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 Five years later and it has installed turbines that can generate
barely a third of that amount. The company says muddled Italian laws
and a plethora of regulations are to blame.
"Italy's an appealing proposition and we'd like to spend more but
the slow and tortuous legal framework has clipped our wings," EDPR's
EU Country Manager Gianluca Veneroni said.
The same complaint is heard across the business spectrum, with
economists saying the convoluted thicket of rules and regulations is
one of the reasons why the Italian economy has proved such a serial
underperformer over the past two decades.
In EDPR's case, the firm has struggled to get the necessary permits
to erect its wind farms, having to deal with myriad offices at a
national, regional and town level, with everyone from a cultural
protection unit to a local fire brigade station able to delay a
project for months and even years.
"How do I explain to my board a fact like by the time I finally get
the go ahead from the regional government, the environmental permit
has expired and we have to start over again," said an exasperated
Veneroni.
Prime Minister Matteo Renzi's government says it is well aware of
the problems and has introduced a series of reforms aimed at
simplifying the legal system and regulatory landscape, with more
bills in the pipeline in parliament.
These include enhancing special business tribunals to cut the length
of time it takes to resolve cases, offer incentives to plaintiffs to
seek out-of-court agreements and setting up a committee to help
foreign companies overcome the red tape.
"This year, 30 percent of parliamentary activity has been spent on
measures that come from my ministry," Justice Minister Andrea
Orlando told Reuters. "The results are already clear. Italian
justice is undergoing a deep reorganization."
But Italy has a mountain to climb if it wants to catch up with its
main economic rivals when it comes to legal efficiency.
BOTTOM OF THE CLASS
The World Economic Forum Global Competitiveness Report for 2015/16
highlights the problem. It ranked Italy 139th out of 140 countries
in terms of the efficiency of the legal system in settling disputes
-- well below the likes of Haiti and Zimbabwe -- and 138th in terms
of the burden of state regulations.
Latest World Bank data says it takes on average 1,120 days to
enforce a contract in Italy against 538 days for the 34 rich and
developing nations in the Organisation of Economic Co-operation and
Development (OECD).
The drawn out legal process acts as a dead weight on the economy,
making it difficult for creditors to call in their debts and
deterring investors from entering the local market.
"I cannot tell you how many CEO's of American companies have told
me... (the legal system) is the number one reason they decide
against investing and doing business in Italy," U.S. Ambassador John
Phillips told an audience at Pisa University this year.
A number of businesses point to their own misfortunes. New-York
based Fabrizio Arengi, head of investment company Fidia Holding,
says his group sold a business in Italy four years ago and has been
suing to recoup the cash ever since. He declined to name the firm
because the case was still on-going. "If you go to court you know
it'll take forever and that the outlook will be uncertain. And even
if you win you only get back what you’re owed. The legal costs are
all yours," he said.
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Australian group Westfield <WFD.AX> signed a deal with city and
regional authorities in 2010 to build a huge shopping mall on the
outskirts of Milan. The 1.4 billion euro ($1.5 billion) project has
been held up ever since because it has failed to secure planning
permission for a 6-km access road.
The government has created a committee as part of its so-called
Unblock-Italy reform, to try to slash back bureaucracy.
"Like Westfield, we have looked at 20 other foreign projects which
have been blocked and which are worth 6 billion euros," said junior
economy minister Carlo Calenda. His office said the committee was
making headway but had yet to yank any of the projects free from the
red tape.
FLOURISHING CORRUPTION
Such blockages are dragging down the economy, which has barely grown
since 1994 and has shrunk since 2000 -- the worst performance of any
OECD member. The Bank of Italy estimates that the poor functioning
legal system costs Italy the equivalent of one percent of GDP
annually.
Officials also acknowledge that Italy's Byzantine legal system and
mass of overlapping authorities are partly to blame for the
pervasive corruption that leaves the country floundering in last
place in Transparency International's latest Corruption Perceptions
Index for the European Union.
"Italy is hampered by the instability of its regulations. The rule
of law often changes, allowing corruption to permeate and prosper,"
former Prime Minister Enrico Letta told Reuters, suggesting repeated
micro reforms only added to the confusion.
What the country really needed, he said, was "a proper reform" of
the justice system.
Renzi, who seized power from Letta in early 2014, has ducked a
full-blown revamp of the bloated legal architecture, preferring
instead to reform specific elements -- a piecemeal approach
contested by advocates of sweeping change.
"The government keeps talking and talking but it's mostly hot air,"
former judge Bruno Tinti told Reuters.
The government says its strategy is working and points to the fall
in the number of pending civil cases as proof. Such cases fell from
some six million in 2009 to an estimated 4.5 million this year, with
the rate of new filings in decline.
"The results are clear. Italian justice is undergoing a profound
reorganization," said Justice Minister Orlando.
($1 = 0.9187 euros)
(Additional reporting by Danilo Masoni and Gavin Jones; Editing by
Crispian Balmer and Anna Willard)
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