Interview: The shift from state-ownership to privatization in Italy

State-owned enterprises (SOEs) exist in Italy but have undergone a transformation in decades past in response to market criteria, experts told Xinhua in a recent interview.

Italy has a tradition of state intervention in the market since the Mediterranean country was unified in 1861, said Andrea Colli, a business history professor at Bocconi University here.

Colli said the Italian state has always been an important flywheel for big companies, which became more evident in the 1930s due to the global crisis that hit the Italian banks and industrial system.

"This, in the 1930s, led to the creation of a large state-owned holding, IRI, aimed at saving the Italian banks and economy," Colli said.

"After World War II, this situation had become structural and given the Italian state the occasion to use SOEs as a powerful instrument of industrial policy, from infrastructures to energy and technology," the professor noted.

But later, SOEs went through a degeneration process which had its peak in the 1970s, when they became less efficient, making way for political clientelism and corruption, Colli highlighted.

Now the Italian state maintains control over certain sectors that are considered strategic, such as defense and energy, and has learnt to use instruments of control that are different from ownership, he explained to Xinhua.

"For example, the Italian state maintains a relative majority in certain companies or a relationship with other institutional or private investors that are somehow bound to the government," he noted.

"I would say that the Italian state's property has changed skin, has diversified compared to the past, has different and more sophisticated instruments, it has reduced but has become more efficient," Colli pointed out.

In fact, he also noted, in those countries that are considered major emerging markets, including Brazil, Russia and India, the state still has a function of direct involvement and guidance of the economic system.

"None of them is carrying out a complete privatization, they maintain SOEs and want to learn how to privatize them selectively," he said.

Gianni Dragoni, a columnist at Italy's leading economic newspaper Il Sole 24 Ore, noted that the issue of privatizations is nowadays a "priority in the government's agenda."

"Every year the Italian budget law indicates the amount that the state should take from privatizations or sale of minority stakes in SOEs," he explained to Xinhua.

Some companies, including big ones such as phone company Telecom Italia and flagship airline Alitalia, have been entirely privatized, Dragoni said.

In fact, privatizations, he noted, have been seen in recent years as an addition to the Italian state's coffers but have also posed doubts on the risk that important companies, once privatized, are managed with a short-term view only driven by immediate profits.

Dragoni cited the example of big companies such as energy giants Eni and Enel, or defense group Finmeccanica, that have been listed on the stock exchange but are not entirely privatized.

"The Italian state has maintained a stake between 25 and 30 percent in these companies and thus has continued to be their main shareholder," he highlighted.

"In this way, strategic companies are still controlled by the Italian state while they are trying to respond to market criteria at the same time," he told Xinhua.

The next privatization is expected to concern Poste Italiane, Italy's national postal service, a big company still fully owned by the Italian state. The government plans to list it on the stock exchange and sell a stake of up to 40 percent, Dragoni said. Endit