Italy Worries Sicily's Woes Could Have Ripple Effect

Enlarge this image toggle caption Alessandro Bianchi/Reuters/Landov Alessandro Bianchi/Reuters/Landov

In antiquity, Sicily was known as Greater Greece. Now, the eurozone crisis has led to sharp spending cuts and, with an economy based on public sector wages, Sicily is being called Italy's Greece. The central government fears the region's debt of more than $6 billion could further endanger the country's financial stability.

Worried about contagion, the Rome government is dictating on Sicily tough bailout conditions similar to those international lenders imposed on Greece.

Headlines scream "Possible Sicilian Default" at a newspaper stand in Palermo, the capital of the autonomous region. Antonello Sferuzza, 57, is bitter, but not surprised.

"The budget is a wage-making machine. There are no investments, no infrastructure," Sferuzza says. "I wish Rome would get rid of all our parasites. The budget serves only to re-elect the same politicians decade after decade."

Nearby, the atrium of a regional government office building bustles with mostly idle workers. They belong to an army of 144,000 public sector employees among a population of 5 million. Their ranks include 26,000 forestry rangers — more than Canada's British Columbia has.

The budget to pay for all these people is four times that of Lombardy, the northern Italian region that has a population double that of Sicily's.

Andrea Vecchio, a businessman and prominent anti-Mafia activist, was recently recruited to cut waste from the regional budget. He was shocked by what he found.

"There are some 2,200 managers, some of whom have a staff of no more than two or three people," Vecchio says. "They were not promoted for merit but because each has a political sponsor."

The system is known as clientelism. The politicians give work and the citizens give votes, says Emanuele Lauria, co-author of a book on waste and privileges in Sicily. "Now the problem is that the money is finished, the cash is empty," he says.

The debt crisis is undermining the traditional jobs-for-votes exchange that kept conservative parties in power in Sicily for six decades. Vecchio says this entrenched system was conceived as part of the country's national reconstruction plan.

"After World War II, the powers that be decided that the north would be the productive part of the country with industries and infrastructure, and the south would be the state-subsidized consumer," Vecchio says.

The division also ensured that Sicily would remain Italy's poorest region, with hardly any manufacturing industries. Economic isolation also favored the growth of Mafia influence in politics.

The current governor is under investigation for Mafia ties, while his predecessor is serving a seven-year jail term for the same crime.

Now, the eurozone crisis has brought austerity. Unemployment is nearly 20 percent, twice the national average, and almost 40 percent among the young.

The European Union is demanding that 600 million euro (more than $736 million) be returned after its development funds were misspent on frivolous projects in Sicily, such as couscous festivals and fencing matches.

It's now crunch time, and many public-sector workers are taking to the streets. The slogans at a recent protest rally were directed at the central government: "Keep your hands off Sicily," they said. "We want to be our own master."

On an island that has long nurtured separatist aspirations, demonstrators worry that the central government will take advantage of the financial crisis to curb the island's semiautonomous status.

"We see the Mediterranean area as our world, not Italy," says Carmelo Buschera, who belongs to a pro-independence movement. "It is Italy that wants to impose itself on Sicily. Sicily is seeking its freedom, either through more autonomy or independence."

A new group calling itself Pitchforks shares the anger and ideas of the Occupy movement in the U.S. Its vice president, Giuseppe Scarlata, says Sicily needs an entirely new political establishment.

"They must all go," Scarlata says. "Do you realize that out of 90 regional deputies, 27 are under investigation for Mafia ties?"

Scarlata has few illusions that it will be easy to change Sicily's political culture, but he's convinced the current crisis and tough austerity measures will have at least one positive effect: They'll help rid Sicily of a parasitic economic system based mainly on exchange of favors.