"Italy Is At A Turning Point"

A talk with fiery Employers' Assn. chief Antonio D'Amato

Antonio D'Amato, the new president of Confindustria, the Italian Employers' Assn., got off to a fiery start on May 25. In his inaugural speech, he lambasted politicians and unions alike for obstructing economic reform and eroding Italy's competitiveness. The 43-year-old Naples food packager won in a landslide vote in March, defeating for the first time the candidate backed by the powerful Agnelli family. His election signals an important break with the oligarchs who once dominated Italy's industrial landscape. D'Amato spoke with Rome Bureau Chief Gail Edmondson.

Q: How can you accelerate reform, given Italy's political instability?

A: Italy is at a turning point. Either we make important reforms or we risk losing our competitive edge. Every political party is aware of that. We had eight years in the 1990s of very interesting political upheaval, with change in the Establishment unlike any other country in Europe. Italians want change. Whoever will not introduce reform will be punished in upcoming elections.

Q: Confindustria has historically been dominated by the Agnelli family and a few other industrialists. How do you see its role now?

A: We need an economic policy in this country that allows companies to grow. In coming months, we will develop a stringent set of benchmarks, comparing Italian competitiveness with other countries. We will take a lead in giving direction to government in reforms. We have a big asset: a nation of small and medium-size entrepreneurs who take risks, innovate, and are highly motivated. Italy can also take a stronger lead in Europe. We have a clear agenda for the European Parliament. We need to develop a platform for change and an entrepreneurial network across Europe.

Q: What are your key priorities?

A: There are three major areas. We want a more balanced policy in corporate taxation. At 41%, Italian corporate taxes are higher than that of most countries we compete with. Second, we need to redefine the welfare state. That means reform for pensions and the way we protect the weaker side of society. Third, we need more labor flexibility. We are still highly overregulated. We need rules that are more transparent and updated. That will be a major contribution to reducing the black [i.e., underground] economy.

Q: Do you read the weakened euro as a signal that the markets are impatient with the pace of reform in Italy and elsewhere?

A: Politicians wanted the euro, but they have failed to support it with the proper economic policy--leaving it instead in the hands of bankers and monetarists. Support for Europe's competitiveness must come from politicians, who cannot and will not face Europe's problems. If we do not solve the old problems, we cannot develop a New Economy.

Q: Although Italy has begun to open its economy, the old power structures still interfere with the market, however subtly. How can Italy move forward?

A: We are in the middle of a major transition, which still is not reflected in institutional reforms. State interference in the economy froze a lot of energy. Being small and flexible was a solution to rigidity and overregulation. Now it's not enough just to avoid the disadvantages of the system. We need a more competitive state environment to allow [companies] to grow. This revolution already has happened in Confindustria. Today there is a shift of power under way to a system that is more Anglo-Saxon, more transparent, with open markets and simple rules which release entrepreneurs' energies to develop new businesses, stand up, and compete.

Q: Can Italy develop a New Economy based on information technology and services?

A: Italy has a greater chance than many countries of succeeding. It's a nation whose DNA includes mental flexibility, creativity, and innovation. If we are smart, we can benefit from the learning curve of others who have been building knowledge economies. No one is better suited to play in the New Economy than a young Italian.

Q: Spain has shown an incredible economic dynamism and has a new generation of global managers. Is it overtaking Italy?

A: Only in its determination to make economic reforms. Italy has failed to introduce a handful of critical reforms. If it would do two or three basic things, you would see the energy in this country exploding--like the cork coming off a bottle of Champagne.

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