Italian Strike Paralyzes Transport as Monti Presents His Growth Plan to EU

Striking truckers and cab drivers disrupted traffic and commerce across Italy in protests against Prime Minister Mario Monti’s policies as he presents a plan to spur competition and growth to European Union allies today.

Truck drivers parked their vehicles across highways throughout the country in a wildcat strike that is backing up traffic for miles. Cab drivers are also striking, choking traffic in cities from Milan to Rome and leaving thousands of travelers stranded at airports and train stations. Pharmacists and gas-station operators threaten to protest in the next week.

“The resistance to these reforms at a time when the economy is contracting is likely to be fierce,” said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London. “Opposition to structural reform in Italy is legendary. Mr. Monti knows these measures will be fiercely resisted, but is under enormous pressure to present an agenda for growth.”

Monti has pledged policies to boost growth, which has lagged behind the euro-area average for more than a decade. The premier has said spurring the economy will help Italy tame its 1.9 trillion-euro ($2.5 trillion) debt and withstand the fallout from the region’s sovereign crisis that led Greece, Portugal and Ireland to seek bailouts.

Weeklong Protest

Truck drivers are protesting higher gasoline, insurance and toll prices, while cab drivers are demonstrating against measures in Monti’s new plan to increase the number of licenses and permit drivers to transfer from one city to another. The truckers have threatened to continue the protests until Jan. 27.

“We hope that if the government intervenes, we can end the protest sooner,” said Maurizio Longo, secretary general of Fiap, an association of truckers’ unions.

The strikes are disrupting delivery of such goods as fuel and food, leaving some service stations in parts of the country short of gasoline.

“The blocking of highways won’t be tolerated,” Interior Minister Anna Maria Cancellieri told journalists at a conference in Rome today, news agency Ansa said. “As much as we can, we will use tolerance and dialogue, but we have to consider the rights of citizens.”

EU Allies

Monti is presenting the growth package to euro-region finance ministers in Brussels today. The measures attempt to reduce barriers and boost competition in the Italian economy.

“Competition and liberalization doesn’t mean we are introducing the law of the jungle to help the economy, but in our vision, eliminate barrier above all for the young,” Monti said at a press conference Jan. 20.

The government will license an additional 5,000 pharmacies, 500 more notaries and permit the opening of more gas stations. Lawyers and other professionals won’t be able to set minimum or maximum fees and will have to offer estimates for their services.

The package also includes proposals to reduce natural-gas prices, lower car insurance costs, speed the selloff of local services, make it easier to get public-works projects off the ground and reduce bank account fees and commissions.

Productivity Gains

Italy’s Antitrust Authority has said that a gradual opening of the professions may add an estimated 1.5 percent a year over the next decade to the $2.3 trillion economy. By combining such measures with policies to eliminate barriers to business and commerce, Italy could boost productivity 14.1 percent over 10 years, the Paris-based Organization for Economic Cooperation and Development has said.

Italy may be in its fourth recession since 2001, after the country’s growth averaged 0.2 percent annually in the decade to 2010, compared with 1.1 percent in the euro area. The credit rating of Italy, the region’s third-biggest economy, was cut two levels on Jan. 13 by Standard & Poor’s to BBB+, two steps above junk status, after Italian bond yields soared past the 7 percent level that led to rescues for Greece, Ireland and Portugal.

The yield on Italy’s benchmark 10-year bond has fallen by about a percentage point in the past two weeks to 6.11 percent at 2:26 p.m. Rome time, as Monti pushed ahead with his economic overhaul and as demand for bonds was boosted by the European Central Bank’s lending 489 billion euros to the region’s banks last month for three years.

Austerity Measures

Monti, who heads an unelected government with a term limit of just more than a year, is racing to overhaul the economy and slash Europe’s second-biggest debt. The government last month passed 20 billion-euros of austerity measures to eliminate the budget deficit and today began talks with unions and employers on revamping the country’s rigid labor laws. The government has also pledged a package in the coming weeks to cut red tape.

Today’s labor talks “addressed flexibility both at the start of employment and at the end,” Emma Marcegaglia, head of employers’ lobby Confindustria, said at a news briefing after the meeting in Rome.

The growth plan was passed by the Cabinet by decree and must be voted on by parliament within 60 days to remain in effect. So far, the biggest political parties have backed Monti’s efforts, though resistance to his policies may build as elections draw closer. Former Prime Minister Silvio Berlusconi, whose resignation in November led to Monti’s appointment, said on Jan. 20 that he was prepared to return to power.

“Monti’s medicine hasn’t had any result,” Berlusconi told reporters in Milan. “We expect to be called back to govern because we were democratically elected.”

To contact the reporters on this Andrew Davis in Rome at abdavis@bloomberg.net;

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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