This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 NAPLES 000102 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: IT PGOV ECON ITALY NATIONAL ELECTIONS
SUBJECT: LAGGING ECONOMY (MEANING JOBS) TOPS LIST OF VOTER CONCERNS 
IN SOUTH ITALY BEFORE APRIL ELECTIONS 
 
¶1.  Summary:  The primary economic issue in Italy's Mezzogiorno 
is far and away that of "jobs".  Unemployment has always run at 
higher levels in the South than in central and northern Italy, 
and southern voters are sure the current economic downturn has 
hit them the hardest.  Parents, educators, political figures and 
young people themselves complain that the South is mortgaging 
its future, as trained university graduates continue to leave 
their families and hometowns to head north and even abroad in 
search of adequate employment.  Next, after the jobs issue, 
comes the challenge of improving Southern Italy's inadequate 
infrastructure, which aggravates the South's geographic 
disadvantage (northern Italy is considerably closer to markets 
in the rest of Europe).  The center-left (CL) charges that the 
current center-right (CR) government has "neglected" or even 
forgotten the South; the presence in the government of the 
Northern League certainly reinforces that message for many 
southerners, especially when its version of devolution is taken 
to mean "let's keep our tax revenues here in the North." 
 
¶2.  (Summary, cont.) However, while many swing voters may choose 
to cast their vote for the CL, many others will abstain or spoil 
their ballot, convinced that neither coalition will be able to 
make headway with the South's problems.  Based on these 
pocketbook issues, the CL is likely to maintain its inroads in 
traditionally conservative Calabria, and will maintain its 
ascendancy in traditionally CL Campania (including Naples, 
Italy's third largest city) and tiny Basilicata.  The CR has 
come from behind enough to make the election a toss-up in 
traditionally conservative Puglia (despite the CL's victory in 
the recent regional elections), while the CR should win in 
Sicily.  Southern CL leaders are cautiously optimistic that 
Prodi will continue to maintain a lead nationwide due to 
economic worries; CR boosters insist the race is too close to 
call, and Berlusconi continues to come from behind.  End summary. 
 
¶3.  This cable addresses how economic issues are affecting the 
political campaign in the South.  A follow-up cable will examine 
the larger political situation in the run-up to the April 
elections. 
 
Southern Italy still lags behind 
 
-------------------------------- 
 
¶4. The depressed economy in Campania, Sicily, and Calabria - not 
coincidentally the three areas with strong organized crime 
presence - remains an intractable national issue.  Faced with 
the EU stability pact requirements, international competition, 
and increased energy costs, these southern regions continue to 
lag behind more advanced areas.  With the current economic 
down-turn, the gap with northern regions has only widened, thus 
making economic and social growth in the short- to medium-term 
even more difficult.  Consequently, "jobs" consistently ranks as 
the number one campaign issue throughout the South. 
 
¶5.  Our contacts believe the economic situation in the 
Mezzogiorno is only likely to get worse if the national 
government does not take effective measures to boost employment 
and economic growth (including foreign investment) in the South. 
 Our interlocutors in political, institutional, 
economic/business, and academic circles are united in calling 
for three measures in this regard: (1) an aggressive, long-term 
fight against organized crime; (2) an improved infrastructure; 
and (3) bureaucratic reform. 
 
Organized Crime 
 
--------------- 
 
¶6. Pervasive organized crime has blighted Campania, Sicily and 
Calabria, preventing the development of a truly market-oriented 
business culture.  The lack of rule-of-law and widespread, 
chronic environmental pollution (aggravated by organized crime, 
known in this manifestation as the "eco-mafia") have made the 
area unattractive to many private investors.  Corruption among 
elected government officials, in many cases connected to 
organized crime, undermines efforts to cultivate a "rule-of-law" 
mentality. 
 
Unwieldy Bureaucracy, Lack of infrastructure 
 
-------------------------------------------- 
 
¶7. A deficient infrastructure and an inefficient government 
bureaucracy with little sense of public accountability further 
retard development.  Business leaders, including American 
contacts with U.S. companies operating in the South, complain of 
infrastructure problems.  For example, Nokia reportedly decided 
to close down its small plant in Sicily because of the 
inadequate water system. 
 
¶8.  As a result, much of the public is cynical on both issues - 
infrastructure and government reform, doubting any government 
will make a difference.  For example, contacts in the small 
southern region of Basilicata recently noted that the leading 
vote-getter in elections there is usually the protest vote 
indicated by unmarked or defaced ballots, amounting to over 30 
percent of the vote. 
 
¶9. The largest infrastructure project on the table, the 
multi-billion-dollar "Messina Straits Bridge" to link Sicily 
with the toe of the Italian boot, is mired in controversy and 
uncertainty.  A pet project of PM Berlusconi, many expect a CL 
government would not go ahead with the bridge project.  Many 
political and business leaders in Sicily argue that the bridge 
does not address the more pressing infrastructure needs of the 
region, such as the water system. 
 
Dissatisfaction with Berlusconi 
 
------------------------------- 
 
¶10. Our CL contacts here cite growing frustration and 
disillusionment with the Berlusconi government, and are sure 
voters will "throw the bums out."  However, CR proponents 
maintain that while Berlusconi has not delivered as much as he 
had promised, he has made important achievements, and certainly 
accomplished more than the CL the last time it was in power. 
 
¶11. Some CR contacts complain of a Southern "assistenzialista" 
attitude, a debilitating dependency on government to provide, 
above all, guaranteed jobs and public works projects to fuel the 
economy.  One Alleanza Nazionale leader noted the significance 
in word choice: Southerners say they want a "position" (posto), 
not "work" (lavoro).  But other Southerners reject accusations 
that the South has grown dependent on financial aid from Rome, 
and that it wastes much of what it does receive through 
inefficiency, poor planning, and corruption.  Some contacts 
insist the government can't tackle crime without implementing 
programs to create jobs and boost local communities. 
 
Yet not convinced by Prodi and the CL 
 
------------------------------------- 
 
¶12. Of course, not only Berlusconi's performance comes under 
fire from a southern perspective.  A recent editorial in the 
Palermo-based daily "La Sicilia" criticizes Romano Prodi's 
announced intention to cut labor costs, saying the measure will 
benefit more economically dynamic northern areas - not southern 
ones.  The proposal will not cut southern unemployment rates, 
nor will it impact on the weak economy, says the editorialist. 
Theoretically, all want to resolve Italy's "two-speed economy," 
but in practice decisions are made with the center-northern 
region in mind. 
 
Business leaders upbeat~ 
 
------------------------ 
 
¶13. Despite the gloomy economic picture, the political and 
economic class is not completely disheartened about the future. 
(One exception is a surprising number of political leaders in 
Calabria, who are despondent about ever eradicating the 
`Ndrangheta organized crime group).  Most of our contacts insist 
that southern Italy has great potential to become an advanced, 
attractive environment for economic growth.  In particular, it 
has human resources, boosted by a number of excellent 
universities, and it has great undeveloped potential in the 
tourism sector.  Many in the South pin their hopes on turning 
the South's geographic position to its advantage by developing 
trade with the Balkans and with North Africa. 
 
~Voters increasingly turned-off 
 
------------------------------- 
 
¶14.  Southern voters are a different matter; we see widespread 
voter dissatisfaction and skepticism regarding the electoral 
choice before them.  But will this attitude be directed against 
both parties (resulting in high absentee rates), or mostly 
against the current CR government?  Or will Berlusconi succeed 
in convincing voters that his government has made real progress, 
and had certainly done a better job than a fractious CL 
government with a potentially dangerous extremist leftist 
component would have done?  The gloomy economic picture in the 
South remains uppermost in voters' minds, but a significant 
portion of Southern voters are still undecided on which 
coalition provides more hope of a brighter future. 
HALLIBURTON