JPRS ID: 8601 WEST EUROPE REPORT

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000100080002-0
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 93
• Document Creation Date: November 1, 2016
• Sequence Number: 2
• Content Type: REPORTS

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JPRS L/8601
2 August 1979
ti, .
.
W
est E u ro e R~ o rt
p p
CFOUO 44/793
FB~~ FOREIGN BROADCAST INFORMATION SERVICE
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JPRS L/8601.
2 Augus~ 1979
WEST EUROPE REPO RT
~FOUO 44/79)
, CONTENTS PAGE
EUROPEAN ~'ARLIAMENT ELECTIONS
~ Fi2ANCE
Changes in Air Traffic Manggement Poseible
(AIR & COSMOS, 19 May 79) 1
~ COUNTRY SECTION
. FItANCE~
~
PCF Banking on Crisis, yiolence To Regain Voter
Support
(Andre Lesueur; VALEURS ACTUELLES, 19 Ma~ 79)..... 4
Military's Personnel Stxength Outlined
(AIR & COSMOS, 2 Jun 79) 7
Corsican Rebellion Seen Heating Up Rapidly
(Pierre Pasquini; PARIS MATCH, 6 Jul 79)............ 9
Ct~anges in Armored Division Makeup, Mission Outlined
(Bertrand de Montaudoui~.; ARMEES D'AUJOURD'HUI,
Jun 79~ 14
Organizatirn, Duties of Armored Recon Company Noted
(Yves kermarvant; ARMEES D'AUJOURD'HUI, Jun 79)..... 18
Industry Minister Derines Space Policy
(Pierre Langere~x; AIR ~ COSMOS, 16 Jun 79)......... 22
~ Scientific Satellite Pro~ects of ESA Discussed
(Pierre LanQexeux; AIR & COSMOS, 16 Jun 79)......... 25
- a - [III - VdE - 150 FOUO]
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CONTENTS (ConCinued) p~ge
Reasons �or Naval Air Arm's Choice of Aircraft Dieclosed
(AIR & COSM~S, 16 Jun 79) 27
Kourou Launch Base Checked Out for Ariane
(AIR & COSMOS, 16 Jun 79) 31 ~
ITALY
Annual Reporti of the Bank of ICaly: 1979
(IL MONDO, 15 Jun 79) 32
i Prospects for Fossil Coal Deposits in S~:dinia
,(Varioua 90t3rCe3~ V8r~.0U8 (1$~88~ ~ ~ ~ � � � ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ � 62
Reservea 132-145 Million Tone
Sardinia Has a Century's Worth of Coal, by
Enrice Negretti
SPAIN
ETA's Organizational Methods Described
(CAMBIO 16, 17 Jun 79) 75
Labor, Employers Negatiations: Positions, De~.snds
Given ,
' (CAMBIG 16, 24 Jun 19) ~ 77
Production of Light Naval Craft Reported `
(M. Ramirez Gabarrus; DEFENSA, May 19)............ 86 ,
~
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~ LUKOI'I:AN 1'A[tLIAMENm ~LECTIONS ~'RANC~
. CHAI~iGES IN A1P, TRAFI'TC MANAGEMEIVT ~'USSIBL~
~'a.ris AZR & COSMOS in ~ench 1y }ta,y 79 p 39
[Excerpts from resolution under consideration by European I~,rl.iament] _
[Unsigned asticlei "The European Parliament s,nd Air Traffic Management"]
- [Text~ During 2 days in Paris--19 and 20 March of this year--thoee membera
of the E~zropean Yarliament who serve on the Cowaittee on Regional Po11cy~
Territorial Facilities and Trarusportation of the European parllament had
the opportunity to hear the apecialized representa.tives of ma~or E~ropean
~ aerona.utical jurisdictions presenting theix viexs concerr~ing "the develop-
ment of effective management and control of' air traffic"--the topic of the
public heasing held by the Parllament. In commenting on these 2 days of
discussians (see AIR & COSI~YJS~ No ?58) we stated that a report xould
snortly be submitted to the Comraittee oi~ Transportation and subsequently
discussed at a plenary se$sion of the Pa,rliament.
That session toolc place in Luxembourg from 7 to il May. We are reproducing
herexith several excerpts from the draft resolution xhich the committee
~adopted and subsequently submitted to the European Parliament for its vote.
"The Euz~opean Parlia.ment is convinced that it is essential--for con~idera-
tions of safety and a more efficient utilization of the available airspace--
to estab:ish close cooperation betxeen the civilian control units and -
militaxy control units with a viex to their possible integration. It
emphasizes that in order to avoid ar~y potentially fatal ambiguity in the
transmission of instructions and information Among pilots and controllers,
only English should be used.
Disquietin~r Tensions
"The Pasliament proclaims its concern with reapect to the danger~ and the
delays, resulting from the lack of compa.tibility betKeen the air traffic
control equipment and the installations used in the individual European
countries. It declares that it is equally concerned over the tenafons and
disruptions in the airspace of Western Europe that result from the discantent
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amc~ri~ the air. traffic aontrollers with reapec~ to their working con~litj.ana.
The ~'arl~.amont d~ema it a,dvi.~able ~tha~ air traffie cdntrnllers nnt b~
c~nsidered national civil aervants~ and that they be conaulted as to the
chni.ce nf equipment they ase ob7.iged to uee. Yt believes tha~ the man~ge-
ment of air traffic should, over the long term, m~,ke it.possible to adapt
capacit~.e~ �rn tl~e d~mands nf air traffic rather than vice verea, as is
unfnrtunatoly the case today.
"Given the lack of integration in the fielcl of air traffic management in
Western Europe~ the European Aarliament advocates ~the creation of a single ~
agency for management of this traffic~ said agency to be eridowed with
executive powersi and it states i~s conviction that auch an agency--ane
- comparable to the American Federal Aviation Ageney (FAA)--xould make it
possible to establish stricter safety sta,ndards but would at the same time
reduce the operating expense of air traffic control and of aerial navigation
in ~eneral.
Lack ~f Pnlitical Volition
"The Eur~pean Paxliament regrets that the lack of political volition has
prevented Eurocontrol ~rom fulfilling the role it should play in a ma,jor
par�t of the airspa.ce of Western Europe~ and it invitea the signatories to
the Eurocontrol convention to assume the responsibilities of a'Europea,n
A~;ency for Air ~af�ic.'' In the event (also because of the lack of polltical
volition) the present si~natories of the Eurocontrol Convention do nat
succeed in achieving thia ob3ective~ the Conunittee--and the member atates
- of the Community--should take the initiative of creating such an agenc~,
xhich kould integrate the exiating personnel~ ~urisdictions and installa-
~ tions of Eurocontrol."
After citing some of the obstacles to a Community approach to the problem--
the 1ega1 and technical constraints that very seriously 11mit the activittes
of the Committee~ the fact that this problem ia not anion~ the priority
actior~s a.d~pted by the Council in connection xith ~he aerona,utics program~
as well as the non-Community charaCter of the Eurocontrol convention--
Committee member Burke stated in conclusion that the Commi.ttee would without
fail. stuc~y the exceptiona,lly Kell researched documentation that the E~aropean
1'arliament has assembled on the sub,ject.
The followir~g three significant passages from the explsxiatory atatement
accompanying the draft _resolution are also xortt~y of notes
"The Committee has been glceatly encouraged by the reception that all parties
have accorded this initiative of the ~ropean Pa~rliament. It believes that
heaxings of this type~ when held at the desired location, are one of the
most useful instruments at the Pa,rliament's disposal for performing its
investigatory functions~ not only xhen it atudies the specific proposals
of the Committee but also--as in the case of the present hearing--xhen it
itself proposes the areas of activity in xhich future a~tion by the
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' ~nx nrr~cl~, us~ ornY
Community Cnu1d posaibly be urulextaken. This ~.s pa,~ticula~l.y true wheri the
c~mmittees af, the Eur.~poan E~arliament are dealing with matters that have
diroct impact ~7n the 11ves and wel].-being nf the people~ of the Cammunity.
"An effectiv~ ~ystem of air traf�ie cnntrol muet be organized on a supra-
national basis~ a~nd...intensive cooperat~.on in Eurcpe responda to a ma3or
imperative that derives from Europe's particulax geographic canfiguration. �
Ai.r tra,~fic control is only one of the aspec~ta--an easen~ial aspea~t~ to be
aure--of air traff3a ma,nagement~ and it should be remembered that at the
time of the failure to establish a centrallzed air traffic control aystem
it was no~ anticipa,ted that Eurocontrol would limit its act~.vitiea to the
airspace of the seven member countries of the Community of that day. ~ur~-
contxol is~ moreover~ not a Conununity organiza,tion~ although some af its
member states be~ong to the Community. Even in a 12-member Community,
hnwever~ the very nature of air traffic management makes it difficult to
_ conceive of an exclusively Community entity that would be capable of
assumin~ complete responsibi.lity for all aspects of the management of air _
traffic in its airspace. This does not mean, on the other hand~ that
coordination and cooperation should not exist to the highest possible
degree in the countries of the Community~ alxays on condition tli~t they be
accompanied by the appropriate contacta not o:~ly among the member atates
thomselves but also bstween theee atates on ~the one hand and the other
F;uropean countries. Cooperation within Europe exiats naturally by virtue
of the membership of the European states in interna.tiona,l organizatians
such a.s the OACI [Interna~tional Civil Avia~tion Organization]~ but thia
cooperation should be expanded and intensified.
A Pan-European Authority
"The Committee approves without reservation the statement ma.de by Mr
Hammark3old general ma.na.ger of the IATA [Interna.tional Air Transport
Association~, who during the public heaxing cited 'the necessity for a
Pan-European authority endowed xith executive poxere to formulate long- and
madium-term programs, including implementation programs, in order to have
available all those means that xill be required for putting in place an
efficient~ inteEgrated and comprehensive air traffic control system in
_ � Europe.
"It is obvious that such a system xill not be created overnight, and that
it will take form progressively. In common xith all the participants~ thF
Committee believes that the E~ropean Parliament has the duty to utilize
to the maximum the aurveys and the hearings--such as the present ones--
which have resulted in the present report~ and to continue to bring pressure
to bear on the Council of Ministers~ the Committee and the governments of
the member states in order to ensure that the Community will pla.y a positive
role in putting this system in place. The appropriate committeea of the
" Parliament should therefore be invited to follox closely the evolution af
all a.spects of the ma.nagement of air traffic control~ including technolo~i-
cal advances~ meteorology and xorking conditions." ,
COPYRIGHT: Air & Cosmos~ Pa,ris, 1979
1oq92
, ~cso: 3l00 3
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COUNTttY S~CTION TRANCE
PCF BANKI~iG ON CRISIS, VIOLENCF TO 1tEGAIN VOTER SUPPORT
Paria VAL~URS ACTUELLES in French 19 Mar 79 pp 21-22
[Article by Andre Lesueur: "Policy of A11-Out Aggravation"]
[Te:cC] The French Communist Party is banking on the crisis to halt the
erosion of its voter support, counter the building of Europe, and reduce
disaension within the party.
The crisis, indeed even violence, are now part of the communist logic. On
Tuesday the 13th, some 300 communisti demonstrators from t:_~:~ department of
Val-de-Marne, Georges Marchais' department, led by their' ~tected officials,
occupied the offices of DATAR (Delegation for Territorial Deve~opment and
Regional Action). A week earlier, when rioting set Denain aflame, L'HUMANITE
expressed little alarm at the mounting violence. In the field, both in the
North as well as in Lorraine, elected communist officials were doing their
utmost to assume leadership of the varioua demonstrations.
The PCF has chosen Co aggravate the current tension. At a meeting of com-
munist ~ournalists on Friday 9 March, Roland Leroy, editor of L'HUMANITE,
explained from what viewpoint the party press must henceforth depict all
demanstrations, violenC or not. In essence, he told them a11 demonstrations
had'to be encouraged, sven occupations of company offices, and even those
demonstrations which may be akin to sabotage, such as the damaging, the
previous week of pipelines designed to carry Dutch natural gas to the
Usinor plant in Longwy. The only restriction: co~nunists may not endorse `
the use.of firearms.
This policy of all-out aggravation must be viewed in the light of three
coming events: the cantonal elections, the direct election of the European
Assembly in June, and Che 23d PCF Congress in early May. ~
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CanConal Elections
This Sunday nighr, Geor~~es Marchgis is expected to awaiti tihe �~.rst-round ~
election returna with s~me trQpidation. Hie~fear is that they may ahow
�urther eroeion o� communiat voter support, thereby po~siblq confirmittg ~he
his~orical characeer or' Che PCF's electoral decline.
It ia to avere ehia particular danger Chat communieCa have everywhere be~n F
making m~re extravagant promisea on social welfare iseues in order to gain
votea: iu the East, where the latest legislative el~c~iona revealed a
sharp shift af the working clasa vote in favor of the Socialiet Party; in
the North too, where ~ommunists are afraid of the increasing popularity of
Pierre Mauroy, Che sociallst member of parliament from Lille, mayor of that
city, and chairman of the regional council.
By banking on aggravated t~nsi~n, rhe cCF could hope for recu~trence of that ~
phenomenon whi~rh invariably accurs among vot~rs in times'of crisis:
desperate pereons go to extremes and those who are afraid rally round�the
incumbent office hnlders.
European Elections
For the past 6 moriths, communists have been striving at every turn to estab-
lish a connection 'bi.tween France's current social criais and the constru~tion
of EuropE. The banl~;rupt situatian. of the ateel industry? It is due to the
"German k,onzern" [tr~tsts]. The slump in tb~ ..tvestock ind+ustry? It ie the
result of the a.pplication of compensatory du:tes. Viticulture's difficulties
in the SouthwesC? These would be aggrayflted by the entry of Spain and Portugal
into the Common Market. Argumentation couched in language which Edmond Maire
~ould label as sheer "xenophobia," directed pr~rticularly against the Federal
Republic of Germany.
"If defending France, the steel industry and our planta, the ~ob~ of our
workers, i~ fighting to preserve France's independence, if all this is
nationa~ism, then I am a nationalist," Gecrges Marchais unheaitatingly
declared in a statement televised on 13 March.
`The mounting tension in France can but add fuel to this campaign to discredit
Europe. As a mat~er of fact, the crisis prompts public opini~n to fall back
on the more sharply defined positions.
On Che issue of Europe, however, these positions or views converge: Michel
' Debre is not less nationalistic than Georges Marchais. Consequently Chirac's
movement may, paradoxically enough, benefit from the PCF strategy. Yet thia ~
possibility does not seem to disturb the communist leadership. In all of his
public statements, Marchais avoids making any attacks on tha RPR [Rally for
the Republic]. Last week, after the rioting in Denain, Radio Moscow expressed
satisf~ction at the fixm and reasonable atti~ude taken by the RPR in France's
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social criais: Radio Moacow'e comments are undoubtedly noC unconnec~ad with
whati is being said ina~.de ehe PCF. Indeed, aome communi~ts are beginning eo
rebel againati thi.a "convergence" betiween their parCy and Chirac's party.
One auch group is the "Strugglea and Debates" movement made up of inembere
opposing the PCF's presenC leaderehip.
~ Th~ 23d PCF Congrese
In view of the open outburst~ of d3ssent fol.low3ng the legisla~ive electio!as, `
this congreas was promising to be a seormy one. In th3s connection, however,
the social crisis and the Eurnpean debate have b~en a god~end for the PCF
leaderahip. They have enabled the latter to put a damper on demands put:
forth by dissenters relative to internal party democracy and the parey's
evaluation of socialist countries. As a reault, such diasenters now have
no choice but to remain ailent or appear to be undermining ~heir party's
war effort.
In thus rev3ving its former party line, the.PCF ia making a stiff wager on its
ability to reverse a l0~year ald downward trend. The fir~t teat of this
ability occurs with thP cantonal elections on Sunday.
COPYRIGHT: 1979 "Valeurs actuelles"
8041
CS0:3100
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COUNTRY SECTION FRANCE
MILITARY'S PER50NNEL STRENGTH OUTLINED
' Paris AIR & COSMOS in French 2 Jun 79 p 36
[Text] 7'he JO (Official Bulletin] for 23 May 1979 has published the~text
of a decree pertaining to the distribution of the authorized military per-
sonnel strength of the Armed Forces for 1979. For all branches and ser-
vices, it amounts to 575,562, broken down as follows: 319,745 for the
Army, 100,810 for the Air Force, 68,246 for the Navy, 77,306 for the Gen- ~
darmerie, 190 for Military Justice, 6,866 for the Armed Forces t4edical
Services, 2,192 for the General Delegation for Armament, 63 for Central
Administration and 144 for the Inspectorate General of the Armed Forces.
The following are included in this overall personnel strength of 575,562:
17,844 for the S~rategic Nuclear Forces, 7,190 for the Tactical Nuclear
_ Armement, 385,353 for ~he conventional forces and 17,343 for the overseas
forc;es.
By systems, the following is the distribution according to each of the Armed
Forces:
Armyl Air Furcel Navyl Gendarmeriel
E'NS2 2,538 10,355 4,228 723
(168 + 753) (767 + 5,184) , (299 + 2,508) (27 + 696) ~
~3 6,075 1,040 75
(315 + 960) (127 + 772) 75 noncommis-
sioned o�ficers
Conven- 231,446 52,204 34,644 66,988
tional (10,216 + 37,789) (3,374 + 24,076) (2,057 + 14,094) (~,686 + 62,350)
forces
Overseas 1~,738 1,700 1,931 2,969
~ forces (519 + 2,132) (120 + 883) (122 + 679) (80 + 2,889)
[Footnotes on next page]
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1 In parenthesea, the number of active-du~y officers and noncommissioned of-
�icers
2 Strategic Nuclear Forces.
3 Tactical Nuclear Armamen~.
The D~~A [Generai Delegation for Armament] has 71 ofticers in the conven~ional
forces and 5 officers in the overseas forces.
COPYRIGHT: Air & Cosmos, Paris, 1979
10,042
CSO: 3100
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COIiNTttY S~C'TIf~N
FRANCE
:i
CORSICAN ~EB~tLION S~~N H~ATING UP EtAPIbLY ~
- P~ris I'ARIS MATCH in ~r~nch 6 Jul 79 pp 48-49
~Articl~ by I'ierre Pasquini gs r~porCed by Yves de SninC-Agnes :"Car~icn:
A N~w Algeria?!'/
~TNxe! "I'm frighren~d: Corgica ie becoming another Algeria. It is impos-
sibl~ noe td be struck by ehe similarity between Che progreasive deCeri,nretinn
of ehe situarion in Algeria afeer 1954, end the esc~luting aepar~Ciam Corsica
h~s experienced since 1971,"
Pierre Pasquini, 58-year old attorney, mayor of Ile Rousae, RPIt ~Rally for
Che Republic/ depuCy from CorCe Calvi and vice preaident of the National
Asspmbly knows what he is talking about. Not so long ago part of the .
diuspora sprinkled Chroughout France's overseas territori~ss, and now reaiding
in ~'rence, Pasquini has reluctanCly played Che role of Cassandra since 1971.
A former officer of Free France, Pasquini followed the painful stages of the
Algerian drama from 1954 to 1962. And for the past several years, the cres-
cendoing violence in Corsica has brought him to sound the warning aignal again
and again. Because it is starting all over, worse than ever. And 1979 risks
seeing French unity torn apart by faction once again. The French people are
at ~ loss for what to do, and Napoleon must be turning in his grave.
Fnrty-two Acrs of Violence in 1973, 480 in 1978
"It's later than we Chink," said Pasquini, "and iC has to be said. .In Coraica, �
just like in Algeria, the SCaCe has had iCs head in the sand, and so has the
ma,;ority of the people. In November 1954, when the Algerian siCuation ex-
plnded with the murder of a couple of teachers back in the Aures, hardly a
murmer was heard in Algiers. 'That could never happen here,' sai�d the augurs
of Che Rue MicheleC bisCros.' Later, during the battle of Algiers, scepticism
found refuge in Oran. 'Thoae people in Algiers don'C have any guts,' acoffed
tite inhabitants of Oran. 'Let the terrorists come here and they'll find out
a thing or two:' "
Pasquini's chiseled, classic features have nothing of the fanatic in them.
And if his deep, ringing voice sometimes ahakes with anger, it ia free of
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.
~iny Crn~c~ nf. ~v~~~xeiC~mEnC nr fr~n~y. Wh~~ d~~~ Ch~` C~11 u~? It e~11~ u~
thuC, ufl:~r luciki�g ne Cha figur~~, w~ ~rg fnrc~d Co c~dmi.C Chttr Iii~ anxinCie~
nr~ in nh wuy ~x~~g~rar~d, 9~rw~en 1954 ~nd 1971, th~re wa~ a e~e~1 n� 1n9
c~cCg n� vidl~nc~ i.n Corsica commieeed by groupe demanding autonomy~ AG ChnC
rime, Pnsquini Cri~d Co brin~ the ga~h~ring gtorm ro ehe ~eC~nrion di th~
MinisCry of rh~ Int~rior ~nd Ch~ l~r~e d~i1y p~pers~ "It's a11 rubbish,"
r~pli~d Ch~ ha~d nf Che de Frey ministerial etaff, Pi~rra Somv~ille (Cod~y
pr~fecC r~� police). Th~n, 3n 1912 ~lone, rhere wer~ 12 ecrs o� viol~nce
cdune~d, and ~ftar thar eh~ incraaae becrim~ almdeC ~xpon~nrial: 42 in 197~, ~
111 in 1.974, 226 ~.n 1975, 298 in 1976 and 480 in 1978. And ehne i~ noe all; `
Th~ incr~~~e w~g noe only qu~nriteCive, bu~ "qualiC~Cive" as well~ Gnn~ ~r~
Ch~ ine�f~ctugl "b~ng b~ngs" of the early years~
Corsic~ Eneers the Phase of Fear
' The more re~ent ~cts of violence have been large-acale: ~s ~ar1y as _
Mgrch 1974, an Air Inrer Car8ve11~ ~et ~t Che B~sti~ ~irport w~s bomb~d;
nn z2 March 1975, ie w~s ehe Curn of a Boeing 707 in A~~ccio. Anoeher gianC
seep wtts tiaken on 22 Auguae 1975, when a man wae killed. The separatige~
killed Cwo g~ndarmes during ~n aCeack on the police. And on BagCi~'s walls,
aldng witih scribbled signs reading "I Francesi �ora" (ouC with Che ~'rench),
flouri~hed the ignoble graffiei whtch read "Coraice 2, France 0." TheC was
only a tempnrary gcore, becauae s.~ortly afterwards a member of the C1tS
~Republican Security Companies/ was killed during a aiege of the new pre-
feceure. Out with ehe French? The separatisCa must have rubbed their handa
in glee, as here were already three Frenchmen leaving the island--in coffins.
One cannot help buC be reminded of the famous "suitcese or coffin" alogan
used by Che FLN in Algeria.
"These rwo movements presene sCrikingly similar profiles," says Pasquini.
"In Algeria it was Che FLN and in Coraica it is the FLNC LCorsican National
Liberation Front/. In both cases, the early acts of violence were committed
againsC property, and Chose acCs were difficult to distinguish from ordinary
misdemeanors. During Che second stage, responsibiliCy for violent actions
of this sort was claimed by groups aspiring to internal autonomy. The next
stage saw a further hardening of attitude, and the demands changed from
autonomy to independence. From then on, attacks were directed ~t public
buildings and people. The reactions nf Che Algerian and Corsican people
were also quite simi.lar. AC the beginning, the insurrection fomented by
a violent minority wenC pracCically unnoCiced by the majority of the popula-
tion. Think back Co 13 May 1958, when Pieds-Noirs and Moslems gathered
together on the Forum in Algiers to cheer the name of France. That was
4 years afCer the beginnings of the revolution, buC also 4 years before
French wirhdrawal. Once the panic implanted iCself in Algeria--when civil
servants no longer dared go into the douars Lvillages consisting of tents or
huts encirclin an open space/ and avoided visiting the gourbis Lsemi-
permanent huts~--withdrawal became inevitable. Well, Corsica is entering
exactly the same phase--the phase of fear--right now. From Cape Corsica to
Bonifacio, from Aleria to Cargese, the Corsican National Liberation ~ront
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(FLNC) "c1d~~ wh~~ ie lilceg, g~rtk~s wh~ra ie 1ik~~ ~nd wh~n iC ~.ike~."
Und~r ~hg~a eundi~ieng, ir i~ noC gurprisin~ thae Ch~re is ndC a publtc
building (in~luding ehe ~~nd~rmeriea) or ev~n a sereee si~n which has
mnn~~ge.cl tn CgCi1p~ rc~valucinnary gr~ffi~i, Ev~n more diaturbing is Cl~e facC
~h~~r g5 h~re~ne uE eha v~c~Cinn hdmue dn Cap~ Coraie~ h~va been b~mb~d.
Itr~thar L~~nuNpicluu~ t'c~r c:ur~ienn Cc~ur.iem~
Ser~~C~ N~~ S~f~
"A11 ~hi~ h~pp~n~d 3u~r when winti~r eaurigm was ~tarCin~ Co pick up," commentad
Ch~ I1~ ~~~gge m~yor~ "C~r~ic~n officiala had ~uat obt~ined, throU~h ~n
higtnric dacigi~n, y~ar-round air nnd etie~mahip service~ A bert~r furure
w~g in Ch~ nffing. Bur the reality ta much harsher. After nighefall, Che
gcane ~orces of eh~ g~nd~rm~ri,~ barricade tihemselves~ From rhen on, the
~ere~Cs ~re no lnn~~r g~f~. The fear ia even felt on the continent. Oeher-
wig~, hnw c~n you ~xpl~in th~t the Coraic~n ~diCion~ ~f NICE MATYN ~nd eh~
PR~VENCAL publish ~LNC cnmmuniqu~g aithour changing them one inta. In these
Cwo widely-circulating ~r~nch n~w~papers, I have reafl veriC~ble c811~ to
revolueidn ~nd form~l candemn~eions o� ''Erench coloni~lism.' The editors
af the newspap~rs in que~tion, already guilry d� encouraging ~tr~cks on
naCion~l gafeCy, do not dare atraah any aore of correcCiv~ commentary to
these m~nifegros~"
PnCrintism nf the Over-40 Generetion
itcnding thes~ astonighing communiques~ ~ne wond~rs if Pterr~ Pagquini's
Algerian-Corsican comparison did not stop somewhere ahor~ of the truCh.
~ The Algerian FLN had to dietribute its underground paper EL MOUDJAHID at
its own risk, if ie wanted to get its word out. By publishing its com-
muniqueg in the French news~apers, the FLNC is smashing a11 records aet by
its Algerian predeceesor. What kind of impact are the aeparaCists
having on public opinion? In September 1975, a SOFRES ~French Opinion
Polling Company/ survey gave the following results: 55 per~~nt of Coraicans
were satisfied with the present status; 38 percent supported autonomy within
the framework of ehe French Republic; and 3 perce~t Wanted independence.
What does Pasquini think of these figures?
"This kind of tf~ing glways has to be taken with a grain of sal~. IC is not
alwgys easy to make a distinction between a sincere autonomisC and a disguised
separaeist. Look et Dr. Simeoni. He claima, now, to be fighting g nonviolent
- baCtle simply Eor internal autonomy, and nothing more. This is a new
position for him to take. What he did in Aleria hardly resembles nonviolence.
Maybe he has simply been overridden by the more violent wing of his movement.
In my upininn, Corsicans of the over-40 generation still shos+ a strong
French petriotism, not unmixed with a marked particul~riam. They are per-
meated wiCh French culture, served in the war and took part in the French
colonial adventure."
Amo~g the younger generation (from 15 to 30), the eaw tional ties with
~rance are more easily broken, and the younger generation represents
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_ Cw~-Chtrd~ df Ch~ igl~nd popul~tion. F~~nne, now reduced tin ies naCidn~1
bound~rt~~, c~n nh 1ong~r offer th~ expan~i,~n and advdntiur~ i,r once cnuld.
~rdm ehe vi11~~~ ehief in ~quaeorial A�ri.ca to the peeCy of�icer ~C~Cion~d
ati Tonktn Co the eusComs of~icer aC some distiane bordgr, Corsicana in
drov~~ ug~d ro fill publi~ o�fiags whiah ~he loss of French terriCoride
h~s e1iminarQd~
"You know," coneinued P~squ3ni, "during tihe period of France'e 'gre~eneas'
naiCh~r Cc~rgic~ng nnr Frenchmen worried tioo much abou~ imprdving the i~Land's
~oci,~l or econdmic sCruceures. Lord knows ~here were enough Corsican
mini~C~rs and ~1~cCed nffici~ls under the Third and FnurCh Republica: t~ue
Chey w~re ~~~isfied wiCh gpttiing a job here, a cigar gCore thare, or an
incr~ased pension. Corsicans asked no more than rhat at Che Cime, and had
no desire ro se~ ~he old country trac~s�ormed ineo an induaerial or ~auriae
compl~x."
~.5 Billidn in SC~tie ~unds
~oday, Che winds o� time have once and for all toppled this patriarchal
org~nizat~on~ Bur ts Coraicg really any worsa for iC? NoC according to rh~
Eigur~s: 420 million fr~ncs were allocaCed to pnblic serviceg in 1976,
c~gainst 220 million in 1973. State subsidiea ~or public utilitiee went
from 110 million franca in 1973 to 375 million in 1978. The ro~al amount
~ssigned to social welfare servicea was 115 million in 1973, and 218 million
in 1976. To sum up, SCate fund~a allocated to Corsica amount to 2,5 billion
francs, while taxes paid by Coraicans only amount to 700 million~ Simply,
thar means that each tine France collects 70 centimes in Coraica, it returns
2.5 francs. Then what is there to complain so loudly about in Corsica?
i'ublic S~fety h~s PrioriCy
"~'or a short time now, the governmenC has been going full sCeam ahead with
economic developmenC," Pasquini said. "And that brings me back Co my
Algerian comparison. What good did it do to pour billions of francs into
the ConstanCine plan and Che Bone iron and ateel plant in a politlcal
situation which France no longer controlled? What resident of Algiers was
going to ,~ump for joy about the conseruction of a bridge, when a fellagha
was threaCening his safety and his belongings in cese of "collaboration"?
With Che aituation as it is now in Corsica, priority should be given to the
reestablishment of public safery. The Roman a~age 'Spare the rod and spoil
the child' came from a time when Rome was a mighty power. But the clemency
of Augustus came from the same period. And then, there is imagination: for -
10 years, we were told Chat it was going to taka power. We muat set aside
grand cultural and poliCical plans, and not lock ourselves into great `
principles. Alsace-Lorraine has a speci~l statute covering religion and the
law. Somewhere between overconciliation and excessive severity, there is a
middle path."
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Iy ie rac~ lurn ~n imprnve, reform and prevent a serious mi~underae~nding
~�rnm b~cnming ~ cnt~serophy? Or will we go ahead and sell off Cor~ica,
Brieenny, rh~ Lan$u~dnc, Cha Baeque countiry, Als~ce and un and on, only
en ~ind ourselvee beGween "a~uChenric" F'renchmen aqueezed inro the territory
of what w~s once ehe Seine-er-Oi~e, with the island of MavoCte for oux
v~cgrions, since ir hgd to pracrically go to batitile Co remain French?
P~gquini is neiCher pesaimistiic nor optimistic, but Criea Co look clear.ly
~t ehe situg~ion:
"Things can sCill be saved~ Bue we hnv~ to ace quickly, Cake inieiatives,
ei~hten a screw here and loosen one there. One word say~ ir all: govern,
L~~ uy noe hesiCaee Co do iC now, becauae tomorrow will be too late.
COPYRIGHT: 1979 par Cogediprease SA
11935
CSO: 3100 '
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I~OEt dPCtCtAt, U5 nNLY '
COUNTltY S~CTION FRANC~
CHANGES IN~ARMORED DIVI5ION MAK~UP, MZSSION OUTLINED
Paris ARM~ES D'AUJOUItb'HUI in French Jun 79 pp 61-62
(ArC:lcle by Army Corps Gen Bertrand de Montaudou~.n:* "Armored Division 77--
Z'he 'Smallesti Big Un~.t"']
[Text] A ma~or ineeraervice unit, the armored division is now the amallest
formaeion of forces combining a commiCment of attack and supporC weapons to
execut~ operarions decided by the arnry corpa.
In the earlier setup this responsibility fell to brigadeg while the division
rhen had the task of coordinating the operationa of several brigades and of
their environmenC. Why was this change made?
The mechanized brigade of type 67 lacked as-mor: Its approximately 100 tanks
of which 50 were scattered among mechanized regiments no longer enabled it,
in the European theater, to face large modern armored and mechanized units.
In addition, its means of army engineering and logistical aup>>ort did t~t
endow the mechanized brigade with sufficient autonomy.
Furthermore, the existence of two levels of command--the division and the
brigade--among the regiments charged with Che executiion of operaCibns and the
army corps responsible for over-all strategy and noCably coordination be-
tween nu~lear and conventional weapons precluded satisfactory response time.
It was thus necessary to ease the chain of command for operational reasons
and this coincided with the need for saving on personnel without reducing
the number of front-line troops.
. *Army Corps Gen Bertrand de Montaudouin is a graduate of the Saint Cyr
military academy, class of 1943. He took part in the French, Indochinese,
and'Algerian campa~gns. After commanding the 6th Armored Regiment, General
Montaudouin became head of the group of Coetquidan schools, ~oined the
personal general staff of the French president, commanded Che 7th Mechanized
Brigade, and was director of advanced military, scientific, and technical
instruction. He is now inspector of the armored cavalry branch and member
of the Higher Army Council.
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;
~
, i~'dlt U~'CZC lAL US ~ nNLY ~
mh~ eli.minaeinn of on~ leve~. nf command ~hus became n~cegsary, but sub~ect ~
~ rd nn imprdv~menr in rh~ m~ans of commun~.catione. Surveys and experimente ;
indicnCed th~e th~ new equipment made tihie posa~.ble~ someChing which tiruly . !
1~rg~-~c~le maneuvers have cnnfixmed.
~n iCs existing gt~t~ ehe armored diviaion ie Chua th~ beat comprom~.se berween ~
rh~ r~yu~.r~d pow~r ar~d the imperaeive o� direc~ connnand: It is Che "smallesC
big unir."
~ Under the Sign of Dnring I
Armored Divigion 77 comprises seven regimenCs as follows: ;
1. Two tank regiments wiCh four Cank squadrona and one mobile squadron.'
2. Two mechanized regim~nts with two mechanized companies and two eank ~
companies. ~
3. One artillery regimen~ with four batteries of six guns of 155 mm.
;
4. One army engineering regimen*_ with equipment to cross waterways and
obsracles.
5. One command and support regia~ent including meana of communications,
circulation, transportation, material support, and medical facilities.
i
Additionally, the division has a reconnaissance squadron available to acquire
information ancl proCect iCs personnel as well as a company of VAB/HOT [Armored
Attack Vehic].es/expansion unknown] improving its long-range antitank capability.
In all, Armored Division 77 has one chief in command of 7,000 men serving '
500 armored units including 150 battle tanks to fulfill the combat missions
entrusted to iC direcCly by the arnry corpa.
Firepowar, mobility, and flexibility are the principal characteristics of
the armored division. The firepower is provided by the 150 tanks and their .
support uniCs, mobility is assured by the mechanization of its combat
capabilities and its logistical autonomy, and flexibility is made possible
by its four-level structures.
In the face of an adversary threatening to be superior in over-all number,
this armored division has to operate so as to be locally and temporarily in
a position of sCrength to throw the adversary off balance, to disorganize '
him and to destroy him. Like a"high sea squadron," the armored division
must be capable of "diverting" ita thrust of operations in very short order.
Avoiding frontal aCtacks, it will contrariwise strive to find a weakness in
the enemy's setup, creating it if necessary in order to infiltrate it and
to hit the sensitive and vulnerable zone of the enemy where his command posts,
support units, and supplies are located. Any raid, even on a small scale,
in the rear of the enemy on contact 3eopardizes his operational capability
and makes him vulnerable. The adversary's deatruction is then possible.
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~U[t Ol~i~'~:CIAL USr ONLY ,
~hus, wllnt is invnlved gr~ sys~em~ttically exclud~,ng slow devel.opments Ar~d
reg~.d muncuvers. It ~.s under ehe sign of daring and ~.n:ttiat~.ve ~hdt ~'ne `
comb~t nf ehe armored d~.vision wi~.l take placQ: 7'he ~.nsCrucCion and txai.ning
nf the units are nr~.ented alnng th~ae lines.
This style of action ia noti new, 3.ncidentially~ It ~.s thr~e of the operatinna
of ehe lat Armored Division in Provence and in the lthone River valley or
Chat of Che 2d Armored Division in ~.ts operatiiona in ~he SCrasbourg re~~nn.
More recentily, during the Yom Ki.ppur war, it was ehe e~ctic of the armdred
group of [Isrneli] General Sharon surrounding the ~gyptian Third Army and
transforming ~o its benefit an initially dangeroua situaCion.
Team Work
In order to wage its mobile combat, the armored division needs help.
It firsC has tu be protiected against the adversary in ehe sir. While, during
an engagement, advance elements in contacC are hard Co identify by aircraft
flying at very high speed, the armored division with its 1,800 veh~cles is
very vulnerable to air aCtacks, especially during its movements along roads.
To proCecC it against such a threat, the army corpg has Hawk and Roland
missiles which complemen~ the general protection asaured by the air force,
the division having numerous self-defense weapona available at iCa level.
During ies operatinns the armored division must be supported by effective
arCillery. The means of its own artillery regiment will not always be
sufficient. The division will then be reinforced by Che arCillery of the
army corps. .
Mobiliry can be checked by natural or arCificial obstacles. Undoubtedly,
the caterpillar tracks of tanks and accompanying equipment, the "submersi,ble"
capacity of the AMX 30 tanks, the amphibious characteristics of the AM}C 10
tanks, and Che army engineering capacilities of Che armored division endow
it wiCh a certain degree of autonomy, but it will often be necessary to re-
inforce Chese means.
Mobile op~rations need to rely on large thoroughfares, whether what are in-
volved are ma~or communications centers, generally in urban areas, or areas
difficul.t to cross. Infantry divisions will provide armored divisions with ,
the necessary assistance in Chis field.
Tanks and helicopters are ~:omplementary in modern combat. To be sure, it is
not a matter of superimpos~ng equipment having very different potentials, for
this would be to limit both, but rather of coordinating their efforCs. Thus,
operating according to their own procedures but in close linkage with ground
troops, helicopters extend the operations of the armored units by doing re-
connaissance work and by providing cover and expanding their op~rations.
For reasons of organization and in order Co use to best advantage the pos-
siblities offered by their great mobility, helicopters have beect consolidated
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~
Fnlt ~F~~C [Ai. I151. UNL~'
u~ l:he ].ev~1 ~f the army corpe bue mo~C oftien ehey will operate to assiat
tlie nrmored divi~inn~. -
Finglly~ rhere i~ ehe assiseance of the log~.~t~.ca1 brigade which mgkes it
pn~sible for the divieiona to continue operations, the la~ter having the
capab~.liCy of 3-day aueonomy but needing suppor~ in the ehreefold nrea of
supplies, medical faciliriea, and maintenanae.
To Prepare Tgctical Nuclear Firepower and Itis ExploitiaCion
'The nrmy corps is Ch~t level aC which Cactical nuclear weapons are uaed,
the armnred divis~on helping in the preparation of the strikes and ineur~ng
rheir exploiCarion. However, the decision to use these weapons which liea
exclusively with ehe political authority can be deferred. At any moment
the armored division must thus be ready to change ita thruse. Whereas iCs
acCion was oriented to tihe preparation of a sCrike, the order can be to
pursue conventional combat �or a certain period. Contrariwise, the deciaion
to uae tactical nuclear weapons can be made at a time when one of the divisions
is engaged in acrion involving a clash with adver.sary forcea. Leaders at
all levels must then be ready on a pernianent basis to f~ce unforeseen aitua-
tions and must t~ain for them in peacetime.
Through its firepower, mobility, and flexibility, the armored division is
thus a well-adapted instrument Co meeC the demands of modern warfare.
' IniCiative, daring, capability Co rapidly change i~a thrust and be ahead of
events are the principal qualities which cadres muat posaess to wage a
mobile, changing, and constantly dynamic combat.
COPYRIGHT: 1979, Revue des forces armeea francaises "Armees d'Au~ourd'hui" ~
2662
CSO: 3100 '
~
~
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ro~ oi~~~crAr~ US~ ONLY
COUNTItY S~CTION ~
ORGANIZATION, DUTIES OF ARMORED RECON COMPANY NOTED
Paris ARM~ES D'AUJOURD'HUI in French Jun 19 pp 65, 13 -
[Article by CapC Yves Kermorvant:* "To Do Reconnaissance for the Division's
Movement"]
, [Text] "The basis of any milltary operation is, firat, a knowledge of the
Cerrain under its twofold defensive and offensive aspects, then thar af ~he
position, power, and if poasible plans of the enemy" (General de Brack).
Established in 1977 at the time of the army's reorganization, the reconnais-
sance squadrons of the armored division are the heirs of the brigade recon-
naissance companies.
BuC they are significantly different from these and for three reasons at that:
1. The aCtachment of these squadrons to the armored cavalry unit.
2. The creation of armored diviaions.
3. The advent of new means of communications, reconnaissance, and antitank
combat.
While they have only slight influence on general organization, these changes
have been felt in a more noCable way in the parameters of the operational
zones and principles of use.
' But before everything, why an EED [Divisional Reconnaissance Squadron]?
*A graduaCe of Che Saint Cyr military academy of the General Gilles class
(1969-71), Capt Yves Kermorvant was squadron chief with an AMX 13 tank unit
and then with an AM~C 30 tank unit in the 2nd Light Infantry Regiment. After
assuming the command of the training squadron in the 5th Dragoons Regiment,
he has been commanding the reconnaissance aquadron of the 3rd Armorded
Division since its creation on 1 September 1978.
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~'nEt nNI~'ICIAL i15~ ONLY
' 'Ib Cufirnnt~~ elie Aggregate Sgfetiy of the Divieion
.
The arm~red division ie the mu~or base unir: It cannot be commit~ed effec-
tively agninst ~n enemy that is probably more numerous unlees the division
:L~ informed~
Th~.s is done by the higher echelons. However, auch inf.ormation provided by
the air force, radar stttCions, and liseening poats must be made fine-tuned
and confirmed 3n Che f~.e1d constantly.
The captain in command of a reconnaiasance squadron has the fo].lowing
ava~lable for his "informaCion gathering" acCivity:
1. Means of surveillance: These consisC of Che two groups of squadron radar
staCions. Each of these groups has ~wo "Rasura" units which make possible
surveillance of the baCtlefield day or night and in all weather.
2. Means of reconnaissance: These consiat of nine patro].a divided into three
platoons. They are characterized by mobility and secrecy.
3. Fin~lly, the EED has the following means to insure its firepower: Three
two-piece Mi1an missile launchers. Each of them belorngs to a platoon to
which they provide an extension of antitank defense but can be consolidated
3nto an antiCank platoon then having six units.
In all the EED has the following: ~
52 vehicles including 40 Jeeps.
Eight radar stations (Five "Rasura" units and three "Oli�ant"units).
Six Milan missile-launchers.
Nine 89-millimeter antitank rocket-launchers.
Nine 7.62-�millimeter machine guns served by six officer.s, 27 noncommissioned
officers, and 129 men of the rank and file.
The basic vehicle is the Jeep. The latter is obviously not a new piece of
equipment. But it provides Che squadron with extreme mobility owing to its ~
great autonomy (ran~e of 500 km),its small hulk, its speed along roads and �
trails, and its relative capability for crossing obstacles.
Its shortcomings are esentially its vulnerability to both conventional and
nuclear fire and its lack of amphibious capability.
The operational range of the reconnaissance squadron is that of the armored
division.
Its resources enable it to operate on a front from 20 to 25 km wide at a
distance of from 80 to 100 km of the divisional command post.
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~'OEt UI~r'~:CIAL US ~ dNLY
~n mo~ti ca~eq rhe c~ptu~tn must commit his ehree raconnaissance squadrone aC
~ single level, which averagea a zone of from 5 tio 8 km of frontil3ne �or `
each pl.atoon. `
In a~uropean thear~r of operations the patirols muati mnst often opera~e in
isolation over an iCinernry, the Mi1an miesile groups be~ng at tihe seCOnd
level of their plaeoong. ~
Widely SCr~Cclied SeCup
"How does the 1~.ght cavalry manAge Co do reconnaissance for the army7"
"By going ahead of our columns, do~ng reconnais~ance on their flanka, sur-
rounding them, providing cover wieh a vigilanti and courageoua curtain,
shadowing Che enemy step by atep, harasaing him, worrying him, aborting his
plAns. . . (General de Srack).
The EED's task is to secure and tranamit information.
What is involved most often is to define the enemy's paramerers and to con-
tinue contact up to Che time of the engagement of Che firsti level of the
division.
The seeking of information calls for a widely stretched setup which makes it
possible Co observe over the entire ~oidth of the zone by taking advantage of
all possibilities of discreet surveillance and infiltration in the enemy
setup.
At any rate, the information acquired must be transmitted rapidly, which
implies not only good use of the means of communication but also that each
one, at the lowest levels, should strive toward that goal.
It is necessary to avoid allowing oneself Co be located and therefore to
engage in combat only under very favorable circumstances or when a mission
mandates it.
The artic~llation of the platoons is generally unchanged. However, in order
to launch a significant antitank attack Che Milan miesile groups can be re-
grouped. ~
The EED musC be ready to subsist in the enemy's rear after leapfrogging or
penetrating deeply to continue to provide information.
Finally, initiative is indispensable at all levels to seize every occasion
to locate the enemy, to find weak spots in his setup, or to inflict losses
on him.
The study of the operaCional zone of a squadron shows that the base unit
cannot be the platoon but rather the patrol. Now, what is a patr.ol? It
consists of one young noncommissioned officer, a corporal, and four men.
~ . 20
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~OFt O~T~'~CrAL I151's dNLY
As fAr as equipment gnes, it has ewo Jeeps, one 89-mm rocket-launcher,
and one mach~.ne gun.
A sma~.l ct~ief, ~imieed means, but a"ma~or miesion!" For in part tt~e
divi~ton'~ oper.~ttons depend on ~hem: On their information, their ~gility,
Chclr ~kll,]~ rheir shrewdness, and their dar~ng.
'rhiq i~ whgt typifies ~ reconnaisaance equadron.
' COI'YRIGHT: ~.979, Revue des forces armeea francaiaes "Arme~s d'Au3ourd'hui"
2662
CSO: 3100
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_
~'UR O1~F~CTAL 1t51: qNLY
COUNTRY SCCTION FItANC~
INDUSTRY MINISTER llEFINES SPACE POLICY
Paris AIR & COSMOS in French 16 Jun 79 p 59
[ArCicle by Pierre Langereux]
[Text] "The space venture is too vasC for France to be able eo go it
alone; France has Cherefore chosen an internaCional pclicy which observes
both our concern �or independence and our concern for cooperation,"
stated French Minister of Industry Andre G~.raud on 11 June~ while visiting
the CNES [National Center for Space Studies] display aC the Le Bourget
Salon.
"The primary ob~ective of our space policy is Co situaCe Che French
industry in fields where, today, promising markets are appearing and
where it has a good chance of being competitive: telecommunications,
- direct television broadcasting, earth observation, and associated equip-
ment.
"It is obvious Chere can be no industrial mastery possible nor any real
~ independence in the space domain without free availability of launchera
enabling satelliCes Co be placed into orbit," the Minister of Industry
reminded, thus confirming the continuiCy of the French policy in that
regard.
Manufacturers' Charter
This presupposes "a sCrong and compeCitive industry" capable of facing
the international competition. "The French industrial potential of today
inspires confidence," considers Andre Giraud, but for thaC feeling to be
reinforced "it is important that a number of actions be undertaken.
"Manufacturers must strengthen the rigor of their management. They
should, in particular, achieve substantial gains in productivity, ener-
getically reduce their costs, tighten control over foreseeable delays,
and improve the service life and reliability of their equipment.
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~ "M~nu~~~tur~r~ mu~~ ai~o m~r~ C~~ar1y ~~~~rti eheir de~ir~, ~nd ~bi~.ity
, ~d exrort. 'I'hQir pr~g~ne~ updn ine~rn~e3onal m~rker~ mu~e b~ fureher
lncrc~ir~rd. 1 t 1H ~ppra~irine~ ~h~t tt~~y take over from admini.~trgtion~ ~
huving ,~uriKdlrela~i, wiehin wh~ch th~y wi,11 alweys find energet3c ~upport,"
rhp mi?ii~e~r g~~eed, re~allin~ Ch~ r~eent esrabli~hm~n~ of th~ Sae~i-
Cnn~~il Gi~ C~Cnndmi~ ine~re~e ~rdupj ~d the bireeCOrate of Ineern~tional
llugin~s~ w3el~in tl~e CN~S.
"La~e, m~nufa~eur~rg mu~r coneinu~, ~nd inCen~i�y, rh~ir reeearch and
dev~lnpm~ne ~ffore~," p~reieularly in ~he area~ of pow~r tran~mitrerg
f~r dir~ce e~l~viginn ~gC~llit~s, on-bogrd recordere for oba~rvaCi.ons
~~r~ll~teg, and ~bov~ a11, hi~h-powered cryogenic mot~re for the Ariane
roCk~e.
N~w Mis~ion~ af eh~ CN~S
in order ~o guppnre ehi~ m~nufgeCuring effort Che Mini~ter af Induatry
h~g mddifi~d th~ gCrucCur~ af th~ CNES which 3~ h~ncQforth r~spon~ibl~ ,
fnr "gtimul~ting Ch~ gpg~~ induerry, increaeing dialogu~ wiCh uger~ of
gpgcg, promnting our expore capab~.liei~~, and ev~luat~ng Che long term
gtakes. In addition ehe CN~S mus t, for the sake of efficiency and
comp~eirivenes~, provide particuZarly rigoroue program management," the
minist~r d~clc~red, in thug defining the ne~ missiona of the CNES.
It i~ for rhat reason th~t the Space Appllcation Council has been abolighed
gnd the role of the new administrative council of the CNES enlarged. B~- ,
yond managem~nt of the CNES, it is henceforth responsible for studying~
_ Eor the account of the government, the directione of the French apace
policy~.. with dynamism but also with moderation, the miniater etated.
"5upplier to cugComer type relaCions will henceforth be the rule between
the CN~S and users," Andre Giraud stated. "These rules are being estab-
lished by formal agreQments, by institution of program committeea, and in
some cases by constitution of special structures." Thus, for example,
Ceraud announced that construction of the TELECOM 1, the French telecommuni-
cations satellite, will be by an economic interest grouping of the CNES and
Gpneral Telecommunications Directorate (DGT).
Ambitious Programs
- "'Che goverttment is counting on realization of deffned, ambitious programs,"
the Minister of Industry declared. Beaides the programs to which Prance
is committed within the scope of the European Space Agency (ESA)--of which
it is financing the greatest part (36 percent of funds)--French apace
facilities today are engaged in f.uur ma~or directions: telecommunications~
direct television, earth nbservation, ~nd Iaunch fgcilities.
The 5POT French observation satellite program has been confirmed by the
government. It will have to meet the requirements of all its potential
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~u~enmar~~ Th~ pr~~~ne dev~lopm~ne ph~~~ ~11ou~.d b~ campi.~e~d in M~y
1~~0, p~~mi.e~ing ~ fir~e ~.~unCh 3~n eh~ b~ginni.n~ df 1994 (in M~r~h), eh~
MinigC~r of tndu~rry ~nnnunc~d. V~riou~ probi~m~ r~inti~d eo ~h~ n~tiur~
df ie~ miggi.on ~r~ now in eh~ cour~~ of b~ing sCudi~d: eh~i.r ~~rly
r~~~lueion m~k~ pa~~ib1~ b~ee~r aoordin~tiidn of u~ar~ a~ *~~11 gi.mpl~
and aff~eCiv~ con~aee wirh th~ CNES. ~h~ dara bro~d~g~~in~ po~.~.ey ha~
b~~c~ ~l~ri.f~.~d.
Th~ gov~rnm~nt hc~g gtv~n Ch~ CN~S ~ manda~e tio nego~i~e~ eh~ ~~C~bl~.~hm~n~
df ~~dmpany--'~RANSPAC~--eo b~ r~gponsi~bl~ for produeeion ~nd commer~~a1
exploie~Cidn nf rhe Curop~~n~l~unch~r, Ariane~ F~rer r~~u1e~ of ~uch
negoti~eion~ ~r~ po~iCiv~, Gir~ud ~taied. A~ we h~d announ~ed ~~e~ AIR &
COSMOS No~ ~6g), moredv~r, ~uYOpean manu�aeCurar~ hav~ ~i~n~d a formA].
ngr~em~nt cnnc~Yning Cheir parC~.c~.pation ~.n TRANSPACE dur3ng the Le Bourg~t
581on (~e~ following ~rCicle).
~ue, "in ord~r th~t eha Ariane rockee have a gufficienely ~.ong career~
improv~m~nCg mu~t ~l~o b~ mad~," declar~d Gi~raud~ Such wi.ll be ef�ecCed
~o ehat, ~e the ~nd nf ].9~2, th~r~ will be avail~bl~ ~ c~peniCy ~dap~ed
tn Ch~ he~vy payingde of dir~ce eelevigi.on or doubla launching of e~le-
cnmmunieetiions saCellite~ (gee AItt & C~SMOS, No 7.h9).
"dv~r rhe longer term ehe evolution of the launcher wi11 be the sub~ect
of a deci~ion by ehe government b~fore the end of the year," the Minigter
o~ Industry ~nnounced, particularly as far as "development o� i~igh-power -
cryogenic motors" is concerned. Thua Giraud was referring Co the new
cryogenic motor, wirh 60 to 80 tons thru~C, which ia to be developed by
the SEP (~uropean Propulsion Company~ for the aecond gtage of the Ariane
5 rocket (see AIR & COSMOS, No 769).
A~renchman in Space in 1981!
"The government's concern is to gssure France's independence in the space
domain and in that way most effectively to Europe's independence," the
Minister of Industry declared. For this reaeon "the firench space effort
must be enCered within a wide international cooperation."
'In this connection the Minister of Industry confirmed that the first French
astronaut will be senC into epace on Che occasion of a forthcomi~ig Soviet
space flight; he even wished it might be a matCer of a"French wotnanl"
France has in fact selected five astronaut candidatea for the first Spacelab
flights, including one woman, Annie-Chantal Levasseur-Regourd.
The first flight of Che French astronaut--man or woman--is supposedly
planned very soon, in 19811
COPYRICHT: AIR & COSMOS, Paris, 1979
11,706
C50: 3100 24
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COUNTEtY 3E;C7'tdN ~~C~
~CICN`T~FIC SATELLITE PROJ~G~S OF ~3A D~3CUS9~P~
~ P~rig AIR 5 GOSM03 in French i6 Jun 79 p 6~
(Areici~ by Pi~rr~ Lan~~r~ux~
(T~x~] Fund~ for the ~ci~neific ~~e~iiite~ pro$ram of ehe ~urop~an Spac~
Ag~ncy (LSA) wi11 b~ incre~~ad durieg the n~xt 2 year~ in conformance with
eh~ r~c~mm~ndaCions coneained in ehe r~eent report of th~ Agency'e Sci.~n-
rifi~ Advi~ory Committ~~ (SAC), ESA dir~ctor general Ray Gibeon gCated to
th~ pr~~~ on ~ Jun~. ~h~ ~rientific progrems budg~t of Che E5A, now about
90 million do11~r~, which ig (in 1979) 13.7 percent of the Agency'g total '
budg~t, wi11 be gradually inereased by about 10 percene annually, ehe E5A
- dir~ctor ~eneral promi~ed. This decieion should eati$fy both France and
Cermany, principal p~rticipant~ in the ESA~ aho~e repreeentativea had only
reeently deplored the inadequacy of the bud~et for the European ecientific
programs, which would not permit undertaking operatione of broad acope.
in 10 yearg, from i968 to 1978, ehe European epac~ organizatione responsible
for satellieea~ thet i~, the ESItO (~uropean Space Research Organization] end
then the ESA, had succe~sfully launched 12 scientific eatellites for study
of cosmic rays and solar X-rays (ESRO 2-IRIS), of the polar ionosphere~and
phenomena of the aurora (ESRO 1A-AURORAL and ESRO 1 B-BOREAS), of the solar
wind and particlea (HEOS-1), of the conosphere and solar partic2es (~SRO-4),
of the polar magnexosphere and interplanetary medium (HEOS-2), for astronomy
fn the ultraviolet (TD-lA and IUE), gamma astronomy (COS-B), and study of
the e~rth-sun relationships (GEOS-1, GEOS-2, and ISEE-2).
The next ~uropean scientific satellite, the EXOSAT, will be launched in
Nov~mber 1981 by one of the first production naden Ariane rocketa from
Kourou in Prench Guiana. This satellite Will be placed into a highly
elliptical orbit, with perigee of 300 kilonetera and apogee of 200,000
kilometers, inclined from 65 to 80 degrees, for a mission of et least 2
years duration, consisting of locating precisely, and atudying thg atruc-
ture, spectral composition, and variations with time of celestial source~
of X-rays, ~rhich are emitted within an energy range between 0.1 KeV ~kilo-
electron vo1tJ and more than 50 KeV. The�original feature of the EXOSAT
satellite will be use of a method of occultations with the earth or the
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m~on ~ HC~'@@ft for ~naly~~~ of ~h~ phyAiea~ ch~~ace~~~.~ric~ of ~he
~~u~c;~~ ~nd eh~i,r ~.oc~eion wi.ehin 1 second of arc.
Ar nbou~ eha ~~m~ eim~, ~ow~rd th@ ~nd af 1981~ th~ ~SA will p~rriCi.pa~~,
wieh etle Am~ricc~n NA3A CNaCi~n~l A~ronautica and 3pac~ Admini~rr~einnj,
in et~~ Eir~C 9pge~l~b mi~~3.oa, which will include a eotal of 76 ~cipnCi.Eic
and eechnological experimen~~, 60 of ehem European, ~5 (1m~ricsn, and
J~pan~~~~ Th~ ~ci~neif3e di~ciplin~e conce~ned, du~3.ng Che couree of the
~irge mi~~ion, will b~ ~~tironomy, aemoepher~,c phyei.c~, eo1~r phye~.ce,
pla~ma phy~ic~, e~rth ob~~rvat3on, life scier.cs~, and pr~pararion of
ma~~rial~ und~r condi~i,on~ of m~.cro-~ravitiy. A European a~tronauti--the
fi.r~t--w311 participa~~ in thi~ mission. Oeher ~uropean mi~siAne ~,n the
Sp~e@i~b la~~r an ar~ be~ng plann~d.
In eddieion, th~ E3A ha~ conclud~d cooperation agreamene~ wiCh NASA for
p~rticipation in two important scientific pro~acte which are to begin in
19~3: ~h~ iarg~ arbiting 3paca Teleecope, and the two extra ecliptic
prob~~ of ehe ~nt~rn~~i.onal So1ar Pol~r Miesion (ISPM).
Th~ ISPM i~ ehe first mission o� exploration o� the third dimension of ehe
solar gy~C~m by meang o~ two automated probae which ~t �lrgt wi11 f1y over
Jupiter in order to Cak~ advanCage of Che "gravitat:ional trampolene" effecr
of rhe giganric plan~t in order tio exiC Che plane of the ecliptic and thus
g~ nn to fly over the north and eouCh poles of the sun, regions sei11
un~xplc~red to rhi~ day. The two probea--one`furnished by the ESA and Che
other by NASA--are to be launched on 3 February 1983 by the Space Shutitle;
dn 25 May 1984~ after 460 days in flight, they will fly over Jupiter, which
�aill deviate their tr~~ectories in order for them to go toward the aun~ one
pagging over the north pole and the oCher over the eouth pole. The mission
of the ISPM probea will cenclude on 30 September 1987.
The ~SA will participate in the construction (to the exCent of 15 percent
cf development coats) and exploitation of Che Space Teleacope, the future
large American eaCellitp which will 1+p r1A~eA inr~ g terrestrial orbit of
about S~f?-600 kilometera alCitude by the Space Shuttle toward the end of
~ 1983. This 2.4-meter diameter teleacope will make it possible to explore
the cosmos up to 15 billion light-ye,~ra, or to the enda of the universe.
The instrument will be so powerful that the hand of the Creator can be
seen, NASA explaine, almost seriously. This teleacope will be exploited
for ae least ~5 years, with periodic visita by astronauta for repair and
maintenance. The European contribution has to do with furnishing of the
solar grating of the photographic chamber for ob~ects of low luminosity
(magnitude leae than 29) and a portion of the support at the Space Telc:-
scope Scientific Inatitute. In exchange, 15 percent of Che observation
time will be at Europe's diaposal.
COPYRIGHT: AIR b COSMOS, Paris, 1979
11,706 26
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COUNT1tY SECTION FRANCE
~
~
~
REASONS FOR NAVAL AIR A1tM'S CHOICE OF AIRCRAFT DISCLOSED
Paris AIR & COSMOS in French 16 Jun 79 pp 77-78 '
(Rear Admiral ~atou interviewed by Jean de Galard--date and place not given]
[Texti] We have already publiahed the decisiona of the minieter of de�enae
relatiive tio r~placement of overseas maritime surveillance aircraft and in-
sGruction airplanes for flying personnel o� Che Naval Air Arm. Let us xe~aii
the three-�old choice made:
Five F'alcon 20A (otherwise known ae Mystnre 20H) airplanes for overseas ;
maritime aurveillance miasiona;
~
Nord 262 airplanes (from among those asaigned to the Navy) conWerted to in-
strucCion airplan~s for training flying pereonnel other than pilote; and ~
Foreign twin turbo-prop airplanes of 5-ton class for retraining pilots intend-
ed for aupport aquadrons and fleeta of BregLet 1050 AClantic airplanes.
Expected for several montha, these decisiona were surprising to the extent
that other and very different optiona had been contemplated not ao long ago.
We therefore asked Rear Admiral FaCou, chief of the aeronautics division ~
of the Navy general etaff and of the cenCral branch of the Naval Air Arm,
to tell us the reasona which 1ed the Navy to propoae to the defense miniater
those choices which were finally adopted. We thank him warmly, here, for
the interview he was kind enough to grant u8.
[Question] Last week the Minister of Defense made known hie decisions
relative to replacement of the f1eeC of inaCruction airplanes and naval air
a:.~ airplanea atationed overseas. Can you tell ua the reasons which led to
the announced three-fold choice?
[Answer] Each of ehese three choices was determined by reasons of different .
kinds. However, one reason influenced all three: the desire to limit the
effects of the petroleum crisis by chooaing types of aircraft which enable ,
missions to be accomplished with minimum fuel consumption. This obviously '
led to adoption of airplanes lighter than those in service at present and
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tihar~�ore, ~ forC3or~~ to r~~act rh~ ide~ ~r one eim~ contempl~t~d,
acquiring Eor~ign mu1r~.-eurboprdp ~~.rplanes of 20 tone ~1~ ~.flstrucCiona~.
g~.rcr8fe nnd fo~ ~~~t~.on~.ng over~e~e. ~h~ so~u~~.on f~.n~~.1y ~d~pred wil~
re~ulti--wieh respect eo tihati wh~.ch had been coneempl~~~d--~.n reduceion ~.n
operati~.ng co~rs estimated aC 30 mi1l~.on francs annu~lly, b~s~d upon~pr~~~ne
oil prices. In addition, ie will enabl~ acqu~.s~.t~.on cdetie ~o be r~dueed by
abouti 30 parcene.
~
[Que~t3on) At eh~ f3nanc3al 1eve1 rha eolut~,ons ~dope~d in facC appear
- attr~cC~.ve~ Are the ahoice~ which have been mgde also ~atiafacCory on ~h~
opera~ionA1 level7 . `
[An~wer] My answer i~ a cati~gor~.cal yee.
Th~ f~.rsC mission: reCraining piloCs of the aupport aquadrons and iCs Atlanric
fleets.
Up eo 1970 such retiraining was accompliehed with 7-ton ewon engine airplan~s
of American origiri~ T'he N262, although conaidered too heavy, wa~ adopted at
that time because it was the only twin turbofan-~et masg produced in France.
T'he ndoptiion of a S-ton ewnn turboprop airplane ie therefore no more ~han
a reCurn to g more narmal situation. Thia ie the solution ~dopted by the
Air Force and which has never been abandoned by the U.S. Navy.
. The aecond miasion: inatruction of flying personnel other Chan pilots.
Adoption of Che N262 fur this mission is the solurion the Navy has been
recommending since 1976. But recovery of airplanes from the pilot training
school was not then contemplated, aince that solution involved again atart-
ing up the production line. That not being adopted, the Navy wae forced Co
seek another solution upon the international market. Thua it became inter-
ested in twin and four turboprop aircraft of 20 tons, even Chough conaidered
too heavy for the school's requirementa.
[QuestionJ And the overseas maritime surveillance mission?
[AnswerJ That is the third mission; it is at present accomplished by
Neptune P2H aircraft based at Papeete and Noumea. Theae were former mari-
time patrol (PATMAR) airplanes with large range of acCion. Tf it were
desired to replace them with airplanes having the same capabilities, re-
course must be had to the Atlantic. (hi the other hand, if a reduction in
so~e of the capabilities accepted, a anluCion can be sought among the
numerous airplanes offered on the international market to provide maritime
surveillance (SURM~,R) of zonea of 20U nautical miles.
Some c~f these aircraft~ ranging in size from 5 to 30 tons are equipped with
propeller motors (turboprops in general), others with turbofan engines. Th~
former, derived from commercial transport aircraft or business aircraft,
correspond with an old and conventional concept of maritime patrol: to be
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pr~~~ne ov~r eh~ zon~ for max~.mum C~.me~ tihe a~.rplane f~.ying aC low ~l~~.tude
and law ~p~~d. In otiher worde, ~he "terrain" ie occupi~d.
mhe turUnf~n giretiaft, dQri.ved from g~.rcraft designed .Eor fast connectinne
and b~C~us~ ~f thae capable o� high speed and r~p~d a1C~.tiude changps corre~-
pond to a n~w ~nd orig~.nal cdncep~: on Che one hand, Co be euited for intiPr-
veneion ~e ~~iven po3nC wieh emall delay, and on tha other hand, provide
coverage oE a zone as ~~rga ~s po~~ible in minimum ~~.me, tih~ a~.rcr~ft f~y~ng -
aC high altieude end not descending to 1ow levels except ro "investigate"
~ontacCg. In picturesque terms~ it is practicing Che operation of "a blow
of Che fiet."
Ag a matter of fact the conditions under which maririma aurveillance miaeione
are exe~uted being highly variable, depending upon the theater and the cir-
cum~tiances, the propeller and eurbofan aircrafti are resources more comple-
mantary than competiCivQ~
Ia Che pareicular case of the Pacific~ the maritims zones under eurveillance
from pgpeete and Noumea are characterized by theis extenC and the low density
of ships navigatin~ within them.
Such conditions are the most favorable for use of turbofan aircrafC. Among .
the latter the Falcon 20~ o� 14.5 tone, is ehe best compromise between air-
cr~ft of 30 tons and thoae of 10 tons or less.
r
That is why the chief of the Navy general staff, after a thorough examination
of the capabilities of that airplane, propoaed ite acquiaition to the Miniatry
of Defense.
(QuestionJ Can you give numerical data on the difference in operating coate
berween the Falcon 20 aolution and the "multi-turboprop" aircraft of 20 tons"
in the particular case of maritime surveillance in the Pacific?
[Answer] Assuming that the sircrafC have Che same capabilities for detection,
aweeping the entire economic zone of Polyneaia requires, with a Falcon 20,
nine misaions of 5 hours, 30 minuCes, or SO hours of flight and 46 cubic
meters of fuel; with a multi-turboprop airplane of 20 tons, eight mieaiona
of 10 hours or 80 hours of flight and 62 cubic metera of fuel.
Using the Falcon 20 therefore reaults in a 36-percent saving in fuei volume
and 40-percent saving in operating costs since at present fuel prices the
unit per-hou~ costa of flying the two typea of aircraft are nearly the same.
The advantage of the Falcon 20, already great, were become greater at the
price of petroleum increases. ~
But savings are expected in other areas. For example, the missions executed
by the Falcon 20 in general will be of shorter duration and hence less
fatiguing for the crews. The latter's number will therefor~ probably be
reduced. .
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L~.kew~.~a~ Che greaC ~p~ed of the Falcon 20 makee xone surt?eys le~s burdansome
gnd Chu~ anabl~e tihem ~o be conti~.nuously provided w3,~h crewe mo~e �requanely
~nd, becauae of ehie, more g1erC and more eFfectiiv~.
[Que~e~.on] w~ii this order ~or Falcon 20 aircrafC for overseas be fol~owed by
anoCher order for a~.rcraft o� rhe same eype for mieeione o� m~rieime sur-
veillance of Metropolitan Franca?
~Anewer] Notihing has been decided in ehat regard ~e present~
However, I shall take advantage of qour question to stiate a point wh~.ch I
corisider essent~.al; maritime aurveillance aircrafe are not maritiime paerol
aircraft and cannot be eubetiCuted for tihem.
In particular, the acquigiCion of SURMAIt a3.rcraft for MeCropol~.tian France
would not reduce the f1eeC of PATMAR aircraft, since the latter ha~ been
mathematical].y eatablished on the basis of the number of contin~ous patrols
it ie deaired to provide in ehe Atlantic and Mediterranean in timea of criais.
On tha other h~nd, acquiaition of such aircraft would permit avoidance of
sometimes ueing Atlant3c aircra�t, �or lack of other resources, fnr easks
requiring neither Che autonomy nor equipmene of those aircraft.
Thus a poCential saving in PATMAFt, and as a consequence, the operating aervice
_ li~�e of these aircraft would be increased, which is important, conaidering
the high acquiaition cost of theae aircraft.
tt is in this spirit that, one day, the meriCs of acquiring a few Falcon 20
aircraft for Metropoliean France may be examin~:d.
COPYRIGHT: AIR & COSMOS, Paris, 1979
11706
CSO: 3100
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COUNTRY SECTION FItANCE
KOUItOU LAUNCH B~1SE CHECKED OUT FOR ARIANE
Parie AZR & COSMOS 3n French 16 Jun ~y p 83 ~
[Text~ The serips of eeste with the "fuel mock-up" of the Ariane ~Ariadne~
rocker has firati ended aC Kourou ~.n French Guiana. It had ehree principal
purpuges: to verify general conditions of aseembling the launcher and ita
compatability with the ground insCallations (platform, towgr, and so forth);
to verify technical ~peration of the facilitiea and systeme for aupplying
and draining fuel, on the ground as we11 as on the launcher, and also the
evolutian of the correaponding proceduree; and to evaluate the technical
behav~.or of the launcher under the ambient climatic conditions. .
After erection of ehe test model of the 1aun~her on 5 February 1979 the
computer controlled automatic fueling operations on the three stages were
~uccessfully accomplished. Four fuelinge of the third atage with liquid
hydrogen and liquid oxygen and a single fueling of the firat and second
stages with atorable fuels preceded a general rehearsal of the launching
chronology (on 16 and 17 May 1979) conforming to that of the actual launch-
ings. This chronology ended with an automatic aequence stopping first
before ignition of the H-65 motors. Dropping of the various electrical,
pneumaCic, and fuel supply connections was also accompliahed. These opera-
tions demonstrated the capabiliCy of the working Ceams as well as the
suitability of the launch pad for launching the Ariane.
The launch aeries will begin in the middle of September; the launcher will
have been shipped to Kourou in the beginning of thaC month.
COPYRIGHT: AIR & COSMOS, Paris, 1979
11706
CSO: 3100
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COUNTRY 9ECTI4N
ITALY
~ ANNUAL REPORT OF Tk1E BANK OF ZTALYs 1479
Milan TL MONDO in Italian 15 Jun 79 Insert pp I-XVI
(ExcerpCe] Exchange and Inflation
Italy~s en~ry in~o the EMS came at E favorable momenti from the foreign
exchange aepect above all due tio ehe overall advance in the ba].ance of pay-
menta wt~ich in 1978 amouneed to ~ erillion lire, of which 5.4 trillion are
in tihe current portion, and jti coneinued during Che firat few months of
Chis year.
At the end of laat April, governmenti reserves amounted to 27.4 tril~.ion and
were made up eo the extent of almost one half by gold ae balance-sheet value
and for the res~ above a11 by coin and convertible foreign currency. The
reserve volume exceeded by abouti 14 trillion the sum of governmenC foreign
liabiliCies, of those of the banking system and thosa pertaining to com-
pensatory loans, while at the end of 1977 theae two aggregate amounts were
equal.
This money volume appeared adequate in taking care of a flow of imports
which, for commodities alone, now comea to 55 trillion. Along with the
functton of financing any possible deficit in Che current portion, this--
like the loans that are involved in the EMS--involves the function of
deterrin~ apeculatton which is preferably aimed at the foreign currenciea
uf countriea that have few reservea, as happened to the lira early in 1976.
The poasibility of conatituting reserves through an influx of inedium-term
loans was also restored; during the 1asC 2-qear period, wi.th the emergence ~
of surplusea in the current-portion balance sheet, the international money
market applied conditiona to the ItaYian borrowera which gradually moved
closer to those offered Co cuatomers of first-ranking importance~
The strengthening of the foreign-exchange position was paralleled by stabiliry
in the lira exchange rate during the firsC three quarters of 1978,
deriving from a 5 percent 3mprovemenC over the dollar and a 3 percent
decline with respect,,the curr~ndes of the EEC countries. During Che last
part of the year, while dollar quotations, in epite of broad variations,
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rema~.ned rough].yr equ~~. Co ~hose oE ~h.e preced~ng quaxter~ tihe lira Wae allowsd
Co drop 4 percent ae compered ~o the Commun~~y currenc3es in lieu oE Che enexy
inro force of ehe EMS and tihe aubeequent reducrion in the exchange operaCing
marg~.n.
The precautionnry nature of this d3p aae confirmed by davelopmen~e during Che
current year. The 13ra, wh3ch had remained eubstanCi.ally steady untii~. the
EMS w~s launched, afCerward reve~~.ed an average appreciatiion which yesterday
~;as a~.~.t~1e bit leee than 2 percent ae compared Co Che currenates of the ~EC
and the ECU.
In 1978, these modifications 3n the effective exchange permi~ted a elighe ~
improvement 3n the competitive poaiticn; aompared tio 1971~ ~.t wae 2-3 percent
if we relate iC to export pricee and abouC 1 percenCage pointi if we look aC
the per-unit labor cost. Considering the margin o� uncertieinCy implied in
these calculationa iC does not seem wrong to say thati the depracia~ion o�
the lira substantiially was i~ keeping with the differentiated development
of costa and prices~
While domestic in�lation and ehe rise in labor coeta in thc private sector
are still cont3nuing at raCea very much fitgher Chan the European average
rates, the favorable development of trade with foreign countxiea thua
broadened the leeway within which one could seek a satisfactory reconcilia-
tion between atability and growth. On several occaetona we aeked ourselves
the question--alao advanced by outstanding scholars-~whether, in 1978, it
might not have been advisable to uae that leeway to allow a minor dip in
the exchange rate of the lira or also an appreciation of the lira.
. The frame of reference for foreign exchange management was characterized by
the formation, throughout the year, of a current surplus with dimensiona
greater than anticipated, especially as regarda the quanCitative development
of exporta, which turned out to be tarice the 5.5 percent indicated in September
in the fnrecasC and program report, by the continued existence of emall foci
of inflat3on operating in the production sector of the economy and in the
public sector, and finally, the uncertain and alow rhythm with which the re-
covery of domestic demand manifeated itself.
Fully aware of the role which it plays in ahaping up the price development
proftle, the deCermtnation of the lira's foreign value was so oriented as to
permit a development of exports whtch would create the premises for a resumption
of accumulation and for an absorption of unemployment that would be less in-
fluenced by foreign conditions. On the other hand, Che quieting effect of
Che cost of supply ahipmenCs from abroad, in terms of lira, was soughC
Chrough the gradual appreciation of Ttalyfe currency with respect to the
dollar, a foreign currency in which there ts billed a conspicuous amount of
Italy~s imports, while accepting depreciation w3th respect to some other
currenctes, particularly the mark and yen wf?oee exchange ratea were influenced
by the international process of d3versification of government reserves.
.ti
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Wn our~a].vee a~aerted aevera~ times thati an appropr~.atie way Cn h~ndla rhe
exchange rate ie a neceaeary facCor ~.n a pol~.cy aimed ati contirolling in-
flation. BuC ~.t ~~.so true ehat Chis ~:s noti a suff~.ciene cond~ti~.on ~nd
Chat ~.Cs e~�ecrs are ~.im~.xed when Ghe ob~ect~.ve oP r~covering a more ga~ie-
factory profir level--ae generally happens aC the end of a receasion--ie
assigned higA prioriCy 3n the deais3ons mede by ~he enCerprises or when
rhe l~ck of perfect~.on on ~he marketi, which character3zea eoma of Ch~ im-
_ ported gooda, is such as tio hinder the epread o~ coet benefits which the
upaard eva~.uation oP ~xchange would allow.
Im m~re long-range terms, the presence of an in�1.ationist potential
imp~.icit in the growCh of ehe public deficiti in relaCion to ehe groge out-
put atrengtihened the conviction that the final ouecome of an appreciation
of ehe lire wou~d derive noti so much from a slow~down ~.n ~nflation ae from
the negaCive effect on tihe eotal demand and on Che way the balance of pay-
ment turns out. In that way we would have slowed down tihe recovery of
production and ati the seme time we would have weakened the requirements
for ttis regular con~inuation.
Intlaeion during this decade aas inPluenced by a combination of faceors
coming from abroad, the mos~ i.mporCant among which aras repreaented by the
_ producera of energy sources, and from a~ home~ among wh3ch those tied to
tihe development of per~-unit labor coat and the inefficient allocation of
funds, implied in ~he public secCor's deficit,were sub~ected to a more
rhorough analysis.
Because of the high level of sal~ry indexing, the excess of purchasing
power, which shaped up aC some moment in the syatem following higher con-
tract wages, a shortage in the supply, or other factors, was first absorbed
beCween two succeasive apurts on Che sli.ding scale by the price rise, hence,
without any reconstituted base. Real wages thus became more rig3,d also with
reapect to the inflationary imp.etus coming from abroad in a manner which
no permanent wage negotiation procedure could have brought about.
The potenCial instability, which derived from that, cannot in any case be
underesttmated, iP we admit that the main disturbances in the system do not
come from currency management. As a matter of fact an almoat complete indexing
of wages attenuates the fluctuations in income and prices cauaed by variations
in the quantity of funds made ava~lable to the economy but also amplifies
,the inflaCionary and output-reducing effects inherent in any enterpriae
operating cost rise. Autonomous increasea in the standard wage greater than
increases in producCivity are expressed 3n increases in real wagea but re-
duce the ability of the enterprise to expand the production base and Co in-
crease employment, Chus creating the premtses for furCher inflationary
spurts. Tn Chis proceas, the advantages obtained in short-range terms by
individuals and groups turn out to be harmful through the effecCs reflecting
upon the condition oP the working class as a whole and on that of the younger
. generations.
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~ ~ ,
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Sim~,lnr rESU].ta derive Erom Che deeeriorat3on 3n Che Cerms of rrade; if Che
reduce~on in ehe ava~lable income~ which Cl~~s causee, ie concenCrated on
tihe enterpriaes, ~hen the ulttmate effect 3e broughti to bear on the variablea
tihat are ~.nEluenced by ehe leve~. of in-house financing~ Downturne in
economic acCiviey, with real wages remaining constiane, can be avoided if
the enterpriaes accepe a reducGion in the profit margin; this is a procees
whose 1~mit is reached a1~ the more quickly, rhe greater the intens~.ty of
the facCora ~.n the deterioration of profitability happengto be.
The failure of monetiary measure sCability, on which certainCy ~.n Che wage
contracts in general should be based, alters the economic relationships and,
in view of the diversiey of atrength relationships among ~he workers, 3C
modifiea rela~ive prices in a manner tihaC canno~ be predicted. Thia in-
creases uncertainty, 3~ reducea the eime frame for the entrepreneure and glows
down the process of capiCal accumulat3on on wh3ch depend not only the inerease
in productivity but also Che creati.on of ~ obs.
Laet year, the stabilization effort bene�itted from relat3ve tranquilli.ty
of internaCional prices for primary resources. Measured by conaumer prices,
the rate of inflat3on dropped 5 points as~compared ~o the preceding year's
average but, during the year, it did not drop sig~iificantly and its value
remained sttll rather considerably above the two ftgures given here.
There are dark shadows IZOVering over the future. Oil price increasea,
already decided upon or threatened and certiainly greater Chan 20 percent
for the year's average, as well as the tension Chat prevails on other
markets outline an international situation in which inflaCionary spur~s
wi11 again prevail over the intention of real growth and employment develop-
ment.
z~
(3 ) TASSI ATTIVI
18
15 ~ -
� �
12
9
8 TASSI PASSIVI
3 ~ Amkipulonl ~ ~ud~nta fiw/ Opaltl InbrumWw{
Itnw ma~dmol \a NI
~miuloeN dd 80[ 121
O - Hmdim~nto obElt itoni (1)
1973 1974 1975 1976 1g)7 1978
(t l 11.nai~mnro mwN dN ewna Neonara a~M eeWyul~nl a~U MUtuu A wda nwa~Nn
tT M~a~ oonarw~ dd neq~m~mi AN /ot ~ n~. ~N i doaN
~ix years of interesC rates. Key: 1--average yield on secondary market of
obligations of real estate loan insCitutions; 2--weighted mean of yields of
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3, 6~ and ~2~monrh pBT [~reasury~ nn~es R]; 3~~eseti raeee; 4--l~.ab~.lity
raties; 5~~f~.xed~~erm advancee (maximum ratie); 6--y~eld from obl~.gatiiong
(1); 7--inCerchange depos~.ti~; 8~~yield upon issue of BOT (2)~
In a siCuaCion characeerized by signif~.can~ ~orei~n inflatinnery ~mpe~u~-- ~
although A broad curren~ surplue may continue to be paral.leled by a satie-
~~ctiory ~volu~ion in the toral demand and i~s makeup-~-tihe past reoon~~~.tu-
eion of resexvea would make it poesi.ble to reconsider the syetem of ob~ ec-
tives by asa3gning more room ~o the uae o~ exchange for the purpose of
w, nold~.ng ~.mpor~ed inflation down.
Bu~ 3C would il~.usory to think tihat one could ateain the priority ob~ect~ve
of seopping inflation through Che instrument of exchange alone. 'The latter
would ineviCably tend to become drawn out in terms of time if ell of the
, causes of price r3aes, from the increase in the coat of labor Co production
inefficiency, to the growth o� comperition, and the deficiC in the public
aector were not foughti at the same time.
AccumulaCion and Foreign Trade
The increase in the.gross domesC~c output in real terma came to 2.6 percent
in 1978; a positive beginning during that year was �ollowed 5y two uncertain
middle quarters and recovery during the last few montha. The impetus for
production came from consumption and above all from exports while the
endogenous accumulation mechanism got going only during the year's final
phase.
Although greater than in 1977, the 2.9 percent increase in private consump-
tion was made to feel the effects of the gap with which private consumption
finally followed the rise in incomes so that autumn r~covery was not enough
to make up for the shrinkage during the first quarter, following the f iscal
drain thaC took place at the end of 1977.
Instead, overall capital investmenC continued to decline. The 3.8 percent
drop was mainly due to the reduced formation of inventories but inveatmenta
in machinery ac~d transportation equipmenC also dropped 1.9 percent; the
increase in the construction volume was rather slim.
The quota of funds which the Italian economy devoted to accumulaCion thus
further declined to 16.6 percent of tfie domestic output, continuing the.
1974 trend when it was 20 percent.
The recenC devel.opment of the Italian production machinery seems to have
been sustained by the light consumer goods industry which , was
supported by the foreign demand. The fabric of inedium and small enter-
prises which operates in this sector, released entrepreneurial energies:
which provided impetus for the increase in exports and which strengthened
Italy's foreign exchange situation. To hold on to the positions gained on
' the international markets, it is necessary for the system of industrial
relations not to compromiae the capital return. But, above all it is
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n~c~~~~ry ~o mak~ ~ur~ ehati thQ growth oE rhe light indu~~ry Wtli be euAt~inad
by ~in gppli~d r~s~ar~h efgorr in ehe lieid of eemt-linie~hed goode aheYe new
t~chnala~ie~ wi11 b~ in~lud~d in eh~ produce~ ~nd wh~r~ inv~~em~n~ ia~pli~~
proportionately greaeer r3~ks and coeCs.
The ~ector~ ehae produc~ e~m3-fin3sh~d goode on the other hgnd ere in th~
midgt of a pro�ound crise~. Influenced by aggr~~e#v~ in~~rnat3onai compe-
e~tion and heavy fingneial burdene, they suffer due to the mode8t growth of
the final demgnd ahich keep~ their ut313~ed capacity at 1oa lavele. Under
theee conditions, induseriee with the higheet l~vel of capital-inteneity ere
un~bl~ to g~n~rae~ in-houe~ �unds that wouid be euffici~n~ to eustain the
acCUmulaCion process ead ehis l~mite the inveaCment acttviti~s connected
wirh th~ repl~c~ment of ob~oLata machinery~
The failure to mgke �~ind~ ~v~ilablp for industr3al convereion and reorgeni-
zation and tihe long-drawn-out efforti to come up ~rlth gtandards for the
financial recovery o� thQ enterpriaee conetituted a further obstacle to the
procesa of restoring tih~ ICalian economy's balance.
' During g year in which there was no ahortage of financial Yesourcee~ privere
enterprises promoted rhe rearrangement of their balance-eheeC liabilities~
holdiug down the recourse to indebtedneae ~rithin limite ep��easary to complete
investments in the proceas of excution; Cheir initiaLive ie due to the resump-
tion of accumulation by the end of the year.
Once again, ~he delay with which this recovery m~nifested itaelf wae not com-
pensared by a~flow of autonomous investmente, aimed particularly at meeting
the profound infrastructure shortcociings which etill characterize Italy. In
the public utillty sector, the lateat slight decline shoWa the continued
existence of difPiculties when it comes to handling those investmente during
a business downturn. The electric poaer sector--which atill reveals long-
term inadequacies with regard to supply--aas likewise unable to epeed up ite
investment plana. In sCate participation enterprises finally the eurplus
capacity crisis and the related lossee in the basic indusCry prevented the
sector from being able to play g role in aupport of the capital goods producing
industry.
~
The exceptional export increase--10.8 percent in terms of quantity--that i~
Co say, twice the rate of world trade, permitted a further expanaion in the .
Italian output rate on the international market and decisively contributed to
the formaeion of the current surplus. But it u~ould be dangero~s to rest on
the laurels represented by the positive reeult which reflecta the action of
continger,t factors, rather than structural changes in Italian relations with
the outside aorld.
In 1978, as a matter of fact~ exporta Were favored by the recovery of economies
which are the major custamers for Italtan products; the domeatic demand groarth
rate in Italy Was only 1.7 percent as againet 4~3 percent in the other eix
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principal ~,ndu~exi~~, eouatir,ies of Ch~ OECD, ~he Ce~n~ of erad~ wer~ mod~.fied
in T~aly~~ favo~ and Ch~ counery~"e compee~ti~ve capabi;].~Cy wae improved ehanks
Co Che 6~.vere~Pi~d exch~nge pol~.cy{ ~n~ernat~.onal pr~.ces on manufactured gonde,
~xpr~~~~d 3n doi~.are, r~veaied an increaae o� 14 p~reene aga~neti 11 percene
3n Ztaiy, Th~ riee in th~ market raee thus a3dad eh~ �i,n~ncia~ ~uppare
~ffort--wh~.ch Wae accenCuated ~n recent ye~re--deriv~.ng �rom ehe ~xport~
of in~erwnen~s. ~inally, the 1ow domeeric ~emand profile cont~nu~d, for a
good parr of th~ year, eo hav~ Che effecC oE a BYief period during ahich
impart~ wer~ ~eld doan and ehae wae CRe bas~,a for the foreign ba].ance
~e~Coring policy ~niCiaCed at tihe end of 1976~
During thie year, the favorable development of some variablee might be
reversed; thia has already happening in the caee of international quotae3one
on r~w m~t~rial~. ~he ra~io between importe and the nat3onal income on the
oeher hand does not point to any deeline in the prop~ns3ty eoward importiing.
For tha 1978 average, conmadiCy importe revealed an tncome epread of 2~9,
~ahich wa~ higher then thg long-re~tnf~gure. Iti is true that the rie~ in Che
, raCio of taxable imports was helped along by the exceptional developmenC in
Che �low of exporrs which rev~aled a high content of imported maCeriala
although a similar affect migh~ have derived from the hoped-�or relativQ
growth of investments in the uses of the income as such.
In the makeup of Italian trade in manufactured itema, we obaerve a continuing
trend, Which ~aa~ ~n effect in 1973-1974 toward an increase in specializaeion
in traditional products ~rith a relatively low technological content while the
chemical industry deficit revealed a figure of 1.2 trillion. It followa from
this that Italien trade is even more sensitive to the relative development of
dom~stic prices and of international prices on manufactured goods and ie etill
aub~ected to competition from the emerging countries.
There is therefore no lack of contrasting elements in th~: picture ve have out-
lined here~ While Che results achieved over the past two years on o~orld marketa
turned out better than expecCed, this is due noC only to a combination of
favorable circumstances; this is also due to the facC that the Italian economy
expressed a basic vitaliCy without which any developm~nt will be impossible
also in the future. From the reaources that Were constituted we must however
derive inpeCus toaard a more stable and balanced setup--not the illuaion that
the foreign constraint has already been shaken off and that the goals of un
induatrial civil society will henceforth be easier to attain. Phenomena of -
grey-market or black-markets ~obs--which explain the by no means negligible
parC of the savings achieved by Italian industry in recent years--cannot con-
stitute the Poundation for a permanent strengthening of the production
structure and represent� a remedy that is not only socially undeairable but
that is also economically disallowed. The backwardnes,s of the South, the
poverty of the infraBtrucCure facilitiea, the decline of the natural environ-
menCs Che imbalance between sectors--these are problems Which the spurt of
economic vitality and individual motivation will not resolve by iCaelf in
the future, as it did not in the past either. Instead, it must be aimed
also toward collective goods and it must be added on top of social coheaion
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wi,thoue ho~tev~x b~~,ng wa~t~d ~,n an @nC~,re].Y toq x3g~,d contexC o~ induetrial
r~lati3ons no~ suiCed for keeping up w~th ~he proEaund nhan~~~ > neceeeatiy
eo ~hge eh~ i~~1~,an ~conom~c ey~rem may be moved to~rd 8 developmanC road
~h~r~ee~ri~~d by tiA~ fuli ~mploym~ne of tih~ f~eeor~ invoived ~nd e~h~r~n~
witih eh~ fore3gn ~onsera3nee. ~ ~
~h~ ourline of the policy a~med a~ act~.vely promoe3ng tha neca~eary
seructural ad~uetmenrs a~e spelled ouC in an organic manner in the Three-
Year Program su6mirted by thg administratiun laet January. Along w3th
conerol over the demand~ 3ti proposea to c~rry out a ma3or effore in terms
of resources red~.str3bue3on Wh~ch would ald~inata Waate and which ~ould
promote production inveetments and civilian and soeial 3nfraerructure
facil.itiee. To att~in theee ob~ectiv~g, it is not en~ugh to make the necessary
funds avaiiable for inv~~stmente by holding the public deficie down aed by
keepfng the cost of labor per uniC produced down; one mu~t giso be concerned
with the effic~ent ut3lization of human resources represented by Che heritage
of technolog~.ca1 and organizational knowhow which ae have in ICaly.,
Monetary Developments and Public Debt
Turning from real aspects to monetary aspects, we note that the framework,
within ahich the transactions of tihe Central Benk on domestic ~narkets took
place~ wae characrerized by the intensity of expaneive impulees deriv3ng
from the budget policy and, to a lesser degree, from exchenge management.
The 34 trillion in treasury requirementa and the 7 trillion in the balance
of paymente aurplus, which, when added up, give us a measure of the monetary
growth potenttal, in 1978 accounted for 19 percent of the groas domestic ,
output. After the 1963 crisie, the same ratio averaged 7 percent and during
no year did it reach the 1978 level, aince the preceding maximum, recorded
in 1977~ was 13 percent.
Treasury apending, even more so than foreign trade, transmits discontinuoue
impulses to the creation of money; their diffueion ~rithia the economic gystem
is slow; before it can take place~ the Central Bank must eometimes at least in
part saCisfy the demand of the operatore. Por example, the ample expenditure8
m~de by the treasury during the laat daye of 1978 helped i,nflate the statistical
r~sulta also because the economy in the meantime vas aupplied, through other
channels,with funda which had not qet been returned to the bank of iasue by
the end of Che year.
In view of Chese conditioniag factors~ the moneta.ry authority propoaed not
only to contain the creation of liquidity but also to stimulate the holders
of publ.ic debt certificates toward longer-term holdings; these are tw~ ob-
jectives which are not alWays easy to reconcil~ because, while the offer
- of adequate yields on regular treasury bonda represent the immediate inetru-
ment for absorbing liquidity and hence for attaining the firat purpose, the
pursuit of the second one requires that long-term certificaLea present a
good yield advantage as compared to the more ahort-term cert3ficates.
39
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Anhi~ving Ch~,e maYgi,n Chrough an increa~e ~,n ratiea, on Che fox~mez~ would havg
made the col~.ecC~.on of Che epec~al credit ~nsti~.tiuties and ehe ~inanc~.ng of
inveatmenr~ roo troubia~ome. ACta3ning ~.r tihrough ~ h~avy drop in ~he r
yieid~ of ord~nary treasury bonds would have reduced the ~.ncentiive fvr ~~v~r~
when ~.t came ro aeking for financial inserumente differene �rom depoeit and
th~.e would have rap~.dly e~~.ped ouC tihe advantage as compared tio the yields
Prom do~lar tiraneact~.ona. ~ha BOT rate Found ~.eself in the midse o� parely
conflict~.ng requ~rementis among wh3ch iC seemed advi.eable not rigidly Co
favor one ov~r ehe other,
Thie group of considerat3ons--which~ throughout 1978, was sub~ected to a '
construcCive dialog aith the ~reasury-~facilitiated a slight drop in the raCes
on more ehore-term bonds and it aleo helped orient the makeup of public cet-
tificaCes of~ered toward longer-range Cerms. The increase ~.n the moneCary
b~ee, which ~ppeared very conspicuous when v3ewed in the lighti o~ y~ar-end
data, accountied for only a little more than one-third of the above-mentioned
potenti~l; Chere is no example of so high an absorption rate in recent his-
Corical exper~.ence.
While ehe sterilization o� the monetary base did assume noCeworChy relevance,
ie however did not manage Co prevent the economy from being supplied with
abundant liquidity also due to the gradual nature wiCh which the added
currency was tranaformed inCo other financial transactions; the quantity
of money increase 23 percent throughout the year and its ratio to the groas
domestic output went up further. In the beginning of 1971 monetary growth
declined; the increase in bank depoeite over the 12 montha ending laet March
dropped Co 20 percent~
The most heavily cdntained influx of the funda, caused by the ceiling on
sho:~t-term bank commitments, was only in part felt by the enterpriaea be-
, cause other factors working towards an increase in available money were
alio at work, including the highest tranefer from the treasury and greater
in��house f inancing.
~ Monetary transacttons explain effecte upon the economy not only with regard
to the o',jectives pursued but also with respect to the instruments employed; ~
the choice of the tqp~ of intervention has an effect on the inacroeconomic
variables on prices, money, and income--effects which are not always imme-
diately not3ceable but whtch are lasting and deep. Convinced of that, we
tried in recent years to make sure that the design of a system of instru-
ments, in Which the operattonal freedom of the markets and the efficiency
of interventions would be achieved in the best possible fashion, would be
pursued, also through the various ups and downa of the situation. '
On the finance market, an important step in that direction was taken aast
June when the amount of the portfolio reatrictfon was reduced from 30 percent
to 6.5 percent of the deposit increase. The current raCe of obligaCory in-
~ vestments in securities wSth respecC Co the flow of deposits is the lowest
since 1973. However, the f~xed-income aecurities market is far from free.
GO
80R 0~8'ICIAL U8E OI~LY
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'~he crediti l.netitiueiona xema~n ~,n~luenced b~y ~he obl~.gaC~.on ~q recqyer
secur~Cies ~hae have exp~r~d or rhat have been sold ~nd they are also furCher '
i.nf].uenced by Ch~ r~duced share of ~he ceiling; in 1978, the reconstituC~,on
of secuririae ehae exp3red came ~o a totial of about 3~5 tri111on. During
the last 2 monChs, ehe nea~ norma directed purchasae for ~he resCoraCion of
Che portfolio tioward ~.~aaues Chat did not gee the ben~fiti of Che continued
cei~ing. ~or tihe immediaee future, it ie to be hoped that the ~.ncrease in
preaeure on price~ e~i11 noe force us to double back on ehe road we traveled
laeG year~
,
On Che money market, ~reasury action on the primaxy [market] and the act3on
of Che bank of igsue on Che secondary [marketi] were coordinated in terms of
guiding ~.nveators ~oward less ahorC-eerm securi~ies. The monthly supply of
3-month BOT gradually declined from 1 tirillion in January 1978 uneil it
atopped entiire].y last February. During a year~ in which treasury require-
menrs came tio 34 trillion, the overall volume o~ bonda went up only 5.7
trillion. Our bond portfolio, which ae the beginning of 1978 came to 7.59
Crillion, yesrerday amounted to 694 billion. Aa for the part that belongs
to us, we tried Co achieve these reeults by Yefining the techniquea of
market intervent3on, encouraging the market to express its own evaluations,
spreading sales over a broader range of aecuritiea~ turning up not only as
buyera but also as sellers, establishing a terminal procesaing link with
rhe principal operators; it is our intenti.on this year to put together a
first system of bond tranefer through commercial booka and forme of buying
which would also enable the nonbanking operators to to have an item sade up
of BOT, running the risk of loss but reducing the risk of insolvency.
Still looking at the money market, Che reduction in the atamp tax on bank
acceptances and new surveillance provisions to a great extent corrected a
disparity in terms of access between the treaeury and the other issuing .
institutions. This kind of organization of profesaional capacity and re-
sourcea on a market cannot be achieved overnight. Bank acceptances, sold
in amounta of several hundreds of billions, have been Caking hold in a
promieing fashion also because they introduce an element of flexibility ,
into a setup which is still rendered rather rigid by the ceiling on bank
commitments.
On the foreign exchange markets, the obligation to finance export loans in
foreign exchange was eliminated and the ceiling on terms operations against
lire was raised; the terms of advance payment of imports were doubled; the
time limit on foreign exchange accounts and pending accounts was extended.
Thus, some of the facilities, nor~iiy en~oyed by the operators of other
countries, were restored to the Italian operators; these are facilities
which the Ttalian operators enjoyed iit the past when the foreign exchange
situation looked good. Under current conditions, many reatrictions could
be lifted, in particular those regardtng deadlinea for the payment of imports
and exports, on the duraCion of foreign exchange accounts, on the allocation
of foreign exchange for tourist travel, on commerical transactions carried
out without foreign exchange formalities. We aubmttted these proposals to
41
~'4R Oa'FxCIAi~ i18E QNLY
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rh~ compeC~nC auChorit~;es recently and tihe~e ~,daae are ~n 11ne aith the
~3mel~ness of usfng the insrrumen~a e~ foreign paymenti d~~cip~it~~ in ~n
ever more coherent and more ~cc~n~u~~ed 0ene~ ~n ke@ping wieh et~e ~tYUCCural
and ~~,tuati~.on~1 condiC~on of the balance of paym~nte~
As comparad to orher nat~.ons, T~aly, in exerc~~~ng it~ ~conomic fresdom,
~uPfers from the double 1~.miCation of having to invesC ~.te own eavings
witih~.n ~.te own borders and 3n a currency eub~ected to heavy 3nfiationary
eroe~on; broaden~ng ehe freedom of eurrane traesactione and their eetele-
ment~ to the fullest ex~enC aliowed by the fore3gn eituation, would a18o
be ona way of reducing rhe area in wh~ch tha law 3s leee felt because it
does not correspond to ehe real na~d of aociety.
z1~ o,a
e,e
.
~0,8 0~+
For:o di wwro~3 1 )
, ~ ~ i ooeua:torw tK:t~rt~ e,o
,
- ~o.o ~,e
4) OoeuP~ti Ooa~pr b, industri~ �
~o.e ~.o
�,z 5 ~,a -
on oacup~tt Isut
te; ~qp~:bn~ prto0~ ~~2
t,o Isaitt alfe 2.e
rtw u~ 1 ste di ooltoanknto
000 %
A
7 ~ ~~ff dI lOOp1a2~OM
~00 d P~ oa~ ~ tar~u 1 7
~ Itl
6
8 ) aui ~or, oa~,wti ` 1~1
aoo s
( boaa,pet~
~oo~n~ n n u ~a ~e n~om ~9� n n~~ ~s m n��~ =
rem.: o.N a~�.?~Mw~�~. e.~ r.a. a.wlenw.,,n.
It l TMr a1 Aom,pikir sioo4ro aenr noowr w rrn emwu twN ~ brw A ~~n.
(t) T~w d~ ~Oea~ae~aw ereeur mn~ nqwr w YaNt1 Mr Min~ M N~w
d aerooiwr � 1at� a wrora
[Key on following page]
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Labor forc:a and ~mploymenti~ Kay~; 1'~~'0unempldymene r~e~ c~lculared r~tiio
beCween un~mp~cyed accoxding tio the Cenrral SCatiietics ~nstituCe end ~abor
Force; 2--unemploym~nt ra~e celculaead ae ratio betiaeen pereona regiseered
on Che f3r~ ewo ~ob placemene liste and labor forca; 3--labor force; 4--
employad per~ons; 5-wnemploy~d accord~.ng to CenCral SCatiaCica Ineti.tute;
' 6--p~reon~ regi~eEred in ~ir~t two ~ob placement lisee; 7--persons looking
for �i~~x ~ob; 8--other unemployed; 4-�unemployed; 10--eertiary employment;
11--indueCrial employmenC; 12~~-agricultural employmene; 13-~unemploymene
rates~ Sources Datn from ISTAT [Central SCat~,s~ice ZnstiCute] and Minietiry
of Labor, cortiected for aeaeonal variatione.
The growing nged for aff3cienti markete is also in keeping with an avolution
wh~.ch is now in progresn in Ita1y and which can glso be observed in other
~conomiea--the evolution from a finance syetiem oriented ~oward inetitiutinns
to a fi.nance syaeem orieneed toward the marketa. As far as monetary pollcy
is concerned, this evolut~on is mani�ested ~.n the swi.tch from an effort
accompliehed through the refinancing of the banka Co an effort accomplished
above all through ~he purchase and eale of public securities.
The increase in the needs of the public aector was accompanied, down through
the yeara, by the increase the debt. The t~o phenomen~ did not proceed in
an exactly parallel fashion because inflation causas the former to increase
more than the latter; as the nominal interest rates become ad~uated to higher
inflation and as Che old securities expire, spending and the current deficit
increase by a componenC which, from the economic viewpoint, represente a
mere renewal of the real value of the previously existing debt. The public
sector's recourse to private savinga has gone up drastically; the ratio
between the makeup of the public debt and the gross domestic output aC the
end of 1978 came Co 70 percene whereas it was 45 percent approxtmately during
Che three~year period of 1968-1970.
When inflation was at its worat, the treasury covered ita needa exclusively
from very short-term aecurities; then it went back to offering longer-term
securiCiea, up to 12 months in November 1976, 2-year securities in June 1967
and 5-year securities ~ OcCober 1978.
The stepa taken during the past three~-year period were able only to slow
down Che further reduction in the average residual lifetime of public debt
securities; for the portion held by the market iC was, at the end of 1978,
3 years and 5 months~ in other words, less than half of what it was ten
years earlier.
It is true that, while yielda are adequate, savers are not perauaded to in-
crease their spendfng merely by virtue of the fact that they invest their
own financial wealth in short-term securiCies. Aud it is also erue that
recourse to these securities makes it possible to adapt the nominal yields
to the variations--within both stgns jup and down]--of the rate of inflation,
wiChout any need Por introducitlg forms of indexing. But in spite of these
considerations, the gradual return to a public debt makeup organized also
43
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in long~xange Ceriqs and, ~qaxe gene~a~,],y~~ tihe deE~ni~ion o� a publ3c debt
pol~,cy' ar~;se among the mos,t ser~,ous prob~.eme concarn3ng financial deve~op-
ments over the nexC several years. ~he~r correcC soluCion requires the
publ3c operator to refine and develop A~s markeC knoaledge gnd prac~ice~ in
terma oP meChods and techniques while he mus~ also grow 3n terma of dimen-
sione; it wi11 perhape also be n@cessary ~o rev3ew ~he ~nsCitiutional mechanlsme
wh~ch enable ehe treasury, on ehe one hand, to use the Central Bank ae a kind
of d3gphragm ~:n dealing wieh savers wh~en 3C comea to the eale of iesues and,
on Che otiher hand, to resurt to loans from the k+ank at a ratie which hae no
- relat~onship whateoever to ~he rate prevai~ing on ehe money markets.
However, the high rate oE public debt expansion will be capable of be~.ng
broughC under conerol again not through new management techniques which may
be required or which may even be ~uae3fied in the light of Community coordina-
tion~ Thie w311 be posaible only i~ We get rid of some of the indexed apending
mechanisms; it arJ.ll be poseible by reorganizing our spending ao as ro con~ri-
bure ~o national accumulation; by develop3ng a public tariff and price policy
which, taking into account the rate of 3nflation, wi11 noC lead to a below-
cost goods and services supply or a aupply which wi11 not be in harmony with
the ob~ectives of reducing some forms of consumption; and by handling taxes
in a manner more designed to broaden the taxation base ra~her Chan further
to compresa Che tax-paying capacity of thoae who are already heavily taxed by
the treasury and by inflation.
Tn recent years, a design of the modernization of fiscal policy inatruments
has been taking shape, ranging from tax reform to the reform of budget forma-
tion procedures. Yn this way indispensable cognitive, and normative premiaes
have been apelled out not only for the restoration of puBlic finance but, along
with this, also for a return to a less tormented moneCary policy.
Bank Middleman Transactione and Monetary Ob~ectives
The way to prevent dtscontinuity in practical and conceptual statements does
not reduce but rather emphas3zes the need for analyztng and reviewing the
ways in which moneCary policy is put together, from the most technical phases
involved in the choice of instruments to the phase of spelling out the medium-
range and final objectives.
- Thus, a monetary siCuation in which credit control was less imperative and
where the need for reducing the monetary component of overall financial trans-
actions was strongest, again raised the problem of whether to index some in-
struments in order to reduce bank middleman transactions. We carefully
considered the experience of the United Kingdom, where a progressive reserve
coefficient on deposita forced bank collections within growth raCes indicated
by the Central Bank.
It is true that the swfitch from a cetling on commitments to stricter control
on deposits, through their progressive penaltzation, ~ould return freedom
and responsibtlity to the bankers and at the same time this would reduce the
44
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_ _ ~
~
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room ava~.lable for depoait~ ~;n all o~ Che ~inancia~. trans$ct~;one taken
eogc~ther, with an effece~.vene~s thaC ie eometimes locking in Che clasei,cal
requirement ~or proporC~.onal reserves. Tn tihe,United Kingdom, on the other
hand, th~.a obligat~,on ~.s a].moeti ~.noperative because 3t can be meti also with
rrea~ury ~onde and betwegn-bank depos~.te, both of which are available
~bundanely at markee rates~. Tn Ttaly~ similarly, a progressive burden~
which would select obligaeione as a reserve 3netrument, would h~ve limited
ef�ect~veness, would be tailored only ~or very high marg~nal increa~ente
and for securities isaued at rates clearly out of the market~
Mora generally speaking, in evaluatiing Che innovations which are poesible
in Ghis matter, we cgnno~ overlook Che causes that govern the demand for
money on ehe pare of ehe operators. The dynamica of depoaita~ 3n the various
economic environmenCs in which a country is~organized, reflect terriCorial
deformitieo,especialry in terms of income groweh and in terma of finance
marker imperPectiion. Where, as in France or in the United Kingdom, the
banking system is made up of very few and very big ouCfita operating on
a nati.onal scale and numerous other operatore active essentially in the
capital, these deformities can be hidden tio a certain extent. But where,
as in Ttaly and in'Weat Germany, the phenomenon of regional banks ie wide-
apread, the danger of hitting real sponCaneous phenomena--together with
censurable practices of deposit hoarding--ia great.
In Ita1y, Che growth of the individual banking inatitutions re.flecCa rhe
growth of the areas in which Chey operate moatly, rather than the manage-
ment or rate policies. The most dynamic credit institutions not neceasar3ly
are those that offEr relatively high yields to Cheir own depositors.
These considerations are deaigned Co illustrate the difficultiea which we
can see in an application of the Britiah experience to Italy but they are
nor inCended to deny the importance of orienting the public toward non-
monetary inveatmenta by also asking the banks for a stronger commitment'in .
that senae. As for the rest, both the public debt policy pursued by Che
treasury during the year ending today, and the courageous direction adopted
by some banking institutions, as well as, finally, our action the secondary
market and in reducing some ceilings, alreadq made it possible, wi.thout any
sudden changes in existing setups, to take some ateps in the desired direction.
Others could be favored by new provtsions. -
It has been proposed, for example, to tie the action already undertaken over
these past several years toward strengthening thQ resources of the credit
institutions in with the effort aimed at diacouraging increases in collection
that are not in proportion to the profitable employment capacities. The
maintenance of minimum ratios between assets and deposits Would be in line
wiCh an effort-�-on the part of the managers of the credit institutiona--to
keep the budget balanced and to take care of the profitabtlity of the enter-
prises; an example of this could be found in the lessons learned in other
countries, such as West Germany and Switzer' nd. The application to Italy,
of this kind of discipline could come after we have reviewed the procedures
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for incxpae~,ng tihe ~ts,~aCe of ~he b~c~k~ng ~nst~,tut~.one wh~.ch ~re involvc~d in
th~ publ~a propexty epAereR euch ae ~he xecenC ~'rench exper~.ence ~e~chee us
in thie regard.
i~~~i ~o~e-ioo 3 ~
( Z~ IN COMPLESSO PRODOT71 ALIMENTARI
Prodottlnonallmentari
13p In~(Clqonerelo 200
Prodott
iZ0 �~--dlm~nterl - 1~
Servl:l(6 ~
110 igp -
4~. PRODOTTI 13~ Fru_u~(raco
~NON ALIMENTARI r.... ~~p
(7~Moblli
140 V~tt~arlo 180
~ C~IfStUf�
130 160
C~4> 140
~ El~ttrodom~stlei Zucch~ro
110 - i~
140 (6 ~ SERVIZI
~ ~ ~ Amminlttrati I , r Grne (15 ~ 1 ~
1~
,so ut~ri(11) J - �o
~oo
110 Blocati ~ 2 w -
100 90
1977 1978 1979 1~77 1978 197D
fo~t~ : El~bonibn~ w dnl but
Consumer pricea. Key: 1--indexes; 2--overall; 3--food producta; 4--non-
food producCs; 5--general index; 6--aervices; 7~--furniture; 8-~clothing
and shoes; 9--elecCrical household appliancea; 10--government-managed; 11--
free-enterprise; 12--blocked; 13~-fresh fruit; 14~-sugar; 15--meat. Source:
Based on ISTAT data.
We also considered the posaibility of graduating the yi,eld from the
obligatory reserve on the basis o� th~ yi~ld from collections. For example,
one could render fruitless the portion of Che reserve made up against the
~ deposiCl which--are explicit declaratton of the credit inatitution--would
be remunerated Beyond a cerCain rate. Like the British scheme, thi.e scheme
would fall within the category of tncenttves rather than prohibitions; in
contrast to the British sqstem, it would not discourage the growth of
dimensions as such but only the dimenaions obtained by offering con3itiona
for collection designed Co make profitable use more difficult; besides,
it w~ould not create anq problema of definition and offer of the reserve
instrument. At the end of 1978, the monetary and loan volumes for the f3rat
time since 1474 ceased Co be tfie subject of foreign obligations, commitments
and liability. But new connnitments, of a different nature and origin, began
to enCer the picture during the tirst quarter of 1Q79; here we have the
aspect of exchange, instituted along w3,th the EMS and the announcement, �
Co parliament, of a compleCe Pramework for preventive evaluations of the
flow of money and total domest3c credit, follo~,ring the general governmene
accounting reform law.
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The fact tihat ~ta],y~ ~a~,ned ~Aa F.klS tqe~ns ~Y?s cannn~tment of ~ w~.thin a ehort
time., areaini:ng a degree oF monetary s~ab~~li:ty~correaponding to the average
of ehe Conanunity oP whicR we are a pnrC~ Beyond the variable expresaed by
exchange, eh~:s~ alsa ~nvolved puU1~c f~nance, productiv~ry, wages, ~nd pr3ces.
Following the submission oQ ttte three�year program, which charted a road
for return to ~he Europenn Community, the tihreat of a Yeswap~ion of ir+-
flaeion,~mos~~ly of foreign or~gin, became worse~ The monetary aunc~,rities
conaidered it advisable noC correapondingly to correct the anticipated
money growth bue to keep ~t along the courae already announced.
The moneeary polic~es of the Sevent3.ea seemed to be characterized not only
by ~n increased awarenesa of Che limits of monet~sry action within a ehorC
period o� time but also by the practice of announcing annual targets.
These are two interconnected phenomena because a listing of targets has
meaning only when one i~ sure that one wi11 nor have to make sudden course
correctiona at every turn and boCh are inapired by a concept according to
which the total monetary volume should be regulated only go as to offer
the operaCora a stable frame of reference in Cheir quantitaCive terms which
do not change as the economic aituation changee. Tn this concept it is
perhaps already poas3.ble to dist3nguish the aspecta that most probably
wi11 last from Chose ehat look as if they are going Co fall by the wayside~
In a society where institutional and public-opinion control over the execu-
tive has become tighCer and has been enhanced with growing information, Che
element of transparency, inherent in the announcemenC of monetary targeta,
will remain an established fact. In the macroeconomic field, the actiona
o� the Central Bank have emerged from their silence, perhapa never to return
there; while this ailence in the past was perceived as a guaranCee of in-
dependence, eoday we find that thia independence ts materialized by rendering -
an explicit accounCing of one~s own action in tertna of inethods and Cime
�rames which would not interfere with efficiency.
On the oCher hand, we have acknowledged, as a simple truth, the fact that
economic actions and reactions developed in terms of Cime, Chat an economic
policy is ePficient if it does not introduce an excessively broad and long-
lasting gap between the behavior imposed upon the operators and the behavior
imposed upon those who are pushed along by the entire price siCuation, by
the inclinaCions and Che conveniences at work in society. The illuaion of
the shortcut of government controls has ta a great extent vanished. The
delays with wh~ch we can explain the efPects o~ economic policy have been
recognized as a sound, not pathological manifestation of a setup which
assigns a role to the market, although that is noC an exclus~ve role. These
convictions also can be constdered an accomplished fact.
Less strong and firm seemy to us to be another element whtch has been
present in the announcement of monetary targets--the element of rigidity.
The events of 1978 persuaded Switzerland to drop the monetary target and
to draft a target in terms of exchange rates; West Germany accepted a
47
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moneeary growth of 11,5 percen~ af~er hav~ng announced a gro~rtih of. A pez-
centi ~nd~ �or 197~, defined,~as ~~g target, a growth ~n~erval wiehin
wh~ch the upper ex~r~m~ ~:s equal Co 1~5 ~imes the lower one~ Whichever
way you measure ~.e, Che dr~ft from ob~ectives observed for ze$iy ~.n ].978
in this contiexe look~ like one of Che best-contained~
Moneeary valuea have been shap~.ng up ~n a gradually more flexible manner,
wieh an indica~ion of margins of tolerance rather tihan precise values, or
wi~h periodic revisione of annual targeCe. The new rulea established by
� the ZMF, on ehe terma for loana to be extended to varioua countriea, move
along tihose 13nes.
The or3entiaCion eoward gt~ater flexibiltty brings us to the lasti problem
of a central bank--tihe problem of monetary management and inflaCion. We
can detect ~oday ehat--because of its higt~ level, because ef its peraistence,
because of its worldwide spread, and becauae of the fact that it ~.a roored
in expectations--inflation in recent years has turned out to be a phenomenon
different from the ma~or explos3ons or the alow changea in pricea we had
in the pasC; we can detect that this is not adequately explained in tercns
of an unexpected, wideapread, persistent wearineas on the par~ of rhe Cpntral
Banks or in terms o� government waste; we can see that it is perhaps not
entirely atrange to find here a more profound evolution of eocial rel~tion-
ships also, through which the mechanisma of prica determinations themselves `
have been transformed, in oCher words, including the universal price which
is represented by the value of money,
The production of money and, hence, the fixing of its price, are taking place
within a monopoly syatem--all at once. But prices c?n other goods, suGh as
labor, raw materials, and industry producte are being fixed in several
phases under conditiona very closely resembling a monopoly, by forces
organized for the defense of sector intereats; and the variations of those
prices, which in the final analysis make up the price of money, are often
rigidly interconnected.
Managing money for the exclusive purpose of stabilizing its value once upon
a time ~nvolved a process of adjustment that could be defined in terms of
time and that was capillarily diffused in a multitude of individual adapta- '
tions, a process in which the temporary costa of stabiltzation were
economtcally~ socially, and politically tolerable since they were distri-
buted among many sub~ects. Today these costs seem to be concentrated in
blocks of the economy whose resistance has finally and perhaps forever
been overcome; th~a is Where the unemployment in vast regions and among
vast social straCa would be determined and tfiis is where the crisis of
the entire ind.ustry, not excludfng the banking industry, would also be
determined; the econom~c d~apar~t~es~ waul,d then becc~me ~ntolerahl.e~
Juxtaposing the most concentrated and rigid processes of price formation
w~th a harsh exercise of the monetary monopoly~ tndependent of the support
and the conviction of those who aork ~n the economy, would mean--as it did
in some countrtes, pursutng monetary ~Cability through imposition, through
48
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a meChod wh~:ch, wou~,d ~nyo~ys. ata,Qke ~,nd d~:,~,~prt~;pna o~ xe~ouxcea nQt
di.ss~mil~r from Lhoae accompanying a prtce freeze'~
The various ~xper~.ences~ agree ~n suggeating tihat each of tihe modern economies
is, a~ once, too much dependent on fore~gn countiries and tioo exposed to
domes~ic impulses which are autonomous althaugh th~y are interdependenti
because the Central Bank can etabilize the currency a~ a11 costs, without
wtnning tihe dif�icult FiaCtle of perauas~on a~.so on d~stant fronts. Under
the cond~Cions of our time, a monetary rule cannot be a aubaCieute for or
an tnstrument of d~sc~pl3ne in decision�Knaking and in ~he 6ehavior of a11
soci,ety; whenever i~ was success�ul, it was guided and geared toward
decisions that matured through reason and exper~ence.
Within these narrow conf~nea, an appropriate 13nk between the reasons behind
the operational nature of markeCs and those of intervenCion on markets is
bound to continue to be sought through the exerciae of discretionali~y whose
continued proper use mus~C lie guaranteed by the competence, the prestige~ and
the indepenilence of the 3nstituCion that exercises it. This function,
which modern syatems place wiChin the sphere of executive power, cannot
be rigidified into bureaucratic rules or legialative standards. Both of
these must be understood as the factors that atabilize and preaerve the
room w3thin which the discreCional choices move not as those that supgress
it. '
Loans and Their~Reflections on the Loan System
The difficulties encountered by a portion of the loan system are a mirror
image of Che crisis encountered in large production sectors, caused by
foreign and domestic factors, the last of which is certainly not ~ust the
mechanism of financial credit aimed at the country~s growth and territorial
equilibrium. ~
The orientation effort has been accentuated during the Sixties under the .
impetus of the negative effects which the unequal pace of economic growth
produced with regards to employment, especially in areas with heavier in-
dustrial concentrations and later growth throught natural population move- '
ments.
During those years, planning efforts were explicitly aimed at industrializa-
tion and at Che definition of new organa and�procedures: From consultation ~
between the public administration and the enterprises, the so-called "planned
contract negotiations," all the way to the obligation of advanced communication -
of all investment decisions of any relevance whatsoever, and on to the insti-
tuion of conformity opinions.
The su~,table mechanism for launching a process of self-expansion in the
South emerged through the creation of big complexes which required small-
sized production units. -
� 49.
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The widening gap deve~.oped between the growing asawnpCion of risks in loan
, middleman transactions, gradually, ae ~nvestmen~ activ~ties were puehed
and were concentirated in areae with ~ese~ ~nduatiry, and the declining
decision-making autonhmy, as Che area of ~nit~at~vea, considered to be ~.n
keeping witli ehe country"s growth ob~ect~vea, grew larger. Tn quite a�ew
cases, ~he dec~,sion~cnak~ng liodiee of t'he financing agenciea~rg3ven the parti-
cular ~uridical na~ure of C~ie matter~~tiurned out to be the directi or indirecC
extens~on of the administrarions thetase~.ves wli~ch were suppoaed to be in
charge of grant~ng loans.
At this point we musC noC Ea31 Co menCion ~he piCfalls and dangers ~o the
insCitutions wh3,ch der3ve from ~he gradual and grow~ing atrength of heavy
emphasis on social-political cons~.derations fin tfie evaluation and placemenC
of invesCments. TC would take too much time to report here all. of the partis
of the reporCs that went 3nto the poai~ions~ assumed by the inatitution.
A sysCem based on proper diatribution of responsibilitiea requires financial
institutions--which assume the commitment of remuneration and reimbursemenC
of funds accepted from savers--~to have Che authority carefully to examine
the pro~ects submitCed for their examination and therefore to eatimate the
risk which they assume, before there is any statement as tio the loan 3.t-
self from the government agenciea.
Tn the case where authorization from the surveillance organ is necessary,
such authorization always comes after the loan instiCution~s dec3eion to
provide financing and, in any case, this does not imply any ~udgment as to
the merit of the initiative. The standards established that, for industrial
loan institutions, the action of the surveillance authority be confined to
the most recently instituted steps involving only financing transactions
concerning guarantees with high statements as compared to the guarantor's
assets. Regarding the tfiree southern medium~term loan institutions, this
authority was exercised by delegation of the interministerial committeP for
crediC and savings, hence,�w~th criteria aimed at stimtilating and supporting
industrialization in the South, which the law had assigned to the commitCee
~ itself by giving it this authority, This persuaded the Bank--with the
consCan: approval of this delegat~ng body---to suthorize all requests from
these entities to exceed the guarantee limit.
The economic evaluation of the init~atives ~s based on long-term estimatea
and therefore "even wfien tt is made with tTie utmost clarity, it cannot and
must not be assumed to be infallible" (report for 1966). Nor is iC thinkable,
. for investments of the dimensions required to implement a strategy of in-
- dustrfal development 3n depressed areas, to be able to ask the entrepreneur
to provtde guarantees which, from an economic viewpoint, can commit the
loan ~nst~Cution to a greater extent tfian would be guaranteed by the
mortgage on the plant and equipment.
The action described above and the strategtc functton assigned to the steel
industry and the chemical tndustry were confirmed in the analysfs of the
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. ~~:~�nrmi;ey~ opi,nion p~re~in~,ng Co eh.~. 3outh. Aux:tng eh~ �our~year period
1967~197 Q, eh~y ~moune~d ro 3~376 jb3111on] for 8 f~.xed inve~em~ne volum~
equa], rd 4, 900 bill~.on a~ pr;tc~e that had not baen raieefl; of the ~aee~r
~moun~, 2~900 bi1l~.on i:nvolved ~nvestmenee 3n Ch~ div3e~one of the ch~micel
3ndu~try and m~CallUrgy, In 1Q7]., anoChex 840 wera releae~d for a velue
of 3.48 eriliion~ aBout four~fifthe of Wh~ch ~:nvolv~d invegtmente in the
~r~~ ~nd ~~etior~ meneioned~
'~k~e heavy conc~nCraCton oE inveatm~nt dec~siona in induatry branchae which
~r~ chargcCerixed by Che ~arge dimeneion o� plane and equipmenC an~ by the
pre~ence of ~nail economic group~nge a~e ir l~.n~ aith ~he ob~ectiivae of
aetaining--through economies of scale and 3ntegrated produc~3on pracesees--
the ehregholds of economical oparaCion during the fiscal year, as well as
bring the Italian produce3on capacity up to ehe level attained by the
leading i,ndustriai countr3es. More epeciftcally ae reggrde th~ chemical
industry, ~his d3rection was also determined by the deterioration in the
balance of trade wtrh foreign c~untries which~ inetead of ehowing one of
the mo~C consiaG~nt a~set ieema, as ie does in otiher iuduetrialized
economies, becam~ a growfng liabilit~ item atarCing in 196~. The CIPE
[Intermin~.gterial Commireee for Economic Planning) in 1971 thua approved
~he specif~c secCor developmene plan; xechnical groupe and perCinent
committeeg chenked out the programa of the operators by placing Chem
within tihe framework o� eetiimaCes drafted at that eime.
After 1973, the well-known inflationary developments, which were of inter-
nationa.l and domestic origin, made the implementatiion of the pr~grams that
had been launched even more expenaive. Along wiCh g further deterioration
in the foreign trade balance, also due to a drop fn the supply, we thus
faced the drastic alternative between stopping Che initiatives, with a loes
of ~obs and money already inveated, and Che implementation of the glana
already approved, along with a tremendoua increase in loan requiremente
- and with an expanaton in the relative financial burden particularly due to
the rise in the cost of prefinancing.
In 1974~ the CIPE afCer-�specific deliberaCion issu~d directives to ad~ust
the conformity opinions already granted to the changed monetary etandards
and to the new technological requirements; for chemical industry invest-
menCs alone in the South during the tt~ro-ye~r period of 19%4-1975, opinions
for about 2 trillion were reevaluated and new aurveys were ordered for another
3 trillion. This deciaion was tnfluenced by the widespread conviction both
in Italy and abroad that the criais ehould not have lasted so long and
assumed such dimenaiona as to ~ustifq substantial modifications in the i~t-
vestment programs in sectors Where these programs ahould cover a much
broader ttme frame.
The successful development of prices and tncomes in the Italian economy
and the World economy turned out to differ from the estimates drawn up also
internationally. The heavy increase in the coat of the producti,on facCors,
eopecially of raw materials uaed by the chemical industry, could be ahifted
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only in pa~r~ ro producr pr~;cae. BetWeen 1,972 and 1~78, Cf~~ whoJ.~s~].e
prtce 3nd~x en ch~mte~~ producee aenr up 1~5 e~ines~~ ae c~ga~.nse ~imn~~ a ~
200 per~enC incre~se Che cos~ of putit~ng up rhe plan~e and ~quipmenr and
an gpprox~maCely six-fold r3se in oi~ pr~ces~ ~toreover, the r~.~~ in
chemical producC pric~~~ although ineu�ficien~ when ~.e ~$m~ Cd eafaguarding
~h~ balance of economic accounts, wae such ae Co produce a consumpCion drop
~nd g h~avy shi~ti toa~rd~ Ch~ use of alCernaee product~. The chem~.ca1
induaCry wae lefti wi,rh a ehx~.nk~,ng share of the marketi whose overall
d3mens~.ons grew more slowly tHan expectied in tihe 1~ght of tihe drop of
ehe economic growCh rare~ TY~e t~,ro p~rameCerg, on ahose basi~ Che expar~s3on
plana were drawn up, ehat ~s, ~.ncome growth and Che high caeh elastic~.ti,y
of chem~cal products consumprion, ~kyrockeeed together.
~'or Che OECU eountriee, the Average chemical output increase raee dur3ng
Che period of 1974-1977 dropped to 2.6 peYCent as compared eo 9.2 percent
in 1969-1973 and ae compared to the estimates prepar:~d by international
ag~ncies wh~.ch, alehough wiCh some slowdown ae compared to the preceding
de~ade, ~nd~.cgted a sti11 sustained advanc~ment �or ehe entiire sp~n of the
SevenCies. For Italy, ehe 19~1 chemical plan for Chis period of Cime called
for an annual average grawth raCe of 10-11 percent; ~his growth rgte wno -
still greater than 8 percene for primary production during the three-year .
period of 1970-1973; during the period of 1974-1978 it dropped to le~e than
one percent.
The world crisis in the ateel and chemical sectore assumea more preoccupying -
aspects for Che latrer in particular in Italy becauae of Che country's lesaer
degree of apecialization in some of the more highly developed production lines, -
the large percentage of planta Chat have not yet become operational, as well
as Che absence of any community action in reeponse to phenomena of increased
competition within. Since the plants now being finished are located entirely
in the depressed areas, the crisis of basic industry and especially in the
chemical it~dustry constitutes a aerious problem for the development of the
SouCh.
A process of industrial and financial reorganization for these and oCher '
sectors which are in trouble has now become abaolutely urgent also to prevent
the crisis from involving Che loan middlemen.
The unpaid bills and overdue installments of the apecial loan 3nstitutions
increased from 650 billion at ehe end oP 1974 to 2.5 trillion at the end of
1978 and 2.1 percent to 4.6 percent of the overall domestic commitments;
related to assets, they xose from 30 percent to 58 percent. The conditioh
of some of the industrial crediC inst~tut3ons is particularly worrisome
because unpaid bills and installments are concentrated in a limited number
of industrial enterprtses, some of which have invesCment pro~ects that are
now being put up.
52
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cee+o.w~aw p,e.~ww. v� u?ou d~ d~wi.
~ ~
A0 Titnl~ ~ Iuna I f 1
~OT 1~I
90
niui a~e~u ~a? ~6 )
~o ~ -
R~ecoly pattl~ -
20 ~ -
D~bld wra 91- ute ( 8) -
0
1070 19~1 1972 tA73 1074~ 1076 1076 1A77 1918
111 AI alen di btlMele - U1lneluY 1 Iel pn H�rv~ O~OII~Na4 ~
1!1 hlndp~Mrm~ Mnptpnl dl lnuwl tll cnaito ~ INen AI ~nll ka11
phM~ntl.ll eb~d~nnl ~ ~rM~M lulene~ne.
Public secCor debe. Key: ].--at ~alance eheet value; 2~-~ncluding HOT for
obligatory reserve; 3--primarily commitmentie of loan inetituCione in favor
of local welPare and hogpital agencies and autonomoue eetabliahmenta; 4--
percentage makeup per de~t type; 5--long~term securitteg (1~; 6--other debCa
(3); 7--postal colleceions; 8~-debta owed :lI [Bank of ICaly] and UIC ~ICalian
Credit Union
The effort aimed at restor3ng th~a orderly and economical development of
producCion activities invo:v~~~~ three Areas: The area of enCerprises, Che
area of loan middlemen, and the more stricCly normative area. The reeults
wiXl be influ~nced by the coherence and timeliness with which Che actions
wi11 be combined along the broad ouClines indicated.
Mnving toward the solution of the real problems of the enterprises consri-
tutes the basic requiremenC for concrete support by the loan institutions
which the financial reorganization law has brought under control. We
affirm the principle to the effect that the contribution of riak capital,
by the credit system, confined to in-houae, uncommitCed funds, must be
limited to those enterpriaes Which reveal a well-~uatified probability of
return Co econom3c and financial balance, ~ust as we believe that it is
indiapensable to keep the financing function separated--through the creation
of consortial companies--from the function of managing the industrial enter-
prises as such.
Pareicularly serious enterprise situations with social repercussions have
led to a search for new alternate methods, other than the bankruptcy
procedure. If ir, the~z cases, in which the estimate of the industrial
risk is moat difficult, the loan inatitubions were to review the posaibility
of applying the consortial mechanism with prosgecta of auccess, the recog- ~
nition of the general interest in saving jobs and keeping production
activities going would be manifested then in authorization for the establish-
ment of the consortial company by the Interministerial Commfttee for Gredit
and Savings to which a recent government directive, to be converted into a
53
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law, ase~.gned rhe parti~.nenti auehoriCy ~uet ae ~he righe tiime~ Buti wher~
ehe consort~.al mechani~m ie cons~idered uneuitable or proved to be im-
practiicable, tihe paeti ~ntiroduction~ ~.nCo our aye~em, of the procedure of
axtraordinary adm~.n~etrae~on offere an instrumenti wh~.ch~ wiChin ~he limite
of what ~.a poes3ble, wou~d avoid the efPece of breaking up Che product~.on
org~n~.~~t~.dn ~
Even when the restiorae~on effort 3nvolveg immed~ate fimanci,ar contir~.bution,
the rebalancing of coatia and returns of Che production unir can be ach~.eved
only w~th a epan Cime tiha~ is certainly not ehort and during which tha
epec~.al loan ~.net~.tu~3on mighti encounter 1lquidity problems; ae �or enter-
prises that are una6le to pay back what they borrowed regularly, they muet
in any case saCisfy the bearers of the notes and tihe obligat~one that are
due.
The recapital3zar~.on, which was undertaken by eome in~t~.tu~ione and which
- was supporCed Dy publ3c coneributions ~hati had ~uee b~en decided upon,
cannot be enough when the amount of unpaid installments and Che amount
to be "reeeruceured" is large. And eince the renegot3atiion of loans, in
addition ~o the dendli:ne, invc?lves the rate, the diecovery of Eunds nn the
capiCal market may turn out to be impoasible. The government loans pro-
vided for ~.n ehe eneerprise f3nancial recovery 1aw, to take effect only
to the extient thaC there are sound balance sheets available, can on the
other hand reduce but not eliminate the impact of a liquidity cr3eis upon
the atability of Che insCitution.
The government guarantee, recently provided for a apecific series of obliga-
tions iasued within limits determined by industrial credit institutions,
facilitates the sale of secur3tiea among the public and, if necessary,
allows their purchase by the bank of iesue; in any case, it must be noCed
thaC the etrength of loan institutions can be preserved~ provided the
bu~~3ens of credit reorganization in dealtng with Che enterpriaea that are
in trouble will not harm their economic equilibrium and, in general, pro-
vided that the production units themselves can be helped to recover. If
this is not so~ C~en it may be necessary for the instituCions to prepare
easier crediC mechanisms.
The problema sprtnging from the allocation function and the risks which it
involves explain Che difficulties encounCered particularly by the middlemen
whom the limtted area of authority did not allow to achieve a aector-by-
� aector dtversification of commitments. The ewitch, after the war, from a
substantially monopolist 3ndustrial crediti system to a syatem based on a
rather broad network of insCitutions is really behind this problem. Groupings
of inatitutions Wi.th a restricted operational base may be a good idea to
solve that problem; Che needa of the enterprises, no matter where they are
1ocaCed, could be satisfied not so much by an increase in the number of
middlemen but much more so by their vaster territorial organization.
54
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In any case, eEEic3ent resources ~~~oca~ion ie b~sed on the eeparaC3on of
reeponei.bilities. To ach~eve thie~ we muet restiore substanCial decieion~
meking autonomy for ine~i~utione responsible for aelecting the initiatives;
in this connection ae mueti consider tihe prov~ieion on the priority to be
given to technical-�~.nancial atudies~ with respect ko Ghe conformity
opinion ~.ntroduced by way of implementation of 1aw 183 of 19~6~ Ae we
ea~.d ~.n tihe 1971 report~ "tihe system wi1]. be workable if it turna out
poaeible to prevent its dec~.ine intio a a~.tua~ion where reeponeibilit~:ea
are dissolved and whera we seek to reseore it through administrative and
~udicial con~rols."
Surveillance FuncCion and Its Protect3on
The moat decisive d~receion impartied to surveillance acCivities in Ita1y
and abroad has iCs common origin in the di�ficulties encounCered by the
industrialized econom~.es in recent yeara. The developmenti o� inflation,
the discontiinuous produc~ion aituation, the drop in the growth rate,
the variability o� relative prices, the foreign exchange fluctuations--
all of these are factora which have expoaed credit ayatems to rieks of
� insolvency; it was nor only the high volume of indebtedneas and Che reduced
cash flow of the enterprisee that exerted the kind of pressure that would
threaten the assee balance of the middlemen; Che latter hae also been under
attack in specific cases by speculative behavior, primarily on the exchange
market.
The mos~ acute phase of this inetability came in 1974-1975 and iC~manifested
itself not only in Ttaly but also in the United Kingdom through the cr3ais
J
of the secondary banks, in Weat Germany through the Heratatt cgse and in the
United Statea wiCh the increase in bank failures; a�ter that, even neighboring
- Switzerland was caught up in events which involved a big credit institution.
55
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~ ~ ~ /rnkNdnl pt?ttnfwtl~ �
6 D a m ~ n d ~(1) 0 t f e ~ 1 ~ I) /17 ~ Indu~lrl~ m~nlf~~lu~~a~ ~21 ~
f4) (5) ~A~.~~. ~~~~~r~ ) ( ` ~~a~~~.
9 15 16 DM~~e~~ !d~?I 20 pwen~
P~ ~ ~ I Annl Rnvo?(, IiedM o IMpluUO Produ, di hun PieeU, In t~
eon~ ml e nw na ~~poH~ dl mutl n~UonN~ dN PNL tlen~ P~~ unlN ~n~~o~~o feru
oNn11 OuDehtl hul lordl dl roerel ~ ~~~r1u lo~de dl Ofe~ dl I~.a~e
~ ~~~?ul , della
GeCn~~i
Zu fede~d~ 191 f ~,1 1,0 1,1 ~,9 1,~ !,6 ~,6 ~,6 ~,3 !,6 1,0
191A ~,A i,l A,1 !,0 !,0 ~,1 7,9 1,> >,1 I,! ~,9
~23: "
1'~eneW , , , , , , 191! ~,8 �O,A 1,9 . 1,0 !,l 1,! 0,9 9,1 6,9 1,9
~97A 1,0 !,1 0,1 1,1 S,S 9,9 0,9 !,I 1,6 S,f
~24)
at~nn u~uo i9r~ -a9 -o,~ -~,e o,~ ~ i,i t~,: i,+ io,: i9,e s,~
� (25) ~o~e s,~ i,s ~,i :,i d,> 9,e o,e i3,e 9,i s,~
Italf~ 1911 2,7 2,t � 6,1 �0,! 2,0 tl,9 1,~ 11,5 18,1 6,4
1911 2,9 i,S ��0,~ IO,s tl,l 1,6 17,7 1,6 10,6 A,2 1,0
paaU B~
sGl, 1971 ~,9 ~,6 11,1 -2.! J,6 !,2 1,~ 0,9 6,~ S,1 1,2
19~A ~,S !,I 3,4 2,4 !.6 1,6 S,S 1,~ 1,!
~ 8eIN27, 1977 !,1 f,~ -0,9 1,~ 1,2 6,9 O,O 6,! 1,9 1,B
. C28, 197A !,0 7,9 I,S 3,1 ~,0 I,A I,t 1,! 6,S -0,6
O~n~m~re~ 197J O,t !,N -1,8 ~,1 �1,6 1,9 t,9 O,A A,O 3,1
C29, ~ 1911 �O,S 7,3 0,6 ~,1 1,2 1,0 10,~ I,I 6,I 1,1 6,1
41~nd~~ 1917 S.9 1,7 1,6 Il.1 1~,~ !,S 1~,3 7,0 II,S ~ 11,1 9,~
C30, t9~t t,9 3,0 10,3 ' IIb 1~,6 6,0 10,2 9,o e,s, e,9 9,0
Lu~tembur~o 1917 1,3 2.1 -2.6 t,l 3,6 1,4 6,1 1.0 7,3 ~ 0,3
~31~ 19~e i.a :,i l.s ~,s s.z ~,e s,~ o,e
; TOTALFCEE 1911 !,1 1,9 ta ~,1 2,0 10,0 1,7 I,t 10,9 S,~
~32~ t9f1 7,1 1,9 ' 2.6 1,1 3,6 !.9 t,9 1,7 6,1 1,0 3.3
Si~u Uni~i 1911 1,1 2,~ Il,1 !,1 10,2 ~,9 S.9 S.9 6,7 3,9 1,0
~33~ , 191t 1.0 t,2 6,1 9.0 11,2 4,0 7,~ 6,1 1,7 7,1 6,0
c+~o~o~ i9� ~.o ~,i ii.~ s~ s.s ~,i ~,o i,e :.o
~34~ 1911 ~,9 S.9 7,0 � O.t la S,6 ~,0 6.1 -I.0 -0,6 2,!
C~nid~ 1977 2.! 2.0 0,7 1,S 2,S 2,7 6.9 ~,t S,3 1,6 !,1
~35 ~ is~e ~.i i.s -o~ a,s ~,i 6,> >,i i.9 ~ � e.~
SMtan 1977 ' 2,e -O,t 1.2 9,6 9,7 !.7 0,4 ta -I,7 Oa 0,!
191t I,A 1.2 3.9 t,1 9.6 1.2 2,6 Oa 7.0 -7,~ 0,3
Crelh SMletl~nl n~t~onah e Gomenl~~ione CEE. C!r d t97~ dil~ pronNO?1 ~ M p~?1~ tlirti~ll.
(q L~ �uu+lonl ~oeo etlcol~u wl vdon ~ or~u~ ee~unu. hr 1'IU1u eo~u dN I~roro P~r uniii dl orodoHO.
Economic indicators in EEC and other industrial countries. Key: 1--variationa
calculated on the basis of values at constant pr3ces; 2--for Italy, the coat
of labor ia given per unit of product; 3--percentage variatione; 4--countries;
5--years; 6--demand (1); 7--supply (1); 8--manufacturing induatry; 9--domestic;
� 10--foreign; 11--private consumption; 12--public consumption; 13--fixed
capital investments; 14--export of goods and aervices; 15--import of gooda
and services; 16--GNP; 17--specific GNP deflation factor; 18--output; 19--
actual wages per output unit (2); 20--wholesale prices; 21--unemplo~nent in
percent of labor force; 22--West Germany~23=-France; 24--United Kingdom;
25--Italy; 26~-Holland; 27--Belgium; 28--~enmark; 29--Ireland; 30--Luxembourg;
31--EEC total; 32--United States; 33--Japan; 34--Canada; 35--Switzerland.
Sources: Naeional bulletins and EEC Commission; for 1978, the data are
provisional and partly estimated.
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Grow~.ng f~,nanc3al in~~graC~on, du~ ~o tihe ti~gRti network a� ttt~a ~otie~gn
b~anchea and affillatione o~ tiAe pr~ncipal world banke and ~he growth
oE inCernati.on~l markeCe into which fore3gn currencies flow have made it
more probable ehgt the d~.~�icultiea of one or moxe middlemen in ~ cerCein
~ountry migiie hav~ ser~,ous consequencies a].so for foreign banking syaCems~
Th~ action of the surve~.llance author3ties hae been developed ~herefore
also on tihe level o� internatiionel cooperation;.by exch~nging informa~ion,
tihey try ati an early stiage tio ~.den~ify potient3al dangerous siCuat3one and
eo coordinate the gurve~.llance methode and criteria. In several countries~
the legielative branchea have baen concerned witih protectiing savings by
introduc~.ng or improving depoeit insurance schemes. ,
In Ita1y there ~re specific factore ~hich recer?tly emphas3zed the gutiveillance
effort; Chey are to be found in the etirong groaCh of financial middleman
Cr~neacCione, in ehe attiempt to increase their operational and allocaCion
ef�ic3ency, in the t3ghCer interdapendence between loan esCgbliehments and
special inetitiuCione due also Co economic policy �acCors. The recourse tio
restrictions on the makeup of bank asaeta has made it receseary to check
on the way ~n which the loan eatablishment8 have been following the law and
Che extent to which they can handle the cost involved.
The activities carried out here thia year are covered at length in a apecial
chapCer in th3,s report. In covering the fielde and methods in which this
activity was carried out~ we took care to provide documentation designed
tio prove that our inspection effort in recent yeare has been substantially
diatributed in an equal tnanner also from the t~rritorial viewpoint.
In evaluating the actions of the enterpriaea, we are constantily concerned
with idenCifying the formal rules which sometimea are rather ancient in
- origin. The interpretationy ~quite properly based on law and doctrine,
which the bank has come up with regarding the proviaions in force with
respect to the evaluation of the loan issue methods employed by the private
and public banks is intended to distinguish those which conflict with the
enterprise interesta and ob~ectives from those others which dfffer only
formally from bureaucratic practices or regulations put out by th,e agency;
this is in keeping with the principle of equality of discipline application
to the managers of loan 3nat3Cutions and establishmenta, regardless of
whether they are public or private.
It would as a matter of fact noC be in line with economic logic to derive
different consequences from identical company procedures, according to
the legal nature of the institutiona involved. That w~ould place the puolic
institutions in a position of diRadvantage, that is, institutions which are
most committed to the efforC'to suppor t the developnent of the leas well-off
areas; it would make their mgnagers relucCant to asaume responsibilities
for management decisions; it would accentaaCe the bureaucratic distortion
'of loan management. To counteract these Cendencies, the Bank of Italy wants
to make sure that the successive 3udgment on the technical results deriving
from the credit risk will not be reflected upon the result having to do with
the level of ~espons3bility thaC can be carried out by the loan-approving
agency.
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Regarding en ~.nveee~:gat~.Qn of a epe,~i:,a1 ~.oan ~,net~,tut~.on, ehe ~overnor o�
the Bank o~ ~ta].y wae accuaed of ~tiC Rav~ng been ob~ecC~ve in the decis~.on
not Co forward, on his own ~n~t~ e~ve ~o ~he ~udic~.al auehori.tiy~ the in-
Eormatiion~ da~a~ and news aontia ned in ~ha inspection report.
The Crial which folloe~ed tri e,red a debare on rhe powera of Che surveil~.ance
agency ~.n 3tis re~.ationa w3~ Che ~udicial author3Cy which makes it poes~.ble
~o clarify tihe orientaCion ,P the Bank of Tta1y. The courtis have made and
can make a significan~ contr`ibution ~o th~s debate, as well as Co dactrine~
� There is a standard on th~s matter~ specifically Artic~.e ~.0 of the bank~.ng
1aw, which direcCly involves.relaCions between loan au~horiries and ~uris-
d~.c~ional author~~ies~ Tn intierpret~ng it and apply~.ng ~t the surveillance
agency always tried at the same ~ime to guarantee cont3nuity of ita own
actions and of the aceione of the eub~ects operatin gtn ~he loan seceor; ie
aleo Wgnta to make sure +:hat theae company actiona wi11 6e in keeping with
the mutual requirements of the econom~c and social syetem, noti only the
domestic one buC als,o the international one. This is a tradit~.on which each
governor hands over ~o hia auccesaor �or the purpose of maintaining the
cohesion, credibili,~y, and capacity of the credit ayaeem when i~ comes Co
coping the commitm~nCs assumed toward tihe collectivi~y.
. Article 10 of the banking 1aw is important not only becauae of its best-
known passage which requires surveillance off3cials to reporC, exclusively
to the goyernor the facts and 3rregular3ties diacovered, even when they are
in the criminal area, but also the porCion tn which the reporta and data
concerning credit 3nsCituCions are proCected by o~fic~al aecrecy.
Indlef 1975 ~ 100 1
% %
105 q0
,oo g ur~n:,oew.ae~ es
9S produttiv~ 80
Inwftimmtl tU~l ladi
~ 18
~~F~ DOMANOE 01 FINAN2IAMENTO
Tu~i muNi ~ m~dio 14
125 �lu unnirn 1~
~
100 6 ~ 120
76 Pewnuu . 110
50 Attivltl Iiquidr
150 100
~ ~ ddb Impn~
145 7 ~0
100 (8 ~ 130
naau
76 irolltd lotdi t~
~ 110
Z5 100
197b iW8 1~7I 1978 1076 1~78 1p77 tp78
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ro~ o~~~iciar, us~ orn~r
Cap~,ta]. ~,nve~tmenes. ~n ~dua~xy~, Key~i ~,~~indexea; 2~-f~,xed capital invest-
menes; 3--produc~~.on capac~.ty u~ilization; 4r-~inanc~,ng requests; 5--medium-
~erm and long~term borroarl.ng rate; 6-�xdceived; 7-~liquid as~ees of enter-
prises; 8--approved; 9-~groas prof~.te. Noee: The fixed and capiCal inveeti-
mente, the rece~.ved and approved f~.nanc3ng applicar~.ons~ the groee proPits,
and the 13qu~.d assete of the enterpriees are expressed 3n 19'70 prices on
rhe basis of ~he ~,ndustr3al. investment deflation factior. The received and
approved financing applicatiions involve requestie for funds from ehe apecial
real estate loan institiutiona eubmitted by the induatiria~. sector, wieh ehe
excepCion of rhose peregining to export loans.
This etandard represented the recognition of the bank~.ng aystem as a complex
of enterprises sub3ecCed to con~rol, designed to evaluate their solvency and
liquidity and by looking into the regularity of management procedurea. This
control is among the basic requirementa for the confidence which the depositore
as a whole cgn have ~.n the protection o� the seaur3ty of loan ins~itution
transactiona in their relations with clients, aeaured, by the banke, th~ough
banking secrecy and, by ehe aurveillance agency, tihrough official aecrecy
and the obligation tio report only to the governor.
Following the criminal code itself~ banking ~egislation asaigned to a high-
level ofPice in the crediti system, the function of and responaibilities for
modifying ehe requirement for aecrecy in banking transactiona and the pro-
Cection of the trust of savers with the requirement for maintaining ehe
efficiency of the general aetup by punishing the criminal.
Article 10 of the banking law was inCended to authorize the governor to
subordinate the suUmission of a reporC to the ~udicial authority to an
evaluation of timeliness as to the harmful effects which Che untimely
opening of criminal proceedings could have upon loan institutiona and the
actions which the governor himself can take in order to guarantee security
and in any case to safeguard the depositors.
The law was intended to enable the governor to evaluate the facts determined
through surveillance and to proceed to a comparative consideration of the
requirements which emerge in Che individual specific cases, for the purpose
of determining the most suitable action to be taken toward loan institutions;
noi is the choice confined to apecial management and forced liquidation.
This scheme guarantees the internal coherence of forma of behavior in the
diacharge of the control funtion; this hae always been done by the governora
of the Bank of Italy also in dealing with the judicial authorities.
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, ,
IMPORTA210NI ESPORTAZIONI
~3~Imporution.involun� ~~F~ EWOH+tlonlinvolum~
~ ~ 5 ~ Oom~rM~ mondi~l~ rnl~
D~~nd~ Inlun~ nd~ /
7 ~ntnn~ ~np?c,a c8 7) df?~ pu,T~ ~'o
�o ~~e:i _;~~~~;g~~ rr~:,i-. wn
_L
~.2; ~ ~
' ~ ndo dl e~ cIN uttllee~t~
1078 iD77 1078 10)8 1077 1078
Foreign trade. Keyr; l~~importa; 2-~exports; 3~-importe, volume; 4--exporCa,
volwne; 5--res1 domestic demand; 6--real worldwide demand; 7--pricea; 8--
domestic wholesale; 9--imports; 10--other couneriea; 11--Ttaly; 12--degree
~ of capacity utilized. Base indexea as of 1976 n 100; data corrected for
seasonal fluctuations~ ~
It was possible for a long time to think that there was an appreciable
significance, ~n banktng and legal term~, in avoiding the "noise" wh3ch
supposedly derived from the idea of sub~ecting irregularities that might
turn into crimes to examination by the ~udicial autl~ority. The subaequent
change in enterprise sitiuations and in the context within which they exiated,
persuaded the Bank of Italy, from 1970 onward, to institute a procedure--of
which the ~udtcial authori~y was fully informed--for evaluating information
collected in the course of surveillance activities. The procedure provides
that--where it is considered necessary to determine whether conditions call
for overrid3ng the secrecy requirement in dealfng with criminal ~uatic~e
authorities--the tnformation collected be submitted for examination by a
consultative commtssion made up of the chiefs of the services and the central
director of surveilla;.Ce who would be the chairman, assisCed by a legal officer
from the bank.
The comm:l.sston arrives at its ~udgment also on the basis of observations
made by Che loan institutions as to what had been ascertained earl3er. The
reports examined, the conclusions arrived at, and the motivations behind
them, are formally expressed in the commission's minutea and are then sub-
~nitted to the chief prosecutor for legal review to be explained in an opinion.
The minutes containing Che commission~s proposals, coordinated with the legal
opinion, are passed on to the governor for decision,
This procedure makes it possible to meet the requirement for equal treatment
through the submission of all circumstances to a single procedure in which
the bodies responsible for evaluation are not cl~anged. The results spring
. from the constitution of many technical competences and professional ex-
periences of the managers whom their daily arork on surveillance assignments
makes sensttive to Che problems of efficient and orderly cred3C operations.
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,
.
~'Olt O~FICIAL USE ONLY
'~he governo~ gete the. atxength and atitqu]us gax hi,e acCion by virCue oF the
fact eh~t he i.s ~,~olated when ~t comes ~o mak~;ng ~he. dec~,sions a,nd has no
immuniCy ~.n dea].ing ari.Ch any other governmenti agency, otiher than tihe immun~.ty
thAr would der~.ve from ehe respec~ which ~he ine~3tutie he heads and the
entire bank~ng eysrem are capable of winning and maintaining. The governor's
insri~utiona~ connec~ions to other poliCical and ~uriedict~.onal org~ne, which
can be invo~.ved as neces~ary, were approved by the legislaeive branch in
order eo streng~hen h~s posi~ion.
In particular, as regards the reports of tihe bank in ita capacitiy ae sur-
veillance organ, eogether with the ~udicial authority, we trust that the
governor will be atrengtihened in hia conviction that ~he powere of b~nk
supervisor are asaigned noC to carry ou~ inveatigationa aimed at detecting
criminal acCion or atarting repreesion but at oFitaining elaments useful in
achieving the public ob~ectives o~ the issuing 3ns~3tution itself, through
consCant coordination with government autihorities; thaC the ~uridical setup
did not provide and cannot provide tha~ the bank aurveillance organ come to
consCitute a special police force, endowed with a power of self-deCermination
in the investigation~ to be carried out; that the banks must not~be sub~ected
to discriminatory treatmenC as'.compared to other enterprises which muaC not
be handled thxough an investigative power that is not headed by the criminal
~udge; that it is up to the governor to determine whether it ia necessaxy ~o
involve the ~udicial authority within the limits of compatibility with the
essential requirements of credit protection; that the requirement of secrecy
regarding banking transactions will be complied v~ri.th by all government ~
agencies without excepCion and by way of implanentation of the principlea
covered by constitutional guarantees~
We may be asked whether--without taking anything away from the tasks and
responsibilities of the governor--this office might be allowed Co operate
without any paralyzing uncertainty, affecCing the range of powers asaigned
to it, being added Co the necessary decision-making doubt~
COPYRIGHT; IL I~ONllO 1~79
5058
CSO: 3104
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COUN'TRY SECTION ~TALY
PROSPECTS FOR FOSSY~. COAL DEPOSITS ~N SARDSNIA
Reaerves 132-145 Mil~.ion Tons
Rome ENEItGIA E MATERZE PRZME 3n =tal3an Sep-Oct 78 pp 9-12
.[Text] Fossil coal in Sard3.nia as part o� the
" Italian energy picture. The promise of the
Sard3n3.an f3elds at Sulcis is~ so great, from
many points of view�and as~part of the impera-
tive search �or additional energy sources~ as,
to make its reopening an immediate priority.
The impact of the oi1 criais is steadily growing throughout the
world, particularly in the highly i.ndustr3.alized areas, and thua
making it a matter of urgent necessity to find alternative or at '
least supplementary sources of energy. With thia end in view~
ti;e United States, Germany, and France have already revived
or are planning to revive "coal plans~" which call for reopen-
ing long-abandoned mines, looking for new deposits and new fields~
and conducting surveys de4igned to lead to fuller and hetter
planned exploitation of such resources. Once drafted and appro-
ved~ these plans have swi�tly gone into effect, with widespread
- recognition of the their imp.artance and urgency; financing for
' them has invariably been ample, and sometimes gigantic.
What has Italy done in this field? Has it considered the mat-
ter at a11? Perhapa it has, but not with�the pressing urgency
-i which, in our view~ would be requisite. For example, the big-
gest coal deposit in Italy, the one in southeastern Sardinia in
~ the region known as Sulcis, has long been idle and is still.
awaiting what we feel, for the aforesaid reasons, is an impera-
tive reactivation.
A number of years ago an interrainisterial technical commission
was appointed to study the matter: its conclusions were that
the mines could be reopened and that it would be profitable to
do so. The economic feasibility, the necessity, and the urgency
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o~ ~he undertalc:~n~ reco3.ved renewed emphas3.s a~ the 3rd nat:~ona1
mining con~erence, he~.d 3.n Cagl.iari in 19~3� Despite a1l this~
~hore w~s �urthor dolay 3.n mov3.ng 3nto the operat3onal phase~
at leas~ in terms o� practica~. work ra~Gher ~han mere talk. Even
~he Carbosulcis company~ eatabl,3shed speci�3ca11y to reopen and
manage tho mines~ 3.s find3ng 3.~ di�ficult to move into rea~.
produc~3on.
Given a11 the m3.s1e~?ding propaganda encountered in much of pub-
7.ic opinion on the 3.ssue, and the occasionally incorrect esti-
mates being spread about, we bel3eve that the si~;uation as well
~ as ~he time is ripe to spread the actual state of a��airs out
on ~he table and to analyze, on the basis o� the data generated
by the 3n~erministerial comm3,ssion and by the findings of the
mining conference already mentioned (and particul.arl.y in 1.3.ght
of the report Prof Paolo Piga del.ivered at that meeting), ~he
real potential o~ the Sulcis coal �ield 3nsofar as concerns the
reserves, the type of material there, and the potential for its
utilization for purposes of generating energy.
The Fie1d
Wha~ we have here is a tertiary sedimentary bas~n whose western
boundary lies along the coast and whose eastern edge abuts on
older (paleozoic) geological formations which built up the bot-
tom and the prehistoric boundaries of the basin. Its western-
most portion lies beneath lava flows attributed to the upper oli-
gocene/l.ower mioc ene eras. The productive series~ as it is
called, lies between the underlying paleozoic rock and the ste-
rile overlayment, which in turn consists~of marly and sandy
limestones (upper eocene), clays (miocene), and lavas (in ascend-
ing order). The coal-bea~ing straCum consists of seams o� coal
clustered together in'bundles of as many as eight seams, not all
of which are present and workable in all cases, interlarded with
marles, marly and sandy limestones, whose overall thickness is
somewhere in the neighborhood of 100 meters. The miliolite (lo-
wer eocene) chalk formation c~.oses the lower portion of the basin
resting,~at least in some places, directly upon the paleozoic
strata.
The entire basin is part of a system of major faults running from
northwest to southeast, which cause the basin to slant down from
east to west. The peripheral areas o� the basin, particularly
those toward the east, are also involved in a secondary tecto-
nic system consisting of fault networks and faults paralleling
the principal upheavals, whereas such conditions are not encoun-
tered, as a rule, in the central. portion of the basin.
In the Seruci field, aside from the occasional minor.'local dis-
turbance, there is a degree of evenness in the deposit with a
sub-horizontal slant and a maximwn slope of degrees in a
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~on or~zczat, us~ ortLY ~
sou~her~.y d3.rect3on. Very much tho same s3.tuat3.on h~s been
reve~~.od through bores in the Nuraxi Figus �ie~d.
- The mean ~h3ckness o� each of the aeama and workab~.e b~nks r an-
ge~ from ~..80 tio ~..90 meters. The total extent o� ~he bas~.n 3.s
~ grE~ator th~n 200 ~quare kilome~ers.
Resorvo~
At presen~ ~he two zones in which the most re~.iable es~3.mat es
oE reserves c~n be made~ on the bas3s of a good 36 kilome~ers
of.mine ga1].eries in Seruci and o� numeroua bores made in the
~ related zones, are those of Seruci and Nuraxi Figus.
The f irst datwn we got in making our estimates o� the reserves
was the record of E~lEL ~ s operations in the Serttci m3.no, which
may qu3.te properly be cons3dered representative o� the en~ire
basin. No set of sample bores, no matter how we11 plo~ted, can
be so representative as the �igures based on ~he actual y3eld
of a mine operated for years (1964-1972), which ~hus is based
on a high-percentage sampling referring to the to~a1 population ~
in statistical terms.
ENEL's figures show a yield of 3.3 tons per square meter of
operations.
As for the cubic meter figures~ for the Seruci and Nuraxi Figus
f ields alone, the f ollowing areas may be ~ingl.ed ou~ :
a. an area entirely bounded by galleries and hence available
to visual examination, in which there are still available for
mining in the primary vein a total of some 2 million c~bic me-
ters, and in the secondary vein a total of 4 million m.
b. an area mapped partially with working galleries and part ly
with closely spaced bores, ~gain to be examined visuallyy for
a total of some 8 million m in the primary vein and another
8 mi1l:.on m3 in the secondary.
c. an area mapped by means of somewhat more widely spaced bores
which, again, may be visually inspected since the bed is fairly
level, with a total of 11 million m3 in both the primary and
secondary veins.
Even so, should one aim for a very prudent estimate, one might,
for the aforementioned zone c, take a hedging figure of 0.80;
in this case you would get (taking 80 percent off the 11 mil-
lion m3 for the two veins in area c) something like 9 million
m3 �or each of the two veins. Zn the latter case, this would
come to a total of some 40 or even 44 million square meters.
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tC wr. ~~ow multiply t;}i~sQ C:tgur~~ by ~hn ~for~m~ntidnr~d y3c~1d o~
3~,3 turi~ pr.r yqu~r~~ mc~t~r, w~ ~rr3v~ ~hc~ ~01.~o~~~.ng rd~~rvo~~
c:xpr~sscd in ~~ns : w~.bl~nub ~hd prud~n~~ ~~c~or, 145 m3.~~,~.an
tdi~~; w3.th i;lic~ prudniicn �~Ctor~ ~.3x mi~.~.~.on ton~.
Onc~ uga3.n, w~ rapcui: til~~t ~he currently o~lau~~ted re~~rves
cnncnrn dnly ~.h~ F3.r~ti ard ~c~cond ve3.ns. To ~he~~ mue~ b~ r~dded
~h~ res~rvds in ~ti~ r~m~3nd~r o� ~he b~s~.n~ which can b~ ~s~b~.-
m~+t;ed nnly by mcan~ ~f' ~eo3.og3aal and sad3mentiary cr3.ter3.~~ plus
tihos~ o~ t;ha ~ara~ ~ust d3sCU~snd, bub cover3ng oth~r veins~
which c~n be ~stim~~ed only on thc b~gi~ o~ cor~ s~mpl.3.ngs, ~.n-
c~smucli as they h~v~ no~ yet been involved in ~xtraetion.
A~ L'nr tilie stir~t~ undc~r~ly3.n~ the �ira~ two 3n ~he Seruc3 ~nd
Nur~xi I~'igus ttr~as, ~v~n 3.f wo 3.ntroduce ~~3.rly conservati~.ve
correctiion ~~c~org (0.6d), s3nce th~,g 3.s a~~d3.men~~ry b~~3n
whcisa continuity nf depos3.~ ~nd negl3.gible veria~3on in ~hick-
ness is gener~~.~.y recogn3zad~ we grr3.ve a~ ~n estimate ~'or t~ ~
rhird ve3n involv~.ng an area of 2~ m3.~13on square meters~ which
_ woi~ks oub to Sg mil~.ion ~ons; aimilar es~3.ma~es c~n be made
w3tti ref~rence to n~our~h vein.
It should be und~rstiood that these last data ~rE3 to be taken as
t~ough esbima~es ttnd tha~ they will therefore have to be sur38c~ed
to d~~ail.ed geos~atisticnl investigat3on.
In any c~se, �or thg Seruci and Nuraxi Figus zones~ we come up
wibh tt tot al of more than 300 mill3.on tons of accessible coa1.
For the rest of ~he basin~ bering in mind the fact that the
area as yet unconsidered represents around ~S percent of the
Latal, we can assume albeit only within the broadest margins
of error that there is 800 million to a billion tons of coal
down there. ,
Qu~lity
Amon~ the charges levelled in the pasb and right now against
Sulcis coal, the one citing its inferior quality is the most
persistent and urgent. We shall say at once that of course
this coal cannot be numbered among the world~s finest, but it is
not true, as some have charged, that 3t 3s unburnable.
The three parameters governing coal quality~ as we all know,
are its Lowest calorific power'(LCP), its percentage of ash
con~ent, and its percentage of sulphur content.
~
With regard to the first parameter, we can confidently assume,
on the basis of swnmary reports from the Seruci mine as well
_ as on that of analyses ordered by the Interministerial Commission,
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~OIt OI~~ICIAL US~ ONLY
~h~~ bhn LCY rang~r~ grom 4, d00 ~0 4, 50o k~.~.oc~id~~.~~ p er k~.~.o-
gram t1tQq~./k~) .
~NCL rapor~~d~ ~.n th~ per~.od~ a o~~or3.~3.c power o~ on~.y
~t~aui~d 3, ~00 c~~,or3.~s. ~n ~1~. probab3~~.'cy, ~h3~ was nn ~.na~anco
oC pol~.ut;3on w3.~h s~~r~.J.~ t~~t~.~.nga; we sha11 re~urn to ~;h3~
pninti ~.~~~r on.
Th~ ~~h conten~ 3.s 3.n thc~ ne3.ghborhood o~ 25-30 percen~, wh~.~.~
thr~ su~.phur conbent 3.~ ~round 6 percent upon extrac~3.on.
Onc~ ag~3.n, we rep~~t ~hat these data descr3be a fuel thtt~, -
wh~.1e no~ op~ymwri~ 3a cer~~3.n~.y usable and no~ v~ry much dif-
�~er~n~ from other coa~s m3.ned 3n Europe or on oth~r continen~~
wh~.ch are u~ed ~or ~hn s~me purpoaes. Furthermore~ 3n o~her
areas o� Its1y ENEL 3.~se~.� burne coa~~ wh3.ch ar~ certa3n~.y no
betber. We shall come b~ck to that ma~~er of ~sulphur conte~n~
ag~3.n~ ~oo. ,
Produc~3on and Cos~s
For ~he following ev~lua~3.ons we have referred to the feasibi-
13.~y study made by ~he Interm3nisterial Commission~ to o1d pro-
duction data from EN~L (the last company to manage the mine)~
and to ~he already cited report submitted by Prof Paolo Piga~
professor of Mining Arts on the faculty o� Engineering in Rome,
to tin~ ig73 Cagliari conference.
The output of the Seruci and Nuraxi Figus mines, under a plan
which calls for utilization of the Nuraxi Figus shaft for~ ex--
traction and of the Seruci shafts for ventilation," can reach
2,100,000 tons per year, a quantity which, in the current stnte
of affairs, is not far from the optimum for extraction opera-
~ions. I� we assume 230 working days per year, in the course
of which every employee, assuming a 25-percent absentee rate,
would be on the job for 180 days, we come up with production o�
9,000 tons per day.
Coupling that output with a labor force of ~83 (with an inside-
outside ratio of 75-25 percent), we get a total yield of~11.5
tons per man per day.
By way of comparison, consider that the now suspended Seruci
operations produced 12.7 tons per man per shift, and that the
modern coalmines at Gardanne in France and at Walsun in Germany ~
produce yields of 11 and 8.4 tons per man per shift, respectively.
On the basis of these yields, and taking 45,000 lire as the cost
of one man/day (incl.uding fringe bene�its and other ancillary
expenses) and assuming th~t the manpower share of the total
cost is around 60 percent, we arrive at an extraction cost of
6,500 lire per ton.
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ro~ o~ric~~ us~ orn~Y
~L', Curbhor, we shnu~.d b~lc~ ~.~~s ~avorable cond~.~~.ons ~h~n the
dn~;:~ w~ havc~ ~usb C3.ted ~ven ~hough the ~at~r.er~ w~ hav~
sc~~ri, ~rc~ qu~.~~ ~~~r~3.b~.e ~nd c~?1au~.~~e a to~al y3eld o�
~3~ht or c~vnn f3vn ~ona per worker per day, we ahould h~ve aost
o~ 4Ud and ~.5~ ~00 1.3.re p~~ ~on~ respect3.ve~y.
U~.3.13.z~~3.on
As to tho i'~~s3.b3.~.3.ty o~' us3.ng Su~.c3.s coa~.~ ~or wh3.ah we have
thus fur ~n~~.yzad nat on~.y ~h~ geo~.o~3.ca1 and sed3mentary fo~-
~ures and ~he qu~~.ity,~ bu~ the~ ~xt~nt o� ~he reserve~ and the
co~t pr3.ccs a~ wa~.~.~ ~.et~ us 'po~.nb out at once ~hat ~h~re ar~e
no prob~.~ms inheren~ in us3.ng coal w3.th a low calori�3c power,
in tl~at ~}?a S~rdin3.~n power p~ants are set to operate at
3~.00 � 20d kc~1./kg. ' _
In 197'5 ENEL liad a~.roady stabed tha~ 3.t was re~dy ~o use a mi~.-
~.ion tons o� conl per year, pay3.ng for it at pricns pegged to
the ca~.orif~.c conten~ in equ3valence, without penalty (so as
to allow for ~;h~ yield rat3.o between 13.quid and ~o13.d �uels)
wi~}i fue~. oil. At bha~ time~ ENEL quoted a valuo for fuel 03.1
o� $l~ 000 ~.ire per ton~ and assigned it a cal.orific power of
9800 kcAl/kg. Accepting the calorific rating as sound, but
be~ring in mind as we1.l ~he fact that, on the basis of the la-
test increases, �ue1 oil has hit 90~000 lire per ton~ wc can
arrive at the purchase price of 40~000 lire for coal rated at
4, 400 kcal/kg and 27, 600 lire per ton for coal rated at 3, 000
kc al/kg.
A comparison with the cost prices we calculated above ahows un-
mistakably that Sulcis coal is commercially marketable.
In any case, it is possible to prove as of now tha~ ENEL cau~.d
absorb a good deal more than the million tons it is apparently
still prepared to make a commitment for.
ENEL~s power plants in Sardinia~ and we are referring to Porto-
vesme Nuova (known as the "super-plant)~ P.ortovesme Vecchia,
and Santa Gi11a, can readily burn the 2 million tons of coal
we started out with.
If we decide to consider old Portovesme as already obsolete, we
could include in our reckoning the Alsar-Euroallumina plant,
which recently was transferred to ENEL management.
If, on the other hand, the 1.1 million tons unused by ENEL were
to be sold to other users and penalized by 10 percent~ the pri-
ces wou].d be remunerative for the mining company, dropping to
36,400/ton for 4,000 kc~l/kg coal and to 28.8$0 lire per ton of
3,000 kcal/kg coal.
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rox orric~~ usE ortLY
~n ~h3.s conndc~~.on, wn~.l ~o bnar ~.n m3nd bh~ ~~o~; ~h~?t
~ ~h~rd ~ra ~evnn morQ ~h~rmo~~~o~r3.c pow~r pl~nt~ 3n S~rdin3.~
now 3n nroduat~.on~ w3.bh a comb3ned ~.n~~al~.ed power c~.ose ~o ~00
MW, wh~.~.o ~hdr~ wa~ r~cen~ d3~cu~s3.an and con:~3.derab~.o protn~~
ov~r n propo~~d nnw ENEL pow~r plant 3.n th~ nor~hern par~ o�
~h~ 3s~.~nd; ~h~ pro~~st~ be ~tt nnt~d~ h~d to do on~.y w3.~h s3.~~
~.n~, ~~.nco ~h~ n~ed ~or ~he plant in term~ o~ energy requ3.r~~
men~s~ 3~ genera~~.y rncogn3.~ed.
mhe ~nct is thtt~ energy consumpt3.on 3.n Sard3.nia ovc~r ~the pas~
few ye~rs has 3.ncrea~ed very mark d1y~ up from ~~~.O9kwh 3n 1.g65
~0 2. 2� 10g i~ ~.q 70, and �rom 3�~.0~ i975 to the curren~ 1.eve1
o� some 4�~.0 ; o� ~h3.s~ ~he hydroelectric share, wh3.ch rema3.ned
pract3.ca~ly cons~an~~ accounted for 20 percent in a.97o, bu~ now
accounts for on1.y 10 percent.
Rem~rks and Conclus3.on
To arrive at som~ conclusions I do no~ th3.nk we can do w3.*houb
~ mare d~.rect compar3son~ ~.n terms of suitability~ between �ue~.
o~.~ and coal.
To make the comparison more meaning�ul~ let us ~ake ~he ~.east
�avorable data for coal~ asaum3ng an overall yield o� 5 tons per
day per worker and hence a price per ton of 15,000 ~.ire and a
' ca].orific rating of 3~ 000 kcal/kg~ and 1et us take the data we
have been using all along for fuel oi1~ which ~;3.ve us a cost of
90~000 lire per ton and a calorific rating grea~er than 9~800
kcal/kg; we shall make ~he comparison in terms of therms (th).
- The two data we derive, fuel oil at 9.20 lire per therm and co~l
at 5 lire per therm, are, it seems to me, more than indicative
of the wisdom of us3ng coal. Not onl.y that, but the difference
between the two costs leaves great leeway both �or increases in
coal ca~sts (eith~r in terms of ]Labor or in terms o� overall ex-
penditures) and for variations in yield and performance. Now,
should we choose to use the most favorable hypothetical condi-
tions f~~r coal, taking a cost price of 6,600 lire per ton and a
calorie rating of 4,400 kcal/kg~ the cost per coal-generated
therm would drop to 1.55 lire. Clearly, this argument holds
good for a combined management which sees no management profit
for its mining division or for utilization at the pit mouth.
Transport costs, in any case, do not substantially affect the
terms of the probl.em inasmuch as, accorda.ng to Giovanni Maria
Piga, of the Calgliari school of engineering, transport from
the mine to the Sassari zone, clear across the island (200 km),
would cost 2.08 lire per them by rail and 2 lire per therm by
road, whereas for shipments in the neighborhood of 100 kilome-
ters the cost of transport would come to 1.$~ by either rail or
road.
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rox ~~~~czar. usE om.Y
Now ~h~~ ~hd princ3.p~~. ~nrms o� ~h~~ prob~em havo been clearly
~~~tc~d~ ~~hou~.d 13.ke bo make a fEAw remArk~~ b~~oro c~.os3.ng~ on
th~ mo~?ti~.ng r,� ~he~ r~sump~~.on of aoa~ oper~?~~.ons~ ~nd ~.t~ re-
p~.~c~m~nb of fu~~. 03~ 3n ~he Sard3.n3.an power p~ants 3n ~e,rms
o~ ~he economy ~s ~ who~.e and o� ~he ba~.ance of payments~ as
w~l~. ~s som~ remark~ about th~ eco~.ogical problem~ 3nvolved.
Hy burn3.ng co~~. 3.nstet~d o� 03.~., we shou~.d rea~.3.ze sav3nga of
z3 pQrcen~, wh3.ch oome~ to somo 20 b3.~lion 13.re per year, for
p~.~?n~s in the southern part of the is~.and, and of 20 percent,
or more ~han 15 b3.113.on, �or ~ha same number of plants to be
bui~.ti in the Sas~~r~. ~rea; at the same t3me~ we should be cu~-
' ting abou~ 70 b3.1J.ion ~.3.re o�f the balance of paymen~s deficit.
C~.ear~.y, such sav3.ngs do not aolve the overall problem o� Italy~s -
ba~.anco of payments y, the energy field~ s3nce Sard3n3.a~ accord-
ing to data in ov.r po.~sosa34n~ accaunts for less than Z percent
of Italy~s total electric power generation (1975~ l40�109kwh =
54'106oquivalent tons o� coal at 6,000 kcal/kg).
I�, however, along with the purely technical and economic assess-
ment we take the soc3.a1 probl.em of employment~ it ia clear that
the whole argument takes on a different signi�icance and assumes
an even more inviting pro~pect. In a depressed zone like Sulcis,
without enga~ing in rhetoric or pointless demagoguery, a,steady
job for say 700 ~0 1~000 men takes on very considerable economic
value~ particularly when those jobs are ~qing to be there for ,
a good many years to come. '
'There are those who see a negative side to the employment ques-
tion in the alleged difficulty of finding manpower, particularly
men with highly specialized mining skills.
In our view, even while we perceive one of ENEL~s mistakes in
its having allowed and encouraged the scattering of a
very sizable pool of experience and akills, the problem does not
in Fact exist.
We can use in proof of this two orders of considerations, the
first of which stems from the example of the Seruci mine, where
advanced mechanization was introduced in i96o. The m~en on the
job quickly got the hang of the system, to the point that Seruci
during those years was a�must" for technicians from all over
Europe as an example of the finest use of the potential of inecha-
nization. Consider, if you will, the fact that productivity
rose by $1 percent, while in other advanced technolc,gy countries
the gain from automation was 9 percent at most.
The second consideration is that right now there are some 4,OOU
Ttalian miners, a go~?d share of them Sardinians, working abroad
in France and Belgium alone, and that we could easily draw upon
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~ ~OIt O~~ICIAL USE ONLY
~h~t work �ora~ ~o round ou~ ~he a~?dro~ of 5~rd~.n~.an ao~~. m3.ners, ~
~he mor~ ~o ~.n ~hat the ~ore3gn n~t3ons~ who ~r~ ~h~m~o~.vo~ ~.n
a cr3si~ a~ presnn~, are beg~.nn3ng to d~.sm~.~~ �ore3.gn work~r~.
r~ a~,~~r 3n ~ny ca~e ~ha~ h3.r3.ng manpower mus~ be ~he con~e-
cluE:ricn~ r~~h~~r th~n tho cauae, of r~dpen3ng the mines, wh3.ch
would bn mo~3.va~nd by eaonom~.a factors: in no oircumstances
should we ~.3ke to see ~he need for f3nd3ng work for peopl.e de~nr-
m3n3ng or even ~us~3fy~.ng ~he open3.ng o� a m3.ne.
As for th~ eco~.og3cal aspec~, unqunst3onable reopen3.ng the Su~.c3.~s
mines and a~art3.ng to burn ~heir coal again poses a problem of
th3.s k3.nd in cannection w3.th ~he h3gh sulphur content of tho coal
3tself .
Sta~3s~3c~~. 3.nvest3.gat3.ona c~nducted on the s3.te make it poss3.bl.e
to s~~te ~hat~ given the a3.~~i.ng o� power plants 3n ro~.ation to
preva313ng winds and stack he.igh~s~ the risk o� po~lut~.on is very
slim 3.ndeed.
Zn this connection Prof Paolo P~.ga wr3tes that: "Solely in con-
sideration of the very low levels of S42 concentra~'ions a~.~.ow-
able under Italian law (around half that called �or by the EEC) -
could there occur under under specific c3.~cumatances~ even
though with a very~low probability, a concentration at ground
level in excess of that limit.
Furthermore~ a number of studies are go3ng on 3n Ita1y and abi~~ad
on desulphurization of coal and fumes and, according to reports
published in the ANNALES DES MINES DE BELGIQUE for ig75, the
latter process would seem to be just about ready to go. We
might add that PL 6l5/966 on polution does not consider Sulcis
as a zone to be subjected to atmospheric monitoring.
From everything we have said it seems to us that we may conclude
fairly confidently that Sulcis coal can be used in electric power
generating plants; not only is it feasible~ but its use would
constitute budgetary savings and remove some of the burden from
the balance of payments.
The final question is sti11 one of the ~ime-frames involved.
They could (and we use the conditional here because they will be
a matter of political decision, and hence are extraneous to a
technical discussion) be �airly short: within the span of a few
years we could achieve complete resumption of operations in both
the Sulcis mi.ne and at Nuraxi Figus, and the production level
of ~ million tons per year that has been planned.
We hope for ourselves, and above all we hope for this country,
that those who can do it find the will to get started in the
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' FOit O~~LCIAL USE ONLY
~hort~sb poss3.b~.e t3.mo nn ~h~.s under{;aking, because and 1.e~
u~ ~h3.s clo~r~.y und~r~~ood so a~ to keep our feet f3.i�m~.y
nn ~hc~ ground :~t 3.~ o� rea~. value as a~upp~.ementary source
01' ~nor~y.
CO.E'YRZGHT: i~78 "~ner~;3a e mater3.e pr3.me~'
S~rd~.nia Has a Century ~ s Wor~h of Coa~.
Milan IL CORRICRE DELLA SERA in Z~a13.an 26 May 79~p 9
1 CArtic~.a by Enrico Negrott3]
CText] Extrac~ion could starb up again as
ear7.y as ~.98i. Energy generated w3.th this
�osai~. �ue1 would cos~ half as much as oil-
gener~ted power. Latest aurveys o� the
�ields~ ahut down in the early 70s~ double
. earlier est~.mates o� reserves. Su7.cis basin
to be worked with highly sophisticated new ~
installations.
Carbonia ftere, beneath the gently rol~ing hills now green
with myrtle and scrubby, 1ow-growing mastic tree, lies Ztalian
coal. The coal o� Sulcis~ corapletely overlooked in our "energy
p1.an." ~Zt is a coal which is certainly not to be counted among
the finest, but which, in an energy criais like the one we now
have, we cannot afford to forget. Coal like this is regularly
and profitably mined in France, while East German.y~s energy sup-
_ ply is actually based on a lignit coal even poorer than this.
This coal-bearing basin has a life story centuries long. The
first to pay attention to Sulcis for the ~'black" wealth of its
under~;round depths was General Lamarraora, who began to take an
interest in Sardinian coal in 1852� In 1854, l~.S tons of coal
were mined from Sulcis. In 1876 fossil coal f�rom.these mines
was sent to the navy yard at La Spezia.for assay~ and the report
from the technicians was very significant. It said in part:
"For an urgent mission we do not.hesitate to say that a ship
stoked with fuel from Bacu Abis could call herself lucky." And
leter on, in a report from the same yards the following year:
~'Ba~cu Abis coal is a fuel which may~ readily be used in station-
ary machinery as we11 as in ships engines, because 108 kilograms
of this coal is the equivalent of �100 kilograms of Cardiff."
It is thus not, or at last was not i.n those days, coal to be
thrown out as useless. In fact, i.n times of a"squeeze," the
Sulcis fossil coal has come in handy. It did so, and contribu-
ted a serendipitous propaganda plus~ dur3.ng the ~20s. Then
again after the war it looked good for reconstruction, It kept
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roR o~~zci~ us~ otnY
on 1.ook~.n~ good r3.ght up un~3.~. the ~ 60s, and 3.n the ear~.y ~ 70s,
whon ~he Sard3.n~.an mines were �3na~.~.y ~hut down 3.n ~he cours~ of
a comp~.~.catad ch~nge of management, ~here they s~~.1~. aa~~ unused
and usoless, tuaked away 3n mothball~.
Now peop~.e are ta7.lc~.ng about them aga3n, because ~he onergy cr3.
s3~ hus neared its peak. The NationaJ. kIydrocarbons Agency (ENx)
and ~he Sard3.n3an M3n3ng Agenay (ESM) (ho~lding a 60 percent and
40 pc:rcent in~erest respect3.vely)handle the management of ~he
coa~. bas3n, which in recent years has been in the hands of ENEL
~nd EGAM.
TherQ is also ~a~.k about s~arting the m3nea up aga3.n~ ancl has
been for years. There is talk~ but the time~frames are grow~.ng
steadily longer, because opinions on the 3ssue are wide].y d3.~
vergent.
As of now~ 180 workers are employed at the Seruci mine (more than
a few of them graduates); after having taken a course in the
- French coal mines, they are now engaged in keeping the machinery
in working order. Running the show is engineer Giovanna. Congera,
who, like them, is just waiting,for the ~ulcis basin to be active
again, to start supplying its coal again.
Where do things stand? We asked Dr Pietro Rambelli~ managing
- director of the Carbosulcis company: ~'Right now," he said, "we
have comp7.eted taking core samples in the southwest zone of ~he
basin, in the Nuraxi Figus area~ with results which we re~ally
m~tst c~ll somewhat 'surprising: there is a 1ot more coal there
than we thought.'~
"How much?
~'The deposits revealed by the cores are very ].arge: let~s say
that if the earlier estimates for the basin were $00 million
tons, in the light of these latest findings we can talk about
just about double that. Now we have to get in there and take a
look at it, and that will take several. months, i� these veins
are a~ the same level, depthwise; and then we can start mining
the big manway, the tunnels, each of them 3.5 kilometers long, that go down
to the working face."
The new extraction systems, though, no longer require shafts and
lifts, but swift descents, ~xcavator ~'moles, " and conveyor belts
to carry the coal directly to the�washery and from there to where
it is to be burned.
"Dr Rambelli, when wi11 you be able to reopen the mines, see-
ing that you have already received mor~ ~th~an� 3~ 000~' ~ob ~agplica-
tions, many of them even from emigrar~ts svh~o�would like to come
home?"
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"Wn huve 3us~~ now ~on~ ou~ to 20 ~tal3.an comp~n3.ns invitia-
~3.nns ~o b3.d on construct3on of the manways. I ghould
s~y ~11~~ by Sop~embor we can get started on work. The �3rst
coal wi~.1. come ou~ 3.n 1981~ 3.f we don't run 3.nto any obatacl.es.
Remember that we ~re go3ng ~o have ~o ~rain ~he m3.ners~ a very
3.mport~n~ ~hing, bnoausa even though work3.ng ,3n the m3nes 3s not
what 3.~ used ~o be, the ac.c3dent r3sk is st3~.~. very h3gh : you ~ ve
~o~ coa~. duat~ gas~ and water 3nf13trat3on... .
According ~o Rambo].13., there ia enough coa1. right here under our
feet to ].as~; a century. And the experts say that the enorgy
generated with this coal wou~d cost when all the reckon3.ng
3s done on].y~half, or 1.eas, as much as o3].-generated power.
With ~.2 mi~.l3.on tans every year ( al.though i~ w3.17. take years
' ~nd enormous inves~ments to get to that po3nt) we could gener~te
as much e~.ectricity with Sulcis coal as ~11 0~ Italy~s hydro-
electric plants produce today ( six percent of national require~
ments). That 3.s what the moat opt3mistic of the experts say.
"The political wi11 is there, " Rambe].13. says, �but we here at
Carbosulcis are not ready just yet,�
~~We Sardinians~� says Sardinian~So.ci~list Party (PSI) leadnr -
. Hon Giuseppe Tocco, outgoing member of parliament and mayor o�
IglESias from i95o to 1959, "have had it up to here wxth a~ntra~
venous injections o� hope. Insofar as the political wi11 to
move ahead goes, a11 I can tell you is that the mines muat be _
reopened in the interests of the nation. And I should like to
add that I find it grotesque that the ENI people~ at the very
time when the balance of payments is running increasingly into
the red, should be the.ones insiating on all this delay~ linger~
and wait."
"We shalY see whether or not the political will is there,~' says ~
the Italian Communist Party~s PC$ Senator Daverio~Giovannetti~
a former labor union member and a man who knows all ~there is
to know about the malaise that is a creeping disease in labor
circles in the coal basin, "when they keep their promises and
when we see a start on construction of the manways. If
this does not happen, there will be a scandal, because all the
technical reports agree that the deposit is there, and that it
is a big one. Either they are going to start up the mines
again, or the time will come when somebody is going to find out
just who is responsible. We cannot go on forever with these
delays, which, more than anything else~ constitute a heavy bur-
den for the society and which, furthermore, are an insult to
every Sardinirian."
In the view of Senator Goisue Ligios, of Nuoro, Christian Demo-
crat (DC) candidate for the Senate as well as for the European
Parl.iament, and an expert on alter;~ative energy sources, a11
this talk about Sulcis coal has to be examined in the light of
what is happening worldwide in the area of energy supplies.
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~~The government, he says, ~~mttst care�u~.~.y exam3.ne the techn3.ca~.
dor,umen~at3.on. rf ut313.zat3.on o� these Sardinian m3.nes wns not
' econom3c~~.1y practioal when o3.1 prices were ~.ow, th3ngs are not
~h~ ~am~e today ar~d~ unfortunatel.y~ they w3~.1 be even worse to~
morrow: honce the whole matter needs to be reexam3ned. Thare-
fore beFore we star~ talk3.ng about �ore3gn coa~., we must ~ake a
look around our own house, aee whether or not they have gat tho
costs r3.ght~ and �urthermore cons3der the ~'a~ct that r.eact3.va~3on
of tho Sulc3s wou~.d have anyth3ng but a slight e�fect on the
3ntractable prob~.em o� unemproymenti on the island."
Taking a stand against the charges that Sulcis coal has ~an exces-
s3.vely high sulphur oontent ~ 3.s Armando Congiu~ professor of ~.et-
ters and chairman of the comb3ned Sulcis-Zglss3s3ente district:
~'Nowhere 3.n the United States or in Russia~ or even in Engl.and~
he says, ~~is there any law against burning coal with a sulphur
content in excess of 5 percent, so long as any poll.ution is car-
ried off on the wind. And here on our� ~nsland there is a].ways
the mistral." ~
And so the issue is sti11 open. Ita1y's energy plancalls for
at least 10 million tons of coal per year. Yet, incredibly,
nobody even mentions a7.1 that coal in Su:lcis. And that is some-
thing they don ~ t 7.ike out there ix~ Sardinia.
� COPYRIGHT 1979.Editoriale de1 "Corriere de11a Sera'~ s.a.s.
618~
CSO 3104
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COUNTRY SECTION SPAIN
ETA'S ORGANI2ATIONAL METHODS DESCRIBED
Madrid CAMBIO 16 in 5panish 17 Jun 79 p 37
,~Text/ The ETA %Basque Fatherland and Libert~/
military wing for a year now has mai~ntained in
Madrid six or seven "sleeper commando units"
composed of four members each, plus another dozen
, or so people in its in�ormation apparatus and
corresponding clandestine logistic aecurity
structure. In all, there are between 40 and 50
"Etarras" /ETA members/ in Madrid.
One of these squads was responsible for the killing on Friday, 25 May, of
three military officers and their civilian chauffeur, a reliable Basque
source fiold CAMBIO 16. The squad in question remained in Madrid after the
attack and is still here, according to the same aource, who explained to
this newspaper the functioning of the terrorist organization.
About a year ago the Madrid press, citing police sources, reported on the
presence in the Spanish capital of some outstanding members of the ETA
military wing, mentioning among them Apala himself, one of the men moet
wanted by the national and international police.
What are the "sleeper command'o units"?
These are the men who set up the superseczet terrorist atructure in the
Spanish capital, which carried out its firat important misaion on 25 May.
The Madrid "sleeper squads" are composed of terrorists who are perfectly
adapted to and integrated into Madrid life.
They ordinarily lead normal lives, holding ~obs in offices, banks, shops
and other establishments, or are registered in some center of learning.
There is never any contact among them, and in many cases they probably don't
even know each other. They are "hit me~i," willing to do anything and p~rfectly
trained, whose sole function is to act when they receive the order and
until that time to wait, submerged in the grayness of the urban landscape
and in the shadows of perfectly normal, everyday iives.
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Meanwhile, ehe informaCion aervices prepare the at~acks down to the f~.nest
detail. Including the action commandos, there are said to be between 40
and 50 "Etarra~" ~.n Mad~id at this time.
Theae services seudy varioua attacke and draw up a diveraity of plans, which
they communicate by devioua means Co the actual ETA mil.itary chiefe, whoee
~identity Ct~ey probably do noC know. -
On the day the chiefa decide Co carry out the attack, they chooae a plan,
and the order arrivea aC each of the "aleeper commando units," with precise ;
instructions worked outi to the last mi~limeter.
Then, in the terroriae ~argon, the "sleeper commandos" awaken, come ouC of
~ the shadows, attack and return a few momenCa later to their normal lives,
whether in an office, a shop or classroom.
Without furCher ado, then, credit is claimed for the attack, always in the ~
same manner, so that there will be no inrerference. Until he was assassinated,
Argala took charge of this from France. Iti is thought today in certain circles
that this was probably his only function in the ti,ghtly sealed terrorist
organization.
Absolute Secrecy
In this structure the commandos or information services are the moet wlnerable.
Their members see and know each other and are the moat viaible part of Che
Etarra "iceberg."
Their capture, however, does not endanger the essential part of the organization,
since these services maintain no contact whatsoever with the "hit men."
The "hit men" are often youths who have had no contact with the police. They
hsve never been arreated and perhaps never will be.
Actually, according to the special source interviewed by CAMBIO 16, after
an attack as big as the one on 25 May in Madrid, the ETA military will never
again use those terrorists. Perhaps they receive a reward and from their
bloody anonymity as executioners return to the anonymity of their daily lives.
Those who are in Madrid will one day, perhaps witinin a year, quietly offer
Cheir resignations on one pretext or another from their places of employment
and will return to their families or to their Basque valleys.
The Basque irredentist organization, with its internal excisions and dramas,
has been underground for almost 21 yeare. It has accumulated a huge reserve
of experience~and in addition has succeeded in creating for itself a not
inconsiderable political support, with figures at the polls which did not
surprise the experts.
When, how and where will the next "sleeping co~mmandos" strike, when the
signal is given?
COPYRIGHT 1979. INFORMACION Y PUBLICACIONES, S.A. ~ ,
76
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COUN'I'RY SECTSON SPAIN
. ~
LABOR, FMPLOYERS Ni7GOTSATIONS: POSITIONS, DE~iA1~TDS G~VEN
Madrid CAMBIO 16 in Spaniah 24.Jun 79 pp 66-6g, 7't~ 74
~Text) Carlos Ferrer: "Suarez Ie Allergic to Economi.ce"
"The government's economic team~is characterized by a pragmatism that
shuna programming, a pr tism at all cos~s," Carlos Ferrer, the
president of the CDOE Spanish Confederation of~Employer Organizations�~,
the major employer group, tol.d CAMBIO 16 after learning that there would
not be a pro~ram as they had called for on 1 May. "A bad program is
better than none at all," Ferrer added. "We aannot think ~ust about 1979;
we have to set down economic ~uide].ines for the next 3 or 4 yeaxs. But
given the g~overnment's current mentality, talking about even 6 or 8
months seems a very long time to them."
.The C~70E's complaints about the g~overnment are shaxpening once more, after
~ a honeymoon of sorta, because the economic team has not paid a'ttention to
a memorandum of requesta subau~.tted by the employer organization. "After
- .~he ardt~ous birth of a well-thou$ht-out government, we have come up
against a series of self-sufficient.peraonalitiea~" says an editorial in
the CFJOE's information bulletin. "They do not need ar~yone~ they do rl~t
consult ar~y~one and they ignore the country's industry, commerce and
banking, whose cooperation is necessary for good government. This ie
bad." -
To Carlos Ferrer, "the only thing that has come out of this economio
pragmatism has been the struggle against inflation through monetary
controla," while a series of problem~ basic to overcoming the crisis have
been overlooked. Beginning with the issue of labor relations~ he says
that "it has been 3~ years now that Mr Franco is dead~ and nothing has
changed here in the labor sphere." In this regard, Ferrer feels that it
is especially important for th~ bills relating to the new framework of
labor relations to be passed in the Parliament through the emergency
procedure. "We cannot keep the country upside-down~ as it ia now~ for
much longer." �
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But what i~ more, if we wan~t bueine~smen ~o invest and crea~e ~obe, "we .
have to make aure that they have oonf3dence 3n the f'u~tuxe." As far a~
Carlos Ferrer i~ aoncerned, this is a very epeoifio thing~ whiah oan be
acoomplished 3n several ways. "In ~he f3rs~ p1a4e, the g~overnment~
starting with Suarez, has to give the impre~~ion that it is giving praority
to economic i~sues. This 3s what moat of the world'a presidenta do~
by constantly making statements on econom3c iseues like energy o~ the
budget, in the style of a Carter, a Giacard or~ previously, a Callaghan.
But here everything seems to indicate that Suarez ie allergio to
economic problems."
Tn this regasd the CDOE feels that "an econom3.c program creates aonfidence."
Moreover, they insist on no furl;her delay,s in taking a series of
very specific measures to promote investment: payroll flexibility~ better
credit and a cutback in public expenditures~ mainly. "With regard to
the monetary objectives for 1979," Ferrer comments~ "the government says
that there ase going to be fewer pres~ures and more credit. I would
like to see that."
If the unions and leftist parties accuee the g~overnment of pursuing a
pro-business policy, the CDOE streases that the g~overnment systematical.ly
ignores its requeata. "I think that this ie because ita upper reaches
axe not very sensitive to economic ieeues," Carlos Ferrer clarified for '
this maga,zine. Therefore~ the employer orgaaization leader has ~pent
the last few weeka dining with a11 of the miniaters and high-level
officials, without forgetting the presidents of the Congress and the
Senate, in a sort of "economic apostolate." Naturally, he has not
managed to convince Fernaudo Abril M~artorell~ the political-economia
vice president. "The fact is, Mr Abril has other things to think about
in addition to economic issues," he indicatee With his Catalan ha1�-smile.
What the CIlOE Is Asking For
--A new framework of labor relations (a new labor unian contracta law,
payroll flexibility, a new hiring and employment arrangement, regulation
of strikes, labor union contracts and lockouts, le~islation on union
_ rights and representivity~
--Action to moderate business costs (raw mat~rials, energy~ wages and
financial costs~
--Promotion of private investment (by creating a series of objective
conditions: political and economic e~rpectations as to the model of -
society and economic policy in the intermedia~te a~nd long term,
expectations as to businesa clima,te and social peace and expectationa
as to profitability~
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~
--~d~t~r or~nd~.~~.on~ ~nx buainegs finanoing (do ~ha~ bueineaeee havn
onougl~ nrQd3t a~ a g~ood prioe and wS~h ~u~~able ~~rms)
--An ~.n-dep~h ~eaaeesemen~ of sooial ~eour~.~y (o~ ite expenditure~~ in
orde~ ~o avoid wa~~e; nf ~.~s fur?otion, by ~ransferring ~ome of ite
aotivitiee to ~he private aector; and of 3~a finanoing, ~o ~ha~ ~he
sta~es ~akes ~.nareasing responeibility for i~)
--An in-dep~h re~g~e~~ment of unemploymen~ ineurana~
--A looaening of ~.ndug~rial price~
--~iacal promo~tfon of eavings and self-finanoing
-8ui~able expor~ promotion (tax and sooia7. eeaur3ty exemptions,
credits and insuranoe, e1lmi.na~ion oS 1.3eenees for some items and .
part3.culaz~ at~ention ~o seatora ~ha~ are di~or3.mi.nated againat
internationally)
~--The uxgen~ form~ulation of an energy program
UGT ~General Union of Workers,]: 1979 Ob~eatives Have to Be ~eassossed
"It seems as if the gavernment does not want to present an economic
program. If it's ~uat a ques~ion of words, 3t's all the eame to us.
Iiowever, if it means that the ob3ectives for 1979 are the same as the
, one~ that Abril put forth at the end of the year and that it is now
merely a question of pursuing them~ this is inadmissible~ because today
no one believea 3n those ob~~ctives at~}?more," Joaquin Almunia~ an
economics adviser i;o the UG1' Executive Committee and a deputy of the
Spanish Socialist Workers Party (PSOE)~ told CAl~IO 16. -
"7'herefore," he adds, "whether it'a called a program or not, there has
to be a reassessment of the macroeconomia ob3ectives set forth in late
19?8 in order to tailor them to current realities." According to Almunia,
the imract of the election, energy problems arxd developoaents in the
econorqy make far-fetched the ob3ectives that the government aet for
itsel~ in 1979 in the area ef growth, private investment, prices and
unemployment.
The socialist union feels that creating a new f`ramework in labor
relations ("negotiated, not imposed") and tackling unemployment with an
"ima~ina,tive and determined" jobs policy are txo priority measures in
ar~y reasonable economic plan. Moreover, it favors encouraging public
investment ("local entities have to be given a gxeater investment
capability"~ and private inve~tment ("the administration and buaineasmen
shculd seek the most appropriate incentives"), as long as the minimum
wage is boosted to a reasonable level ("no less than 25,000 pesetas a
month"~ arid the clauses safegut~.rding buying pot~er are respected.
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~
Wi~h ra~~d ~o mon~~~yr polioy, Almuni.a �ee~.s ~ha~ oredi~ ~houlrl be
loonened "ooS~1y and gradual7,y" s~o ~ha~ bua3nee~ee or entiro oea~ors
(nu~h n~ hc~using~ a rebound in whioh he aonaiders a top priority, vrgent
matii;er) ~x~ not ovarburdened. Zn aonneation aith ~eotore in orisis~ ha
cri~3ai~es the admin3etration~ a poature of ehwu~3.ng oomprehens~.ve~
~ripar~i~Q and negotia~ed ~eamen~a.
~
5o far the ~ovor�men~ has not con~u].~ed w3th ~he unions on the measures
~ha~ i~ plan~ to eumbi~ to ~he P~rliamen~~ and the UGT 3s th3nlcing abou~t
"responsib~.e union pressure, along w3.~h colleo'tive bargaining and
parl3.amen~ary deba~e as a meanc~ of making itself heard. As long as there
is a des3re to negotiate and not ~tn 9.mpoge~" Joaquin Almun9.a pointa
out, "we ~re w~.lling to negotia~e, but we do no~ ~ee this at~itudo on
~he par~ oS the gronernment. If they oontinue to be unwilling to
modi~yr their economic ob~ectivea, the ooneequenaes are go3.ng to be
dieas~rone for the workerg."
ThQ Measures That the UGT Fropoaes
Short-term: a new f'~camework for J.abor relations (union role in ~he _
en~terprise~ collective bargain3. ~ labor dieputes~ strikes, workers
st~,tute and union representivity~
--~Iea~ures;against ~oblessness and to promote ~obs (establishment of
'INFM ~expansion unlrnown] and its taska, a socialist 1aw ag~a.inst
layoffs, measures to directly promote the areation of 3obe, struggle
against unemployment...)
--Promo~ion of investment (both public and by local entities, as well as
ge~nerally agreed upon ineentives for private inveatment~
--Reassessment of views on monetary policy
~
--Reactivation of the housing aector (mainly by financing)
--Maintenance of purchasing poWer
--A compr~hensive policy for and a negotiated reatructuring of sectors
in crisis
--An approach to energy prices and develop~ents in them
Meda.um-term: oreation of an economic and social council (an initial
~ ver~ion of this constitutionally stipulated tripartit~ boc~y within 2 years~ _
--A pro~,*ram t~ overhaul production structures with an eye towards
' membership in the EEC (defining a bargaining posture)
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,
~ox orr~c~nL us~ oNr~~r
--Social ~oauri~y �inanaing prog~am
--A pxogram to red3a~r3bu~e ext~~ing ~ob~ (ee~ting the workde~y~ ~he
pariod of appxen~~.ae~hip and re~iremen~)
CC00 ,~Workers Commi~sion~] ~.n Favor of a Democra~i.a Eaonorqy
"We have to distingu3.~h be~ween the g~overnment no~ having a program and
thE oaonomia t~am not h~,ving an eaonom~.a s~rategy~" Antoni.o Ga11i�a,
an econom3.as ~dviser to ~he CC00'e Confedera~ed Secretasiat, aommented
~o GAMB;CO 16. "A etrategy ex~.s~~," he went on to eay, "and 3~ aim~ at
construa~~.ng an eaonomic model of a market eoonom~r wi~h o1~.garchiaal
charaoteriet~.ca~ t3.ed ~o ~he mul~~natioaa],e and 3.n whiah there would
be a~eeble publ3.c sector that finanaes private aat3.vitie~ and ~eeke ~o
boas~ ~he ra~te of priva~e profSts."
Ga7.lifa feels th~,t ~the governmen~ doeg no~t want an eaonomia program,
"because that would mean coming out in the open w3~h the very debatablo
strategy ~hat they do have, because that would tr3gger a parliamentary
debate on ~two models~ the oligaacchical one that they defend and the
democrati.c one that we advocate."
CC00 maintai.na that "the consolidation and intensification of democracy~
objectively require a democratic eaono~y." And this model of a
democratic economy, at all times within the framework of a market
econot~pr as defined by the const3tution, means: control over the mos~
destabilizing activities of the monopoliea; an in-depth redistribution of
income ~nd greater access to property for the lower clasaes; a new
orientr~tion of investment and consumption; greater solidarity among
region~ and na,tionalities; enhanced economic powers for the entities
with autonomy; economic sovereignty and technological independence for
Spain, as well as a powerful public sector, competitive with the private
and the foreign sectors~ democratically controlled by soc3ety and
serving aollective rieeds and ob~ectives.
"A solut~.on to the economic and soc3al crisis that the country is
experiencing," Antonio Gallifa points out, "requirea democratic plannj.ng.
The serious problems that we are faced with~ inflation, unemployment,
integration into Europe, sectors in crisis, etc, can begin to be tackled
only under a 4- or 5-year plan." In the opinion of CC00, the government
does not want to talk about an economic program ~~because it lrnows that
thin~s are no longer as they were in the days of Lopez Rodo, when no one
had to be ~iven an explanation; it la~ows that there are social forces
with which it has to talk things over and which hold different views
concerning the economic model to be shaped and the measures to be taken."
"Last December we told Abril what CC00 was asking for in terms of a
program~ and he didn't even want to begin discus;tng it~" Gallifa comments.
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"But it mus~ be made olear tha~ any eoonomia program or plan wi11 either
be n~gn~iated wi~th the soo~.a1 foroes or will be doomed to fa,~.l.ure." The
CC00 eaonomig~ no~ee ~ha~ ~he bee~ proof of thie has been wha~ hae
happened eo Sas in 197g, aa ~he un~,lateral handling of the eoonomy hae
not al.owed down in~la~ion euffiaiently~ hae wa~~ed oredit and ha~
made Spai.n the ~uropean leader in day~ loet dY~ ~o conflia~e. "'I'he
fao~ ~ts, I emphasize~ that ar~y non-negrotia~ed plan~ in addi~ion to no~
, working, w~.11 be more oo~t~y eoa~.ally 3n ~he long run."
The CWO's ~conomio 1~1an
--P1an of strugg~.e againe~ unemployment (areation of new ~ob poets and
ex~enaion and fncroase of unemployment insuranoe benefits)
--Plan of strugg~e against inflation (a,alling for a series of anti-
inflation measure~t oligopoly, commeraia~]. oha3ns, raw materials priaes,
speculat3.on, cogt of money, importe polioy...)
--Bolstering the public eector (to take on an aative role in improvin~
~.ncome redistribut3.on, financing collective outf3tting and areatfng
3obs)
--Institutional reforma (social security, enploy~eat 1~areane~ public
enterpriaes, etc, with permanent inpnt f~om the union organizationa in
supervising them)
--Measures towards labor democracy (recognition of union righte, Workere
Statute, Collective Bargai.ning Act, return of union patrimor~y)
PSO~: "The Government Has No Program"
The problem is not for the government to print up for us 300 finely
written pages in the basement of Castellana 3; it's a question of
having to come up with an agreed upon solution to the crisis, with the
cooperation of unions, employer oxganizationa Rnd the administration," said
Enrique Haron, a PSOE deputy and the virtual economic spokesman of the
Socialist members of Parliament. In h3s opinion, "if the grovernment does
not submit a program to Parliament~ it is becauae it does not have one."
Baron thinks that this can be olearly seen in mar~y fields, one of the
most recent bein~ the energy price iasue, "Where Economy and Industry
disagree completely."
If a program i.s not submitted t~?ithin the time period agreed upon
("becau~e they are unable to," Baron underscorea~, the Socia3ists will ~=Y
denounce this breach and protest what they regard as "absolute diada3n ~
for Parliament."
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ro~ orFZCi~ us~ ornY
~ut ~he Soo3a].is~s do no~ have a olear-aut eoonomio program ei~ther. xhe
Plenwa of the 28~h Congxe~e of
~he PSOE approved the repor~ oS 3,~ts
Programming ~oard, aoaord~.r~ to whioh the ~ear~ ~ha~ the board drew up
would ba only ~he g~oundwork doaument on wh3ah a defSnitive Soaialia~
eannomia program would be formu~.a~ed wi~hin 6 mon~he. "Our no~ yet
hav3ng oomple~ed a wr~.~ten progratn i~ different from a party tha~t has
been 3n power 2 year~ no~ having one~" Enr~.que ~aron repl3e~. "Moreover,
the 1?SOE does have oZea~cu~ views on eaonomio polioy. 3.s on7.y a
quo~; ~.ton of disau~s3ng ~hem in-depth wi~thin ~the pa~~y ~nd epe113.ng them
ou~t."
BFaron referred ~o a 300-page ~ext ~hat the T'SOE's group of eaonom3~~e
drew up prior to the ~ March elect~.ons in ~the event tha~t ~he Soc~.alist~
had won and had to ~ake oharge of the country's eaonomy. Sub~equentl ,
the Federa]. Committee p~epared a report on econom3.o policy (~14? page~~
that was based on it, for ~he 28th Cong~es~. The po13.t3.cal problem~
tha~ sprang up and the general el3mate in Congres~ made the approval of
an "official" economic progxam imposeible.
"The ~ext approved as a g~oundwork document is an outline and, in general,
does not gret down to specific econoiatc pol3.cy meac~res~'~ Ju13.o
Rodriguez, a PSOE economiat, explained to CANIDIO 16. According to him, the
main point in the docwnent is the formulation of economic meaeures to
defend democracy and the intereats of the maseea. Zts stresses the need
for the public sector to play a more important role, for ~he enactment
of labor legislation that will democratize the workings of en~erprisee
and for the autonomies and city governments to have the economic
wherewithal to exeroise true self-government. It points to the need to
ach3eve major growth rates and lists general policies to m3tigate the
unjust distribution of income.
The pages of the draft program describe the main points of Socialist
economic policy: jobs policy, public sector, housing, the development
of constitutional economic norms, reform of the financial system,
energy, industrial developmen~, collective outfitting and entry i.nto
the EEC.
"In compar3son to the economic prog~ram intui~ively ascxibed to the UCD
~Democratic Center IInion~, ours~" Julio Rodriguez clarifies, "offers
a much more dynamic view of the public sector, emphasizes our continuing
concern over the problems of ~o'bs and unemployment and calla for
progressive labar legislation and an in-depth development of the most
advanced elements in the constitution's econodic articles: economic
planning and the creation of an Economic and Social Council, banically."
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~oR or~icz~w us~ orn.Y
PCL ~5p~ni~h Communi~~ ~ar~y)t "We Have ~o P1an"
"mho gov~rnment has ~o preaent an eoonomia program, but it looke l~.ke
i4 not gro3ng to do so. The faa~ 3~~ ~h3~ is a government w3thout
program~," R~non Tam~amea commented to CAN~IO 16. In ~he v3ew of the
Communis~ deputy and Madrid depu~y mayor~ "thi~ grovernmen~ hae b~ou~t
~hQ coun~;ry unemploymQnt and an in~en~3~�ied eaonomi.a ari~is with a poliay
wi~h which ~.t is defending the 3n~ere~te of a�3nana~.a]. oligarohy~ ae
shown by ite close contacts w3th ~he CF~OE."
IS the grovernment does not of�er a progrem~ the PCE is p~epare~? to denounce
3uch move and bo,ck up its al~ernative. "We Comanuni~ts have already
sa3d as cl.easl.y aa posgibl.e what we are asking fort democratia planning
~,nd a new development model," ~'amamea replie~ brusquely~ adding in
reaard to the type of plann3.ng that they baaks "We ~hould a3mply aomply
with Article 131 of the Const~.tution~ demoara~io planning wi~h ~he
participation of the socia]. forces axid the autonomous commun3.tie~~ wh3.1e
bringing probleras to Parliament."
When th3s magazine pointed out to Tamames that the PCE does not have a
clear-cut economic p~cogram e3ther, the Communist deputy replieds "We
aren't ~oing to be writing up papera every day. Our economic program
ia the one contained in the PCE's platform for 1 March. Our economic
alternative is expxessed perfectly well 3n the platform and in our ~
speeches every day both inside and outs3de Parliament,"
Under th3s program the PCE proposes "a progreas3ve alternative" based on
defining new f~nctions and tasks for the publi.c sector, on its demooratic
planning, on revamping the econorqy by channel~'.ng it towarda activities
~ that generate the most jobs, on the modernizat;.on and maximum utilization
of agxiculture, ].ivestock and fiehing, on the creation of non-discriminatory
conclitions for small and intermediate busineas~ on adapting the econo~y
for a bene~'icial incorporation into E~irope, on reorgaaising the f~netions
of credit and its more ratioria,l use f~om a social atandpoin~~ on
eliminatin~ boondo~gles and corruption, on bol~tering collective services
and on a jobs and ~listribution policy that will equitably apportion the
costs of the crisis.
This alternative calls for "a new development model" for Spain. Julio
Segu~ca, a leadin~ PCE economist, explains and expounds on this concept
in a pamphlet entitled "An Explanation of the PCE'a Economic Plan."
As far as the Communists axe concerned, the crucial problem is not
putting a halt to the crisis but seeing what alternatives lie open.to
overcome it. "Over the next few years," Julio Segvra points out, "two
views of how to cope with the crisis once it has been halted, two
_ political models for society will be competing in Spain and throughout _
E~zrope."
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roR or~zczaL usE ortzY
One o~ ~hem, Segura add~, a~temp~~ only ~o deal wi~h ~he ourren~
cap~.talist or~.s~.~ a~ effec~3ve~y as possible~ whi7.e acknow~edging a,~ va13d
an economio and poli~ioal sya~em that leads ~o ~he ~ooia~. xag~� of liaving 1
of every ~0 workers out of a~ob. "There ie another al~erna~ives the one
that considers that the ourrent form of the oapital.ist eystem hae en~ered
a defini~tive ari~i~ and that, therefore, a new mode~. of ~oc~.e~ty hae to
be proposed ~hat will preven~ the ourren~ in3u~~icses, wae~e and
3~rrat~.onalities. u
Thie "new development model~' has ~hree ob3eotivess ~0 3mprove and Qxtend
collective ou~tf3~~3ng and publia serviaee~ to tran~form ~the productive
atructure to absorb the unemployed and ~o change the cucren~ pat~ern of
' 3naome distribution.
. ~~G~': ~979, INFC)RMACION Y PTTBLTCACIONES~ S.A.
e743
cso: 3~~0
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COUh1T12Y SECT'ION 9PAIN
PRODUCTION OF LIGHT NAVAL CRAFT REPO1tTED
Madrid DEFENSA in Spanish May 79 pp 8, 9
,~Article by M. Ramirez Gabarrus/
/TexC/ Tn Spain we are accus~omed to going from zero
to infinity in many differenti areas, and we always try
to reach that infinity when powerful forces are pre- ,
venting us from doing so. As usual, we continue to be
faithful to our old tried and true desire to improvise;
to make things in a hurry and on the run, spurred on try '
the need of the moment, although up to a certain point
that need mighC have been forseem~~ For decades our
. navy has been suffering from a tremendous scarity of
light patrol units for protectio~~ of the fishing fleet
coastal control, etc. Drastic meansures had to be taken
by foreign powers to reduce our'fishing catches, including ~ -
savage attempts against the lives and integrity of our
long-suffering fishermen, before someone took note of
the situation and tried to provide our naval forces
with the adequate light units needed to protect and police
our maritime interests. ,
In any case, as the proverb goes: "Better late than never." Now we are
going to try to remedy the si~uation quickly, a�ter many years of neglect
and inattention to our coasts, territorial waters and fleet.
Basically, under the progra~ drawti up and financed by the Undersecretariat
of the Merchant Marine (I do not like the agency's real name: Undersecretariat
of Fishing and Merchant Marine), four Spanish shipyards are working overtime
to give the navy (for it will be the navy that benefits from the equipment,
maintena~nce and operation of the new units) a total of 64 patY~oL boats and
launches of four different types.
Thus, the Ro~lman shipyards at Vigo are delivering the 30 launches for patrolling
inland,w~~terways (LVI) which were oraared in 1977 and will be used to patraY
the waters in the vicinity of our national ports.
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The t~resa facCory at Arenya de Mar (Barcelona) has F.lready delivered ~evera~.
of the 20 coastal patrol ~.aunches (LVC), which were also conCracted at the
end of 1977. This program will be compleCed in the autumn of this year, _
Th~se 50 ~.ight unirs are the first ~o be commiesioned far serv~.ce~ '1'en of
the LVC's are destined for Che Canary Islanda, eix for Cantabrico and ~nur
for the Straits area (Huelva-Malaga).
For supporC and cover for Che LVC's--as we would eay i� we were speaking of
intermediate combr~e unita--the Bazaq~ �actory at E1 Ferrol wi11 construct not
less than ~our LVE's (exeerior patrol launches), and it ia poesible the
number may be increased to eight, since this was the number called for in the
1976 p1an. They will be capable of withsCanding a certain amavnt of heavy
seas, with 85 tons displacement, and it ia predicted that the fiYSt 2 wi11
be delivered to the navy in October and December 1980 and Che second pair
in February and April 1981.
Mar3.Cime Patrol Boats
Finally, there is Che series of 10 martime patrol boats (PVM), the first
4 of which will come out of the Bazan tactory at San Fernando (Cadiz) in
1980 and the remainder in 1981. In naval ~argon they are already known as
"los Cacanones" /the stingies/. The origin of that nickname is simple.
When in the early 1970's the Undersecretariat of the Merchant Marine (read,
"Ministry of Commerce) decided to create the FUVIMAR (Maritime Patrol Forces)
under the 3d'Development Plan, as 3t wae then called, it financed the construc-
tion of several patrol boats--both heavy and light--of the German Lurssen
type, to be used to police and protect our fishing traffic and industry. ,
The pr~trol boats in question were as followa: 6 Lazaga type of almost 400
tons, with a speed of 30 knots and powerful and 3ophisticated armamenC, and
6 li~ht Barcelo type, 135 tons, with adequate armament and a speed of 36
knots. Well, the fact i.~: that neither one was suitable to the real needs of
the maritime patrol, the first because they wer,~ too big, had excellant electronic
systems and modern artillery and were going to oe used for antiship missions,
which made them too expensive for the patrol m�L~sion. Nor would the light .
Barcelo boats serve the purpose, since tt~ey are toa fast at minimum speed -
and theref~re unable to approach and come�:~longside a fishing boat. And
the fact is, boti~ types are essentially warships. For *_:~at reason the navy
decided to add them to its fleets and, to compenstate for the economic loss
suffered by the Ministry of Commerce in their construction, to construct
another series at this time for that ministry to carry out the missions which
in theory should be assigned tc the two German-type "P" boats. ~
In any case, and according to those who should know, the PVM's, 10 of which,
we repeat, will be constructed by the navy for incorporation into the FUVIMAR,
could have had somewhat mors ~~fii~an~ features if the economic contributio.
had�been more generous. This is the reason, then, for their collective nickname ~
of "tacgnones" with which the fine Andalusian sense of humor has branded them.
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Miseions
However, a11 ~oking aeide, we can anticipate that the PVM's wi11 be fully
guaranteed to discharge the general miasiona of mariCime patrolling,
especially thoae of pa~rolling the fishing fleet and saving livea in case of
shipwreck and accidents at sea. They wi11 be abla Co aid �i~hing boa~s
~nd sma11 merchant ships, to provide tug service in certiain casea and ro
provide aupplies, water, food, etc., as we11 as to cooperate in putting
out fires. They wi11 mainta3n permanent contiacC with fiahing boata, patrol
helicopCers, shore atatiions and other navy shipa.
Ie should be emphasized here that the LVI and LVC launches r~eing produced
by the Rodman and Aresa shipyarda resemble sports models very closely and
are made by fiberglasa. They are 8 and 10 metera long, respectively, and
have very limited missions. The firat is 1lmited to inland waterways and
the second to ].imited ahorC-range coastal patrols up to 40 milea offshore.
Th~e plan for the PVM's is for more robust ahips, capable of operating in all
kinds of weather and of sCaying at aea for more than 12 days, with a range
of over 200 miles offshore; in other words, they are well suited to maritime
patro].ling in the "9panish economic zones." .
The graph below details the specifications of the four types of crafC. We
welcom~ these 64 13ght units, which are so badly needed by the SpEmish Navy
and whict, will be added to the few in exiatence up until recen~ly, among which
we can single out because of their modern design (although they were constructed
unc~er special circumstances, outside the FUVIMAR pro~ects), the Aguilucho,
the Gavilan I and the Gavilan II, each with 45 tona displacement and 2,750 hr,
with a speed of 30 knots, which were launched in Vigo between 1973 and 1976,
as well a.s the V-33 and V-34, constructed in 1977 by the V,iudes and Aresa
shipyards, respectively. They are very similar, although not exactly alike.
Each has 25 tons displacement and a maximum speed of 25 knots and is armed
with one machinegun.
TYPES ~VI LVC LVE PVM
Overall length, meters 8.9 15.7 32.1 ~G4.4
Beam, meters 3 � 4.2 4.8 6.6
Draft, meters U.7 0.9 1.4 2.1
Displacement, tons 8 20.8 ~85 280
Max. speed, knots 18 22.5 26 20
Max. power, hp 300 700 2,800 4,800
:'~~ge, miles 160 400 1,200 4,000
Crew, no. of inen 4 6 12 21
Armanent Portable 1 machinegun 2 Bofors- 1 cannon,
12.7 mm. Breda cannon, 76/50 mm,
40/70 mm. Mk 22; 1
machinegun
20 mm. Mk 10
COPYRIGHT: Ediciones Defensa, S.A., Madrid 1978
END
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