Debt-heavy Rome reins in spendthrift regions

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.

Italy: Much to play for

By Guy Dinmore

Published: May 4 2010

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.

Turin migrant sense shifting mood

By Guy Dinmore in Turin

Published: April 28 2010

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.

The Vatican: A cross to bear

By Guy Dinmore

Published: April 2 2010

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.

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Derivatives and local authorities: An exposed position

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.

Campania: Bold vision for future rises from the ashes

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.

Berlusconi finds fresh territory for his politics of peekaboo

By Guy Dinmore in Rome

Published: November 5 2009

Otto von Bismarck once derided Italians for having a “very large appetite and very bad teeth” and counting for nothing in the affairs of the world. But then the German chancellor had never met Silvio Berlusconi.

While an introspective Europe remains transfixed with sharing out Lisbon treaty positions of power, and critics at home are distracted by his alleged sex scandals and spats with ministers, Italy’s premier is successfully staking out national, and personal business, interests on the fringes of the European Union.

The billionaire media magnate attributes his efficacy to building close personal ties with fellow leaders – a strategy he calls cucù – peekaboo – after he once popped out from behind a fountain to greet Angela Merkel of Germany.

Berlusconi the statesman, not the playboy

By Guy Dinmore and George Parker in L’Aquila, July 10, 2009

From scandal-plagued playboy to international statesman, Silvio Berlusconi’s gamble to host the G8 summit in the quake-torn town of L’Aquila has silenced his critics and soothed his allies, at least for the moment.

For the 72-year-old billionaire prime minister, the three-day summit of 40 heads of government and international organisations concluding yesterday was as much a success for what did not happen.

Aides were visibly relieved that none of their worst fears materialised — no aftershocks from the April 6 quake disturbed proceedings; no prosecutors announced investigations into well publicised allegations that prostitutes were procured last year for his lavish parties; and no reporter, Italian or otherwise, had the temerity to ask Mr Berlusconi about his sleeping habits.

Italy forecast bright 2010

Published on FT on June 18 2009

By Guy Dinmore in Rome

Italy’s economy, the eurozone’s third largest, may emerge from recession earlier than expected although timing remains uncertain, the OECD forecast on Wednesday as Italian officials also pointed to promising but scattered signs of recovery.

The Paris-based Organisation for Economic Cooperation and Development said in a 150-page survey on Italy that it had raised its GDP growth forecast for 2010 to 0.4 per cent from a previously estimated 0.4 percent contraction.

But at the same time its outlook for 2009 worsened, with a 5.3 per cent contraction forecast against the last outlook published in March of a 4.3 per cent drop. Italy’s GDP shrank 1.0 per cent last year as it began its worst post-war recession.