By Angelo Amante, Gavin Jones and Giuseppe Fonte

ROME (Reuters) – Prime Minister Mario Draghi set an ambitious reform timeline to relaunch Italy’s chronically sluggish economy after the COVID-19 pandemic, but political disputes and cloying bureaucracy are starting to get in his way.

For weeks, the government tried to resolve divisions within the multi-party coalition that governs a tax reform proposal and the market competition law Draghi promised would be implemented by July.

In April, Draghi presented the Plan to the European Union. It outlines infrastructure investments as well as reforms in order to increase Italy’s economic growth potential. The Plan will also help to obtain over 200 billion euros (or $2234.52 million) from the EU funds within the next six year period.

Carlo Bonomi from Confindustria, the head of the employers lobby, said Thursday that delays in reforms could put at risk future tranches of EU funds. But, most importantly, they will delay what’s important: that the Recovery Plan be implemented quickly and effectively.

Draghi started well, meeting the initial requirements to receive a tranche of 25 million euros from the EU. This was released by them in August.

A coalition agreement was also struck to bring about a highly contested reform in the criminal justice sector. Meanwhile, new rules that will speed up civil cases are being considered for approval in parliament.

The Recovery Plan for 2021 sets 51 goals. Only 38 have been set for the fourth quarter. And the government appears to be slowing down when it is needed to speed up.

One of the special commissioners charged with overseeing the infrastructure projects included in the Recovery Plan for 2021 complained to the government that the bureaucracy was hindering them from their work. The commissioner asked not to be identified.

Pasqualino Monte, a commissioner responsible for ports in west Sicily, said that the bureaucracy in the state would continue to impede projects and “we’ll face an impediment as formidable as the Great Wall of China”.

The government issued a statement following Thursday’s cabinet meeting in which it urged ministers for a roadmap to all necessary interventions and stated that new steps are being considered to accelerate the project.

All the involved administrations will meet to discuss the status of the national plan for recovery and any obstacles.

Draghi faces the same problems that have plagued Italy for many decades, including political fragmentation and bureaucracy as well as constant electioneering.

On Oct. 3, 4 and 5, big cities like Rome and Milan will elect new mayors. Parties in Draghi’s national unity government refuse to make any moves that might upset their voters.

Eugenio Pizzimenti of Pisa University, said “The current problems Draghi are having were unavoidable.”

We have believed that technocrats can fix all our problems. But these are not technical decisions and there are conflicting interests at stake.

NATIONAL SAVIOURS

There are parallels between Draghi and Mario Monti, another non-partisan technocrat who led a similarly broad coalition for just over a year from 2011, when he took office at the height of a debt crisis.

Draghi was originally hailed Monti as the national saviour. But after swinging budget cuts, and tough pension reform, Monti’s government lost momentum, and his popularity plummeted.

Draghi will be out of office in 2023. He has one major advantage. Where Monti had made cuts, Draghi can allocate billions more spending, provided there is continued investment and reform momentum.

In order to reduce income tax, simplify the tax system, curb evasion and cut down on evasion, Draghi will need to implement competition laws to create a level playing ground for infrastructure investment in ports, telecoms, national power grid and other areas.

Political bickering is preventing both from moving forward.

Although the government claims that the tax reform will not impact the public finances in any way, the government wants to revise the taxable values of Italian real property, which are often far lower than real market value.

The right-wing League, Silvio Berlusconi’s conservative Forza Italia and other key coalition parties are opposed to this.

They both claim to be staunch home-owner defenders, and they say that the government’s plan will lead to higher housing levies.

“We support the rights to property. Antonio Tajani (Forza Italia’s deputy chief) said that this is not the right time to increase taxes.

Both parties oppose plans to allow the lucrative concessions that are used to operate tourist services along Italy’s coastlines to be liberalised. This is similar tensions blocking competition law.

These concessions were traditionally owned by family members and handed down through the generations, in spite of repeated requests from the European Commission to open up tenders.

Pizzimenti, an Italian political professor, said such disagreements were likely to worsen due to Draghi’s vast coalition. This would lead more delays in reforms and weaker results.

He stated that he believes Brussels would soon discover we’ve not done what was promised.

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