JPRS ID: 9710 WEST EUROPE REPORT

• Document Type: CREST
• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000400010006-0
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 53
• Document Creation Date: November 1, 2016
• Sequence Number: 6
• Content Type: REPORTS

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
;
FOR OFFICIAL USE ONLY
J`PRS L/9710 '
4 May 1981 -
West E u ro e R e o rt
. p p
(FOUO 24/81)
FBI$ FOREi~IV BROADCAST INFORMATION SERVICE
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
NOTE
� JPRS publications contain information primarily from foreign
newspapers, periodicals and books, but also from news agenc,y
transmissions and broadcasts. Materials from foreign-language
sources are translated; those from English-language sources
are transcribed or reprinted, with the original phrasing and
other characteristics retained.
Headlines, editorial reports, and material enclosed in brackets
are supplied by JPRS. Processing indicdtors such as [TextJ
or [Excerpt) in the first line of each item, or following the
last line of a brief, indicate how ~he original information was
processed. Where no processing indica tor is given, the infor-
mation was summarized or extracted.
Unfamiliar names rendered phonetically or transliterated are
_ enclosed in parentheses. Words or names preceded by a ques-
tion mark and enclosed in parentheses were not clear in the
original but have been supplied as appropriate in context.
Other unattributed parenthetical notes within the body of an
item originate with the source. Times within items are as
g~ven by source.
The contents of this publication in no way represent tre poli-
c ies, views or at.titudes of the U.S. Government.
COPYRIGHT LAWS AND REGULATIONS GOVERNING QWNERSHIP OF
MATERIALS REPRODUCED HEREIN REQUIRE THAT llISSEMINATION
OF THIS PUBLICATION BE RESTRICTED FOR OFFICIAL USE ONLY.
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
JPRS L/9 710
4 May 1.9 81
WEST EUROPE REPORT
(FOUO 24/81)
COPlTENTS
TERRORISM
ITALY
Revelations by 'Repentant Terrorist' Libardi
(Maxcella Andreoli; EUROPEO, 9 Max 81) 1
TIJRKEY
Historical Grounds for Armenian Terror Examined
~ (Georges Men~,nt; PARIS MATCH, 20 Mar 81) 4
ENERGY ECONONiICS
INTERNATIONAL AFFAIRS
- Sweden, Norway Sign Energy Cooperation Pact
(Ake Landquist; VECKANS AFFARER, 12 Mar 81) 9
ITALY
Analysis of Nation's Energy Trade Balance
(Alberto Clo; ENERGIA, Mar 81) 17
ECONOMI C
_ ITALY
Makno Opinion Poll on Inflation
- (IL MONDO, 27 Mar 81) 32
, Poll Results Discussed, by Bruna Bellonzi
Economist Interviewed, by Maurizio Valentini
' a- LIII - WE - 1~0 FOUO]
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
Briefs
Ai~ ~o Third World ~l
POLITICAL
ITALY
Local Off`icials Oppose U.S. Base at La Maddalena.
(Alberto Pinna; CORRIERE DELLA SE~A, 28 Ma,r 81) ..............e... ~+2
Doxa Opinior Poll on Att~tude Towaxd PCI
(Vittorio Feltri; CORRIERE DELLA SERA, 2~+ Mar Sl)
GENERAL
FR.ANCE
Preparations for Operational Network of Spot Satellites
(Pierre Langereux; AIR ET COSMOS, 7 Mar 81) ~+7
CNES Prepaxing to Market Spot Satellite Photos
(Pierre Langereux; AIR ET COSMOS, 7 Mar 81) ~+8
- b -
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
TERRORISM I7'ALY
REVELATI(:NS BY 'REPENTANT TERR:; .ZST' LIBARDI
Milan F,UROPEO in Italian 9 M~r 81 pp 24-25
[Articl~ by Marcella Andreoli: "That Other Lotta Continua Current"]
[Text] How did Italy's armed bands come into existence? tiow
_ did political dissent come to resort to machine guns? The
, following confession sheds some light on the mystery.
Of the numerous mysteries that shroud the whole story of terrorism, there is one
that stumps everyone: the mystery of its genesis. How did the armed revolt be-
gin? How was it that political dissent took recou.rse to lethal weapons? Founded
iii 1976, Prima Linea, guilty of assassinating Judge Alessandrini and Judge Galli,
is under close scrutiny while a team of judges from various cities are dissecting
it like surgeons over an operating table. Of all Italy's terrorist clans, Prima
Linea has filled our jails with the greatest number of outlaws, including Marco
Donat Cattin, recently captured in France and extradited to Italy in handcuffs.
Prima Linea, too, has yielded the greatest number of penitents, including Massimo
Libardi, theorist for the gang until he quit sh4rtly before those two ghastly
murders. His confessions reveal how Prima Linea began. _
Massimo Libardi, 28, of Trento, formerly hotel worker in Levico, now in prison,
begins his story with Lotta Continua and the early 1970s. His basi~ chapter, a
startling document, ~alls attention to a magazine LINEA DI CONDOTTA, which ap-
peared only once, in July 1975, published by a group affiliated with Autonomia; -
some of its members, Franco Piperno, Oreste Scalzone, Paolo Virno and Libero
Maesano, later joined the periodical METROPOLI, currently under accusation. ~
LINEA DI CONDOTTA created a good deal of dismay when it published two documents
by Lotta Continua dissenters, which "formalized" a schism already under way with-
in Lotta Continua that opened the way to the foundation of Prima Linea.
Massimo Libardi was himself a dissident, Leaving Trento to study philosophy in
Milan, he joined LC in 1972, charged with making contacts with students of the
university's architectural department and persuading them to switch ov~r to LC.
His dissidence already began the folluwing year when he instigated a debate be-
tween the left and right currents. The leftists "sustained the need to give all
possible support to the PCI towards favoring its rise to power, after which LC
would do its utmost co radicalize the struggle in behalf of labor's demands...
thus to create a split between class and state." The rightists described this
1
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
goal as a"Chilean revolutionary hypothesis," and affirmed, "although with some
confusion, the need to initiate a process of 3rming the masses."
' In the autumn of 1974 the "definitive rupture" occurred: the theories of~the
Lotta Continua left were published in the single issue of LINEA DI CONDOTTA urider
the headline "The Problems Come to the Surface." What had happened? Some of
Lotta Continua's big shots had set up a new unit, unnamed until Prima Linea was
founded, but referred to in the meantime as the "current." The big shots were
Roberto Rosso, chief of the nuclei in Milan, Genoa, Bergamo and Naples; Piero Del
Giudice, in Sesto San Giovanni; Chicco Galmozzi, Sergio Segio (indicated f or the
assassination of Judge Alessancirini), and Massimo Libardi, with Marco Donat Cat-
tin in Turin. Dissident Libardi's account jibes with tliat of another more notori-
ous repentant, Roberto Sandalo, also ex-Lotta Continua who moved on to Prima
- Linea. Says Sandalo, "Prima Linea originated wit.h the tough elements of Lotta
Continua." Hes too, names Galmozzi, Del Giudice, and Roberto Rosso who, he states,
. participated in Lotta Continua's "service order" and therefore "was familiar with
_ L~tta Continua's paramilitary project, to which it had been dedicated since its
origin." He continues, "I must explain that a.n 1972 and the ensuing years, these
plans involved mainly an antifascist crusade (against various MSI exponents ~nd
offices) and holdups, carried out especially by the Milan and Rome branches, to
finance the publication LOTTA GONTINUA. From tho~e years on Lotta ~ontinua col-
lected stores of arms and explosives."
The LC dissidents formulated an ambitious program. Libardi recounts that they
formed an armed group to set up, through pistol practice, a"federation" of armed
groups. These were the years when the leftist extraparliamentary fringes were
~ showing the first evidances of their P38 vocation, and the Libardi gioup's pro-
posed "federation" was intended to give them homogeneity and guidance. Th~.s it
did in grand style, separated into various sectors, according to a model which
- has become classical: "information, to collect political ans~ military facts on
selected targets"; "logistics, to find arms and money"; and "the political, to
maintain contacts with other organized groups, especially Workers' Power." It
had four branches, in Milan, Turin, FJ~rence and Rome. In Rome the military
~ chief was Valerio Morucci," who atte~npt.ed to gain control over the Red Brigades
in behalf of Autonomia when Aldo Mo~~o ~~aas held captive.
"As for our own objectives, Libardi explained, "in the main we ruled out homi-
- cide," but then the group murdered two p~rscns; Milanese MSI party member, Enrico
Pedenovi, a crime perpetrated on the pretext that the fight on fascism conformed
to the LC's "firm tradition that. fascists must be assaulted physically and even-
tually killed," and the assassination of the Turinese Brigadier Antonio Ciotta,
victiin of "an autonomous izitiative by the Turin branch," who sought to "intensify
the militaristic aspect of the struggle." Other exploits including wounding vic-
tims in the leg, holdups, kidnapings, and murder attempts.
, But the group focused mainly on factories. Libardi: "Del Giudice, who was
fanatically on the side of tb: workers, thought it was essential to organize
armed nuclei in the factori~_s by militarizing the workers. This was the whole
- organization's official 1'_ne, enacted through this sequence: workers' struggle,
intensification of the struggle, the creation of a workers' order service in the
factory, and their militarization. This sequence was actually followed at tl-e
2
FQR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
I
FOR OFFICIAL USE ONI,Y
- Magneti Marelli plant in Milan up to the order service, but the last stage was
never realized and no arms were distributed among the workers." At any ra_~e, the
group achieved a"political result" when, on a suggestion from Autonomia, it de-
cided to take part in a street demonstration. "Counting our people, we saw that
with our 300 members, together with those of Autonomia, there were 2,000 peraons
. on hand." This was in 1976, in Milan.
The hope of constituti~g a force encompassing the difftrent groups, ho~- fail-
ed. The crisis came to a head "because of the total lack of political .eba~_e."
This crisis gave birth to Prima Linea, to which all the ~,C dissidents transferred
when it was founded on 16 November 1976 in a villa in Salo, on Lake Como. Miss-
ing, however, was Piero Del Giudice, who was left out because of his "personal-
- i~m" (he later founded the Communist Revolutionary Committees with Oreste Scal-
zone). Massimo Libardi would remain in the background because he was arrested for
the first time l.year later. In Prison, he had secand thoughts about armed re-
volt so pervasive that, once released, he gave an interview to T,OTTA CONTINUA,
urging "explicitly all comrades to abandon their arm~d warfare ;nd to emerge from
the blind alley in whicti we found ourselves.'' The interview, f.owever, was never
published, and Libardi circulated it in the "movement" in mimeographed form, only
to learn that Prima Linea deemed it extremely dangerous. Marco Donat Cattin
later told him that "my position as a comrade urging desertion was much more
dangerous than that of a spy, that is, of a traitor who no longer claims +~he
respect of his comrades."
COPYRIGHT: 1981 Rizzoli Editore
9653
CSO: 3104/221
~
_ 3
FOR OFF[CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
TERRBR~M . ~ TURKEY
~ ~T(9RTCA,~, GROUNAS ~oR ARMLi~II`At~I TERROR EXAMINID
Par~s PARTS MATCFL in French 20 Mar 81 pp 78, 79 .
jArticle i~y Georges Menant: "Armenians' Sudden Revenge."]
[Text] Tn retaliation they are committing murders in the
streets of Paris 66 years af ter the Turkish massacres . _
To the sound of bombs and bullets France is now discovering its Armenians, after
~ts Bretons, ~ts Corsicans and its speakers of Provencal. First of al.l, they were
forgotfien, Because tFie Armenians had for a long time forgotten about themsleves .
Ttiep~ were ta~lors, shoemakers, doctors, lawyers, grocers. They lived in Marseille
and spoke w~tiL 2~ldrius' accent; in LS*ons they became regular Lyonnais; in Paris
and its suBurbs they spoke the old-fashioned slang of Paris. Of ten they
- Gallic~zed tFieir family name, like Charles Aznavour (ian), and most of them
married FrencTi women. Numbering 300,000 they were absorbed, melted, dissolved
~nto tfie FrencIL enviromnent like incense in the evening air. In a word, they
were one of tfie f~nesi. examples of the success of that "French miracle",
fiosp~talitq, gerpetuated tfirougIiout tize centuries, and strengthened in hard
t~caes.
And th~.n last Wednesday, in broad daylight, in the heart of Paris, on the
boulevard Beaumarci~ais, three Turkish diplomats who were leaving an annex of
tfieir Embassy wpxe caugfit in the cross-fire of automatic weapons. ~tao died; one
miraculouslp escaped. The killers,.scarcely glimpsed, escaped without misfiap. _
Tn a telephone ca11 a few hours later the "Armenian Secret Liberation Army"
cla~med responsibility. As in October 1975 when they shot down the Turkish
amBassador to Paris; in Dec~nber 1979 it was the director of the Turkish Touris t
O~f ~ce; and in September 1980 it was the press counselor of the Embassy; finally,
~ 1980 tfiey attacked and just missed the economic counselor. And what is the
reason for tfiis sla~ighter? Only yesterday the terro.rists evoked it, on the eve
of the arrival of the Turkish Foreign Minister in France, last 9 and 10 February:
"The Frencfi.government should know that soon we shall strike, in reprisal for
th~s vis~t and for I~aving forgotten about the Armenian~ problem."
Ar~e~an problesn? That too, we had forgotten. We had forgotten the most tragic,
t~e most cruel, the most horrible of all the problems making up the old and
ixi.exFia.ustible "Eastern question." Genocide: it took the Second War1d War and
. 1~
FOR OFFICIAL USE ONLY =
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFiC1AL USE ONLY
the Jewish hnlocaust to crea~.:e the word. Although first in name, ~he genocide of
the Jewish people was not however the first of its kind. The first goes back to
1915, to tfiat proclamation o~ Talaat Pacha, the thea minister of interior, drafted
in a tone the Nazis themsel_ves would never dare use: "The government has decided
Co e~terminate completely the Armenians living in Z`urkey. We must put an end td
their existence, without consideration for women, children or the infirm, without
' heeding pangs of conscience, no matter how tragic the extermination may be." And
- the communique added, in its official harshness: "Those wI~ oppose this order
cannot remain in the government."
Peeple didn't need to be told twice. Against the Armeni.an people, thousand-
pear inhabitants of Ana.tolia, Christians from the earliest times, heirs of a
glor~ous fiistory and ref ined civilization, Turkish 3arbarism was unleashed, with
its brutal soldiery and p~pulation, as had not been done since the time of the
in~rasions. Tfiey burned and pillaged; they killed and tortured--for pleasure or
to slww an example--tfiey defenestrated, decapi tated, disembowelled and flayed.
As for the survivors, "They push.ed them aY?ead, won~en and children, striking them
arEth fists and sticks," related a missionary. Wnere to? To the burning Mesopo-
tamian desert, wiiere camps awaited them. Camps where cattle itself could not
survive. Tfies were camps where, according to the revelations o� ~n American
diplomat, "lfiey brought doctors to examine the attractive girls and select only
the best of them." In camps which the German consuls--Turkey was then at war on
the side of Germany--in tfieir reports described with a word which one war later
woul.d acquire the notoriety we are all aware of : "Konzentrationslager"
[Concentration camps]... What were these poor people accused of? For having
always been friends of the Russians, for being Christians like them, and traditional
- enemies of the Ottoman Empire. The proof of it is that As~menian emigres made up
a volunteer legion fighting on the Allied side. Deportation of the Armenian
people was thus a"security" matter. But after the war when the lay and modernist
dictatorship of Kemal Ataturk was established on the ruins of the Ottoman empire
the young revolutionaries of the new Turkey simply completed the former pashas'
extermination of the Armenians: this time in the name of "purifying" nationalism.
Af ter 10 years of uninterrup ted massacres Turkish Armenians ended up numbering
640,000 in the 1927 census, while before the war there wer_e more than two million
of them! Hilter was right. "In 50 years who wi~"1 remember the massacre of the
Armer~ians?" he asked. Not even 50 years ~a.re needed to forget ti:em. The more so
_ since there was no Nuremburg for that infamy. Neither moral nor ma~~�rial
"reparations" for this martyred people. Not the slightest memorial at these
_ Eastern Dachaus and Auschwitzes. On the contrary, a grateful Turkey erected a
mausoleum to the memory of Talaat Pacha, who ordered the m:~ssacre. Erased from
tfie map, the very name of Armenia would be eliminated r_hereaf ter from diplomatic
- la.nguage. Mention the "affair" in the presence of a Turkish repY~esentative and t~e
will leave, slamming the door. The Armenian colony of Marseille raises a
monument to the memory of its martyrs, and the Turkish ambassador to Paris leaves
France forthwit~. A United Nations commission "for the protection of minorities"
dares to mention Armenia, and the Turkish delegate raises heaven and hell for.
withdrawal of such allusion--and succeeds.
- TdEiy this silence? For a very simple reason, old as the nations, called reason
of state. Stronghold and advanced base for the West�, loyal and resolute member
of NATO, but poor and divided by internecine struggles, Turkey ~nust be handled
5
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
- r'OR OFFICIAL USE ONLY
carefully at all costs. And forgetfulness is not a very high price for states...
- But wfiat a choice prey ~rkey, crucial but fragile partner of the West, represents
for communism! T[ius, when the first attacks broke out against Turkish institutions
and citizens abroad, many saw it onlq as a new manifestation of anti-western
- terrorism: tIze action of a few i.ndividuals who may or ma.y not be Armenian hut
who at all events were certainly foreign to Armenia.n emigre circles. But this
- soon proved to be an illusion. First, in France, where parades and demonstra~ions
of support increased. Last year 3,000 persons assembled on the Champs-Elysees
to commemorate 24 April 1915, the beginning of the great massacre, and the police
were forced to cfiarge in order to protect the windows of the Turkish Tourist
Office. The same in Lyon. And in Marseille a crowd swarmed into the Canebiere
de~anding the relea.se of a prisoner, Max Kilndjian, suspected of having participated
in teh attempt on the life of the Turkish ambassador in Berne. Is this Kilndjiar.
an. international terrorist? Not at all. He is the proprietor cf_ a cafe and.
toFiacco sfiop, an unadulterated product of the Ma.rseille melting-�L,ct, ~~ho would not
be cut out of place in a Pagnol comedq. And here, suddenly, 6C years of sil~ace,
60 years of apparent oblivion, are effaced. And France thought i.t : s.ieltericg
an Armenian France only suddently to discover it is a French Armenia, and that it
ba.s an Armenian "problem" on its hands. And then everyone asks ho~~ ~.t happened.
Isn't that so, Achrag? Achrag is 24 years old, has his law degree aiid tTao
generatiAns of emigres befiind him. Tt~ere still is something orient~..1 in the
fineness of his features or the slant of his eyebrows. But his mind is pe-rfectl~~
attuned to the discourse taught in the courses on Roman law. "To unclerst.and
the Armenian problem," he said, "You must distinguish three periods ~orresponding
to tbree generations. The first, our grandparentst, I call it the survival
generation. Mp grandfather ha.d escaped death by hiding in a ditch covered with
brarcches. My grandmother had been sold as a slave to some Syrians after having
been picked up at an ophanage. Boats of emigrants, "Exodus" before it was ever
written, brought them to France where they met. France, bled white by the war
of 1914, needed workers to make its factaries run. My grandfather and grandmother,
so filled with wonder at having survived, never asked anything from life other
than work and peace. Their son, my father, opened a shoe repair shop, which
thanks to his work and determination was to end up as a shoe store. Hi_s, the
second generation, was the generation of integration.
It was the generation that was to leave work in the factory and make a place for
itself in the field of business, in the professions, in the arts. It was the
generation of the Aznavours, the Troyats, the Carzous. Intelligent, talented,
energetic, standing by each other to a remarkable degree, Armenians worked
furiously to succeed. Sundays, they would gather around for a plate of rice
flavored with grape leaves and drink Raki, pale, this shimmering "eagle's milk"
that excites tfie imagination and rekindles memories. They went to the Armenian
church and listened to phonograph records of traditional music, memories For the
six-finger-holed flute and the three-stringed guitar, melodies that told how
beautiful were the fruit and how clear the rivers in the shade of Mount Ararat,
and Iww great was the glory of the Armenian Empire in the time of King Tigrane.
But Sunday was also the ~ime to recall that Armenians fought at the side of the
Crusa.ders against the Infidel--Armenia was the first Christian state, a quarter
century before Rome--that their kni.ghts married Frankish princesses and that an
' 6
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
Ariuenia.n king named Lusi.gnan rests in the Saint-DeniR Cathedral. Mysterious and
- reqnote affin~Lt~es: perfiaps they explain why there never was any anti-Armenian
race pre~udice in France. During the last war, when Armenians were often in the
f irst ranks of tfie Resistance--showing the inborn courage of an ancient war-like
pec~ple and also the natural ref lex of a persecuted people--they won their place
trt France.
And the third generation is Achrag's: "The generation of renewal," he says.
Of revolt. Why be surprised? Unlike the preceeding generations, Achrag und those
of his age were born into a milieu free from fear and poverty. They have every-
tfiirig an.d everpthing seems natural. But they are lacking just what is lacking
all around them ancl without which youth cannot be youth: a faith and a struggle.
TTie.y i~ave four~d it in "Armenian-ness." But what use is all the efforts of t
~e
preceeding gEnerations to "become French" i_f it was only to have all their children
~ cast in tfie same mould and in the end participat~ in the great uniformization of
- tfie world? that is what A:.hrag and his friends say to each other. What is the
purpose of these meetings, t.hese contribuCions, these clubs, this record music,
if it is simply to cultivate a longing for an ever more remote folklore? And
wlzy lea.ve it to States, to the powers, tn international organizations, since
tfiep never did anything to see to it that ~ustice be rendered for the suffering
of Armenia? Sons no longer listen to their fathers, but rather to their grand-
flathers, those who lived thx'ough the slaughter. Exalted by the passage of time,
tj~pi'r stor~es become legends, their sufferings asswne epic proportions. For
Acfirag and his comrades, the decisive years were the~70~s. The post-1968 years,
wfisn "fiigh school committees" took over the barricades, the time of third-
~rorldism and "peoples liberation struggles." The time, too, when the Palestinians,
driven out of Jordan by King Hussein's Bedouins, entered Lebanon in force. In
tIze Lebanon where a large Armenian colony ha.d lived for 60 years and maintained
its identity intact. And it was not long in becoming indoctrinated by the
Palestinians who were supplied both ideologically and materially by the communists:
in truti~., ha.ve not both Palestinians and Armenians. endured the same ~ate, suffered
the same injustice? And through the fault of the same OILCS--since does not the
- sa.me enemy, eternal "imperialism", lurk behind both Israel and Turkey? You see
the connection...
The war in Lebanon was to speed matters up. Armenian refugees arrived in France
an,d ma.ny of them were militant activists. Some had even seen action on the side
of the Palestinians. That gave them an aura which helped their entry into the
seething milieu of young French Armenians. With the new immigrants two errorist
organizations took root in France: The Secret Army of Armenian Liberation" of
~~enly Marxist orientatia, and the "Commandos of Genocide Judges" claiming to be
nationa.list above all. But both claim to have the same aims: force Turkey to
acknowledge its crimes toward the Armenians and give them reparations. How?
Bp~giving back to Turkish Armenia its lands and its independence so that finally
- tIie Armenian fatherland may reappear.
An obvious lack of realism: haw could Turkey, even under the direst of pressures,
agree to cut away from itself a part of its own territory? And how could the
Russians agree to allow Soviet Armenia to reunite with Turkish Armenia? Since
tTiere is a Russian Armenia, a"Soviet Socialist Republic of Arnienia," which it
_ 7
FUR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
must he sai.d our own "Armenian-ness" zealots rarely mention. However, it is far
from being a para~lise, and the Armenians of the diaspora are aware of this. They
Iatow that de~monstrations against the central government take place periodically,
like the one tfiat brought 100,000 persons into the streets of Erivan in 1965,
and tanks had to be sent against their.. They know that dissidents are hu~ted dowtt,
imprisoned and sometimes shot, like those two Armenians who placed bombs in the
Moscow subway ~n 1978. And they are aware of the regrets of those who went back
there during tfieyears 46 and 47, victims of propaganda that at the time was
strettgthened by tfie prestige of the victorious Russian armies.
- Achrag knows all that. No matter: "Let them say what they want about Soviet
Armenia, one thing in its favor is that at least it exists. With its people,
- its cities, its factories, its schools. And even if you can argue about the
extent of its independence, one thing is sure and that is that the Armenians
there have never been massacred."
Ouce again, communist propaganda is effective. It matters little if Armenian
terrorism is in fact only an extension of Palestinian terrorism--and particu~arly
- of its extremist wing, the F.P.L.P. [Popular Fron~ for the Liberation of
Palestine] of Georges Habache, who was the first to present the "Secret Army of
Armenian Liberation" during a press conference in Lebanon last year, during which
Armenian guerillas in hood and kalashnikov announced their intention of "organizing
mi.litary operations against the Turkish authorities until the regime falls and
_ Armenian aspirations are achieved." (Read on this subject--and on many others--
"The Network of Terror", the excellent book by the journalist Claire Sterling,
whose translati.on has just come out at Lattes, a decumentation teeming with facts
show~~ the obvious control r~f M~o~cow over international terrorism.) The result~
are known: twleve Turkish diplomats serving abr~ad dead already, without
- mentioning the dozens of bombs which have blown up embassies, airline company
of f ices and Turkish touris t of f ices .
The truth is that it is a mattar of weakening the free world by all methods,
~ striking it everywhere possible, preferably in the underbelly--and what better
~ray to weaken it than by destabilizing Turkey, vital bastion of the West, and
what better time to select than now, when the economic and political situation
makes tfiis country mare vulnerable than ever?
Yesterday, everywhere throughout the world the Armenians were saying: "Oh, if
onl}r the Turks ha.d a Willy Brandt, a lea.der who would acknowledge once and for all
the crimes of the past, as the German chancellor did when he went and kneeled at
Auscfiwitz." But the Turkish Willy Brandt, even if he ever could have existed,
would be dead because the Armenians would have killed him. And, with this, the
old Armenians who were saying that remain silent.
As for the young ones, what is there to be said to them that they can understand?
Tfie greatest tragedy for men is not to go to war, but to go to the wrong onP. But
they only f ind that out af terward .
COPYRIGHT: 1981 par Cogedipresse S.A.
9772
CSO : 4900/ 23
8
FOR OFFICIAI.. i1SE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
ENERGY ECONOMICS INTERNATIGNAL AFFAIRS
SWEDEN, NOR'rJAY SIGN ENERGY COOPERATION PACT
_ Stockholm VECKANS AF'FARER in Swedish 12 Mar 81 pp 4~2-4~
~rtic~ e by Ake Landquist: "The New Export Commodity: Nucleax Fowe to rlorwa,y"
~ex~ This week almost exactly 1 year after the puptt-! a.r ref-
- erendum thE government will submit its second energy proposal
_ xegarding, among other things, how to use the surplus electr.icitiy
_ from nucleax gower (for heating~ among otiher things). For there
_ will be a surplus of energy co�rres onding to almost an en~t:i.re
nuclea,r power plant as early as 1982~3. At the end of Marcn thc
_ government is expec~ed to sign an agreement for the export ui'
- electric power to NorFray. These are some views of Energy-Sweden,
- of which VECKANS AFFARER here presents a few examples.
One yeax after the populax referendum on nuclear power Sweden is in the process of
building up a suxplus of electric power. Some of this surplus will be exported to
_ N orWay. The remainder will be used to replace imported oil.
The export of electricity to Norway is paxt of a pact which includes three com-
ponents:
1) Electricity to Norway
2) Oil to Sweden
3) :Industrial cooperation in the framework of the Swedish-Nor~regian fund.
- It was at the ~rime minister meeting in Copenha,gen in November that Thorbjorn
- Falldin took the initiative for this transaction. Norwegian Prime Minister Odvar
Nordl.i became i.nterested. This was a way of br~aking the deadlock in the coopera-
tion on energy and industry that never led to any results.
_ The intent was for an agreement to have been signed at the end of Februaxy. B ut the
agreement was delayed due to the change of prime ministers in Norway. N ow Gro
Haxlem Br~zndtland is the new prime minister after Odvax Nodli: "We expect the
_ agreement to- be signed at the end of Maxch," says the information chief of the Nor-
- wegian Energy Department.
9
' FOR OFFIC2AL USE ONLY
a
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
~ FOR OFFICIAL USE ONLY
The volume of electric power which Sweden will export to Norway amounts to 2-3 TWh.
This is the equivalent of half the annual production at one of the laxger nuclear
powe.r plants. It is intended that Swed.en w~ill export 2-3 TWh a year for 10-15 ,
yeaxs. If a kilowatt price of about 15 ore is estimated (which is considered low)~
the deal involves about ~00 million ebawns per yeax, that is to say between 5~d
7.S billion for thE entire period.
The result of the refe~endum mea_ns that Sweden has received a new expart product
electricity from the nucleax power plants.
At present there is no surplus of electricity. Low figures axe reported from tne =
water reservoirs. Nuclear power saves Sweden from having to import electricity ex-
cept periodically, for example in today's situation precisely from Norway.
But on Monday 26 Januaxy the second reactor at Forsmark came on line, Sweden's
eighth reactor. J ust as Forsmaxk 1 it produceG 900 MW. Together these twin reac- -
tors produce 11 TWh annual.ly. That is more th~~si 10 percent of the total production
c?f electric power.
"Furthermore~ 1980 was a record yeax for Swedish nucleax power, which generated
_ 27.1 percent (25.4 TWh) of the electricity. During 1981 one out of every three
kilowatt hours is expected to come from our nuclear power plants it says in an
announcement from the Waterfall Agency.
Electric power from Farsmark costs about 13 ore per kWh. Of that, fuel costs
- account for 4.3 ore. Electric power frQm oil costs 15 ore~kWh in production heat _
and 30 ore in oil condenser power plants.
_ During 1981 Forsmark 2 is expected to yield about 4 TWh. That amount is already ~
expected to produce a certain surplus and room for export. For 1982 Forsmaxk 2 will
provide 6.5 TWh additional pawer. At that time reactor ntunber 9~ Ringhals 3, will `
also reach peak capacity. That means an additional 6 TWh, approximately.
After that, the 1 as~ reactors in the Swedish 12-reactor program will follow this ~
timetable:
198w - Ringhal s 4
- 1985 - Forsmark 3 =
1986 - Oska.rshamn 3
Each one delivers at least 6 TWh. At peak capacity the 12 reactors will generate
~I. TWh (if the hot water tunnel from Forsmaxk to Stockholm is built this will be re-
duced by 3 TWh used for heating the water to 51 TWh).
~ Hydroelectric power and nucleax power dominate the Swedish system of electricity
production up to 1990. According to the enexgy proposal production in 1985 wi11 be
120 TWh (hydroelectric power 63~ nuclear power 47) and in 1990 13~ TWh (hydroelect-
ric power 65 TWh, nuclear power ~ TWh or 51 TWh,.alternatively).
The great uncertainty factor is the extent of demand and consumption. The prognoses
for the 1970's were tremendously off the increase in demand for electric power
10
FOR OF'FJ:CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
. )R OFFICIAL USE ONLY ~
_ The 5ystem of E1 ectric Power Production in 1979, 1g85 and 1990
~ ~1. 2lnduatriproduktion
Elprodulctionaayatemet ~r 1979;1985 xI~ 19~0 ~ miljarder kr i t975 ~ra
1 prisniv~ ~s~o
Summ~ mvindning inkl BverHlringtf8rlutter _
93,811Nh 120 TVllh 134 TWh ~n 5~ ~.~u ~s
~ : ~oa
~ ~
- p~ Krattv8rn~e, 6 W 78
Kd; tcw, flis
~oaiknndm:,. ~ Olja ~
= dy 2,~ 6 5 ~ ~ .
- 5 3 M~atrieAf moc- 8 14
- I ~I ~1 ~1~ . ~ ~...i~7 ~'{J ' V�~ �{I~
4WI~VIY~Q~1 ~~t' ; ~
~ . MfI1Rla1l ~110Y Ynn1~'
. ~ ~ i;. rs r.; .
rt ~+n~ evfippl1~11Y~ ht1Y~t-
~61 - ~e ~~0 86 ~o ~s ao e -
* I`~l`� ; .
_ 9,2 C~.~,~T~ ~ -
~ ' ~y14. ~I~If~~ ~I~IIdl11~ + '
~ ~ ,a~~' �0 Induatrina elNfrb~ukning
' 15 ~exkl fbrluater?
` ~ . ` TWh/ir ca.~o
~ ~aa
~~~a.. < . 1;748
~~.,�716
~:r � e~ =�'77A .
- 80,1~ 63 65 Vmenknh I1 40 ~r
e U. ,
i~~ . ' VMkigt ntFr
- ~ ~s`, ' '
- 1979 1985 1990 ~
- 1960 ~6 10 75 ~80 g
_ Key: 1. Total use includ.ing transmission losses
2. Fossil condensates, oil 2.9
3. Import~export 1.3
_ 4. Gas turbine 0.1
5. Wind power -
6. Thermal power~ coal, peat, wood chips
7. Oil
8. Industrial energy exchange -
, 9. Nuclear power with the tapping of heat~ hot water pipeline
10. Nuclear power, condenser -
11. Hydroelectric power
12. Industrial production; billion crowns at 1975 prices
13. LU ~ong-term stud~?]].970
- 14. Actual turnout
15. Consumption of electricity by industry (exclud~ng losses); TWh~yeax -
- 11
FOR OF'FICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FO:~ OFFICIAL USE ONLY
The energy minister is not of the opinion that concentration on electric heat will ,
obstruct the development of alternate sources of energy~ such, as wood chips, peat
and solax heat. "The efforts to find new sources of energy whici, I have detailed
he~e must be ~egarded as very ambitious. Consequently, I believe th~,t there is
re~,son for both electric heat and the new sources of energy," Caxl Axel Petri main- ;
tains in the new energy proposal. ~
After a so-called consideration period up to the popular referendum and then after
the actua:l referendi:m~ nuclear power is to be used for, among other ~hings, export
and replacement of imported oil. The consideration period meant that four reactors '
were delayed, Ringhals 3 and Forsmaxk 1~ which were completed, and Ringhals 4 and
Forsmark 2, which were under construction.
According to the law about the consideration period the power companies are entitled
to damages for this delay. The damages are estimated to be between 1.3 and 1.9 bil-
lion crowns.
N ucleax power is to be eliminated by the year 2010, according to a presently valid
paxliamentaxy decision. Economic prepaxations for the subsequent dismantling and
_ handling of the radioactive waste are outlined in the energy proposal. The costs
- are to be borne by the power industry~ which is passing them on to the electric
rates. In order to cover the costs completely the power companies need to set
aside 1.~ ore per kilowatt hours. Previous allocations have been considerably low-
er, 0.8 ore in 1979 and 0.9 ore in 1980. In 1982 the allocations axe expected to
be as high as 1.2 ore~kWh, which means about 4~00 miliion crowns.
The .responsibillty for handling~ the radioactive waste will be given to a future
company owned by the power companies. This company will be supervised by a national
authority. The company and the authority will be formed this summer.
Central Nucleax Fuel Storage Facility for 1 Billion
The money paid in will be held in trust funds. The power companies will be able to
- borrow money from these funds, which as time goes by will include several billion
crowns. Such loans shoul.d be made in proportion to the amount of surcharges paid
in. The reactor owners should have to put up security for loans from the paid-in
- surcharge funds," it says in the energy proposal. It should be possible to grant
loans for, amon~ other things, investments in energy conversion facilities, faciii-
ties for electric power distribution and investments for greater safety in the
nucleax power plants.
" In the spring of 1980 the government decided to have a central storage facility
for spent nucleax fuel built in Oska.rshamn in conjunction with the nuclear power
plant there. That will be an investment of around 1 billion crowns. The central
storage will be administered by Swedish Nucleax Fuel Supply Co (SKBF), owned by the
power companies.
"The central storage facility projected in ordPr to receivp about 3,000 tons of
uranium fuel, will be used in order to store spent nucleax fuel while awaiting re-
processing or, if that will not take place~ while waiting for final storage,"
writes Carl Axel Petri in the energy proposal.
12
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
turned out to be less than half' of what had been anticipated. The reason is simply
that the electricity prognoses were based on the long-term studiPS of the economic
development, all of which proved extremely wrong.
- Surplus of Electric Power Replaces Oil
_ B ut there wi11 still. be a surplus of electric power. According to a calculation
made by the Waterfall Agency, the "surplus" the Waterfall Agency does not call it
a surplus will be about 5 TWh as early as 1g82/83. That is the equivalent of a1-
- most an entire nuclear power plant. In 198~ the surplus is estimat~d t~ be asound
13 TWh, that is to say more than two reactors. In 1990 the electric power surpl as
is estimated to be 10-16 TWh.
If the export to Norway of 2-3 TWh is subtxa.cted, the maxgin fo.r suY~s ~ituting ~ m-
ported oil will be 2-3 TWh in 1982~83 and will then grow to a maximwn of 13-14 TWh
in 1990. (1 Mton oil = 11 TWh.) This is a paxt of the efforts to r.e~'uce oi1 con-
sumption by 9 Mton (about one-third~ dur~ng the 1980's. At today's pi�ices this is
- a decrease in the oil import bill by more than 10 billion crowns, which represents
about half of the deficit in the balance of payments.
Energy Minister Carl Axel Petri says about the electric power consumptiori polic;~ in
the energy proposal: "Paxliament has decided that nuclear power is to be eliminated
at a rate which is possible in view of the need for electric power for maiiitairiing
= employment and the standaxd. of living. The supply of energy should be good during
the 1980's. This means that during the 1980's electric power can be used to save
o'il in the most efficient way possible. This ought to take place so that there will
be no bottlenecks during future high demand for electric power and so that it does
not make introduction of other forms of energy difficult."
During the 1980's the surplus of electricity from nuclear power will be used to
heat buildings and save oil. The guidelines are established in the second ener~y
proposal made public on 10 March. There will be no prohibition on direct-acting
electric heat, but instead certain limitations. For new, small homes it will in
principle apply only to those homes which fall 44 percent short of the requirements
of the building code~ which ought to be raxe. As for multiple family dwellings,
the government will again issue regulations in 1985. In places of work or vacation
homes there axe no restrict~.ons for direct-acting electricity.
The long-term electric power supply will~ according to the energy proposal, primar-
- ily be aimed at meeting the need for electricity in industry, in the transportation
sector and in homes and other premises. If needed, the electric power which,will
be used during the 1980's for heating homes (that is to say oil rep~acement) could
be converted to other forms of energy, above all thermal power plants and energy
exchange plants f~eled by solid fuels.
13
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
_ FOR OFFICIAL USE ONLY
The central storage facility is expected to begin operation at the beginning of
1985. In addition to uranium fuel from the 12 Swedish nuclear power plants, space
will be sold to f'oreign nuclear power plants. At present negotiations are under
way with the TVO ~xpansion unknown] power company in the Finnish industry for a
starage contract. The contract covers the p.roduction of 10 years, which corresponde
~ to 11~00 tons of ~~ranium fuel , that is to say more than 10 percent of the capacity of
- the storage facility.
As for the final storage of the radioactive wa� te from the nuclear power plants,
Caxl Axel P etri says: "I want to emphasize that handling and storage of the radio-
active residue products is a process which extends ovar periods of time which are
considerably longer than the planning periods normal in other industrial activity.
Carrying out a nuclear power progra.m which includes 12 reactors can be axpected to
mean, with the technology anticipated at present, that not until the yeax 2060 will
a11 the radioactive residue have been taken caxe of and placed in final storage."
How this .final storage is to take place is not apparent from t~he energy proposal.
Carl Axel Petri states that a foundation for such a position is still lacking.
"After the closing of the final storage facility some sort of responsibility for
and supervision of the storage ought to be required for a considerable period of
~ time," the energy minister writes.
One out of Two Wants to Scrap Nucleax Power Prematurely
Every other Swede wants the "nucleax power parenthesis" to be shorter than 25
years.
This was st:own by a study made by STF'0 awedish Institute for Public Opinion Poll~
and VECKANS AFFARER 1 year after the referendum on nuclear power. If the referen-
dum were held today the result woul~. largely be the sa.me as last year (see the dia-
gra.~n). B ut 4$ percent of a11 those asked still wish th.at nuclear power should be
used for a shorter period than 25 yeaxs, which has been indicated as the life of
the nuclear power plants.
Most positive (87 percent~ to a limita~ion are of course those who today would vote
for alternative 3. The supporters of alternative 1 axe the least interested (19
perc~nt) in a reduction, while the advocates of alternative 2 are largely (32 per-
cent) in favor of a shorter period of utilization.
Of all those questioned only 15 percent wish for nuclear power -to be used for more
than 25 years. Among those who support alternative 3 there is naturally not a
~ single person who has such a desire. Of those who today would vote for alternative
1 W1 percent could ima.gine nuclear power over a longer period than 2~ years, while
' only 18 percent of those who support alternative 2 approve of an extended period of
utilization.
Despite the haxsh economic situation and the growing energy prices, the Swedes put
_ the environment before the price. !~s much as 60 percent of the 780 persons in
SIFO's poll are of the opinion that it is more important that a source of energy is
environmentally safe than that it is cheap. And on this point the general public
1
~
FOR OFFICIAL US~ ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
"ks~ aca t,atydehs aa du m+n~a emry jtwor tomma
+tt N Por vk frriMid~ eMrgifE~sErjn6q i SwriqT"
35 skiie eu n'fe m vih wmt?ekverk envu,d~ 15
�,Om fdcomrWU~iq~n von i dp - Mr dni~ du di r8e1~Y' ~ 1M'9?e eter kattre period in 25 ir1
Felxur; isat ? FalwmrB~Wny,n mrs t99ot~ ~ 16 qg
_ R~�caM 2 ~ ~,1 $ ' 29
- : 35 21
fi~mk~
za
. s~
~
~ ~ ~o
a 16 15
ENE)tGl 5~~?y'~ 3
~RC`,~. a~ ~ ~o .:a ; ~o ,~2 = 17 18 19 20
V
~i'v~j,G'~ ~n '~1 W~ N Nortrs in v~r m rvew~n
r~ ~ M~~ 'Sd ' Yfnd To v ~id4: ~ 25 ir 26 ir wt ej ,
Key: 1. "If the popular referendum were 10. Natural gas
held today how would you 11. Solar
vote?" February 1981; The pop- 12. Wind
ulax referendum Maxch 1980 13. Peat
2. Percent 14. Wood
3. Blank 15. "Would you li?:a our nuclear power
4. Energy for Sweden plants to be used for a longer or
5. ~llegibl~ Nuclear Power short~r period than 25 years?"
But Sensibly 16. Percent
6. Nuclear Power No 'i'hanks 17. Longer than 25 years
7. "How much importance do you 18. Shorter than 25 years
- think other sources of energy 19. Want it to last 25 years
will have in our future energy 20. Doubtful, don't know
supply in Sweden?"
8. Rather much
9. Very much
today sees coal as a grea.ter threat to the environment than both nuclear power and
_ oil. Twelve percent even believe that nuclear power is the best form of energy
- with regard to the environment. The incomparably best source of energy from tha
viewpoint of both environment and cost is otherwise hydroelectric pcwer: 81
percent believe it to be environmentally safe and 65 percent think it is the cheap-
est. Nuclear Fower appeaxs as a somewhat more economic form of energy than before
(ranked as the cheapest form of energy by 18 percent~. The "competitive power" of
oil, on the other hand, has dec_lined since last year and is now judged as the most
expensive form of energy by 65 percent.
_ 15
~
OR 0~'F'ICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
A s regaxds the future energy supply, the general public aoes not nourish any great
hopes for alternative sources of energy. The public mostly hopes for utilization
of solar poxer half of a.ll those questioned believe that the sun will acquire
great importance for our future energy supply. Other, than that, however, the un-
- certaintly is great; More than half believe that gas, wind~ peat and wood wi11 be
- of little importance.
COPYRIGHT: Ahlen & Akerlunds tryckerier~ Stockholm 1981
1194~g
cso: 31og
16
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
ENERGY ECONOMICS ITALY
ANAL�~'S OF NATION'S ENERGY TRADE BALANCE
Rome ENERGIA in Italian Mar 81 pp 16-25
[Article by Alberto Clo, of the Institute of Business Economics, University of
Modena: "Market Behavior and the Oil Balance in Italy"]
[Text] 1. Introduction
The continual rise in the real pricas of oil in the international markets (a rise
which no one seems to want or to be able to resist any longer) now constitutes the
determining principle of the world economic situation and outlooks.
The intensity of this conditioning increases, obviously, with the degree of econo-
mies' de~endence on imported oil, and will tend, with time, to become even g-reater
in those countries, such as Italy, that prove incapable of or prevented from working
out adequate strategies of response. The increase--per the 1980 average--of little
less than 65 percent in the unit importation values (in lire) for petroleum and its
derivatives, and on the other hand, the relatively weak contraction of domestic de-
- mand--whether it is b~cause o� the still-sustained level of economic activity or be-
cause of the paradoxical failure of the control measures adopted by the government
in the past winter season--have produced in Italy a further widening, by more than
7 trillion lire, of the deficit account with overseas sources as regdrds energy;
~ this deficit has thus reached the level of about 18.5 trillion .lire. If we excluded
this category from t~ie overall Italian trade balance, the resultant balance would be
substantially in equilibrium, while as regards bulk exports, the contraction of
about 7 percent registered for the year would be practically cancelled out.
In the span of a decade, the ratio of energy sources to total imports has approxi-
mately doubled, reaching a level of close to 30 percent :iow, while the proportion of
energy exports has remained substantially stable at around 6 percent.
In order to have a more meaningful idea of what this has signified for our economy,
it is useful to note that while the country's entire en,~rgy defi.cit a decade ago
could be paid for with barely a quarter of the foreign sales of our mechanical and
transport-e~uipment industry, that entire amount was necessary last year, despite
the fact that it increasE~d more than fivefold in the same period.
Things can only get worse in the near future, and a deficit close t~ 25 trillion
lire can be forecast for 1981. On the supply side, prices could in fact rise by
more than the 10 percent decided on by OPEC at the end of 1980 on account of the
persistence of the conflict between Iran and Iraq, which has removed from interna-
17
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY �
tional available supplies a quantity of 4 million barrels per day, not compensated
for b~ production ir:creases by the other oil countr~.es (OPEC and non-OPEC).
On th~e other hand, on the domestic-demand side, there cuuld be a relative increase '
in the quantities, because of the foreseeable entry into operation of new and old _
petrochemical installations, the reduced possibilities of further replacement of
coal-fired electric-power plants, and the continuing uncertainty and slowness that
mark the public administrarion's activity in adoption of adequate measures for con-
tainment of consumption.
The energy deficit ha~ reached such a degree of acceleration that it greatly alters
or cancels out every positive compensatory effort accomplished in the rest of our
economy. Hence the general interest that should be devoted to identification of ac-
tions capable of attenuating the effects and, partially, of removing the causes that _
underlie our very heavy dependence on foreign energy supplies.
Considerable results in this last-mentioned direction could be achie~~ed, i.n our
judgment, by the adoption of a pu.rpose-directed supply policy, through implementa- -
tion of appropriate measures of an administrative and legislative character, aimed
_ at more careful optimization of imports in line with the specific necessities of our
- domestic market and at elimination of certain dysfunctions in market behavior that
have the result of aggravating our already compromised currency situation.
The purpose of this article is to analyze thE levels and structures of the oil-trade
- flows to and from Italy, with an attempt to bring into focus certain variables
which, though less well-known, nevertheless influence their evolution considerably.
2. Italy's Role in the International Petroleum Market
Before goircg into detailed analysis, it appears necessary to refer, albeit briefly,
_ to the very particular role that our country has been taking on in the international _
petroleum market since WWII, for a set of reasons (of a political, economic and geo-
graphic character) that we shall not analyze here. We can sum up this role in terms
of three different configurations that we list below along with the quantities of _
- crude involved, relative to 1979: . -
--domestic consumption market: 96.5 million tons
--sector of foreign-order refining: 24.9 million tons -
--"transit" area: 52.2 million tons
The total is a quantity of slightly less than 180 milli.on tons, equal to about 10
percent of all world oil movements and a little less than 30 percent of European
- oil mov~ments.
Although the oil market is now recognized as a textbook case of a"seller's market,"
it should be considered nonetheless that such a large quantity should have given our _
country a considerable contractual strength vis-a-vis both those producer countries
that need to export oil and those consumer countries of Northern Europe (richer in
energy than we) for whom our country canstitutes a further condition of relative
economy of their energy supplies. Italy's lack--contrary to what happens in other
countries with energy situations similar to ours (France, Spain, Brazil, Japan,
: etc.)--of any overall supply strategy nevertheless has not made it possible to seir.e
the market opportunities that might have worked in our favor. The quantities ~f
18 -
FOR OFFICIAL USE ~JNLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
~
+ crude that "transit" from our ports to the northern countries, although extraneous
to our direct oil supplies (and indeed they are not shown in the foreign-trade bal-
= ance) could themselves have represented a point of strength which other countries in -
the same situation (such as Tunisia, Sudan or Turkey) have shown and continue to
show that they know how to exploit in a more intelligent manner than what it has
been possible tu observe here in Italy.
f
Within the framework of the international petroleum industry, our country has, in
substance, acquired a double interest: in the first place, it is one of the major
oil-consumption markets, with limited risks of competition from domestic energy
sources; an~ secondly, from the logistical point of view, it constitutes a fundamen-
tal "service area" for the Northern Eurupe markets that are not self-sufficient as
regards refir~ing capacity--on account of specific economic and environm~ntal~ deci-
sions--and that have a domestic-demand structure for petroleum products that is
highly differentiated as regards the product yield from process.ng of crude,~ b~cause
of the sizable presence of nonpetroleum domestic energy sources. Our refinin~ in-
dustry, which was almost completely destroyed in the last war, subsec;vently g,r~w by
about 100 times, going over 210 million tons (more than twice the level of domestic
_ demand): a dimension which most people seemed to become aware of only after the
fact. It is certainly not an exaggeration to say that what :.s still, from the in-
" ternational statistics, the world's third-ranking refining inciustry is the most ob- ~
vious sign of the serious errors and the heavy contra~ictions o~ Italia;, petroleum
policy that has not only made possible but also largely encouraged its disordered ~
growth. In the face of the radical change in international economic conditions, .
; that sole abundant "resour:.e" that we had at our disposal is slowly deteriorating,
to the point of becoming a cause not only of severe economic inefficiencies but also
of the continual instability and disorder in the flows of supplies to the domestic
market. This is true especially for the so-called "service" refineries referred to
above, almost aZl of which are located on the islands and which so far have been �
used mainly for "foreign-customer" processing, but have also aimed partly at the do-
mestic market, only at those times when the prices offer the best remuneration, and
in any cas~a, with an obvious distribution-cost penalty because of the installatiuns'
_ locations, which are far-removed from the zones of consumption.
This catch-as-catch-can character of supplies--which has been brought out with the
aggravatioti of the international tensions--has also been accentuated by the specific
policies adopted in Italy by the Italian and foreign oil companies.
Although the quantities of crude for the domestic market always prove larger than ~
' those processed for overseas customers, the optimization of the policies on importa-
tion, processing and marketing of crude and/or refined products has always been done
by the individual oil companies in function of their actzvities as a whole, and
therefore in function of the profits to be made both domestically and externally.
In an atmosphere of rapid and continual ~hanges, such optimization can prove to be -
not always congruent with the specific national needs, especially from 1973 on,
whereas our ~;rincipal objective should be minimization of the net costs of importa-
tion of crv.de.
3. Public Support and Freedom of Action for the Companies
Our country's role in the interna.tional market and the conpanies' policies had had a
means of expression mainly by virtue of the full support granted to the sector by
the governmental authorities, but without the government's manifesting any dirigisme
at all or any programming-oriented preoccupation.
19
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
~
FOK OFFICTAT, tISF. ONLY
Furthermore, this approach was not at all far-removed from that applied to the other
sectors of Italian industry. Thi.s unconditional bestowal of financial means on the
- companies, together with benevolent disittterest in their behavior, was explained by
- the government authorities--and substantially accepted by the others--in terms of
"collective end-purposes" (end-purposes extraneous to the energy questions) which,
in their judgment, could have been achieved in such a manner: industrial development
of the Mezzogiorno, support of local employment, increasing exports, and so on.
" It is these end-purposes which, at 30 years' remove: 3nd notwithstanding the com-
- plete failure of that approach, we find ag~in, symmetrically repeated, in support of
- the present policy of "merhanization" of the South and of the large public appropri-
ations planned for it. According to a large proportion of the authorities on southern
Italy, "'methanization' will be able to have an incisive and sufficiently broad im-
pact on southern economic and social structures, denloying its propulsive potential
on the local reserves and capacicies for development,"Z and can thus constitute the
nth historical opportunity "for the development and localization of diffuse and de-
centralized activities on the territory," both industrial and tertiary activities--
which would not have ha~nened because of the lack of inethane Even if we do not
wish to deny the scope of the innovative phenomena that could result from "methani-
zatior:" of the South, we c~~nsider it necessary to be more cautious about viewing it
as a sure factor o� econon~ic and social propulsion in those areas, since we have not
so far had the opportunity to verify any precise correlation between industrial de-
velopment and the presence of inethane, as is clearly demonstrated by several indus-
trially backward zones of the lower Po Valley.
The numerous and articulated legislative instruments--the first among them being law
1741 of 1933--that could have given a way o� laying down a serious policy of orier?-
tation and control on the petroleum industry remained unapplied, and a widening gap
- between the choices procalimed and the choices effectively implemented opened with
time and the dirigistic character of the law of 1933 gradually fade~d away. From.
1951 on, administrative actions began to prescind from market quot3s; in 1954, im-
port licenses were eliminated, while in the following ~ear, the rule-making for the
~ assignment of fuel-sales points was delegated to the Prefects (thv~s giving rise to
the world's most Pharaonic and disordered distribution network), and finally, in
= 1962 the Ministry of Industry �bdicated its maintenance of discipline over the plac-
ing of petroleum products on the consumer market.
- The collapse, in 1973, of the favorable international conditions that had accompa-
nied the growth of the petroleum industry in Italy, in the conditions that we have
described above, entailed for the country further aggravations and inefficiencies
that we shall examine below, as regards that part of ~hem affecting commercial
interchange.
~ 4. Overall Results of the Energy Trade Balance in Italy
As was said above, the 1980 Italian energy trade-balance deficit should reach
18.5 trillion lire, up 63 percent over the preceding year. '
This result is 9/10 due to the worsening of the oil deficit, which has risen from
approximately 9.5 trillion lire in 1979 to more than 16.2 trillion. This greater
net outla~ of about 6.3 trillion is the consequence mainly of the 63.7-p~rcent in-
crease in the import prices of crude and its derivatives, anly one-fifth compensated
20
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
- for by the reduction--not a negligible one (down 12.7 percent)--of the quantities
� imported. In the second glace, the result was contributed to by the very strcng
contraction, from the beginning of the year, of the quantities of petroleum products
exported (down 41 percent)--though this was largely com~ensated for by an increase
in the prices for them, albeit an increase lower tha:1 ttiat on the crude-purchasing
side.
We present in the following table a summary estimate of the principal flows in the
energy trade balance, as they emerge from the ISTAT [Gentral Statistics Institute]
announcements relative to the last 2-year period. For a more complete picture, we
refer the reader to the foreign-trade tables of the Statistical Section.
Table 1- Italian Energy Trade Balance
(b illions of lire)
% Varia~ioiis 1980/1979
1979 1980* Values Yri~ es Quar,tities
_ Total Energy Sources
Exports (FOB) 4,Q47 3,631 -10.3 +52.3 -410].
Imports (CIF} 15,377 22,093 +43.6 +58.6 - 9.5
Balance -11,333 -18,462
Petroleum and Derivatives
- Exports (FOB) 3,882 3,447 -11.2 +51.5 -41.4
Imports (CIF) 13,763 19,672 +42.9 +63.7 -12.7
Balance - 9,881 -16,225
Natural Gas
Imports (CIF) - 6~8 - 1,165 +79.8 +76.5 � 1.9
Charcoal and Derivatives
Exports (FOB) 165 184 +11.5 + 9.2 + 2.1
Imports (CIF) 966 1,256 +30.U +12.8 +15.2
Balance - 801 -1,072
* Estimates
~
Two-thirds of the drop in the volumes imported is due to the decreased export activ-
ity, while only one-third is due to the lower domestic demand (down 3 percent).
~ Whereas in 1979 the nearly doubled volume of exports made it possible to pay for
about 30 percent of imports, that percentage dropped to 17 percent in 1980.
The drop in exports and, on the oth er hand, the exceptional increase (+73 percent)
in imports of derivatives produced--for the first time i.n Italian petroleum history
--a negative balance of 7 million tons in the exchange of products with foreign en-
Cities. This is the most obvious sign o� the deterioration of our refining system,
to which we called attention in a previous article.2 ~
The increase in imports of derivative products (up 9 million tens) has occurred si-
multaneously with the reduction (down 25 million tons) in imports of crude oil, thus
21
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
� FOR OFFICIAL USE ONLY
signalling a radical transfcrmation, in t.~vor of the former, of the qualitative
structure of our supplies.
We point out that our country is the only one to have bee~n involved in such a trans-
formation; the other countries prefer to consolidate their supply contracts in terms
- of crude. In the preceding issue of this journal, we expressed our concern about
_ the damage which, in perspective, such 2 policy could have produced on the stability
and burdensomeness of the country's oil suppZies.3
The unexpected outbreak of the Iran-Iraq co::flict at the end of last September4 and
the consequent further jump in the Rotterdam petroleum-product sgot prices and the
buying prices for crude in new contracts surely entailed for the country a cost
higher than the modest profits made possible by the depression of the products mar-
ket in the second and third quarters of 1980.
, If, however, we wish to go into further detail on the articulation of the trade
flows, even before the situational variables that condition its dynamic, it is nec-
- essary first to refer to data other than t'~:~se reported by ISTAT.
- 5. Limits of the ISTAT Statistics
_ These statistics reflect the exchange values declared or. the Customs declarations.
that accompany goods enterir.g and leaving the Customs territory. Nevertheless, such
data dc not reflect the entire and real cost borne by ou~ economy for energy sup-
plies from abroad and the real articulation of the flows in quantity. This is be-
~ cause of three kinds of reas ,ns:
--absence of specificity about certain energy sources;
--inclusion of "foreign ownership" goods and exclusion of "nationalized" goods;
--difference between payments declared on the Customs declarations and actual pay-
ments for "nationalized" foreign goods.
5.1 Absence of Speci�icity Regarding Energy Sources
The ISTAT statistics do not specify~, in value and quantity, all the categories that
make up the country's energy exchanges. Electrical energy, in particular, remains
excluded. For reasons of "circumspectio~," requested by ENEL [National Electric
Power Agency], it is indeed reported by ISTAT, but it is placed among "miscellaneous
- manufactured products" in such a way as to prevent exact identification of it. Even
_ though ENEL's "circumspection" is protected by the rules on the subject, it nonethe-
less seems surprising in view of the fact that the data not publishable by ISTAT ap-
pear regularly in the foreign-trade statistics published by the OECD (series A and
a B).
Up to a very few years ago, the exclusion of this category from the trade balance
did not substantially alter it very much, because of both the low volume of the ex-
- changes and the low transfer prices. But from 1978 on, the situation ~eems consid-
erably changed. ENEL's recourse to importation of electrical energy has become
constantly greater, while at the same time, export~tion has been dropping. In 1979,
imp~rts5 totaled about 7.6 billion kWh, for an increase of a little less than 50
percent over the preceding year. Exports, on the other hand, decreased by about 27
percent to 2.2 billion kWh. These divergent tendencies continued during 1980: in
the first 8 months alone, the balance of exchanges proved negative by a little less
~ 22
FOR OFFICIAT USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFTCIAL USE ONLY
than 5 billion kWh, for an increase of about 70 percent over the correspondin~ peri-
_ od in the preceding year.6 On an annual basis, this means electric-power availabil-
ity equivalent to the production by a little less than two power plants of the Caor-
so Cype, with 4-percent coverage of the total demand on the national network'. The
hypothesis, put forward by certain persons years ago, of building abroad the power
plants that are not built in Italy would seem, from these data, to be a reality al-
ready. The burden borne for electrical-energy supplies from abroad is not brought
_ out either by ISTAT or by ENEL itself. Indeed, ENEL's balance-sheet does include
all of the energy invoiced by and to other firms. The only element that can be de-
rived from it is that the energy effectively invoiced turn~ out, for both importa-
tion and exportation, to be lower than what is physically exchanged.7
- According to an approximate estimation by us, the cost borne for net incomirig sup-
plies in 1980 could total 25d-300 billion lire, thereby raisin~ the Italian energy
deficit to 18.7-18,75 trillion lire.
5.2 Inclusion of 'Foreign Ownership' Goods
This second category of reasons challenges, in our judgment, the meaningfulness of
the ISTAT statistics ~~ith regard more to the absolute values of importation and ex-
portation than to thP relative balance. Therefore it is not a matter.--as in the
preceding case and in the one that we shall examine farther on--af a problem of in-
correct estimation of the energy "deficit," but rather one of overestimation of the
flows which determine it and which, in reality, enter and exit from the ]:~alian eco-
nomy. lhis has the rESUlt of causing statistical distortio*!s in importar.*. ecunomic
indicators such as: indexes of the mean unit values in importation and in exporta-
tion; propensity to import; export market share; etc. This category of prblems con-
cerns the petroieum sector only (though it is of dominant importance) and results
= from the fac:: that in the "special" trade which is the subject of the ISTAT statis-
tics--on the basis of the international statistical convention of 1928--are included
also the so-called "foreign-purchaser goods in transit,"8 or in other words, goods
being processed "�or third p~rties," so as to distinguish them from in-transit im-
ports "for one's own account."
_ Both cases involve goods imported for the purpose of undergoing specific processing
treatment and intended, upon completion of them, for reexportation outside the Cus-
toms territory.9
Two elements characterize "third-party account" goods. The first is that they re-
. main, for all purposes, under foreign ownership and do not come under any foreign-
exchange regulai:ions. This is different from the case of goods in transit "for
one's own account," which for foreign-exchange purposes are considered by the stan-
dard of definitive importation~.
Another important element is thF effective availability of the product, which re-
- mains, for the fore:;n purchaser, in the "third-party accotint," and for the resident
importer, in the "own accou~it."
- A clarification on the functional dynamic and thF real nature of this particular
"segment" of the Italisn oil market proves to be of considerable interest for two
- principal reasons:
(a) the considerable importance taken on by these movements ir overall Italian oil
exchange: in 1979, trey were a little less than one-fourth of all the quantities of
23
FOR OFFICIAL USE 0*.1LY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
crude and products. The highly erratic course of such movements is indeed the prin-
c ipal cause of the oscillations observed in recent years in the Italian petroleum
trade balance (in terms of quantities), domestic demand having remained ~~~'~stantial- _
!y stab le at around 100 million tons.
I t is interesting to note that "third-party account" processing increased strongly
during the 1970's, starting in particular from the first big crisis of 1973, despite
the very considerable contraction (100 million tons) of the demand for crude and
products that occurred on the European market at that time. This is exactly the op-
- posite of what should have been expected, given the nature of the processing done on 'c
b ehalf of foreign operators. A partial explanation of this (apparent) paradox lies
preciaely in:
(b) the tendency to assign an increasingly large proportion of the products derived
f ro~ "third party" processing directly to the Italian market. Instead of berng re-
exported, the products become "nationalized": that is, cleared through Customs, for
a 11 practical purposes, and put on the domeotic consumer market,l0
Table 2- Italian Petroleum Exchanges (millions of tons)
1965 1970 1973 1974 1975 1976 1977 1978 1979
Imports of Crude (A) 68 114 128 119 93 100 104 108 li0
Definitive and "own account" 65 107 109 94 8i 87 91 92 91
"Third-Party Account" 3 7 19 25 12 13 13 16 19
Imports of Products (B) 2 3 6 6 10 11 12 13 12
- Exports of Products (C) 18 29 30 23 15 15 19 23 23
Net Supplies (A+B-C) 52 88 104 102 88 96 97 98 99
Domestic Demand* 52 88 102 99 96 99 96 99 100
*Obtained by totaling: domestic consumption, bunkerage and consumption and losses
in processing. _
S ource: Ministsy of Industry
This growing interest in our market on the part of foreign purchasers--in addition
_ to being surprising, in view of the fact it is normally described by the operators
as not very profitable--raised problems of two kinds: the first, of a statistical -
type, follows from the failure to compute in the trade balance the payments effec-
t ively made by residents for purchase of th.ese goods; the second one, relating to
o il policy, concerns the real nature of the foreign orders and the effects which the
expansion of such an importation system produces on the condition and situation of
the national oil market. -
Table 3- Balance-Sheet ror 'Third-Party Account' Processing (1) (millions of tons)
- 1965 1970 1973 1974 1975 1976 1977 1978 1979
Imports (2~ 3 7 19 25 13 13 13 16 21
Exports 2 S 12 16 7 8 8 i0 12
Nationalizations (3) 1 2 6 8 6 5 3 6 9 _
~
_ of imports) (33) (28) (32) (33) (46) (38) (25) (38) (43)
~ (1) Only in 1979 did the Ministiy of Industry explain this Bdiance-Sheet. For the
other years, our estimates are given. The figures are rounded off.
( 2) Crude and products .
(3) The total of exports and nationalizations sometimes does not coincide with im-
_ ports because of va~iations of stocks and bunkerages.
_ 2~+ _
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
' In 1979, more than 40 percent of the goods temporarily imported on "third-party ac-
counta" was put onto the domestic market, cavering a~bout 10 percent of domes'tic-
market demand.
What it was more important to stress here, though, is the fact that inclusion oF the -
"third-party" in-transit imports in total Italian oil trade, even if correct from
the point of view of the international statistical criteria, nonetheless falsifies,
by overestimating it, the real magnitude of oil imports and exports to and from our _
country. As was said above, what is actually involved is "fareign-ownership" mer-
chandise for which no payment occurs (unless it is subsequently "nationalized"), and
no collection of charges (except compensation for processing, whi.ch sometimes--
_ though to a very small extent--may also consist in a part of the products obtained).
Since the declared value of the "third-party account" goods on tne Custams declara-
tions does not follow any market contraction, it proves, in our jud~n~ent, to be of
- doubtful economic significance, ~specially in periods, such as the recent ones, in
which the prices of crude prove to be constantly evolving and present wide marbins _
of differentiation, even for the same qualiCies and sourcE~s.
5.3 'Declared' Values and 'Effective' Values of the Nationalizatians
The products "nationalized" from goods in "third-party account" do not logically -
constitute the subject of statistical reporting in the ISTAT trade balance, since
the raw material from which they originated have already been accounted ior in it.
For Customs purposes, therefore, the "nationalized" products appear on the basis of
j the value declared for the goods initially imported on an in-transit basis.
_ The effective payment made that corresponds to the "nationalized" products should -
nevertheless prove greater than the value declared for Customs purposes. With regard -
to this important point, we have been able to make only limited verifications, but
logically, this conclusion should hold true for the general run of "nationalized"
products. It would follow from this that, in 1979, for example, about 9.0 milli.on
_ tons of petroleum products purchased by our country were recorded in the trade bal-
ance at a value lower than the real one.
Two factors should be the principal ones in producing this difference: the cost of
processing the crude, and especially, the "market factor," this latter being under-
stood to mean the earnings that the foreign orderer (the owner of the goods) could -
alternatively have received if he had placed the products on a foreign market in-
stead of on the Italian market. Thi~ factor should be of particular importance if
we take into account (Table 3) the fact that the "nationalizations" reached their
highest levels in the years of greater tension on the international prices (1973-
1974 and 1979) . ,
_ 6. ISTAT and "Effective' Trade Balance
Because of the important ref.erences we have so far made to the oil trade balance, as
reported by ISTAT, and in view of the necessity of having correct methods for pre-
_ senting in summary form the principal flows of this market, we consider it useful to
construct an oil trade balance--which we shall designate as the effective one--that
excludes, vis-a-vis the ISZ'AT l~alancE, the "third-party account" element and instead in-
cludes the "nationalized" eleme:zd at the ef.fective value. We shall construct this
balance-sheet first in terms of quantity and then in terms of value..
25
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
T~OR Ul~l~ IC1Al. Iitil~. (1N1,Y
- Since ISTAT does not present either the "third-party account" processing or the na-
tionalizations,"li we must use data from another source (Ministry uf Industry)--data
which, however, are not always congruent with the overall ISTAT data, on account of
eome considerable differences.i2
Table 4- Oil Trade Balance in Terms of Quantity for 1979: Balance as Reported
by ISTAT, and 'Effective'~ Balance (in millions of tona)
ISTAT "Effective"(1) ~
Importations of crude 109.2 91.0
Importations of refined products
and semiprocessed oil 12.2 10.7
"Nationalizations" of prod~cts ~.7
Total Supplies 121.4 110.4
Exports 24.9 14.4(2)
Net supplies 96.5 96.0
(1) Data from Ministry of Industry. Contrary to the data of the
ISTAT column, thFy exclude "tr?ird-party account" exchanges.
(2) For homogeneity with the ISTAT exports, foreign bunkerages
have been included. In Table 2, that quantity was included
in "domestic demand."
It can be seen at ance from the table above that the differences betwean the two
balance-sheet approaches relate not so much to the magn~.tude of "net supplies" from
abroad as in the absolute total of the f1owR entering and leaving the country, which
amount, repectively, to 110.4 M~11~on and 14.4 million tons in the effective balance
sheet and to 121.4 million (+10 percent) and 24.9 million (+73 percent) in the one
reported by ISTAT.
A second set of considerations has to do with the breakdown as between crude oil a~._
refined products for our market's real supply flaws. It would emerge from the ef-
fective balance-sheet that the proportion of refined products in "net supplies" came
to more than 20 percent in 1979--a percentage which in 1980 should be increased by
another 10 points, confirming a dangerous and burdensome exposure to the more un-
stable refined-products markets.
Reconstruction in value terms of the trade balance-sheet by the approach we have de-
fined as the "effective" one presents quitE a few difficulties, since the value of
movements un,der "third-party accounts" is not explicitly indicated either by ISTAT
or by the Ministry of Industry. In tot�il, according to an estimation by us,13 they
should have come to 1.8 trillion lire for importation of crude and refined products
and to 1.1 trillion for the reexports. The difference between these two figures re-
presents the payment declared for the "nationalized" products. Considering also the
cost of processing and the one which we defined above as the "market factor," we
can estimate an additional cost of 567 billion for the latter14, for a total of
1.267 trillion.
The following observations emerge from comparison of the two oil balance-sheet ap-
proaches in terms of value:
(a) a worsening of the Italian oil deficit by 567 billion lire (about +6 percent),
which drops to about 525 billion if we consi.der, on the income side, the foreign-ex-
26
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
change compensation remaining from "third-party account" processing. This deterior-
ation of, on the one hand, a cost of eupplies that is 533 billion lower, and on the
other hand, exports 1.1 trilli~n lower.
_ (b) an increase of about 3.5 percent ir�, the unit value of imports of crude, and an
increase of about 5.5 percent in total supplies;
(c) an increase of about 14 percent in the unit value of exports.
If we were to exclude the "third-party account" movements from the ISTAT trade bal-
ance, there would be a reduction of all Italian imports by 1.5 percent or of exports
by 1.8 percent.
In evaluating these differentials between the ISTAT and "effective" trade balances,
we should keep it in mind that they follow from estimates that ~re certainly~suject
to error. What we were concerned to indicate was, on the one hand, the diff?rent
articulation of the real flows that make up the oil balance-sheet--as regards the
data normally referred tu--and the statistical distortions, especially in the unit
~ values, that occur when the "third-party account" movements are taken into account.
It is not by chance that the Interministerial Price Committee (CIP) has never fixed
_ the selling prices of refined products in relation to the unit costs reported by
ISTAT, but rather on the basis of the declarations presented by the oil firms in re-
lac_on only to d'e�initive and "own account" imports. For 1979, the firms indicated
- a unit cost of 115,I05 lire per ton of crude (see Table 21 in Statistical Section)--
a fi~ure very clase to the one estimated by us (115,600).
' 7. Hypotheses on the Behavior of the Operators
~ The fact of having clarified, from the statistical point of view, the articulation
of the oil exchanges that most directly affect the domestic market certainly does
not settle for good the problem of interpretation of the market behavio: that under-
lies them. In this last part of our article, we shall try in particular to grasp
the reasons that explain the great variability of the in-transit movements and the
growing trend toward "nationalizations."
~ The lack of literature on this subject and the reluctance of the operators to talk
about their own affairs force us to reason on the basis of working hypotheses.
What seems to us most congruent with the available data and with the market situa-
tions experienced in recent years is the hypothesis that the importing firms (or
only some of them), in the face of increasingly recurrent tensions in the interna--
tional market--tensions that work in favor of the raising of price quotations (be-
yond the dynamic of the raw material)--prefe~ to declare a part of their crude-oil
availability in the form of in-transit ~rocessing contracts for the account of for-
- eign ~per~tors, instead of importing it an a definitive basis. In essence, onl.y a
part of t~zird-party processing appears actually to be such.
- The advantages of such behavior would appear to be principally:
, (a) guaranteeing maximum freedom of maneuver in the effective placement of the re-
fined products on the various markets, so as to obtain the maximum net profit. Tem-
_ porary importation is the optimum approach from this point of view, since it enjoys
27
FOR OFFICIAL JSE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
a kind of exempt status vis-a-vis the administrative controls which the law imposes
_ (or would impose) on goods imported on a definitive basis, and also as regards pub-
lic opinion, which would not take well to a domestic scarcity of refined products if
there were sustained export activity as happened in the winter of 1978-1979. The
1933 oil law cited above (and subsequent rule-makings) exempts those "mineral oile
intended for processing in Italy so as to obtain from them petroleum-derivative pro-
ducts to be exported" from the obligation of licensing, and thus from the restric-
tions that licensing imposes.
The full liberty guaranteed to temporary imports will enable the firms to optimize
their profits by placing the products on the European markets where the prices prove
higher, and in particnlar, to operate in the so-called "spot" market of Rotterdam
- (but it would be more correct to say the ~pot market of Genoa, Sardinia, Sicily,
etc), which in certain periods, such as 1979, have gua.ranteed prdfit per ton of pro-
cessed crude up to twice the cost of purchase and processing of the raw material.
From this point of view, we think it is correct to state that the temporary importa-
tion permitted in our country is one of the most important, if not the principal,
reserve for the spot market, to which everyone now attributes responsibility for the
aggravation of the rise in the prices of crude in 1978-197915~
(b) the second advantage is the fact of not having to meet the requirements to main-
tain reserve stocks related to the quantities of crude processed;
(c) in any case, the ability to nationalize a part--which could be a sizable part--
of the available refined products at prices higher than the implicit costs of the
raw material (declared value), when the domestic market proves sui~table or in order
to maintain a sufficient flow of supplies to the automotive-vehicle refined-products
- distribution network, for which products the defense of the market prices remains an
objective of primary importance. The importations from the more expensive spot mar-
ket, which many operators have said they have been forced to have recourse to be-
cause of scarcity of crude, were very often nothing other than "nationalizations" of
in-transit ~oeds cc-^i^;, Frc;r. our coastal ref=n^*~As.
- The operators' preference for temporary importation, in accordance wirh the behavior
- pattern just described, is confirmed principally, in our judgment, by the fact that
both the "third-party account" contracts and the subsequent "nationalizations" have
reached their maximum levels precisely in the peak years for the international spot
prices. Rather, there seems ta be no correlation with the levels of international
or domestic demand. If the interpretive hypothesis that we have formula*_ed above
were to prove true, it would follow that for at least a part of the "third-party ac-
count" imports, the foreign orderer and the domestic commissioned agent are effec-
tively the same--in other words, that the processing contracts are requested by
_ foreign companies that are connected with or controlled by the domestic operators
themselves. This could easily be made possible by the national oil firms' habitual
practice oF working through their own foreign intermediaries, wtiile the nature of
the controls exercised over temporary imports should certainly not be such as to
prevent the effective sameness of the foreign orderer and the domestic commissioned
agent. The conditions for the granting of temporary-importation status--according
to Article 176 of the Consolidation Act setting the legislative provisions in Cus-
toms matters--place far greater emphasis on the aspects relating to modalities and
times of importation, processing and subsequent reexportation than on the nature of
the contracting parties. If our hypothesis is correct, we we have to do with an ex-
portation phenomenon involving a considerable amount of money.
28
_ FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
Table 5- Uil Trade Balance in Terms of Value for 1979: Balance as Reported by
ISTAT, and 'Effective' Balance
ISTAT Effective
Billions Lire Billions Lire
of lire er ton of lire ep r tan
Importation of crude 12,202 111,700 10,523 115,600
Importation of refined products 1,561 128,000 1,440 134,600
Nationalizations 1,267 145,600
Total supplies 13,763 113,370 13,230 119,800
- Exportation 3,882 156,000 2,782 193,200
Net Supplies 9,881 10,448
8. Conclusions and Some Proposals for Interventional Action
(1) The conclusion of greatest interest that it seems to us should be drawn fyum the
analysis made up ~o this point is that the "old" role assigned to aur country in the
oil market has resulted, in the presence of an international situation profound.ly
different from the original one, in elements of instability and cost burdens in the
country's supplies. The business-operation interests and behavior of the individual
operators, or only a part of them, often prove to be not easily co~c~patible with tYie
national interests. This has been amply experienced in the recent past, when more
than one operator has prferred to speculate to the maximum abroad, wiping out the
normal supplies to the domestic market. That it should then be the state, or the
entities controlled by it, that have to make up the l~sses or take on the debts of
those operators who then decide definitively to abandon our market seems an absurd
policy indeed, but one that is entirely in line with the philosophy of unconditional
public support that became established in the postwar period.
(2) The structure of the supply system--other things being equal--has an influence
= on the country's overall oil deficit. Thus, for example, if we had imported crude
in 1979 instead of the approximately 20 million tona of refined products, we would
have saved about 500 billion lire. This is a hypothetical exercise, but it xs cer-
tain that if overall imports were optimized in line with priority national require-
ments, on the condition of the lowest purcl~ase price, considerable savings would re-
sult. Firms "short" of certain products would thus not be forcEd to import them at
the more expensive snot-market prices, while at the same time other firms with sur-
pluses of the same products export them at prices often much lower than the spot-
market prices.
(3) The complete discretion permitted to the operators as regards the modalities of
importation has the result of thwarting any attempt that one might (hypothetically)
wish to make to program the sector. The possibility given to the firms to increase
temporary importations--and simultaneously reduce definitive importations--repre-
sents too attractive a temptation (to maximize the advantages of a presence in our
country while minimizing commitment to our market) for the firms not to yield to it
in an ever. broader manner.
- (4) The basis of reference for calculation of the costs of supply can no longer be
represented, as has normally been done, solely by the costs of crude, since it re-
present only a part--albeit a predominant one--of total available supplies.
29
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY -
- It does not fall within this article's purpose to formulate proposals to solve the
problems raised here. Nonetheless it seems important to us to point out the lines
of ir.terventional action which the competent. administration could take to achieve
po~itive results.
In the first place, it seems neceasary, in our judgment, to reinstate--after years
of undelcared liberalism in market behavior--solid governmental management of the '
oil economy. This should come about mainly through reapplication of the legislation
promulgated in 1933 (when the country's energy problems were quite similar to those -
of today) and abandoned at the beginning of the 1950's, as regards import-authoriza-
_ tion policy in particular.
Finally, as r~gards the "third-party account" importation system, it should be regu- -
- lated in a manner appropriate to today's situations--which we have analyzed above--
thus achieving an important threefold result:
--sterilizing a large part (the part that originates in our country) of the refined-
_ products market;
- --eliminating a cause of instability of domestic supplies and of upward price pres-
- sure;
--preventing (if our reasoning is correct) considerable e~portation of foreign ex-
change.
FOOTNOTES
1. IASM [expansion unknown], "Prospects and Conditions for the Process of 'Methani-
zation' of the Mezzogiorno, with Par.ticular Refe�rence to Sicily," Rome, July
1980.
i
2, A. Clo, "The Italian Energy Situation: Problems Old and New," ENERGIA, No 1, `
1980.
3. Idem, pp 52-53.
4. For a c.larification of the problems raised by the Iran-Iraq conflict, see A.
Clo, "Iran-Iraq War after 40 Days," IL SOLE 24 ORE, 2 November 1980.
5. Data taken from "Report of the Board of Directors of the College of Auditors and
Balance-Sheet at 31 December 1979," ENEL, Rome, 1980. _
6. ENEL, "Statistical Reports on Electrical Energy," August 1980.
7. For 1979, imported-energy invoicing totaled about 3.4 billion kWh as against a
total of 7.6 billion kWh imported. Exports of about 0.6 billion kWh werQ in-
voiced, as against a total of 2.2 billion kWh exported.
~ 8. For greater detail on the articulation of the subject of the ISTAT foreign-trade
reports, see "General Notices" in the publication "Annual Statistics on Foreign
Trade."
9. From the Customs point of view, the matter is governed by the "Consolidati~n Act
of Legislative Provisions in the Matter of Customs," Presidential Decree o�
3~
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
; 23 January, No 43, at Section VI, Article 175 ff. Temporary importations are
, subject to authorization issued in certain cases (Article I77) by the chief of
; the Customs district where the processing of the goods must begin, or in other
~ cases (Article 178), by the Ministry of Finance, by agreement with the Ministry
, of Foreign Trade and upon consideration of the opinion of the Advisory COMtttit-
' tee set up (Article 221) in the Ministry of Foreign Trade. Goods in transit
are imported without payment of border duties (tolls, border surtax; or any
other impost in favor of the state) on condition that the owner commit himself
' --in the prescirbed manner--to reexportation of them within a fixed time limit.
' An appropriate document is issued for such importations, and a guarantee must
be put up for duties eventually owed and for interest.
i,~ 10. Before the expiration of the temporary-importation term, the owner may request
that the goods imported be put onto the Italian consumer market (Article 190,
Consolidation Act). "The customs duties that would have been~ payable on the
r temporarily imported goods on the date on which the declaration of temporary
importation w~s accepted by Customs" will be paid on such goods (Article 191).
11. ~STAT, in fact, distinguishes only temporary imports--both on "own account" and
on "third-party account"--from definitive imports.
12. The Ministry of Industry's data are publishad in the BOLLETTINO PETROLIFERO. ~
Between 1973 and 1979, ISTAT and the Ministry of Industry give the following
figures (in millions of tons) for total crude imported:
1973 1974 1975 1976 1977 1978 1979
ISTAT (A) 126 117 94 99 100 1Q8 109
' Ministry of Industry (B) 128 118 93 100 104 108 110
(A) as percentage of (B) 0.98 0.99 1.01 0.99 0.96 1.0 0.99
13. The value of "third-party account" importations has been calculated by sub-
tracting from the total expenditure furnished by ISTAT the valuation which the
Ministry of Industry gives for definitive and "own account" importations only.
To the figure thus obtained has been added an estimate of the cost of "third-
, party account" importation of semiprocessed products. Estimation of the value
of exports was made by addiag to the value of the imports of crude a hypotheti-
cal processing cost of 3,500 lire per ton of crude.
14. Obtained by subtracting from the total value of imports (13.763 trillion lire)
; the value of the definitive and "own account" importations of crude (10.523
trillion lire), the value of the refined products (1.440 trillion lire), and
~ the declared value of the nationalizations (800 billion lire).
15. For a detailed analysis of the functional mechanisms of the spot market in
~ 1978-1979, see A. Clo, "The World Oil Situation and Its Effects on Oil-Price
Policy in Italy," in ENERGIA MATERIE PRIME, Nos 7-8, 1979, pp 29-36. '
COPYRIGHT: L'Editrice dell'Automobile LEA-Rnma 1980
11267
CSO: 3104/217
31
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFF[CIAL USE ONLY
- ECONOMIC ~ ITALY
_ ~
MAKNO OPINION POLL ON INFLATION
Poll Results Discussed
Milan IL MONDO in Italian 27 Mar 81 pp 12-15
[Article by Bruna B ellonzi: "Transformed by the Monster"]
[TextJ "One can succeed in living with it, but it leads directly to the people's
descent into barbarity." The solemn words of Paol~ Baffi, honorary governor of _
the Bank of Italy, but above all the nation's critical conscience, ~t~ot:ld reecho
in the lazy ears of many economists and politicians. Reczntly they Y:ave shown -
more frequently wi th words and deeds that they are almost resigned 4o the ine~-
capability of inflation. ~ao years have passed since Baffi made his lucid syn-
thesis of the dangers inflation carries with it. They were 24 months during
which the price ind ex has risen constantly to a re~ord of ~lus 22 percent at the
end of 1980. Together with the decr~ased tension of thos~ who should most di- ~
rectly fight against "the most ferocious evil that afflicts Western societies"
(to once more use Baffi's words) there seems also to r.ave been a loss of atten-
tion and concern by the people. In brief, one has the impression that ~hat
Baffi feared is taking place: The adaptation to living with inflation; to fee?
it, but to submit to it without reacting, each trying to unload it on someone
else, in a race toward egoism that leads to that barbarism. And this attitude
seems to be widespread precisely while on the horizon,. despite forecasts by
government economists, the outlines of concrete dangers of a further recrudes-
~ cence of the phenomenon appear. In fact, the growing price pressure has trig-
gered wage demands to recover lost purchasing power. Price setters (industri-
= alists and businessmen) who certainly do not want to lose the prafit margins they
have gained, react in the same way.
It was in this climate that IL MONDO retained Makno to conduct the first survey
on what Italians think about inflation, on how they relate to it, on how they
have changed their habits. The survey (conducted with a sample of 2,000 persons)
was done in two phases: The first survey was run 1 year ago, the second in
February. For the first time there is, therefore, also the possibilit}~ of veri-
' fying how opinions and behavior of public opinion is evolving in regard to this
phenomPnon. And the overall survey shows that Italians' technical perception
of inflation is at a good level. But here is a detailed study of the results.
32 -
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
Causes and Zesponsibilities
Naturally, the government is the first to be accused (see Graph 2, those respon-
sible for inflation). Forty-four percent of those interviewed say that the _
government is responsible for inflation, and this derives from its function ag
- an organ that sets economic policy. In fact, the direct causes of inflation
most recognized are government spending, too much mc:~2y in circulation, and de- _
valuation of the lira. The government headed by Arnaldo Forlani, however, seems
to come out better concerning this problem than that of Francesco Cossiga. One
year ago, the responsibility of th~ executive (or the coresponsibility, because
- int~rviewees could give two answers) was indicated by 54 percent of those ques- ~
tioned. The constant propensity of governments for indebtedness is, however,
stigmatized now more than in the past, so much so that the weight of the public -
deficit as a cause of inflation increases by as much as five points. _
In any case, the new survey was conducted after several months of discussion of
wage increases for government workers, judges, teachers and physicians in general
practice. The importance attributed to oil producers seems to have dropped
' slightly, from 36 percent to 34 percent, while the importance of industrialists,
_ bankers, businessmen continues to be considerable. Almost one-third of those
interviewed believe that excessive profits for some groups are among the prin-
cipal causes of inf lation. However, opinion assigns various responsibilities to
different business groups. Somewhat less blame is directed toward industry (the
~ autumn difficulties, such as the sensationa]. Fiat episode, certainly have left
a mark) compared with 1980, and also for bankers, while slightly more blame is
attributed to businessmen.
There was a drop in responsibility of trade unions (from 23 to 20 percent) which
nevertheless was considered by respondents to be higher than those of the indi-
vidual categories of businessmen. However (Graph 1) only 7.7 percent of respon-
dents pointed to wage increases against 13 percent in the Frevious survey, and
the much-maligned sliding wage scale rose only one point in responsibility.
A certain opinion change is registered also in assessing the effect of domestic
and international factors on inflation. One year ago international factors were `
considered, overall, to have had a great influence. But petroleum prices, multi-
national policies and threar_s of war in the Middle East declined and, in the ne;a
survey, a net increase in domestic factors emerged.
If the mechanism is fueled by domestic forces, in which the respo:~sibility of
_ certain social groups, aside from the political class, is so clearly indicated,
it is logical that opinion would identify the same groups as those who profit -
most from inflation (see Graph 3). Businessmen and industrialists, even though
ranked lower than in the previous survey, are believed to benefit most, and they
are exceeded only by professionals who were named by 44 percent of respondents.
The latter figure is rising sharply. Evidently, respondents were personally af-
fected by higher fees not only charged by doctors, lawyers, businessmen, and
notaries, but also by mechanics and hairdressers. In addition respondents did
not remain deaf to the hammering of denunciations by Minister Franco Reviglio
against tax evaders and to the results of declarations and income,verification
33
- FOR OFFdCIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
recently made public. Executives and public officials gained little advantage
from inflation, skilled workers very little, white collar workers even less. The
latter are ranked last.
The Effects
- More money is circulating, but the people feel puorer. flalf those interviewed say
they recently cut back on some consumption, and more than half (52.5 percent) claim
their wealth was decreased by inflation. ~
Those most aff ected are Italians in the south and the islands. They claim to an
identical degree (57 percent [Tr. note: Table A shows 57.5 perc ent]) that they
reduced daily expenditures and that their�wealth decreased (see table A). -Posi-
tions are better articulated regarding wealth in the center-north area. The
_ richer northwest area estimates that its wealth decreased cons~derably (61�per-
cent) but current expenditures were not diminished, due, it is b elieved, to re-
sort to ava~lable income reserves. Feelings in the northeast about wealth c.on-
form with the national average. Respondents in central Italy show a marked propen-
_ sity for austerity. Their wealth seems to have been well-protected against the
_ wave of inflation (only 37 out of 100 comrlain of a decrease in ~aealth) but they
also have taken decisive steps to restrict consumption).
As regards consumption (see table C) the primary sacrifice was made for leisure
time expenditures. Vacations, movies and theater, dining out, once more have
become a luxury for many, and in fact a large number of those questioned said _
they gave these things up because of inflation. Expenditures fo r vacations seem
to have been cut the most, and, in the past year declined an additional fivepoints:
Those who said they had to give them up rose from 35 to 40 percent.
But who gave up most luxury expenditures? Primarily those above the age of 50
(the weight of pensioner~ evident here), next youths between 15 and 19 (pay enve- .
lopes getting lighter) and those living in the center-south area. Northerners,
for whom vacations are a widespread and long-established form of consumption,
have given up less.
Inflation seems to have influenced durable consumer goods less: The new washing
machine, television set, refrigerator or dishwasher, as well as personal property -
and other furniture have been less affected by restrictions. The same may be
said for the automobile which--compared with vacations or the movies--is situated
_ halfway in the classification of declared reduction of consumption. It must be
said however that the survey could not register the postponement of decisions to
buy, and more restricted use of certain goods. It can be assumed for example that
many Italians would continue to use the old automobile, perhaps trying to consume
less gasoline. -
An interesting disparity between the two sexes emerges from their respective ex-
penditures and consumption (see table B). Women feel less poor than men. They
see decreases in savings or decreases in family wealth as less alarming, while
restrictions on certain expenditures is felt with grea*_er intensity. Female
_ respondents said twice as otten as male resgond.ents that they sacrificed house-
hold expenditures and reduced food expenditures (respectively 22.6 percent against
3~+
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFIC[AL USE ONLY -
13.8 percent; and 4.3 percent against 3.2 percent~. Under the latter heading
[food] the phenomenon is simply explained: Women make daily expenditures in the
great maj ority of cases and therefore their perception of the phenomenon is more
intense and immediate. Finally, it is a cause for preoccupation that even for
food consumption, the highest reduction ~5 percen~) was recorded in the south~
where consumption already is clearly below average.
Remedies ~
The most striking result of the survey in regard to attempts to counteract price
- increases is the general disorientation concerning means and the possibilities of -
fighting inflation. To the question, "If you were a government minister what
would you do to stop inflation?" 26 interviewees out of 100 replied "I don't .
know" (last year only 19 percent had no point of view). When invited to choose
b~tween price controls and ceilings on salaries, most opted for sinultaneous con-
trols on b oth.
But among those who mentioned only ~,ne approacra, a clear majority favored price
- and not salary controls (20 perceut against 3 percenz). The relative majorit~ of
women (26 percent) considers that the most effective anti-inflation measure would
be controls on only certain prices (administered prices: electric light, rent,
telephone). Southern respondents favored :his choice strongly (35.7 percent).
Shifting f rom anti-inflation policies to what each. single citizen could do to pro-
tect his savings, the survey revealed that the preferred shelter is, by a great -
margin over any other possible choice, the home (table D). Overall, 37.7 percent
favor this kind of protection and the figure rises in the north to almost 50 per-
cent. The figure attributed in the south to this sort of defense is considerably _
- lower (less than 16 percent), probably because of the greater weight of the rural
areas, which are less sensitive than urban areas to the considerable variation
in the cost of housing fol'_owing the total block on rPntal property.
- The survey results show Italians put into second place investment in treasury
_ bonds and other state issues, and in third place the purchase of gold coins, thus
reversing the data of 1 year ago. However, there is a small difference between
the two points of view. All other investment is considered very risky: In any
- case bank deposits are favored over the purchase of paintings and jewelry (which
are accessible only to a small elite, whose value in any case changes only over
long periods of time), and on purchase of stocks, while absolutely negligible -
percentages (under 1 percent) favor all other possible forms oF investment (which
however are favored overall by 21.5 percent of the respondents).
Finally there is an interesting resnonse that fully discloses the state of dis-
orientation of some opinion, and its fear that things will get worse: More than
11 percent of interviewees b elieve that a good protection against inflation woul.d _
b e to sp end all earnings at once. In short, live for today because who knows
what may happen tomorrow.
Despite all commonplaces, men head the list of proconsumers: Thirteen percent of
men against 9 percent of women favor spending all income, thus openly accentuating _
a propensity shown a year ~.go. In 1980, Italian males interviewed by IL MONDO who
had chosen unrestricted consumption as a weapon against inflation totaled somewhat
less: 11 percent.
35
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USE ONLY
( Ao. ~ dd Onuo 32
wd � (a) 31
r f,omti orr� Mn y~r ~ 23
eoinn,ue+~.~i. indincrMl~(b ) so
~e
aa,. vuerxc. - ( c ) 27
35,7
- Sv~Mmztom dNl~ Nn ~ d~ 27,7
Tropp~ mon~q cireolhn~ e~ 18
13
- Po~irin d~lu multirr:ioa~11( f ~ s
12
10,7
SaU mobiM (g~ 11,7
- Auinmti o1wWi ~h~ � ~ 1980 ~
7,1 19e1
Mtnuela dl qu~ ~ i~ 5,6
in AN~a Ori~np 3.6
Non to ~ ~ ~
~o,e
Gra.ph l. What Are the Causes of Inflation?
Key:
a. Higher Price of Petroleum f. Multinational Policies
b. Excess Business and Industrial g. Sliding Wage Scale
Profits h. Wage Increases -
c. Public Expenditures i. Threat of War in the Middle East
d. Devaluation of the Lira j. non't Know
- e. Too Much Money in Circulation
Govuno ( g ~ 54 -
~
Produttori ~b ~ 36
di pnro8o ~,2 -
Sindt:~d (C ~ 23
20
23
Indumi~ ( d ) ~ 1
10,3 ~ ~ 980
Commeei~ntf ~e~ ~3,5 1981
8anchr ( f ) 13,3
11,6
t t,6
Nonw (g) ~~8 =
Graph 2. Who Is Responsible for Inflation?
Key:
a. Government e. Businessmen
' b. Oil Producers f. Banks
c. Trade Unions g. Don't Know
d. Industry
36
FOR OFF[CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOI3 OFFIC[AL USE OMLY
~7 5 ~
Prolmiomai ~g~ ~ j
' Comm~rdmti ~b ~ ~ ~
- 39
45,6
Indurtridi ~C~ 34,6
B~nchiui ~d~ 28
18,6
Funtiarwipubb}i~~ J'S
_ ~
Oiriq~mi (f~
)
Op~ni 2.5
~g~ 1,2
- Aq~icoltor+ (h) 1.7 i ta80
1 i 1981
~~~~i \ i \ 1
~ 0,3
Ahri CJ ~ B~
15
Graph 3. Which Groups Profited?
- Key :
= a. Professi.onals f. Executives
b. Businessmen g. Skilled Workers
c. Industrialists h. Farmers
d. B.3nkers i. White Collar Workers
e. Public Officials j. Other
Table A. Was Your Wealth Decreased by Inflation?
_ e
M ? 1H1~ 7Vf1 ~ !YM .N Mw/ .
- Ow~l f~M M~la
~
- 51 ~a~ E0.9 46.0 32.~ 60~0 6b.e 51,4 62,5 E0.7 51.1 97.7 57,3 52.5
~ Np ~b~ 2l.1 30.7 Jb.b 92.1 2l.t 92,~ ~2.6 2~.7 Y6,3 s4.S Y9,2 29,7
= I Non fo i0,1 2a.a 32,3 t~.9 10,~ ta,2 16,0 16,A 29.a 17.6 t3,3 17.8
~~~irl
' Key:
a. Yes ~ e. Nortizeast
b. No f. Center
c. Don't Know g. South/Islands
d. Northwest h. Combined Total
- 37
FOR OFFIrIA.L USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000400010006-0

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000400014406-4
FOR OFFICIAL USC ONLY
- Table B. Do You Feel You Are Richer or Poorer Than 6 or 7 Years Ago?
sud~ ( )
M F 16/1Y 20/44 7f/~4 7{/M > i0 Owel Est G~rt(
~ Mole T1C.
a'r~cco 15.4 t5.3 242 t87 228 9.t 76 18.t 7.9 t67 t9.6 15.3
~b +u povero 1~.4 96 6. 30.3 34.2 3i 2 ~9.0 55.5 32.3 54.5 36.t 38.6 39.8
~ st~eeo 35. ~~0.4 30 3 43.0 91 7 ~B.S 34.5 ~ 1.8 32 0 41.0 36.6 38.1
d so ~.5 8.9 152 6.1 B.3 5.3 25 7.8 5.6 63 71 88
~
~ Key :
- a. Richer f. Northeast ~
b. Poorer g. Center
c. The Same h. South/Islands
d. Don't Know i. Combined Tota"1
e. 1Vorthwest
Table C. What Form of Consumption Did You Give Up?
, a f lino a 2 risposte)
M F 1S/1f 10/~~ 29/SO ~b/tf ~SO C'?Nt E~1 C(~tfo bol~ 'fmC.
b ) tempo i~bero � ~
(vacanz~) ~ t 8 39 9 30 0 56.5 30 2 ay t ~4.2 29 9 36.7 5:~ 9 48.B a0.7
C ~ t~mpo I~bero
(cinema. ~
- d isatro) 0 t 8 43 8 53 3 ~5.2 43 4 35 1 t6.5 33 6 50.0 d3.4