JPRS ID: 10352 WEST EUROPE REPORT

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000500030061-6
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• Original Classification: U
• Document Page Count: 56
• Document Creation Date: November 1, 2016
• Sequence Number: 61
• Content Type: REPORTS

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JPRS L/ 10352
2~ February 1982
W est E u ro e R e o rt
, p p
cFOUO 12is2~
- FBIS FOREICN BROADCAS�r INFORMATION SER~OICc
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JPRS L/10352
25 ~'ebruary 1982
~
~JEST EUROPE REPORT
_ (FOUO 12/82)
_ CONTENTS
THEATER FORCES
FRANCE
Second IRBM Sq_ lron To Be Qperational in La`e 1982
(Jean de Galard; AIR ET COSMOS, 31 Oct 81 1
~
~
ENERGY ECONOMICS
I TALY
. Plan Envis ions Mino r Ro le fo r Geo the rmal Energy
(Lanfranco Vaccari; EUROPEO, 28 Dec 81) 3
ECONOI~C
FRANCE
- CGC Hardens Stance Toward Soc~alist Policies, Auroux Plan
(Ya.zn. C1erc, ~Iean-Francois Gautier; VALEURS ACTUELLES,
4-10 Jan 82) 7
Tax Policy To Affect Savings, Gold Purchase, '~..:~eritance
(A.gnes Rebattet; L'EXPRESS, 14 3an 82) 10
ITALY
Effects of Labor Costs on Industrial Sector
(Antonio Ramenghi; IL MON D0, 15 Jan 82) 14
- a - [III - WE - 150 FOUO]
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Opinione on Devaluat ~n of Lira
(Giorgio La r~,,lfa Tnterview; IL I~NDO, 15 Jan 82) . . . . . . . . . . 18
POLI1'ICAL
ITALY
. Makno Poll Analyzes Socialist Voting Trendi~
(Mario Abis, Antonio Pilati; MONDOPERAIO, Dec 81)........,.. 30
PLI's Zanane Views Prospects for Lay Parties
(Valerio ZanonP Interview; IL MONDO, 15 Jan 82).........~.. 41
SPAIN
Polls Indicate PSOE Ta Gain Absolute Majority in Andalucia
(Juan cie Dioa Mellado; CAMBIO 16, 18 Jan 82) 48
I~iberal Preas Applauds Top Military Shifta
(CAMBIO 16, 25 Jan 82) 50
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THEATER FORCES FRANCE
SECOND I:tBM SQUADRON TO BE OPERATIONAL IN LATE 1982
Paris AIR ET COSMOS in French 31 Oct 81 pp ~6-27
~Article by JPan de Galard: "lst GMS: 2nd Launching Unit Operational By Year-End
1982"~
CText~ For his first Air Force visit, Defense Minister Charles Hernu chose the
two nearby bases at OrangP and Apt. Present were a dual delegation of inembers of
Parliament--members of the National Defense and Armed Forces Committee of the
National Assembly (among them, its president, Mr Louis Darinot) and members of
~ the Foreigr Affairs and Defense Committee of the Senate (among them, its president
Mr Repiquet)--and numzrous elected local officials and regional notables, as well
as ~he prefect of the de~artment of Vaucluse.
On Tuesday 27 October, the minister had paid a vis~t during the m~rning hours to
Air Base 115, which is commanded by Colonel Richalet and which houses an ai.r
defense unit--the 5th Fighter Winq commanded by Lieutenant Colonel Gachelin--ar~d
an FAS ~Strategic Air Force~ un:.t--the Cevennes 3/91 Squadron.
At Orange, the minister was greeted by Air Force Gen Guy Fleu*_-y, the Air Force
chief of staff, who was flanked by Air Force Lt Gens Llie Humbert, commander of
the FAS, and Bernard Capillon, commanc?er of Air Defense, and by Air Force Maj Gen
Jean Bonnet, commander of the 4th Air Region.
The minister witnessed two sequences of takeoffs on alert involvinr three Mirage
F-1C's in one of the exercises and one Mirage IV A two-seater in the other.
He spent a good deal of time with the noncommissioned officers of the base, whose
president, Adjutant Jacquin, laid before him their most urgent problems and press-
ing concerns, namely, the proposed prohibition against holding civilian jobs
on the side and the accrual of retirement benefits.
The minister dwelt on the characteristics that distinguish the Air Force: Rapid-
� ity, technical proficiency, operational flexibility, youth of its officers,
permanent readiness. Concerning the first and last of these points, he disclosed
that, with the approval of the president of the Republic, he had instructed the
chiefs of the Armed Services to reduce still further, if possible, the response
times following the sound_.~ of an alert. He also disclosed that since June he
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rvn vrr~~.~ni, a~Je. ~ll1VLY
~ and the president of the Republic had visited the FAS and CAFDA CAir Defense
Forces Air Command1 CP's ~ command posts~ at Taverny to experience at first hand
a nuclear alert exercise called unexpectedly by the chief of staff of the Armed
Forces. On another subject, he announced that he plans to add to the 1982 defense
~ budget for discussion by Parliameni~ some 10 measures, to the 20-odd he had sub-
mitted at the time h~ released his draft budge*_ to the press, beneficial to
draftees.
In the afternoon, the minister visited the base at Apt, which houses the lst GMS
~Strategic Missile Group~, who are responsible for the launching of the missiles
deployed in the underground silos on the Albion pl.ateau. General de Buretel de
- Chassey, commander of the lst GMS, outlined for him the program to modernize its
second missile-launching unit (nine missiles) which is to become operational
again, equipped with S 3 missiles, by the end of 1982.
- The SSBS ~Strategic Surface-Surface Ball.istic~ missile S 3, it should be recalled,
is a two-stage solid-propellant rocket, consisting of a 16-ton first stage and a
6-con second stage, armed with a megatonic thermonu~lear warhead. As compared
with the S 2 version with which the lst GMS's two launchinq units were equipped
initially, the S 3 version presents (besides its higher power) some substantial
advantages from the standpoint of penetration potential: Speed ~f penetration,
diversified trajectories, windows, hardened installation of on-b~ard equipment.
With respect to the latter point, *_he S 3 versions of the 2nd Launch~.ng Unit will
be better equipped than those of the ist Launching Unit, which has been opera-
tional since 1 June 1980; this explains the slippage in the initially planned
unit in-service date. The modernization of the 2nd Launching Unit has to do main-
ly with a stiffening of its resistance to electromagnetic interferenc;~. The
modifications and improvements made to the 2nd Unit's missiles will be made
subsequently to the lst Launching Unit's S 3 versions,.
Close to 2,200 persons serve in the SSBS force, of which 1,000 are draftees whose
performance is most satisfactory.
At the conclusion of his visit, after having dwelt on the fact that the Air Force,
a thoroughly technical service, is the service to which most young officers are
- attracted, the minister pointed out that it is also the service charged permament-
- ly with operating the two components of our nuclear deterrence strategy: The
manned component and the SSBS component. The youth of tne Air Force officer
corps, the minister explained, calls for greater thoroughness of training. And
lastly, the minister stated his intent to try to have adopted a draft budyet that
will permit an increase in the number of flying hours for each Air Force fighter
pilot.
For many years now, f�anding for this purpose in France has been based on a figure
of 180 flying hours per pilot per year.
: COPYRIGHT: A. & C. 1981
9399
CSO: 8119/0692B
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- ENERGY ECONOMICS ITALY
PLAN ENVISIONS MINOR ROLE FOR GEOTHERMAL ENERGY
Milan EUROPEO in Italian 28 Dec 81 pp 96-97, 99
[Article by Lanfranco Vaccari: "How Hot Was My Land--Energy/A Forgotten Alternative
Source"]
[Text] With the Larderello geothermal system, Italy was in the
vanguard at the beginning of the centur~. Then came faith in
oil. And now? We would like to rediscover the old "steam-holes."
~ But will we?
By 1984, 3,000 apartments in Ferrara will be heated with hot water extracted from
the wells in the Casaglia zone, 5 kilometers from the center of the city. For the
first time in Italy, part of the energy needs of a large urbar area will be sup-
- plied by the geothermal system that spreads throughout almost all of Italy's terri-
tory, at an average depth of 3,0000 meters. In monetary terms, the Ferrara ~:-oject
means a saving of 3,500 tons of gas-oil per year--thus, Lit 1.2 billion. By the
end of the decade, if all goes well, the number of apartments hooked up to the sys-
tem will be decupled, and so will the savings.
Is this a new E1 Dorado of energy? Does it mean that we have here at home, and
free of charge, an energy source alternative to oil and nuclear power?
Floriano Villa, preside:it of the Italian geologists, is allusive: "It is as if
Italy were lyin~ on top of an enormous boiler. We could use the heat it produces
both for producing electricity and for direct uses: heating, agriculturE, industry.
But take a look at the investments provided for in the national Energy Plan. That
is where the key lies."
Looking over the plan's tables, one discovers that investments of more than Lit 60
- trillion in 10 years are planned. For geothermal energy, the allocation is only
1 trillion. In round figures, there will be 25 ~ousand for oil, 13 thousand for
nuclear energy, a like amount for coal, 7 theusand for natural gas, and 5 thousand
for the hydroelectric sector.
Massimiliano Guglie.lminetti, one of the managers in the geothermal-resources sector
~ of AGIP [National Italian Oil Company], picks u~ his papers, thinks a little, and
then states with the technician's cool detachment: "There has been a lot of c~nfu=
sion. For years, we have gone ahead with projections that are broadly optimistic
and certainly not achievable in the light of present knowledge. Geothermal energy
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_ is an important collateral source, to be sure. It may save us a few tens of thou-
sands of tons of oil. But let's not fool ourselves."
To follow the argument, we have to take a step backward. At a conference on "Geo-
rhermal Engergy and Regions" held at Chianciano 4 years ago, sensatior.al figures
were presented. In the working-out of the ENEL [National Electric: Power Agency]
energy plan of 1976, it was deduced that the real geothermal potential for produc-
tion of electrical energy was 114 gigawatts. This is, so to speak, the equivalent
of 142 nuclear power plants of the Caorso type. The estimates of the energy plan
approved a few weeks ago are for i gigawatt--that is, 114 times less than was
thought 5 years ago. An incredible error in estimation. But is it being committed
today, or was it committed at that time?
Figures are sometimes a matter of o~inion, and so everyone is right. The mechanism
is explained by Claudio Sommaruga, geothermal adviser to the European Communities:
"The valid figures are the latest ones. Those of 1976 are true only in theory. lt
is true that we t;ave all that energy potential in the ground. But to put itsimply,
we cannot extract it."
From a technical point of view, geothermal energy breaks down into t~ao main groups:
high heat content (that is, a flow of steam at a minimum temperature of 180 �C) and
low heat content (hot water from 40 to 100 �C and steam up to 150 �C). Only the
former is useful for production of electrical energy. The latter can be used for
heating apartments, for hothouse cultivation, for some industrial processes. The
problem in Italy is that the richest zones are also the most densely populated
ones. The only exception, and an outstanding one, is Larderello, in Tuscany.
This is the oldest power plant of its kind. It began producing energy in 1905. It
saves about 600,000 tons of oil per year. This is not a grn~at amount for a country
that consumes 147 million tons tep ~"ton-equivalent of oil," the term to which all
energy needs are reduced, no matter how they are filled, and therefore including
hydroelectric energy too), but it is not negligible either.
A zone with immense potential is that of the Campi Flegrei, in Campania. In a well
at San Vito, near Pozzuoli, the world record was established: steam at 422 �C. In
tlie ~lofete field, contiguous to San Vito, more than 300 �C is constar~Lly achieved.
Sommaruga explains: "Development of geothermal energy depends on the status of the
territory concerned, and not vice-versa." Simply put, this means that wells cannot
be sunk in the middle of the towns, and the population cannot be evacuated.
In the particular case of the Campi Flegrei, there is an environmental problem in
addition to the technical one. Guglielminetti tells about the insuperable diffi-
culties in handling steam at such a high temperature and keeping it under control.
Elsewhere, as in northern Lazio, the mining bet is sometimes lost. Thus there is
the I.atera well, which functions very well and produces 10 megawatts; but a kilo-
meter beyond it, in the same geological conditions, an absolutely sterile well was
sunlc.
Thus, peeling off the leaves of geothermal energy as if it were an artichoke, one
arrives at the heart of the problem. Which is, in the most ambitious version, Fer-
rara. And in the less spectacular version, the whole of the small-scale and medium-
scale situations in which a part of the problem of heating has been solved with hot
water. Abano Terme is the case most frequently cited: 130 hotels--the equivalent
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of 8,000 apartments---function on geothermal energy. And then there are all the
other thermal sources, of course--some 40 of them.
( 2 ) EsisteMi
Villa ( 3 Studio/Costnnione
_ 5 ( 4 ~wtern~ica per riscaldamento
( ( 5 ) ~ Bacini tomprensivi ufreddi�
( 6 ) Q Arae distensive �calde�
adicon
Larderel , ~A iat
~
tera
~ Au
Coili ~
Lago '
~ ~d.
Isola di Vulcano
~
~1)
La mappa
- ~eotermica del!'Ifalia '
con le zone a
maggior potenziale.
~
Key:
1. The geothermal map of Italy, with 4. Geothermal energy for heating
the zones of greatest potential 5. Comprehensive "cold" basins
2. Existing 6. "Hot" distensive areas
3. Under study/constrtiction
This particular use of geothermal energy does not present diff.iculties. One need
only have centralized plants in which, instead of boilers, there are heat exchang-
ers that receive the hot water from the well and transmit the energy to radiators
or heating bodies in the apartments.
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_ At Ferrara, the conditions are nearly ideal: high temperature (100 �C), and drill-
ing to depths that are not excessive (1,500 m on the average). But geothermal en-
ergy, treated as a supplementary local energy source, can be exploited under less
favorable conditions also. And there are innumerable projects.
In some cases, as at Vulcano, geothermal energy, though little, is all there is.
They do not have drinking water there or at Lipari: they bring it from Messina, and
it costs Lit 8,000 per cubic meter. And electrical energy costs Lit 160 per kWh,
which is enor:.vus. Now they are working on a well that will solve problems that
are dramatic in the summer. season and painful, for the buildings, in the winter.
With a power of 6 or 7 megawatts and a small turbine-type power plant, not only
- will there always be water and electricity, but at reasonable costs too: Lit 800
per cubic meter, Lit 50-60 per kilowatt.
There is another instructive example. At Bagni di Roma~na, they yses to use the
hot water from the hot springs for therapeutic purposes. Not all of it: only a
third, and they threw out the rest. Now they are building a plant which, with the
water that until just recently was wasted, will provide for heating the hospital,
the twon hall and many apartments.
- One could go on: there is no end to the list of opportunities too long missed. The
use of geothermal energy at the local level seems like the practice of the miser
who, adding one penny to another, ended up a millionaire. But that is too edify-
ing a story in a wasteful country in which energy policy often stinks of narrow in-
terest--and where hot water is not even discovered.
COPYRIGHT: 1981 Rizzoli Editore
11267
_ CSO: 3104/80
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ECONOMIC F~~
.
CGC HARDENS STANCE TOWARD SOCIALIST POLICIES, AUROUX PLAN
Paris VALEURS ACTUELLES in French 4-10 Jan 82 pp 16-17
[Article by Yann Clerc and Jean-Francois Gautier: "Managers: The Swedish Risk"]
[Text] Under pressure from its branches in business firms, the CGC
[General Confederation of Managerial Personnel] has become
"combat-oriented."
"The Polish economy is in its present state because, in my country, professionals are
neither respansible, competent, nor mo~ivated." Jean Menu, president of the members
of the CGC, often cites this quote, which was made by Lech Walesa during his trip to
Paris. It sums up his arguments to the government. The increasing hostility of his
organization has been expressed by Jean Menin, general secretary of the confederation,
as follows:
"Since 10 May we.have simply been asked to change our portfolios from one side to the
- other. For us, increased taxes from the left or the right at the same thing."
An additional withholding of 1 percent on salaries, an accelerated removal of th~
upper lir~it of social deductions, a limitation of the tax advantages for each child
' and tnreats to retirement plans have made the change on the Rue de Gramont now appear
to be worse than the former constancy. Before summer, however, this fear o~
' sameness had shifted a number of professionals' votes to the candidates on the left.
Through exasperation any chance to say no was a good one.
' The targets have changed color but the goals are still the same: Professionals believe
that they are the "damned in the crisis." Since 1975 their actual income has
decreased and they are back to their 1972 purchasing power. The 1970 level could be
reached this year.
- The confederation decreed a"general alert" for its memUers. It intends to sensitize
- public opinion to the "now evident risks of a serious deterioration in the social
and economic situation." On 28 January 10,000 professionals will meet at the
Jean- Richard columm at the Pantin entrance to Paris to hold a massive demonstration
` of their "desire for change."
,
"The Socialist Government has perhaps not initiated measures against professionals,
but it has made them worse," said Menin. "To be attacked with friendship doesn't
make it any better."
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The draft of the laws on the workweek, prepared by Jean Auroux, minister of l.abor~
contains a clause which says that the scheduling of hours in each firm must be
approved by unions representing half the workers.
"That is a veto right granted to the CGT [General Confsderati~n of Labor]," protested
Paul Marchelli, general delegate of r_he CGC, last week. "We will react vociferously
if the texr is not changed."
An analysis of the 6 months of Socialist rule does not of itself explain the hardening
attitude of the CGC. Other elements played a role, especially the more and more
pressing intervention of union chapters on behalf of change to the oppositic+n.
On 2G November, the day before the confede~ation board meeting, almost 4,000 responses
to an internal questionnaire were placed on the president's desk. This X-ray of the
morale of CGC members called for extending no more goodwill to the survival of the
administration's "state of grace." Of 1J0 replies, 81 characterized the economic
and social situatian as "worse" and 90 believed it "more unfavorable to professionals."
- As for the CGC's action since the elections, members ,judged it "too soft" (50 percent),
"bad" (33 percent), and "not very satisfactory" (32 percent). However, 30 percent
consider it "appropriate."
P survey of the professional population (unionized or not) done by Cides in Sep*_ember
at the request of the CGC indicated the pessimism of this social category.
Professionals denounced a"Swedish evolution." Above a certain level, 21 percent of
engineers, administrative personnel and foremen would refuse any more responsibilities;
12 percent would go abroad; and 8 percent even foresee the possibility of working on
the sly.
At the end of November, a report ~ublished by the Center for the Study of Income and
Costs (CERC, which is subject to the planning department) gave a true indication of
the restraints felt by professionals: In national averages, the relation of actual
income of worker households to professional households is only 1:2. The relation of
net salaries 10 years ago was 1:4.5 (see chart).
"The policy of equalization is only ~etting worse," said Charles Mara1, president of
the Synidcal Union of Managing Professionals. "The image of privileged upper level
proFessionals is completely outdated, but his image continues to justify the measures
taken against them."
_ In the longrun, new burdens on the managers and professionals could lead to a
voluntary flight from nonremunerated responsibilities.
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100 ;
' 1970 1975 1980
The change in purchasing power of the net salary according to job category. Every
category underwent a decline in 1979 with the "extraordinary 1 percent" which was
added to the normal Social Security deductions. This drop was overcome 1 year later
for the lower salaries, but professionals' purchasing power has fallen to its 1972
level. the differences shown on this graph are only for net salaries. They are even
greater for actual income, after taxes and family allowances.
- Key :
1. manual laborers
2. employees
~ 3. technicians ar.id forem~.n
4. professionals
COPIRIGHT: 1982 "Valeurs Actuelles"
9720
CSO: 3100/254
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ECONOMIC FRANCE
TAX POLICY TO AFFECT SAVINGS, GOLD PURCHASE, INHERITANCE
Paris L'EXPRESS in French 14 Jan 82 pp 68-73
[Article by Agnes Rebattet: "Your Money in 1982"]
[Text] An obsession with devouring taxes; chaos in savings? It's
true. Savers are entering a crucial year. L'EXPRESS presents and
explains "plans" for everyone.
A veritable rush--during the last half of December the French hurried to bank windows
to buy Monory SICAV investments, an effective way of deducting 5,000 francs from
their taxable income. In all, 7 billion francs will have been invested in these
stock exchange securities, which are managed by Variable-Capital Investment Companies
(SICAV). A record.
This avalanche of last-minute orders created huge traffic jams at the Paris stock
exchange. However, the day after 10 May last year, estate managers all predicted:
"The tax advantage of the Monory SICAV investments will never hold up under the
uncertainties of the financial market," an opinion which held true until mid-December.
Then, savers, attracted by the immediate advantage of a tax gain, worried little
about the future of this invested capital. This attitude says a lot about the fear
which the tax collector strikes in the French middle class. It is also a sign of
- confusion: 1982 will be a turning point for many reasons.
The Socialist government's policy is ambitious. Reducing uiiemployment--its primary
goal--will take place through a massive emphasis on industry, and therefore, on
productive investments. Such a program means an increased appeal for savings.
In addition, the Left, as Francois Mitterrand and Pierre Mauroy recently pointed out,
:ntends to reduce inequalities through taxation. The upcoming f iscal reform will
upset the spectrum of investments. The f indings of the commission "on the develop-
ment and protection of savings," under the direction of David Dautresme of the Credit
Lyonnais, wiil be submitted next March. What to do between now and then? Will
fiscal credits and the Monory advantages be maintained, ~r replaced with other
measures? Will the stimulus to save be stronger as income is lower, as economist
Pierre Uri hopes.
There are many unknowns. Any change in the taxation of an investment will have a
substantial effect on the market. That was shown in 1978 when the Monory SICAV
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investments brought a million new stockholders to the Paris stock exchange, with a
detrimental eff ect on savings and loans. The government will be hard put to avoid
- this problem. But there is another, more serious one to consider: the rate of
household savings is decreasing dangerously. It has gone from 17 percent in 1979
to 14 percent today. Under these conditions, how can a sense of savings be
reinsrilled in the French? It is better to seduce than to f�~rce. As a candidate
for the presidency, Francois Mitterrand understood that well. "Savings will be
strongly encouraged," he said, and continued, "the reform of financial channels will
allow French savings to be directed toward investments which are considered high
priority by the Plan." If the gentle approach duesn't work, then there is "the
unpopular forced savings that raising taxes signifies. However, this is not always
the best solution. The extraordinary tax for those with income taxed at tlie60-percent
level and the lev~ of up to 1.5 percent on wealth are measures that should reduce
the savings ability of those who own che most. However, "it is well known that the
rich are the ones who make the market," explained one estate manager, "the others
follow...."
The Upheaval
The 200,000 Frenchmen who are taxed on wealth and the 1 million most highly taxed
households will find it difficult to maintain their purchasing power; thus, they
will be particularly interested in any investments which are liable to provide them
witti additional income. They ~aill therefore be more concerned with the annual
return on their investments than with the long-term increase of their estate. In
order to pay their taxes in 1982, some will have to liquidate part of their
possessions. The more worried ones are already se'lling their second homes.
This upheaval began the day after the elections. On 11 Piay the stock exchange
collapsed and lost 30 percent. This was an indication of distrust toward the SoGial-
ist government, but above all a fear on the part of stockholders of nationalizable
firms that they would be cheated. The slightest rumor caused overreactions. Clients
were seen rushing to the banks to take their anonymous bonds, diamonds, or gold from
their safe-deposit boxes. The word had spread that the administratioa would open
all safe-deposit boxes~ Jacques Delors, minister of economy and finance, tried to
calm everyone and promised, like his predecessor Rene Monory, that everything would
be done to encourage long-term savings. It was a futile effort: the government was
embarrassed in September when it introduced two poorly received measures. It changed
the rules for deposit accounts and abolished the anonymity of gold transactions--two
investments dear to the French because of their good resistance to inflation.
Deposit accounte: Frenchmen who had 100,000 francs could place them in special
- short-term (1 month) bank accounts and freely negotiate the interest rate. Yield:
16 or 17 percent gross, or 12 percent after taxes. This was an ideal short-term
investment. (It accounted for 100 billion francs.) Delors put an end to it.
Henceforth, only investments of 1 year or longer, or investments of very large sums
(over 500,000 francs), can be freely negotiated. Al1 others are limited to an
interest rate of 3.5 percent. By 1 October, for example, this measure had resulted
in the withdrawal of nearly 6 billion francs from tre BNP [National Bank of Paris].
But the bankers have found a way around this. After all, you only have to group
clients together to surpass the fateful sum of 500,000 francs. And there already
is such a framework that has been in place for 2 years: The Common Invetment Fund
(ceiling fixed at 100 million francs). The variation will be called the "Common
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rux ~rrt~.iHt, uJG uI~ILY
- Treasury Investment Fund." Instead of being invested in various stocks, the funds
will be directed toward short-term (1-2 year) bonds and to ~ariable rate bonds.
"Variable rate bonds have a significant advantage: they are indexed to the money
market rate or to the rate of state loans," explained stockbroker Alain Ferri. Thus
they adapr to variations in the interest rate. One example: The Vive Oblivar fund,
administered by Ferri and created on 1 October, has already gained 18 percent, or
13.5 percent after taxes.
The savings banks have fallen victim to these new approaches. Although they were
supposed to benefit from the measures to encourage mass savings, they have once
= again been slighted. Already, in 1980, families directly affected by the crisis and
by unemployment had to draw on their "rainy day savings." After a record surplus
(7 billion) in the passbooks of the national savings bank in October, enthusiasm fell
swiftly. In 1981, passbook savings (314 billion) increase~ only 13 percent, not
even at the rate of inflation. The most prosperous households were tempted by the
new, more advantageous investments, such as variable rate bonds or state loans.
"The one in September was well received by our clients," said Jerome Pichard,
general. delegate to the National Union of Savings Banks of France. At 16.75 percent,
it guarantees an exceptional return: for an average investor, who subscribes about
18,000 francs, and taking into account the fixed abatement of 3,000 francs on bond
income, the yield is 2.5 percent higher than inflation.
The best shelter and an old French passion, gold, also received a shock. In order
to discourage this "unproductive" ~nvestment, the government last September put an
end to one of its most irresistible attractions: the anonymity of transa:tions.
"You can't catch flies with vinegar; every time an attempt is made on market free-
dom, the French take cover," commented a stock exchange regular.
So we wi11 certainly not see the napoleon or the gold ingot reappear in productive
- channels, A black market has already organized, and transactions are taking place
there to such an extent that the official market has collapsed. The ingot, after
having reached its peak (99,485 francs before the election), stabilized in December
_ at around 74,000 francs. The napoleon went from 900 francs at the end of May to
700 francs. Loans indexed to gold are following the decline, especially the 1973
4.5 percent (ex-Pinay), whose Treasury reimbursement price is 18 percent higher than
its stock exchange value at the end of December. "I avidly recommend it to my
clients for paying inheritance taxes," said a notary from Seine-et-Marne.
Sizable Estates
Taxes have become unbearable for certain large savers, especially since they cannot
.ake refuge in real estate as in the past. The price levels and the cost of con- '
struction credit have discouraged those interested. In 1980,construction investments
= caved in, and this tendency is increasing. "To go into debt at 18 percent for 5
years is madness. By ti~e time the fi�th year comes, you've paid the amount borrowed
one time over," explained a real estate agent. Few are tempted unless they anticipate
a rate of inflation higher than the current interest rate.
Placed in the impossible situation of [ha~~ing to] buy their principal residence,
savers are resorting to leisure-time real estate: winter sports or seaside effi-
ciencies. For those who already own property, the proposed new measures are hardly
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encouraging them to invest further. UnLil now, the yield for renting was about S
percent before taxes. It wasn't much, but it was only necessary for the capital
investment to increase each year. With the ceiltng on rents, the reinforcement of
_ renters' rights (Quilliot law), ai~d the abolition of housing tax advantages, inves-
tors fearfully await 1982. But will the price of real estate go down? The
government h~pes so. But in waiting, housing construction is liable to suffer.
What is left for sizable estates, since neither the traditional shelters nor real
estate is beyond the reach of the taxation department? The forests? Taxwi~e, this
has been Iess certain since 19 December. An amendment to the 1982 draft finance law
includes certain types of forest groups in the tax assessment on estates. This
measure is contrary to forestry policy, because investors divert about 500 million
francs to the forests through group shares.
The only exemptions to the tax on wealth--axt and collections--are benefiting from
this situation by a significant appreciation. Prices have climbed. One example is
original illustrated books. "Romantic books weren`t worth 200 of our present francs
20 years ago. Today a Grandville (a well-known illustrator) can be worth 5,000
francs!" sighed one collector.
All of these changes have disconcerted the saver. But they have answered one precise
worry of the administration: to direct Frenchmen's money toward long-term invest-
ments--a policy which should first strengthen the stock exchange. But what will
the stock market be like tomorrow?
Nationalization has withdrawn one-third of the negotiable stocks (35 billion francs),
~ while at the same time activating the already large bond market. But, determined to
procure fresh money, thanks to the bond market, the private and public sectors are
liable to get into a fierce competition which will have no real benefit for the
investor. In addition, with the colossal imbalance between bonds (700 billion) and
stocks (150 billion), "the stock exchange will be a disappearing t.radition," said
Yves Flournoy, the agent of the Stockbrokers Company
The government commission is considering ways of directing savings toward ve~iture
investments. In order for those who invest by buying stocks to be encouraged, how-
ever, they must be granted a tax credit. But a tax advantage will not be enough.
In order f~r the faithful but fearful saver to be tempted, he must first be assured
that he will receive dividends each year. And this assumes that private firms will
make a profit.
COPYRIGHT: 1982 s.a. Groupe Express
9720
CSO: 3100/252
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ECONOMIC IyALY
EFFECTS OF LABOR COSTS ON INDUSTRIAL SECTOR
Niilan TL MONDO in Italian 15 Jan 82 pp 41-42
[Article by Antonio Ramenghi: "Who's Manuf acturing Inflation?"]
[Text] The cost of living index creates inflation, and the
productive sectors spread it. But there are large
- disparities. An unpublished study has run them
through the computer, one by one.
The Oscar in productivity goes to the home furnishings sector: 10.6
is the annual mean variation over the past 10 years, as compared with
~ a mean increa>e of 22.$ percent in labor costs and a price i~icrease '
of 16.5 percent for the rest of industry. Bringing up the rear is
the automotive sector, with an average rise in productivity of 1.5
percent, an 18-percent rise in labor costs, and a 20.8 percent rise
in prices. Even f rom this comparison between the two sectors we can
draw several general considerations that apply to all 12 sectors cov-
ered: there is already a growing interdependence in the Italian pro-
duction system between the cost of labor and productivity: it is no
longer true that he who produces most makes the most money. Nor is
that ~,11. Pegging wages to the cost of living has as its effect the
flattening of wage curves, not only within each sector, but clear
across the board, with the effect of penalizing the more efficient
for the benefit af the less efficient.
These are some of the conclusions to be drawn from the study conducted
by tMe Research Center for Corporate Economics (CREA) at Milan~s
Bocconi University, :into "The effects of rising labor costs on indus-
trial sectors." The analysis, run by Franco Bruni, Emanuele Cairo,
Sandro Frova, Angelo Rainoldi and Carlo Scognamiglio, covers the last
10 years, from 1971 to 1980. The purpose of the study, say the CREA
research team, was not to come up with another proposal for tinkering
with the cost of living index on top of the many already made, but to
find out to what degree the various sectors have absorbed and spread
inflation in the system through the interplay of prices and the cost-
of-living index machinery. Theirs is a contribution designed primarily
- to provide clarification and the figures to back it up on the
long-standing question of the cost of living index, and whether it is
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_ - -
PRODUTTIVITA' ~COSTO OEL LAVORO- COSTO LAVORO pRE2Z1 QUOTA DEI PROFITTI LORDI
~ 1~ ~ 2~ � PRODOTTO RiEZZI ( 4) SUL VALORE AGGIUNTO
-24
22 ' ~ 3~ ~ `3~
20
i
18 ~ ~ ~ ` ~ - ` /
16 - - ` ~ ~
~
14
12
10 ~
8
6
4
2
0
O
0\v Gj~~ ~JQ~~' Q,~
v ~
~Q~ ~ ~~C~ .F~~ \V~ tt',~M~O
ti~' C,~ 2~'~ J~'J ~'r C~~~ J~~ ~Q~Q
~
C'~ er4~ `rp Q~' .~~4 ,`QQ
Z Q ~
O
(7) (8) (y) (lo) (11) (12) (~13) (14) (15) (16) (17)
THE EFFICIENCY RATINGS (mean annual variations fro~n 1979 to 3981)
KEY:
(1) Productivity (10) Non-metallic minerals
(Z) Labor Costs (11) Manuf acturing industry
(3) ~,abor costs per unit of (12) Paper
product price (13) Chemicals
(4) Prices (14) Rubber
Gross profit share of (1$) Metallurgy (steel, etc.)
_ added value (16) Food
(6) Home furnishings (1~) Automotive
Textiles
(8) Footwear
(9) Machinery
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ir~ and of itself, a cause of inflation, or whether it has merely
- helped in a perverse way to spread it.
- One quick ansz,rer comes from the analysis of the data on thc manufac-
_ turing industry as a wYi~le : the deteri~: ation i.n earnings . ecords,
- say the CREA research peopl~~, seems to be attributable not so much
to the rise in wages in real terms as to tha built-in weak points in
the structure that have marlted the developmpnt of some of the key
sectors of the a.ndustrial system: heavy dependence ~n procluction re-
~ quirements from abroad, a very low 1eve1 of ~inancing investments out
of corporate capital, technical, productive, and occupational rigi-
dity, the inadequacy of strategies to respond to qualitat ive and quan-
titative fluctuations in demand, which adds up to a poor showing in
the marketplace. This, we were ~iven to understand, is clear indi-
cation that Mario Monti~s proposal to strip the cost of living index
; of the external f actors of inflation (the costs of energy and raw ma-
terials) would certainly be tYie most effective approach, the one that
could restore some balance ta the system. However, that says nothing
about the political feasibility of the idea, or about th~; confidence
that would have to prevail between management and labor, if only when
it came down to deciding who should control the ups and downs of the
relative prices abroad.
The sector-~y-sector analysis givc~s us a clearer glimpse into the
issue of who has benefitted and who has not benefitted by the current
- indexation of labor costs with one preliminary observation, derived
from the horizontal graph, to wit: while productivity has shown aver-
age yearly gains ranging from 10.6 percent in the furniture sector to
1.$ in the automotive industry, labor costs have chalked up .increases
rangi.ng from 23.9 percent in footwear to 18.0 in th.e automoti�re sector.
. This works out to swings of 9.1 percent in productivity along with
, only $.9 percent for labor costs. And when it comes to prices, we go
from an average rise of 20.8 percent for the automotive industry to
~ 15.8 percent for food. Tha.s latter sector is the only one of the 12
. surveyed showing a�negative mean value for the share of gross profits
on an added value of 0.4 percent. This makes food the only sector
that has not managed to tack the unit cost of labor onto its prices.
Those that did pass on their increased costs in their prices, thus
becoming the flywheel, rather than the mere transmitters of inflation
are two: the automotive industry, aand the chamical sector. For the
former, the slump in demand, low productivity and structural rigidity
combined to prevent the companies from absorbing the inflationary
thrust from the cost side. So the companies passed on not only their
increases in labor costs and otner� producti_on factors, but even their
higher fixed costs deriving from their productive ri~idity.
In chemicals, on the other hand, tne strong inflationary pushes seem
to stem primarily from their heavy dependence on foreign sources for
their manuf acturing processes, which has sent i.mport prices soarin~.
So if on some imaginary blackboard we were t~ divic~e the sectors into
good ones and bad ones, the xesult would come out like this:
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_ ~ vi� va a~a~,~~i. vJG V1VL1
Who Has Spread Inflation: As you have seen, it is primarily two sec-
tors: the automotive and the chemical.
_ Who ~Ias Been Hit by Inflation: in addition to the food industry, as
- we have seen, the ones that have absorbed inflation at the expense of
productivity and of the companies' financial positior~ were metallur-
gical and non-metallic minerals.
Who Has Offset Inflation: these are the sectors that have struck a
kind of inner balance sufficient to absorb inflationary thrusts them-
selves, without spreading those thrusts through the economy: tex-
tiles, shoes, home furnishings, mac;hinery, rubber, and paper.
The CREA analysis concludes with a simulation which, while not inten-
- ded as a proposal. does deserve credit for showing us how putting the
COLI on a quarterly basis is, in and of itself, a source of automa-
tic price rises. They st arted with the assumption that the COLI was
adjusted only once a year between the end of 1976 and the end of 1980 .
Well, if the cost of living index had been adjusted only once a year
over that span of time, the rise in prices would have been 52.9 per-
cent, rather than what it has been 69�2 percent. And that proves
that when compared with adjustments at year~s end, the quarterly ad-
justr,ient in the indices automatically feeds the inflationary push.
COPYRIGHT: IL MONDO 1981
6182
CsO: 3104/96
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ECONOMIC ITALY
OPINIONS ON DEVALUA~iiON OF LIRA
Milan IL MONDO in Italian 1$ Jan 82 pp 48-53
[Interviews by Davide Paolini with Budget Minister Giorgio La Malfa
and by Giulia Giavi with foreign exchange experts, plus commentary
by Mario Sarcinelli, deputy director of the Bank of Italy]
[Text] 'vVhat sort of year will 1982 be for the lira? A lot of
companies have made allowances in their planning for
further devaluation of the lira. But will our cur-
renc;y really keep on declining in value? And if so,
~ by how much? IL MONDO asked that question of finan-
ciers, businessmen, experts...
Two off icial adjustments of parity within the European Monetary System
(EMS), sharp depreciation vis-a-vis the dollar, and of recent months
another slide vis-a-vis the mark. On the whole, i98i was a rotten
year for the lira. And a lot of campanies have written predictions
of further devaluation of the lire into their plans and forecasts for
1982. And yet, 1981 did bring some progress on the inf lation f ront,
- which is ultimately where the steady decline in the value of Italy's
currency comes from.. The price increase was smaller than in the pre-
ceding year, and the government has staked its credibiZity on the
fateful threshold of 16 percent for 1982.
The cornerstones of the government~s policy reducing the public
debt and labor costs per unit of production have yet to be truly
tested. Meanwhile, in the other European countries, with the compli-
city of the recession exported by the United States, prices have al-
ready slowed their rise, raising the spectre of restoring a conspi-
cuous differential in inflation for Italy and renewed troubles for
its currency. For an analysis of the lira~s prospects in so complex
a ti.me, IL MONDO conducted a broad survey with the participation of
international exchange experts. After an interview with Italian Bud-
get Minister Giorgio La Ma1f a, in which we cover all the variables in
government policy which affect the currency, we talked with bankers,
f inanciers, and leading industry f igures, asking f or their views.
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La Malfa: "Let's not repeat the mistakes of the past"
Davide Paolini: The western countries are faced with the longest re-
cession sin~e the end of FVW II, and for the moment there are no signs
of recovery. The international economic situation does not seem pro-
pitious for rosy forecasts. What do you think of it?
Giorgio La Malfa: The gravest danger is that the international reces-
sion may stretch on and on, particularly in the United States, where
it is deeper no~r than the government had predicted a few months ago.
For one thing, it is no help to prospects for r~covery to have so much
uncertainty surrounding the direction economic policy ought to take in
countries, like the Unzted States, where debate inside the American
_ administration indicate that no firm orientatinn has yet been achieved.
This continuing uncertainty may well lead to a prolongation of reces-
sion conditions. The picture in the other countries is affected to
a large degree by what happens in the United States and Germany, both
countries whose prospects are not encour�ging. It is likely, even so,
- that 1982 will bring us the beginnings of recovery on the global level
even though of course the whole outlook is darkened by the uncertainty
arising out of events in Poland and their future course.
Question: But if no country adopts a policy of rising demand, thus
becoming the locomotive for the other economies, 1982 will be just as
biack a year as the one just ended.
Answer: I am convinced that during 1982 there should be at least a
start toward recovery, both in the United States and in Germany. One
positive factor in the 1982 picture, though, should be the stability
or even a slight decline in crude oil prices.
,
Question: Stability or decline in oil prices, though, might slow im-
ports by the OPEC nations from the OECD countries, and those imports
were one of the few bright spots we saw in 1981.
Answer: I do not yet have the firm estimates of the trade surplus be-
tween OPEC and OECD countries, but I believe it is still holding, to
the point where i.t won~t trigger any freeze on international trade.
Question: Even if the world economy begins to move again, Italy's
problems will still be fairly serious: the zero growth rate assump-
tion has already had to be adjusted downward to - 1 percent.
Answer: The estimates for Italy still remain at zero for 1981 or
in other words, at the stagnation level, even though the figures on
_ industrial production for October show a fairly sharp drop by compa-
_ rison with those for the same month of 198~� As for 1982, we noted
in our forecast and planning report th.at there might be a trend of
sorts toward stagnation, with a gross internal product [GIP) more or
less the same as last year's. We also noted the possibility of growth
- as high as 2 percent over the year, in response both to the evolu-
tion of domestic economic policy and to the international situation.
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I am still confident that a recovery of these very modest proportions
will be possible, but it is important to bear in mind the fact that
any rougher push might f ire up the def icit in the balance of payments
which has just in the past few months been showing signs of easing.
Question: You still think the 2-percent goal is possible in 1982, but
the steady decline in long-term investments would seem to indicate
otherwise.
Arswer: What we have here is in part a physiological reduction follow-
ing 2 years of very high investments. Further, it would be surprising
if there were not a drop in investments with interest rates running at
- 2$ to 30 percent. We are looking at a decline in investments which is
an expression of a period of recessian.
Question: Is that 6-trillion-lira investment fund you have set up to
be used for hastening recovery and breaking out of the recession?
. Answer: The idea is to spenci the 6 trillion � trillion of it in
1982, as underpinning for recovery. A modest slice of the fund will
go towards restoririg the state participation companies and the Indus-
trial Participation and Management Company (GEPI) to healtli, 2.$ tril-
lion will go to energy and technological innovation, and 2 trillion
to the special lending institutions to finance expansion programs of
corporations in sectors yet to be chosen, which might have a salutary
effect on employment. The end goal is to aim at patterns of support
for production of investment and industrial products through public
~ demand, as has been done in France. Here in Italy, we have always
used the state's financial power as an element of support for individ-
ual incomes.
Question: Your program was rejected, though, by the Interministerial
Committee for Economic Planning (CIPE) when the economic ministers
met on 23 December.
Answer: The concern of many ministers was with holding off from pre-
determining either the criteria for projects eligible �or financing
or the areas of intervention, which would have made the whole opera-
tion clearer and more understandable. Just now gaining in favor is
an effort to use the fund as a reserve to cover ~i.nancing for the
most pressing needs of this ~r that sector or for the super-greedy
state participation companies.
Question: Isn't there perhaps a danger that once the first signs of
recovery appear, the country will start up with a very high rate of
inflation, which would generate extreme pressure on prices?
Answer: The risk threatening the Italian economy when recovery comes,
- either in response to internatiorial demand or in response to domestic
demand, lies precisely there. If at that point the inflation rate
has not been brought down to reasonable levels, even before it begins
to show a healthy effect on investment and employment levels, it will
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� v.. ..~...u ~Jl~ VI\l.~
show them on the inflation rate and on the balance of payments. 50
we may well fail to see even the strong recovery of 1976, after the
1975 recession, because the Bank of Italy would be forced to choke
off the recovery even before it had a chance to get under way. T}~is
is why it is so vitally ur~ent �,o get measures for controlling infla-
tion in plac;e, along with agreements on budget and labor cost policies,
which ought not to be confined to 1982, but extended to cover all of
1983.
Question: You talk of agreements on the budget, but your 50-trillion-
lire ceiling for 1982 begins to look like an impossible ta.rget: there
is talk of ,5'7 to 60 trillion.
Qnswer: If people are afraid t hat the public deficit wi11 top $0
trillion, then the only thing to do is to put it under limits as of
the beginning of 1982, make projections on an annual basis to see how
- things are going, and step in with legislative remedies to lay down
regulatory restraints on current spending to hold it below the SO-
trillion ceiling. Besides, when Giovanni Spadolini said that the
SO-trillion constituted a political objective, there were those who
interpreted the word "political" in the pegiorative sense, whereas
the prime minister meant that the ceiling must be kept on by using
the tools parliament has ready to hand. And I believe that the road
we must take is the one that leads to holding down spending rather
than increasing revenues. To perform this operation we have built-in
mechanisms contributing to inereased current spending (health, we1-
fare, some labor costs in the public sector) which must be brought
under control, if necessary by amending the laws from which this kind
of spending arises.
Question: In short, you are not, all that pessimistic about 1982.
Answer: I am sure that 1g82 will not bring a worse crisis than 1y81,
or rather that it will not bring new factors into the reckoning. My
conviction is that in 1982 we shall see the start of a recovery pro-
cess, and I look with some trepidation only at the temptation to toss
caution to the winds and go all-out for any kind of support for em-
ployment and demand. This would have the same consequences as those
that followed the turnaround of economic policy in the second half of
ly'7$ when, under ths pressure of demands very like the ones we are
witnessing right now, we allowed a sharp decline in interest rates,
permitted the public deficit to rise very swiftly, and as a result
in 1976 inf lation zoomed to ZO percent, and the lira plunged to trau-
- matic lows and on top of it all we had earZy elections. ThP situ-
ation may well be worse right now than it was in 19~6: which means
that policies like the ones adopted in 1976 would have even shorter-
lived impact, since a lot of people are beginning to look too long-
ingly toward early elections, it would be necessary to bring the situ-
ation slowly under control again.
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The Italian Experts: "The mark wi11 leave us in the dust"
(Luigi Coccioli, president of the San Paolo Banking Institute in f~urin)
All the top economic f orecasting outfits are in substantia? agreement
in shifting their prognosticated date for the turnaround in the eco-
nomic cycle for the leading industria~. powers to some time after the
start of the second half of 1982� In their view, the first half of
this year should bring some kind of truce on the exchange rate and
trade books fronts. The trick, though, ~,rill be to s. .ze this hiatus
of relative slowdown in imported inf lation and use it as a temporary
coolant for t;he domestic inflation rate. Only under these canditions
will we be ready to ~take our proper role in the international produc-
tive recovery naw predicted for the closing months of 1982, which will
clearly bring with iL- renewed tensi~ns on the international currency
markets.
The paradox in all this lies in the fact that at the very moment when
there is a first glimmer of light on ou~ export horizon and hence some
" practical possibility of an improvement in our balance of trade, there
will be renewed pressure from domestic inflationary f actors: so what
we must deal with here is not merely waiting to see whether or not the
prime minister succeeds in pulling his rabbit out of the hat, as the
INTERNATIONAL CURRENCY REVIEW put it ironically in its November issue.
Where we stand now, the sole fairly solid point of reference we have
in the international financial context is the Brussels agreements on
the EMS. The EMS is a crawling-peg system, and as such represents a
kind of middle way (today the object of general hopes in international
financial and academic circles) between the fixed parity system of
Bretton Woods and a policy of totally free fluctuation in exchange
rates. In such a system there could be no parity set which would ex-
ceed the internal inflation differentials. This element of certainty
in relative prices among member countries is, in my opinion, a truly
strategic factor to encourage product marketing policies on foi~eign
markets by our industrial corporations. It is, furthermore, the best
possible guarantee against purely speculative ups and downs on the
currency exchange market.
Insofar as I am concerned, I should lik~ to underscore one point: San
Paolo's decision to seek loans in European currency units (ECUs), by
pioneering a road which you will see other Italian banks gladly fol-
lowing, was dictated precisely by its concern with assuring less
risky and less costly financing to Italy~s export-oriented companies.
Luigi Lucchini, president of the Brescia lndustrial Association)
To get a fix on how the lira will do in 1g82 you must predict the per-
formance of the Italian economy. For instance: will Giovanni Spado-
lini (or his successors) manage to keep their 16-percent ceiling on
inflation? I think it would be a lot easier to win the soccer pool
than to answer that question. Personally, I hope that inflation will
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stay below 20 percent. I do not see anywhere either the men or a po-
licy in a position to force the economy into a U-turn. Under these
_ conditions, industry here is l.iving from one day to the next, held to
very tight margins to keep their year-end figu~es from disaster. You
- r~ai.ly cannot run 26 percent into debt to pile up margins while you
- hope for devaluation of the lira.
Vittorio Merloni, president of Confindustria
Performance in 1982 will be intimately related with the 1981 track re-
cord, and that is altogether normal in economic betiavior. In our coun-
try, 1981 was a year of missed opportunities. We wasted the first
half of the year arguing abouL whether or not to concentrate on contain-
ing inf lation, and the second half on arguing about how to do it. The
ups and downs of forei gn currency exchange are strongly a�fected by
the expectations of international dealers be they bankers or not.
Even though the general opinion abroad is that our country does best
when left to its own devices, the international community looks at the
inflation differential between Italy and the rest of the worlci, and at
our official net reserves. On both these counts, Italy's position c3Q~
teriorated in 1981 and it is to be taken for granted that trie interna-
tional f inancial community i~ aware of that fact.
In all likelihood the mark will gain ground against the dollar in l~)~S`l.
Italy's membership in the EMS should tie us to the European currencies,
yet our inflation rate is running ~vell ahead of European levels. What
will happen?
In no area of economic forecasting is there greater uncertainty i~h;~n
in predictions on exchange rates. I could not in conscience rule out
the possibility of a realignment within the EMS sometime around the end
. of 1982 or in early 1983� Italy wi11 not be the only member to feel
the brunt of the mark's rise against the dollar, limited though that
gain may be: in all probability, Belgium and France will feel it too.
The ErIS wi11 probably hold an increasingly slack rein on Community
c:urrencies: that is the inevitable consequence of the lack of any
real convergent economic and social policy on common, consistent ob-
jectives.
Nerio Nesi, president of the Banca Nazionale del Lavoro
Si.nce the latest r~alignment (4 October) the lira has been relatively
~table within the EMS, although it did decline slightly beginning with
the last 10 days of November. Once again, the poor performance of the
Italian economy has had adverse effects. The lira has declined, as a
_ result, by 2.3 percent against the Dutch florin, and by 1.3 percent
against the Deutschmark, which has itself shown a degree of gain even
against the dollar. The lira has gained strength, though, against the
Belgian f ranc (up 0.4 percent) which, owing to current political insta-
bility, is currently bringing up the rear in the EMS.
It is no easy thing to venture specific predictions on exchange rates,
particularly over the short term. We all agree that there will be
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continuing fluctuation, brought about by interest rates and political
_ event s(t he Polish issue is a case in point). This agreement on long-
_ term forecasts counts on a degree of stability for the dollar, but
with a trend toward weakness vis-a-vis the mark, the yen, and the
British pound. As for the lira, there should be a sharp drop against
the ma.rk over 1982 (something like - ~ percent), from 538 lir~e per
mark in the first quarter to lire per mark in the final quarter of
1982.
Francesco Parrillo, Vice President of t}ie Italian Banlcing Association
For 1982 the goverrunent's strategy aims at achieving 2-percent growth
in the GIP ~nd holding the in�lation rate a~t; an annual 16 percent by
means of paring back the requirements of the expanded public sector
_ to ~0 trillion lire, containing total internal credit at 73 trillion,
putting in place a public investment program designed i;o whip the pro-
duction crisis, and reaching agreements on the delicate issue of labor
costs. Aside from the uncertainty of the success of its anti-iiifla-
_ tion strategy, another unknown has to do with the impaci; of the two
devaluations of the lira approved zn 1981.
In March the change in the central parity of the lira in the EMS (down
6 percent) was surrounded by suclz restrictive measures as the rise in
the official discount rate from 16.5~ percent to 19 percen~: and by
other currency coiitrol measures; the steadily rising tensions in the
European rnonetary system led to the latest realignment on 1 October,
which resulted in a further devaluation of the lira (down 3 percent).
The effects of all this fiddling with the curr�ency, coupled with a ri-
gid monetary and credit policy, which also introduced such protection-~
ist measures as the 30-~ercent non--interest -bearing deposit (2'7 May),
were on the whole salutary from the point of view of relations with
foreign countries, allowing a turnaround in the closing months of the
year in the performance of the trade balance,. of the balance of pay-
ments, and of the hard-currency reserves. Still to be found, however,
is some way of cushioning the inevitable impact of devaluation on
price trends at h~me in the medium term.
And so the current situation of productive stagnation coupled with in-
flation will leave no room should the stated objectives of economic
policy not be reached for removing the current harsh mondtary and
credit restrictions. On the other hand, it does not appear feasible
or advisable to engage in further manipulation of the exchange rates,
inasmuch as, even though exports have got a healthy boost out of it,
improvement in the trade balance can be attributed to the shrinkage in
imports in resp~nse to the production crisis and the liquida~;ion of
inventories which, however slowly, will some day run out.
These, though, are improvements which do riot warrant any immediate
easing in the credit squeeze or any lowering of interest rates.
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rvx urr~~,iAL UJC, IJIVLY
- Lucio Rondelli, managing director, Credi~o Italiano.
In 1982 there should be good opportunities for adjusting the Italian
economy~s foreign-side balance. These opportunities will arise out
of the probable unrolling of the international scenario, which should
see a levelling off, if not a decline, in the dollar price of crude
oil, a halt, if not a turnaround, in the growing strength of the dollar
which has been one of the prime causes of the skewing of our balance
of payments in 1981, and lastly, a degree of recovery, after 1981's
stagnation, in world trade, getting its main support from the OPEC
nations.
So we do have the premises for a start in the next few months of a
process of restoring equilibtium to the balance of payments, and hence
we can expect to see some stability in the exchange rate of the lira.
Of course this evolution in tb.P foreign variables must be flanked by
consistent performance in our domestic variables particularly in
our inflation rate. For the latter, furthermore, once we have this
behavior on the part of the foreign-born inflationary factors, it
ought not to be impossible to achieve that 16-percent target, at which
economic policy is so determinedly aiming.
IF that happens the competitive stance of our exports could be held for
the year without having to stray outside the oscillation band the EMS
allows us.
There might be some consolidation, profiting to some extent from a rise
in domestic demand that bids fair to be lower than foreign demand, of
the progress made in 1981 by our foreign trade in manufactured goods;
and that could make possible, given a deficit in the oil imports bal-
ance which is expected to remain just about where it is, a significant
reduction in our trade deficit (which might drop from the `LO trillion
or so expected at the close of 1981 to 1$ trillion).
The current balance of payments would see a drastic reduction, if not
cancellation of its deficit: and from that would flow further support
for the lira's exchange rate.
These prospects might turn out to be unrealistic, though, if the inter-
nal economic variables should behave in ways inconcistent with the
need for a return to balance. The consequences would be g rave, and
not merely in the short term. One need only contemplate the dire
possibility that should our country fail again in 1982 to bring its
foreign indebtedness into line, and should it continue to show defi-
cits on the order of those we had in 1980 and 1981, we should find
ourselves with an accumulated 3-year deficit on the order of 30 tril-
_ lion lire, ar~d foreign indebtedness to match. The already substantial
burden of the related capital costs and in interest would grow very
miach heavier, and lightening it would be a11 the more difficult silould
the favorable circumstances which, on the a.nternational economic side,
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appear to be taking shape though perhaps only temporarily in
crude oil prices particularly-- over the next 12'months should fail
to materialize.
Abroad, the Small Countries Will Be Going into Debt
A few days before leaving for the Christmas holidays the deputy direc-
tor general of the Bank of Italy, Mario Sarcinello (recently empowered
by Treasury Minister Beniamino Andreatta to monitor Italian recourse
to international loans), summoned the directors of tlie major banks en-
gaged in foreign transactions. Sarcinelli anticipated the Bank of
Italy's forecasts on the nation's currency position in 1982; the bal-�
ance of payments would show a deficit of $ to 6 trillion lire as com-
pared with 11 trillion in 1981; the credit squeeze will be held firm
so as to avoid runs on the lira and so as not to pour oil on the infla-
_ tionary flames: on the whole, there will be less need to turn to the
international capital markets for loans, and that will slow the rise
in domestic currency circulation.
Despite the fact that the outlook for 1982 is less alarming than 1981,
Sarcinelli asked the banks to inform him of all loans to be negotiated
abroad in excess of $100 million. Approval issuance must follow a
timetable set up by the Bank of Italy. This is necessitated in order
to avoid a stoppage on the Eurodollar market like the one we had in
the first half of 1981.
But just what chances are there for Italian banks and businesses to
get loans abroad in 198'L? In what form, and under what conditions?
"The Eurodollar market," explains Alessandro Alessandrini, admini,-
strator of the Bank of Rome, "will show a smaller flow of petro-
dollars in 1982 because of the reduction in OPEC surpluses, which even
in 1981 dropped from $110 to $70 billion." "Besides," adds the pre-
sident of San Paolo di ~urino, Luigi Coccioli, "some countries like
Holland and Belgium which never used to seek foreign loans are now
getting in line with the rest of us."
Italy, many international observers point out, has very high indebted-
ness today, second only to Brazil and Mexico, but in relation with its
currency reserves (including gold), its GNP, and the value of its ex-
ports, it is still a good risk. Possibilities for new indebtedness
are particularly good for financing needed for production plans and
exports. "Loans for small imports," says Alessandrini, "are increas-
ing so fast that nobody can keep track of them. "This, if you will,"
says Ottavio Salamone, director of the Banco di Sicilia's main foreign
loan office, "is aur bread and butter. We make ~ots of so-called "si-
lent" small loans [obtained from few banks, without publicity: Ed.],
and we get the names of a lot of inedium-sized but healthy companies out
there on the international market."
In addition to financing exports, there is growing interest in financ-
- ing imports. For that purpose Pietro Battaglia, president of Inter-
bank, will accept credit lines from international banks tiiis year.for
the first time. "These liability credit lines," Battaglia explains,
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"aren't incentives to import; what they do is to make those imports
indispensable to Italian industry less costly.'~ The Interbank presi-
dent will be engaging in 1982 for the first time in co-financing with
the World Bank, advancing funds to projects abroad in w~hich Italian
firms are involved. The array of choices in foreign financing options
is expanding, too: some banks, l~.ke San Paolo, the National Bank of
Agriculture, and the National Bank of Labor are considering, for exam-
ple, turning to the infant European currency unit (ECU) market (see
below). "Another growing market is the one in certificates of depo-
sit," says San Paolo's foreign loan co-directer, Mario Mauro. "Yet
another expanding form of financing,'~ adds the director of the National
Bank of Labor's main foreign loans office, Angelo Florio, "is in 'tri-
angulars', the operations that make it possible to finance Italian ex-
ports from abroad." Sarcinelli thinks that official recourse to ~the
international market on the part of Italian banks should come to $1.$
billion in the first quarter� of 1982 just about in line with 1981
(around $6. $ billion) ar.d then taper off somewhat. Conditi.oris of
indebtedness, according to the bankers IL MONDO questioned, might get
slightly worse. The spreads, meaning the increases on the London inter-
bank interest rates, will have ~o rise if they want to gei;, say, ~nre
loans from American banks, which are in a particularly exposed posi-
tion on Italy.
A Better Bet: Ask for Loans in ECUs
[Niini-survey of banker opinions, by Julia Giavi]
- Would it be wiser to ship our oars and incur debt in lire even at the
hibh cost involved, or can we get our hands on some foreign currencies
without running the risk of taking a huge loss in case the lira slcids
abain on the exchange market? Attilio Bordogna, who since last Octo-
ber has been president of the Forex Club, the Italian exchange opera-
Lors' association, is quick to note that it is no simple matter L-o
make predictions at the present political juncture. "Poland and 25-
racl are only the tip of the iceberg, hiding a lot more trouble down
, below." Having said that much about the international frame of ref-
ei~ence, Bordogna points to the French franc as the foreign currency
wtiich in the next few months should behave most like the lira as a
result of the economic policy adopted by the new administration under
Francois Mitterand.
A.lfo,iso Iozzo, head of research services at the San Paolo B~nking In-
.~titute in 7.'urin, likes the German mark, which was L-he topic of a re-
cent seminar offered by the bank in the castle of Kronberg, a luxurious
rctreat just outside Frankfurt. At the seminar German and Italian
ba~i}~ers agreed on a favorable diagnosis for the mark, and found that
the interest rate differential with the lira was, in short, adequate
to cover the e.cchange risk. "The Germans," explains San Paolo Presi-
dent Luigi Coccioli, "are willing to finance both Italian exports and
our tourist industry, in which they have particular interest."
"I�'or the long term," says Iozzo, "we could also turn to the ECU, that
market basket of EMS currencies that lowers the risk of sudden jumps
or dips in the individual currencies." For the time being, however,
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very few operations are being handled in ECUs. Among the fir~t banks
to usQ this conventional currency was 5an Paola, which, along with
_ Credit Lyonnaise and the Crediet Bank of Brussel.s, has floated a.loan
of 30 million ECU (40 billion lire) on behalf of three ltalian com-
munes. Other Italian banks are beginning to busy themselves on that
same ground, as well. The Banca Commerciale Italiana, the Banca Na--
zionale dell'Agricoltura, and the Banque d'Indochine et de Suez.
Among the banks on the verge of picking up this option is Credito
Commerciale. "The ECU afrords good surety of stability," says Mario
- Foglia, who heads that hank's exchange affice. "The banks don't give
it enough publicity, though, because they still aren't quite ready to
handle it: we still have too few operations, and as a aonsequence
we haven't enough f loat
For short-term loans and for those involving relatively modest sums,
Fo;lia would pick the Belgian f ranc, in which some adjustment of parity
is in the offing, even though Belgium~s currency commands scalding
interest rates (there is talk of peaks as high as 40 pereent) steep
enough to scare off a lot of shoppers.
Romeo Malacarne, who is director of i,he main headquarters o~ t~1G' Banca
Nazionale dell'Agricoltura, agrees with Foglia. Malacarne, too, sees
the ECU as a hig~hly promising currency: "Especially when you consider
~that its 3-month cost runs at 1$.75 points, which, when you add on the
1.30 percent for coverage of the exchange risk, gives you a toi;al cost
of 17.05 percent. That's sti11 a lot cheaper than the clollar, wliicli,
_ when you count coverage, wi11 cost you a total of 'L3�S Percent."
Ottavio Salamone, director of the Bank of Sicily's foreign sector,
points out in addition that the American currency will be the star of.
the show in 198`L. "This year again we are going to be living under a
dolJ ar s~T~+~r:, hc ~ay~, '~Ir.�c: c~� ratcs i.n the li~~ ~`�c~cl St~t.A~ ha~*n
already reached a minimum threshold. WE: they recover, along,with the
recovery in the American economy, the ciollar will enter a new phase of
strength in stability. "
p THE TRIBULATIONS OF' THE LIRA
Tasso medio annuo ponderato
di deprezzamento,
base 9 febbraio 1973 Abscissa : mean annual rate, weighted
-10 '9-2 for depreciation.
-�,5 Base : 9 February 1973
-20- _2t,z ~
Ordinates: percentage decline in tens
-30- , ~ of percentage points.
-35,1 ~
-ao,~ Source : Bank of Ita1y
-40 - -42,6 ~
-46,2 0
-44,2 LL
-50 - -53.0
- 1973 74 75 76 77 78 79 80 81 I
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- -
0
d
200o D
~
4000 ~ THE BA1~KS: FOREIGN DEBTS
. �E �
6000 `
-6877 Abscissa: 1979, 1980 [followed by]
8~ 1981, January, February, March,
4 � April, May, June, Ju1y, August,
~ SeptemUer.
12000 ~ Q, ' ~ N oo ~nc,
Q ~ f`~ M ~ ~
~ 4~~ ~ ~ N ~ N~ ~
i ~ ~ fG ~ ~ ~
~6~~ ~ ~ ~ ~
~
79 80 G F M A M G L S
1981
HOW THE EXCHANGE RATE WILL BEHAVE
(Forecast exchange rates for the lira against leading world currencies.
Average quotations for each quarter of 198Z)
(Source: Somea-Predex)
KEY: '
(1) Currency:
'J . s. $ Y~lut~ t� trim~~fro 7 t?ImNtn 3~ trimNtn 4� trimsstn V~rl~:ion~ %
Canadian $ ~:1) ( 2) ( 3) ( 4) ( 5) '~~""""Q~
FrenCh f ranc S Usa 1. te3 1.197 , t.215 1.2a9 - 5,3
Deut schmark S canedese 955 950 952 959 - 0,4
British ound Fr. fra. 194,5 19~,6 196.8 200.1 - 2,8
P Mr. ted. 519,0 529,5 548,8 575,4 - 9,9
Japanese yen St. Gb. 2.209 2.268 2.342 2.447 - 9,8
SWiSS franc Y. giap. 5,50 5,74 5,94 6,18 -10,7
Fr. sviz. 631,9 640,3 656,4 , 881,2 - J',2
Belgian franc Fr.bel. 312,2 317,7 329,6 346.4 � -10,5
Dutch Florin oi. a~s,i aso,t soe,s ss3,a. -~o,~
Sc. aus. 738,8 752.9 777,4 812,4 9,0
Austrian Kr. den. 161,4 165,3 171,5 180.1 -10,4
s c h i 11 ing Fonte: Somea-Predex
Danish krone _
(2) First quarter
(3) Second quarter
(4) Third Quarter
(6) Year'-end variation, percentage.
COPYRIGHT: IL MONDO 1981
6182
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POLITICAL ITAI'Y
MAKNO POLL ANALYZES SOCIALIST VOTING TRENDS
Rome MONDOPERAIO in Italian Dec 81 pp 45-48
[Article by Mario Abis and Antonio Pilati]
[Text] A study of the socio-demographic composition of the vote is necessarily based
on data: the only way to get an approximately accurate picture of the facts is to
collect a lot of data, making sure, using various controls, that they apply pre-
cisely to well identif ied social situations and, if possible, a homogeneous structure
(where hybridization among social strata is reduced to a minimum, and with it the
possibility of multiple interpretations).
There are basically two ways to get this type of data about the vote. The first is
an analysis of the results of the vote by small well-defined territorial divisions.
If one selects voting samples frem relatively homogeneous social areas (according
to socio-professional status and cultural history) it is pos~ible to get significant
data about the composition of the voting electorate from different parties. These
samples must be small, however (limiting sample size is the best guarantee of homo-
geneity, so one should work with very small sectors of communities), numerous, and
- we11 distributed throughout the country (so as to cover the most relevant social
components of the vote). The second method is to collect data using the tools of
empirical research about voting decisions and their distribution according to
significant socio-demographic categories.
The problems this method entails are basically the neutralization of distorting
attitudes, which are characteristic of answers regarding voting behavior (frequency
of refusals and inclination to penalize parties which have a bad image even if they
are really preferred; the influence of material factors which tend to be denied in
unconditioned answers but which are very much present in the minds of voters; real
uncertainty, etc.).
Once these distorting elements have been identified and dealt with this second
method seems to be the most useful one in that it enables one to identify and
classify samples rigorously. In this connection two surveys were made between 1980
and 1981 by Makno (a specialized institution on demoscopic research) in the context
of its own socio-political observations; the results of these surveys provide valid
material for analysis.
In the surveys, 2000 people were questions. The two surveys were made in May 1980
and April 1981 respectively. In this article we present a series of elements
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rvn vrr~~.iHi, uJC, UIVLY
identified on the basis of these surveys. A more in-depth analysis could be made
by combining these data with a study (now in progress) about the election results
from some homogeneous territorial divisions.
The Great Change
Data provided by previous studies about the composition of the vote by sectors
makes it possible to approach the question of the socialist vote and provide a
background for empirical data.
An analysis conducted by Pietro Corbetta ia Genova, Bologna and Vernoa on changes
in voting patterns in 1979 (published in MULINO, No 275) emphasize three pr~nciple
elements f or the PSI:
a) The electorate varies considerably: in the three cities the faithful electorate
(those who voted PSI in 1976 and 1979) range from a minimum of 65 percent (Bologna)
to a maximum of 71 percent (Genova), involving a change in a third of the electorate.
For the PCI the faithful vary from 83 percent (Genova) to 89 percent (Bologna), with
a fluctuation of about 15 percent. For the DC the faithful oscillate from 79 percent
in Bologna to 87 percent in Verona (with a fluctuation of less than 20 percent). The
rate of change in the PSI is about twice as big as in the other two major parties;
b) Votes pass back and forth from party to party over a wide range: PCI and PSDI
[Independent Social Democratic PartyJ in the first place, then radicals, Christian
Democrats, Republicans, new voters (there are fewer exchanges between the PCI and
the DC) ;
c) There is a tendency to lose ~round in the "low" social strata (manual workers,
craftsmen, the proletarian part of the tertiary sector) which is offset by gains
in white collar sectors.
One element can be added to these data which emerged from a previous analysis: a
tendency towards homgeneity in the vote on the national level, with the greatest
progress in the south, where the PSI has been weakest historically.
_ Social Composition of the Vote
The first element that emerges from this is that there is a pronounced interclass
evolution in the socialist electorate, especially ir~ the latest elections, from 1979
on, in other words in elections held during the tenure of the new leadership estab-
lished in 1976, which led to a vast renewal o� the traditional composition of the
PSI electorate. As the data on the issuing of cards show (see Table 1), the compo-
:~ition of the PSI has been mainly traditional until recently: manual workers,
peasants, and persons not in the active labor force (retired persons, housewives)
account for almost 60 percent of the registered party members. Of course the com-
position of registered party membership can differ significantly from that of the
electorate, but for the most part it does indicate what the backbone or inner core
of the par ty's electorate is.
The most recent elections changed. this picture. There is a pronounced trend towards
a mixture of classes which is even clearer in this case than it is for the two
major parties.
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It is taken for granted by now that the large parties of industrial Westerr.
societies cannot be made up of a mixture of classes and be able to draw votes from
- every social stratum. The two major Italian parties fit into this picture too;
nevertheless, there appears to be a strong interc].assism in them. The PCI has a
consistent membership of white collar workers and teachers (28 percent for the two
categories according to Makno's latest survey) and a significant representation of
craftsmen, trademen and professional people (13 percent according to Makno's
surveys); nevertheless, the PCI is still anchored on the worker class, manual
laborers being the largest category of its membership (together with peasants and
the unemployed they make up 35 percent of the electorate of the Communist Party,
according to Makno's surveys). This situation is somewhat analagous to that of the
- DC (see Table 2), whose electorate, although it is better distributed among various
social categories, has a significant proportion of housewives (23 percent according
to Makno's surveys) retired persons (18 percent according to Makno), and white
collar workers (20 percent according to ~Iakno).
Thus the class structure of the two major parties is unbalanced; the PCI leans
towards a"mature" productive sector (manual laborers), the DC leans toward non-
productive sectors (housewives, retired persons, white collar workers above all from
the bureaucratic tertiary sector and the south).
The class distribution of the membership of the socialist party seems better
balanced, with various social categories being represented in a fairly homogeneous
way throughout the nation. The most significant data regard manual workers, which,
according to Makno surveys, varies between 9 and 13 percent of the electorate (the
figures presented in Table 2 include farmers, whose participation is estimated at
about 3 percent). This percentage is not very different from that of the parties
- of the center, and is confirmed by a study made to confirm the hypothesis of Craxi,
president of the council (see Table 6). This stabilization of the worker vote
around one-eighth of the electorate seems to be confirmed by the limited concessions
found by Corbetta in this area too.
White Collar and Emerging Strata
The second element that stands out from the Makno study is the strong progress made
by the PSI with managerial and professional people and industrialists (10 percent in
1981, with a significant upward trend). The trend is specially pronounced in the
~ north, particularly in the western part of the country, which--above all in 1980
when there was a slight regression--adhered to the Socialist Party with special
loyalty.
Another significant factor is the large support among women: almost 20 percent of
housewives (21 percent in the Makno survey of 1980, 17 percent in the Makno survey
of 1981). This is indicative of the fact that the dominance of the Christian
Democratic garty among women is beginning to weaken (see Table 5).
The last and most complex element to analyze is that regarding white collar workers.
This is a very diverse category which--according to the Makno survey--includes many
and very different strata, including non--managerial personnel of f irms, particularly
persons involved in sales (agents, salesmen), reachers and government employees down
to the lowest levels. It is useful to note that the socio-cultural status as well
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rvn vrri~,~r?L uJG V1VLY
as the political orientation of these strata vary considerably. According to the
Makno data this category, which is remarkably consistent in its support of the PSI--
about 25 percent--has two principal areas of strength: the northwestern areas (this
seems to indicate consistent support from persons employed by firms), areas in the
south, and Rome (this seems to indicate support from the lower tertiary sector).
These findings coincide with those of Gianfranco Pasquino, who sees a predominance
in the southern socialist vote of the rural petit bourgeoisie and of white collar
workers (which seems related to some very personalized voting patterns made evident
above all by the rapid growth of southern constituencies).
Some useful data can also be derived from samples made according to age group. As
Table 3 indicates, there is a fairly clear preponderance of the less young groups:
the 45 to 55 age group and the over 55 age group taken together account for more than
37 percent of the socialist vote. Only 16.5 percent of the socialist vote is
accounted for by the youngest voters (15-24).
This is not surprising if we consider the issue in a general way: almost all parties
except for the radicals (28.6 percent of the radical vote comes from the youngest
voters) are shunned by the youngest voters; they are shunned even more by young
people who do not vote yet. This confirms the fact that the groups which have
entered the political life of the country most recently are the most likely to make
a sharp distinction between politics and their own lives.
At any rate the greater support of older groups for the PSI is clear, and is more
significant in the case of the PSI than it is for the other two major parties, which
have fairly well consolidated support from this part of th~ electorate.
purely political consideration shauld be added to all of this. The fact that the
party which has changed the most drastically--as far as its image is concerned,
too--has appealed so little to young people is somehow surprising. It is also
- interesting to note that the most representative age group in the PSI electorate is
_ that of the young to fairly young (25-34, furnishing 25.6 percent of the socialist
- vote). This is also the most demographically consistent group and the most reliable
source of new social issues and of the most signifi~ant changes in the economic and
cul.tural structure of the country. No other party has such a large base among this
age group. The DC gets most of its support from older people; the other, lay
parties, are either homogeneous or are poorly represented among this age group.
- The Class Structure of the PSI Electorate
- In conclusion, the new electorate of the PSI can be described as follows:
a) Integration of classes, with a substantial loss of the dominance of the
prol.etariat;
b) Consistent growth in the north among social strata associated with f irms
(industrialists, managers, professional people, skilled personnel);
c) A broadening of the influence of the PSI among women, with ma.jor gains among
huusewives being important, but just one indication of this trend (as Table 4 about
distribution according to sex shows, the 1980-81 series indicates a sizable increase
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in the female vote for the PSI, even though it is still smaller than the female vote
of the other two major parties;
d) Strong representation of the fairly young age group but very low support from
the youngest age group;
e) The capacity to attract votes in terms of trade-offs, especially in the south
and above all in peripheral areas (alongside this factor it can also be assumed
that the socialist party's progress in the soutr is largely due to a concentration
of production there, both industry and commerce: Bari is particularly significant in
this respect) .
If any conclusion can be drawn from all of these data, which are still merely
indicative and very general, it concerns thedistribution of the socialist vote along
cla~s lines, which differs from the pattern noted in the Communist and Christian
Democratic Parties: the two major parties seem to get the most support from unpro-
ductive (DC) and declining (PCI) sectors, whereas the socialist party has a more
balanced representation among social classes, especially those who are in a position
to contribute the most to development.
Postscript--This research on the socio-demographic composition of the socialist
electorate is based, as we have said, on a comparative analysis of data collected
- in two successive demoscopic surveys conducted within the context of Makno's
- political studies. From an analysis of these empirical data a few preliminary
considerations emerge which deserve further study using other instruments and other
methods of social research. In the second phase of this study (which will be
carried out in the very near future), emphasis will be placed on the methods
describ ed in the introduction of this article.
Analytically speaking, the methodology adopted provides f or a selection of samples
among electoral sectors which would be broad enough to cover all relevant social
strata participating in the vote, but would be composed of units which would be
small enough to be representative of a given group. In other words the researchers
must create in vitro situations having only one variable (which one wants to measure
the intensity of the effects of), after previously bringing all other variables
under control so as to neutralize them. For each of these model sections/situations,
in a given socio~-economic context, an analysis will be made of the relevant voting
history through the most recent elections.(from 1979 on), so as to deduce further
elements to be investigated using the hypotheses put forward at the beginning of this
study.
The methods we have explained will enable us to complete the theoretical reference
picture by comparing a quantitative analysis of the macro-universe with qualitative
research concentrating on the micro-universe. The purpose of this procedure is
obviously to meet the need or wish for coherent, reliable models for the interpreta-
tion of che socio-demographic composition of the stable socialist vote, the socio-
demographic composition of ihe recent socialist vote (mobile or stable), and the
composition of the mobile vote which may be inclined to support the Socialist Party.
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rvx ~rrt~iAL UJC. VIVLY
TABLE l: 1979 PSI Membership by Geographical Area
Employees
Geographical and Non-
Area Workers Peasants Craftsmen Professionals Other Professional Total
North 25.3 1.9 4.7 17.9 22.3 27.9 100.0
Center 25.6 4.1 5.0 13.9 20.4 31.0 100.0
South 19.4 5.4 5.6 12.2 24.1 33.4 100.0
- National
Average 23.3 3.6 5.0 15.1 22.5 30.5 100.0
(From A/CR/1, "The Membership of the PSI," by V. Spina and S. Mattana, Jan-March
1981, Nuova Guaraldi, p 63)
,
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TABLE3: By Age Group
- Party 15-19 20-24 25-34 35-44 45-55 Over 55
DC 8.6 10.3 18.9 18.3 15.4 28.6
~ PCI 4.6 11.9 33.0 18.3 11.9 20.2
PSI 9.0 7.5 25.6 20.3 16.5 21.1
Republican 6.5 6.5 9.7 22.6 29.0 25.8
Indep. Soc. Dem. 5.3 5.3 21.1 21.1 26.3 21.1
Liberal 0.0 6.7 6.7 20.0 26.7 40.0
Soc. Movement 11.1 5.6 11.1 0.0 38.9 33.3
Prolet. Unity 0.0 14.3 57.1 14.3 14.3 0.0
Radical 28.6 4.8 38.1 28.6 0.0 0.0
37
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TABLE 4: By Sex
party Male Female
DC 38.9 61.1
PCI 52.3 47.7
pSI 55.6 44.4
Republican 64.5 35.5
Indep. Soc. Dem. 52.6 47.4
Liberal 46.7 53.3
Soc. Movement 61.1 38.9
Prolet. Unity 85.7 14.3
- Radical 47.6 52.4
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COPYRI(~iT: 1981 Mondoperaio Edizioni Avanti!
9 855
CSO: 3104/78 40
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. -
POLITICAL ITALY
PLI'S ZANONE VIEWS PROSPECTS FOR LAY PARTIES
Milan IL MONDO in Italian 1$ Jan 82 pp 10-12
[Interview with Va l~rio Zanone, secretary of the Liberal Party (PLI)
by Donato Speroni]
[Text] "This will be the lay parties' year." The bloc of four
minority parties may well rise to strength equalling
tlzat of the DC and the communists. To achieve that,
though, says t,he PLI secretary, a whole lot of
things will have to happen...
Sitting in Montecitorio between the 261 Christian Democrat deputies
and the 201 from the Communist Party are 138 deputies from the lay
democratic parties: socialists, social democrats, republicans, and
liberals. They have always been a cantankerous bunch, ever read.y to
trade accusations and vetos which have historically blocked their sim-
ultaneous presen~ce in any cabinet.
Someth~.ng changed in 1981, though. For the first time, the barr~iers
_ toppled, and a five-party government was born, one which, in addition
to the DC, included all four of the lay democratic parties. One of
their own, Giovanni Spadolini, took over the helm of government. And
another first there is a widespread impression that the four par-
ties will be able to follow a coordinated line, which will free them
from subordination by the DC or the PCI.
No small credit for this turn of events must go to Liberal Party Sec-
retary Valerio Zanone, who has nudged his party away from its tradi-
tional conservative positions (winning a clear victory at the PLI's
latest congress) and has settled it into a middle position among the
lay democratic parties, seeking at every turn to encourage the emer-
gence of a common outlook. His policy will certainly play a major
role in the forthcoming trials awaiting the government, and in the
achievement of nEw understandings among the parties. IL MONDO talked
with Zanone about the lay-party outlook, about the meaning of latter-
day liberalism, and about its prospects in Ita1y and in Europe.
Question: Las` year was the year that brought us a lay-party prime
minister, the congi esses of the PSI, PRI, and PLI, and the full-fledged
crisis in both major parties. From all these events, can one assume
that the lay-party outlook in Italy is looking up?
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Answer: The growth of the lay parties is really only a prospect right
now, a long-term trend which, if it is to continue, will call for
restraint and consisten~ beriavior. The four lay parties, in the space
of a few years, can put together an area of overall consensus in no
way smaller than that enjoyed by the two largest parties, but all pre-
dictions carry the caveat that, for them to prove true, a whole set
of conditions must be met. I
Question: What conditions are those?
Answer: First, the lay parties are entitled to move up only if they
do not repeat the structural flaws of the big parties with their big
apparatus. Second, the lay parties must demonsi,Yate their ability to
act pragmatically in dealing with the crisis in the mass and class
ideologies, and hence in the two iddological parties. Third, the lay
parties must prove their independence with respect to the compromise
agreements with~both; this would certainly be the time to remind
people, in this connection, that the 1978 match between the DC and PCI
ran into opposition among the parties invited to attend the wedding
only from the Liberal Party. Fourth, the lay parties must work toge-
ther with mutual respect for their respective identities. Collabora-
tion among the lay parties must rule out from the start any notions
about star billing or yens for hegemony which, if they are not to go
on at the instigation of the stronger parties, there is al1 the more
reasan why they must not find encouragement in the weakest. These
are all conditions that must be met, without an~F illusions as to the
speed or facility of the process.
Question: In 1981, though, we also had the P2 scandal, and the con-
tinual poisoning of politics with real or alleged scandals. Do you
think political ethics are still deteriorating?
Answer: There is more corruption in Italian politics than we hear about,
but perhaps less than we think. Not everything is poisoned and pol~
luted. Reclamation is possible if we steer clear both of a prurient
taste for scandal and resignation to it, and if we tackle the problem
of restoring ethics and morality on two fronts: strengthening our
institutions, to strike at the roots of alternative fiefdoms; anci
putting more muscle into the instruments of control that can be put
into play by our citizens.
Question: Specif ically, what did the who1~ P2 aff air mean, in your
view, to Italian politics?
Answer: First of all, the P2 business is still unresolved. I have
said all along that P2 is a case of power and money, of wheeling and
dealing and of striving for success but there is more to it. There
is a subversive core here which has not yet been laid completely bare,
and which is held together by international strings. In an interview
with Maurizio Costanzo in CORRIERE BELLA SERA, Licio Gelli said that
he always wanted to be a puppeteer when he grew up. I believe that
when we get to the bottom of this business, we shall find that Gelli.
is a puppet.
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_ Question: Then who is the puppeteer?
Answer: That is something we still have to find out, and we hope
that the P2 commission will be able to shed some more light on thc
whole business.
Question: Your party is perceived these days as a growing force;
yet it is so small in size that it is perpetually at risk of being
nothing more than a cultural presence. What are the scenarios in
which you see a greater potential for growth for the Liberals?
Answer: We are at the end of a year, so this is a time for forecasts:
I shall take advantage of that to put some numbers into the question.
One could fairly reckon that in free Europe, liberals account (with
sharp disparities among nations) for about 10 percent; I should say,
on the basis of reliable surveys, that one of every 10 Italians has
a more or less ~olid 1 iberal commitment. One of my goals is to reach
the point within a few years where at least half vote for the party
that bears that name and that strives to represent those ideas. The
slow recovery we have made, under a:Ll but prohibitive conditions, since
19~6 demonstrates that for the Liberal Party the n ational average of
$ percent is noi; a wholly unreachable goal.
Question: Some of the main tenets of liberal thought would seem these
days to have been adopted by many other political parties. How is
latter-day liberalism different from social democracy? In other words,
where does Lib. end and Lab. begin?
Answer: Once you peel off the partisan emblems, the question can be
put in these terms: where does the right to individual diversity end
and where does the obligation of gatting along with one another in
society begin? It seems to me that the factors of agreement between
liberal democracy and socialist democracy are more numerous than are
those that put them at odds. Remember, though: to each his own: for
example, all the current wave of critic~.sm directed against statism,
against welfareism, against bureaucratism has undeniable liberal
not socialist connotations. However, I don't see why liberals
should be suspicious or worried if liberal ideas crop up in political
circles other then their own.
Question: The welfare state is now going through a stage of dismant-
ling or restructuring in a good many western countries. What about
Italy? Don't you feel that all the parties, including your own, have
failed thus far to come to grips with this problem with sufficient
- courage?
Answer: The imperative need to dam the ruinous expenditures of the
welfare state is now widely recognized. If we really want to do the
job, t;hough, we must have 'legislative reform that will take at least
2 years to pass and implement;~ we can~t do it with governments that
survive only an average of 6 to 8 months. For this v~ery reason, the
Liberal Party argues the urgent need for a political entente among the
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five parties in the parliamentary majority behind a program and a gov-
ernment that will make good use of the second half of the legislature.
The quest for such an understanding is point one on the political agen-
da for 1982.
Question: In ot~er words, you see a relationship between the election
- returns and the agreement in the legislature and the fight against the
welfare state. What, in practical terms, does that mean?
Answer: When we sat down at the table to talk about institutional re -
forms, with all our cards on the table, we realized that our firist move
must be to prevent the collapse of the state.
Question: What move is that?
Answer: There should by now be substantial cultural unity behind some
reforms: changes in puUlic spending procedures, intervention to ward
off the collaps of the Social Security system (INP~), revision of the
health delivery system reform, healing the schizophrenia between na-
tional policy and the behavior of local governments, and reform in the
agencies that manage state participation.
Question: Who is to manage all this? A new government?
Answer: Well, yes: this one or another one that's the big ques-
tion. As I see it, there is only one certainty here: there is no
alternative to this coalition. If the five-party coalition breaks up,
the legislature will pack up and gb home. Once we agree on that, it
is understandable that each party will have its own ideas, and that
those who think they hold the right cards will decide to play the game.
For that matter, even the prime minister has consistently underscored
the token, temporary nature of this government. That sometime in the
future another will take its place is in the order of things. But to
say who is going to form that government, you have to be living in the
Quirinale.
Question: The latter-day Liberals emphasize their social concern. In
what way is this different from the attitudes of traditional liberal-
ism say that of Luigi Einaudi or Giovanni Malagodi?
Answer: I can answer that with a quot ation from Einaudi's "Lessons of
Social Policy" or from the principles of social order in the manifestos
of the Liberal-International conferences at Oxford in 196~ and Rome in
_ 1981, both writt en by Malagodi. The new rationales for freedom, though,
are coming out of the revolutionary swiftness of social change over
the past decade. Today, the freedom to possess is secondary to the
freedom of interprise, to find work and change jobs, to express fully
one~s own personal initiative both on the job and in one~s leisure time.
New patterns of deprivation of freedom are also emerging: urban unrest,
the spoiling of the environment, the swindls cha~t is consumerism.
Individual freedom must be affirmed in the face of the new bon~dage.
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Question: Is there still a place in Italy for battles for individual
libert ies in the liberal t radition? ~
Answer: On all too many occasions the citizen runs up against the
_ state as an antagonist, a tyrant glassed in behind the little barred
window. All our institut ional policy, the reform of the state, is
perceived by the Liberal Party from the citizen~s point of view. The
primacy in institutional reform centers on the px~imordial function of
the st ate as the guarantor and executor of just ice. The front line of
defense of individual liberties and of juridical ci.vility today runs
through the courtrooms and into the prisons. All our experience goes
to prove that the liberal state under law is not a heritage handed
down by tradition, but a continuing porcess of evolution.
Question: The PLI some t ime ago lost its cozy relationship with the
General Confederation of Italian Industry (Conf industria). Do you
hope to get it back, and if so, how?
Answer: I have good relat ions with the president and the board of Conf-
indust r ia, and there are some liberals in its e~Cecutive bodies. The
_ Party deriv~s no privilege from that. I should be altogethcr content
if next time Confindustria lets us use the EUR auditorium for one of
our congresses, it would refrain from insisting that we reimburse it
_ for minor expenditures.
~uestion: How would you describe the business and industrial bour-
geoisie's behavior during the current phase? Is it still creative,
is it purely defensive, or is it perhaps a vanishing class, being
pushed out by entrepreneurs getting handouts from Brambilla?
- Answer: I could cite you dozens oi cases that prove the vitality of
the free enterprise system. The roots of this recession are easily
traced to interest rates, the rigidity of the labor institutions, and
the appalling inefficiency of public services. Generally speaking,~it
is the behavior of government that places the free enterprise system
in diff iculty in internat ional competition.
Question: What do you think of the recent public utterances of the
most prominent private entrepreneur in Italy, Giovanni Agnelli?
Answer: A elli has ar
gn gue d vehemently in many circumstances for the
need t o allow business to plan ahead and make decisions in conditions
of adequate institutional and political stability: that seems to me
a perfectly legitimate demand. On the other hand, I most emphatically
do not agree with the proposal to sacrifice Italian agriculture on
th~ alt ars of the European community to big industry, which is what
Agnelli seems to me to be asking for. Most i.mportant, the boundaries
between those two sectors of the economy are increasingly blurred.
I
Question: 1982 may well be PSI Secretary Bettino Craxi~s year. What
do you admire in him, and what do you fear?
i
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Answer: I admire the way he has pushed the Socialist Party into a
change of course. Insofar as I am concerned, I fail to see what I
ought to fear from him. .
Question: Of course, you have nothing at all to fear. But more gen-
erally? Craxi has been accused of arrogance, of bullying, of stoop-
ing to the same kind of precinct gatronage as the DC...
Answer: If we were to look into the behavior of the parties that have
spent much time in government,+we should see that the use of power for
patronage is not a prerogative enjoyed solely by the Christian Demo-
crats or the Soc~i.alists. Yes, they do say Craxi uses platoon-style
systems inside the PSI. But if we compare these socialists in the PSI
with the ones we had in Francesco De Martino's day, crammed full of
old-line ideological truisms and perennial losers, we are forced to
say that Craxi has done a good job.
Question: What opinions would you give us about the other lay-party
leaders? Just how does the way they play politics differ, for instance,
from that of Giovanni Spadol~ni and Pietro Longo?
- I
Answer: I am not clever enough to find a witty reply to that one, but
if IL MONDO will take a bit of advice, don't cite Spadolini and Longo
as "two examples of the same species." You might get one, or even two
very angry phone calls.
_ Question: How deep is the crisis in the DC? Do you believe that party
can get itself together and stage a comeback?
� Answer: The will to shape up is there, no question about that: when
all is said and done, there is no other political party that has called
a public nationwide conference to find out where it had gone wrong.
It is hard to see, though, just what direction its renewal is taking.
There is a strong resurgence of religious motivati~ns; yet in a
highly secularized society a religous party would~be doomed to a mino-
rity role. In other European countries the Christian Democrats have
assumed the role of popular parties with moderate programs to counter
the socialists: Italian Christi_an Democracy, though, rejects the mod-
- erate identity. There is of course leftist Catholic populism, but
that lost much of its appeal when the historic compromise fell through.
There will be other roads for the DC to travel; but for total out-
siders, it is hard to discern them.
Question: At t he Liberal Party congress, you came out with a platform
containing no prejudicial positions toward.the PCI. In light of recent
events, wihat do you believe would be helpful and what would be point-
less in a conf rontation with the communists?
Answer: The coup in Poland has precipitated a historic crisis in in-
ternational communism. Communism in Europe stays in power by force o~
arms, not by consensus. The threat of Soviet totalitarianism wilJ. go
on stirring up ever-incr~easing protest all over Europe, and that pro-
test will be both inevitable and legitimate. The PCI is on the brink:
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a v~~ vrra~,a~~. vJG VI~L1
it has no choice but to jump: it must choose between Europeanism
and pro-Sovietism, between tiuman rights and reasons of state~ between
. democracy and totalitarianism. Upon tha~ choice will depend the
confrontation between the PCI and the western-oriented parties in the
years ahead.
Question: In the west we see the ever-elearer emergence of a conflict
between American President Ronald Reagan, with his polarized world-
view, and German Chancellor Helmut Schmidt, who favors an independent
rale for Europe in the dialogue with the east. To which of them do
you feel closer?
Answer: Once we make it clear that there are some specific factors
in German politics at work in Schmidt's position, I should like to say
. that the most i.mportant contribution Italy can make to international
policy in 1982 is a renewed commitment to and drive toward the pro-
cess of European integration.
Question: Aren't those fairly hollow words? We have heard them now
for so many years....
Answer: We intend to deal with the problem on a practical basis, and
in f act European integration will be the theme of the congress of the
Liberal Democratic Federation to meet for the first time in Italy, in
Venice, in May 1982� But we don~t want to conf ine ourselves to talk-
ing about Western Europe. In view of the crisis in communism which
can no longer govern in Europe by consensus, we must affirm the united
and liberal character of European civic belief and custom. Because
liberalism still lives in Krakow, in Prague, or in Belgrade, even
though it is repressed. This is why I am convinced of the need for
multiplying the occasions of encounter not with the USSR, but with
the nations of easte~n Europe. I have promised myself to go very soon
to the German Democratic Republic to meet with the Liberal Party in
tliat country. Even though it is a party supportive of the regime, it
IZas its own demand for and claim to a specif ic identity which must be
deepened.
Questiori: I seem to get the feeling, then, that as between Reagan and
Schmidt, you would lean toward Schmidt...
answer: Insofar as concerns relations with the countries of eastern
Europe, of course. But it is clear that this process must never be
allowed to challenge Europe~s alliance with North American democracy.
COPYRIGHT: IL MONDO 1981
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POLITICAL SPAIN
POLLS INDICATE PSOE TO GAIIY ABSOLUTE MAJORITY IN ANDALUCIA
Madrid CAMBIO 16 in Spanish 18 Jan 82 p 32
[Article by Juan de Dios Mellado: "Come On, Socialists!"]
[Text] If the voting were held now for the Andalucian Parliament, the PSOE [Spanish
Socialist Workers Party] of Andalucia would win the absolute majority. According
to the first opinion polls, the Communists and Centrists would be beaten by Rojas
Marcos' Andalucists and Fraga's followers in Andalucia. Three different polls
have had these results: one, of the CEOE [Spanish Confederation of Business Organi-
zations], another prepared by a government sociological research department, and
the third, a partial one, prepared by a political party which does not. want to
make the findings putalic.
The businessmen received the first results from Cadiz and Sevilla with great concern:
The PSOE of Andalucia not only wins an absolute majority, but has a sweep, politically
humiliating its adversaries. The only one saved from the burning is the Andalucist
Party, which would win 15 percent of the vote, followed by Popular Alliance, with
10 percent; while Carrillo's followers would have to be content with 9 percent, and
for the government party the debacle would be total, with a horrifying 5 percent.
According to this poll, Manuel Clavero's party would not have any representation
in Parliament.
The government poll shows an almost spectacular item of information: The Communist
Party of Andalucia [PCA] would become an extra-parliamentary party in four Andalucian
provinces, obtaining five seats out of the 109 that will comprise the Andalucian
Parliament. The crisis among the Communists, despite Felipe Alcaraz's attempts at
"mending," could underlie these poor results.
There are some colorful incidents in both polls, such as when Fernandez Ordonez was
mentioned, and many of those queried asked: "And who :ts he?" The same thing might
be said of the extra-parliamentary leaders and parties, such as Andalucian Unity,
New Force in Andalucia, and Andalucian Communist Movement, which in no instance
will attain results enabling them to seat a member of Parliament.
The Socialist `Scare'
According to the government poll, with the 109 seats, the Andalucian Parliament
would be comprised as follows: PSOE, from 55 to 60 seats; PSA [Socialist Party of
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r~ux ur~r~t~tAt. US~; UNLY
Andalucia], from 22 to 28 seats; UCD [Democratic Center Union], from 18 to 22 seats;
AP [Popular Alliance], seven seats; and PCA, five seats.
When CAI~IO 16 asked the Socialist leaders for their opinion of these results, they
claimed not to accept them a priori, "although we are convinced that we are the
leading political force'in Andalucia." PSOE knows that it will be able to govern
i~ndalucia as comfortably as PNV [Basque Nationalist Party] in the Basque Country.
Francisco Oliva remarked: "T~Ie don't want to put our trust in these results either:'
UCD Sounds the Alarm
The Centrist party does not attach the slightest significance to these results,
although it sounded the alarm when Moncloa confirmed Perez Miyares and Carlos
Rosado as the party's strong men in Andalucia.
Perez Miyares admitted to CAMBIO 16 that "UCD will continue to be the second poli-
tical force in Andalucia; but at the same time we are striving to be the first."
The secret, in addition to the program and strategy which will emerge from the
forthcoming regional congress, may lie in the tendency of the vote of the undecided,
according to these polls. Forty percent of those polled have not yet decided whom
they will vote for. Carlos Rosado, the UCD regional secretary for Andalucia, told
CA~yIBIO 16: "This floating vote is the one that could cause a considerable change
in the final results." The specificat~ion of the PSOE electorate is very definite,
and almost the sams might be said for Andalucists and Communists, although these
two parties could lose votes to more radical areas.
COPYRIGHT: 1982, Informacion y Revistas, S.A.
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CSO: 3110/77
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POLITICAL SPAIN
LIBERAL PRESS APPLAUDS TOP MILITARY SHIFTS
Madrid CAMBIO 16 in Spanish 25 Jan 82 p 28
[Article: "At Their Orders"]
[Text] Two artillerymen, aged 63 and 61, a"sea wolf" from the Navy and a veteran
aviator and helicopter pilot from the Air Force, and former tutor of the kin~,
are the new officials serving as Joint Chiefs of Staff (JUJEM), the top-ranking
position in the military chain of command.
These four military men, Army Gens Alvaro Lacalle lieloup and Ramon de Ascanio y
Togores, Adm Saturnino Suanzes de la Hidalga and Air Force Gen Emilio Garci.a-Conde
Cenal, are the individuals who, in their respective posts will have to undertake
the trial of those who perpetrated the coup of 23 February, and establish means for
understanding between the civilian society and the military.
_ The replacement of the Joint Chiefs of Staff occurred in the Council of Ministers on
15 January, a week after the former Army Chief of Staff, Jose Gabeiras Montero,
used very severe language in condemning the extreme right poison campaign in the
barracks.
In that atmosphere of tension and apprehension, the dissemination of the news,
which had been kept in the greatest of secrecy for a month, by the Europa Press
agency, the same ag~ncy which distributed the "document of the 100", 24 hours
- before the replacement occurred, created a state of shock in press and political
circles.
There were, moreover, other causes for alarm. A few days earlier, the extreme right
press had asked for the head of Lt Gen Gabeiras Montero, and the attacks against
the JUJEM had become more severe. The front page headline of HERALDO ESPANOL,
referring to the Military Christmas speech, read: "Gabeiras causes an earthquake
in the Armed Forces."
- Nevertheless, there was no earthquake, and the renovation of the Joint Chiefs of
Staff was not based on any type of pressure from the military, but rather on
reasons of age.
Taking advantage of the fact that Lt Gen Jose Gabeiras Montero was retiring from
his post with the JUJEM next April, and considering that the courts-martial
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_ r~n urrl~ltu.. u~~ U1VLY
against the perpetrators of the coup of 23 February are to be held this year, the
president of the government, Leopoldo Calvo Sotelo, asked Gabeiras to advance his
resignation a few months, so as to put at the head of the Army a yotinger military
man, who could remain on active duty until the general elections were over.
The renovation, which was going to be limited to that, was made to apply to the
full Joint Chiefs of Staff when the previous head of this entity, Ignacio Alfaro
Arregui, talked with Calvo Sotelo and afforded him the leeway for making a more
extensive restructuring.
Hence, the replacements of the Joint Chiefs had been disclosed since December.
Throughout the month, the defense minister, Alberto Oliart, planned the changes
in the most scrupulous secrecy. Forty days later, on Monday, 11 January, the
minister had the remodeling devised, and it was submitted to the president of the
government for approval.
Combined Replacement
Calvo Sotelo gave his approval for Oliart's plans. The following day, the president
of the government received at rioncloa the brothers Ignacio and ~miliano Alfaro
Arregui, chiefs of the JUJEM and Air For~e Staff, respectively, and Jose Gabeiras
~tontero. The three chiefs expressed approval for the replacement being made iii a
combined manner. However, Adm Luis Arevalo Pelluz, Navy Chief of Staff, who had
been traveling and who visited the presidential palace the next day, had misgivings
about the plan. He was more in favor of a progressive change in the JUJEM commands,
as they reached retirement. Oliart and Calvo Sotelo tiad to persuade him of the
feasibility of creating a compact, homogeneous team to face the 23-F trials.
The restructuring was completed with the appointment of Gen Jose Saenz de Santamaria,
a maii who was typified by his unconditional support for democracy at the difficult
time of 23 February, to the command of the captaincy of the Seventh Military Region,
an area wherein conflicts with the government have arisen in recent months.
Gen .Jose Aramburu Topete, director general of the Civil Guard, and one of the mili-
tary mentioned for holding a post with the JUJEM, will be kept in his current
position until the 23-I' trials have ended. Jesus Gonzalez del Yerro, commander-in-
chief of the Canaries, and one of the military who has prompted the most discussion,
o~aing to his contacts with professional politicians, is beginning to sound in mili-
tary circles like the replacement for Gen Joaquin de Valenzuela, in the king's
~tilitary Squad. However, the decision from Zarzuela does not appear to be inclined
in that direction. Meanwhile, the former head of the JUJEM, Ignacio Alfaro Arregui,
was named adviser to the president of the government on defense matters.
Professionals
'I'tie biographies of tne new JUJEM commanders disclo~~ that they comprise a young
Kroup within the bottom scale oL the generalship, and a team of military with a
bril.liant service record and complete professional dedication.
~l.varo Lacalle Leloup, chief of the JUJEM, is 63 yea'rs old. He was born in Haro
(La Rioja), and has spent 44 years in the Army. They underscore his tenure in the
artil.lery headquarters of the Canaries, the command of the 6th Navarra Mountain
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Division, his assignment in the technical secretariat for economic affairs in the
Defense Ministry and the command of the Captaincy General of the Seventh Military
Region.
Two years younger, the Army Chief of Staff, Ramon Ascanio Togores, was born in
Tenerife, and began his military career as a volunteer artillery soldier. His
most recent assignments have been those of Army Artillery chief, artillery chief
of the Guzman el Bueno~~ Mechanized Division, and chief of the higher personnel
command of the Army.
The Naval Chief of Staff, Saturnino Suanzes de la Hidalga, is the youngest of all.
He was born in Vitoria, and is 60 years old. He is a naval artilleryman and heli-
copter pilot. Throughout his life, he has commanded eight warships, including the
aircraft carrier "Dedalo".
A specialist in helicopters also, and tutor of the king, Air Force Chief of Staff
Emilio Garcia-Conde Cenal was born in Oviedo, and is 63 years of age. He was air
attache at the Spanish Embassies in Rome and Athens, director of the Air Force
_ Helicopter School, and chief of the technical cabinet of Gen Manuel Gutierrez
Mellado.
COPYRIGHT: 1982, Informacion y Revistas, S.A.
2909
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END
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