30 April 1993: outside Rome’s Hotel Raphaël, an angry crowd hurled coins at former prime minister Bettino Craxi. The image came to embody public fury at a ruling class unmasked by Tangentopoli — “Bribesville” — a massive corruption scandal that exposed a political system of kickbacks and illicit financing. The Times of Malta reported that bribes to politicians totalled about $4 billion a year.
The fallout was swift: Italy’s two main parties collapsed, dozens of politicians were jailed, and public trust reached a nadir. The political breakdown caused a currency crisis. The new government radically departed from the previous mode of governance. Italy entered its “Second Republic,” breaking with the clientelist model that had defined the First.
The reckoning did more than end careers; it set the stage for a new economic policy course that would follow in its wake. Under pressure from the EU and IMF, the state decided to focus on reducing public debt. Privatisations were presented as the cure. Thirty years on, they have instead dismantled Italy’s previously solid economy: debt has more than tripled, the economy has stagnated, and citizens are poorer, without any promises of growth being honoured.
A silent auction
Privatisation meant that the state quietly began selling its own assets. Overshadowed by shifting powers abroad and upheaval at home, one of the country's deepest economic transformations took place almost unnoticed.
Before the Tangentopoli scandal, Italy had a solid economy, despite its issues with corruption. Italy’s economic model was one where the state played a “heavy” role. This meant the state controlled transport, utilities, and industries. Nearly one in six workers were employed through its public administration. It worked — Italy’s economy guaranteed tangible advantages for companies, workers, and consumers via state financing — but was heavily challenged by a neoliberalist ideological wave adopted en masse by the West. The neoliberalist dogma mandated a less “heavy” state, cutting welfare and delegating control of critical sectors of the economy to private hands.
Tangentopoli had created a desire from voters for greater transparency in public administration, who questioned the virtues of a state-driven economy. That mood, plus pressure from Western partners, pushed Silvio Berlusconi’s new government toward the prevailing orthodoxy of debt reduction. Goldman Sachs coordinated the handling of Italian national assets to global finance, which was presented as an economic necessity to align the country closer with the other European Union member states.
Privatisation would take the country by storm; ENI, one of the largest Italian state enterprises, transformed into a joint-stock company: by 1998, the privatisation process allocated 64% of the company’s capital on the market. Other energy-related companies had a similar ending: AGIP (the Italian general company for oils) and SNAM (the national methane pipeline company) were quick to follow suit. Banks endured similar transformations, with Credito Italiano and Banca Commerciale Italiana being sold off through public offerings.
Una vita non dolce
Many economists believe that privatisations — if held transparently and in a regulated manner — represent an opportunity to improve service efficiency and attract investments, which ultimately help strengthen competitiveness on the global markets.
But in Italy's case, most privatisations were carried out hastily and with little transparency, lacking strategic vision. This generated short-term liquidity but none of the promised benefits in efficiency or competitiveness. According to Italian news agency ANSA, public debt has now tripled since the privatisation era of the 1990s, growing from approximately €1.18 trillion in 1990 to €3.08 trillion in 2025. The OECD reports that Italy is the only country in Europe in which salaries have decreased since 1990. This wage reduction has led to a brain drain, with Italy’s best and brightest leaving to other European countries, heavily reducing the nation’s competitiveness on an international level.
Today, Rome seems paralysed; the fear of further increasing public debt has guided the country’s political aims. Rome continues to follow the same script since Tangentopoli by selling as many shares as possible of the little remaining equity it holds. Just last year, the minister of finance, Giancarlo Giorgetti, announced new privatisations worth 20 billion euros. The main benefit promised to consumers — lower prices resulting from the competitiveness of private companies on the market — saw no progress, and today the cost of living is dramatically higher than in the past.
But privatisations cause geopolitical problems as well. The possible integration of Elon Musk’s Starlink into Italy’s civil communication network has ignited public concern over a loss of sovereignty. The deal has been sold as innovative. It is an old tradition: for decades the country has handed its strategic assets to foreign billionaires.
ITA Airways (previously Alitalia), the Italian airline, is another example of the endless spiral of privatisation leading to chaos. First it sold its operational assets in 2009. Then it sold 49% of its value to Etihad Airways, and by 2020, it was bankrupt. The viability of privatisation seems to be only a dead end. National industries should be properly supported by the state.
More alarm bells continue to sound, reminding the nation that an economy must defend its energy, industrial, and productive sovereignty to protect its citizens. To return to a more state-driven economy is a complex issue, often obscured by ideological disputes, technicalities, and ideological preconceptions. What is clear is that the results of Italian privatisations have
fallen short of their promises. Recognising this failure is a necessary step to ensure that the pursuit of short-term relief no longer undermines national long-term economic sovereignty.
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