Italy’s Dirty Linen

1.

Fifty years ago the collapse of Mussolini’s authoritarian regime left his country in chaos, out of which emerged a new parliamentary republic. The achievements of this republic have since then been widely discussed, most recently by two of the more perceptive foreign observers now living in Italy. Matt Frei is an always well-informed journalist who reports for the BBC, and his new book contains a wealth of fascinating comments. Patrick McCarthy writes as a professor of European Studies at the Johns Hopkins University Bologna Center and treats the subject more analytically than Frei, with an even greater accumulation of detailed and persuasive evidence. From quite different perspectives they reach broadly similar conclusions. Both describe the enormous changes for the better that have taken place in Italy since the dark days of military defeat in 1945 and show how, after casting off the incubus of fascism, Italy moved with impressive speed from being predominantly agricultural to becoming one of the major industrial nations in the world, with a great increase of individual prosperity. In fifty years its people have also made notable contributions in virtually every field of Western culture.

Yet the main theme of both authors is not these undoubted successes. It is rather the more difficult story of how Italy’s political practices have been corrupt, self-destructive, and often more hindrance than help to social or economic development. Although the main Italian parties have all produced a few politicians of stature and integrity, in general “the political class”—the active politicians and civic leaders—has not measured up to the sophistication or to the enterprise and intelligence of ordinary citizens.

Admittedly the historical setting was not propitious. Fascism had its origin and classic manifestation in Italy after 1922: the word “fascism,” like “mafia” and “vendetta,” has come into universal currency from the Italian language, and the Fascist heritage has lingered beneath the surface of political life. Another divisive impediment has been communism, which as a consequence of Mussolini’s ham-fisted politics, found far more support in Italy than in other Western countries. Further back in history, many centuries of foreign occupation and authoritarian rule encouraged qualities of rebelliousness and individualism which, however admirable at the time, attenuated any sense of allegiance to the state or the community.

Such ingrained habits are not quickly changed. Italy has been a unified state for not much more than a century, and loyalties even today are sometimes as much regional as national. Some Italians continue to blame the Risorgimento for having created an artificial union of disparate peoples that allowed prosperous northern Italians to exploit an impoverished south. Others have put some blame on the Vatican which, after many years of refusal to recognize the existence of an Italian nation, was subsequently, Frei writes, “responsible for some of the worst aspects of modern Italy”; McCarthy claims that it was “the prime cause of the new state’s weakness.” Pius IX and Pius X both issued anathemas against liberalism and democracy. Pius XI tried to persuade the Christian Democrats to ally themselves with fascism after 1922; so did Pius XII favor an alliance with the neo-fascists in 1952, though such an arrangement would have forfeited Italy’s liberal credentials in Europe and handed victory to the extreme left in the perilously balanced elections of 1953.

Unlike other West European countries, the left in Italy has never won a national election, with the result that the Christian Democrats dominated fifty successive governments after 1945. This lack of any rotation in power was an anomaly and obviously unhealthy for any democracy; but it was supported by voters out of fear that a change from Christian-Democratic dominance would mean a victory for communism. What justified this fear was that the Italian Communists received subsidies from Soviet Russia until the 1980s and continued to talk favorably of revolution and proletarian dictatorship. Moreover, Palmiro Togliatti, their first leader, had been associated with some of Stalin’s worst crimes. McCarthy, however, argues that Togliatti was no longer a genuine revolutionary after 1945 but merely feigned toughness in order to disarm the Leninist faction inside his party. Frei, while not going quite so far, writes that where the Communists held power in local government, as in the city of Bologna, they set an unmatched example of good administration, aiming to create “not so much a socialist workers’ paradise” as “a monument to bourgeois good living and civic values.”

This suggests an awkward comparison with the national administration, since the permanent occupation of central government by the Christian Democrats led to corrupt practices on so huge a scale that they eventually destroyed their party and greatly damaged the republic. One possible judgment in retrospect is that anti-communism, however expedient at first, persisted too long, both as an excuse to please the Americans and a convenient pretext to keep corrupt Italian politicians in power. Many foreign observers have forgotten that Togliatti’s party, after playing a useful part in drafting the republican constitution, gave indispensable help to conservative governments in the daily business of legislation and supported the conservatives in crushing left-wing terrorism. One level-headed Christian-Democrat prime minister, Aldo Moro, defied American advice when he tried in the 1970s to bring the Communists into his coalition; in doing so he made what McCarthy calls “the postwar order’s only serious attempt to reform itself.” But this caused Moro to be unpopular with powerful interests at home as well as abroad, and after his tragic assassination by left-wing terrorists of the Red Brigades in 1978, the politicians of the old order made sure that the experiment was not repeated.

The background to these events remains partly mysterious, and some of Italy’s dirty secrets have been uncovered only by the much greater freedom of information in the United States—for example, American information about bribes of Italian officials by the Lockheed company led in 1978 to the ignominious resignation of an Italian head of state. The Communists were revealed to have accepted Soviet money, for which they were attacked as unpatriotic; but Washington turns out to have paid considerable sums to anti-Communist parties, including the neo-fascists. In 1990, Italian ministers and members of parliament were astonished to learn not only that for forty years a secret paramilitary force in their country had been trained and supplied by NATO and the United States in order to resist a possible Communist coup, but that some of the extracurricular activities of this undercover force seem to have had more dubious objectives, including personal profit, and were a grave threat to liberal government. The parliament has had difficulty in discovering whether the Italian secret services ever performed a useful and acceptable function: they are now known to have maintained disreputable links with both the mafia and right-wing terrorists, and their deviant behavior in repeatedly frustrating judicial investigation of terrorist crimes was a disgrace.

Another Italian anomaly was the preponderant size of the state sector in the economy, an imbalance inherited from Mussolini but further extended after 1945, when additional increases in state-controlled industries became an invaluable source of political patronage as well as of payoffs to politicians. Private industries such as Fiat, Pirelli, Olivetti, Benetton, Gucci, and Armani were admired and envied abroad for their success, whereas Italian state industries became a byword for inefficiency, featherbedding, and profligacy. All the major banks were inside the state sector, and they were often managed by party hacks who had absolutely no experience of banking.

McCarthy, in his best but most complex chapter, describes how Eugenio Cefis, a talented but dangerously power-seeking industrialist, used political intrigue and financial juggling with state-owned resources to fuse ENI, the energy conglomerate, with the Edison electricity firm and the giant Montecatini chemical combine. In doing so he damaged three major industries; his successors, seeking to recoup some of the huge losses he incurred, then spent a hundred million dollars bribing politicians to use vast amounts of taxpayers’ money to dissolve the partnership.

Political bribery can be found in every country, but in Italy it was allowed to proliferate almost unhindered, in part because the electoral system worked to prevent any alternation among the parties in power. According to Frei, no contracts for public works were signed with private or public companies unless a substantial bribe, or tangente, had been paid to the politicians involved; the naive assumption was that the lucky recipients would at once turn over the whole amount to their party. Even the Communists, though they denounced such illegal payments, yielded occasionally to temptation by accepting them when local administration was in their hands.

“The bribe was not only used as a lubricant for business,” Frei writes, “it was often its sole purpose.” The result was that the Italian landscape became littered with unfinished motorways, unused canals, abandoned hospitals, and building sites whose completion had sometimes never been intended. This systematic extortion of funds through public contracts was as harmful as the extorted “protection money” that supported the mafia. Both led to increased prices for consumers and losses to the government. Yet without these bribes the parties and politicians would have had to reduce lavish styles of life they had come to take for granted; McCarthy suggests that as a result the whole political system might have collapsed.

At the same time, social services were in effect taken over by politicians, who freely and corruptly distributed state-paid disability pensions in return for electoral support. Frei explains that in a country of fifty-eight million people there were four million disability pensioners, “about whom the most invalid thing was their ailment”; he might have added that in 1993 they included 150 members of parliament, one of them because of his “obesity.” As many as a quarter of the population enjoyed some kind of index-linked pension because many people became legally qualified for retirement before the age of forty. Such retirement payments accounted for a quarter of the national budget. Any amateur economist might have foreseen that such extravagance could not continue without disaster, but ambitious politicians continued to outbid each other in the competition to buy votes. The public debt rose from 55 percent of gross domestic product in 1981 to 92 percent in 1987, and to over 120 percent in 1994—far beyond what Italy promised to maintain under the Maastricht treaty. Worse still, the example of their elected representatives reinforced the belief of taxpayers that politics had no connection with moral obligation or civic duty, a lesson that encouraged people to react in kind. In fact, without the wholesale evasion of taxes, the astronomical national debt would have been contained. Half of the value-added tax seems not to have been paid, and in some regions the figure rose to almost 90 percent. An investigation by the leading financial newspaper, Il Sole 24 Ore, found that

the worst tax dodgers are economists and statisticians, followed closely by furriers, accountants, and stockbrokers. Those who dodged least…were doctors, who failed to declare, on average, only 20.5 percent of their annual income.

2.

In most governments after 1963 the Socialist Party was a junior partner inside Christian-Democrat coalitions and readily adapted to the prevailing practices of clientelism and tangenti. The Socialists won only between 9 and 14 percent of the popular vote after 1948, as compared with the Christian Democrats, who had 33 to 40 percent, and the Communists, who won between 22 and 34 percent. Despite this numerical discrepancy the Socialist Bettino Craxi became prime minister in 1983, since his support was needed to provide the dominant party with a safe anti-Communist majority. In the late 1980s Craxi indignantly told Frei that he had never committed a single illegal act. A few years later he was convicted and given an eight-year prison sentence for some of the many crimes charged against him, and he then escaped to Tunisia pending an appeal. One of Craxi’s friends told the judges about stacking billions of illegally contributed lire in bundles at Socialist Party headquarters. Another friend confessed to having paid Craxi $16 million for favors, and the courts soon learned that this was only a small fraction of the illegal money that he or his party received.

Cabinet ministers from the Socialist Party, by demanding bribes before they took action, delayed rescue operations to save Venice from destructive flooding; they also siphoned off millions of dollars from the relief funds allocated to Bangladesh, Somalia, and Senegal. A Christian-Democrat minister of health was sent to prison for taking a regular cut from the money allotted for medicines, hospitals, and other help for patients with AIDS. One of this minister’s senior officials had such a stranglehold over the drug companies that he and his wife accumulated fourteen Swiss bank accounts and kept one hundred million US dollars in cash at his various apartments and houses, along with a hundred gold ingots. When arrested he said this represented “forty years of personal savings,” but unlike others he at least admitted to having “bent the rules a little.”

Such details could not be revealed before 1992 because, by a private agreement between the parties, hundreds of deputies and senators used parliamentary immunity as a means of avoiding investigation, exposure, and possible prosecution. But rumors of vast corruption and of lawless official behavior became more and more current. Possibly no other Western country has so many major mysteries of state, so many unsolved crimes that were one way or another linked to high officials. As Frei and McCarthy observe, the truth has still not been established about military coups that were allegedly threatened in 1964 and 1970. Nor do we have the full story of the misappropriation of relief funds on a huge scale after horrific earthquakes; or about the murderous bombing in Milan in 1969 and a subsequent bombing in Bologna that together killed over a hundred people. In each case the evidence was deliberately falsified by the authorities, presumably to protect those responsible. We know something, but hardly enough, about the ways that the P-2 Masonic lodge acted outside the law during the 1970s to bribe politicians and engage in other corrupt financial and political dealings. Its members included cabinet ministers, top military officers, judges, and leading industrialists.

Among the “illustrious deaths” of Italian public figures, the details of many are still vague—for example, details of the murder of Aldo Moro in 1978. The killing of the famous Sicilian bandit Salvatore Giuliano in 1950 became clear only after a newspaper discovered that the official account was a cover-up by the police to conceal their complicity with the mafia. The circumstances surrounding the plane crash in which the highly controversial oil baron and public official Enrico Mattei died in 1962 remain unclear; so do many questions about the deaths of the iniquitous “Vatican bankers” Roberto Calvi and Michele Sindona in the early 1980s. The Christian-Democrat leaders who refused to negotiate with left-wing terrorists to save the life of Aldo Moro were nevertheless willing to save a minor kidnapped party official from the same terrorists, with whom, Frei tells us, they persuaded the infamous Neapolitan Camorra to intervene, and whom they then paid what seems to have been an enormous ransom.

These are only a few of a long series of mysteries in which the public has been inclined to suspect the worst since the authorities have concealed the truth. Fortunately, however, there has in recent years been much more openness after an unexpected shift in the balance of political forces. A necessary catalyst was the end of the cold war and the fall of the Berlin wall; many voters now felt they no longer had to support parties that for more than forty years, by magnifying and exploiting the fear of communism, had maintained an increasingly unmerited dominance over Italian politics.

Another momentous change came when the Italian Communist party dissolved itself in 1990, permitting its more moderate members to form a quite different Democratic Party of the Left, which the die-hards refused to join. In Sicily the Catholic mayor of Palermo, Leoluca Orlando, broke ranks with the discredited Christian Democrats to form an anti-mafia and anti-government group. Another Christian Democrat, Mario Segni, led a similarly divisive movement inside his party, hoping to displace the older generation of politicians by modifying the practice of proportional representation. Equally important in changing the political balance was the formation of Umberto Bossi’s Lombard League which, along with other regional groups in the north, achieved a remarkable electoral success as a populist party of protest against corruption and over-centralized government.

These new political groups, though they had little hope of winning a majority in parliament, and though their members often disagreed with each other, opened the way to new and quite different political alliances which reflected a growing popular frustration with the political establishment. Among Sicilians who, either from fear or insular pride, had frequently made excuses for the mafia, there was an increased awareness that this murderous organization was damaging their prosperity as well as their reputation in the outside world.

Government officials, too, after failing for decades to arrest convicted murderers who lived undisturbed in the center of Palermo, began to understand that the mafia connection, instead of winning votes as usual, might now do the opposite. It was too late for leading politicians to deny their own past by heading a movement for reform. But they were forced onto the defensive by a clause in the constitution that permitted the abrogation of existing laws by means of a popular referendum. Two such votes in 1991 and 1993 led to changes in electoral practices that allowed new parties more scope and left the Christian-Democratic and Socialist parties floundering. Distrust of the parties and of the government they installed was increased by their extravagant mismanagement of the economy. Lower profit margins forced some businessmen to resist demands for tangenti, a fact that not only reduced the amount of money available to politicians but at last encouraged aggrieved industrialists both to name the politicians who had been bleeding them and to seek protection from the courts.

Additional pressure on the Christian-Democrat politicians to accept changes in the system must have come, at least in private, from the Church; and much more publicly it came from the rest of Europe, where Italy’s mounting budget deficit diminished the country’s standing and credit-worthiness. Italians had enthusiastically joined the European common market but they caused offense by their reluctance to carry out many European Community decisions that they disliked. There was irritation in Brussels when EU funds allocated for the relief of poverty vanished into the pockets of politicians in Rome or were sometimes sent to southern farmers who turned out not to exist.

As the main parties lost face and lost respect, the courts were at last able to step into the vacuum of power and act effectively, with results that were immediate and dramatic. Politicians had for many years hindered the judiciary in its dealings with the mafia, but a group of courageous judges and policemen, notably Giovanni Falcone and Paolo Borsellino in Palermo, took the initiative and scored important successes against the malavita. In places where witnesses had been too frightened to speak out, hundreds of senior and junior mafiosi, realizing that the usual political protection was no longer reliable, turned state’s evidence, while hundreds of others were imprisoned.^*

In Milan, where the main problem was political corruption, Antonio Di Pietro and Francesco Saverio Borrelli led another group of investigating magistrates who brought to court a cross-section of the political and industrial elite, producing a mountain of incriminating evidence. Di Pietro quickly became the most popular man in the country, more popular than pop stars or soccer players and far more popular than any minister or prime minister. The very suddenness and completeness of this change was telling: it suggested that a small group of politicians had been allowed to flourish at the expense of the community.

The most prominent representatives of this political class were the Socialist Craxi and the Christian Democrat Giulio Andreotti. The latter had been a minister in thirty governments since 1947 and was seven times prime minister, twice during the years between 1989 and 1992. As late as February 1992, Andreotti and Craxi expected to form a new government that would halt further investigations into political crime and perpetuate their joint condominium. Either was a possible candidate for the presidency of the republic; but in May 1992 their plans went awry when the brutal murder of Falcone by the mafia on a road near Palermo shocked the electoral college into choosing someone outside the main party machines. After fifteen inconclusive votes the choice fell on Oscar Luigi Scalfaro, a Christian Democrat with a reputation for probity and good judgment, qualities that were constantly required during the next three years. The sense of panic was intensified when Borsellino, too, was murdered by the mafia in Sicily, and when several former ministers were arrested in Milan. Parliament once more voted to protect Craxi from indictment but then changed its mind as a result of public indignation. The judicial officials announced that three other former prime ministers were under police investigation. Andreotti, the most powerful man in the country, finally volunteered to waive his own parliamentary immunity from prosecution. (His trial on charges of collaborating with the mafia has only just begun and may go on for years.)

With the political parties in such disarray, four emergency governments between 1992 and 1995 tried to restore confidence and repair the damage. The first was led by Giuliano Amato, a Socialist with a reputation for honesty who made a valiant attempt to contain the budget deficit both by reducing pensions and tax evasion and by starting to privatize state-owned enterprises. His successor in 1993, Carlo Azeglio Ciampi, was a much respected governor of the Bank of Italy who had never been in parliament and was free from party affiliations. Ciampi’s government of unelected academics and technical experts had the great advantage of not needing to buy votes; its honesty in confronting the crisis won it more admiration than any other government since the days of De Gasperi in the early 1950s.

Its chief task was to change the existing procedure for parliamentary elections, something that the dominant parties had not been able to do without risking political suicide. Proportional representation had created a large number of parties in parliament, leading to coalition governments that were unable to act decisively, could not agree on necessary reforms, and were held together mainly by a corrupt involvement in patronage. Ciampi and his advisers suggested a majoritarian method of voting that might produce a more homogeneous parliamentary majority and a more coherent opposition. Hitherto the opposition parties, with no expectation of ever winning power, had lacked the incentive for constructive criticism and accepted that their best hope of influencing policy lay in some kind of half-hearted cooperation with the government.

Unfortunately Ciampi’s new law was watered down by parliament and the election of March 1994 produced ten different parties, so making another heterogeneous coalition inevitable. It was led by Silvio Berlusconi, one of the half a dozen richest people in Italy, a television, publishing, and real-estate mogul who had been a close ally of Craxi on the left, but now surprisingly allied himself with neo-fascists on the extreme right. Berlusconi’s new party, Forza Italia, organized only two months before the election, nevertheless won 21 percent of the vote, a brilliant success that was helped by his ownership of all the main commercial television stations (and of a leading soccer team in a country that is passionate about football). His promise to create a million new jobs gave him further popularity, although Frei points out that unemployment actually increased during his seven months in office. He also promised not to raise taxes; but the budget was already so far out of control that this was merely populist electioneering.

Berlusconi’s chief political weakness was that his two main coalition allies had entirely different aims: Umberto Bossi of the Northern League favored local autonomy and a federal division of Italy, while Gianfranco Fini, formerly an ardent fascist, inherited Mussolini’s belief in strong centralized government. Bossi was violently anti-fascist, while Fini called Mussolini the greatest politician of the century. But Fini was a skillful political strategist and in January 1994, realizing that identification with fascism had no future, he persuaded his neofacists to dissolve their party and change into what he now called the National Alliance. He announced that it was democratic, anti-totalitarian, and anti-racist; but it was also nationalistic, with some mild overtones of anti-Americanism.

Such an ill-assorted coalition was bound to be ineffective and its members were soon quarreling. It was also weakened in the eyes of public opinion by apparent conflicts of interest that Berlusconi took no serious step to correct. As well as controlling most of commercial television, he now used his position to appoint new managers of the state television network in order to curb criticism of his government. As prime minister he also controlled the public-sector banks to which his commercial enterprises were heavily in debt; it was suspicious that he refused many requests to create a blind trust and put his own enormous business empire in escrow. He also proposed an amnesty for indictments of tax evasion and illegal real-estate development, which was not reassuring when he himself came under judicial investigation for these same offenses. He attempted to hinder the judiciary in its prosecutions over tangenti and even arranged the release of some of the worst offenders, until public indignation forced him to back down. McCarthy concludes that Berlusconi was so busy looking after his personal interests that he had no time to consider serious political reforms. Frei finds his government an almost complete failure. The collapse of the stock exchange and in the value of the lira showed how wide the loss of public confidence had become at the end of his time in office. Forza Italia lost much of its previous share of the vote in the local elections of November 1994. (Berlusconi himself was recently indicted for bribery and faces a trial in January 1996.)

Both books under review take the story down to January 1995, when President Scalfaro appointed Lamberto Dini as prime minister for what was Italy’s fifty-fourth government in fifty years. Like Ciampi, Dini came from the much respected Bank of Italy and once again chose his ministers from outside parliament. During the following months he was remarkably successful in restoring confidence at home and in the international financial markets. But Italy’s deeper political problems will be solved only when another election shows whether a discredited political elite can be replaced. Since 1945 the country has not lacked admirable politicians—the Christian Democrats Alcide De Gasperi and Oscar Luigi Scalfaro, the Communists Giorgio Amendola and Enrico Berlinguer, the Socialists Norberto Bobbio and Giuliano Amato, the Republicans Ugo La Malfa and Giovanni Spadolini, not to mention economic experts such as Luigi Einaudi, Carlo Ciampi, Dini, and Romano Prodi, the University of Bologna economist and former state administrator who is now trying to put together a center-left coalition.

Writing in January, McCarthy concluded that, until either the left or a center-left coalition comes to power, the reform of the Italian state will be impossible. Since then, Dini’s stabilizing policy and Prodi’s partial success may justify at least some degree of optimism. Nor is it entirely out of the question that Fini or some other conservative may create a genuinely democratic party of the right. Frei adds that renovation will also require a collective change in mentality, a keener sense of political morality, and a greater trust in the state. Italy might then become what, with pardonable exaggeration, he calls a paradise on earth.

Unfortunately, Italian-style politics still seem an almost insuperable obstacle to good government. Not only does the present administration lack a safe parliamentary majority, but the two most prominent politicians in the country—Andreotti and Berlusconi—are being prosecuted for bribery and corruption. Not only has the autumn budget not yet been passed, but the public debt continues to spiral out of control while the value of the lira has been falling dramatically. Another election cannot be avoided in the next few months and will hardly produce a credible result if Dini is unable before then to curb Berlusconi’s virtual monopoly of commercial television. In other words, we may be watching the most critical test since 1945 of the Italian political system.