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Why Venice is a microcosm of Italy's problems

Voters leave a polling station after having casted their vote in Venice, Italy
Marco Secchi | Getty Images
Voters leave a polling station after having casted their vote in Venice, Italy

If you want to see how dysfunctional Italy has become, look no further than Venice, the original Disney World, where tourists have come to gape ever since two ambitious Venetians stole the body of St. Mark from a church in Alexandria in 828 AD.

He's still here, in the church that bears his name, but if he could get up, walk out, have an espresso at the historic Caffe Florian and read the local paper, he would probably demand to be deported.

Venice, which stole not only St. Mark but also a good part of the wealth of the eastern Mediterranean during its thousand-year reign, is currently the object of great amusement in Italy.

Last year the port of Venice proposed banning the largest cruise ships from the area around St. Mark, and with good reason: Not only was there concern about damage to the buildings, but the Costa Concordia disaster of 2012, in which 32 people died when the cruise ship ran aground off the coast of Tuscany, highlighted the potential for grand-scale havoc when these giant cruise ships try to maneuver in tiny spaces surrounded by thousands of tourists.

The port authority said a deeper canal would be dredged to accommodate these large ships away from the city center.

All well and good, but in Italy nothing is ever settled permanently. The regional government overturned the ban. Several weeks ago, the national government stepped in, overturned the regional government's overturning of the ban (you following this?), and decreed that the biggest ships would indeed be banned by 2015.

There's one problem: They forgot to dredge a new canal. The head of the port authority announced last week that he was hopeful it would only take two years to finish, but the work hasn't even started.

So they are banning big cruise ships beginning next year with no place to put them.

Picture this: Tens of thousands of cruise ship refugees rowing to St. Marks in tiny boats from several miles offshore. The gondoliers will make a fortune.

This is nothing: I'm just scratching the surface of the comedy that is Italy. You would think that the mayor of Venice Giorgio Orsoni would play a major role in this farce, but he's gone. He was forced to resign in June and was put under house arrest.

There hasn't been a new mayor since, and there won't be for a while.

Orsoni was deeply involved in one of the grandest boondoggles in Italian history, a massive five-billion euro project to construct underwater barriers to prevent the city from flooding. Dubbed the Moses project (as in "parting the sea"...get it?), it was inaugurated in 2003 under Silvio Berlusconi.

The consortium building the project immediately set about taking care of everyone, Italian-style. The head of he consortium allegedly created a 25 million euro slush fund to secure the cooperation of Orsoni and other officials.

Orsoni said he was shocked--shocked! to discover that large contributions made to his 2010 campaign were illegal.

And the Moses project? It was supposed to be finished in 2012. Now the projected completion date is 2016, with five billion euros and counting.

Berlusconi's former culture minister is accused of taking 200,000 euros to fast-track the project. The former president of the Veneto region is also being investigated. There are secret accounts. In Italy. In Switzerland.

Think about this: Even with all major officials apparently on the take, the project is still years away and billions of euros over budget.

This is fast-tracking in Italy!

This comedy highlights one of the major problems that is sinking Venice (literally and figuratively) and the rest of the country: It's impossible to get anything done, and what does get done usually involves kickbacks. It's all part of what is sometimes called the "legal Mafia," the incomprehensible Italian political system.

At least in the United States, there are only two major political parties you have to bribe (Sorry: contribute campaign funds to).

In Italy, there are about ten political parties just on the national level. Can you imagine what happens when you start dealing with local, regional and national governments all at once, with that many parties?

The permutations are mind-boggling. The kickbacks multiply. Exponentially. It's no wonder the Moses consortium had a slush fund.

With this many parties, this many hands out, you need more than a slush fund. You need artificial intelligence. You need Big Data just to sort out who you're giving all the money to.

Tomorrow: What the Venetians think of this farce, and more on why Venice is a microcosm for what ails Italy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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