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Italy's `Haves' Have Had It Up To Here (Int'l Edition)

International -- Int'l Business: ITALY


The prosperous North wants more for its money from Rome

It seemed like a political version of a Hollywood comedy. While Italy prepared to vote in its recent national election, Umberto Bossi, the histrionic leader of the Northern League movement, loudly announced he would set up an independent republic in prosperous Northern Italy. Sure enough, when Italian Prime Minister Romano Prodi named the ministers in his center-left government in Rome on May 18, Bossi unveiled a new, separatist regime in his "capital" of Mantua. He even coined a name for this country: Padania, which sounds vaguely like a place in a Marx Brothers movie.

Mantua and the rest of the North are still very much part of Italy. Yet Bossi, whose League has 59 seats out of 630 in the Parliament, may yet end up having a big impact on national policy. That's because many Northern Italians--especially business owners and executives--are fed up with the ineptness of central government. These influential people don't necessarily back Bossi's calls for secession. But they applaud his anti-Rome rhetoric, and they would gladly back any overhaul of government that cuts the power of Rome and boosts the clout of regional authorities. So Prodi must embrace regionalism or run the risk that Bossi will gather more support for secession from disgruntled voters.

Bossi's hostility to Rome certainly strikes a chord with Northern business executives. The region that covers Padania (map) is an economic powerhouse. According to the Giovanni Agnelli Foundation, a private institute founded by the Agnelli family, Padania accounts for 45% of the population but 55% of gross domestic product and 53% of total tax revenue. Central Italy, which includes Rome, contributes 21% of GDP. In contrast, the South accounts for only 11% of national tax revenues, 24% of GDP, but 35% of the population.

LITTLE HELP. Yet citizens in this rich region wonder increasingly what they are getting in return for their taxes, which are often siphoned off to support make-work schemes in the South. "People are sick and tired of living in a wealthy area where public services don't live up to the standards of what they produce," says Luciano Benetton, chief of the apparel manufacturer based in the northeastern Veneto region. In Veneto, the creaking railway system dates back to the 1940s. Two highways started years ago to link the region to Germany were never completed. "For an area where businesses are export-driven, that is crippling," says Mario Carraro, president of the Industrialists Association of the Veneto.

Entrepreneurs feel Rome has done little to help them. Giulio Paiato, the owner of Lambda Impianti, an air-conditioning-systems maker in Northern Italy, once asked the state-run Foreign Trade Institute to help identify potential partners for a joint venture in China. In reply, he was sent "the kind of information you can get out of the phone directory," says Paiato. He had to fly to China himself to seek out partners.

Fortunately for the Prodi government, most of these exasperated executives still reject Bossi's calls for cutting Italy in half. Yet Prodi cannot assume that separatism is forever doomed. In the general elections, Bossi's movement, which a decade ago had little support, won 24% of the vote in the North. The League now runs the administrations of 200 towns, including Milan. A former League deputy, Fabio Padovan, is also calling for a tax strike against Rome.

REFORMS PLEDGED. To keep the League's separatist ambitions at bay, Prodi is pledging greater decentralization. In a speech to the Senate, the new Prime Minister promised to "transfer the administrative functions of central government to a regional system." Public services such as health care, education, and transportation are now all managed from Rome. Franco Pizzetti, Prodi's constitutional affairs councillor, says federalist reforms would transform Italian regions into self-governing entities, similar to German states but with the power to raise and manage tax revenue. "We want to reverse the way the state works," he says. Bossi's parliamentary bloc would probably back any bill promoting more autonomy.

Such federalist reforms would create a better environment for business, since stronger and more accountable local authorities would spend tax money more effectively. A total revolution is unlikely, since Prodi must fight the entrenched interests in Rome to achieve true regionalism. But with the threat of even more radical action by Bossi's movement hanging over Italy, the Prime Minister may pull off more change than many ever thought possible.By Silvia Sansoni in RomeReturn to top

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