You would not know it from the English-language signs promising to serve
passengers ``quckly'', but Naples' Capodichino airport is British-owned. In
August, 70% of it was bought by BAA, a company that also runs, among other
things, London's main airport, Heathrow. For the Italian south this is a symbol
of hope. Finding an international firm of this calibre willing to invest there
has greatly boosted its confidence. BAA, for its part, was attracted by the
south's tourist potential, but spent three years thinking hard about the $44m
deal. What clinched it in the end was the enthusiasm of Antonio Bassolino, the
mayor of Naples since 1993. He won round BAA bosses with his clear commitment to
privatisation, and fought off opposition at home to foreign ownership, branded
as ``colonisation by the British''. A former communist fundamentalist, Mr
Bassolino is an unlikely champion of privatisation. But the BAA deal is no
one-off. Mr Bassolino boasts about selling the municipal dairy-``What was a city
council doing selling milk?''-and about pioneering, with Merrill Lynch, Italy's
first international municipal bond issue, which sold well in America. The cash
was used to renovate the city's public transport system. He is promoting
public-private partnerships; and he has just persuaded the Chinese commercial
fleet to use Naples as its main container port for serving Europe. The city's
inefficient bureaucracy has been shaken up, with the mayor leading by example.
His distinctly un-Neapolitan punctuality and long working hours have earned him
the nickname ``the German''. Using money for hosting the G7 summit in 1994 as a
catalyst, the city has cleaned and restored many of its vast number of tourist
attractions. It has also extended its opening hours and cleared the main piazzas
of parked cars (though not, alas, of moving mopeds). Mr Bassolino talks with
passion of re-born civic pride, of the need for Naples to solve its own
problems. ``The south has been living on money from the government for too
long,'' he says; this has created a ``deadly dependence''. Mr Bassolino explains
that he has been able to make these changes only thanks to a new system,
introduced in 1993, for the direct election of mayors in cities throughout
Italy. This gave him a mandate for four years, allowed him to appoint his own
senior officials, and made him directly accountable to the electorate rather
than to party politicians on the city council-who cannot now remove him without
also triggering new city-council elections. Past mayors, chosen by the ruling
party on the council, did well to last a year. Direct election has produced a
crop of impressive new city mayors all over the south (and some in the north,
too), many of whom have followed Naples' strategy of promoting cultural tourism
and tackling inefficient bureaucracy. Their first test will come later this
month, when some of them are up for re-election. But there is still plenty of
inefficient southern bureaucracy left. Consider, for example, the startling
statistic that in 1996 Italy managed to spend only 30% of its entitlement to EU
money to help disadvantaged regions such as the mezzogiorno. The country's local
and regional governments, it seems, are not even up to collecting hand-outs. The
EU increasingly allocates money to specific projects instead of handing it over
in a chunk. That means local administrators have to prepare a project submission
and translate it for officials in Brussels, for which many of them at present
lack the skills. But things may be getting better, slowly. For instance, a
``Europe Office'' with English-speaking staff has been set up in Palermo's city
hall. Bassolino's new recipe for Naples Bureaucracy has also made it hard to do
anything new. One big firm wanted to sink some wells so it could build a new
plant in Sicily. Enzo Bianco, the mayor of Catania, tells the story of how,
after two years of waiting, the firm made its fourth phone call to the regional
government, only to be told that ``if you call a fifth time, you will never get
permission.'' Mr Bianco has made some improvements in his city, including
setting up a ``one-stop shop'' to help firms with permits. But much remains to
be done, he says: over the years, the impact of bureaucracy on Sicily's
development has been ``no less than the impact of the Mafia''. Who is the boss
now? The Mafia (along with similar criminal organisations, such as the Camorra
in Naples) remains a huge problem for the south. Even in areas where the
influence of organised crime has been greatly reduced, the image of Mafia
violence continues to worry outsiders. In Palermo, where two prominent
anti-Mafia judges, Giovanni Falcone and Paolo Borsellino, were blown up in 1992,
``The Mafia is now the cultural minority; it was the majority,'' says the city's
mayor, Leoluca Orlando. ``The bureaucracy is now honest, which it was not ten
years ago.'' Local experts on the Mafia say he may be exaggerating, but not
much. Palermo is spending a fortune in establishing itself as a centre for
cultural tourism, mounting hundreds of musical and theatrical events. Many of
its buildings have been beautifully restored. Those tourists who come say they
feel safe. Yet it will be many years before the city sheds its worldwide
reputation as the city ruled by the Corleone family. Naples, too, is more in
control of its Camorra now. Tourists in the city centre are probably as safe at
3am as they would be at noon in midtown Manhattan. Yet when 500 soldiers were
sent to the city last summer to support local police, newspaper headlines at
home and abroad conjured up images of mob rule and tanks patrolling the streets.
In fact, the soldiers were used mostly to replace police guarding consulates and
civic buildings while new police officers were being trained. Camorra killings
still go on around Naples, but they arise from battles between rival gangs, away
from the tourist areas. Both local and national government are anxious to reduce
such activity to levels no worse than organised crime anywhere else. The
authorities say the Sicilian Mafia over-reached itself by declaring war on the
state with the murder in 1992 of the two judges and Salvatore Lima, a leading
Sicilian politician. The public turned against the ``men of honour'', and many
pentiti, former mafiosi, gave evidence that led to hundreds of arrests. The
command structure of the highly centralised Sicilian Mafia is thought to have
been destroyed. The main concern of the police now is to identify anyone who may
be trying to fill the void. Elsewhere in the south, organisations such as the
Camorra tend to be fragmented, so it takes far more arrests to reduce their
effectiveness than in Sicily, where a few key arrests had a huge impact. Even
so, the state is winning out. According to Giorgio Napolitano, the minister of
the interior, far more progress against organised crime has been made on the
political front-by breaking the links between crime, government and the
judiciary-than on the economic side, where the potential for drug-dealing and
racketeering remains significant. A new strategy of ``investor protection'' is
to be put in place, coinciding with the establishment of special enterprise
zones, which will offer companies tax breaks to attract them southwards. In
areas where significant investment is planned, the government will provide
resources for policing and surveillance to keep organised crime at bay. If the
authorities can show they are able to protect investors, many more international
companies may follow in the footsteps of BAA. But before they do, there is
another thing that the south will have to get right: infrastructure. It suffers
not only from the problems afflicting Italy as a whole-such as inadequate roads
and rail services and insufficient integration between different kinds of
transport-but also from its very own surfeit of white elephants. Much of the
corruption revealed in the tangentopoli scandal was concentrated in the south,
where many public-works programmes became purely a means of distributing public
money. Few people bothered to ask whether a particular project was needed, and
many such projects never got finished. As one Neapolitan businessman put it,
``70% of the new roads around Naples cannot be used. Lousy infrastructure is a
bigger problem for my company than the Camorra.'' Seeing orange The mezzogiorno
cannot afford any extravagant gestures. It is heavily exposed to international
competition, explains Giovanni Pecci, an economist at Nomisma. Its location on
the periphery of European markets puts it at a disadvantage compared with
Central and Eastern Europe, which also offer far cheaper labour. Agriculture in
the south is under threat from North Africa as well as from the Middle and Far
East. For instance, Sicily now imports oranges, of all things, from Israel
because they are cheaper. (Encouragingly, the Sicilian grower who complained
about this was on his way to Kuwait to try to sell his crop there.) And until
the recent crisis in Albania, small industrial firms in Apulia, in the
south-east of the region, were increasingly moving parts of their production
there. With a GDP per head of only 70% the Italian average, the mezzogiorno is
casting around for an economic winner. Its best hope seems to be tourism. It may
be hard to believe, but the tourist industry in Italy, and especially the south,
is seriously underdeveloped. In 1996, the country had only 33m visitors from
abroad, compared with Spain's 41m and France's 62m, despite its unrivalled range
of tourist attractions (see chart 5). Politicians and businessmen were slow to
catch on, but are now making the promotion of tourism a top priority.