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Rome rethink on US identity card suppliers

November 27, 2009

by Guy Dinmore in Rome
published on FT: November 27 2009

Italy’s centre-right government is set to abandon plans to issue sophisticated and secure identity cards using technology supplied by a US company, raising concern in Washington that Europe is falling short in its commitment to combat terrorism and other illegal activities.

Two Italian state-controlled companies have confirmed to the Financial Times that discussions are under way to drop technology supplied by Lasercard, a Mountain View, California-based company, on identity cards already being issued to foreign residents as well as future plans to issue them on a voluntary basis to Italian citizens.

The technology, which LaserCard says has never been successfully counterfeited, includes an optical stripe capable of carrying layers of personal data as well as a hologram of the holder’s image.

Robert DeVincenzi, chief executive of LaserCard, said he understood the motivation to reduce the cost of the card but found it incomprehensible that Italy was contemplating a “step backward” in terms of security. The contract value of the foreign residents card was worth $6m to $7m a year to LaserCard, and the national identity card would have been worth three to four times that amount, Mr DeVincenzi said.

The Obama administration is following events closely and, according to an official source, has communicated its concern to Rome that the optical stripe made available to Italy under a technology transfer programme will be dropped, compromising Italy’s ability to counter international terrorism, illegal immigration, trafficking in arms and people and other crimes.

Washington is lobbying for a pan-European standard on high security credentials and is concerned that backtracking by Italy – especially given the counterfeiting abilities of the Mafia – will weaken this process. Italy’s ID scheme would have been the most sophisticated and secure in Europe.

Roberto Maroni, Italy’s interior minister and a member of the Northern League party which takes a tough line on illegal immigration and security, agreed to the proposed changes under pressure from other coalition partners, including the finance ministry. He later revoked his decision, an official source said, and a final resolution is expected soon.

The interior ministry did not respond to requests for comment.

Poligrafico, the state-owned printing corporation and mint which is the prime contractor, confirmed that it has submitted a new design for the foreign resident card that would not include LaserCard’s optical stripe.

Finmeccanica, a state-controlled and publicly listed industrial and defence conglomerate, has been contracted by Poligrafico to install the personal data on the national identity card.

Giovanni Soccodato, a senior Finmeccanica executive for strategy, said Poligrafico was also evaluating whether to replace the optical stripe on the national identity card “with other cheaper technology to assure a high level of security”. The new technology would be compatible in the future with other functions, such as credit cards, drivers and firearms licences.

According to a parliamentary source, a separate chip on the card supplied by Siemens might also be removed.

For the moment, however, the national identity card project – already several years behind schedule — is stalled following legal action taken by Finmeccanica against Poligrafico over a contractual dispute. “Finmeccanica is open to a dialogue that will resolve this,” Mr Soccodato said.

It is compulsory to carry certain forms of identification in Italy, but state-issued identity cards – which Italians must buy themselves – are not obligatory under current laws. One concern of the authorities is that if the identity card is too expensive – projected to cost at least 20 euros – then few Italians will buy them.

The optical stripe supplied by LaserCard, which also provides the technology for the US Green Card for foreign workers, raises the base cost of the card by only about one euro.

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