Claudio Scajola (right) with US Ambassador to Italy David Thorne.
THE ITALIAN GOVERNMENT’S PLANS
As Claudio Scajola, Italy’s Economic Development Minister, sees it, the worst is over. However, he says, the risk is that the recovery may take too long – and speeding up the process is essential.
CLAUDIO SCAJOLA was born in the Liguria region 61 years ago. He has served two terms as mayor of Imperia and been in Parliament for four legislatures, was previously Forza Italia national coordinator and is currently Economic Development Minister.
‘’The decline has been interrupted,” he told the Italian Insider’s JOHN PHILLIPS in an interview. “However, if we don’t want to wait 5-6 years,, we will have to work on speeding up the recovery.’’ Signor Scajola calls 2010 a year of crucial challenges for Italian industry. Support for enterprise credit and workers’ wages, internationalisation and a lightening of fiscal pressure are the directions he points to as ways out of the crisis. He also mentions a future project for the South, modelled on the anti-rubbish measures taken in Naples and post-earthquake relief in the Abruzzo region.
Minister Scajola, is the crisis really over with, or are we in for some tough times in the coming months?
“Paraphrasing Eduardo De Filippo, ‘crises are never over,’ since one can always do more and do it better. From a macroeconomic point of view, the drop in production came to an end in the third quarter (2009) with (an increase of) 0.6% after five consecutive months in decline. This year GDP is expected to fall by 4.5-4.6 percent, and next year to rise by 1.1-1.2 percent. Therefore, from a statistical point of view the decline has come to an end and a recovery is underway - though slight and exposed to potential relapses, as shown by the crisis in Dubai and the problems in Greece.”
How long will it take before GDP rises to the level seen in 2007?
“If we see growth similar to that previous to the crisis, at 1% or slightly higher per year, it will take 5-6 years to make up for the 6.5% drop in 2008-2009. This is too long, and may lead to the shutting down of enterprises and an increase in unemployment. Therefore, we all have to work on strengthening and speeding up the recovery.”
Where should we begin?
“By working in two directions — the first aim is to ensure access to credit and support for workers’ income, to help enterprises ward off closure and prevent lay-offs. For this reason, we refinanced the SMEs Guarantee Fund with 1.6 billion euros until 2012, extending it to the crafts and transport sectors. In the first ten months of 2009, we supplied credit guarantees to 18,000 enterprises, 80 percent more than in 2008.”
And the second aim?
“Reform — infrastructure, energy policies, public administration, incentives for research and innovation and new policies for internationalisation, as well as implementing a reduction in fiscal pressure as soon as possible.”
Talk has been heard of an exchange between a reduction in transfers to enterprises and a lightening of fiscal pressure. Can this be done?
“In theory yes, but in practice I don’t think it would produce good results. Cutting enterprise transfers and taxes by a few billion would have a rather limited effect in terms of reducing fiscal pressure on firms, and this wouldn’t allow us to orient growth towards objectives which are important for the country overall, such as innovation, energy efficiency, internationalisation and growth in the size of enterprises.”
The crisis has struck the manufacturing heart of the country. Does the Government have plans for measures to foster its recovery?
“We’ve already done many things –. incentives for ecological cars, detaxation of profits reinvested in industrial machinery, the Housing Plan. Other initiatives are being looked into, especially to support demand in the sectors worst hit by the crisis.”
Export is crucial. What signs have been seen concerning the ability of enterprises to orient themselves towards markets with greater growth?
“A different world will emerge from the crisis: some countries will have to cut consumption and export more. Others, such as China, India and Brazil, are increasing domestic demand and will therefore also have to import more. Fortunately, Italian enterprises are proving able to do well on new markets, confirming once more their flexibility and ability to adapt.”
How are you helping them out?
“In July we received over 300 Chinese enterprises in Rome, in November we accompanied over 200 enterprises to Brazil and in mid-December another 200 to India. This year we will be going to Persian Gulf countries, and then back to China. Then there’s Russia, with whom we are developing a true, strategic partnership not only in the energy sector, but also through industrial collaborations in the automobile and hi-tech sectors — from aeroplanes to helicopters, all the way to Italian-made products and SMEs. The government is fostering these processes in every way it can and over the coming months we will be launching internationalisation reform for public agencies.”
Much expectation surrounds Italy’s return to nuclear energy. What steps will be taken in 2010?
“We are launching the Nuclear Security Agency, as well as criteria concerning potential plant sites. In the second half of the year enterprises interested in building a plant will have the chance to submit authorisation requests. We are on schedule, and will start building the first plant by 2013.”
Could Italy come out of the crisis stronger than before?
“This is what the Government is aiming at. For this reason, in the budget law we balanced the necessary stringency of public finances with a number of selected stimuli targeting industrial sectors, which can contribute to the struggle against pollution and climate change - such as research and innovation projects, which are fundamental to regain productivity.”
Is there the risk that the South could come out the crisis worse than the rest of the country?
“The crisis is widening the gap between the North and the South in the country. However, it is equally true that the South is where Italy’s growth reserves are found – without which we will not be able to speed up the recovery. Therefore, the South is a resource also for the Centre-North. For this reason Prime Minister Berlusconi decided to launch a 10-year Special Plan for the South, which aims to lift the obstacles which have up until now stopped the South from growing as much as the rest of the country: from organised crime to slow justice, to the lack of infrastructure … we will be presenting Prime Minister Berlusconi with a draft version of the Plan for the South, which provides for similar modalities for intervention to those against rubbish in Naples and for reconstruction in Abruzzo.”
Translation: Shelley Kittleson.