ITALY: POLITICAL SYSTEM UNDER FIRE

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 06746647
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 5
• Document Creation Date: December 28, 2022
• Document Release Date: August 30, 2018
• Case Number: F-2016-01115
• Publication Date: October 26, 1992

Approved for Release: 2018/08/28 C06746647
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�Top-Secret�
CPAS ND 92-25011
its 2950/92 5
26 &Myr 1992 �Yil �
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Contents
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Special Analyses
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Italy: Political System Under Fire 14
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Special Analysis
ITALY: Political System Under Fire
Scandal, economic necessity, and electoral declines are pushing the
leaders of Italy's largest political partki toward reform. Although
traditional politkians still shrink from serious change, anxiety about
Italy's status in the EC will help Prime Minister Amato's reform agenda
and make support for US policies less certain.
Popular discontent with Italy's governing class continues to grow.
Regional protest parties made dramatic gains in the national election
last spring, and the political corruption scandal that began in Milan
last February has spread nationwide. Well over 200 politicians,
businessmen, and public officials have now been arrested or are
under investigation for their pan in a pervasive network of bribery
and graft, much of it involving public funds.
The scandal has dealt long-governing parties a mortal blow in
prosperous and politically influential northern Italy. In local
elections last month in Mantua, Northern League protest parties won
40 percent of the vote; the national coalition parties�the Christian
Democrats, Socialists, Liberals, and Social Democrats�together got
23 percent. Local elections in December, which Rome had tried to
delay, and a referendum expected next March on electoral reform are
likely to deliver similar blows to Italy's traditional rulers.
International markets fear that the enormous public debt will
precipitate renewed attacks on the lira, similar to those that forced its
withdrawal from the EC's exchange rate mechanism last month.
Italian investors, worried that Rome will resort to controls on capital
movement to save the currency. have been moving money abroad at
an increasing rate. oreign banks, embroiled in a
dispute over the debts of a state-owned holding company, are refusing
additional credit to Italy's largest public firms. The banks may even
cut off short-term funds lathe banking system and impound Alitalia's
aircraft to force Rome to repay the loans.
Crisis Management, Italian Style
Amato is trying to restore credibility to the old political process by
showing that Rome is finally reining in public-sector spending.
Undeterred by the largest display of labor unrest since the 1970s, the
Prime Minister is forcing Parliament to accept an austere budget that
includes unprecedented measures to dismantle pension and health
continued
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benefits. He also is seeking an EC loan of roughly $10 billion. He
believes that Community preconditions for the loan will force Italy to
adopt further controversial reforms and thus give him some cover
from domestic critics.
Public anger over the power of the Mafia�Italy's two top anti-Mafia
prosecutors were murdered last summer�is forcing Rome to show
surprising resolve against organized crime. The traditional parties
have long enjoyed the benefits of votes controlled by the Mafia in
southern Italy, but fear of further electoral gains by protest narties
the north may push Rome to keep up its anti-Mafia efforts.
Implications for European Role
Against this backdrop of deep domestic trouble, changes in European
political structures, and challenges from the Northern League, Italian
leaders will be forced to make economic gains and continued
inclusion in the EC core their main foreign policy goals. Such
priorities will make Rome a less predictable and more troublesome
ally for Washington.
For eiample, Rome may look for economic benefits from closer ties
to Iran or Libya, or it may become skittish about letting its bases be
used for US out-of-area operations. The need for near-term economic
assistance from the EC probably will make Rome less willing to make
concessions on bilateral or GA17-related trade issues. Concern about
arousing French or German ire probably will also constrain Italy's
willingness to assert the primacy of NATO against any EC- or WEU-
based security structure.
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