National Trade Data Bank ITEM ID : ST BNOTES ITALY DATE : Oct 28, 1994 AGENCY : U.S. DEPARTMENT OF STATE PROGRAM : BACKGROUND NOTES TITLE : Background Notes - ITALY Source key : ST Program key : ST BNOTES Update sched. : Occasionally Data type : TEXT End year : 1994 Date of record : 19941018 Keywords 3 : Keywords 3 : | ITALY BACKGROUND NOTES: ITALY PUBLISHED BY THE BUREAU OF PUBLIC AFFAIRS U.S. DEPARTMENT OF STATE AUGUST 1994 OFFICIAL NAME: Republic of Italy PROFILE Geography Area: 301,225 sq. km. (116,303 sq. mi.); about the size of Georgia and Florida combined. Cities: Capital--Rome (pop. 2.7 million). Other cities--Milan, Naples, Turin. Terrain: Mostly rugged and mountainous. Climate: Generally mild Mediterranean; cold northern winters. People Nationality: Noun and adjective--Italian(s). Population (mid-1992): 57.2 million. Annual growth rate (1992): 0.3%. Ethnic groups: Primarily Italian, but small groups of German-, French-, Slovene-, and Albanian-Italians. Religion: Roman Catholic (majority). Language: Italian (official). Education: Years compulsory--14. Literacy--98%. Health: Infant mortality rate (1992)--7.4/1,000 live births. Life expectancy--male 73 yrs; female 80 yrs. Work force (1993): 22.3 million; unemployment 11%. Agriculture--7%. Industry and commerce--33%. Services-- 60%. Government Type: Republic since June 2, 1946. Constitution: January 1, 1948. Branches: Executive--president (chief of state), Council of Ministers (cabinet), headed by the president of the council (prime minister). Legislative--bicameral parliament: 630-member Chamber of Deputies, 326-member Senate. Judicial--independent constitutional court and lower magistracy. Subdivisions: 94 provinces, 20 regions. Political parties: Forza Italia, Northern League, National Alliance, Democratic Party of the Left, Italian People's Party, Christian Democratic Center, Socialist, La Rete, Communist Renewal, Social Democratic, Republican, Liberal, Greens. Suffrage: Universal over 18. Defense (1993): 2.1% of GDP. Flag: Three vertical bands--green, white, and red. Economy GDP (1993): $992.4 billion. Per capita income (1993): $17,368. GDP growth (1993): -0.7%. Natural resources: Fish, natural gas. Agriculture: Products--wheat, rice, grapes, olives, citrus fruits. Industry: Types--automobiles, machinery, chemicals, textiles, shoes. Trade (1993): Exports--$168.9 billion; partners--EU 53.1%, U.S. 7.8%, OPEC 4.9%; mechanical products, textiles and apparel, transportation equipment, metal products, chemical products, food and agricultural products, energy products. Imports--$148.1 billion; partners--EU 55.3%, U.S. 5.3%, OPEC 6.5%; machinery and transport equipment, foodstuffs, ferrous and nonferrous metals, wool, cotton, energy products. Exchange rate (1993 avg.): 1,572 lire=U.S. $1. PEOPLE AND HISTORY Italy is largely homogeneous linguistically and religiously but is diverse culturally, economically, and politically. Italy has the fifth-highest population density in Europe--about 200 persons per square kilometer (490/sq. mi.). Minority groups are small, the largest being the German-speakers in Bolzano Province and Slovenes around Trieste. Other groups comprise small communities of Albanian, Greek, Ladino, and French origin. Although Roman Catholicism is the majority religion--99% of the people are nominally Catholic--all religious faiths are provided equal freedom before the law by the constitution. Greeks settled in the southern tip of the Italian peninsula in the eighth and seventh centuries B.C.; Etruscans, Romans, and others inhabited the central and northern mainland. The peninsula was unified under the Roman Republic; the Empire extended Roman rule over the neighboring islands. After the collapse of the Roman Empire in the West in the fifth century A.D., the peninsula and islands were subjected to a series of invasions, and political unity was lost. Italy became an oft-changing succession of small states, principalities, and kingdoms which fought among themselves and were subject to ambitions of foreign powers. Popes of Rome ruled central Italy; rivalries between the popes and the Holy Roman Emperors, who claimed Italy as their domain, often made the peninsula a battleground. Commercial prosperity of northern and central Italian cities, beginning in the 11th century, and the influence of the Renaissance mitigated somewhat the effects of these medieval political rivalries. Although Italy declined after the 16th century, the Renaissance had strengthened the idea of a single Italian nationality. By the early 19th century, a nationalist movement developed and led to the reunification of Italy--except for Rome--in the 1860s. In 1861, Victor Emmanuel II of the House of Savoy was proclaimed King of Italy. Rome was incorporated in 1870. From 1870 until 1922, Italy was a constitutional monarchy with a parliament elected under limited suffrage. 20th-Century History During World War I, Italy renounced its standing alliance with Germany and Austria-Hungary and, in 1915, entered the war on the side of the Allies. Under the postwar settlement, Italy received some former Austrian territory along the northeast frontier. In 1922, Benito Mussolini came to power and, over the next few years, eliminated political parties, curtailed personal liberties, and installed a fascist dictatorship termed the Corporate State. The king, with little or no effective power, remained titular head of state. Italy allied with Germany and declared war on the United Kingdom and France in 1940. In 1941, Italy--with the other Axis powers, Germany and Japan--declared war on the United States and the Soviet Union. Following the Allied invasion of Sicily in 1943, the King dismissed Mussolini and appointed Marshal Pietro Badoglio as premier. The Badoglio government declared war on Germany, which quickly occupied most of the country and freed Mussolini, who led a brief-lived regime in the north. An anti- fascist popular resistance movement grew during the last two years of the war, harassing German forces before they were driven out in April 1945. The monarchy was ended by a 1946 plebiscite, and a constituent assembly was elected to draw up plans for the republic. Under the 1947 peace treaty, minor adjustments were made in Italy's frontier with France, the eastern border area was transferred to Yugoslavia, and the area around the city of Trieste was designated a free territory. In 1954, the free territory, which had remained under the administration of U.S.-U.K. forces (Zone A, including the city of Trieste) and Yugoslav forces (Zone B), was divided between Italy and Yugoslavia, principally along the zonal boundary. This arrangement was made permanent by the Italian-Yugoslav Treaty of Osimo, ratified in 1977 (currently being discussed by Italy, Slovenia, and Croatia). Under the 1947 peace treaty, Italy also gave up its overseas territories and certain Mediterranean islands. The Roman Catholic Church's status in Italy has been determined, since its temporal powers ended in 1870, by a series of accords with the Italian Government. Under the Lateran Pacts of 1929, which were confirmed by the present constitution, the state of Vatican City is recognized by Italy as an independent, sovereign entity. While preserving that recognition, in 1984, Italy and the Vatican updated several provisions of the 1929 accords. Included was the end of Roman Catholicism as Italy's formal state religion. Italy's Cultural Contributions Europe's Renaissance period began in Italy during the 14th and 15th centuries. Literary achievements--such as the poetry of Petrarch, Tasso, and Ariosto and the prose of Boccaccio, Machiavelli, and Castiglione--exerted a tremendous and lasting influence on the subsequent development of Western civilization, as did the painting, sculpture, and architecture contributed by giants such as da Vinci, Raphael, Botticelli, Fra Angelico, and Michelangelo. The musical influence of Italian composers Monteverdi, Palestrina, and Vivaldi proved epochal; in the 19th century, Italian romantic opera flourished under composers Gioacchino Rossini, Giuseppe Verdi, and Giacomo Puccini. Contemporary Italian artists, writers, filmmakers, architects, composers, and designers contribute significantly to Western culture. GOVERNMENT Italy has been a democratic republic since June 2, 1946, when the monarchy was abolished by popular referendum. The constitution was promulgated on January 1, 1948. The Italian state is highly centralized. The prefect of each of the provinces is appointed by and answerable to the central government. In addition to the provinces, the constitution provides for 20 regions with limited governing powers. Five regions--Sardinia, Sicily, Trentino-Alto Adige, Valle d'Aosta, and Friuli-Venezia Giulia--function with special autonomy statutes. The other 15 regions were established in 1970 and vote for regional "councils" (parliaments). The establishment of regional governments throughout Italy has brought some decentralization to the national governmental machinery. The 1948 constitution established a bicameral parliament (Chamber of Deputies and Senate), a separate judiciary, and an executive branch composed of a Council of Ministers (cabinet) which is headed by the president of the council (prime minister). The president of the republic is elected for seven years by the parliament sitting jointly with a small number of regional delegates. The president nominates the prime minister, who chooses the other ministers. The Council of Ministers--in practice composed mostly of members of parliament--must retain the confidence of both houses. The houses of parliament are popularly and directly elected by a mixed majoritarian and proportional representation system. Under 1993 legislation, Italy has single-member districts for 75% of the seats in parliament; the remaining 25% of seats are allotted on a proportional basis. The Chamber of Deputies has 630 members. In addition to 315 elected members, the Senate includes former presidents and several other persons appointed for life according to special constitutional provisions. Both houses are elected for a maximum of five years, but either may be dissolved before the expiration of its normal term. Legislative bills may originate in either house and must be passed by a majority in both. The Italian judicial system is based on Roman law modified by the Napoleonic code and subsequent statutes. There is only partial judicial review of legislation in the American sense. A constitutional court, which passes on the constitutionality of laws, is a post-World War II innovation. Its powers, volume, and frequency of decisions are not as extensive as those of the U.S. Supreme Court. Principal Government Officials President--Oscar Luigi Scalfaro Prime Minister--Silvio Berlusconi Foreign Minister--Antonio Martino Ambassador to the United States--Boris Biancheri Italy maintains an embassy in the United States at 1601 Fuller Street NW, Washington, DC 20009 (tel. 202-328- 5500). POLITICAL CONDITIONS There have been frequent government turnovers since 1945. However, with the Christian Democratic (DC) party as the majority party, there had been continuity and comparative stability in Italy's political situation. Italian governments consistently formed around the DC, which governed either in coalition with other parties or alone through 1994. From 1992 to 1994, Italy faced significant challenges as voters--disenchanted with past political paralysis, massive government debt, extensive corruption, and organized crime's considerable influence--demanded political, economic, and ethical reforms. In 1993 referendums, voters approved substantial changes, including from a proportional to majoritarian electoral system, stiff campaign reforms, and abolishment of some ministries. Major political parties that were beset by scandal and loss of voter confidence underwent far-reaching changes. New political forces and new alignments of political power emerged. In March 1994 elections, the "Freedom Alliance" of the new Forza Italia party, the federalist Northern League, and the National Alliance (which traces its roots to fascism) won an absolute majority in the Chamber and a plurality in the Senate. Prime Minister Silvio Berlusconi formed a coalition government based on the Freedom Alliance, small centrist parties, and independents. There was a major turnover in the new parliament, with 452 out of 630 deputies and 213 out of 315 senators elected for the first time. The Berlusconi government pro-gram emphasizes economic reforms and continuity in Italy's foreign policy. It aims to continue former Prime Minister Ciampi's privatization program, reduce the debt and deficit, reform the fiscal system, and improve economic competitiveness. Further institutional reforms-- additional changes in the electoral system and possible direct election of the president and/or prime minister-- are issues of ongoing political interest; so too is the possibility of reducing central government control while introducing greater federalism. Political Parties Italy's dramatic self-renewal transformed the political landscape between 1992 and 1994. Scandal investigations touched thousands of politicians, administrators, and businessmen; the shift from a proportional to majoritarian voting system (with the requirement to obtain a minimum of 4% of the national vote to obtain representation) also altered political ground rules. Party changes were sweeping. The Christian Democratic party dissolved; the Pact for Italy, the Italian People's Party, and the Christian Democratic Center emerged. Other major parties, such as the Socialists, saw support plummet. New parties such as Forza Italia, led by media magnate Silvio Berlusconi, emerged; others, such as the National Alliance, formed by the Italian Social Movement (MSI) and conservative former Christian Democrats, picked up strength. Since Italy has slightly differing electoral systems in Senate and Chamber races for the 25% of seats allotted on a proportional basis (in the Chamber based on individual parties but in the Senate based on multi-party coalitions), it is difficult to judge increase or decline of party preferences compared to earlier elections. Moreover, because of considerable political realignments, some parties do not bear resemblance to their earlier iterations. The largest parties in the Chamber are: Forza Italia (21%); Democratic Party of the Left--moderate successor to the Italian Communist Party--(20.4%); National Alliance/Italian Social Movement (13.5%); Italian People's Party--primary successor to the DC--(11.1%); Northern League (8.4%); and Communist Renewal--hard-line successor to the Italian Communist Party--(6%). In the Senate, the largest groups were: Forza Italia-Northern League (19.9%); Forza Italia-National Alliance (13.7%); Progressive Alliance--PDS and others--(32.9%); Pact for Italy (16.7%); National Alliance/Italian Social Movement (6.3%). Several other smaller parties are also active. In municipal and regional elections, such parties, including the Greens and La Rete (the Network), drew well. ECONOMY The Italian economy has changed dramatically since the end of World War II. From an agriculturally based economy, it has developed into an industrial state, and, with a total GDP of more than $992 billion in 1993, it ranks as the world's fifth-largest industrial democracy. Italy belongs to the Group of Seven (G-7) industrialized nations; it is a member of the European Union and the OECD. Italy has few natural resources. With much of the land unsuited for farming, Italy is a net food importer. There are no substantial deposits of iron, coal, or oil. Proven natural gas reserves, mainly in the Po Valley and offshore Adriatic, have grown in recent years and constitute the country's most important mineral resources. Most raw materials needed for manufacturing and more than 80% of the country's energy sources are imported. Italy's economic strength is in the processing and the manufacturing of goods, primarily in small and medium-sized family-owned firms. Its major industries are precision machinery, motor vehicles, chemicals, pharmaceuticals, electrical goods, and fashion and clothing. In 1993, Italy, caught in Europe's economic doldrums, experienced 0.7% negative growth, one of the largest drops in the postwar period. Investment, consumption, and industrial production fell; the services sector grew modestly. Italian economic performance is expected to improve modestly in 1994 and 1995, with real growth projected at 1.4% and 1.9%, respectively, based on strong exports and increased domestic demand. The 1992 floating of the lira led to a 1993 export boom. Italy posted a 1993 trade surplus of $32.4 billion, compared to $3 billion in 1992; and a current account surplus of $9.5 billion, compared to a 1992 deficit of $27.9 billion. Continued competitive lira exchange rates should assist further export-led growth. Government economic reforms, sluggish domestic demand, and a landmark 1993 wage accord all helped keep inflation in check despite the lira's 1992 depreciation. Inflation was at 4.2% in 1993 and should remain moderate, at 4%-5%, in 1994-95. In coordination with the EU's planning for an eventual single market, Italy seeks to align its economic policies with those of the other major continental economies and to privatize large state-owned holding companies in a number of sectors. Italy faces several economic and political hurdles in achieving both goals while maintaining social cohesion. Moreover, under terms of the Maastricht Treaty, a convergence target of 3% has been set for public sector deficit as percentage of GDP-- far below Italy's present rate. Also, Italy's public debt/GDP ratio does not put it realistically within reach of the Treaty' s target of 60%. Italian Government efforts to reduce the relative sustained size of the public sector budget deficit have met some success. The public sector deficit dropped to about 10% of GDP in 1993 and should decline slowly to 9.6% of GDP in 1994 and 9% of GDP in 1995, assuming continued reform. The gross public debt fell in 1993 but still remains greater than 100% of GDP. These deficit/GDP and debt/GDP ratios remain well above the rest of the group of major industrial economies and complicate efforts to coordinate Italy's economic policies with those of its major European partners. Italy's closest trade ties are with the other countries of the European Union, with whom it conducts about 54% of its total trade. Italy's largest EU trade partners, in order of market share, are Germany (19.4%), France (13.6%), the United Kingdom (6.4%), and the Netherlands (5.6%). U.S.-Italy Economic Relations The U.S.-Italian bilateral relationship is strong and growing. The U.S. and Italy cooperate closely on major economic issues, including within the G-7, which Italy chaired in 1994. With a large population and a high per capita income, Italy is one of the United States' most important trading partners. In 1993, the United States was the fifth-largest single foreign supplier of the Italian market (with a market share of 5.3%) and the largest outside the EU. Total trade between the United States and Italy exceeded $21 billion in 1993; the U.S. ran more than a $5-billion deficit with Italy. Significant changes are occurring in the composition of this trade which could narrow the gap. More value-added products such as office machinery and aircraft are becoming the principal U.S. exports to Italy. The change reveals the growing sophistication of the Italian market, and bilateral trade will expand further. During 1993, the United States imported $13 billion in Italian goods while exporting $7.8 billion in U.S. goods to Italy. U.S. foreign direct investment in Italy exceeds $14 billion; Italian investment in the U.S. is growing fast. Labor A rigid labor market and protective legislation for employed workers have compounded Italy's major problem of unemployment, which held at about 11.3% in 1993--with most job losses occurring in the industrial sector. For structural economic reasons, unemployment should continue to be a problem even with economic recovery and modest wage gains following the landmark July 1993 labor accord. Although skilled labor is in short supply in some categories, inefficient use of labor, structural unemployment, and underemployment persist, as does labor unreported for tax purposes. Adult and youth unemployment are more acute in southern than in northern Italy. Official estimates place the unionization rate of the labor force at 15%; this does not reflect union statistics, since as it accounts only for dues-paying, active workers, omitting retiree/pensioner figures. Most Italian unions are grouped in three confederations, each of which has had traditional ties with a particular political party. With the collapse and near disappearance of the traditional ruling parties, these informal ties have ended, and the confederations now emphasize their autonomy from political parties. The three major confederations are the Italian Confederation of Labor Unions (CISL), the Italian General Confederation of Labor (CGIL), and the Union of Italian Labor (UIL). The approximate labor share for the three confederations is: CGIL, 42%; CISL, 37%; and UIL, 20%. Agriculture Italy's agriculture is typical of the division between the agricultures of the northern and southern countries of the European Union. The northern part of Italy produces primarily grains, sugar beets, soybeans, meat, and dairy products, while the southern section specializes in producing fruits, vegetables, olive oil, wine, and durum wheat. Even though much of its mountainous terrain is unsuitable for farming, Italy has a large work force (1.6 million) employed in farming. Most farms are small, with the average farm only seven hectares. FOREIGN RELATIONS Italy is a founding member of the European Union--before the Maastricht Treaty, the European Community. Italy was admitted to the United Nations in 1955 and is a member and strong supporter of the North Atlantic Treaty Organization (NATO); the Organization for Economic Cooperation and Development (OECD); the General Agreement on Tariffs and Trade (GATT); the Conference on Security and Cooperation in Europe (CSCE), the Western European Union (WEU); and the Council of Europe. It chaired the WEU in 1993 and has chaired the CSCE and the G-7 in 1994. Italy firmly supports the United Nations and its international security activities. Italy actively participated in and deployed troops in support of UN peace-keeping missions in Somalia, Mozambique, and Cambodia; Italian troops provided logistical and humanitarian assistance to Albania from 1991 to 1993. It provides critical support for NATO and UN operations in Bosnia. The Italian Government seeks to obtain consensus with other European countries on various defense and security issues within the WEU as well as NATO. European integration and the development of common defense and security policies will continue to be of primary interest to Italy. DEFENSE A strong NATO ally, Italy occupies an important strategic position in the Mediterranean, critical to regional security and for enhancing stability in the Balkans, North Africa, and the Middle East. To meet challenges of the post-Cold War era, Italy has proposed a "New Defense Model" that calls for the creation of more mobile and highly trained units staffed by career professionals. The Italian military is subordinate to civilian authority, which is vested in the Ministry of Defense. Under the authority of the Defense Minister, the armed forces have also been used in Italy for emergency relief and combating organized crime. U.S.-ITALY RELATIONS The United States enjoys warm and friendly relations with Italy. The two are NATO allies and cooperate in the United Nations, in various regional organizations, and bilaterally for peace, prosperity, and defense. Italy has worked closely with the United States and others on such issues as NATO and UN operation in Bosnia; sanctions against the former Yugoslavia; assistance to Russia and the New Independent States (NIS); Middle East peace process multilateral talks; Somalia and Mozambique peace- keeping; and combating drug trafficking and terrorism. Under long-standing bilateral agreements flowing from NATO membership, Italy hosts important U.S. military forces at Vincenza and Livorno (Army); Aviano (Air Force); and Sigonella, La Maddalena, Gaeta, and Naples-- home port for the U.S. Navy Sixth Fleet. The United States has about 17,000 military personnel stationed in Italy. Italy hosts the NATO War College in Rome. Italy remains a strong and active trans-Atlantic partner which, along with the United States, has sought to foster democratic ideals and international cooperation in areas of strife and civil conflict. Toward this end, the Italian Government has cooperated with the U.S. in the formulation of defense, security, and peace-keeping policies. Principal U.S. Officials Ambassador--Reginald Bartholomew Deputy Chief of Mission--James Creagan Minister-Counselor for Political Affairs--Harry L. Coburn Minister-Counselor for Economic Affairs--Robert J. Smolik Minister-Counselor for Public Affairs--Cynthia J. Miller Minister-Counselor for Commercial Affairs--Keith Bovetti Minister-Counselor for Agricultural Affairs--Frank A. Padovano Treasury Attache--Gay Hoar Defense Attache--Capt. Philip Bozzelli, USN Consular Posts Consul General, Florence--Sue Patterson Consul General, Milan--Richard Shinnick Consul General, Naples--Clarke N. Ellis The U.S. embassy in Italy is located at Via Veneto 119, Rome (tel. (39)(6) 46741). TRAVEL NOTES Clothing: Woolens and sweaters are practical in winter; cottons are recommended for the hot summers. Currency: Non-residents are allowed to take out or bring in to the country Italian and foreign banknotes and bearer and personal checks up to 20 million lire. In cases of negotiable instruments exceeding the 20-million- lira limit, non-residents should request an import certificate (Form V-2) from the customs authorities at the port of entry. Health: Medical facilities are available in cities. No special immunizations are necessary. Tapwater is safe. Meat and shellfish should be well-cooked. Telecommunications: Telephone and telegraph connections within Italy and to international points are good. Rome is six standard time zones ahead of eastern standard time. Transportation: Many major international airlines have service to Rome and Milan, and there is daily jet service to the United States. Public transportation is modern and efficient; metered taxis also are available at stands. Visas: No Italian visa is required of American citizens visiting Italy temporarily for tourism or business trips. Persons planning to travel to Italy for work or other purposes should inquire about their visa status in advance at an Italian embassy or consulate before traveling to Italy. Published by the United States Department of State -- Bureau of Public Affairs -- Office of Public Communication -- Washington, DC -- August 1994 -- Managing Editor: Peter A. Knecht -- Editor: Marilyn J. Bremner Department of State Publication 9542 -- Background Notes Series For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.