by Tobias Jones
Eventually the heavy door swung to, and a policeman – decked out in shades and epaulettes – ushered us in. When towards ten o’clock I arrived at the counter and shouted my request through bulletproof glass, I was given the application form for a sojourn permit. I went to the bar across the road and began filling in the form. More and more people came in, clutching their precious forms: Albanians, Ukrainians, Tunisians, Somalis. We passed around biros borrowed from the bar for the cost of a coffee. Jokes started flying around in pidgin Italian about how Albania, or Nigeria, was more efficient than this, and shouldn’t we all just go back to where we came from. By the time I had explained the form to various people, and filled in my own, the Questura was already shut.
Seven-thirty the following day. The same crowd on the pavement, waiting for the office to open. We greeted each other like old friends. The man in the West Ham top was there. He shook my hand, delighted that the English were subjected to the same routine as Africans. After queuing for only 45 minutes, I proudly presented my application for sojourn in Italy. The application process, of course, would require months, but at least equipped with the carbon copy I could go to the Anagrafe – the provincial equivalent of Somerset House – to apply for residency. The Anagrafe is an infamous institution: any change of status – marriage, new house, identity card – has to be rubber stamped. Then to the tax office, to apply for VAT status: another morning gone. I was beginning to understand why people talk about doing an ‘operation’ in a bank, or an office: it really does require military precision to navigate your way through the documentation.
Worse was yet to come though. The university presented me three contracts for the three courses I was supposed to teach. Since they are formal pieces of paper, it’s not enough to sign them: they have to be bollati, given an official postage stamp sold at tobacconists. Then, I was told, I had to be insured in case of personal injury incurred whilst lecturing on English literature: another 300,000 lire. A few days before the beginning of the course, I went to the faculty library to see what books were available. The stern signora from the secretarial office ran up to me: Ma che fai? ‘What are you doing?’
‘Trying to find a few books for next week.’
‘These are for the exclusive use of permanent staff. You’re hired as a freelance and must buy your own.’ She produced the business card of a friend who could help me out.
‘But I’m allowed to use the blackboard, right?’
‘Haven’t you read your contract?’
I hadn’t of course. It slowly dawned on me, as months went by, that since I was working freelance at the university there was no date specified as to when payment arrived. Assuming things were done monthly, I had only looked excitedly at quanto – how much? – not at the much more important information: quando, when? Months went by: the deep blue sky of late summer gave way to the dense fog of autumn. The snow began to fall in December, and the local electricity monopoly, AMPS, wanted its heating bills paid promptly at the post office. Any tentative payment enquiry at the university accounts office was brushed off with brilliant ventriloquism: ‘It is foreseen that the pre-agreed payment as stipulated in the contracts for freelance teachers will be honoured before the end of the academic year.’ Months later, that line had turned into ‘before the beginning of the next academic year’.
I went back to see Filippo, who began laughing. ‘You’ve still got milk in your mouth! Of course she makes you get insurance and books from her friends. Of course she then pays you a year and a half later. What did you expect? You really are so naive.’ He began, slowly, explaining the whole thing again. ‘Cash,’ he kept repeating. ‘Cash. Documents and contracts and banks will always rip you off. You must insist on cash. And never tip. Tipping is for stupid foreigners. Italians never tip. Why would we? Tipping is like paying tax … a voluntary contribution towards someone you don’t know and shouldn’t care about.’ The distrust was incredible. All the more so because ‘credit’ – that Italian invention – was originally based linguistically and financially upon belief, on trusting the other person.
I had even seen politicians urge tax evasion, though. Those in opposition would encourage viewers not to pay the TV licence because the RAI channels were in the hands of the ‘wrong’ party. Other political leaders regularly urge a sciopero fiscale, a tax strike in protest against unfair financial burdens from the government. The defence line for tax-evaders is always the same: either it’s justified because the government is corrupt, and therefore our tax-evading corruption is actually ‘fiscal resistance to corruption’. Or else it’s justified because of the extraordinary tax levy on Italians, the theory of the so-called oneri impropri (‘unfair burdens’). It’s a defence line which Silvio Berlusconi has repeatedly used to explain his financial manoeuvres: tax-payers, he has said, feel ‘morally at loggerheads with the state’, observing that the state’s laws go against ‘our natural sense of justice …’2
Given that backdrop, in which everyone (from friends to parliamentarians) urges you to, sooner or later you will become ‘furbo’. However earnest the intentions, you’re almost forced to collude with ‘unofficial’ money, with the ‘black’ side of the economy, simply because it’s so widespread. To avoid doing so would be harder than avoiding the cracks between the cobbles. Renting property ‘in the black’ (with under-the-counter cash) is very common because it suits both sides: the landlord pays no tax, so the rent is lower. You’re welcome to do it legally and above board, but then you’ll end up in a bedsit somewhere under the ring-road. If you can compromise on your morals a bit, the opportunities are exponentially increased. If you want to buy a house, the scams are even more labyrinthine. Buying a property involves so many middle-men (not only estate agents, but ‘notaries’, the richest of all Italian professional orders) that it’s not surprising that Italians are bemused with the ease and speed with which the British buy and sell houses. Here, the costs and complications are so high it’s clearly best to keep it a once in a lifetime experience. The only way to save yourself 30 or 40 million lire is to take a few short-cuts. Many suggested to me that if I were to pay them in ‘countables’ they would accept a 1.5% instead of the 3% cut. With the notaries you can even pretend that you’ve bought the house for half the price, thus halving his cut (although there you will be left with a property which is worth, on the vital, stamped paper, only half of what you actually paid). Alternatively, there’s something called a scrittura privata, a ‘private document’, a sort of ‘for our eyes only’ agreement. Thus you can buy a property for two different prices: the official one (cutting your costs, future taxes and so on) and the private one (which is the real price you agree to pay the seller). Not for the first time, it became difficult to distinguish quite what was going on. There seemed, at all levels, to be parallel paths – the official one written on paper, and the hidden one going on in verbal agreements between ‘gentlemen’.
The other problem was that frequently I was offered a flat that, given the official/reality divide, wasn’t actually in existence. The widespread practise of illegal building (abusivismo) means that you can find something that – given your modest budget – appears a bargain: a two bedroom attic flat on split levels in a part of the city that feels crumbling but lively. The estate agent notices your enthusiasm, and whispers in your ear about how negotiable they are when it comes to cash payments. The problem is that if the flat or a part of it, say the second level of the flat, is ‘abusive’, it simply doesn’t exist in the annals of bureaucracy. To save money, the notary has been bypassed and in buying the property, you make the gamble that the ‘unpardoned’ building doesn’t get discovered, because you would have inherited the abuse. You would, to officialise the abuse, have to pay for the pardon, or else keep it secret and risk the fine. It would be very unlikely that anyone would even discover your inherited abuse, but if you had snapped up the bargain you would already be on that well-trodden road to collusion with illegality. Anyone who had a grudge against you could simply do th
e ultimate in betrayal: denounce you.
Stay in the country long enough and you simply have to become ‘cunning’ in order to survive. With a shrug of honest admission, everyone in Italy will admit to having broken the law at some point (it’s hard not to if being ‘an accessory to tax evasion’ involves leaving a shop without the till receipt). Catholics mention original sin and our fallen nature; politicians talk about being realistic rather than ideological about the law. Everyone has a bit of ‘black’ mixed in with the ‘red’ and ‘green’. It’s only a matter of degree. Così fan tutti: everyone’s guilty of something, so if you go looking for dirt, you’ll find it anywhere.
The whole debate about Clean Hands is about where to draw the dividing line (if it even exists) between what is ‘cunning’ and what is ‘corruption’. And even corruption is a redundant term because here the word has so many layers. It is only a loose, generic word (like prosciutto) that needs to be divided into dozens of different cuts, each of a different quality and cost.
The other side of the economy is the complete opposite of those small enterprises: huge ‘para-statal’ companies employing hundreds of thousands of people. As with the politics, in economics there was a marked continuum between Mussolini’s regime and the First Republic. The many acronyms from Fascism such as IRI, IMI and AGIP survived untouched. To those state enterprises, founded in 1933, 1931 and 1926 respectively, was added another in 1953, ENI. Thus the public sector workforce remained much as it was under Mussolini: IRI had in 1942 employed 210,000 people; by 1955 it was still employing 187,000 people and would, seven years later, become Europe’s biggest industrial group after Royal-Dutch Shell.
The other catalyst for Italy’s post-war reconstruction was Mediobanca, founded as an offshoot of the Banca Commerciale Italiana in 1946 and nestled just behind La Scala in Milan. It was, until his death in 2000, for over fifty years the private domain of a banker called Enrico Cuccia. Even there the continuities with the Fascist period are marked: Cuccia had married the daughter of Alberto Beneduce, the man who had, under Mussolini, been president of both IMI and IRI. Mediobanca provided credit to the country’s commercial ventures, receiving in exchange large shares itself or else positions on the board. (It now has a market capitalisation of almost £7 billion, and owns, amongst other assets, Assicurazioni Generali, Europe’s third-largest insurer. Mediolanum, a bank in which Berlusconi has a 36% stake, is now part of the controlling shareholder group of Mediobanca.)
For all the subsequent criticisms aimed at the Christian Democrats, their rebuilding of the Italian economy was a brilliant piece of strategic management. Mediobanca, with its secretive system of overlapping interests, provided capital investment. Those semi-public corporations (often blamed for the later distortions of the Italian economy) for decades laid the foundations for Italy’s industrial revolution. Thanks to their partnerships with private enterprises, those para-statal acronyms offered Italy the best of both worlds: the guiding hand of the public state combined with the acute, capitalist judgements of private enterprise. The result was that the raw materials and the physical infrastructure required for the country’s economic miracle were quickly put in place. To give just one example, steel production, controlled by IRI through the Finsider company, reached three million tons by 1955; the obvious beneficiary was Fiat, which in turn increased production by some 400% during the 1950s.
Thanks to the low value of the Lira, and the low labour costs of the immediate post-war years, the ‘miracle’ was export-led. For much of the post-war years, the percentage growth of exports – cars, chemicals, clothes and so on – was in double-figures. The crisis only arrived in the 1970s. Since Italy was more dependent upon oil than many of the other industrialised countries, it was particularly susceptible to the hike in oil prices at the beginning of the 1970s. The end of the Bretton-Woods agreement on fixed exchange rates and the devaluation of the dollar (in both 1971 and 1973) meant that Italian exports (ever the success story of the economy) were hard hit. Industrial unrest was also causing a wage spiral. The hourly rates of workers between 1964 and 1968 increased by 22.8%; during the four years after that period, they rose by over 95%. In fact, inflation was perceived as a way out of the Italian crisis, not least because the continuing fall in the value of the Lira meant that the engine of the Italian economy – exports – could be kept competitive. (Meanwhile imports, of course, and especially oil, became as a consequence evermore expensive, which itself fuelled the inflationary spiral.) It was in that period that the most surreal effect of Italy’s economy took place: everyone became a millionaire, and calculators started to come equipped with that unique button of three zeros in order to save time when adding up.
The more serious problem was that the economy was being subordinated to the survival of various political parties. Since they depended so heavily on patronage, on the ability to place their supporters within the bureaucracy through ‘recommendations’, any attempt to cut down on the mushrooming public sector workforce would have been tantamount to political hari-kiri. Thus organisations like the ‘Cassa per il Mezzogiorno’ (the ‘fund for the south’) and the ‘Ministry of State Participation’ were just the most famous examples of the bureaucracy providing jobs rather than services. Despite its important role in post-war reconstruction, the huge public sector had ‘become the centre of party power, paving the way to the so-called spoils system’.3 It served politicians to do exactly what was worse for the Italian economy: exponentially expand the size of the bureaucracy, thereby increasing the size of their grateful clientele. By the beginning of the 1970s, just over 30% of all salaries and wages in the south of Italy were due to public administration jobs. The circumstances were exaggerated in the south, but even nationwide the percentage of employment in the public sector had doubled from just 9% in 1951 to over 18% in 1990.
There was nothing particularly new about the size and inefficiency of Italy’s bureaucracy, which had, for centuries, been the brunt of bitter criticisms. ‘In Italy,’ wrote Stendhal, ‘and especially in the neighbourhood of the Po, everyone’s conversation turns on passports.’ He describes in The Charterhouse of Parma one clerk who ‘waved his hand several times in the air, signed his name, and dipped his pen in the ink to make his flourish, which he executed slowly and with infinite pains … The clerk gazed at his flourish with satisfaction, added five or six dots to it, and finally handed the passport back …’ Luigi Barzini was even more scathing. Bureaucrats, he said, ‘are as a rule impatient, overbearing, hurried, ignorant, indifferent to other people’s problems, insolent and sometimes corrupt … Italians of all classes (unless they are important people with powerful friends) spend a substantial part of their time standing in angry queues, in front of office windows, or waiting endlessly merely to have some simple right recognised. What their rights are, nobody knows for sure. Uncertainty is used, in Italy, as instrumentum regni.’
There were other problems. Mediobanca was the epitome of the ‘salotto buono’, an exclusive club of few high-financiers whose interests overlapped wherever possible. In fact, there had been ‘a massive rush towards the concentration of capital. Between 1966 and 1967, twenty-nine companies possessed over 34% of the entire equity capital.’ 4 That trend would continue during the following decades, witness to both the financial muscle of a few, very large corporations and the small size of Italy’s stock exchange. Given the size of the Milan Borsa, it had traditionally been simple artificially to inflate or deflate stock prices. Shareholder rights were minimal, consolidated accounts were until recently unheard of, public information was nearly impossible to obtain. Business empires were split into the usual ‘Chinese boxes’; if you opened the lid on one company, you didn’t see the contents but just another box. Meanwhile many of the largest and most influential companies remained unquoted and in private, family hands.
Even today, that habit of Chinese boxes is incredible. Take, for example, the takeover in 2001 of Olivetti (and therefore of Telecom Italia) by Pirelli. It was masterminded by
Marco Tronchetti Provera (former husband of Cecilia Pirelli) and his Benetton allies (‘Benetton Edizione Holding’, responsible not just for the clothing empire, but also a Formula One team, and almost all of Italy’s motorway service stations and the motorways themselves). In the deal, £4.3 billion was paid for a 23% stake in Olivetti (in a move which would have been illegal elsewhere, a premium was paid only to certain shareholders). The resulting Chinese boxes should give some idea of the byzantine, secretive world of the Borsa: Tronchetti Provera now owns 53% of Gpi, which owns 55.1% of Camfin, which owns 29.6% of Pirelli and Company, which owns 100% of Pirelli and Company Luxembourg, which owns 27.7% of Pirelli S.p.A, which owns 60% of Newco, which owns 27% of Olivetti, which owns 54.9% of Telecom Italia which in turn controls 56% of Telecom Italia Mobile and 54.6% of Seat-Pagine Gialle, which is responsible for the seventh national television channel, now renamed ‘the seven’. Looking at that empire, and it’s much the most simple example of the genre, the usual pattern emerges. In a few family hands all the aces are held: telecommunications, publishing, mass media, offshore stop-overs and so on. None of which is, of course, illegal. It’s simply that high-finance is like so much else: not exactly transparent.
Italian investors, at least those outside the cosy ‘salotto buono’, were disinclined to invest money in someone else’s Chinese boxes. There was for years an enormous export of capital abroad (an estimated three billion dollars in 1969, before the crisis had even begun). Once inflation did begin to go well into double figures, people realised that it was better to invest money in dollars, sterling, or even Parmesan cheese, than in the Lira. Foreign investment, too, was minimal (even in 1999 it was only one ninth of Britain’s), largely due to the opaque quality of Italian finance. Transparency International, a company that analyses the corruption factor across the globe on behalf of potential investors, now ranks Italy bottom of all western European countries. On the world stage, it rates worse than Estonia and Botswana because its free-market is perceived as being besieged by ‘dirty hands’.