JPRS ID: 9837 WEST EUROPE REPORT

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000400030018-5
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• Document Page Count: 33
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• Sequence Number: 18
• Content Type: REPORTS

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~R oMFicr~?. ~~tih: oNi.~~
- JPRS L/9837
9 July 1981 .
~l1/est E u ro e R e o rt
p p
CFOlJO 32/81)
FBIS ~'OREIGN BROADCAST INFORMATION SERVIC~
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JPRS L/9837
_ 9 July 1981
WEST EUROPE REPORT
(FOUO 32/81)
. ~
CONTENTS
~1ERGY ECON~IICS
ITALY
Cement Industry Oil to Coal Conversion
(Eugenio Occorsio; IZ SOLE - 2!~ ORE, 12 Jun 81) 1 ~
ECONOMIC ,
- FRANCE
Aerospace Industry Urged To Make Still Greater Effort
(Pierre I,angereux; AIR ET COSMOS, 30 May 81) 3
ITALY
Report on State of Nation~s Econorr~y
(Guja Bacchilega, Chiara Fornasari; II, MONDO, 15 May S1)..... 5
POISTICAL .
FRANCE
Reactions to ~ench Vote in African Nations
(Paris JEUNE AFRIQUE in French 27 May 81 pp 26-29)
This article appeared in JPRS Z/9794~ 16 Jun 81, No 725
of SUB-SAHAR.~N AFRICA, pp 1-7.
Reaction to Mitterrand Victory Reported
(Related articles, various sources, dates)
This article appeaxed in JPRS L/9801, 19 Jun 81, No 726
of SUB-SAHARAN AFRTCA, pp 34-37.
~ a- [III - WE - 150 FOUO]
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SPAIN ~
Tejero Interviewed in Prison by FRG Journalist
(Erik M. R~ckert; STERN, 27 May 81) 14
- MIZITARY
ITAI,Y
Contract on Sa1e of ti7axships to Iraq Signed
(Alvaro Ranzoni; PANOMAFZA, 1 Jun 81) 17
GENFR QT,
FRANCE
~New Industry~ Seen Being Put in Orbit by Ariane
(Jacques Houbar~; PAR~ADOXES, T~'inter 1980) 20
ITALY
Lombardy Region ~ s F`i.ght Against Ra,bies
( COftRIERE DELI~A SER,A,, 30 May 81) . . . . . . . . . . . . . . . . . . . . . . . . . . 27
_ Dog Owners~ Coop ~ration Poor, by Maia Bel+,rame
Rabies Spread Into Italy, by Giorgio Gagliai�di
-b-
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ENERGY ECONOMICS IT~y
CEMENT INDUSTRY OIL TO C~AL CONVERSION
Milan IL SOLE - 24 ORE in Italian 12 Jun 81 p 4
~Article by Eugenio Occorsio: "Cement Industry Chooses Coal To Limit ~ergy
ConsumptioJ .
~extJ Px~otests Qver Imported Minerals Caution Money
During 1980 practically all of the increase in Italian cement production was
covered (from the energy point of viewj by using coal. In f~ct, thanks to the pro-
" gressive reconversian of the factories, 14.~5% of the product is the result of pro-
duction fueled by coal as against 9.6X for the previous year. Dur~.ng the same
- period of time, the total production went from 39.2 to 41.8 million tons with an
increase, therefore, of slightly more than 6%.
On the basis of these facts, AITEC (Association of ~:ement Producers) in the past few
c?ays has added its voice *o the many protests against the na-interest deposit of
= 30% on imports instituted by the Goverrnnent. AITEC has asked that coal imports be
exempt from thig regulation by c]:aiming that otherwise it would place a rather
heavy handicap on reduction in conaumption of fuel oil and, therefore, on petroleum
imports.
In fact, a recent Confindustria study on energy sources indicates that this sector
itself, a heavy consumer of fuel oil, has been the first to pave the way ~oward coal.
All of the programs and the timetables projected in 1976 for factory energy recon-
_ version have been achieved. Some figures: in 1977, the c~ment industry was running
71.8% on fuel oil, 23.7X on natural gas and 4.2y on coal.
The following year the percentag~s became 74.9%, 19X and 5.6X respectively. In 1.979,
fuel oil consumption still accounted for 73.2% while ~as declined to 17.X and coal
jumped to 9.6y. The following year, as previously mentioned, 72.~X of the factories
were running on fuel oil, 17~6 on gas and 14.4X on coal. Currently, 28 of the cement
plants are coal-fired and another eleven are in the process of being converted. The
number of these factories, Confidustria calculates, could reach 63 at the ead of
1983.
_ The figure of 647 thousand tons of coal consumed in 1980 will surpass 1.5 million
tons this year and possibly reach 3.5 million tons by 1983. The savings in fuel oil
are on the order of two million tons for this period (next two years).
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These figure~ are significant in a sector where energy accounts for one-half of the
tatal costs. Among other things, this same industrial sector is experimenting with
- using the airborne ashes from thermoelectric powerplants in the industrial cycle
without qualitatively aff ecting the final product.
Confidustria, in its study, is.stressing a series of other problems. The greatest
handicap in the use of coal--the release of sulfur into the atmosphere--is, for
example, finding a solution in the fact that the sulfates, in this case, remain in
the product. Then there are the usual questions of incentives (which are absent
despite the need for 200 billion in investments over the next five years). And,
Chere is also another specific shackle that can be eliminated: the conversion of
factories from oil to coal, maintains Confindustria, must not be subject ~t~a the
issuance of building licenses.
COPYRIGHT: 1981 Editrice I1 Sole-24 Ore s.r.l.
- CSO: 8128/8552
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ECONOMIC F~~$
AEROSPACE INDUSTRY URGED TO MAKE STIL1. GREATER EFFORT
Paris AIR ET CQSMOS in �'rench 30 May 61 p 10
[Article by Pierre Langereux]
[Text] The French armaments induatry had a turnover figurc last year of 60 b311ion
francs, including 25 billion france (40 percent) for export. The aerospace industry
accounted ~for 34 billion francs in 1980, of which 60 percent wen~ for export:
military aerospace activities accounCed for 70 perce~t of the turnover total and
civilian activities for 27 percent. In 1980, orders glaced.with th~ a~rospace
industry ~110,000 persons) came to 35 billion francs.. These were the gross figurea
announced by Jean Martre, gc~neral weapons representative, to AJPAE journalists.
"The status of the French aerospace indust~y is on the whole favorable,".J. Martre
stated. The aircraft structure and miesiles sector wil.l reach a peak of activity
late in 1981 and early in 1982 which should last for another two or three years.
The engine sector will also see a production increase at the same time, thanks to
. the CFM56.
The French aeroapace induatry is curr~ntly "at a high level of efficiency., with a
- happy financial basis and solid structure," the representative concluded. Aowever,
future difficulties are foreseen, for this induatry is based on a high rate of
export (60 percent) as compared to the United States (10 percent). In addition, it
already has competition at the top of the line, from the U.S., and at the bottom,
from increasing numbers of aeronautics industriea (Japan, Italy, Spain, Brazil,
Argentina, Israel, Indoneaia). The recent Italian-Brazilian agreement on the AMX
aircraft illustrates this developing competition at the lower end of the range for
civilian ar.d military aircraft.
"French industry must thus redefine the foundations for 'new growth' in the 1983-84
range, fo~ the producte being aold," J. Martre stated.
"The most important effort to be made pertaina to military engines, radar and
missiles," the representative explained. It is necessary among other things to
prepare a new technological line to succeed the M53 generation and to devote the
necessary effort to the next military engin~, tha M88, which wi11 be a more multi-
- purpose apparatus. The delay which has developed in Fraxice with regard to airborne
radar is not substantial, J. Martre said, but it can only be overcome with the next
generation of combat planes, plana for which have now been poetgoned until 1995
(inatead of 1992). With regard to other equipment, French induetry has reached the
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same level as American technology and even leads in certain cases (multiplex ex-
change of information on aircraft). France is also very well situated with regard
- to civilian aircraft (airbus), helicopters (sales to the U.S.) and tactical and
strategic missiles. It is necessary, however, to be prepared to keep up with the
great progress being made in the dEVelopments pertzining to captors, self-direction
and automation equipment, as we11 as the techniques of miniaturization, electronics
and optronics, which will soon be involved in tacCical missile design.
The future of Franco-German cooperation also merits special attention because of the
scope of the projects underw~.y: a future combat plane, antitank helicopter, third
generation antitank missiles, combat tanks.
The task will not be an easy one because it will be necessary to deal with several
fronts simultaneously. The acceleration of sci~ntific and technological progress
will become even greater in the years to come as a result of the efforts undertaken~
in the U.S. to retain the advantage over the USSR, and France will have dif�iculty
keeping up with this pace. For example, J. Martre noted, France is already lagging
- in personnel skilled in the development of [logiciels) whi.ch are coming into massive
use in aeronauCics. Competition with the U.S., which.is still favorable for French
_ products thanks to uwnetary parity, will then become more keen, the representative
believes. The increasing complexity of wcapons systems pos.es technical and financial
problems. Cost increases--five percent per year, like tMe gross national product,
in recent years--will in the future become more acute in relation to a national
product which is leveling off. This led the representative to say that eventually
"we will no longer be able to afford the moat modern planes in sufficient quantities."
In this connection, it will be interesting to see the directions in the new 1983-1988
draft law which will be the subject of a technical examination in the course of the
second hal� of 1981, before being submitted to the new parliament in 1982 (first or
- second session), at xhe same time as the 1983 budget.
COPYRIGHT: A. & C. 1981
5157
CSO: 3100/785
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ECONOMIC ITALY
REPORT ON STATE OF NATION'S ECONOMY
Milan IL MONDO in Italian 15 May 81 pp 33-44
[Article by Guja Bacchilega and Chiara Fornasari: "Inflation is Still the Key to
Everything"]
[Text] If government and business do not adopt urgent measures against inflation,
the rate of price increases will not only remain high but might virtually explode.
This warning comes from a highly qualified and traditionally cautious source, the
scientific committee of IL MONDO, and it lends particular urgency to the report
published in these pages.
Reports on the state of the econom y are drawn up periodically for IL MONDO by
- a group of economists representative of the various schools and institutes of Italy.
Since its first report was written in July 1978, the members of the group have been
economists Marcello De Cecco, a professor of economics a� Florence, and Luico Izzo,
a professor of political economy at the University of Rome; Angelo Tantazzi, a pro-
fessor of economics at Bologna; Luigi Spaventa, a deputy and professor of political
economy institutions at the University of Rome (on "parliamehtary leave") and a mem-
ber of the Torre Argentina center; and Mario Monti, a professor of economics at the
University of Turin and at the Bocconi, in Milan. Prof Monti was not avsilable to
take part in drawing up this report. The group was joined more recently by Inno-
cenzo Cipolletta, director of ISCO [Institute for the Study of Economic Trends]
and, for this occasion, Mario Baldassarri, a professor of political economy at
Bologna. Others who have served on the cammittee are Minister Franco Reviglio and
Paolo Savona, the genral secretary for planning the budget ministry. Marcello De
Cecco and Luigi Spaventa took part in the meeting but were not able to examine the
final draft of the report.
Highlights [by Nicola FortiJ
The i~iternational scene, of which the Italian economy is a part, looks particularly
bleak. High U.S. interest rates have affected the cost of money in European countries
despite the recession current in Europe. Recessionary policy has had modest effects
on inflation but has worsened the already difficult productivity situation. Nor do
inflation and growth seem likely to show any improvement before 1982.
On the other hand, the industrialized countries' balance of payments should show
definite progrecs, provided oil prices da not rise sharply. Thus, Italian exports
will encounter sluggish worldwide demand and aggressive exporting by other European
countries. Italy's only glimmer of hope is in a possible fall in the U.S. market
share caused by a high revaluation of the dollar.
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In the last months of 1980 and early 1981, the Italian economy went through
a phase of higr dornestic demand sustained by investment and construction spending,
which has restricted exports. On the other hand, consumer spending sh~ws signs of
slowing down.
The hole in the public-finance pocket (a 14 trillion lire government deficit in
only 4 months) has worsened this situation by fueling the economy and creating
new money. Only monetary policy has tried i:o head off expectations. But the
. obvious limits on credit control and the government's contradictory statements
have compromised its credibility.
'I"ne treasury and the Bank of Italy occasionally talk about divorce, i.e. ending
the bank's obligation to buy BOT's [expansion unk~own, probably T-bills]. This
- would make it possible to control closely the enormous oscillations in the money
supply caused by the treasury's erratic defi.cit. The greatest consequence of
the divorce, namely the great variability in interest rates, especially in compa-
rison with earlier rates, creates some perplexity: brokers become discouraged, and
the long-term debt is hard to consolidate. Thus, the divorce should be performed
gradually to avoid excessive repercussions on interest rates.
For. months the government and parliament have been working on the budget and on
cuts in public spending. It is still impossible to judge the effect of the cuts
' already approved (precise data is lacking on the means and timing of application),
but a strategy of small cuts here and there certainly appears insufficient.
Rather, it will be necessary to make structural changes to control spending:
- ~1) by establishing a maximum limit on borrowing from the money market as a prime
~ article of the budget;
~ (2) by implementing the constantly ignored rule that provides for covering current
and recurrent expenses;
(3) by decent.ralizing part of the income on a regional basis and reducing the growth
of payments to, peripheral entities. That way, there would be an initial control
over public expenditures at the local level, and the citizenry would be put in the
position of comparing the quality of services received with the local taxes they
have paid,
One thing is certzin: strong measures are needed to reduce inflation, Any gradualist
policy would certainly be made hopeless because it would not turn around the wide-
spread inflationary psychology and because inflation might be given a push by out-
side events (oil, contracts, depression of the lira). The risk is, then, that
inf.lation not only might not be reduced but might even reach levels never before seen.
Inflation therapy must solve three problems: costs, demand and psychology. All
the contributors to the report agree on the ~iecessity of a social truce that would
cool off costs and prices and start a virtuous circle in which the drop in infl~tion
would support exports and the lira. Mario Baldassarri has advanced a proposa'~ to
put a ceiling on wage indexation that is untaxed for both workers and businesses.
Some say this action sl~otild be accompanied by a further restriction on demand in order
to demonstratc an unequivocal intention to stop inflation. But it is equally impor-
tant to have policies that are coherent and do not spoil expectations. Ministers
ought to make few l~ronouncements, and they ought not to contradict each other.
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Rates shoulci be increased very cautiously and equalizations set for long periods.
Only this kind of public action can enable money managers to work in a context of
certa~nty and to cool off their own pressure on prices.
The Two Yossible Cures
The Znternational Scene: The salient fact of the international economic situation
is represented by the conflicting monetary policies o~ the major industrialized
countries. Tn the United States, monetary policy is aimed entirely at containing
the growth of the money supply within modest limits in order to reduce inflation.
High American rates have induced European monetary authorities to set similarly
high ones in order to avoid weakening their currencies with respect to the dollar,
despite a decline or stagnation in their countries' productivity. Interest rates
are at high levels both absolutely and relatively. The effects that these restric-
tive monetary policies have had on inflation in European countries have not yet been
felt because tlieir curxencies' weakness relative to the dollar is causing consider~ble
inflation. Forecasts for the next 2 years, assuming that real oil prices remain
constant and raw material prices are weak, show a slow, gradual drop from an average
inflation rate of 12 percent in 1980 to about 8 percent in 1982, or slightly higher
than the average for 1976-79.
However, these policies have had much more marked effects on production. Forecasts
are that the industrialized countries' PIL [Gross Domestic Product] will be stagnant
or in mild recovery in the next 18 months. The low growth rates in 1981 and 1982
show widespread economic stagnation in the industrialized countries, although great
uncertainty prevails in the short term concerning the U.S. economy pending approval
of President Reagan's tax policy proposals.
In conclusion, then, the industrialized countries' balance of payments should improve
in 1981, still assuming that r.eal oil prices remain constant. The deficit in the
exchange of goods and services should be significantly reduced in most industrialized
countries, and their deficit seems likely to be financed as easily as in 1980.
Another element in the international situation is the European countries' losing
shares in the export market in 1980 to the United States and Japan. Assuming that
the U.S. share is reduced proportional to demand, the European countries, including
- Italy, may regain at least a part of the market, but it is less realistic to assume
that the Japanese share of the market will be reduced. Protectionist measures can
probably be conceived that would bring some stability back to the market. Jn any
case, Italy should have two objectives: to return to its 1978-79 export market share
and improve the non-oi.l accounts in its balance of payments.
The Present Situation in Italy
The last months of 198Q seem to have been marked by a recovery in production largely
attributable to domestic demand. Indeed, a detailed examination of its components
shows that investment is taking place at a hitherto unequalled rate and that savings
are being accumulated in various sectors of the economy relative to not only consumer
goods but also intermediate goods. Private consumption has not shown any particular
shift, and that has contributed to a certain extent to the expansionist nature of
budget policy.
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While domestic consumption has grown, Italy's export markets appear to be in quite
a different position, and this should also be considered. The sharp drop noted in
the past year seems to have been c3used by both weakness in world demand and a slump
in competit~veness.
The few figures available concerning demand in the early months of 1981 lead us
to believe that spending for investment goods is being maintained, particularly
for plant and machinery. Construction also seems to be showing some signs of life
yet because of demand for construction materials in that sector.
Private consumption remains stuck at levels reached at the end of 1980, although
the demand for durable goods is beginning to show signs of weakening.
Economic Policy
Between October i980 and March 1981, the state budget deficit virtually exploded.
- Some forecasts show an overall deficit of 14 trillion lire between �Tanuary and April
1981. Part of this deficit increase is attributable to the long delay in publishing
the final version of the state budget for 1980; it came out in October 1980. It is
also attributable to the new rule requiring transfer payments be made at the begin-
_ ning of each trimester to the regions and local government entities. But there are
no serious reasons to think that the situation will change spontaneously in the
second half of this year. All this has affected the economy by sustaining domestic
= a~~pana znd by creating new financing that has made i~t harder to control liquidity.
- Monetlry policy, however, has basically come back to the route taken in 1973,
thanks to measures taken between the end of last year and the beginning of this
year, as concerns bank credit controls, All the various components of bank capital
are now controlled; ho2dings and placements in both lire and gold are verified
- monthly. This now requires a different approach t~ controlling the money and credit
sup~ly. Also, monetary authorities have tried to anticipate expectations in recent
months by announcing provisions that would have gone into effect only later. This
is the case with the renewal of credit limitations announced in June 1980 and applied
in September. This monetary policy message could have been,beneficial to controlling
credit had it not been often contradicted by other government pronouncements, which
sapped its creclibility in the eyes of economic managers.
That is how the last two measures were arrived at early in 1981, namely the increase
of 2 1/2 poiTits in the discount rate and the increase in the mandatory reserve caef-
fic:ient, which accompanied the revision of the lira's parity relative to the F1'-~S
~i;uropean Monetary System]. Tight money was thus maintained by a policy of high
r:ites, wtlich the banking sector will probably respond to by a high rate of disinter-
mediatian of its bank deposits, already begun last year, and by reducing bank pur-
chases of public bonds. This reduction in bond holdings also appears to be a first
step toward the divorce between the Bank of Italy and the treasury in public debt
man~lgement policy, which has been announced by various sources.
~
Uutlook
The situation that has been sketched out is characterized by a depressed international
economy, a slowdown in domestic activity and high rates of price increases, The out-
look is hard for society to accept: no or very restricted growth in incomes in the
next 2 years and do;iestic der>>and stagnant at very low levels. Inflation seems doomed
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to stay at high levels. Monetary and credit policy, like tax policy, seems
intended to be more restrictive in 1981, presumably to rzstr~.~c� domestic demand
relative to foreign demand and thus avoid excessive weakening of exchange rates.
- In this context it should be remembered that brokers are still hoping for a cor-
rection in the exchange rate, whicr has always happened in the past, and that '
the policy of ever higher interest rdzs~ is seen in that light.
The Treasury-Bank cf Italy Divorce
One of the most important points touched on in the discussion was an evaluation of
the so-called divorce between the treasury and the Bank of Italy in managing the
public debt. Tt has been annour~ced several times by central monetary authorities,
but it is not yet clear how and when it will take place. It is very clear though
- that this divorce does not mean that the Bank of Italy will cease to absorb bonds
not bought on the open market. It means only an an improvement in the instruments
for reaching greater stability in creating the monetary base, which has been made
difficult by the treasury's erratic deficit in the course of the year,
The first hypothesis possible on carrying out the divorce seems to be an action
- nlanned by the Bank uf Italy, which decides and checks monthly on how much ta put
into the market, whether for the general reauirements of the economy or for budget
deficit needs. The Bank of Italy can thus avoid a heavy deficit build-up in any
single month. At the same time, provisions for increasing public expenditures
would have more visible effect on the market; these effPcts are not always clear
to those who decide or vote on them. This has the obvious re~~ult of increasing
the variability of treasury note rates. An attempt to attenuate this effect would
have to involve increasing the various bond matu~�ity rates, especially to less than
3 months, in order to meet unexpected expenses. 'Ihey could even be issued at 15-day
_ intervals. Deficits could also be covered temporarily by using public entities'
bank deposits, which come to about 20 trillion lire (the finance law recently passed
already provides that these funds return to the treasury at the rate of 5 trillion
lire in 3 years).
Some confusion arises, however, when it comes to evaluating this series of proposals
when one considers the specialization of the Italian money market. The increased
variability of treasury bill rates might discourage some of the newer money brokers
who have begun only recently to invest directly in the market, and, in addition,
the persistent high rate of inflation might halt completely the consolidation of
longer-term bond debt. Gven though there are plans to issue inflation-indexed
long-term bonds, it is not yet clear how this might take place or how this indexa-
tion might be applied. The terms of the divorce will therefore have to be arrived
at very gradually and painfully to give brokers the time to adjust to the new
situation.
- It is also important to note that carrying ouz this project would involve a change
in the policy that the Bank of Italy has been following. Indeed, it would mean
giving priority to control of the money supply over total domestic credit and
interest rate stability. Too many factors have caused failure in the various pro-
visions for liquidity supply and maximum bank credit; now these controls are being
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ruK urr~c:~A~ utiE UNLY
extended to credit in both lire and foreign currencies, which prevents any compe-
tition between credit agencies and makes the bank credit market increasingly rigid.
Budget Policy
Another point that has caused talk among all policicians and economists in recent
weeks is settling 1981 government budget policy. Government and parliament have
- been discussing for weeks on end new spending decisions to be inserted in the budget
and budget modifications, but they have not� succeeded in evaluating the effects in
terms of increased budget deficits and the lack of incame to cover these deficits.
That is why it has become necessary to set as a first article of the budget rather
than as a last article as is now done the maximum limits on borrowing from the money
market, which may not necessarily coincide with the deficit forecast, and afterwards
deciding on budget policy and the margins available for further parliamentary action.
In additian, the recent parliamentary debate on putting wage indexation on a quar- .
terly basis for pensioners has brought out the necessity for activating the law 468
rule, which has never been applied t~ standing current expenses, such as the l~test
provisions concernitig pensions and also the reduction in family allocations and put-
ting wage indexation on a trimesterly basis for civil servants, as voted last year.
This rule requires that every major standing expense be allocated a specific income
source to cover the major part of the expense. Only the rigorous and decisive appli-
cation of these two instruments can keep the budgzt upset that happened this year
from repeating itself in years to come.
Before entering into a real discussion of government budget and tax policy propo~als,
it is necessary to evaluate what it special about the present public budget situation,
iii light of the experience of the 1970's. In the past de.--a~, two opposing tendencies
came together: the centralization of tax collections thr~u, cax law reform and the
simultaneous decentralization of expenditures through tt~~_ dtion and establishment
of regional institutions.
This is now causing gigantic problems in controlling outlays to peripheral entities,
whose financial situation is not well known, especially because of deficiencies in
the information and accounting structures i.n public finance ministries. Some tax
collecting decentralization might theoretically be allowed, though more on a regional
th~n communal basis, with the regions' having autonomous decision-making powers in
large sectors of public expenditures such as health. The government could then
reduce the rate of growth provided for in transfer payments to these territorial
units by guaranteeing a certain level of service to be granted the community but
leavin~ it up to the re~io~is to improve the service by increasing their own local
taxes.
~~i lllLt l~il control on the rate of publ ic expendiiures would thus be created at the
territori.~il level, especially because increased local taxation would be carried out
under very tiaatchful eyes and, at the same time, the local governments would stop
puttiilg constant pressure on the central administration to get more funding with
no possibility of controls, with the result that the money often wound up deposited
in banks.
i~iany other proposals have been advanced for rationalizing public spending; among
- them are a policy law on public employment and the spacing of tax payments through-
_ out t11e year to reduce large budget deficit oscillations. But attention has been
~ fixed largely on the present economic situation and on discussions of spending cuts.
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It is not yet clear whether the government wants to restrict demand, which would
call for large cuts in current expenses, or whether the preblem is essentially a
monetary one, that is, whether the deficit will have to be reduced to limit economic
- liquidity. In the latter case, cuts would have to be made in grants from the state
to outlying governmental units.
_ It is no simple matter, then, to give a definite, unequivocal opinion on the present
state of budget policy. All that is sure is that it is now urgent to respand to
two necessities. The first is to lay the groundwork for structural measures that
will have long-term effects in concert with steps that have already been taken to
organize and control public spending. The other necessity is more immediate: to
use budget policy as an instrument of short-term economic policy; however, it seems
to be the more difficult solution, because, as we have pointed out, there is no
room for any of the major voices for spending to be consistently provided for;
making small cuts here and there is certainly not adequate at serious moments
like the present, and it also involves the risk of worsening the c{uality of health
care service.
Something else that has to be gotten rid of is the continual announcements from
the government of ineasures that are possible but never get enacted. Experience
has shown that this behavior only feeds inflationary psychology among financiers,
with all the consequences tha~ flow from it.
Inflation
One of the major problems that has beset the Italian economic system for years is
- the continued high rate of inflation. Forecasts for 1981 show no improvement (up
19.5 percent) and, considering the increases noted in the first months of the year,
the forecasts may be considered optimistic. The situation does not seem likely to
improve any in coming years. Even supposing that oil price increases are moderate,
the rate of inflation in 1982 should be near that of 1981 for purposes of contract
renewal negotiations. Various positions have emerged in the course of discussions
concerning factors that have fueled inflation in recent months, and various proposals
have been set forth to block a new rise in inflation. In any case, there is agree-
ment on adopting urgent measures to reduce price increases drastically and quickly,
because gradualism is rapidly ~oing bankrupt. It appears necessary, then, to achieve
a truce period in which businesses will pledge to restrain their pricing poli-
- cies and a temporary revision of wage indexation can be made so that structural
changes can be accomplished once the present situation is dealt with.
Examining the various hypotheses shows three causes of inflation (which probably
interact with one another): costs, demand and expectations. If we suppose that
- the main cause is excessive increases in production costs, economic policy should
be aimed at containing them tightly by acting mainly on indexation mechanisms.
If the rate of price increases is reduced at the same time, no real income should
be lost, and the improved competitiveness thus obtained would help exports recover.
- Assuming there is no immediate reduction in the rate of inflation, measures should
be introduced that would contain domestic demand and prevent profiteering. On the
other hand, there will be choice of two directions to follow if it is thought that
the causes of inflation may lead to a high level of demand (and therefore implicitly
to a growth in profits). On one hand, a more restrictive monetary policy would
be activated; on the other, tax policy would have to be harshened by increasing �
direct taxes. In fact, the opinion shared by a majority of the participants is
- that there should be no increase in indirect taxes in light of their effects on
prices, nor should there be an increase in feQS that is not supported by a well
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As regards expectations, particular reference is made to the effects that the
authorities' declarations have had in past montfi s. In this respect, it may be
emphasized that the continual revision;of rates.did have an inflationary effect
in 1980, which makes it ~vident that it is necessary to achieve a more credible
formulation of economic policy. It is felt that equalizations, while necessary,
should be set for a fixed term in order to create a climate c,f certainty to work in.
. One possible ~olution might be, assuming a truce between businesses during which
each would try to reduce pressure on prices, that the government would contribute
to it through a serious price policy on goods produced by units in the public sector
that participate in and affect wage indexation calculations. There could be a rate
policy that would realign rate levels upward initially then hold them steady for
a fixed term, thus avoiding episodes of confusion, as happened with the last tele-
- phone rate increase.
- There would be less rate pressure on wage indexation and, therefore, on the cost of
labor and especially cost containment in the public sector, which is now having all
its major current expenses indexed. Considering how large they have become, redu-
cing them might more than compensate for most of the payments necessary to limit
the deficits of various governmental units caused by temporary rate freezes.
_ Conclusions
The discussion of economic policy proposals brought out substantial unanimity among
the panelists on the priority and necessity of bringing inflation d~wn to levels
lower than present ones, more in line with those of other European countries.
"I'he danger in the present situation consists not only of the high rate of inflation
but also of the risk inherent in its instability, as well as the ri~k that it might
explode. Any domestic or international event that unleashed any price level, given
widespread, intense inflationary psychology, would be amplified in its ripple effects
and make it more difficult to control the lira's exchange rate.
However, differences of opinion appeared among the participants when it came to
stating whether direct intervention on production cost and pricing dynamics, par-
ticularly the cost of labor, should be accompanied by a more or less rigid limita-
tion of domestic demand. Limitation of domestic demand requires maintaining and
perhaps strengthening present restrictive policies, particularly credit policy.
Those supporting this line of action recal.l how, in the past (1964; 1974, 1976),
only clear and clecisive intervention by monetary authorities was able to reshape
significantly the inflationary process that was under way. However, those opposing
it say that the benefits were only transitory because experience has shown that
increased productivity follows increased production; and, since productive struc-
tures are essentially fixed, the slowdown in production is causing sharp labor cost
increases per unit product, which are bound to show up in price increases, although
the increases will be spaced out over successive periods of time.
Thus, if limiting domestic demand is to be effective, it will have to be relevant
and extended in time, with easily imaginable effects.
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Proposals along thz other line of economic policy hold that it is necessary
to intervene directly in setting costs and prices. It is therefore opportune
to see what might come of the unions' demonstrated willingness to negotiate with
Confindustria [General Confederation of Italian Industry] and the government over
wage and salary restraint. '
_ Any agreement should be accompanied by other measures. In the fi~~st place, there
should be a less active rate-setting policy; then, as concerns business, there
should be a revaluation of tax-exempt property (Visentini 2), and, finally, as
concerns the unions, a revision of IRPEF [family income tax] ra~es.
In this context, Mario Baldassarri put forth a proposal that makes Ezio Tarantelli's
plan more effective: put a conventional ceiling at points on the wage indexation
scale, but the points should be considered less taxes and company contributions
for both workers and businesses. Thus, two effects: (1) the workers' risk of
- losing real income would be lessened; (2) business would find it more convenient
not to break through the ceiling by raising prices, since in that case they would
have to pay Uoth in uninflated indexation points and all social costs.
The result is a notable reduction in costs through improving business competitiveness
and making the exchange rate more credible, with a consequent calming effect. The
, cost to the government of a 20-point untaxed ceiling is 2.6 trillion lire a year:
1,800 lire for 130 points (10 for the month in the middle of the year) for 12 million
workers. But a part of this cost would be saved by a drop in the interest on the
public debt and in government expenses.
In any case, the illusion would be avoided that an agreement on wage indexation
would mean an immediate and significant drop in inflation.
Recent cost increases have not yet been passed on in prices. It should not be
forgotten that the lira suffered a 35 percent devaluation relative to the dollar
in 7 months. However, even the modest results that may follow in a relatively
short period of time are very significant, because they would strengthen the slowing
of inflation and, especially, help defuse inflationary psychology and keep prices
down.
- ,COPYRIGI~iT: IL MONDO 1981
8782
CSO: 3104/283
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POLITICAL SPAIN
TEJERO INTERVIEWED IN PRISON BY FRG JOURNALTST
Hamburg STERN in German 27 May 81 pp 31^32
[Article by Erik M. Rickert: "Todaq We Need Men Like Hitler and Franco"] ~
[Text] "Impossible," say the Spanish colleagues: "Nobody can visit Te~ero.
Certainly not a foreigner." Three months after the attempted coup Antonio Te~ero
Molina, lieutenant coloael in the Guardia Civil and leader of the attack on parlia-
ment in Madrid, is still the topic of the day at Spanish bar counters. How does
one get to see an arrested military man, who is the Devil to some and a national
hero to others? The tip reads: "Cafe Roma." That is where, camouflaged under
the discreet charm of the bourgeoisie, the reactionary society of the capital city
meets: Aristocrats, retired military and clergy.
It is the hour of the aperitif. "Viva Te~ero," says a dyed blond laden with
jewelry, toasting me. "Baron ahem," I mumble, suggesting a baw and a clicking
of my heels. The barkeeper stares for several aeconds at my neat hair parting
on the right side and then says in German: "Heil Hitler." I wince and glance
= around the bar furtively. The luminaries of the society smile at me and raise
their glasses in encouragement.
- I must eat, drink and converse with Countess de Falco, with Lieutenant General
Ibanez, retired, and with the Very Reverend Don Rafael. And I must drink again
- and again: To Franco, to Hitler, to Te~ero.
His supporters, as the old general revealed to me with a wink of the eye, even
= charter jets and fly with family and friends to E1 Ferrol on the Atlantic coast,
where the new hero of the Right is detained in the fort of that city where Franco
was born. "Nonsense," the editor of the reactionary newspaper HERALDO had replied:
"The military authorities are slowly shutting that off. Now only his family and
closestfriends can go t~ visit Te~ero." Privately the editor says: "Come to the
Roma tomorrow night between midnight and one o'clock. I might be able to help you."
The next evening I put on something dark and formal and at the witching hour I am
standing at the Roma bar. Later the editor of the HERALBO appears and after the
second whiskey he engages me in a conversation about my family. It seems that one
of Hitler's generals had the same name.
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The entire time a man is standing within earshot of us, an erect man in his mid-
- fifties, dressed in a dark blue suit. Now and then he surveys me over the edge of
, his glass. Suddenly he writes something in his notebook, tears a page out, lays it
on the bar and goes. "An ex-general of the Spanish Legion," says the barkeep
reverentially. "An important man from the War Mini~try. Put the note in your
pocket."
The note reads: "Dear Antonioy the bearer is a German, who has come to Spain
especially to shake your hand. I do not know him person~lly, but you can trust
him. The signature is illegible. Quintar or somethin~ like that.
_ I fly to La Coruna, and from there I drive to E1 Ferrol. The fort Castillo de
la Palma is on military territory. The soldiers greet me amicably, feeling
flattered by every pilgrim to Te~ero.
All of a sud~en I am surrounded by uniforms and machine guns. Bodily search:
Minicameras and pocket recorders end up on the desk. I reach for the note in my
shirt pocke:. "This must go directly to Te~ero. Under orders from Genezal Quintar."
Five minutes later I am standing before the most controversial man in Spain.
Tejero's cell is a comfortably furnished office with a view of the sea. The
lieutenant colonel is wearing a freshly ironed uniform of the Guardia Civil and
is in the best of moods. He is drinking cognaG with two married couples of his
own age and he offers me a seat. Piled on a smoking table are mountains of mail,
including large-size congratulatory telegrams.
"So you are the German patriot?" He is on intimate terms with the "sympathizer."
"Yes, who would like to shake the hand of a Spanish patriot."
Tejero turns to his guests: "Look at th at: The first foreigner to visit Te3ero.
They are already coming from Germany to see me." Then to me: "Do you in Germany ~
consider the Right to be bad Germans?"
"It was different 40 years ago," I dodge, obviously touching his favority subject.
"That," says Te~ero, "is what we need today: Men like Hitler and Franco."
"Do you really believe that Hitler or Franco would have the same success today?"
Tejero leans forward and looks at me sternly: "Much more than people think, very
- much more. Except that everything that is witten about these men is a tendentious
smear campaign."
"Do many here think the way you do?
Tejero extends his arms, as if he wanted to take in all of Spain, or at least the
military garrison: "All," he says emphatically.
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This man believes every word that he says,honestly? courageously and fanatically:
a hero for the Right, but no leader. He needs at least one other whom he can obey.
Carefully I try to turn the conversati~n to the attempted coup of 23 February:
"What did you really feel when you stood next to the butcher of Para~u~llo~ de
Jarama with a pistol in your hand?" That is how the Spanish Right contemptuously
calls the communist leader Carillo.
- "Nothing," says Tejero, "I am no butcher, and I would never sink to the level of
- this person. I had another mission." Then he becomes taciturn.
"When," I risk further probing, "will it be time for Carillo?" It is the veiled
question concerning the next coup.
Te~ero's face darkens. Now he looks exactly as he did when I saw him in photographs
of the attempted coup. "Soon," says the lieutenant colonel, "and then I will be
released."
Before leaving I ask for his authograph, but I have no paper with me. He writes
his name in the margin of "ABC," that newspapar in which he published his ~ustifica~
_ tion. Two sentri es pick me up and take me to the gate. The fort, that much is
clear to me, is no prison, but a citadel of refuge and defiance for an important
strategist, who is being kept in reserve for his next assignment.
Tejero seems to be the only one in the fort who can do as he likes, who is un-
- conditionally obeyed. I wonder why Tejero does not simply get up and leave. No
one woul dare stop him.
COPYRIGHT: 1981 Gruner + Jahr AG & Co.
9746
CSO: 3103/327
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~
MILITARY ITALY
CONTRACT ON SALE OF WARSHIPS TO IRAQ SIGNED
Milan PANORAMA in Italian 1 Jun 81 pp 84-89
[Article by Alvaro Ranzoni: "And the Rest Is a Tip"]
[Text] The bribe amounts to 130 billion lire. The one who will put it in his
pocket is Michel Merhe3, the owner of the A1 Talal business firm whose main
offices are in Damascus, the capital of Syria. That is the com~ission, running
to approximaCely 5 percent, which two Italian staCe enterprises, the Cantieri
Navali Riuniti and Oto Melara, are prepared to pay for the contract to provide
naval vessels which has 3ust been concluded with the government of Iraq: 11 war-
ships, ammunition and the training of crews for a total of more than 2,700 billion
lire.
_ Bribes of from 4 to 15 percent are common practice in deals of this sort. Every-
body knows that it is difficult to conclude a contract to provide goods or services
in the Third World without paying influential intermediaries or corrnpt functionaries.
. In Saudi Arabia, the intervention of a middleman is absolutely required by law.
No one sells a pin unless he is presented at court or introduced to the appropriate
minister by an intermediary who is truateci by the Saudis and has a right to a
regular cotmnission.
Other countries, particularly in Black Africa, are more uninhibited. There it is
the family of the reigning sovereign or dictator whose palm must necessarily be
greased with substantial gifts or cash in currencies held in high esteem and paid
into banks in Switzerland or London.
- But there are countries and countries. Iraq is, or ought to be, different. An
authoritarian regime, inspired by Ba'athism--a puritanical and rigoroua Arab
socialism--should exclude cases of financial corruption on principle. And then
this contract with Iraly (4 guided-miesile frigates of the 2,400-ton Lupo class,
6~650-ton corvettes, 4 of which carry guided missiles and 2 carry helicopters,
plus an 8,700-ton supply ship) was desired by President Saddam Hussein personally
and requested of the Rome government by the government in Bagdad.
- Then why did bribes need to be paid? This time there is not even the question of
_ competition. In fact, the Italian shipa of this type are the best suiCed to the
needs of the Iraqi navy. Furthermore, in contrasC with what sometimes happens
with other Western or Eastern countries supplying the Third World with weapons,
the Iraqis do not need to fear that the Italians will postulate any political
stipulations.
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I~OR OI~1~1('IAi. IISF. ON1.Y
Now, if ever, Italy could have been involved in a political problem, since it had
tried, up to now, to remain neutral between Iraq and Iran, where the war which now
has been going on between them for more than 8 months is concerned. But this
contract was initiated in 1977, when no one w3s thinking of a war, and the ships
will not be delivered before 3 more years have passed, and it is hoped that the
wa. will be over by that time. In short, while it is easy to assert that Italy
is taking sides urith one of the combatants by supplying these ships, it is also
true that the Italian ships will not have any influence on the outcome of the
conflict.
Moreover, Italy traditionally also supplies Iran with armaments a~nd could conclude
similar contracts with the Khomeyni regime if Tehran were in a position to pay or
to provide oil, as Iraq, on the other hand, is continuing to do.
Thus it is that the people governing Italy, and particularly the minister of
foreign trade, Enrico Manca, and the minieter of state partic~pations, Gianni De
Michelis, both of whom are Socialists, warmly supported the contract, while the
minister of foreign affairs, Emilio Colombo, who is a Christian Democrat, had no
objections to offer.
This was a politically acceptable and economically convenient deal which was con-
cluded out in the open between two governments, the state war industry of one of
which is directly involved. So what need was there for private intermediaries?
- At least to the extent that we are not dealing urlth the usual thing of "bribes at
home"--that is, money which ends up, wholly or in part, not in the pockets of
personages with exotic names but in the very Italian coffers of parties or politi-
cal movements or in the pockets of generals or admirals! The latter participated
personally in the negotiations with the Iraqis, but they did so, they say, to
promote the Italian war industry and in that way to contribute indirectly to the
technological modernization of our fleet. Certainly not for the sake of bribes!
In the long history of the contract with Iraq, the chapter concerning bribes opened
up at once, in 1977, when the naval shipyards of Breda entruste.d Michel Merhej with
the promotional task of obtaining an order for corvettes from Bagdad. The antici-
pated compensation was 4 percent.
In that same year, the Cantieri Navali Riuniti also began to think of supplying
Iraq with frigates of the Lupo class, and they designated another mediaCor, a
man named Nadami S. Hauchi, who, it appears, was pointed out by the ENI [National
Hydrocarbons Agency] representative in Bagdad. The anticipated compensation was
also 4 percent.
But in October 1979, after the negotiating process had been integrated and the
_ responsibility had been entirely assumed by the Cantieri Navali Riuniti, the
mediator was only one man again--Merhej--who was supposed to take care of every-
thing: the 11 ships (3 percent in pa,yments to be made to the A1 Talal company
and 1 percent to Overseas Shoe of Monrovia, designated by Mr Merhej), log~stical
support (the office, a dry dock and spare parts) and the contract with Oto Melara
for the ammunition (of a value of $800 million).
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However, the other mediator, Mr Nadami, was not disappointed, and this is one of
- the more inexplicable chaptera in the history. Even though hia promotional contract
had expired on 31 December 1979, he obtained, in the aame way, a contractual compen-
_ sation of $23 million, $4 mtllion of which coere debited to Oto l~elara, to be paid to
a Luxembourg company, the Dowell Corporation, and all this without his having sold
even a rowboat or a cartridge.
At that time, there was another minister of foreign trade, Gaetano Stammati, who
did not raise any ob~ections when the details of the operation were recounted to
him at a meeting which took place on 15 February 1980 in the presence of high-
ranking functionaries from his ministry and the Ministry of Foreign Affairs, as
well as managers of the businesses concerned.
A new minister came into office and the contract with Iraq, including bribes,
became the responsibility of Stammati's successor, Enrico Manca, and it was the
- Socialist minister himself who informed his colleague, Emilio Colombo, on 9
February 1981, that, "to acquire this ~ob the businesses concerned had stated that
- they had had to avail themselves of the services of nonresident, foreign inter-
mediaries in return for 5.5 percent of the value of the ships and 3 percent of
the value of the ammunition."
On that same occasion, Manca mentioned to Colombo that, at an unofficial meeting
of ministers wlth Francesco Cossiga, who was the president of the Council of
State at that time, "we decided Chat we would not agree that commissions should
- be paid for the supplying of these ships and ammunition" (Editor's Note: This
was the day after the ENI-Saudi Arabian scandal, and nobody wanted to get involved
in anything having to do with bribes at thaC time). Manca adds: "Personally, I
would have been inclined to remain firm on that decision, but before deciding
anything definite in that regard I would have liked to have had the encouragement
of his concurring opinion, taking into account the delicate implicaCions which,
not only on the specific operation in question but also where future relations are
concerned, might bring about either denials or authorizations which were not sup-
ported by adequate consideration of the various interests involved."
Colombo pondered and replied: "This is a problem which has aspects that go beyond
the specific trade deals and are concerned with the behavior of our agents who
are called upon to compete with similar foreign practices. Therefore it seems
proper to me, even where these more general aspects are concerned, to go back to
- discussing them in our regular sessions." Not even Colombo is explicit. The
meaning which is derived from the correspondence between the two ministries is
dual in nature: 1) Cossiga's opposition is set aside, and 2) authorization is
granted under the responsibility of all the political components of the government.
As PANORAMEI understands it, the situation is as follows with regard to this
question: bribes have been approved. Whether or not they would be necessary to
bring the contract with Iraq to a successful conclusion remains to be seen. In
the next few days, the Iraqi minister of foreign affairs, Sadun Hammadi, will
arrive in Rome to ask for more armaments, among other things. It appears that he
will not be accompanied by any intermediaries. Will at least Mr Hatmnadi have
noticed that a mediator is not indispensabl.e, as seems to be the case as far as
we Italians are concerned?
COPYRIGHT: 1981 Arnoldo Mondadori Editore S.p.A. Milano
9258
CSO: 3104/291
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GENERAL FRANCE
'NEW INDUSTRY' SEEN BEING PUT IN ORBIT BY ARIANE
Paris PARADOXES in French Winter 80 No 42-43 pp 51-59
_ [Article by Jacqties Houbart)
- [Text] There is no mystery about the nature of the fiasco of
Ariane's second launch, on 23 May 19$0. An instability in the
high-frequency combustion, which lasted three-tenths of a second,
suddenly modified the characteristics of the in3ector in one of
the rocket's first-stage engines. That mishap destroyed the
engine, and then a fire that resulted in the destruction of the
~ launch vehicle 108 seconds after take-off.� This incident is
typical in a new precision industry in which people like the
space enginEers must try to reduce "tolerances" and chance to an
absolute minimum.
The failure of the fuel injection system in the combustion chamber of one of
- Ariane's engines was the result of slight variations in manufa~ture between the
otherwise identical parts. It must be empahsized that this variation affected
geometric characteristics the sensitivity of which had not been observed in the
course of numerous engine development tests (close to 200).
So it has been decided to alter the tolerances for the manufacture of the in3ectors--
this kir~d of component contains close to 1,000 in~ection openings and is supposed
to supply fuel at the rate of close to 250 kg per second--and to proceed to go over
them carefully on the engine test bench. This program alteration should make it
- possible to launch Ariane L03 under good technical conditions in the spring of 1981.
The correction of the defect thus serves to underline the role of mathematical cal-
culation and the assistance of the computer used by the specialists with SEP
[European Propellant Company], ONERA [National Office for Aerospace Studies and
- Research], SNIAS [National Indus~rial Aerospace Co or Aerospatiale) and CNES
[National Center for Space Studies]. An extensive and detailed task has been
carried to a successful conclusion, starting with the processing of the telemetric
data and the analysis of the damaged parts recovered from the sea as well as of the
data gathered on the engine test bench and through accoustical simulations.
This long labor of investigation and correlation resulted in the identification of
the aberrant readings from among some 30 groups of parameters monitored on each
injector.
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A Data Matrix
- Indeed, if the computer research has been successful, it is because since the
beginning, the development of the Ariane rocket was carried out within a veritable
data matrix. It must not be forgotten, in fact, that the agreement of 31 July 1979
= on the new European rocket program came after the faiiure of the Europa rocket
because of the lack of tight organization in the effort to fit together the often
incompatible elements of an international puzzle.
It was going to be different with Ariane. France took over close to two-thirds of
_ the program and assumed overall control of productior,. This oas tu make it possible
to do away with any ambiguity about responsibilities, and to impose strict manage-
ment methods bolstered by computerization. Uniform specifications, sector by
sector, were imposed on everyone, and the division of labor into its component
factors was handled with strictly defined boundaries.
Costs and deadlines were established for every contractor, and the principle of
progress reports was formalized. In a vast planning PERT [expansion unknown],
covering tens of thousands of events, every contractor had to put together at pre-
established deadlines the information necessary to coordinate the operations. The
planning administration was entrusted to the CNES project team, assisted by the
_ computer experts of Aerospatiale.
A New Generation
With Ariane, we have the appearance of a new generation of launch vehicles which owe
a great deal to the reliability of mathematical calculation. T~aenty years ago,
things were done step by step, and experimentation reigned supreme. There would
have been no question about launching a three-stage rocket right away in its almost
final version, as was the case in December 1979 for Ariane. But today we have power-
ful logical and material means--, from the experience of other vanguard industries,
such as the nuclear industry, which advanced the processes for structural calcula-
tions. A veritable wall has been crossed in the f ield of simulation.
Tl~e pogo effect, fQr example, linked to the variations in vibration with consumption
of propellants was discovered by computer analysis during the development of the
Diamond rocket, and a corrective device was developed for Ariane. Navigation simu-
lation, moreover, has been virtually perfected, and the mathematical model shows
literally everything. This was inconceivable 20 years ago.
Computerization of the program is all the more vital because it takes 4 years to
prepare a rocket. The launching of the rocket takes place before various modifi-
cations have been made (after experimentation), so one must gamble on the trust- �
worthiness of the computer results and "feedback."
Competition in Space
From the beginning, the space age was considered part of the rivalry between the
Russians and the Americans, who decided to avenge Sputnik. Today, the young Euro-
pean space industry must meet real commercial competition. Participants in the
Ariane program have not forgotten, for example, that several years ago the launch-
ing of the Franco-German satellite "Symphonie" was burdened by the Americans with
conditions that prohibited any possible commercialization.
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Despit~; the American lead in the space field, the present situation is rather good
for Ariane. In fact, the Americans have abandoned expendable launcher technology
in order to perfect a shuttle which has given them a great deal of anxiety in the
last 2 years. That decision resulted from their intention to resume--like the
Russians, and perhaps for military reasons--the manned flights that were abandoned
after the last Apollo mi~sions.
"This is not the ambition of the Europeans," we were told by Jean-Claude Bouillot,
head of the Future Projects division of CNES. "At least not in this decade. The
European launch vehicle has been optimized for applications, and particularly for
those that will involve the placing of satellites in geostationary orbits. With its
improved versions, No 3 and No 4, the European launch vehicle will soon be able to
substantially reduce the cost per kilogram in orbit."
The Ma.rket and the Cost
The world market for launchings is beginning to be discernible, at least for the
next few years: prospects include both the needs of various developing countries
(telecommunications, television) that for cost reasons prefer space equipment to
building a land-based network from scratch, and the needs of industrial countries,
which are not content merely to in?prove the performance of their present equipment
but are making new demands (telematics, meteorology, land rem~te sensing).
With respect to the creation of factories in space (for making certain substances
or electronic components in vacuum conditions, for example), it is possible that
progress in automation will not be sufficient, and that we will have to resort to
manned flights. CNES researchers are also working on that contingency. But com-
petition is not just awaiting us on that far-off battlement: it is also in the
price per launch offered by Ariane and the American shuttle.
' Now "the most curious aspect of this competition," Jean-Claude Bouillot stresses,
"is that no one knows what the price will actually be, neither the customers nor
the supplier. Certainly, NASA announced the rates it will charge during the first
3 years, but those are highly promotional and will be applicable--given the in-
creased pace of flights--only to a small number of customers, most of whom are de-
pendent on the U.S. administration. For subsequent flights, NASA has let it be
known that it would adjust the price based on the results of the first 3 years,
and we can only guess. The world satellite telecommunications organization INTELSAT
estimates that the rates will be at least 50 percent above the announced prices.
With respect to Ariane, it is easier to establish the net cost, but the sale price
should also take into account fixed costs and the market situation."
We are presently reaching the limits of chemical propulsion, and it is illusory to
imagine that we are going to make space flights ~ust like airplane flights.
Initially, NASA planned 60 shuttle missions per year, but it is possible to conclude
that the system can only become profitable at a rate of 150-200 flights per year,
which is too many.
One thing is sure, which is that in the medium term the shuttle is not going to
make conventional launch vehicles obsolete, just as the turbo~et did not eliminate
the propeller.
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absolut~ Reliabflity
There is no way to provide maintenance for a rocket or a satellite. So the chances
of a breakdown must be reduced as much as possible, and must be guaranteed. Thus,
the space industry requires the industries concerned to submit to a severe disci-
pline that obliges the engineers to surpass themselves. For the participants in a
project like Ariane, it is probably above all a question of prestige: indeed, it
is les^ a question of a calling card than of participating in a vast "qualification"
effort. As Mr Haten, head of the Space Division at Souriau's told us, "an Ariane
rocket represents only about one-four-thousandth of our turnover, but fior a manu-
facturer of connectors, it is vital to participate in a program where connectors
are equally vital."
- Souriau has undertaken major research in the creation of materials intended for
_ contracts, and insulators--the two main elements determining the quality of a con-
necting device. Constraints of precision in the industry are such that "in the
Space Division of the enterprise there are as many personnel involved in monitoring
and testing connection systems as personnel involved in manufacturing per se. One
might therefore say that quality control is a part of the product the customer is
buying. Moreover," Mr Haten adds, "in order to satisfy its own need for quality
control, Souriau has developed various pieces of service equipment that can be
furnished to customers. Then they too will have means of verification similar to
those of the maker. Contir.uity of monitoring methods is certainly not a negligable ~
factor in the maintenance of a product's quality right up to~the time it is put in
service."
Lacework
When heavy industry works with lace, nothing should be left to chance. In the
Ariane program, Air Liquide, for example did not content itself just to remain a
maker and distributor of industrial gases; that enterprise got to work researching,
developing, and producing (at Sassenage) the metallic structures of the cryogenic
third stage of the rocket, a structure basically composed of twin reservoirs of
liquid hydrogen and liquid oxygen.
It is a fairly hefty stage--height 8.5 meters and diameter 2.6--representing a
mass greater than one ton for more than 8 tons of propellants. All of these
structures support a uniformly distributed thrust of 50 tons, which is needed to
put the satellite in orbit. Now the thickness of the reservoir must be no greater
than 1.5 mm! That is to say that very sophisticated tests of the construction
materials had to be carried out, and the technology�of thermal insulation for the
reservoirs, which successfully withstood the diff icult conditions of the launch,
had to be developed to an advanced level. Air Liquide has also manufactured con-
tainers destined for the transport of liquid hydrogen at a temperature of -253 C
from France to the launching site in Guyana. These cryogenic containers are volum-
inous (40,000 liters) and notable for the quality of th~ir thermal insulation.
This reduces evaporation losses to a minimum, despite unfavorable atmospheric
- conditions. The containers were taken by road from the Air Liquide factory at
Fr.ais Marais to Havre, then via ship "over the bridge" and by road from Cayenne to
the Kourou launching site.
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The ATHENA Policy
A space program like Ariane does not operate all by itself in the ghetto of vanguard
- activities. Directly or indirectly it plays a dynamic role throughout industry.
Aware of the dimensions of such an impact, Aerospatiale is carrying out a policy of
market exploitation which it has adorned with an acronym--"ATHENA"--which stands for
"applications of outer space technology for new buyers."
As a part of this policy, various kinetic wheels have been developed (on magnetic
_ landings for the accumulation of energy) and a photovoltaic program (conversion
of solar energy of electricity). But these side-e~fects of rocket research illus-
trate quite clearly the evolution of the precision industry toward ever more inte-
grated computerization.
The appearance of new technologies in rapidly-changing industries poses the question
, of safety in a more forceful way. Now the results of the~studies made on the safety
of ballistic engine systeins can be applied in various sectors of activity, as des-
cribed by Didier G. Compard (Aerospatiale Corp.-Les Mureaux) last April in Strasbourg
in the colloquium on "Economic Effects of Space Technology."
"The development of the concept of the "overall failure profile," lie said, led
Aerospatiale to develop two pieces of computer sof tware. One of them carries out a
qualitative analysis of a failure profile. It supplies a list of combinations of
events that would be sufficient to cause an accident ("minimal cut sets") and a table
of frequencies of the events (a priori, the most significant events). The other
- carries out a quantitative analysis of a failure profile. It calculates the pro-
bability of occurrence of all "minimal cut sets" and "feared events."
For Any Contingency
- Whatever may be the feared event--explosion, pollution, radiation, fire--a specially
adapted saf ety program can he designed and implemented. Fields as varied as chemis-
try, off-shore oil, specialized medical equipment, or transport could resort to this
methodology and use the existing software. As for Aerospatiale's considerable test-
ing capabilities, they are also available for industrials that want to verify or
prove the eff icacy of their safety systems.
Aerospatiale's expertise in the field of operational monitoring of launch vehicles,
which makes possible a real-time verification of hundreds of parameters, has also
had an unexpected side-effect: development of the medical monitoring systems called
- SYSCOMORAM, carried out by doctors with the help of DGRST [General Delegation for
Scientific and Technical Re~earch]. These systems make it possible to perform,
practically in real-time, specialized examinations (hemodynamic, respiration mechan-
- ics neurology). More than a dozen systems of this nature have been sold in France.
SYSCOMORAM, according to doctozs who use it, has meant an incontestable leap forward
� tn functional exploration. When one has such instruments, it would truly have been
disappointing if the failure of the second Ariane launching could not have been
e~cp lained .
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Ariane: Dangerous Frequencies
The nature of the ~ailure of the second test f~ight of the Ariane rocket has been
- clearly established, thanks to a laborious scrutiny of telemetric data and a series
of tests carried out at Vernon on the firing ground of the SEP. We must abandon the
idea of any external cause: it was an intrinsic problem in the engine. In effect,
it turned out that some specimens of the'propellant injection devices in the combus-
tion chamber did not have a sufficient margin of stability. So a phenomenon of
rapid oscillation of the combustion pressure in the chamber occurred.
This phenomenon, called "high-frequency combustion instability," has been encountered
in most liquid-propellant rocket engine programs, including "Diamond," the F-1 of the
U.S. "Saturn" rocket, and an engine on the lunar LEM. It was therefore decided to
perfect some modified injectors, and much more stringent criteria for acceptance or
rejection, associated with a sequence of acceptance launching, has been perfected.
Ttie launching of the L-03 may take place in the second half of June, under these
conditions. This delay will not cause any slippage in the operational launchings
already scheduled.
The Four Benefits
During the Apri1 colloquium in Strasbourg, a study which had been ordered by the
European Space Agency [ESA] from BETI (the bureau of theoretical and applied econo-
mics) a~ Louis Pasteur University. Limited to an examination of the impact ESA
contracts between 1966 and 1977--which amounted to $1 billion--have had on the
companies involved, the BETI stud;- showed the four categories of economic benefits
derived from space contracts:
1) technological benefit, which includes the creation of new products and diversi-
fication into new sectors;
2) commercial benefits, which imply growing penetration of markets;
3) the "organization and methods" category, which concerns the internal operations
of the contractor and takes into account new discoveries, the introduction of new
management techniques leading to better productivity in the enterprise; and finally
4) the "labor factor," which expresses the value resulting from creation and under-
writing of highly qualified design and production teams accustomed to working well
together.
After st�dying the condition of a~ sample of 77 enterprises that had received 81
percent of the contracts, af ter evaluating the benefits that could be quantified
- and extrapolating to all contractors, the authors of the study indicate that $1
billion in contracts produced more than $2.7 billion in benefits, leading to a
ratio of 2.7 between benefits and contract size. This already considerable result
is clearly too conservative, as the authors willingly admit. They only considered,
in effect, benefits on which a monetary value could be placed, and no calculation
was attempted of the totality of salutary effects of space contracts on other in-
- dustrl.es and throughout the entire body of society.
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The BETI researchers announce--perhaps a little naively--that these gigantic ~nd
not yet quantified effects "will be the subject of another study." The full impact
of the development of Ariane, of Spacelab, and of the various scientific or applied
satellites, will doubtless elude the telescopes of the team of economists, no
matter how powerful the instruments they use. This space mutation, ~ust like the
changes in computerization and nuclear development, marks the beginning of a new
industrial galaxy in Europe.
COPYRIGHT: 1981 Compagnie Europeene d'Editions et Publications Periodiques, 120
Champs Elysees, 75008 Paris
9516
CSO: 3100/784
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GENERAI, ITALY
LOMBARDY REGION'S FIGHT AGAINST RABIES
Dog Owners' Cooperation Paor
P�1ilan CORRIERE DELLA SERA in Italian 30 May 81 p 29
[Article by Maia Beltrame]
[Text] A few days ago in the province of Cuneo a man was infected by a fox that
_ had rabies. The case raised anew the problem of the spread of the epidemic that
for some years has been affecting the northeastern regions of Italy. It seems,
liowever, tllat the Cuneo case is not to be associated with this phenomenon of in-
filtration from the east, but is due to a penetration from Haute Sa~oie.
- The alarm has shown once more the difficulty encountered in combatting the phe-
nomenon of rabies in wilcl animals. Although the fox is one of the animals most
responsible for the spref~d of rabies, not everybody is in accord with the drastic
procedure of extermination of this carnivore. In Bulgaria in 1963 about a mil-
lion foxes were killed without a positive result, because the individuals that
escaped the slaughter reproduced faster, precisely because of the great availa-
bility of territory due to the extermination.
- Tile fox, an omnivore of the family Canidae, concentrates its activity in the
riocturnal hours and ranges over a more or less large area depending on the density
of population in relation to the availability of food in a given zone. Being a
territorial animal (i.e., one that defends its den and the surrounding territory
- up to a dozen square kilometers), it bars the entry of other, outside foxes that
may be affected with rabies, thus limiting the advance of the epidemic.
In Italy, too, in spite of the elimination of innumerable animals every year, it
can be stated that the number of foxes remains stationary and that rabies con-
tinues to advance, as shown by the cases in the Valtellina.
"Thc only positive system," says Dr G.L. Redaelli, of the Institute of Infectious
Uiseases of the University of Milan, "is that of vaccinating the greater number
of animals, especially dogs, cats, and grazing animals, and proceeding if neces-
sary to kill some foxes in case of real overpopulation. The proposals to give a
bounty to hunters who participate in this campaign are absurd."
This does seem to be the best solution, since the experiments with oral vaccine
carried out in Switzerland, Germany, and Austria have turned out thus far to be
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" of doubtful efficacy. To have the effect of immunizing the animal, the vial
containing the vaccine must scratch the palate and penetrate into the animal's
blood. Besides there being no guarantee of this, it seems that the~foxes
demonstrate their famous cunning; they do not allow themselves to be attracted
by morsels prepared by man.
The course of vaccinating domestic animals and cattle thus see.ns to be one of
the most suitable tools for blocking the advance of rabies. The Lombardy region
has acted in this direction and has established the requirement of vaccination
~ of all dogs, and similar action wi.ll be taken by Piedmont and Liguria.
In the commune of Milan, according to approximate figures gathered thus far, only
5,000 dogs of the 40,000 on record have been immunized. It is hoped that by the
end of June, the date which has been set but will probably be extended, the fig-
ures will be more encouraging; to that end the commune is inviting all dog owners
to take their animals to centers designated for the purpose for vaccination. The
vaccination, done by veterinarians mppointed by the commune, is free.
Vaccines are on the market which are variously prepared. The most effective,
which lasts for 2 years, is the Lepp vaccine; the HEP and HERA vaccines are
milder and must be renewed from year to year. The first mentioned, which is
generally used by the commune veterinarians, generally oauses some reactions (re-
fusal of food), which in the majority of cases are limited to a couple of days.
Rabies Spread Into Italy
Milan CORRIERE DELLA SERA in Italian 30 May 81 p 29
[Article by Giorgio Gagliardi, director of the Zooprophylactic Institute of
Venezia and Padua]
[Text] Rabies in wild animals, as is well known, has invaded the entire north-
eastern and central parts of Europe and is spreading only by passing from fox to
fox, although ir attarkc other animals in its path, both domestic ~~nd wild.
_ This rabies in wild animals, which appeared in Italy in 1977 in Val Aurina, has
invaded nearly a fourth of the province of Bolzano. In 1978 the infection
spread from Bolzano to the province of Belluno, invading the Valle dell' Ansiei
and, across the Italo-Austrian border, to the province of Udine. Bolzano and
Bellu~io have organized a very active campaign to reduce the numbers of foxes,
witti tlic capture of onc animal for approximately every 4 square kilometers
tl~rougl~out the province and almost twice that intensity of capture in the zones
most threatened. The reult has been very encouraging, since rabies disappeared
in 1979. This is the only case of total elimination of rabies in the wooded
territories of all Curope. In the province of Udine the campaign was much less
intensive, attaining only 1/S to 1/10 the level of capture of the other two
provinces. Cansequently, rabies has contined its advance toward the south,
reachiiig the vicinity af Gemona.
Toward the end of last year rabies of Austrian origin launched a large-scale at-
tack across Resia Pass, invading the Val Venosta very rapidly, and later, via
the Stelvio Pass, going down into Lombardy to Sondalo and Tirano. in this zone
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The Battle Year by Year
Wild Animals Wild Animals
Captured With Rabies
~ 19~8: Province of Bolzano 1,842 209
" " Belluno 1,286 26
" " Udine 240 15
1979: Province of Bolzano 1,136 10
" " Belluno 687 14
" " ildine 443 55
1980: Province of Bolzano 1,153 3
" " Belluno 625 _
" " Udine 235 9
a great density of foxes has been observed, so that a rapid spread of the infec-
tion is to be expected unless an intensive campaign is launched against these
animals. Passing from the Val Venosta into northeastern Lombardy, rabies has
reached Stelvio Park, which from now on may be considered contaminated. At this
point the question arises what will happen to this animal refuge under the threat
of rabies, which, as is well known, attacks all the oth~r wild animals through
tlie foxes.

_ The presence of rabies in Val Venosta does not cause much concern, because the
province of Bolzano has shown itself able to control rabies infection very well.
Lombardy, too, however, reacted immediately by programming all the safety mea-
sures, which run from intensifying fox hunting to vaccinating all dogs and all
domestic animals in contaminated zones, and has launched an effective publicity
campaign.
COPYRIGHT: 1981 Editoriale del "Corriere della Sera" s.a.s.
5588
CSO: 5400/2141 END
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