PROBLEMS AND PROSPECTS IN SOUTHERN ITALY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004300130002-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 19, 2016
• Sequence Number: 2
• Content Type: REPORT

`"~ "'21 February 1964
SPECIAL REPORT
PROBLEMS AND PROSPECTS IN SOUTHERN ITALY
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIG ENCE
ea~~F'I?~:C:iF
~,r71G~ui~~ ~~ ~
~~~CRET
howngradi nq and declassification
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21 February 1964
The rehabilitation of southern Italy has been
a major objective of Italian governments for al-
most 20 years. By the end of 1965, public assist-
ance and investment there since 1945 will have
reached almost $10 billion. As a result of this
aid, the south's lag behind the rest of Italy is
no longer increasing. Nevertheless the contrast
in living conditions between north and south is
still so sharp that continuing massive public as-
sistance for at least the next 15 years will be
essential to reduce it appreciably. The present
reform government, in the face of strong resist-
ance from conservative elements, is trying to en-
act a five-year National Economic Plan which would
provide as one of its more important aspects the
coordination long needed for development of the
south. Until some real improvement in the situa-
tion there is achieved, Italy's Communists will
continue to benefit from the protest votes of
many depressed southerners.
Poverty in the Mezzogiorno
Although northern Italy
also has underdeveloped areas
and sharp social and economic
disparities, the situation has
long been far worse in the pov-
erty-stricken south. Most of
southern Italy and the islands
of Sicily and Sardinia--the area
called the Mezzogiorno--is in-
fertile and barren, and illit-
eracy and low health standards
afflict the people. (See inset
top of page two) .
The Mezzogiorno has about
40 percent of Italy's popula-
tion but accounts for same 65
percent of the births each year.
Per capita income is estimated
to be about $400, or less than
half that in the north. How-
ever, the north-south gap in
total. regional income, after
widening annually for genera-
tions, appears to have been
held more or less constant
since 1961.
Public and Private
i an noes men
Sporadic and limited gov-
ernment efforts to help over-
come the south's problems were
ineffectual before 1950, when
the Fund for the South (Cassa
pe.r, it Mezzogiorno) was set up.
In 1953, a Minister Without
Portfolio for the F;conomic De-
velopment of the South was ap-
pointed and an In~erministerial
Committee created to approve and
coordinate all government proj-
ects. for the development of
the Mezzogiorno. Giulio Pastore
--a vigorous proponent of the
present collaboration in gov-
ernment between his Christian
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Democratic Party and the Social-
ists--has been. minister for the
south almost continuously since
1958 ,
The Cassa will have spent
about $3.3 billion when its man-
date expires in 1965, and a law
to extend it for another 15 years
is pending. The new legislation
is expected to provide for ex-
penditures of about $450 million
a year. Three Cassa-controlled
credit institutes are author-
ized to issue capital-grants
and interest rate subsidies to
help finance privately ownedin-
dustrial projects. The Common
Marl;et's European Investment
Bank, which was set up to help
raise living standards in the
EEC countries, has made more
than half--an estimated $80-
90 million--of its total loans
to these institutes. The Inter-
national Bank for Reconstruction
and Development and private in-
ternational banking groups have
lent the Cassa almost $450 mil-
lion.
Since 1957, state-owned
industrial corporations have
been required to allot 40 per-
cent of their total investments
to the south. This amounted to
about $1.1 billion by 1962, and
an additional $1.4 billion is
scheduled to be invested through
1966. Moreover, all new state-
controlled industrial plants
for the period 1962-65 are re-
quired to be located in the
south.
Large investments by pri-
vate Italian firms in the Mez-
zogiorno did not really get un-
Liv~,9 Condit~ons`In Sic
pbl,ma dE Mont~chiaro, a tcawnship near Gela on fihe
~~~#l,~ern ~t ? ~~ is cansiclered~typical of the mare
nt~~lgy_c~?P~d~se~ regions Qf' the 1~lezzagi,orno..1~s
~pc~pulation: of 2br~bC} ~s madg u~ ma-".~, of agricultural.
~~ laborers, almost all~of ~~rhgm live ;in senQUS wan'.
-~-t`~'1. ~rv~y a e~mon a sam~}e o~66~ f`amil~es*f;~,~fl4
persons) showed that 54 b~ercerTt o?the~papulationovei''''
~edrs of a~e~was i(li'terate~ and that tie Fallawing
~~EVin conthtions Q~itaine
x .9 ~_ ..,e ~.. ~ _~ r_~~. _r~. _. ,. z, , .. _
~~ s~~t+e~rau~Swer~ +~vi#~r~Ut r~1~n~nln~water
/g ~rf t e; roomowe~ Vamp an wa~Ts anc~f~aars
~_ ~~,
i:4`~lQ ~i~t~e.~iousiisv~rere v~i.~is~ut~avatA~ies.
.~~~/o.~Lp~S~~,~ci1.[Ilsl[11m4~S_t9~et~lter Wit~i-human occupbnts: ';
la$~Ic 4~ki~: has,~~~"w~r~ wtrgu~ yvincfows _
'1'h~ pygrgge number of mains per Family was 1:1.
~$
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~. __._~~d.~_~ ~._> ,..,. ~..~.~.,~_.~,_..~.,. _s ~ 3re,m.. ..
der way until about two years
ago. The president of the Pia-
tional Confederation of Industry
(CONFINDUSTRIA) envisages that
about one quarter--$3.3 billion
--of the total investments made
by its member companies during
1963-66 will be placed in the
south. Gradual industrial sat-
uration in the north, together
with the rising labor and land
casts there, has made southern
investment increasingly attrac-
tive to some of the giants of
private industry. In the ini-
tial stages of the investment
boom most of the companies con-
cerned were easily able to fi-
nance expansion out of past earn-
ings, but these reserves now are
considerably reduced, and the
interest rate on borrowed money
has become a much more important
consideration. In this situa-
tion, it is estimated that an
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entrepreneur can reduce his ini -
tial capital casts by nearly a
third by using all of the vari-
ous tax exemptions and reductions
and credit assistance which the
Cassa makes available for in-
vestors in the south.
The amount of private f~r-
eign investment in the Mezzogiorno
has been comparatively small.
Between 1956 and 1962 it proba-
bly amounted to one fifth--$50
million--of total foreign in-
vestment in Italy, and almost
$25 million of this went into
the petroleum industry. A spe-
cially created government in-
stitute is making a strong effort
to encourage mare foreign invest-
ment in the Mezzogiorno..
Impact of Aid and Investment
The government placed its
initial emphasis- on agriculture,
and three quarters of the Cassa's
funds went into such related in-
frastructure projects as affor-
estation, dams, roads, and ir-
rigation. Thus far, only a good
beginning. has been made in pro-
viding the south with an adequate
infrastructural system. Moreover,
the basic factor which underlies
southern agrarian poverty is that
much of the land is absolutely
irreclaimable for agriculture
purposes.. Although urge estates
totaling about one atad a half
million acres have been broken
up and redistributed to some
100,000 families, and emigration
has provided an additional slight
improvement of the agrarian prob-
lem, many of the 7-S million per-
sons living outside the land rec-
lamation and newly industrial-
ized areas will eventually have
to be relocated:
By 1957 it had became ap-
parent that primary reliance
would have to be placed on in-
dustrialization in order sub-
stantially to improve southern
living standards and narrow the
growing economic gap between
north and south. It was nearly
two years later, however, before
even government-awned industries
began to move south, and still
another two years before more
substantial amounts of private
investment began to enter the
area. In 1962, such industrial
investments rase by 35 percent
over 1961, compared with an 8-
percent increase in the north.
Both public and private invest -
ments planned far 1963-66,inclu-
sive,far exceed those of any
previous four-year period.
A frequent criticism of the
government's programs for south-
ern redevelopment has been that
the many agencies and ministries
concerned have often operated.
at cross-purposes, with the re-
sult that considerable money and
effort was wasted and the effec-
tiveness of the various projects.
reduced. Concurrent with the
increased flow of industrial
investments by 1961-62, the gov-
ernment moved to counteract some
of this criticism by setting up
12 large development zones and
24 industrial "nuclei'' through-
out the south. The government
believes that by channeling the
bulk of investment and public
work projects into such specific
areas--thus concentrating its
efforts--the centers will
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ITALY'S
"mEZZOGI0Rf10?
O ~ MOI.ISB
O Frosi one
~. ; S AARUZL7
Avezza n o
~RUME ~ F
For purposes o~ receiving special aid, the
Italian parliament defined the Mezzogiorno
(literally "midday" and a standard term for
the South) as al! of Italy south of but not
including Rome. It has a total area of
49.625 square miles, or 4/ percent of ltaly~s
or 38.3 percent of the SO,kb3,762 For all
of Italy.
Valle del Pescara
Industrial nucleus
^ Development area
- Region boundary
coli Piceno
Foggia
0
AMPANIA
Caserta
~ OAvelli
Sant Eufemia Lamezia
0
?
? ? ?O
0
SICILX
Catan
Caltagirone
~ O~
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eventually service a wide area
and attract redundant farm la-
bor. This effort thus far seems
to be fairly successful but the
Mezzogiorno's industrial base
is still very small and greatly
distorted in the direction of
heavy industry. The centers
have not yet succeeded in en-
couraging the growth of an ad-
equate structure of supporting
small and medium-sized busi-
nesses .
The Role of State Planning
While the designation of
specific redevelopment areas
was an encouraging step forward,
of much greater long-run impor-
tance would be the proposed in-
corporation of all measures of -
fecting the development of the
south into a national economic
development plan. Minister for
the South Pastore admits "de-
ficiencies" in the government's
efforts and attributes them to
a lack of national planning and
of "coordinated total public
spending" in the south. It is
generally recognized that long-
term national economic planning,
such as has been adopted in
other West European countries,
is necessary in order to cor-
rect Italian social and region-
al imbalances. The National
Commission for Economic Program-
ing now is studying the draft
proposals--under preparation
since early 1962--of the five-
year National Economic Plan
which the Moro cabinet is com-
mitted to enact. Budget Minis-
ter Giolitti, under whose aus-
pices the Commission was estab-
lished, expects Parliament to
pass the necessary legislation
by the end of this year.
"However, conservative po-
litical and economic forces have
consistently opposed the estab-
lishment of a national plan, and
their attitudes regarding the
content of the final proposal
could be critical not only for
its enactment but for the sta-
bility of Premier Moro's center-
left coalition. The key element
is the extent to which the plan
would modify the free market
mechanism; conservative elements
can be expected to try to prevent
any sizable extension of "public
initiative." An attempt was made
to allay conservative fears on
long-range planning by stating
in the coalition's economic pro-
gram that government policy should
aim at ensuring a basic frame-
work of development within which
"both the free choice of private
enterprise and the policies of
public initiative" may operate.
Despite this clause, conserva-
tives fear that the over-all plan
will determine such matters as
the pattern and location of in-
vestment, and that this would
conflict with industry's own
profit and market criteria.
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The Emigration Problem
At least one million south-
erners went to northern Italy
or to other European countries
between 1951 and 1961, and the
flow has greatly accelerated
in the past few years. The
majority of these are men who,
while often illiterate or semi-
literate, are among the most
energetic and adventurous south-
erners, and their departure fur-
ther hampers efforts to revivify
the south. The reservoir of
southern manpower has been a
vital factor in northern Italy's
economic boom.
Present plans would en-
courage another half million
southerners to leave by 1970.
This, together with the creation
of 1.5 million new jobs, would,
it is hoped, bring about full
employment. Training is already
a serious problem, however.
Qualified workers cannot be
found for many openings, and
technical training facilities
are greatly insufficient. Al-
though more than 3,000 primary
schools have been established
in recent years, it will be
many years before their impact
will be apparent in the labor
mart.
grant vote. The emigrant voted
for the Communists partly be-
cause of the role the party
and their labor confederation
played in helping him adjust
to the new environment. He was
also demonstrating a new aware-
ness of his extremely low liv-
ing conditions, however, and
expressing his protest by back-
ing the party which he felt
identified itself most closely
with his problems.
Even in the south the Com-
munist Party made gains, in
contrast with its losses there
in the 1960 municipal elections
and scattered local by-elections
in 1962. The bulk of the emi-
grants who returned home from
abroad to vote appear to have
deserted the Christian Demo-
crats for the Communists. Work-
ing abroad seems to have brought
into sharp focus the disparity
between conditions in other
European countries and those in
southern Italy, and the vote
represented a protest. There
are also indications that the
Communists gained substantial
votes from those who moved from
the farm into the new indus-
trial centers in the south.
The April 1963 national
parliamentary elections showed
that the massive emigration
from the Mezzogiorno has had a
strong effect on regional voting
patterns since the 1958 elec-
tions. A large part of the con-
siderable Communist gains in
the northern industrial centers
was attributable to the emi-
Whether the government can
narrow the north-south economic
gap and enable the south to
become self-sustaining will
depend in large measure on the
adoption of the long-term Na-
tional Economic Plan. The
large injections of public as-
sistance since 1950 have im-
proved the long-range prospects
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for the south, but a substantial
rise in investments will be
necessary to ensure an upswing.
With a concerted use of public
and private funds the necessary
improvements in southern socio-
economic conditions is possible,
but it may take longer than will
be politically desirable.
Even with a high degree
of coordinated effort, it is
not likely that the gap in liv-
ing standards between -north
and south will be closed within
a generation. In view of the
strong opposition of conserva-
tive elements to national plan-
ning and the disruptive tactics
the Communists can be expected
to follow, the task will be
particularly difficult. The
problem will be complicated,
furthermore, by the growing
impatience of the population
in areas where rising expecta-
tions outpace modernization.
Italy's national strength
and value to NATO are closely
dependent upon the success the
Moro government has in under-
cutting the sources of Communist
appeal. Until the standard of
living in the Mezzogiorno is
greatly improved, many south-
erners--whether living in the
south or the north--will express
their deep dissatisfaction by
supporting the Communist Party,
which has sought strenuousl to
r spokesman.
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