December 13, 2012 / 2:59 PM / in 5 years

A year under Monti: from hope to doubt

MILAN (Reuters) - When Mario Monti took the helm a year ago, with Italy teetering on the edge of a Greek-style debt crisis, he was welcomed as a savior who could finally put the country back on track.

Disgusted with the scandals, corruption and cronyism that had flourished under Silvio Berlusconi, workers and businessmen at first meekly accepted the technocrat premier’s higher taxes and harsh pension reform, confident he would guide them out of the euro zone debt storm into calmer waters.

A year later, after Monti announced his resignation, many are wondering whether it was worth the pain as Italy faces an uncertain political future still mired in recession.

“We were awaiting a miracle. And the miracle did not come,” said Mina Giannandrea, a Rome shopkeeper.

Italians are enduring higher income taxes, a hugely unpopular property levy and increased electricity and gas bills with no sign yet of any reward for the sacrifice.

Many have learned to scrimp and save - at least by the comfortable standards of more prosperous times - for example refusing to call the plumber for a leaking tap and cutting spending even on staples such as pasta. Many families now reheat leftovers from meals instead of dumping them in the bin.

Rome hairdresser Sara Greco said she sees fewer customers when it is time to pay the property tax instalments and women are cutting back on having their hair done. “I have noticed some clients are giving up having their hair fixed every week and trying to get a cut or tint done on Tuesday or Wednesday when we give a 15 percent discount,” she said.


Entrepreneurs who had been disappointed by Berlusconi’s unfulfilled promises of more jobs and more economic growth when he was prime minister, welcomed Monti’s pledge to make it easier to hire and fire staff and to cut red tape.

A recent World Bank report on doing business in Italy said the regulatory environment for companies was improving, but some in business have yet to feel the benefits of Monti’s year in charge.

“There was too much tax and not enough spending cuts,” said Franco Manfredini, an entrepreneur in the Emilia Romagna region’s ceramics industry, who has survived the crisis thanks his company’s large export business.

“The debt issue is still there and we are not yet seeing the light at the end of the tunnel,” he told Reuters.

Particularly disheartening to many business people is the government’s failure to eradicate inflated privileges enjoyed by politicians and local officials and slash Italy’s costly and inefficient public administration.

“Near to nothing was done to cut the cost of the political machine. And this is something that would have received widespread backing,” said Angelo Fracassi, founder of Italian group Dasit, a supplier medical equipment to Italy’s public health service.

“This is my personal, very bitter disappointment,” said Fracassi, who spent the year fighting late payments by cash-strapped local authorities and cuts in public health spending.

Jose Rallo, head of the Sicilian wine company Donnafugata, told a similar story of frustrated hopes. “We took all the bad while waiting for the good which never came,” she said.


But some believe Italy has been fundamentally changed under Monti even though it faces another year of economic contraction.

His sobriety and quiet determination contrast to Berlusconi’s flamboyance, sexual and judicial scandals and indecision, which helped to push Italy’s borrowing costs to unaffordable levels before he was replaced by Monti.

More than anything, ordinary Italians value the ability of the multi-lingual Monti, a former EU commissioner respected by European leaders, to clean up Italy’s name abroad.

“One needs to understand where we stood a year ago,” said Francesco Divella, a 40-year-old member of a pasta-making dynasty in the southern region of Puglia.

“In a single year, Monti has been able to completely turn around how Italy was being perceived abroad,” said Divella, adding that Monti did as much as he could during his short term.

Divella said his company was resisting pressure to move abroad despite the unfavorable business environment at home.

Economic crisis has made Italians realize that they have long lived beyond their means. “Sooner or later we had to come to terms with the need to be more competitive,” said Divella.

Learning to live with less after years of rising consumer spending has also forced many Italians to return to the thrifty habits of their parents and grandparents, and some of them believe this has had benefits.

“I don’t know if this year of crisis has only brought bad things,” said Antonello Piccolo, a 39-year-old worker at the troubled ILVA steel-maker in the southern city of Taranto.

The ILVA site, Europe’s biggest steel plant and main employer in impoverished Puglia, risks permanent closure after magistrates accused it of causing an environmental disaster.

“We go less to the pizzerias, but spend more time with family and friends. We have left a bit of consumerism behind and gone back to some old values,” said Piccolo.

Yet, shopkeeper Giannandrea, who now meets only a handful instead of dozens of housewives in her early morning trip to the local market, fears it may be too late to turn the tide. “After 40 years in the business, I am really worried: what will we leave to our children?”

Additional reporting by Giselda Vagnoni in Rome; editing by Barry Moody and David Stamp

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