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Debt-heavy Rome reins in spendthrift regions

May 23, 2010 Leave a comment

By Guy Dinmore in Rome

Published: May 23 2010

Calabria – rugged, Mafia-ridden and backward – has always seemed a world apart from Italy’s prosperous north. And just as Brussels labours to impose fiscal discipline on distant Athens, so Italy’s central government is struggling to control the debt-laden finances of its own wayward regions.

“Italy is like a microcosm of Europe,” says Stefano Manzocchi, international economics professor at Rome’s Luiss university, noting disparities in wealth and income between north and south and the problems facing a weak central government in managing a quasi-federal system while national debts rocket.

Giulio Tremonti, Italy’s finance minister, is expected to reveal this week how he will plug a deeper-than-expected hole of some €25bn ($31bn, £22bn) in his 2011-12 budgets. Fearing contagion from the sovereign debt crisis that began in Greece, the word “sacrifice” has been thrust into Italy’s political vocabulary. Read more…

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Italy: Much to play for

May 5, 2010 Leave a comment

By Guy Dinmore

Published: May 4 2010

Cafe scene in Milan Italy
Growing pains: demograpic factors, including a low birth rate and a rapidly ageing population, are among Italy’s most serious barriers to growth

In an attempt to put Europe’s most acute sovereign debt crisis into perspective, Giulio Tremonti likes to argue that Greece’s economy is only as big as the northern Italian province of Verona.

Verona might be flattered by the exaggeration, but the conservative Italian finance minister’s point is that the bailout of Greece by its eurozone partners and the International Monetary Fund involves a relatively small sum – several times less than that set aside by Germany in 2008 to prop up its banks.

“If your neighbour’s house is burning it is in everyone’s interests to bring water, not just for humanitarian motives but to stop the flames spreading to surrounding homes,” said Paolo Bonaiuti, Italy’s government spokesman, frustrated by European prevarication ahead of the bail-out.

As the bushfire of market contagion spreads, it is clear that Italy’s nerves are being tested. While, for now at least, Portugal, Spain and Ireland are next in the markets’ line of fire in terms of risk attached to their debt financing needs, analysts fear the fate of the euro could be tested in Italy, the world’s seventh-largest economy and more than six times bigger than Greece. Read more…

Turin migrant sense shifting mood

April 28, 2010 2 comments

By Guy Dinmore in Turin

Published: April 28 2010

A Muslim woman passes policemen in the northern city of Milan
A Muslim woman passes policemen in the northern city of Milan. Difficulty in obtaining citizenship is blamed for driving away immigrants

Change comes slowly in Italy and just as the industrial city of Turin is establishing itself as the country’s most progressive urban administration tackling integration issues, the tide of immigration may be starting to recede.

Evidence is anecdotal for the moment, but it appears that at least among the Moroccan community – the largest group of non-European Union immigrants, numbering some 30,000 in Turin – people are packing their bags and going home. Read more…

The Vatican: A cross to bear

April 2, 2010 Leave a comment

By Guy Dinmore

Published: April 2 2010

Pope Benedict XVI

Such is the furore over the Catholic Church’s handling of hundreds of alleged cases of sex abuse by paedophile priests that television crews were dispatched to the Vatican this week – to cover not the Easter celebrations but a frenzy of speculation that Pope Benedict XVI was on the brink of making history by resigning.

They are sure to leave Rome disappointed. Yet pressure is mounting on the pontiff at least to break his silence over the snowballing crisis by directly addressing allegations that he was involved in covering up two cases of child-abusing priests, first as archbishop of Munich in 1980 and later as Cardinal Ratzinger in the 1990s. Read more…

interview: Berlusconi’s Italy

March 20, 2010 Leave a comment

Derivatives and local authorities: An exposed position

March 9, 2010 Leave a comment

by Vincent Boland, Guy Dinmore, Rachel Sanderson and Gillian Tett

Published: March 9 2010

Baschi, an Italian hilltop village, is a long way from the City of London. Getting there is difficult: take a flight to Rome, then the mainline train to Orvieto followed by a slow train through Umbria. Yet in her office near the central square, Antonietta Dominici, the local treasurer, is wrestling with the kind of decision more commonly taken by the risk officer of a London investment bank.

She can either keep open a €2.5m derivative deal that casts a shadow over the financial health of Baschi’s 2,800 inhabitants – or she can close it, with the risk that the resulting losses will leave the schools, the offices and the medieval church containing a precious triptych by Giovanni di Paolo without electricity for a year. Read more…

Campania: Bold vision for future rises from the ashes

December 17, 2009 Leave a comment

by Guy Dinmore in Naples

Published: December 17 2009

Once the high-society capital of Europe and its largest city, Naples and the surrounding region of Campania have survived over time the scourges of plague, cholera, earthquakes and the world’s most dangerous volcano.

Now seeking to define its future through the development of centres of high-technology excellence – namely in aerospace and aviation – and as an integrated logistics hub linking ports, trains and highways, this region of intense contrasts has run into the latest twin challenges of global downturn and mafia resurgence. Read more…