Italy's `Velvet Revolution' Is Turning Ugly

Ever since a two-bit political hack in Milan was caught trying to flush $4,400 in bribe money down his toilet 18 months ago, Italians have been loudly cheering the country's sweeping anticorruption campaign. Italy's "velvet revolution" seemed to promise a smooth transition from an entrenched and corrupt system to a clean, transparent democracy.

But the euphoria is turning to confusion and trauma. Many Italians took the suicides of two of their most important business figures in late July to mean the process may be out of control and becoming ugly. First came the shocking death of 67-year-old Gabriele Cagliari, former chairman of the huge, state-owned energy combine ENI. He was found in his jail cell with a plastic bag over his head on July 20. Then, 72 hours later, Raul Gardini, 60, Italy's top financial wizard of the 1980s, blew his brains out in his 18th century mansion in Milan.

The growing sense of unease was heightened by the three car bombs that rocked Rome and Milan on July 28, killing five people and badly damaging deeply prized historic monuments. While it is unclear who was responsible for these explosions and for bombings earlier this year, they are seen as a violent protest against the investigations. Throughout Europe, they are also viewed as warning signals that Italy could return to the dark days of terrorism of the 1970s.

"BRIBESVILLE." Italians are now wondering out loud whether the country can take much more of this national psychodrama. But the agony is likely to continue for many more months--if not years--as the complex political and economic upheaval triggered by the investigations rumbles ahead.

Prosecutors continue to unearth evidence of outrageous corruption. Recently, they hit what could be the mother lode of "Tangentopoli," or "Bribesville," as the corruption scandal is known. It involves the abortive 1989 merger of state-owned chemical interests controlled by Cagliari's ENI with units of Gardini's Ferruzzi agro-industrial empire into a company called Enimont. Prosecutors have obtained testimony from an Enimont insider detailing as much as $110 million in bribes when ENI bought out Gardini and the Ferruzzis for a staggering $2.8 billion in 1990.

Similar revelations have already destroyed the careers of hundreds of leading politicians and businessmen and brought about the sharp decline of the Socialists and the Christian Democrats who have governed Italy since 1946. But new political structures and leaders have not yet appeared to fill the vacuum. In fact, parliamentarians, 20% of whom are under investigation, are using their power to block serious reform.

TAX REVOLT. New elections are likely to be held by yearend, but they will not necessarily provide solutions. They could further exacerbate regional and social divisions. The only sure winner will be Umberto Bossi's Northern League. This populist organization has become Italy's largest new political grouping by calling for loosening the prosperous north's ties to the heavily state-supported south. The League's recent calls for an anti-Rome tax revolt are adding to the central government's woes. Property-tax increases of as much as 500% this year are stoking Bossi's appeal--even if many Italians find the League's rhetoric hard to take. "You should all commit suicide," the League's chief ideologue, Gianfranco Miglio, recently sneered at the Italian elite.

The rest of Europe is watching with trepidation as the Italian situation unravels. One witticism often heard in European political circles is that Yugoslavia is the plague outside the borders--while Italy is the cancer within. An exaggeration, perhaps, but finding a cure is going to be long and difficult.

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