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Corruption Is Seen as a Drain on Italy’s South

Italy’s A3 highway, begun in the 1960s and still not finished, starts outside Naples in the ancient hill town of Salerno and ends, rather unceremoniously, 300 miles farther south as a local street in downtown Reggio Calabria.

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Along the way, it frequently narrows to two lanes, with an obstacle course of construction sites that have lingered for decades. Perilous, two-lane bridges span mountain ravines high above the sea, while unlit tunnels leak in the rain — and occasionally drop concrete and other building materials onto passing cars.

Nothing embodies the failures of the Italian state more neatly than the highway from Salerno to Reggio Calabria. Critics see it as the rotten fruit of a jobs-for-votes culture that, nurtured by the organized crime that is endemic in southern Italy, has systematically defrauded the state while failing its citizens, leaving Calabria geographically and economically isolated.

The highway is also a symbol of what some Northern European countries say they fear the most about the euro zone: its development into a welfare system in which they are expected to support a sluggish Southern Europe, where grants and subsidies too often vanish in graft that the governments appear unable — or unwilling — to prevent. And it helps illustrate how the financing has yielded relatively little of the productive investment that might now be helping Southern Europe as it tries to climb out of an economic ditch.

In Italy, misuse of European money “did tremendous damage because the funds were used badly and, as some magistrates say, they also fed organized crime,” said Sergio Rizzo, a co-author of best-selling books about political corruption. “The southern regions don’t have the capacity to plan, and they fund projects without results. That’s the problem.”

As the debate in Europe shifts toward growth, European officials cite an ever more urgent need for accountability. “The more that E.U. funds are meant as a kind of medicine cure for growth, as an exit strategy for dealing with the economic crisis,” the more that greater controls are needed, said Giovanni Kessler, the director of the union’s antifraud office. “It cannot be left only to the willingness and the abilities of national law enforcement agencies.”

From 2000 to 2011, Italy received more than $60 billion in European Union financing to underwrite a wide array of programs, in areas including agriculture and infrastructure, most of it directed to the south, with little but a half-completed highway to show for it. Spain, which was given a little more than $100 billion, at least built a world-class high-speed rail network. (Greece received $50 billion, an enormous amount in per capita terms, also to unclear effect.)

In 2001, armed with that financing, Italy embarked on an ambitious project to build a new A3 in place of the old one, which lacked a proper emergency lane. Since then, nearly $10 billion has been spent on the road. After Italian courts found widespread evidence of graft, European officials demanded this summer that Italy redirect the entire $500 million that Europe had dedicated to the road to other projects.

To take a drive along the A3 — the main artery in a region with no high-speed rail lines, nearly 20 percent unemployment and 40 percent youth unemployment — is in many respects to travel through the dark side of Italy’s recent history, where an amalgam of corruption and political patronage has helped run up the second-highest debt in Europe after Greece.

It is to pass the grim, unfinished concrete houses of Rosarno, an agricultural area best known for violent race riots that erupted in 2010, and to look out on the sea from Gioia Tauro, a port city built on an ancient Greek necropolis where the boxlike tombs in the cemetery are better kept than some nearby houses.

Because the port is not connected to adequate roads or railways, ships must transfer containers to smaller vessels, and little economic activity stays local. To the authorities, the port is best known as the arrival point for most of the cocaine that enters Europe from South America.

Since the road first opened, three generations of subcontractors — appointed by three generations of politicians — have made their livings from it. Since 2000, prosecutors have arrested hundreds of people involved with the highway, mostly on charges of corruption and extortion.

As with tackling the debt crisis in Southern Europe, fixing the highway means going up against a political patronage culture deeply resistant to change. Calabria’s problems are even darker. The region is dominated by the ’Ndrangheta (pronounced en-DRANG-get-ah) organized crime group, which the authorities say is the most powerful in Italy.

“The ’Ndrangheta is a parasite,” said Roberto di Palma, the magistrate who conducted two corruption trials related to the highway. “Where there are big public works, the ’Ndrangheta has a big interest.”

The ties between organized crime and local politicians run deep. Today, 3 out of 51 members of Calabria’s regional council have been arrested on charges of Mafia ties. The president of the Calabria region, Giuseppe Scopelliti, is appealing a lower-court sentence in a corruption case and is under investigation on four charges (none related to the highway).

In an interview in his office in Catanzaro, Mr. Scopelliti denied any wrongdoing. Asked what his strategy was to improve the region’s dismal economic performance, he pointed only to his most recent request for financing from Brussels: $2.2 billion.

In many ways, Calabria illustrates the crisis of accountability in the European Union. The European Commission is not like the International Monetary Fund, which can place conditions on a loan, said Massimo Florio, a professor of economics at the University of Milan, and it also lacks the power of a federal government to monitor spending.

“In the end it’s as if the member states think that’s their money,” Professor Florio said.

In Calabria, that has been an open invitation to corruption. In one of several trials, prosecutors mapped out the A3 not only by work sites but by ’Ndrangheta clan. Using wiretaps, they found that no fewer than a dozen families worked out “peaceful accords” to divvy up the work — and the kickbacks.

In one trial in which 22 people were convicted of Mafia association and other crimes, prosecutors examined one of the highway’s six large work sites, a 215-mile stretch. Prosecutors found ample evidence of what they call the “3 percent rule,” in which subcontractors overcharged the state by 3 percent and crime clans pocketed the difference. They also documented the way the clans helped choose subcontractors and dictated those they hired, often their friends and relatives.

Over the years, as many as 6,000 workers have been employed by hundreds of subcontractors. (No one from the large construction companies from the Italian center or north has been convicted of any crimes.)

“The south is a land of unfinished works because finished works don’t pay,” said Aldo Varano, a journalist and author of several books on Calabria.

Work slows every time the authorities sentence subcontractors for corruption.

But the problem goes well beyond corruption and cuts to the heart of the political systems of most of Southern Europe, in which politicians have traditionally offered citizens state-financed work in exchange for votes.

“The problem here is political,” said Mr. Varano, as he looked out at Sicily across the Strait of Messina from Reggio Calabria. “Once the South was a reservoir of manpower, but in the ’70s, there was an exchange: It became a big reservoir of consensus,” he added, referring to the votes from Calabria that have helped every government of the last 25 years stay in power.

To secure those votes, governments “needed to spend money, not for investment and development, but in a clientelistic way,” he said.

At any given time, around 1,000 people are employed on the highway and related projects, according to the Italian highway authority, ANAS. But on a series of recent drives, no more than a handful were ever visible — and few of them were wearing hard hats.

That jobs-for-votes system is now under scrutiny after a series of recent corruption scandals throughout Italy, which have further shaken Italians’ confidence in a political class whose inability to manage the economy led to the current technocratic government of Prime Minister Mario Monti.

Few Calabrians have much confidence in their leaders, or that the highway will ever be finished. “I don’t think so,” said Salvatore Emilio, a bartender in Gioia Tauro. “There’s too much pork.”

Still, the picture is not entirely bleak. Today, 169 miles of the 307-mile-highway have been reconstructed, and 246 miles are open to traffic. ANAS has said that 74 more miles will be completed by the end of 2013.

Asked whether he thought the deadline was feasible, Sebastiano Wancolle, an engineer who oversees the highway for ANAS, breathed deeply. “The goal is challenging,” he said, “and not everything depends on us.”

Mr. Wancolle showed off two nearly completed suspension viaducts spanning a steep mountain pass, with the sparkling blue Tyrrhenian Sea far below. Soon the car sped past a hillside where a mudslide hit the road in 2010. Luckily no one was injured that day, he said. “It was the feast of the Madonna of Fatima,” he added.

In an interview in Rome, Fabrizio Barca, the Monti government’s minister of territorial cohesion, said that for too long, money for the south was spent poorly. “What the south calls for is citizens’ rights,” Mr. Barca said. “The quality of basic and essential services is inadequate. In Calabria the problem is particularly bad.”

Asked whether he had political allies in Calabria, his face dropped. “Let’s just say that the renewal of the south won’t start from Calabria,” he said.

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