attempt to save convict Berlusconi’s hide. Why should anyone in his right mind want to do that? Berlusconi’s reign made matters even worse.

The ex-prime minister has left Italy with an addiction to slot machines, a virtually crippled economy, millions without jobs, millions teetering on or below the poverty line and seems also to have permitted Italy’s mafias to consolidate their grip on Italy’s north, and that’s not to mention giving the world bunga bunga and making Italy the butt of thousands of jokes. And Napolitano wants to save Berlusconi? It makes no sense at all, nor does Italy’s odd approach to encouraging foreign investment.

Discouraging Foreign Investment

On one hand Italy says it wants to encourage more foreign direct investment. On the other hand though, it is not too keen for investors to take over Italian companies, especially if those companies happen to be more or less state owned.

To keep ailing Italian airline Alitalia in Italian hands, money has been taken from Italy’s state owned postal service. While Italy should not use state funding to save private businesses, the EU suspects that the Alitalia post office bailout is little more than cover up for state money – that’s tax payers cash, folks – being used to save a private company. Oddly, fabulous Italian national brands such as Ducati were allowed to fall into foreign hands in complete silence. Why?

The Solution

The answer is very simple, if too simple for ever complex Italy. The Boot needs new, carefully chosen, politicians and a new president who does not have skeletons in his or her closet. At present, the very same people who have landed Italy in the mess it finds itself in are still running the show. Guess what? The mess is getting even worse.

Come on Italy, wake up.

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