Italian billionaire woos southern vote

When Emanuele D'Onofrio completed his B.A. at Rome's La Sapienza University in 1998, he needed no time to ponder what to do next.

"Milan was the only option," he says.

Like thousands of other young Italians from the central and southern regions, Mr. D'Onofrio headed north to seek his fortune, enrolling in a business and marketing master's program that placed graduates with Milanese firms.

"And I was one of the lucky ones," he says. "Nine hundred people applied for that course - only 30 got in."

It is Italians like D'Onofrio - young, southern, and eager for jobs - who are likely to decide Italy's presidential election this weekend. With Italy's struggling economy the overwhelming issue, Prime Minister Silvio Berlusconi desperately needs to win hearts and minds in the "Mezzogiorno," the country's chronically depressed south. The region has traditionally supported Berlusconi's center-right government, but voters shifted left in elections last year.

Italy has long been a two-speed economy: The relatively prosperous north boasts bustling industrial cities like Milan, while the underdeveloped south lags at 14.2 percent unemployement, compared to a national unemployment rate of 7.7 percent. Youth unemployment is worse (see graph below).

"Whoever wants to open a business here will immediately have a problem financing it," says Stefano Porro, spokesman for the regional government of Campania, which includes Naples. Bare-bones transport infrastructure, a lack of credit institutions, and a poor commercial environment have slowed business growth in the south, he says.

In addition, the presence of criminal groups such as Naples' Camorra and Sicily's Mafia frightens away potential investors, says Isaia Sales, an expert on organized crime for the Campania government. Illegitimate businessmen also bypass tariffs, undercutting law-abiding companies, he adds. "They're enemies of development."

Judges in Naples and Sicily have been cracking down on the crime syndicates. "We discovered that the famous Sicilian omerta [loyalty] was not a Mafia value," says Gianfranco Micciche, Italy's minister for the Mezzogiorno and a former member of Italy's Mafia Commission. In his experience, Mafia snitches have happily cooperated with the government if it pays them more than they get from their Mafia bosses, he says.

The efforts have born fruit: The south's unemployment rate of 14.2 percent is down from 21 percent in 2001, when Berlusconi came into office. And in recent years its economic growth has tended to be better than Italy's, says Mr. Micciche.

In the past, Rome attempted to bolster the southern economy with cash handouts to businesses that lost money owing to the region's poor infrastructure. No more, says Micciche. Italian and European Union (EU) funds now go directly into building projects.

Both Rome and the Mezzogiorno have cultivated a close relationship with the EU, which gives money to underdeveloped member states. "We no longer lose anything," says Micciche, explaining that Italy's efficient use of EU funds is expected to result in Brussels increasing Italy's allotment by 1.9 billion euros ($2.3 billion) in the EU budget for 2007-2013.

But the improvements may not be enough to benefit Berlusconi, who hasn't had as much success boosting Italy's economy as he's had building the business empire that makes him Italy's wealthiest citizen. In 2005, Italy's economy saw zero growth.

Despite promises of massively increased public spending in 2001, "they've not been able to spend much beyond what [Italy normally] commits to [EU] structural funds," says Robert Leonardi, a senior lecturer in European politics at the London School of Economics. The government has trumpeted the creation of a million new jobs, but the figure may have been inflated by the registration of black-market workers and new laws allowing for short, no-benefits contracts.

"Jobs that would have been long-term contracts have been cut up into these short-term jobs," says Leonardi. Such positions are often filled by desperate young graduates willing to forego job security for temporary work. "[The bosses] make you out a three-month contract, then you're fired," says Annalisa Scatena, a part-time teacher in her late 20s.

Young people are predicted to vote against Berlusconi. "There's this mounting anger [against him]," says Leonardi.

A recent poll found that 37 percent of Italians want to emigrate. "Because they know that if they stay in Italy, they're finished," declares Ms. Scatena, who is applying for a Fulbright Scholarship to study international relations in the US.

Polls show Berlusconi trailing his rival, Romano Prodi, by 3 to 5 percent. But recent surveys suggest that upwards of 10 percent of voters are undecided.

Berlusconi may swing them yet.