Italian Corruption Scandal of the Early 1990s

Italian Corruption Scandals of the Early 1990s

Introduction

For those old enough to remember, Italy's current political and economic sickness is quite reminiscent of 1992. In 1992, Italy faced two separate crises: a political crisis triggered by the uncovering of “Tangentopoli” (Bribesville), a wide and deep system of corruption that political parties relied on for their financing, and a financial crisis, which forced Italy to devalue its currency, the Lira. As a result, Italy seemed to be on the brink of collapse, especially given the challenge posed by the Northern League party, which was then pursuing a secessionist agenda.

In the past three years, corruption scandals have resurfaced at an increasing rate, revealing that despite “Mani Pulite” (“Clean Hands”), the inquiry that led to the uncovering of Tangentopoli, the Italian political system has remained deeply corrupt. Minister Claudio Scajola, undersecretary Marco Milanese, and Guido Bertolaso, head of the civilian emergency agency, have resigned, all due to different scandals. Additionally, MP Alfonso Papa was preemptively jailed and former regional governor Totò Cuffaro was sentenced to seven years in prison for his involvement with the Sicilian Mafia. Perhaps most damaging, Prime Minister Silvio Berlusconi, in addition to his considerable legal problems, has been involved in additional scandals, ranging from involvement with underage call girls to patronage of RAI, the Italian public broadcasting company.

Similar to the early 1990s, a financial crisis has followed suit. Last month, the financial turmoil that had so far affected Portugal, Ireland, Greece, and Spain (PIGS) finally spread to Italy, as investors fear that Italy's large debt (120% of its GDP) and its stagnant economy might prove to be unsustainable in the long run. This study is going to discuss the causes and consequences of Italian corruption scandals of early 90s, and will also explore the effects of reform on corruption culture.

Discussion

Causes and Consequences of the Italian Corruption

Italy's reversion to its poor condition in the early 1990s is even more disconcerting when one considers the failure of its reforms in the last twenty years. In the past fifteen years, corruption has been increasing steadily and is now higher than it was in 1992. The same is true for waste and red tape in the government as well as for patronage and cronyism. Most notably, public spending in the last ten years has increased by 50%. Despite this, no significant public investment has been made during this period.

With a stagnating economy, Italy has finally seen the financial markets start betting against it. The political system, paralyzed by internal scandals and conflicts, has no ability to adopt the measures needed to avoid the worst from happening. The cumulative situation begs the question: Why has Italy fallen back into the same crisis as in 1992? The answer lies in the nature of the Italian political system, which is filled with unaccountable politicians with control over the economy. Public funding for political parties reveals the absurdity of the Italian political system. Public funding of elections was abrogated in 1993 through a ...