12/06/2024

Dispatch from Rome: May 2024

The Haizum Italian Insider Report is a monthly news service that monitors the most relevant issues in Italy. This document focuses on political, Economic, and Strategic matters, considering the role of Italy within the European Union, the MENA region, and Transatlantic Relations. The report will deliver clever insights by leveraging Haizum’s deep connections in the national institutional ecosystem.

Reading Time: 20 Minutes

SUMMARY

In the most recent briefing on Italy’s strategic landscape, a series of significant developments are shaping the nation’s trajectory across multiple fronts. Ansfisa‘s expansion, bolstered by increased authority and resources, stands out as a pivotal focus, aiming to fortify security in Italy’s road and rail networks in line with broader infrastructure objectives. 

The establishment of Coordination Offices within Prefectures seeks to streamline communication and governance under the National Recovery and Resilience Plan (NRRP), thereby enhancing coordination between central initiatives and local implementation efforts. The appointment of Marcello Fiori as Director General of INAIL underscores Italy’s dedication to effective labor and social policies, leveraging his expertise to enhance the organization’s agility and responsiveness.

Moreover, Italy’s leadership in defense innovation, supported by funding from the European Commission, underscores its strategic significance within the region. The forthcoming space law signals Italy’s intent to regulate and invest in the space industry, positioning itself as a noteworthy global player. Strategic partnerships with nations such as Thailand, Jordan, and Serbia underscore Italy’s collaborative approach to diplomacy, prioritizing mutual benefits and shared objectives.

Economic stability remains paramount, as evidenced by the IMF‘s recommendations. Italy is committed to strengthening its position in the global economy while advocating for deeper integration within the European framework, as articulated by Governor Panetta. Notably, Italy’s leadership at the recent G7 summit led to the adoption of the Venaria Charter, reaffirming its dedication to environmental stewardship and renewable energy. Safeguarding national security and ensuring supply chain resilience are also top priorities, entailing the modernization of military capabilities and cross-sector collaboration.

Despite economic uncertainties, companies like Enel and Generali demonstrate resilience and strategic foresight. TIM‘s strategic pivot towards innovation, including the approval of its network sale to KKR, signifies Italy’s readiness to embrace change in the telecommunications sector. Anchored by foresight and determination, Italy keeps trying to position itself for continued success and prosperity on the global arena.

INSTITUTIONS
GOVERNMENT
Strengthening Infrastructure Security 

To enhance safety standards across Italy’s road and rail networks, Ansfisa, the authority responsible for infrastructure security, is undergoing significant expansion and empowerment. Led by Director Domenico Capomolla since its establishment in 2018, Ansfisa has faced operational challenges due to a lack of effective coordination with other institutional entities. Salvini‘s Ministry aims to remedy this by fostering closer collaboration between Ansfisa and the Ministry of Infrastructure and Transport technicians.

The proposed changes grant Ansfisa broader authority to conduct inspections and communicate their annual inspection program to the relevant chambers. Additionally, the agency will be allocated a portion of the revenue from tolls on sub-concessioned highways, amounting to approximately 25 mln euros, to bolster its safety monitoring efforts. Furthermore, Ansfisa’s workforce is set to expand. Ansfisa’s responsibilities will also extend to evaluating the adequacy of action plans devised by road and highway operators and recommending adjustments to safety standards where necessary. 

Coordination Offices in Italy's NRRP Implementation 

Italy has initiated over a hundred Coordination Offices in Prefectures across the country to support the implementation of the National Recovery and Resilience Plan (NRRP). This move aims to enhance governance and coordination at the local level, reinforcing the Government’s efforts.  These Coordination Offices play a crucial role in facilitating communication between the NRRP Steering Committee, central administrations, and implementing entities. They leverage the proximity and expertise of Prefectures, revitalizing their role in NRRP execution. Enshrined in Article 9 of Decree-Law No. 19 of 2024, these offices are chaired by the Prefect or their delegate, without any financial compensation. 

The participants in these Coordination Offices include the President of the province or the Mayor of the Metropolitan City, their delegates, representatives from regions or autonomous provinces, the General Accounting Office, mayors of municipalities involved in NRRP projects.

Marcello Fiori becomes INAIL Director General

Marcello Fiori assumes the position of Director General at INAIL for the next four years, appointed by the Minister of Labor and Social Policies, Marina Calderone, upon the recommendation of the Institute’s Board of Directors.  Marcello Fiori, born in 1960, brings a wealth of experience from his previous roles within various Governments institutions. His career highlights include leadership positions at the Prime Minister’s Office and serving as the head of the Public Service Department since 2021. He has also held significant roles such as coordinating numerous emergencies at the Department of Civil Protection, serving as Chief of Staff at the Rome City Council, and Secretary General of the Ministry of Communications. 

STRATEGIC ISSUES
DEFENSE
Italian-Led Projects Receive European Defense Fund Financing

The European Commission allocated $1.03 bln to defense industrial projects under the European Defense Fund (EDF), with 8 of the 54 projects being led by Italian entities. Italian-led projects like Archytas, Lace, Demethra, Emissary, Epc2, Staalion, E-Cuas, and Carmenta Pf cover a spectrum of defense areas, including technological excellence in cybersecurity, land, air, naval combat, and protection against chemical, biological, radiological, and nuclear threats.

Key initiatives involve advancing technology for a future European main battle tank, developing counter-drone capabilities, and enhancing maritime patrol corvettes. Projects like Marte and FMBTech aim to design and develop a new European main battle tank, while E-Cuas, led by Leonardo, focuses on countering unmanned aerial systems, building on previous successful collaborations.

Furthermore, the European Patrol Corvette program, led by Naviris, a joint venture between Naval Group and Fincantieri, will receive funding for the development of two prototypes over four years, enhancing naval capabilities with innovative solutions and technologies.

Italy's New Space Law: Balancing Regulation with Investment

Italy is poised to introduce a comprehensive space law aimed at regulating and fostering investments in its space industry. Spearheaded by Minister Adolfo Urso. The primary objectives of the proposed law are to ensure safe and sustainable access to space, promote investments in the space economy, and enhance national competitiveness through research and development. 

A key feature of the legislation is the establishment of a National Space Economy Plan, backed by initial funding of €85 mln for 2024, €160 mln for 2025, and €50 mln for 2026. This initiative underscores the Government’s commitment to supporting space activities as a driver of economic growth. Furthermore, the law designates the Prime Minister or a delegated authority, currently Minister Urso, as responsible for authorizing space activities.

To ensure compliance and safety, the law mandates that space operators meet stringent requirements regarding the security, cyber resilience, and environmental sustainability of their activities. The legislation also establishes the Space Safety Committee within the Interministerial Committee for Space and Aerospace Research.

Furthermore, the law outlines national space infrastructure projects, such as the Iridi Earth observation constellation and plans for a national space infrastructure following the potential decommissioning of the International Space Station. Emphasis is also placed on satellite connectivity initiatives to enhance broadband access.

DIPLOMACY
Strengthening Italian-Thailand Cooperation

The recent meeting between Italian Prime Minister Giorgia Meloni and Thailand’s Prime Minister Srettha Thavisin underscores the commitment of both nations to explore significant opportunities beyond tourism and culture. They aim to collaborate in strategic sectors such as infrastructure development, digitalization, and energy transition. Thailand’s aspiration to join the OECD, supported by Italy, signals a mutual interest in economic ties.

Bangkok’s role within ASEAN, the Association of Southeast Asian Nations, has evolved strategically, particularly amid complex trade dynamics with China. With a population exceeding 600 mln, ASEAN offers substantial investment potential for businesses, especially considering Europe’s demographic decline.

The bilateral relationship between Italy and Thailand has a solid foundation, marked by the celebration of their 155th diplomatic anniversary in 2023. A Business Forum established in 2015 has further facilitated economic and commercial exchanges, as evidenced by the recent memorandum of understanding signed between their Chambers of Commerce.

Italy’s trade volume with Bangkok amounts to 4 bln euros, with promising prospects for future growth, driven by Thailand’s political stability and economic vitality. The geopolitical landscape, however, poses challenges, with Thailand balancing its relations between China and the West. 

Italy and Jordan: Key Players in the Gaza Crisis

In recent diplomatic moves, Italian political leader Giorgia Meloni‘s meeting with King Abdullah II of Jordan underscores the strategic importance of Italy and Jordan amid the ongoing crisis in Gaza. The dialogue between the two leaders is anchored on UN Security Council Resolution 2728, emphasizing sustained diplomatic efforts for a sustainable ceasefire.  Jordan’s evolving role, alongside Egypt and Turkey, forms a significant axis in the broader Mediterranean-African-Middle Eastern nexus. Jordan’s moderation, economic modernization, and humanitarian efforts elevate its geopolitical significance.

Italy-Jordan bilateral relations extend across various sectors, including defense cooperation and humanitarian aid. Recent military discussions between the two nations have culminated in the signing of the 2023 Cooperation Plan, outlining joint military activities for 2025.  Beyond diplomatic efforts, energy dynamics in the Eastern Mediterranean play a crucial role. Developments such as the expansion of the Tap gas pipeline and initiatives like the EastMed Gas Forum, involving Italy, Jordan, and other regional players, underscore the interconnectedness of energy and geopolitics in the region. Despite challenges, initiatives like the EastMed Gas Forum signal potential avenues for cooperation and development, with projects like the Gaza Marine gas field awaiting further progress once the crisis subsides.

Strengthening Italian-Serbian Relations

In a recent business forum Italy and Serbia reaffirmed their commitment to enhancing bilateral ties while emphasizing Italy’s support for Serbia’s Euro-integration path. The event served as a platform for Italian contributions to Serbia’s development and showcased the significance Italy places on the broader Balkan region. Prime Minister Vucevic extended an invitation to Giorgia Meloni for a joint session between the Italian and Serbian Governments in Belgrade, underscoring the desire for closer collaboration.

Italy’s financial support, exemplified by a 100 mln euro loan from Cassa depositi e prestiti to Serbia’s Elektroprivreda Srbije Beograd, highlights Rome’s investment in Belgrade’s infrastructure and economy. This commitment extends beyond Italy, as evidenced by the European Bank for Reconstruction and Development‘s 300 mln euro contribution and a further €100 mln euro from Germany’s KfW Development Bank. 

Energy cooperation emerged as a cornerstone of Italian-Serbian relations, with discussions emphasizing the potential for renewable energy and innovative technologies to drive economic prosperity in both countries. 

Integral to these discussions is Serbia’s aspiration for EU membership, a goal actively supported by Italy. However, challenges persist, including divergent views on historical issues such as the resolution on the Srebrenica genocide. The Kosovo issue remains contentious, with Italy affirming the protection of Serbian monasteries in Kosovo while urging Pristina to honor its commitments to minority communities. 

Strengthening Italian-Serbian Relations

In a recent development at the International Institute for Political Studies (ISPI), Franco Bruni has been appointed as the new president, succeeding Ambassador Giampiero Massolo. This transition confirms previous speculations that Ambassador Talò would not be continuing in the role. Bruni, a long-standing vice president and director of the Scientific Committee at ISPI, brings over 20 years of experience to his new position. His appointment, along with the confirmation of vice presidents Emma Marcegaglia, Carlo Altomonte, Antonio Villafranca, and Paolo Magri as Managing Director, was endorsed by the institute’s board of directors.

ECONOMY & FINANCE
Leadership Change at ISPI: Franco Bruni Takes the Helm

Ten elective vice presidents have been appointed, with three confirmed roles: Francesco De Santis will continue his focus on Research and Development; Maurizio Marchesini, after overseeing Supply Chains and Small Businesses, will now handle Labor and Industrial Relations; and Stefan Pan, who will continue his work in Europe over the past four years as the president’s delegate, is appointed as vice president for the European Union and relations with European industry associations.

The other appointees are: Lucia Aleotti, who will serve as vice president for the Research Center, pivotal in defining economic policy strategies; Angelo Camilli, taking over Credit, Finance, and Taxation from Orsini; Barbara Cimmino, responsible for exports and investment attraction. Vincenzo Marinese will oversee Organization and Relations with regions and sectors, while Natale Mazzuca will handle strategic policies and Southern Italy’s development. Marco Nocivelli takes on the new role of Industrial Policies and Made in Italy, and Lara Ponti focuses on environmental transition and ESG.

Completing the presidency team are three statutory vice presidents: Giovanni Baroni, representing Small Industry; Riccardo Di Stefano, representing Young Entrepreneurs; and Annalisa Sassi, representing Regional Representatives. The new board will also include five presidential delegates: Leopoldo Destro for Transportation, Logistics, and Tourism Industry; Riccardo Di Stefano for Education; Giorgio Marsiaj for Space Economy; Aurelio Regina for Energy; and Mario Zanetti for Maritime Economy. At the president’s request, the team will also benefit from the guidance of three special advisors: Antonio Gozzi for European Strategic Autonomy, the Mattei Plan, and Competitiveness; Gianfelice Rocca for Life Sciences; and Alberto Tripi for Artificial Intelligence.

The IMF's Prescription for Italy's Economy

On May 20, 2024, the International Monetary Fund (IMF) concluded its mission to Italy, during which experts outlined several recommendations for bolstering the country’s economy. The IMF suggests replacing tax wedge cuts and employment subsidies with measures that permanently enhance labor productivity. This approach includes rationalizing pension spending by increasing the effective retirement age and avoiding costly early retirement schemes. Additionally, the IMF recommends streamlining tax expenditures to broaden the tax base and increase progressivity. A key point emphasized by the IMF is the need for Italy to improve oversight and supervision of tax credits, particularly within the framework of the National Recovery and Resilience Plan (NRRP) for green and digital investments. 

Regarding economic growth, the IMF acknowledges that Italy has recovered well from the pandemic and energy price shocks. However, it projects moderate growth for the coming years, with potential downside risks. To counter this, the IMF stresses the urgent need to boost productivity. Achieving this goal requires the full and timely implementation of the NRRP, followed by a medium-term structural fiscal plan focused on critical public infrastructure, research and innovation, educational reform, and an improved business climate. Furthermore, addressing low fertility rates and female labor force participation is essential to enhancing Italy’s growth prospects.

The IMF also highlights the high levels of Italy’s deficit and debt, warning that expansive fiscal policies, while supportive during the recovery, have increased the country’s risk premium and weighed on private sector investments. 

Embracing European Integration for Economic Advancement

Governor Panetta inaugural remarks at the Bank of Italy underscore a nuanced shift in emphasis, aligning with predecessors’ analytical rigor while directing attention towards the imperative of European integration. Central is the pivotal role of collective European action in propelling Italy towards long-awaited reforms and enhancements. Amidst discussions of monetary policy and budgetary considerations, the call for deeper EU integration reverberates. 

The imperative of EU progress is deemed essential for addressing geopolitical challenges, fostering innovation, and reducing reliance on external resources. Panetta articulates optimism regarding inflation management and economic stabilization, albeit amidst uncertainties surrounding interest rate projections and liquidity dynamics. Crucially, he advocates for a robust European economy bolstered by common fiscal policy and integrated capital markets. While acknowledging recent strides in European economic governance, he cautions against complacency, emphasizing the need for a centralized budget to complement monetary union—an ambition yet to materialize amidst lingering hurdles.

Marco Rottigni Appointed as New Director General of ABI

Marco Elio Rottigni has been appointed as the new Director General of the Association of Italian Banks (ABI), succeeding Giovanni Sabatini. 

This decision comes as Antonio Patuelli is confirmed unanimously for the sixth time as the President of ABI. Rottigni, previously serving as the Chief International Subsidiary Banks Division at Intesa Sanpaolo, brings with him a wealth of experience to his new role. His appointment aligns with ABI’s objective to overhaul its associative structure, aiming for a stronger European focus and addressing issues pertinent to larger banks rather than smaller entities.

The selection of Rottigni marks a shift towards a more European-oriented vision. His tenure at Intesa Sanpaolo saw him taking on significant roles, including the management of large corporate entities and public administration. Notably, since January 2020, he has served as the head of the International Subsidiary Banks Division. Additionally, he has held advisory and board positions in several financial institutions.

ENERGY
The Venaria Charter

At the G7 summit in Venaria, Turin, held from April 29 to 30, 2024, environment, climate, and energy Ministers from the seven leading industrial nations reaffirmed their dedication to fulfilling commitments outlined in the Paris Agreement, the Kunming-Montreal Global Biodiversity Framework, and the 2030 Agenda for Sustainable Development. The Ministers adopted the Venaria Charter, which delineates their approach to accelerating the transition to net zero emissions while maintaining the global temperature increase within 1.5°C.

The summit’s final communiqué outlines the G7’s strategies for enhancing renewable energy capacity threefold and doubling the rate of energy efficiency to 4% by 2030. This effort involves strengthening public sector leadership in energy efficiency and supporting developing and vulnerable nations in their energy transitions. A significant commitment is the phased elimination of unabated coal power production by the early 2030s, aligning with the 1.5°C temperature goal.

The communiqué also addresses just and inclusive energy transitions, carbon markets, carbon pricing, and advancements in nuclear and fusion energy. Support for developing countries, especially in Africa, includes aiding their energy transitions and ensuring universal access to clean energy. This commitment extends to reducing methane emissions in oil and gas economies, climate finance, adaptation funding, and aligning financial flows with Paris Agreement objectives. 

NATIONAL SECURITY
Strengthening National Security and Supply Chain Resilience

In a world marked by increasing geopolitical uncertainties, nations are recognizing the imperative to bolster their defense architectures. While reinforcing the armed forces is crucial, it alone is insufficient. This sentiment underpins the new investigative endeavor initiated by the Defense Committee of the Chamber of Deputies, focusing on “National Security and the New Challenges for Defense.” Announcing the launch of the inquiry, Antonino Minardo, the committee’s president, emphasized the necessity of modernizing the military apparatus amid geopolitical instability. Yet, he underscored the equally critical need for a serious reflection on the procurement systems for strategic goods. 

Moreover, Minardo articulated the imperative for national and European discourse to extend beyond traditional defense concerns to address threats against functional supply and distribution lines. To arrive at holistic solutions, the inquiry intends to foster a comprehensive, multi-stakeholder approach to national security. It will engage stakeholders from research, academia, industry, and defense sectors. 

STRATEGIC COMPANIES
ENEL
Enel's Solar Panel Initiative in the United States

Enel‘s ambitious plans to establish a solar panel manufacturing facility in Oklahoma, akin to its successful venture in Catania, Sicily, have faced significant delays. The project, spearheaded by Enel’s American subsidiary 3Sun USA, was slated to commence construction in autumn 2023, with production expected to begin in 2024. However, under the current CEO, Flavio Cattaneo, Enel’s focus has shifted towards debt reduction and streamlining operations, prompting skepticism about the viability of large-scale investments abroad. Enel has attributed the delay in Oklahoma to ongoing efforts to secure a majority financial partner for the project, indicating a degree of uncertainty surrounding its future. This setback is not unique to Enel; several solar manufacturing projects across the United States have faced similar challenges, ranging from delayed expansions to outright cancellations.

GENERALI
Generali's Financial Performance and Strategic Moves

In the first quarter of 2024, Assicurazioni Generali reported a mixed financial performance, with an increase in operating profit but a decline in normalized net profit, which settled at 1.1 bln euro. This decline in net profit, down 9%, was largely due to the absence of non-recurring gains from the previous year, specifically from the sale of a London property. Despite this, the company’s operating profit rose by 5.5% to 1.9 bln euro, while the net result increased to 1.256 bln euro, partly due to a post-tax profit of 58 mln euro. from the sale of Tua Assicurazioni.

Cristiano Borean, Generali’s CFO, expressed satisfaction with the results, citing the diversified insurance and asset management model and strong capital position. He confirmed that Generali would not pursue additional acquisitions in 2024, as the company’s free cash flow will be utilized for share buybacks and maintaining a liquidity buffer of 1 bln euro.

TIM
Italy's Telecom Network Sale to KKR: Implications and Reactions

The recent approval from the European Union regarding the sale of Tim’s network to KKR has significant implications for Italy’s telecommunications landscape. The 22 bln euro acquisition of NetCo by KKR, aimed at reducing Tim’s 14 bln euro debt, received unconditional approval from the European Commission. This decision marks a pivotal moment as it signifies the first instance of a former telecommunications monopoly in a major European country divesting its fixed-line network. Despite initial market volatility, the approval sets the stage for Tim’s transformation into a company primarily focused on services and Brazilian activities.

However, underlying legal challenges persist, notably the ongoing civil case in Milan’s Tribunal where Vivendi, Tim’s main shareholder, seeks to annul the board resolution approving Netco’s sale. Additionally, while the EU Commission greenlit the transaction without conditions, it refrained from commenting on the Master Service Agreement (MSA) between Tim and KKR, leaving it open to scrutiny under antitrust laws.

This development prompts speculation among alternative operators (Olo) considering complaints to both the Italian Antitrust Authority and the European Commission’s Directorate-General for Competition (DgComp). Their concerns center around potential violations of EU competition regulations regarding commercial practices and abuse of dominant positions.

As the transaction progresses towards closure, Italy’s involvement in the new network company alongside F2i, Abu Dhabi’s sovereign fund, and Canada’s CPP pension fund underscores the importance of safeguarding strategic infrastructure while leaving managerial control to the US-based KKR. 

SOURCES
  • Adnkronos
  • AGI
  • AIFA
  • Ambrosetti
  • ANSA
  • ARERA
  • Ares Osservatorio Difesa
  • ASI
  • Askanews
  • Aspen Institute
  • Associated Press
  • ASTRID
  • Astrospace
  • ASVIS
  • Banca d’Italia alert
  • Bloomberg
  • Boston Consulting Group
  • Camera dei Deputati
  • Censis
  • Confagricoltura
  • COTEC
  • Domani
  • Centro Alti Studi Difesa
  • Cassa Depositi e Prestiti
  • Centro Economia Digitale
  • Centro Studi Confindustria
  • CESPI
  • Corriere della Sera
  • CONSOB
  • Dagospia
  • Domani
  • ENI alert
  • Euractiv
  • Fondazione Enrico Mattei
  • Formiche.net
  • Fortune
  • Gazzetta Ufficiale
  • Geopolitica.info
  • Key4Biz
  • ICE
  • I-Com
  • IIT
  • Il Foglio
  • Il Messaggero
  • Il Sole 24 Ore
  • Il Tempo
  • Informazioni Parlamentari
  • Inside Over
  • Intesa Direzione Ricerca
  • ISPI
  • ISTAT
  • Istituto Affari Internazionali
  • Italia Domani
  • Key4Biz
  • La Stampa
  • La Verità
  • Le Grand Continent
  • Leonardo alert
  • Lettera43
  • L’Espresso
  • Limes
  • LUISS
  • Milano Finanza
  • MAECI
  • Nomos Centro Studi Parlamentari
  • Nucleare e Ragione
  • OCSE
  • Open
  • Open Polis
  • Osservatore Romano
  • Osservatorio Parlamento
  • Policy Maker
  • Politico
  • Portale Difesa
  • Poteri Deboli
  • Prima Online
  • Radio Radicale
  • Redazione Terza Repubblica
  • Report Difesa
  • Repubblica
  • Rivista Energia
  • Rivista Italiana Difesa
  • SACE
  • Sassate
  • Space Economy Lab – Bocconi
  • Senato della Repubblica
  • Servizi Studi Camera dei Deputati
  • Staffetta Energetica
  • Start Magazine
  • Symbola
  • Union Camere
  • World Energy Council Italia

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hello@haizum.eu

P. IVA 12561140968

Via Pattari, 6, 20122 Milano MI

Proud member of

© 2022 Created by ABCPRODUCTION.digital