Italy Is Playing With Fire With Investors

The Covid-19 pandemic has dealt a serious blow to Italy’s economy, which was already struggling with high public debt and low growth. The government now risks making matters worse: A string of high-profile interventions, the latest in Telecom Italia SpA, has the potential to scare off investors just when the economy needs them most.

Since the early 1990s, successive Italian governments have sought to attract foreign capital through a combination of privatizing companies and passing structural reforms. From banking to telecommunications, politicians opened up entire sectors, while also making it easier for businesses to hire and fire workers. This process remains incomplete, especially with regard to modernizing the public administration. But, from left to right, there had been a growing appreciation for the role that private investors could play in creating jobs and boosting competition.