Italy for sale

Vittorio Grilli, the freshly appointed Minister of Finance of Italian Government, has explained his plan to reduce Italy’s debt, now at 123% of GDP, “by 20% within five years”. This results will be obtained with an optimistic foresight of 1% yearly growth in GDP, although Mr. Grilli told Reuters that Italy’s government will revise down its forecast for the economy this year to a contraction of less than 2 percent.

The Minister, former plenipotentiary of Mr. Tremonti in Berlusconi Governments, announces the biggest sale of public assets after the large privatisation in the nineties, for “15-20 billion euro a year, or 1% of the GDP”. But worries may arise around the operation.

Large sales of public assets are a mantra for all Italian Governments from the eighties of the former Century. All of them failed in the task, except the sales accomplished by Ciampi’s Government and Mario Draghi under pressure of the downgrading of public debt and assaults to Lira. Much noise was generated by plot theories launched by the Executive Intelligence Review in 1993 (have a look at this summary in Italian to have an idea). Mr. Tremonti launched three similar operations (called SCIPs), and none of them was successful for the State balance, although large international buyers and some good-fellas made exceptional deals.

A complete inventory of the huge amount of public assets has never been made, and nobody really knows the entity and value of assets and, especially, those of the vast number of public estates. Public estates are a kind of oasis in the jungle of unlawful buildings erected in Italy in the past 50 years, and therefore a good booty fo investors. However, their census simply does not exist. So, it is at least original to announce plans with exact figures on such an information basis.

As regards State-owned companies, the number of ‘survivors’ after the many attempt of privatisation is low and strictly relevant to national interest and security: Finmeccanica (defense, energy, ICT), ENI (oil & gas), ENEL (electricity distribution and grids), TERNA (large electricity grids and backbones), the golden share in TELECOM Italia (TLC and the telephone backbone) and few others. Also in this case, it is difficult to see how we could sell the family jewels with no prejudice to national interests, safety and security.

We may keep on talking about the market weakness of real estate and declining or the benefits of sellings under pressure or the legal prohibition to sell centrally the public assets belonging to local Authorities… But that’s enough to say that skepticism about modalities and possible results of the big Italian sale is more than justified.

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