POST-2006 DEVELOPMENTS: THE UNCHANGED CONSTITUTION AND THE BALANCING ROLE OF THE CONSTITUTIONAL COURT

Italy’s federalizing process is currently facing new challenges. On the political agenda the pressure from the main political parties for further reforms is quite intense, particularly regarding the financial arrangements among the layers of government.

Three paradigmatic examples illustrate the confusing trend of what seems to be a transitional moment for inter-governmental relations in Italy’s flawed federal system: the financial relations between the national government and the regions, the efforts of several municipalities belonging to ordinary regions to join the special ones, and the struggle for regional identity.

Financial Arrangements

The allocation of financial resources to each level of government is critical for the very existence of a federal state.¹⁵ The Italian system is still based on a rather centralized arrangement for the collection and the distribution of revenues. In a nutshell, most of the taxes are collected by the national government and distributed to the regions (and municipalities) according to criteria laid down in national legislation. This has a twofold effect: on the one hand, except for a few unimportant levies, the regions (and the local authorities) cannot establish their own taxes; on the other hand, they have very little influence in determining the criteria for the distribution of financial resources, since they are not formally represented in the decision making at the national level (although consultation with them is mandatory).

In 2001 the constitutional reform radically changed the previous system by granting to the sub-national layers of government financial autonomy with respect to revenue and expenditures.¹⁶ Article 119 now provides that regions and municipalities (as well as other local governments such as the provinces) set and levy taxes and collect revenues of their own, while the national government can allocate additional resources and provides for an equalization fund for the territories having lower per capita taxable capacity. The reform of article 119 in 2001 established typically federal arrangements, but it was not implemented for a long time: no by-law was adopted to put its principles into practice, which adversely affected the whole federalizing process.¹⁷

Against this background, a first serious attempt to implement the constitutional framework on financial relations was made by the administration of Prime Minister Prodi in 2007. A draft law was presented for the implementation of article 119 of the Constitution, generally following a cautious line by stressing inter-territorial solidarity and focusing on equalization more than on the taxation powers of the regions. However, because of the early elections, the draft was never adopted by Parliament.

In May 2009, the government led by Prime Minister Berlusconi eventually adopted the implementation law for article 119 (law no. 42/2009). The law provides for a gradual establishment of the new system of economic intergovernmental relations. This is supposed to provide all regions with transfers and equalization payments for so-called “essential services” (heath care, welfare, education); they would be granted irrespective of the financial performance of each region. As for other areas, including their own administration costs, regions will have to either increase their own taxes or be equalized based on benchmarks determined at national level. This means, in other words, that non-efficient regions will receive much less funding from Rome.

On the one hand, the very vagueness of the law actually allows for divergent interpretations by both the potential losers (the Southern regions) and the potential winners (the more efficient Northern regions),¹⁹ which is why it was politically possible to adopt it. On the other hand, the law makes a de facto transfer of the power to decide on fundamental issues to the national executive. This approach is neither very “federal,” nor particularly inclusive, since it excludes both the regions and the national Parliament from the decision on how the regions should in practice be financed. Not least, it provides for a gradual (and slow) implementation, which means that the new system will not be fully in place before 2016. Finally, the degree to which the new system will affect the special regions is not entirely specified. The draft law states only that in principle the special regions shall participate in the overall equalization system (as opposed to the previous situation), but the amount and the rules of such participation are far from being clarified.²⁰ The specific provisions will be negotiated bilaterally between the national government and each individual special region.²¹

In any event, the financial relationship between the center, the regions, and the local governments is likely to be the key issue for years to come. No further substantial reform has a real chance of being adopted before some clarity is achieved concerning the economic aspects of inter-governmental relations. Moreover, it is beyond doubt that the current situation has to be tackled with extreme urgency, particularly for two reasons. On the one hand, there are tremendous disparities in the financial treatment of the various regions.²² On the other hand, the current system is economically dysfunctional: only seven regions (one-third of the total) spend less money than they produce, while all the others (making up 53 percent of the national population) spend more – in several cases a lot more – than the revenue they generate.²³ During the transitional phase, the national budget law of 2010 has dramatically curtailed transfers to ordinary regions.

“Escape from Ordinary Regions”: Frustrated Attempts to Enjoy Special Autonomy

The financial disparities between regions and the more favourable economic treatment of the special regions are the main reasons for the second phenomenon that illustrates the current state of flux in the Italian federalization process. In financial matters, each special region has a different agreement with the State, which is mostly regulated in its autonomy statute. In general, all financial arrangements are very generous with the special regions compared to the other regions.²⁴ Overall, the special regions receive more money than they produce in fiscal revenue, like the poorer territories in the South. But some of the special regions, notably those in the North, are not poor at all and indeed are richer than the average, not least owing to their profitable financial arrangements. This creates some jealousy, particularly in the ordinary regions neighbouring the rich special regions in the North. They find the high costs for the special regions unjustified and exert political pressure to reduce their financial benefits.

Because of the financial attractiveness of the special regions, over the last few years several municipalities belonging to the ordinary regions and bordering on the special regions have sought to become attached to them.²⁵ The complex procedure for shifting regional borders is laid out in article 132.2 of the Constitution. It requires that the municipality concerned approves its separation from one region and its incorporation into another by popular referendum, which must be approved by a qualified majority of the resident population. Should the referendum be approved, the change must also receive approval through a law enacted by the national parliament. The parliaments of both affected regions must be consulted before passage of the law, but they do not have any formal veto right.²⁶

Even though referenda have been held successfully in several municipalities, no change of border has taken place so far, and it is very unlikely that it will ever occur.

When the well-known and very rich ski resort of Cortina d’Ampezzo overwhelmingly voted to leave Veneto and to be attached to South Tyrol,²⁸ the issue gained national political relevance. Both the national government and the regions, although perhaps for different reasons, tried to stop the procedures. In 2007 the administration led by Mr Prodi had already initiated the process of amending the Constitution in order to make the procedure for changing regional borders much more difficult, but the early elections blocked the draft. Some special regions, including the autonomous province of Trento, devolved a considerable amount of money to their inter-regional borders by extending services to several of their neighbouring communes. More recently, the referenda have stopped, both because the concerned municipalities have learned from various precedents that a change is very unlikely and because the law implementing “fiscal federalism” has provided additional funds for the municipalities bordering the special regions.

On the one hand, this phenomenon shows that there is considerable frustration within the current Italian regional system concerning both the financial arrangements and the lack of a consistent view on their overall purposes. On the other hand, and even more importantly, the (unsuccessful) “migration of communes” proves that Italian regionalism still lacks a “soul,” a clear and uncontested legitimacy. Advocates and opponents of the shift of regional borders refer to the “financial privileges” of the special regions but also to the historical, geographic, and even ethnic grounds underpinned by the requests.

It is not by chance, then, that special regions have recently tried to highlight their cultural and political differences from the rest of the country, sometimes in a clearly artificial manner. Such differences are often used to justify their special treatment, particularly from the financial point of view.

The (Re-) invention of Regional Identity: Recent Legislation and the Case Law of the Constitutional Court

The extent to which special regions are pursuing a campaign to support their cultural differences varies considerably from case to case. Overall, it can be said that the stronger and less contested such differences are, the less they need to be manifested in legislation. In particular, while the special status of the two small alpine areas inhabited by homogeneous national-minority groups (South Tyrol and the Aosta Valley) is not openly put in question, others face outright attacks on their alleged “privileges,” and their reaction shows once more that an uncontested approach to territorial differentiation in the country is missing. The cases of Friuli-Venezia Giulia and Sardinia demonstrate this.

Friuli-Venezia Giulia is located in the northeastern part of Italy, bordering Austria and Slovenia. It was the last special region to be established, since this was possible only in 1963 after international administration over the territory of Trieste came to an end and the final issue of borders with what was then Yugoslavia was resolved. The region is composed of two very different parts, so-called Venezia-Giulia, the area around Trieste and Gorizia where a significant Slovene minority is settled, and the much bigger Friuli, where a Romanic language is spoken. Over the last decade, not only have the rights of the Slovene minority been considerably enhanced,³⁰ but also the Friulians (about two million people) have been recognized as a linguistic minority.³¹

With a view to enhancing the cultural diversity of the region, the regional Parliament passed its new autonomy statute in 2005,³² as the first – and so far the only – special region voting for a new statute as required by the constitutional reform of 2001. It must be recalled that following the constitutional reform in 2001 the autonomy statutes of the ordinary regions are adopted by the regional parliaments by a qualified majority and immediately enter into force if the national government does not challenge them before the Constitutional Court (article 123 Constitution), while the procedure for adopting the autonomy statutes of the special regions has not changed: they must still be approved first by the regional parliament, and then they need to be passed by the national Parliament as national constitutional laws (article 116 of the Constitution). The procedure to amend or replace the autonomy statute of a special region is thus indeed more complex, but at the same time it represents an additional guarantee against unilateral changes by either the national Parliament or the region itself. Autonomy statutes of the special regions are therefore negotiated between the concerned region and the central power, and bilateralism is the underlying principle of the relations between the national government and the special regions.

The autonomy statute approved by the regional Parliament of Friuli-Venezia Giulia overemphasized the ethno-cultural pluralism of the region and its difference from the rest of the country. The text proclaimed the region to be a quadri-lingual territory, with Italian, Slovenian, Friulian, and German as official languages,³³ and emphasized extensively the historic linguistic minorities of the region, including by supporting bilateral relations with the “kin-states” of the involved groups. Moreover, the autonomy statute provided that the region would negotiate its financial relations with the national government bilaterally. For these reasons, the national Parliament refused to finally adopt the text voted by the regional assembly. In the end, this process upset both the region, which was refused the text it proposed, and the national government, which read into several provisions of the basic law an attempt to undermine the unity of the country.

An even more glaring example of this same trend was recently provided by another special region. Sardinia is a large island with about two million inhabitants, traditionally isolated from the mainland because of geographic distance. Because of this remoteness and the cultural diversity it produced over the centuries, the island was given the status of a special region after World War II. In 2006 the regional Parliament initiated the procedure for the adoption of a new autonomy statute. It did so, however, in a quite unconventional way: as in Friuli-Venezia Giulia, it was decided to set up a special commission in charge of producing a draft text, but the name that was given to the commission was deliberately provocative: “commission for drafting the new statute on autonomy and sovereignty of the Sardinian people.”³⁴

The name suggested, on the one hand, the existence of a Sardinian people different from the Italian people, something that would not be at all surprising or revolutionary, even though some precedents were not encouraging in this regard.³⁵ On the other hand, it indicated that the Sardinian people had the right to self-determination: by using the term “sovereignty,” the regional law insinuated that Sardinians wanted to exercise their self-determination internally and thus enjoy (special) autonomy within the Italian state. In other words, autonomy was not intended to be derived from the Constitution but from a free determination of the sovereign Sardinian people, who could also decide differently if they so wished.

The terminology used clearly aimed at provoking a debate. As expected, the national government immediately challenged the Sardinian law, and the Constitutional Court indeed found it in breach of the Constitution.³⁶ While the outcome was largely expected, the arguments used by the Court are particularly rudimentary from a federalist point of view. The Court offers its formalistic definition of the qualitative difference between a federal and a regional system, pointing out that in the latter, sub-national entities are autonomous and not sovereign. Even the most significant degree of decentralization does not alter the unity and indivisibility of sovereignty, which cannot but be vested in the national level and in its unitary people.³⁷ As has been noted, the Court clearly used this opportunity as an occasion to stop the increasing spill-over of (more or less genuine) ethno-cultural differences being brought into the political battle for more favourable treatment.³⁸ In practical terms, however, the use of such a symbolic formula was as far as the process of statute-giving went. The debate remained at the level of symbols, but no relevant proposal was made concerning the contents of the new autonomy statute. This shows that the political process deals with symbolic and abstract issues but is rarely interested in (and capable of managing) the more practical issues of federal governance.