JPRS ID: 9706 LATIN AMERICA REPORT

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000400050002-0
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• Sequence Number: 2
• Content Type: REPORTS

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JPRS L/9952
1 September .1981
~~st E u ro e R e o rt
p p
(FOUO 43/81)
FBIS ~OREIGN BROADCAST INFOR(VIATION SERVICE
EOR OFFICIAi~ U~E ONLY
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JPRS L/9952
1 Segtember 1981
- WEST EUROPE REPORT
(FOUO 43/81)
CONTENTS
ECONOMIC
ITALY ~
Treasu~y Minister's Proposals for Curbing Public Spending
{IL SOLE-24 ORE, 26 Jtm 81~ .......o 1
Bank of I~aly: Cia.mpi's Policy
(Nico"la Forti; IL MONDO, 10 Jul 81) 7
Fiat's Financial Report to Stockholders
� (Teo Dalavecuras; IL MONDO, 10 Jul 81) 11
GENERAL
FRANCE
Abolition of State Security ~c~urt Raises Questions
(Jean.-Francois Gautier; VALEURS ACTUELLES, 20 Jul 81) 16
ITALY
Rivalries Between Economic Ministers in New Government
(Donato Speroni; EL MONDO, 10 Jul Sl) 21
Profile of Potential CISL Labor Leader Caviglioli
(Lorenz~ Scheggi; IL MONDO, 10 Jul 81) 26
- a - [III - WE - 150 FOUO]
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ECONOMIC ITALY
TREASURY MINISTER'S PROPOSALS FOR CURBING PUBLIC SPENDING
Milan IL SOI,E-24 ORE in Italian 26 Jun 81 p 17
~Text~ Rome--Addressing the meeting o� the ABI ~Italian Bankers
Association~, Treasury Minister Andreatta went back again over
the problem of public spending in Ita1y and pointed up some
needed provisions tot bringing it under control. We publish
herewith excerpts frc.~? Andreatta's remarks on public spending.
The spending decisions taken through the fall of 1980 carried over into 1981 in
the form of initial treasury pcoblems and, much more importantly, in that of a
_ substantial widening of the gap between receints and expenditures.
In these circumstances, the strategy for controlling public spending was divided
into four main phases:
--Initially, it was sought, with succeas, to minimize the extent of the spending
toward which parliamentary debate on the budget was tending.
--Next, an approach was made on the problem of reducing the heavy burden of the
deficit inherited in 1981 from the burst of spending undertaken the year before;
the impact of the discretionary steps taken beginning in October 1980 on the
results of fiscal year 1981 is es+timated at around 5,000 billion lire.
--Today, a further barrieL against runaway spending has been erected by way of
a decisional control on funding disbursements.
--The fourth element in the control strategy consists of the bas~�c provisions
needed to curb the levels of authorized spending activities.
As regards the first phase of the parliamentary debate, I can s~ate that with the
first memorandum of change sent to the Chambers as of th~ beginning of December,
the appropriations de�icit was improved through a substantial redimensioning
eftort with special emphasis on the current spending portion ot the budget. The
net effect of the first and second memorandums of chanqe on the spending increases
~ voted by Parliament, including the sums for earthquake-damage interven~ions, was
practically one o� nullitication, in that, at the conclusion o� the parliamentary
proceedings, the 1981 budget was approved with a substantially unchanged balance
to be financed as compared with that of the retLrns ss of the end o~' September ~
1980, thus differing from what normally occurs.
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The provisions of the money law have also tightened the regulations on reentry
into the national treasury of sums that have been transferred from the national
budget to public bodies--territorial and institutional--and which are surplus
with respect to the immediate cash tequirements of the individual entities
cuncerned.
The reining-in of the current expenditures budget made it possible to operate on
the cash flow. During the first months of the current year, the public sector's
cash requirement was increased alarmingly by three principal factors: From the
budget standpoint, disbuLsements tor goods and services and disbursements for
interest payments rose by more than 40 percent in the first 4 months of the year
relative to the same period in the preceding year. While outpayments for goods
and services were already accelerating by the end of last year owing to the up-
surge of cash authorizations, disbursements for interest payments, in large part
of course, followed the general increase in interest rates imposed on Europe by
_ the rise of the dollar. But most of the incremental cash requirement arose from
a treasury operation that in the ~irst 4 months raised its needs to almost 7,700
billion lire.
Calculations from the standpoint of coverage of the public sector's overall re-
quirement indicate that during the first 5 months of the year it totaled almost
20,000 billion lire--almost double that ot the first 5 months of 1980. This up-
ward thrust, while contributing on the one hand to the maintenance of Italy's
short-term lag with respect to the~.other countries, with its serious impact on the
foreiqn trade balance and the inflation rate, tended on the other hand to displace
the private sector's demand for funds from the money market: The ceilings placed
in January of this year on the expansion of credit were in fact based on a public
sectoral funding requirement of close to 37,500 billion lire, and were commensur-
ate with the overall state sectoral requirement of just under 40,000 billion lire.
To bring the state sector back into line with the established limits, "phase two,"
as it is being called today, was brought into being.
The effects on the 1981 returns indicate a probable overall deficit dzcrease of
close to 5,000 billion lire.
The spending containment effort has been continued in the advance draft of the
unitary budget bill the qovernment is to submit to Parliament by the end of this
month.
The cash budget that will result from the unitary budget bill represents a reduc-
tion of fully 11,250 billion lire in the outstanding deficit to be financed.
But to fully assess the magnitude of the spending curb that has been effected, we
must consic]ez that the unitary budget bill is being based on 36,000 billion lire
of potentially greater outpayments, consisting of 27,000 billion lire of addition-
al current liabilities outstanding as o� year-end 1980, and close to 9,000 billion
lire of additional funding authorizations to cover the carrying forward of unpaid
. expenditure items outstanding at the close of fiscal year 1980 and o� additional
outstanding balances due under rescinded or insufficiently funded items.
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It can thus be stated that the reduction o~ the total of 164,300 billion lire for
1961 outpayments under the budget authorized by Parliament, to 163,500 billion
lire under the unitary budget bill, represents a much more substantial operation
than would appear to be the case from a mere consideration of the small difference
_ between these two sums.
The significance of this result can be appreciated if ~ye considers that the
1980 unitary budget law dealt with varianGes totaling 14,270 billion lire of ~
incremental payment authorizations, while the ad�aance draft of the 1981 bill
represents spending authorization reductions totaling 9,890 billion lire.
This new method of str~:cturing the unitary budget law represents the appli-
cation of a criterion that is consistent with the innovation introduced by
_ the 1978 budgetary reform law, which coupled with the current expenditures budget
a cash flow budget having the value of a legal limit on the total liabilities that
can accrue against the national budget.
Payment authorization amounts are determined, that is, not by a mere translation
into cash terms of total expenditure appropriations; but rather in accordance with
economic policy decisions with respect to monetary flows resulting from statal
management of its finances.
As can be seen, appropriations for given authorized expenditures can, for varior~s
reasons, not be translated in their entirety into actual disbursements. Evalua-
tion of the real national budgetary cash requirement is thus based upon "estimates"
of the real amounts, in aggregate terms, that are actualizable from revenues as
well as expenditures.
Based on these estimates, updated by the most recently obtained data, the cash
_ requirement strictly for the management of the national budget totals 46,200
billion lire.
Considering further the other treasuty operations carried out by the state and the
reentries from the banking system under the provisions of the money law, the total
statal sector's requirement is reduced to 41,800 billion lire, which, purged of
transfers to credit institutes and of consolidations of state participations to
be effected in terms of shares, reduces to 39,500 billion lire, of which 36,500
billion represents the domesti~ requirement.
For my part, in the guidelines circulated to the ministries for the structuring
o� the 1982 budget, I have indicated a quite modest ceiling on appropriations for
current ~xpen~~~ares for 1982 (+6 percent), in anticipation of outstanding 19f31
balances that, because of the tight control exercised on cash management, could
total in the order of 75,000 bil].i.on lire by the end of this fiscal year.
A stimulus to a tighter fiscal policy will, in my opinion, result also from a
clearer separation of responsibilities between the treasury and the Bank of italy
insofar as concerns, respectively, the management of the money supply and that
of the public debt.
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This is why I maintain, in complete agreement with the governor of the Bank of
Italv, that it is necessary to modify the present system of treasury financing,
- which involves automatic, and prefatorily unlimited, recourse to the credit facil-
= ities of the institute of issue.
The objective to be attained in a reasonably short time is that of a system of
competitive bidding on short-term treasury bills, wherein the apportionment of �ne
bills will be in accordance with prices established by the bidders market; in this
system, the Central Bank's participation in the demand will be entirely voluntary
and confined within the limits established by the Bank itself in accordance with
its t-egulatory objectives relating to credit and deposits.
The adoption of such a system, however, will require, in order to avoid undesired
fluctuations in interest rates, an adequate control on the short-term trend of
cash holdings. To this effect, the first objective m~st be to render more regular
i.n terms of time, and thus more foreseeable by th~ market, the formation of the
treasury deficit. The other important instrumentality is recourse to systems of
temporary investment of cash holdings prior to the auction, and of refinancing
thereafter.
The definitive "divorce" between the treasury and the Bank of Italy should take
place only after an adequate period of experience with these control instrumen-
talities.
With respect in particuZas to cash transactions against future deliveries, the
Bank of Italy is prepared as oE now to start on the basis of sales with option to
repurchase at date of settlement of auction, and with other operations capable of
ensuring a market demand in line with the offering of treasury bills.
In any case, it must be made detinitely clear that the Bank of Italy's object in
purchasing public securities is not the financing of the de�icit but rather the
regulating of the money supply in accordance with the objectives laid down by
monetary policy. One way of establishing this may also be to modify the praxis
whereby the Bank of Italy bids on the total of the bills offered, even before
eliminating its obligation to place the entire offering.
New Proposals for Halting the Escalation
1) First and foremost, financial legislation must recover its basic function as
the body of provisions which, coupled with the budget law, defines the implemen-
tation of budgetary policy.
It follows from this, apptopriately and necessarily, that recourse to the market-
place should be the first provision of our money law. It would therefore be
desirable that Parliament first debate the macroeconomic aspects of our budgetary
nolicy and, having laid down this policy, that it then proceed to define, within
the scope of that policy and as a function of it, the allocative and redistribu-
tive structure of the budget.
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2) Secondly, the control function of the Executive and the Parliament over the
management of public finances must be strengthened.
- To this effect (and together with the proposal indicated under 1) above), Article
4 of Law 468 must be applied substantively to prevent the problem of an over-
expenditure (or of a diminished sevenue) from beinq defined substantially in terms
of a limited number of months (over which the observations have been made) of the
current year.
A close connection must also be maintained throughout between monEy bills and
budget bills, sucYa as will. obviate the difficulty of implementing and man-
aging the budget during the temporasy operational period voted prior to definitive
approval c::: the money bill.
To this effect, recourse to a temporary operational periad must become the excep-
tion rather than the rule.
In other countries, this objective is realized through suitable parliamentary
procedures that provide for a"plenary budget session."
During such a session, the sole bill admitted to debate is either the money bill
or the unitary budget bill.
3) The overall budgetary control functions exercised by the Executive and by the
Parliament could also be strengthened by avoidir,g inclusion in the money bill of
any norms that delineate organic interventions or that deal innovatively with the
financial situations of funded institutions, for which cases the submittal of
specific bills should be required. Of course, the financial legislation may
provide for the necessary coverage of designated deficits by specific appropria-
tions from special funds.
~ 4) It would be desirable to prevent budgetary headings whose inclusion under
general funds was intended tor application to specific laws from being used to
finance provisions other than those speci�ically indicated at the time of approval
of the budget and of the money law.
5) Next, there is a specific problem having to do with the administration of
social security. It originates in the abil.ity ot the INPS ~National Institute of
Social Security~ to use unlimitedly its recourse to the postal system and hence to
the national treasury to meet its payments of family allowances. This can produce
unsettling imbalances,the effects of which are =?isordered, unforeseeable and
vortical cash requirement increases. In this regard, it should be established
that the INPS's recourse to the treasury is transitory. Once the formal content
of this transitoriness is defined, the INPS would be compelled to cover its fund-
ing needs by increa~ing the rate of contributions to the extent and in the manner
specified in the applicable legislation, the applicability of which, however,
could be suspended by a law or an executive decree.
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- 6) Then, there is the management of the public debt. It must be borne in mind
that close to 45 percent of the transactions involving the entities of the exten-
ded public sector take place within the sector itsplf. It is illogical that such
transactions be carried out using funding the iinancing of which involves charges
to the treasury at the same level as current interest rates. These transactions
within the extended public sector could be carried out by means of a mere book-
keeping entry. But such a procedure would necessarily involve the creation of a
system of "treasury correspondents" with accounting proced~res, to be defined
opportunely, modifying current norms.
7) The forms in which transfers to local administrations are indexed to increases
in revenues make it impossible to decide what use is ro be made of the fiscal
dividend derived from th~ high degree of elasticity of revenues, and, for the .
local administration, render painless the indispensable process of weighing
desired improvements in services ag4inst a perception of the costs of such im-
provements.
' Even more important would be the introduction of additional taxation powers on
the part of local administrations. This approach, which should be pursued and
expanded, certainly offers the best solution to the problem ot restoring to the
local administrations and to the citizens an appreciation of tY,e costs and of the
benefits involved in services that are not the responsibility of the central
gavernment.
8) The treasury has also begun a study of ineasures for controlling the burden of
interest on the public debt: These disbursements have actually doubled between
1979 and the current year.
9) Lastly, with regard to the multiple-year budget, provided for by Article 4 of
Law 468 which I have mentioned above, this is a great opportunity to restore
order, exactness and consistency to a legislative activity that is sometimes mud-
dled and myopic. The integration of the 3-year plan with the multiple-year pro-
graming budget is indispensable: first of all, to starting the implementation of
the 3-Year Plan in those of its aspects involving the public sector; secondly,
to conveying the sense among the operators that the compatibilities provided for
under the plan are backed by consistent provisions in the public budget; and
thirdly, to the offering of a vast opportunity for cooperation and debate both
within the government and vis-a-vis Parliament on the basic choices with respect
to public finance.
COPYRIGHT: 1981 Editrice I1 Sole-24 Ore s,r.l.
9399
CSO: 3104/321
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ECONOMIC
ITALY
BANK OF ITALYs GIAMPT'S POI,ICY
Milan IL MONDO in Italian 10 Jul 81 pp 18-20
. [Article by Nicola Forti: "A Quiet Revolution"~]
[Text] Whereas Caxlo Azeglio Ciampi's predecessors Were ca,pa,ble
of producing lofty economic and monetary policy formulations, he
is oriented. toward concrete action. He is concerned over -P.he
wea.k competitive position of the ba.nks. Quietly, therefore....
E~erything used to take place--as a genera,l rule--behind closed doors xith only the
- governor, the chief'of the inspection service, and (at most) a technical expert or
two present; they xould axrange themselves in a circle and ma,ke important decisions
for the entire ba,r,king system. -This time, however, the cha
total. (~lo Azeglio Ciampi took caxe of all the deta,ils in~ere~ Style has been
change. First ca,me a lo P Paring for the
ng period of consultation xith foreign experts (who have
played. a very importa,nt role), with the participation of the entire staff of the
central ba,nk as xell as ma,ny ba,nkers. Next there was a verita,ble festival of public
sta,tements by the top leadership of the ba,nking community, all of which xere concen-
trated into the spa,ce af a fex weeks: following the fina,l comments by #,he governor
to tha 30 Ma,y meeting, on 10 June it was the turn of Carmelo Oteri, central director
of ba,nk inspection; on 19 June director-genera,l Lamberto Dini; and on 24 June Ciampi
himself, who concluded the series of statements precisely at the general assembly of
the ABI ~Italian Ba,nkers' Association], xith all the bankers of Italy in attendance.
This complex public relations maneuver (which is most unusua.l for the Bank of Ita,ly)
bears the imprint of a decisive change in orien;�ation with res
of ma,jor importance: the mod.ernization of ~talian ba,nki ~ct to txo problems
opening the Italian market to all the 'ba,nks of the EEC ) a~nd,Cthe~newly xith $ viex to
Aroced.ures with rega,rd to inspection. There is one other import,a,nt inrilovation,~
however. "Reversin~ the practice of his preclecessors, who were alxays oriented
towazd. the great questions of monetary policy and interna.tiona,l fina,nce, Ciampi
involved himself deeply in the problems of the ba,nks~'~ explains Ma,tteo Mattei
Gentili, professor of banking technique at the University of Venice. For decades,
however, almost everything had remained unchanged: outmoded statutes which punetil-
iously enwnera,ted the restrictions (xhich were many) on the banks and the operations
(which were few) in which the ind.ividual ca,tegories of banks xere alloxed to engage;
in the public ba,nks, ana,~hronistic administrative orga,ns Nhich had, the most bizarre
~structures ancl xere subjected to political pressures of every kind; axid inspection
_ pera.tions that xere frequently bogged down in questio:is of bureaucra,tic authoriza-
tions and were insufficient to wax,d off the danger of ba,nk failures. In ma,ny ca,ses
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the results xere ~ievous, bu~ the Ba.nk of Ital,y was certainly not to blame: the
Italian ba.nking system is among the most inefficient in E~.irope, despite the fact
tha.t it has reaped bountifu3 profi~s thanks to the high cost of intermediati.on, and
it is amon~ the least competitive even though it is fra~mented into as ~a.ny a5
1~070 individual ban'~cs. Notxithstanding their large profits, Ita,lian ba.nks are
among the least sound in terms of the ratio between total assets and d~posits.
Only a fex days a.go, in fact~ Rina.ldo Ossola, president of the Bank of Naples, used
very strong langua.~e in criticizing the coma.tose state of the top leadership of the
- public banks, which are infested with compartmenta.lized administrators and practices ~
that ~eflect favoritism. Ossola also criticized. the serious risI~s that Ita.lian
banks run if they are una.ble to reform themselves before the market is opened to all
the ba.nks of the C~E-~an event scheduled for 1989�
- Ciampi has deeply committed the Ba,nk of Italy to a course of action that is based
precisely on these premises. 1rThat innovations are involved? And what ma.~or tradi-
tiona.l policies have rema.ined in place?
Comnetition and ~fficiency
- Cia.mpi's declaxed objective is to increase the efficiency and competitiveness of all
banks--including the public banks--by enhancing their "private enterprise" aspect.
For the public banks, the Bank of Italy has formulated a memora.nd.um (see IL MOP~DO,
Pio 27) xhich emphasizes the necessity of broadening the statute, obtaining neK
capital from the investors, an~d introducing new administrative organs for sslf-~
auditing and interna,l dis,:ussion.
A wide-ra.nging discussion of these proposals is already under xay. The institu-
tions of public law are putting the finishing touches on their nex statutes, which
ase in line with the new directives.
In the case of the savings ba.nks the prohlems are complex~ and the Ba,nk of Italy
still has i:hem under discussion. The simplest solution would be to admit the subor-
dina,te loan subscribers to the meeting of the partners, but there is a great deal of
resistance to this in all types of banks. One thing is certain, however. A.stock
or bond that is linked to prof its would--in addition to bringing new capital to the
ba.nks and the funds--would motivate mana.gement to seek the maximum efficiency and
max imum profit, and in the process make said mana.gement responsible and subject it
to a measure of its own ability.
There axe other indications, however, that the Ba.nk of Italy wants to increase the
role of the market and provide incentives for the most efficient banking enter-
prises. Since last February the big banks have no longer been per.alized vis-a-vis
the small banks by the ceilir~ on credit and are therefore able to increase their
receipts at the same rate as the sma.ll banks, which for years ha.ve groxn twaultu-
ously amid much inefficiency. On the other hand, the increase in the BOT [expa,nsion
unknown] interest rates--tog~ther with the ba.nking disintermed.iation that followed
the increase--are benefiting the larger banks, which are able to save interest ~n
the large deposits invested in BOT and axe better equipped for int~rmediation in the
securities market and for supplying other services. The Ba.nk of Italy has also
- decided that in order to prevent waste and losses, permission to open offices and
branches abroad will be reserved solely to the laxger banks xhich have greater
interna.tional experience (in practice~ to no more than the 10 lea.d.ing (in terms of
size) banIcs.
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All tl:ese factors axe serving to ax2est the trend which for 10 years had redimen-
sioned the large ba.nks to the benefit of the small and m~d.ium-sized tanks, inducing
in turn a strong trend. toward despecialization. ~bery bank xas doing everything,
accompanied by obvious Waste. Ciampi's intention now is to demolish the artificial
legal ba.rriers-~thereby placing ba.nks of all sizes and ca.tegories on a footing of
regulative paxity--and to develop the potential of each ba.nk in its most congenial
field of activity, thereby enhancing efficiency and competition. Furthermore, the
oppor.tunity to paxticipa,te in the capita,l stock of the public banks xill motivate
the more efficient joint-stock ba.nks to bring--that is, to tra,nsfer--their own
superior operational expertise to the individual ba.nks in which they have invested.
On the interest-rate front, moreover~ Ciampi favors great elasticity and fexer
monop~listic cartels, on grounds that an interest rate is a price and should reflect
the real behavior of the market. The interest rates on deposits should therefore be
more flexible and understandable, and those on loans should not be changed bureau-
cratically by the ba.nks with every change in the discount rate. On- the ottier hand, a
_ red.uction in interest rates on checking accounts and an increase in those on savings
accounts (a change under study by the ABI [Italian Ba.nkers' Association~ and encour-
aged by Ciampi) would eliminate waste and bring the Ita.lian banking system more into
- line with E~ropean practices.
Inspection
Amid a thousand precautions, the inspection service is updating its policies and
procedures. The first objective is to establish new sta,ndaxds for investment
abroad, at a time when many medium-sized Italian ba.nks are making preparations to
"cross the frontier" and ma.ny large Ita,lian banks are strengthening their foreign
networks. Ciampi wants to avoid a repetition of the already enormous losses tha.t
some Ita.lian ba.nks were forced to sustain as a result of operations xhich kere--in
the past--initiated in certain well-known "fiscal pa.radises~" and to avoid losing
control over the foreign branches of the ba,nks. In a directive he has uncond,ition-
ally prohibited Italian ba.nks from obta.ining foreign participations, while consent-
ing to the opening of offices and branches in foreign countries. The directive will
be implemented ~;radually~ in order to grevent some ba,nks from demobilizing invest-
ments and participa,tions and thereby susta.ining losses. This directive, however,
has not been welcomed by all segments of the ba.nking community, especially that
segment Khich is afraid it will have to compete with the foreign banks~ xhich have
quite a bit more freedom �har, the Italian banks.
~
Ciampi's second objective--xhich relates to criteria of liberalization rather than
restriction--has been greeted by nearly una.nimous approbation. Ciampi has disci-
plined Ita.lian investments in respect to credit opera.tions an~l. qua.si~ba,nking activi-
ties. Moreover, he is in receipt of the 28 January 1981 directive of the Interminis-
teria.l Committee on Credit~ which stipulates that credit institutions ma,y not have
direct participations in publishing houses. By esta.blishing precise limits on
investments (a maximum of 2 percent of the capital stock of the "participa,ted" enter-
prise, provided this amount does not exceed 10 percent of the capital of the parti-
cipe.ting enternrise), the governor of the Bank of Italy has sought to ma,ke the
- inspection service less bureaucratic and more effective by accentuating the role of
- preventive control, reduci*~g the ex post direct investments and mitigating the
requirement of prior authorization, which is currently a condition for transactions
of every kind. To reform the control methods and render them more incisive the
Bank of Italy aims at strengthening the technique of "file control," that is to say,
control based on data which the banks send every month to the inspection service.
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To prevent crises the Bank of Italy is seeking--by an examina,tion of the data pro-
vided--to identify promptly the symptoms of the disea~e. The instrument utilized
for this purpose is called SARAP (automatic system for detecting problem enter-
prises)--a computerized program that singles out the banks which record coef:fici-
ents (rates) of liquidity~ profitability, risk, and soundness of assets that diff.er
from the median of the particular group to which each bank belon~;s. The problem
ba.n~:s are then placed under special surveillance and--when indicated--undergo an
audit. So far, the initial results indicate that SARAP is performing well in
respect to the easly detection of anoma.lies. In the case of the small ba.nks, "file
coritrol" becomes more difficult: the data are fewer and axe less well integrated;
the customers (and their reliability) are less well knoxn; sma.ll loans are r.ot
recorded; there is greater dependence on individual customers; and there is greater
_ vulnerability to regiona.l crises, which are very difficult to t'orecast.
Something is stirring in the intricate sector of authorizations as well. During
these pa.st weeks the Ba.nk of Italy has been studying the requests for new hranches
that xere submitted in late 1980. Thanks to the more precise definition of the
abjective charaeteristics which every bra,nch should have, these requests are very
nearly in accord--"both 9_n thei.r numbers and in their na,ture--with the wishes of the
central banI;, which in any event appears rea.dy to grant a substantial portion of
these requests. Another sma,ll indication is the granting of automatic authoriza-
~ tion for a bank to acquire a uarticipa.tion (permitted by the criteria for invest-
ments) that amounts to less than 2 percent of the ca.pit~.l of the "participated"
enterprise. As rega?:ds the limit on credit (a ba.n~c may not lend, without prior
authorization, an amount greater than one-fifth of its assets to any individual
customer), the inspection sPctio_ has made a clear-cut distinction. In the case
of the regular banks, their situa.tions axe so diverse as to require some form of
selective inspection. In the case of the specialized credit institutions, however,
the law of 23 February 1981 established cateborical limits for each institution~
so that in practice the sma.ll number of these institutions has made it possible to
elimina,te the requirement of prior authorization. Not all these ind.ications, how-
ever, point in the same direction. In addition to emphasizing that this inspection
activity is in any case discretionary; that there are no obligatory measures govern-
ing ba,nks tnat are failing; and that its only responsibility is to decide whether or
not to intervene, the Bank of Italy has reaffirmed two additinna.l points: 1) The
ratios (or coefficients) indicated in the balance sheet which reflect the soundness
o.f a bank's assets will be used solely for informational purFoses. Such ratios are
of no use in a market as renlete with diverse situations as is the Italian ma.rket,
in view of the fact that no minimum value can be established which will be valid for
all cases. 2) The Ba.nk of Italy is applying the brakes through the instrumer~ality
of certification of the balance sheets of the individua.l banks. The control exer-
cised by the inspection service, whose objective is the stability and efficiency of
the banks, has "purposes that are extraneous" to the functions of auditing and
certifica~tion~ which (according to the Ba.nIc of Italy) must respect "the delicate
equilibriums that give rise to certain decisions made with re~ard to balance sheets."
In practice, thexe is no desire that auditing firms should disclose certain ques-
tionable practices which prevail in Ita1y and are used by banks for the purpose of
_ paying less taxes, distributing less dividends, and entering dishonored pa,per in
books of account. In the case of banks quoted on the excr.ange a considerable degree
of graduality is accordingly exercised, whereas in the case of nonquoted banks the
Bank of Italy has adopted an entirely different attitude and will petition the EEC
to rega,in a certain masgin of flexibility.
COPYRIG~iT: IL MONDO 1981
10992
CSO: 3104/327
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ECONOMIC ITALY
FIAT'S FINANCIAL RER~RT TC STOCKHOLDERS
Milan IL MONDO in Italian 10 Jul 8i pp 100-102
[Ar'cicle by Teo llalavecuras s ".Profits of the 'Hard-Liners "'1
_ [Text~ Although not calculated to cause enthusiasm~ the ba.lance
_ sheet for 19�30 which Giovanni Agnelli is presenting to the stock-
holders does conta.in some good news. Is this the result of a
managerial exploit or of a new strategy? No: it is the "iron
fist" that....
Beginning with a vzctory in the legal action taken against 61 workers who had been
dismissed for serious contractual violations, the yeax 1980 has been replete with
events that axe destined to leave a deep imprint on the number one Ttalian industrial
groun. In late July the youngest of the Agnelli brothers, Umberto--the ma,n xho had
embodied within himself the decision-making power of the management of the Fiat
group--abruptly left the ranks of command. The autumn was masked by exacerbated
labor conflicts which brought PCI [Italian Communist Faxty~ secreta.ry Enrico
Berlinguer to the gates of Mirafiori to call for occupa.tion of the factory but ended
with a rictory for the Fiat mana.gement: following a large-sca.le demonstration by
intermediate-level pErsonnel and workers in the streets of Turi.n the unions were
persuaded to sign an agreement whict~ provided for a le:.gthy period on the supplemen-
tary fund for 23,000 employees of the group. The devaluation of the lira (which
Umberto Agnelli ha.d called for in the summer of 1980, employing terms that were
deemed to be arrogant) subsequently did occur--several months before the ItaI.ian
_ Government decreed i.t--as a consequence of the policy of the American president
_ Reagan: whereas in June 1980 less than 840 lire sufficed to purchase a dollax, by
the end of the year 925 lire was required and the Italian currency ha.d already lost
more than 9 percent of its value.
However, 19~0 was also the year in which a profound strategic change of direction
was implemented within the ~iat group: following the years of diversifica.tion and
the ensuing disappointments, Fiat was once again centering its attention and its
efforts on the product that accounts for 45 percent of its tota.l sales--the auto-
mobile. How axe these events reflected in the balance sheet that the la~rryer
Giovanni Agnelli presented to his partners on the morning of Thursday 2 July? One
must say at the outset that the reply is fated to rema,in shrouded in uncertainty.
Until 1983~ when the Fiat group wil1~ submit its first consolidated statement (cover-
ing fiscal yeax 1982), the books of the entire group will continue to resemble a
nebulous blur ~ather than a clear-cut representa.tion of the sta,te of Fiat's indus-
trial and fina.ncial health.
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The balance sheet of Fiat, Ltd (the holding compa,ny of the Fiat group) offers only
- an extremely a,ggregate view of its fina,ncial activities. By assembling the prin-
cipal entries in the balance sheet and profit and loss statement of a groug of asso-
ciated compa,nies which together account for 70 percent of Fiat's tc,ta,l sales (see
table) IL MONDO has attempted to offer a picture of the progress of the principa,l
operationa,l sectors of the group. One should, however, beax in mind that the data
presented in the table relate to individual compa,nies, whereas the vaxious sectors
of activity of the Fiat group in all cases represent a va,riety of companies. Fiat
Automobile, for example, comprises (with sales of approxima,tely 7 trillion lire)
only a past of overall automobile activity, xhich resulted in sales to third
_ parties totaling 8.343 trillion lire in 198~.
Table l. The Group, Sector by Sector
/ 1 ~ FATTURATO INVESTHMENTi DIPENDENTI
l (mlH~rdl) 2 ~ (mili~rdi) ~ 3 ~ (unitA)
~stlor(i Ti st To 6 I sii E tsiro h s t~ E t8i o T 6�
9 Automobil~ 192 8.151 8.343 346 53 399 136.945 27.407 164.352
~ Veicoh industriali 352 3J42 4.094 90 43 133 31.274 23.005 54 279
_ i~ Tre~tori agricoli 13 1.097 1.110 22 9 31 7.320 4.519 11.839
1 Macchine m terra 29 718 747 7 12 1g 4.682 5.684 10.366
( Siderurgia ~ 13~~ 874 777 1.651 71 4 75 26.284 2.902 2g, igg
~ Componenti ~ i 851 952 1.803 89 2 91 34.381 1.13 t 35.512
/ 1 [ 1 Macchine utensill
~ J~ e sistemi di prod. 96 120 216 19 - 19 5.594
~ 16 ~ - 5.594
Ingegneria civile
e lerritorio 73 1.416 t.489 3 - 3 2.215 3 2.218
Energia ~ 1'l ~ 8 259 267 23 - 23 5.129 826 5.955
/ i~ 1 Prodotti e
~ ~ sisiemi lerroviari 6 199 205 8 8 2.804 1.341 4.145
~ 19 ~ Turismo tras ort~ 16 71 87 6 - 8 3A45 � 3.445
Diversi ~'Z Q~ 138 636 774 147 4 151 12.9/1 2852 15.763
~2],, Tot.~t~rclzlo'SO 2.64a 15.138 20.7E6 833 127 Y80 272.9E1 09.670 342.ES4
~22 ~ Tol. ~~~rci:lo 79 2.2~ 15.058 17.341 a12 150 B62 2a3.75S 74.OD7 357.C36
Key:
1. .Sales (in billions of lire) 12. Earth-moving machinery
2. Investments.(in billions of lire) 13� Steelma,king
3~ Employees (in units) 14. Components
4. To other sectors 15� Machine tools and
5~ To third parties systems Production
6. Total 16. Civil en ineeri
7� Italy g ng and land
8. Foreign countries 17� Energy
9� Automobiles 18� Railway products and systems
10. Industrial vehicles 19� Tourism and transportation
11. Ag-ricultural tractors 20� Miscellaneous
, 21. Total for fiscal year 1980
22. Total for fiscal yeax 19?9
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The principal news from the aatomobile sector for 19~0 was the definitive elimina,tion
of a major source of losses, the Sganish SEAT [Spanish Pa.ssenger Car Comga,ny, Inc],
whose ba.lance sheet reflects this fact wi+,h a loss of 120 billion lixe (out of an
overall loss of 130 billion by Fiat Automobile)~ due precisely to accommodation of
ths 5EAT entry. Which is to say that if it had not been necessaxy to ba,lance the
losses from its activities in Spain, Fiat Automobile xould have closed its balance
sheet with a relatively modest loss of 10 billion lire. There remains, hoWever, the
big "question maxk" of Brazil and Argentina, where the reported losses for fisca,l
year 1979 totaled almost 190 billion lire and the results for 198~ axe not y.et known
(one should not forget, however, that only 52 percent of Fiat Brazil--the most sub-
stantial of Fiat's paxticipa,tions and the source of the heaviest losses--is cwned by
Fiat while the rema.ining 4~ percent is owned by the state of Minas Gerais). More-
over, before showing up on the ba.lance sheet of Fiat, Ltd the results for a large
part of the foreign associated compa,nies pa,ss through the books of the foreign
holding compa,nies, of which the most important is Fiat Interna,tiona.l Holding (IHF)
of I,ugano .
In the industrial vehicles sector as well, the :;till unresolved problems
of the French UNIC and the Ger*~an tlagirus Deutz stand in contrast to
the satisfactory progress of the Italian operations (Fiat Industrial Vehicles
recorded a net profit of more than 14 billion lire). Moreover, it is certainly no

_ accident that the improvement in the principal aseas of Italian economic activity
coincided with an industri.al relations policy that reflects an obvious determina,tion
if not actually a full-fledged "hard line."
Froductivity ~,ncreased, as absenteeism declined from the previous 15 percent to 5
percent and the climate in Italian factories underwent a ra.dical change. "The
phenomenon of 'microdisputes'--a phenomenon which is in some respects more haxmful
than absenteeism and does not show up in the statistics--disappeaxed several months
ago," an adviser to the Agnelli family points out. The "hard line," however, has
not yielded equa.lly satisfying results in all sectors. Steelma,king (third among all
operational sectors in terms of total sales) also closed the yeax with heavy
losses, and although the deficit of TEKSID is partly to be attributed t~~
the nega,tive evolution of the South American operations, the Italian steelmaking
industry (which is the completely predominant part of the steelmaking sector of the
Fiat group) is still far from having solved its own structural difficulties.
There is sad news also from Fiat Allis (eaxth-moving ma,chinery)s the good results
_ from the E~ropean and South American operations do not even remotely suffice to
offset the deficit of the North American operations, which recorded losses tota.ling
~55 million (~0 billion lire at the exchange rate which prevailed. at year's end).
As always, however, the components sector yfelded. good results, with a paxticulaxly
impressive improvement being recorded by Maxelli Magnetos. It is difficult, nonethe-
less, to make an objective evalua,tion of these data~ for they relate to enterprises
which in ma.ny ca,ses function almost exclusively for the compa,nies of the group.
This rapid glance at the "provinces" of the Fiat empire leaves the overall impression
- that there has been a substantial improvement in the automobile sector (the balance
sheet of Fiat Automobile shows almost twice the total of fina,nce chaxges paid as in
1979 in addition to the special entry representing the SEAT losses), whereas only
minor changes appear to have been recorded, in the other sects~xtis. The overall
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results, however, ase negative: whereas the losses of the associated compa,nies ~
- included in the table come to 14~8 billion lire, the losses absorbed. in the balance
she2t of Fiat, Ltd (the holding compa,ny of the group) total 188.5 billion lire.
Laxyer Agnelli, however~ has presented to Fiat's stockholders a ba.lance sheet that
shoks a net profit of 51 billion lire~ which (with a touch of generosity) will
ona,ble ~`iat to distribute a total dividend of almost 90 billion lire (the differen~e
will be xithdrawn from the reserves).
The explana.tion for this seeming miracle is well knowns Fiat acts as banker for the
entire group, and the losses it has sustained.--in its profit-and-loss statement--
from its associated compa,nies have largely been offset to date by the interest it
receives on the fina,ncing it extend.s to these compa,nies. It will be useful, how-
ever, to examine the activities of this unique "bank" more closely.
In Italy alone the Fiat group in 1980 obtained--in the form of inedium and long-term
loans--a total of 666 billion lire at an avera.ge interest rate of 17.17 percent
~(and paid.an avera,ge rate for short-term loan., of 16.82 percent). Cesare Romiti
undeniably knows how to operate in the fina,ncial market~ in the light of the fact
- that the cost of short-term money in that maxket has been fluctua.ting betxeen
21.5 and 23.5 percent. The acquisition of ca.pital was not limited to these sources,
however: another 422.5 billion lire was obta,ined partly by increasing Fiat's
capital and partly through the issuance of bonds~ while an additiona,l 250 billion
lire was supplied by MEDIOBANCA. A grand total of approxima,tely 1.35 trillion lire
was obtained on the Italian market alone, which is an indication of the burden
represented by the profit-and-loss statement: such a large-scale recourse to credit
is in fact not justified by the growth of investments, which in 1980 stagnated at
the levels of the previous year.
This acquisition of capital has been accompa,nied by intense activity with the aim of
recapitalizing the associated compa,niess the capital of Fiat Automobile accordingly
increased from 1.2 trillion lire to 1.7 trillion lire; that of TEI^~ID increased by
- 50 billion lire; and operations on a smaller scale related to TEI,ETTRA (Fiat's
associated compa,ny operating in the telecommunications sector) and to Fiat Tractors.
The biggest operation on the agenda, however~ will cost Fiat in the vicinity of 600
billion lires in fact, plans call for doubling the capita,l of Fiat Interna.tiona,l
Holding, which currently amounts to 1 billion Sxiss francs (582 billion lire at the
current exchange ra.te). What purpose will this serve? The beneficiaries xill be
first and foremost Fiat Allis and seeondaxily IVE00 the Dutch holding company that
- controls operations in the industrial vehicles sector.
What about the indebtedness? This is one of the most obscure aspects of the group
and xill rema,in so until the consolidated. statement is known. In round numbers,
the overall indebtedness of the group would appeax to be approxima.tely 7 trillion
lire--a figure slightly below that of last yeax. The sample of associated com-
pa,nies considered in the table, however, r~veals a sharp increase in total indebted-
ness from 3.5 trillion lire to 5 trillion lire, due in great paxt to the.increase
(to 2.35 trillion lire) in the indebted.ness of Fiat Automobile (a figure reduced to
1.6 trillion just recently, following the recapitalization). What is surprising,
however, is not so much the size of the indebtedness as the 61 percent increase in
the finance chaxges. In view of the advantageous conditions under which Romiti
succeeded in finding capital for the group, we ma.y wonder whethe.r this circumstance
ma.y not provide at least a;~artial explana.tion of the miraculous profits of the
Fiat holding compa.ny.
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Table 2.. Accounts of the ''Provinces' [figures in billions of lire~
{ 1) r,n.( 2 ) n~ ~ ~ )abn~( 4~nwir.~o ~
Fiat a o S.~ ~ ~
tpa (5.810) (141) (1.2831 (-97)
Fiat trattori 710 2~ 177 +0
5P8 ~6~ (Sd3) (17) (111) (~t)
~ Hesston Z29 4Z 63 +5
~ (184) (13) . (74) (+Sy
Flat veicdi 2.Sr6 13/ Ht +14
md. ~'j ~ (2.063) (88) (659) (-8)
Fiat Alli ~eo ~o zee +e .
- B. V. ~ (334) (23) . (176) (-8)
Fiat AIAs 413 8! 126 -sp
inc. (389) (25) (98) (-30)
Mapneti/ J70 . 23 1~0
Marellf l9 ~ (321) ~ (22) (161)
wabe~ ~n a a9 ~z
(154) (4) (48) (+4) ,
Fiet ~ ~ 142 ~ 19 +1S
iubrificanti (150) (1) (12) (+i2) !
Teksid 1AOZ !.7 Sp7 -y I
(1.211) (711 592) (-25)
Aspera 17b - - � +4 I
(155) . (+3) i
Gilardinl 913 . 1S 4~ +6
(187) (7) (57) ~ (+8) ,
Fiat terma ~ 11 ` t~ 19 ~7 ~+p
" meccanke ~ (31) (6) (50) (+6)
Fiet ( rZ 7! - ~ ~ +t
lerrovfahi~ ~ (49) (3) ~*~1
La Stampe !1 - 1 +4
(51) ~ (3) (+1)
7elettra 162 ~ ~ +1
(132) (14) (99) (+3)
Ivl ~ 13 } 117 b 17 +2 �
(93) (3) (19) (+p)
Coman ~4p ~7 u +Z
(91) (11) (97) (t2)
Fiat aviaz. ~ 11~.) 117 7 34 ~
(132) (S) (37) (+4)
Totaie ~ 15 ~ 14.7N 727 4.937 -14/
(12.100) (d51) (3.579) 118)
V jaji ne % +2~,8% +6i,296 *38,5% +p5,47r.
lb
Keys ' ~
_ 1. Sales 9. tlarelli Ma,gnetos
2. Finance charges 10. Fiat Lubricants
3. Indebtedness 11. Fiat Thermomechanical
Results 12. Fiat Ra,ilways
5. Fiat Automobile, Ltd 13� IVI
6. Fiat Tractors, I~td 14. Fiat Aviation
7� Fiat 7ndustrial Vehicles 15� Total
8. Fiat Allis, BV 16. Difference in
*1ote: 1980 data in heav t 1 ~ percentages)
neasest bili.ion lire. UIVICyand Mag~rustDeutz n~otnincluded.,Fi~es roundecl to the
COPYRIGHT: IL MONDO 1981
10992
CSO: 3104/327
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GENERAL FRANCE
ABOLITION OF STA~E SECURITY COURT RAISES QUESTIONS
Paris VALEURS ACTUELLES in French 20 Jul 81 pp 27-29
[Article by Jean-Francois Gautier: "The State Without Safeguards: The State
Security Cour*_ Is Going to Disappear; But The Special Cases It Used to Judge Will
Not Disappear Along With It"]
[Text] "By doing away with the Security Court, the new officials of the state are
depriving themselves of the real means for defending the state."
The magistrate who is speaking, concerned about his duty to be discreet, must ma.in-
tain his anonymity. If he has wanted to give his opinion it is because as a man of
around 60 he remembers the beginnings of his career, when legal proceedings did nat
have smooth machinery.
"Before 1956," he recalls, "the FLN [National Liberation Front] uprisings could be
prosecuted only by lodging complaints against person or persons unlmown. This was
powerlessness: Later on, in 1961, there was the mil itary High Tribunal which had to
undergo the rebellion of the generals; then in 1962, there was the Military Court
of Justice for the trials against the OAS [Secret Army Organization]. On each
occasion the general principles of the law were harmed and the ma.gistracy was com-
promised. The State Security Court in 1963 finally relieved the profession of the
burden of lawsuits which are beyond its capabilities to deaJ. with." ~
This court was set up by two laws dated 15 January 1963 and specializes in matters
of espionage, treason and political subversion. The court departs from common law
on several counts. The socialist program, rejecting these d~partures, called for
the elimination of the Security Court. This was given concrete form by a bill put
- forward in the Assembly on 8 July by Robert Badinter, keeper of the seals. As of
last Friday the text was due to be put before the deputies.
On 9 July the minister of justice, with his black hair and bushy eyebrows and power-
ful j aw, set out his program of reforms at the chancellery in Vendome Square. He
explained, "The State Security Court must be done away with because there must not
be any political system of justice nor any political jurisdication either."
Mr Badinter calls to mind his lawyer's profession. His look does not f ix the audience,
is not compelling right away. But by the tone of his voice and the rhyt~m of his
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words the minister seeks approval and personal conviction. He addresses himself
to his public as if they were so many jurors: "The keeper of the seals," he argues,
"does not l~ave the responsibility for judging terrorism. It is for those who render
justice to take responsibility for their decisions; their minister is only there to
give them the means for making those decisions. To define a repressive policy here
in the ministry would not make sense."
Mr Badinter's doctrine contains just a few principles: he refuses as keeper of the
seals to submit matters to the Security Court, that is to say, to take up the iole
of public prosecutor; therefore, i.n the name of independence for the judicial system
he relinguishes prerogatives of the representative of the state's interest; finally,
by eliminating any and all political jurisdication, he does away with the notion
- of political crime "outside the scope of common law."
However, Mr Badinter agrees that certain matters jeopardiz ing military secrets can
be judged by the Permanent Armed Forces Tribunals (TPFA's) which, he adds, "will
not continue to exist in their present state." r4oreover he admits that "special
matters" sometimes justify "special jurisdica~-=~ns."
By setting up the TPFA's in 1956, the Guy Mollet government had introduced the
notion of "permanence" for jurisdictions which had to judge special cases. This
permanence made it possible not to link justice to the i.mmediate event. Mr Badinter
harks back to this doctrine which, however, seemed elementary to socialists from 25
years ago. They had set up the TPFA's in two stages:
--on 12 March 1956 the Assembly authorized the government "to take any Exceptional
measure with a view to reestablishing order;
--on 19 March the keeper of the seals, Mr Mitterrand, established the TPFA's, "any
contrary provisions of the military codes of justice notwithstanding;" the competence
of the TPFA`s extended all the way to obstructions of traffic; the time limit on
custody was done away with; dayt ime and nighttime searches were authorized; and
sentences could not be overturned by a civilian court.
On the long list of those who voted for those "full judicial powers" on 12 March
figure the names of the Communist Party's leading lights--Ballanger, Cachin, Fajon,
_ and Duclos--and, besides Pierre Mendes France and Jules Moch, several Socialists
who were to carve out careers--the lawyer Roland Dumas, three 1981 ministers (Alain
Savary, Gaston Defferre and Charles Hernu), and Mr Mitterrand (although he was a
minister, he was able at the time to vote in the Assembly).
Among the opponents who voted against this piece of legislation were Messrs Hersant,
Le Pen, Dorgeres, and Tixier-Vignancourt.
"The State Security Court maintained this notion of permanence attached to a juris-
diction rendering judgment on special cases," said the magistrate questioned by
VALEURS ACTUELLES. "It also detached itself from the circumstances specific to the
Algeria war by bringing in professional magistrates. History shows that all juris-
dictional arrangements for special cases have been compromised by the event and
been rendered mockeries of justice. With the Security Court, a guarantee of in-
dependence had been found at last. ~
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_ Examples of "compromise" of justice are numerous. In order to have the Knights
Templars tried, Philip the Fair accused them of heresy when it was really the state
- in the f irst place against which they held a grudge. The leaders were sent to the
stake without the king having had actual legal means with which to try them.
With its Revolutionary Tribunal the Revolution of 1789 also established situational
~urisdiction arrangements. Imperial justice showed itself to be even more expendi-
tious for the Duke of Enghien. As for Cadoudal, he was tried by a military tribu-
nal, and Caillaux more than a century later was tried by the Parliament meeting as
the High Court of Justice. The Vichy regime also s~t up special case juriadictions,
followed by those of the Liberation period and 10 years later those of the Algeria
war."
The man with whom I was talking concluded that "on each occasion these situational
tools were ~uestioned and questionable. As for the Security Court, it is now 18
years old. Its existence is no longer tied to the events which it must deal with.
In that sense it is no longer questionable, but it is ready to try special cases."
By way of illustrating the context, he added, "The Court was that missing link in
the chain which leads from a state of peace to a state of crisis and from a state of
crisis to a state of war."
Mr Badinter puts forward another analysis. Refusing to describe the Security Court
as one with "specialized jurisdiction" (on the same basis as the industrial concilia-
tion tribunal or the juvenile court), he makes it out ta be a"special ~urisdication:
because of its make-up, its area of competence, and its procedures" in the explana-
- tory preamble of his bill.
So the minister of justice is proposing a return to the status quo ante, and he is
asking to have attacks on the security of the state be judged by standard courts,
common law courts.
_ However, several magistrates and police commissioners give this court's existence
~ credit for the fact that France, unlike its neighbors, does not experience any
extensive political crime--"provos" in Amsterdam, Baader and his imitators in West
Germany, Red Brigades in Italy, armed separatists in Spain, and paramilitary agi-
tators in Great Britain.
In France most of the Basque, Breton and Corsican terrorist movements, just like
the leftist movements which have international ties, have been nipped in the bud and
their leaders tried by the Security Court.
"That has been possible," our magistrate adds, "thanks to the Court's wide terri-
torial jurisdiction. Fof 30 years it was impossible to break up the FLN networks
because with one little trial in Algiers, another in Bordeaux, and a third in
Marseille or in Boulogne-sur-Mer, terrorists were being tried individually without
being ab].e to get at the organizations's overall plan."
In 1978 Raoul Beteille, former prosecutor general at the Security Court, said
in the course gf the "Versailles Bretons" trial, "If this court did not exist, the
Ille-et-Vilaine occurrences would probably be tried by the Rennes assize court, the
Finistere occurrences by the Finistere assize court, and the Versailles occurrences
by the Versailles assize court. Who would have talked about the link-up of these
affairs? Nobody."
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When asked about the specialization needed for magistrates in terrorism and espionage
matters, and about the need to group investigations together, Mr Badinter answered
on 9 July, "If it is a matter of specia.lization for magistrates in terms of compe-
tence or experience, then that is in the normal order of things. One can always turn
to a particular specialized magistrate for cases which would have come under the
former Security Court. As for link-up, it is always possible for an examining
judge to ask to have a case relinquished from that jurisdiction in order to move it
elsewhere. Those who administer justice have the means to organize it among them-
selves."
He added, "In the case of the Corsicans, there is no need for a Security Court in
order for them not to be tried in Bastia. The prosecutor general can request a
simple change of jurisdication to the criminal division."
- In his closing speech for the prosecution in the FLB [Brittany Liberation Front]
trial, Mr Beteille also referred to the cases in which pressures on the jury members
blocked the "normal" course of justice. This was the case in Nimes in 1962 in a
trial which implicated the OAS; the jurors had individually received threatening
letters. This was also the case in the "gang of people from Lyons" affair, in
several cases of high crime (Mr Peyrefitte had to remove them from assize court
jurisdiction), and in Italy on several occasions in Red Brigades trials.
"In these cases," Mr Badinter affirms, "a permanent subsidiary disposition of the
case will make it possible to replace jurors by additional magistrates."
The magistrate who was questioned by VALEURS ACTUELLES finished up by saying, "If
you are talking about making judicial personnel specialized, about recommending~
'link-ups,' about centralizing things in Paris 3n order to avoid popular pressures,
about going to the military if important secrets are involved, about leaving open
the possibility of a special jurisdiction, you are falling right back on the
justif ications of the Szcurity Court, which was not itself 'special.' So the Court
might as well be kept, which would be simpler, quicker, and more effective."
For reasons of principle which, moreover, are not being attacked, Mr Badinter is
taking away from us the practical instrument whose legitimacy he himself proves.
In cases of serious crisis, he will no longer have the means for reacting quickly.
Organized networks know this; they know the system of justice against which they
work."
Can "organized networks" reemerge? On 30 June Jean-Pierre Cot, minister of coopera-
tion, was giving separatist movements preCexts for doing so. While speaking about
"human rights" in Central America he came down "in favor of the principle of the
right to self-determination, including with regard to France."
"Activist " self-determination in this case could be interpreted only in terms of
political terrorism. Councilor Fuster--who is close to Badinter and is better
known by the pseudonym Casamayor--aff irming that the role of the system of justice
is not to "suppress" but to "educate," throwing responsibility for the causes of
violence back onthe organization of society itself, arguing for a"scientific" sys-
tem of justice, asserted to France-Inter, "When there is a social breakdown, it
must be repaired."
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So then the magistrate becomes a kind of "class struggle garage mechanic." From
this peacemaking point of view, there is in fact no more need for repressi~on.
Victims are just accidental casualties. The state washes its fiands of them until
it goes down the drain.
~COPYRIGHT: 1981 "Valeurs actuelles"
9631
CSO: 3100J864
,
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GENERAL xTnLr
~
RIVALRIES BETWEEN EOONOMIC MINI5TER5 IN NEW GOVERNMENT
Milan IL MONDO in Italian 10 Jul 81 pp 20-~22
[Article by Donato Speroni: "Crisis of the Twosomes"]
[Text] Relations axe difficult betxeen Andreatta and La Ma.lfa,
and they soon Kill be between Maxcora and De Michelis as ~ello
Formica ha.s an abrasive persona.lity. With this team, 5padolini
- will....
Ths first opportunity for a confrontation xill be the coming cabinet meeting at xhich
the sugplementaxy budget estima,te for 1981 will be discussed. Minister of the Treas-
ury Beniamino Andreatta ascribes great importance to this document, which among other
things Kould ha,ve to accommodate cuts totaling 11 trillion lire in order to bring the
deficit doxn to the 39 trillion lire figure that was forecast last Sept~mber. An
initial attempt to obta,in approval of the docwnent at the last cabinet meeting of the
Arnaldo Forlani administration (held on ~iday 26 June) failed, hoxever, in the face
of the objection of ~ea,ny of the ministers to the effect this xas an important politi-
cal action requiring a government in the fullness of its power. As a result, the
supplementary budget estimate had to go beyond. the provisions of the law, because
among other things the disagreement in fact pertains not only to form but also to
contents the budgetary cuts would hit the local governaiental entities in paxticular,
axousing great aoncern on the pa,rt of the socialists and Christian Democrats as xell.
Minister Giorgio La, Ma,lfa is also opposed to this budget; he complains that he
leaxned of the document only a few hours before it was sent to Chigi Palace.
This development is merely one symptom of the strained relations existing a,mong the
economic ministers--relations which almost paxalyrzed the Forlani administration and
today threaten to resurface with even greater intensity following the a,dmittance to
the "team" of prominent persons (such as Rino Formica and Giovanni Marcora) whose
political sta.ture and abrasive personalities are of equally large dimensions.
I. The La, Ma.lfa-Andreatta 'Tandem"
At the outset of the governmenta,l crisis it was taken for granted among the parties
involved in the future majority coalition that the situation would be helped if the
para.lyzing problem of the relations betxeen Andreatta arrd La Ma,lfa could be solved.
The two men have always held contrasting views, but their philosophies ha,ve been
transposed: Andreatta., xho a,s an economist has always been in favor of a Keynesian
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policy of maintaining dema.nd, has--as minister of the treasury--displayed a f#rm hand
in controlling public expenditures, to the extent of slowing down even those expen-
ditures xhich had already received formal approval and releasing the funds thus
authorized "'~rith an eyedropper." La. Ma.lfa--who has alwaqs followed a pa.ternalietic
polj.cy of austerity--has placed all his prestige as minister of the budget behind a
3-year plan xhich is above all a plan for public investments which axe more rationa,l
than pa,st investments but will nonetheless increase the volume of red ink in the
government's ledger. The tNO men often clashed in the preceding administration.
"In Italy, you have a minister of the budget xho never misses an opportunity.to undo
rrhatever the minister of the treasury does," the authorita.tive interna,tional publi-
cation CURRENCY REVIEW of London commented xith irony.
How can this problem be solved? The solution appeared to be automatic~ as a conse-
quence of Giovanni Spadolini's intention to name to the treasury post someone who
enjoyed great p~estige abroa,d as a member of the preceding "team"s that is to say,
either Bruno Visenti or Pa.oli Baffi. Andreatta would then certainly have to leave~
since he xas urnrilling to accept any ministry other than that of the treasury.
Baffi, however--pa.rtly because of his absorption in persona.l endeavors and paxtly
because of his pessimism concerning the practica.l possibility that a technician
_ recruited from outside the political parties could institute a policy of austerity
for all the government apparatus--turned the appointment doKn. The other hypo-
thesis--that of a Visentini candidacy--had even less substance, fvr Visentini had
already taken himself out of contention at the first signs that the DC ~(~ristian
Aemocra.tic Farty~ was unwilling to give the Republicans the treasury post in addi-
tion to Chigi Pa.lace.
Spadolini ma,de one last attempt to avoid reconstituting the "tandem"s on Friday
evening he ha.d a long ta.lk with Marcora in an attempt to induce him to accept the
treasury job. Ma.rcora replied, however--in his brusque manner--by informing
Spadolini tha.t the treasury is not his "bag." Pa,ndolfi rema.ined a possibility,
but xithin the framexork of the internal dialectic of the DC an Andreatta candidacy
enjoyed fax greater prestige. Andreatta has therefore remained in the office on
Venti Settembre Street, just down the hall from his "friend-enemy" La, Ma,lfa.
II. Marcora and De Michelis
Other difficulties have accrued to the government from the twosome of Marcora and
. Gianni De Michelis~ Kho has been reconfirmed as minister of state pa,r~ticipations.
The division of jurisdictions betxeen the two ministries xould appear to have been
designed. purposely in such a way as to make even saints quarrels on the one hand
there are the problems of the industries in the public sector, arrl on the other
there are the sectorial participa,tions which often must be based. precisely on these
same public enterprises. On the one hand you have the ENI ~Nationa,l Hydrocaxbons
Agency~, and on the other the energy sector, with the problems of the chemical
irxiustry situated betxeen the public pole and. the private pole arxi alxays in a posi-
tion to ca,use conflict.
In the two preceding governments the lion's share of the authority was exercised by
De Michelis, xho Kith his "xhite book" on sta,te participa,tions had delineated (and
he was the only one to do so) an overall industrial policy strategy. The other
ministry, moreover, hz,d been held first by Antonio Bisa.glia, who was preoccupied
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with other matters, and subsequently by Fa.r~.olfi, who totally renounced his func-
tions in the area of industrial policy except for energy. But now? Marcora is
assuredly not a minister who Kould consent to being ousted; moreover, he is acknow-
ledged to be playing a principa,l role in the leadership of the Christian Democratic
contingent in the government. "I have no -~asire to make industrial policy," De
Michelis says; "the important thing is for someone to make it."
IIT. Formica, and the Others
Andreatta's relations with outgoing minister of fina,nce F`ranco Reviglio (see inset)
were certainly not idyllic. The minister of fina,nce had, a few days previously,
called for a substantial revision of the tax burden on fixed income~ even in the
- light of the substantial revenues from IRPEF ~tax on family income] self-taxation as
of the end. of Ma.y. Andreatta had quickly "called him to order," expressing the
hope tha,t "fiscal policy, too, will be included in the area of stabilization
policies." Hopefully without any a.d.ditiona.l taxes--Andreatta's people explained. to
the nexsmen gresent--but with considera.tion given to possible tax cuts within the
framework of an overall arrangement xith the social entities. Along xith these
"pinpricks," however, Andreatta. also attempted to defend Reviglio's job. When he ~
realized. that an endorsement by Reviglio of the supplementary budget estimate could
become just one more cause for criticism of his professorial colleague by the
Socialist Paxty ~PSIa, Andreatta readily agreed to hold the document over for the
incoming administration. Now, however, Reviglio will have to resume the role of
professor, xhile his post is occupied by Formica, who is considered to be more
attentive to the need for not aliena.ting the middle classes and thexefore to be
less a.mena,ble to the overall bud.getary demands supported by Andreatta. This is~
accordingly, still another factor that will militate a.gainst equilibrium in the
government.
- How will Spadolini be abZe to develop a coherent policy in the midst of this hornet's
nest? It is well known that the prime minister is relying heavily on the role of
- Baffi, who will assist him at Chigi Pa,la,ce in the capa.city of economic adviser. An
adviser is not a minister, however. "At this juneture," they are saying at the
treasury, "it was better to appoint an additiona,l minister--even a minister without
portfolio--so a,s to give Baffi a rank at least equal to that of the other minis-
ters."
IV. Reviglio's Downfall Ca,used. by the 'Red Book' Carticle by Fa,olo Fa,ssarini;
published as inset~
"I am most grateful to you. You see, a lot of people have phoned me: Sandro
Pertini called, and even Giovanni Spadolini called, but nobody from the Socialist
Paxty called. You're the first one, and so fax the only one." This is how an
extremely bitter F`ranco Reviglio welcomed the friendly telephone call from socialist
member of pasliament Franco Ba.ssanini. It was 1430 hours on Sunday 28 ~TUne. Only a
few hours before, Spa.d.olini had read the list of the 27 ministers of his new admin-
istration: "...Minister of Finance Rino Formica, sena.tor...." Adios Reviglio. The
courteous "tax assessor," the Italian Robin Hood, the most controversial of the
cabinet ministers during the pa,st 2 yeaxs (he had held of`.f'ice since August 1979~
when the first Cossiga a.dministration was formed), the ma,n for whom the prestigious
slogan "to govern a la Reviglio" was invented, ha.d been shunted aside unceremoni-
ously. Suspicions ha.d begun to assail Reviglio only a few weeks before, and he
- received the news of his "defenestra.tion" over the radio.
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Why xas Reviglio ousted--and why in such a brusque manner? As is only 2iatural, in
the offices on Corso Street where the socialist leadership has its headquarters
they axe minimizing the whole affair: "We're not Norried about it!" they say.
- "Reviglio was there for 2 years--longer than Bruno Visentini," they point out. "If
there's a change, it's no traged.y. You also have to beax in mind that although
Reviglio set the new course of the ministry from the technical standpoint, nox--
given the existing problems and given the uproax that has arisen--what is needed is
a politician who will ma,ke decisions and put those decisions into practice." To
this explanation of the advent of Rino Formica to the "ministry of taxes," another
explana.tion can be appended by way of complemer.ting its Bet-tino Craxi has changed
his mind concerning the assistant secretary an~d now prefers to ma.na,ge the party by
himself, while Formica--who had been mentioned behind. the scenes for the post of
assistant secretary ever since the Palermo congress--would have to continue his
work in the government as the stax of Claudio Martelli continues to rise within the
_ party organization.
"But if Formica does rema.in in the government," they went on to say on Corso Street,
"a ministry will have to be found for him tha.t is more prestigious than the ministry
of transport~ in order (among other things) to give additiona,l emphasis to his role
as head of the contingent of socialist ministers on the Spa.dolini administration
team." The most prestigious ministry might well have been that of defense, and of
all the outgoing socialist ministers (except for Enrico Ma.nca.~ who had been daanaged
by the P2 affair) Craxi failed to defend only twos Reviglio and--precisely--Lelio
Lagorio. It was easier to sacrifice the former, who does not have a party card and
is adjudged to be somewhat more independent than is tolerable anri (most important
of all) was invited to join the government at a time Khen the socialists were sti11
keeping themselves on the outside.
Although this line of reasoning may explain Formica's advent to the Ministry of
Finance, it does not explain the brutality with which Reviglio's sepaxation was
carried out. The publication of the "red books" containing the names of the alleged
tax eva,ders had, to be sure, elicited criticism even within the PSI. The minister
Aldo Aniasi (tra.nsferred but confirmed) did in fact blame Reviglio--during the
party meeting at which the cabinet posts were decided--for the Alpi kidnapping (the
father of the kidna.p victim ha.d appeaxed in Reviglio's "books" as the richest man in
Italy). It wasn't just this, however. There is no doubt that Reviglio's campaign
to hunt down the tax evaders had created difficulties in relations between the P5I
and certain strata of the middle class. It is known for certain that when Reviglio
approached the socialist group to request legislative initiatives for his "handcuffs
on the tax evaders" project he always ran into long faces and scanty cooperation.
Someone in the Ministry of Fina.nce has even hinted that Reviglio's independent p~s-
ture towaxd the PSI has been translated into stern rejection of specific urgent
requests by the pasty. For the present, it is all speculation. It is known,
however, that the transition from Reviglio to his successor will not be a tranquil
one: Reviglio's staff--even those men (such as chief administrative aide Maxio
Schinaia) who are PSI members and furthermore axe Craxi supporters) will not place
themselves at Formica's disposal and will resign their posts. "I have always scrup-
ulously avoided making public statements;'Schina.ia declared, "but I ca,nnot neglect
to point out that we established a new policy--a policy borrowed from the logic of
the 'glass house.' In a.ddition to the technological innovations and the automation,
the entire Italian university community was mobilized. Intellectua.ls such as
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Antonio Pedone an~d F~anco Ga11o lent their services gratis. Just thinks the fee for
attendance at one of our meetings is 3,000 lire. As for me, I shall again be serving
as section chairman on the Council of State. It seems to me to be a question of good
taste. I hope Formica will continue our work and, if possible, do even better."
f~ PYRIGHT: IL MONDO 1981
1o99z
cso: 3104/327
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GENERAL ITALY
PROFILE OF PDTENTIAL CISL LABOR LEADER CAVIGLIOLI ~
Milan IL MONDO in Italian 10 Jul 81 pp 28-29
[Article by Lorenzo Scheggi: "Carniti's Heir"]
[Text~ In the eyes of the (~ristian Democrats of the CISL LItalian Confederation
of Labor Unions~ he is an extremist or, at best, an incurable victim of nosta.lgia
who is unable to shake off the experience of the "hot autumn." In the eyes of the
industrial unionists, however (and all those segments of the CISL who continue to
invoke the "hot autumn"), he is the undisputed heir of Pierre Carniti~the "nex ma,n"
for the 1980's. Both groups, though, agree that Rino Ca,viglioli~ secretary general
of the textile workers~ is one of the leading exponents of the new generation of
tra.de unionists and is assuredly destined xithin the very near future to rise to
_ the top echelon of the CISL leadership--very probably at the coming congress of the
confederation scheduled for October. "For the present I'm fine where I am~"
Caviglioli told IL MONDO on the eve of the congress of his confederation to be held
at Treviso from 1 to 5 July, at xhich he will [sic~ be reconfirmed as undisputed
leader, for (among other things) much remains to be done there~ notably the renewal
of the labor contract which is due to expire next spring. One thing is certain,
hoxever: at its coming congress the CISL will provide for the subsequent renova-
tion of its own leadership, and it is no secret that a representa.tive of the indus-
trial categories xill definitely be installed in the nex secretaxiat. In practice
this xill be eitlier someone from the textile workers (specifically, Caviglioli) or
Franco Bentivogli of the metalworkers~ who however has negleeted no opportunity to
tell everyone that he is not receptive to the idea of entering the confederal
secretaxiat.
A 40-year-o1d (as of next 15 August) native of Rome, Ca,viglioli was virtua,lly born
a trade unionist. In fact, he joined the union at 2Q years of age shortly a,fter
receiving his degree as surveyor and a.fter membership as a young man in Ca.tholic
Action under the spiritual guidance of Luigi Di Liegro~ a Roman priest ~+ho was
sensitive to social problems and xith whom ~,viglioli still ma.intains cordial rela-
tions. At the outset of the 1960's the CISL routine xas virtua.lly obli~atorys the
centra]. school in Florence followed by severa.l months of practical experience in
the suburbs (he drex Sesto San Giovanni) before be~ing given his first important
a.ssignment. They sent him to Terracina but he did not stay there long~ "because,
he explains, "at the school in Florence they talked.to us about the CISL's auton-
omy whereas in practice I found I had to reckon every day with the DC C(firistian
Democratic Farty~."
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He returned to Milan, and that move proved to be his decisive step. }~e found a
wife, Regina,, kho xas already xorking at the FIM ~expansion unknoxn~, and. they
have three children of 16, 14 and 12 years of age respectively. He also found the
metalxorkers~ within whose ranks (except for a brief interval in Rome from 1962 to
1965 in the youth office, from xhich Bruno 5torti re~aoved him for certain political
disagreements involving incompatibilities and trade-union unity) he built his
entire caxeer in Lecco, Milan and Rome before xinding up in 1978 in the secretariat
of the textile workers. And he also found Pierre Caxniti, in whose shadow he has
remained almost all his life and from whom (according to ma,ny in the CISL) he in-
herited his sullen countenance and ultimately the post of leader of the left wing
of the confederation.
Ca.viglioli was not in agreement xith the policy change decided upon at the EUR
, [Universal EScposition of Rome~ in the spring of 1978 and ~ras among the few who
abstained from voting. "It was a move that was clearly to the detriment of'the
union~" he insists. Instead.~ he defends the Innocenti action ~xo~d�gaxhled~ FIM
of Milans "Eberyone nox says there should be no more Innocenti's," he empha-
sizes, "but I am not convinced, for xe succeeded in saving the factory and in
guaranteeing the people their jobs."
The truth is that Caviglioli does not like to engage in self-criticism. Nor does
he appreciate those unionists who--he a.sser-ts--"axe too ha,stily liquidating the
entire experience of the union movement of the 1970's, for there xas so much in it
that Kas right and that Kas reasona.ble." So when in July of la,st year the CISL
raised the banner of the 0.50 percent solidaxity fund he was among the fex in his
confederation to criticize the "improvised and authoritarian" xay in xhich the
fund xas established (instead, he declared himself from the outset in favor of
using the fund to help coopera,tives and self-mana,ged firms). Then xhen eaxly last
April ~Che polemics erupted over the anti-inflation pact and cost-of-livin~ index,
he ~as likewise aanong those xho most strongly criticized the manner in xhich some
CISL leaders had presented the transaction, xhich he argues appeared from the
very first to be "too much slanted in favor of the government."
He also speaks his mind. about more controversial issues such as self-management~
of xhich he is the most passiona,te a,dvocate in the CISL and xhich he regards as a
"third Hay between private industry and public industry," although he acknoxledges
that "self-ma,na,gement is not a need but the interpretation of a need and is there-
fore a constrained version of reality." His politics? For yeaxs he ha.s voted
socialist. He believes the DC is "beyond repair." He likes governa~ents of
nationa,l unity ("if one had been formed, at least some problems xould have been
solved"). He believes~ moreover, that the union should participa,te in politics
directly, in the first person. The title he has selected for the congress is in
this sense symbolic: "Renex the ties; engage in politics; and remain a labor
union." Engaging in politics, he explains, means "xorking to liberate the votes
of the people from the Christian Democratic Paxty and bringing into existence a
reformist coalition of a seculax and socialist orientation--a coalition capable
of posing problems even for the communists."
COPYRIGHT: IL MONDO 1981
~
i o992
cso: 3104/32~ ~
" 27
FOR OFFIC[AL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050002-0