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Italy

Alitalia, Indesit, Telecom Italia and the banks: the great Italian sell-off

The sale of Indesit to Whirlpool is just the latest case: what is happening amid the general silence is the end of industrial Italy. The imminent danger is to yield to foreign capital not only industries but also the big banks, and to completely sell off Italian savings. Due to the sharp decline of industry and the problems of Italian banks, and because of deliberate governmental inertia and heavy European constraints, national capital is becoming a subservient vassal of the international market. And so Italy is likely to fall definitively into the Third World, argues Enrico Grazzini.

Untangled. That was the Economist headline – chosen with a certain satisfaction – for its recent article on Italian capitalism in crisis. Untangled translates into Italian as melted, dismembered: this is Italian capitalism today, according to the authoritative British magazine, after the dissolution of the shareholders’ agreement by Mediobanca. One cannot underestimate how radical was the (forced) turning point carried out by the historic merchant bank a few months ago when it decided to dissolve the cross shareholdings among major national companies.

Since then the intermingling between capitalism (partially failed) of large families, financial capitalism and state capitalism (almost retired), has been replaced by the international management of industry and finance. With the blessing of the government Renzi. The young Matteo was clear in a recent interview with Corriere della Sera. He said the sale of Indesit to competitor Whirlpool :”I ​​consider it a great operation. I have personally spoken with the Americans at Palazzo Chigi. One doesn’t attract foreign investment rediscovering an autarchic and superceded vision of the world. We want to bring companies from around the world into [one of Europe’s largest steel plant] Taranto as much as to [Fiat’s factory in] Termini Imerese. The point is not the passport but the business plan. Foreign entrepreneurs are welcome in Italy if they have money and ideas to create jobs.”

Foreign sell offs benefit 1%

So the neo-liberal Renzi rejoices faced with the fact that the Italian industrial capitalism is no longer competitive and is breaking up in favour of foreign capital. It is obvious that foriegn investment in manufacturing is welcome and you cannot always protect at all costs the national companies. But you should absolutely avoid giving strategic industries indispensable to the industrial future of our country. Almost always transfers of ownership to foreign capital enrich only the large families, such as the Merloni family (Indesit) and Tronchetti Provera (owner of Pirelli and Telecom Italia). The wave of industrial sell offs means not only the drastic reduction in employment, but also the impossibility of maintaining the conditions for autonomous – and where possible democratic – economic development. By giving its industries and its banks away Italy undermines the very basis of its development and is leaving itself highly vulnerable in the turbulent economic and political scenario in Europe and the world.

After Fiat fleeing into the arms of the Americans – encouraged by the billions granted by the Obama administration to protect the US auto industry and the criminal and absurd silence of the Italian
governments – after Telecom Italy lost all it heavyweight Italian shareholders, and behind the ideological smoke screen created by executives of the listed company, it is basically put itself up for sale, there are very few large Italian groups that can compete on the international market. And they are virtually all state-controlled, ie Eni, Enel, Finmeccanica, Fincantieri and a few others.

Public more competitive than private

Despite the deadly sins attributed (often rightly) to the boyars of the state, of what remains of our industry it is the public that is able to better compete than the private sector. Even for these strategic industries, the government, however, is planning a disgraceful privatization in favour of foreign capital, with the (false) aim to reduce the public debt and public deficit to respect the constraints placed on it by the European Union. The euro and the EU strangles us and wants us to sell the family jewels. But even an idiot understands that you cannot lighten a debt of 2.1 trillion through the sale of shares in companies which derive at most a few tens of billions.

Quite different is the interventionist policy of the French state that has just defended the control of its nuclear power industry and energy by becoming the largest shareholder of Areva to prevent the complete takeover by US company General Electric. The neo- liberal ideology of Renzi is no longer practiced even in the most liberal countries. Obama zealously guards its strategic industries,
automobile, hi-tech and finance. The Fed, the US central bank, prints tens of billions of dollars a month with which the investment banks and the US industries can easily buy foreign competitors.
Also thanks to the “exorbitant privilege” of the dollar, easy, about 40% of the Italian stock market is now in the hands of banks, pension funds, hedge funds and private equity firms from America, the Arab world, other European countries and sovereign wealth funds of foreign states.

The BlackRock, the giant of US financial is a major shareholder of Telecom Italia but also of Unicredit and Intesa ie the two major national banks holds most of the savings of Italians. But it is not only the US government that has intervened on behalf of its industry. According to a study by Mediobanca the British government and Germany have spent respectively 1,213 and 446 billion euros respectively to save their national banks from the crisis.

Protectionist Germany

Angela Merkel does everything to protect and develop the German car and mechanical engineering industry. Germany also uses the euro as if it were the Mark to promote its exports and the international projection of its industry; and the white-pink coalition Merkel government finances (rightly) with public money its alternative energy industry, robustly confronting the European Union that would like to prevent anti-competitive state aid. Emerging countries – from China, India and Brazil – have been able to develop over the last decades by attracting foreign investment in industry but also to protect strategic industries, due to the strict controls of foreign capital.

Only an active and intelligent state policy can in fact defend the national economy from the onslaught of large financial institutions that devour industries, and develop research, infrastructure, hi-tech companies and alternative energy sources. Unfortunately, the Renzi government seems to have a vision of economic policy completely subordinated to the ideology of “laissez faire” of the financial markets. The government intervenes only when a company is completely bankrupt, such as Alitalia, to sell it to foreign capital, looking only, as far as possible, to save the big creditor banks (Intesa and MPS first and foremost, in the case of Alitalia).

Nationalisation

Even the Left is often inattentive of the economy. It should instead propose the decisive intervention of the Fondo Strategico Italiano, now run by the Cassa Depositi e Prestiti, the only national body similar to a public bank. It would be necessary to go much further. The government should nationalize and manage a large bank and finance (with public profits) small Italian companies suffering severe liquidity crises, and medium-sized enterprises able to compete in international markets. A specialised public fund should also heavily co-finance private venture capital to sponsor the launch and development of new global start-ups in the promising but uncertain field of hi-tech.

Unions and the left should engage finally in the field of economic democracy. In fact, government intervention is certainly not enough to save and develop the national industry: in the innovation and the knowledge economy the intelligence and participation of workers must be mobilized. And it is necessary to develop grassroots democracy because – as is already the case in the powerful and very efficient Germany – even the workers, members and non-union members can elect their representatives on the boards of large companies, such as Ilva and Telecom Italy. Confining this to financial participation is a smoke screen. It is important that, as in Germany, workers elected by all employees sit on the boards of large companies and public bodies. The workers are more interested than shareholders to financial success and the development of “their” companies.

Italians’ savings sold

The greatest – and imminent – danger is that not only manufacturing industry but also domestic banks are sold to foreign capital (as has already happened with MPS, the third national bank) and that Italians’ savings are used wholly for the development of foreign economies. The Economist points out with satisfaction that since 2010, the national foundations – nonprofit, semi-public bodies, however controversial because they have been used by parties of the right and center – have lessened their grip on Italian banks listed on the stock exchange, and that the banks now depend 77 percent on the “free” market. It emphasizes that financial investors have a share of more than 11% of Italian banks, ie twice as much as a few years ago.

The unification of European Banking decided by the EU means going to the market for the recapitalisation of domestic banks that are weighed down by bad debts due to the crisis, and often due to crony loans to “friends.” The opening of the domestic banking market stimulated by the European Union will serve international speculation. The recapitalistion of the banks will be a boon to foreign investors that with little money can buy national savings: but without the slightest control over the economy there will be no new and sustainable investment and development prospects. Italy will become irredemibly a third world country.

The Italian economy needs economic democracy, an advanced industrial policy, captains of industry such as Enrico Mattei and Adriano Olivetti, innovators such as Steve Jobs, bankers like Raffaele Mattioli, founder of Mediobanca, and politicians of the stature of De Gaulle to defend and develop the national economy. Unfortunately, however in Italy Fiat’s Sergio Marchionne, Silvio Berlusconi and Renzi prevail.

Micromega

Translated Revolting Europe

More reading:
Luciano Gallino “La scomparsa dell’Italia industriale” Einaudi, 2003
Enrico Grazzini “Manifesto per la Democrazia Economica” Castelvecchi, 2014

About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope

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