Red tape and political obstacles hamper Draghi’s drive to reform Italy

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Prime Minister Mario Draghi has set an ambitious reform agenda to revive Italy’s chronically sluggish economy after the COVID-19 pandemic, but political disputes and a sickening bureaucracy are starting to stand in its way.

The government has been trying for weeks to overcome divisions within the ruling multi-party coalition over tax reform and a market competition law that Draghi promised in late July as part of Rome’s stimulus package.

Presented to the European Union in April, the plan sets out investments and reforms in infrastructure to increase Italy’s growth potential and leverage more than € 200 billion ($ 234.52 billion) in European funds over the next six years.

“The delays in the reforms endanger the next installments of EU money, and above all they delay what is most important, that the stimulus package is implemented quickly and effectively”, said Carlo Bonomi, leader of the Confindustria employers’ lobby. annual meeting on Thursday.

Draghi is off to a good start, meeting the initial requirements needed to release a first tranche of € 25 billion, which was paid by the EU in August.

He also struck a coalition deal to pass a hotly contested reform of the criminal justice system, while new rules to speed up civil cases are about to be approved by parliament.

However, of the 51 targets set in the 2021 Stimulus Plan, 38 are left for the fourth quarter, and the government appears to be wavering just when it needs to step up.

Special commissioners overseeing the plan’s infrastructure projects recently wrote to the government complaining that bureaucracy is hampering their work, one of the commissioners told Reuters, asking not to be named.

Another commissioner, Pasqualino Monti, in charge of the ports of western Sicily, warned that if the state bureaucracy continued to hold back projects “we will face an obstacle as insurmountable as the Great Wall of China”.

In a statement released after Thursday’s cabinet meeting, the government urged ministers to present a roadmap for all necessary interventions and said it was considering further steps to speed up projects.

Meetings will be convened with all the administrations concerned to monitor the progress of the national recovery plan and highlight any obstacles.

Draghi faces the same difficulties that have hampered Italy for decades: political fragmentation, bureaucracy and an almost constant electoral campaign.

Major cities, including Rome and Milan, will elect new mayors on October 3-4, and parties in Draghi’s national unity government are unwilling to take action that could upset their constituents.

“The problems that Draghi faces now were inevitable,” said Eugenio Pizzimenti, professor of politics at the University of Pisa.

“We live in the collective illusion that a bunch of technocrats could fix anything, but these are political decisions, not technical ones, and competing interests are at stake.”

NATIONAL SAVIORS

There are parallels between Draghi and Mario Monti, another non-partisan technocrat who led an equally broad coalition for just over a year from 2011, when he took office at the height of a crisis. debt.

Monti, like Draghi, was initially hailed as a national savior, but after passing sweeping budget cuts and harsh pension reform, parties turned on him, his government lost momentum and personal popularity. collapsed.

Draghi, whose term ends in 2023, has a big advantage: While Monti has had to make cuts, he has billions of euros in additional spending to allocate – provided the investment and reform momentum is met. maintained.

The aim of deferred tax reform is to simplify the system, reduce income tax and fight tax evasion, while competition law is needed to ensure a level playing field for investments. in infrastructure in ports, telecommunications and the national electricity grid.

The two are stuck in political wrangling.

The government, which has said the tax reform will not weigh on public finances, wants to discount the assessed value of Italian real estate, which is usually well below actual market values.

The Right-wing League and the conservative Forza Italia party of Silvio Berlusconi, the main coalition parties, are opposed to it.

Both present themselves as strong advocates for homeowners and say the government’s plan is unacceptable because it will lead to increased taxes on housing.

“We defend the right to property. Now is not the time to raise taxes, ”said Antonio Tajani, deputy head of Forza Italia.

Similar tensions block competition law, with both sides rejecting plans to liberalize lucrative concessions to run tourist services on Italian beaches.

These concessions are traditionally family-owned and passed down from generation to generation, despite repeated calls from the European Commission to be offered through open tenders.

Politics professor Pizzimenti said the huge differences within Draghi’s coalition meant that such disputes would only get worse, leading to more delays and weak reforms.

“I think that sooner or later Brussels will tell us that we have not done what we promised,” he said.
Source: Reuters (Reporting by Angelo Amante, Gavin Jones and Giuseppe Fonte; Additional reporting by Francesco Zecchini, written by Gavin Jones, edited by Catherine Evans)


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