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Monti takes on lobbies in fight to modernize Italy

By Victor L. Simpson

Associated Press

Published: Wednesday, Feb. 1 2012 9:50 a.m. MST

FILE - In this Monday, Jan. 23, 2012 file photo, taxi drivers gather at the San Siro stadium in Milan, Italy, during a drivers' strike against the government's plans to issue more taxi licenses. It may not be the unusual call to revolution, but Premier Mario Monti has canceled decades of regulations that blocked bakeries from opening on holidays with a decree that has come to symbolize his bid to carry out a bold modernization to jump start the Italian economy.

Antonio Calanni, File, Associated Press

ROME — Fresh bread on Sundays.

It may not sound like a call to revolution, but it has come to symbolize Mario Monti's campaign to reshape Italy as a modern economy, as the reformist premier takes on powerful lobbies that have stifled economic growth by keeping swaths of the economy in the hands of insiders.

These groups have long behaved like Medieval guilds — regulating standards, working hours and prices — and Monti now has a lengthening list of enemies that include bakeries, taxi drivers, pharmacists, lawyers, notaries, railroad workers and newsstsand dealers.

In one bold stroke last month, Monti issued a decree that overturns decades of arcane rules that have coddled many of the small businesses that represent an outsized portion of the Italian economy. Bakeries will be able to open on Sundays and holidays, opening the way for fresh competition to established shops. The notoriously closed taxi industry will be liberalized. Rules preventing pharmacies from setting up close to one another are being lifted.

"We want to create more space for competition and merit," Monti declared.

Monti's mission is stirring waves of anger that indicate a tough battle ahead: Past Italian leaders have tried and failed to bust lobbies in the past — finding the old way of doing things simply too entrenched.

Since Monti issued his decree on Jan. 20, taxi drivers have staged strikes to protest plans to issue more licenses; angry truck drivers have erected blockades against increased taxes on fuel; even normally mild-mannered pharmacists, objecting to an expansion of drug stores and working hours, plan walkouts.

Monti and his new team of economic experts, named to succeed the discredited Silvio Berlusconi when Italy's debt crisis began to spin out of control in November, first enacted stiff austerity measures to tackle the emergency.

A second sheaf of measures announced this year was aimed at reviving growth. That put him straight into the path of entrenched interests — unions, public employees and professional organizations — that have for decades cast a long shadow over politics and the economy.

In many ways, these lobbies go to the heart of what makes Italy tick.

Italian professions have long been protected by systems of patronage, personal favors and backroom dealing. Defenders of the Italian way say that keeping business closed to outsiders guarantees quality and tradition — think fine wines and tailor-made suits. Critics counter that it stifles innovation, entrenches corruption and leads to stagnation.

Monti, an economics professor and former EU competition commissioner is being likened to Margaret Thatcher, who earned her the nickname Iron Lady by taking on labor unions as part of free market reforms that many say modernized Britain but also left it deeply divided and scarred by strife.

Italy's small business lobbies have had a stifling effect on Italy's economy by blocking competition, keeping work hours short and perpetuating deep inefficiencies in business practices.

For example, most pharmacies are closed Saturday afternoon and all day Sunday. Newspapers are only sold at newsstands. Gas station owners in Italy have been barred, with the exception of some highway stops, from selling anything but petrol products, which many argue keeps gas prices in Italy among the highest in Europe.

Monti said the aim is to reduce protectionism and the way industry in Italy "tries to create advantages for those who are inside the fortress to the detriment of those who are outside."

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