PRIVATIZATION : Yes, Everything Must Go! Italy Ponders State Selloff

If you’ve ever craved a blimp base, an old fort, a disused army barracks or a salt warehouse, now’s your chance. The Italian government is about to have a clearance sale.

Parliament will vote later this month on government proposals to dramatically slash Italian state participation in key industries, banks and businesses by selling shares to private stockholders. Some flotsam properties will also go to the highest bidder.

Expected parliamentary approval of the landmark privatizations would change the way Italy does business. Proponents say it would allow overdue industrial restructuring, meshing Italy better with its European Community partners.

But it also has triggered widespread protest by state workers, who predict the loss of thousands of jobs.

One sign of the times: Striking workers of the state’s tobacco monopoly have left desperate smokers without cigarettes for the past several weeks.

In all, the government of Prime Minister Giuliano Amato hopes to raise around $20 billion over the next four years from the sale of what one newspaper called “Italy’s family jewels.” In Italy, one worker in six is on the state payroll, and public spending is 50% of the gross domestic product.

Together with tax reforms and spending cuts, the privatizations are part of a plan to ease state debt and to reduce chronic and alarming government budget deficits.

While Italy’s EC partners have moved away from state-controlled industry in recent years, a procession of weak governments in Rome pledged reform but instead borrowed millions to cover growing state losses.

“Italy is now paying the price not only of past excessive borrowing but also of repeated failures to live up to its promises,” observes the International Monetary Fund, which predicts that if the government sticks to its privatization scheme, “it will be rewarded.”

For sale are major pieces of the state’s largest holding companies: IRI, the industrial-financial conglomerate that is the dean of them all; ENI, the energy conglomerate, and ENEL, the national electricity company. A majority share of INA, the state insurance monopoly, will go on the market.

Also on the block are 4,737 pieces of state property, including an ex-Fascist Party compound; a gym and a bar in the Milan area; a fort and a sports ground in Rome; a nightclub, a flying school, a shooting range and a beer factory around Turin; a small airport and a large air raid shelter around Florence, and a former refugee camp near Salerno.

Sale of the properties may net the state around $700 million, but in the view of Finance Minister Giovanni Goria: “The value of what is being sold interests the government less than the fact that the process is launched. . . .”

In decades of interventionist economics that began under fascism in the 1930s, the state has acquired around 15% of gross industrial assets, by estimate of Stefano Micossi, an economist for Confindustria, the confederation of private industrialists.

The restructuring plan has won support of the four-party coalition headed by the Socialist Amato, a former treasury minister. Its critics, though, are found in boardrooms as well as among state workers and their unions.

“This is not a full privatization but a plan for streamlining, restructuring and rescuing the core by selling off nonessential pieces,” Micossi said. “A lot of people in the government don’t want to sell, but they have to because they are out of money.”