ROME — The resignation of Italy’s prime minister could complicate a major corporate shake-up planned by the Finmeccanica group involving the sale of civil assets, if ministers are reluctant to oversee the deal so shortly before leaving office, analysts have warned.
Meanwhile, a major shake-up of the Italian armed forces, including the shedding of 30,000 personnel, has squeezed through parliament days before it is dissolved ahead of February elections.
The well-timed passing of the reform bill — other, less fortunate pending bills will be killed off when the parliament shuts down — follows the announcement by Italian Prime Minister Mario Monti on Dec. 8 that he will resign by year’s end, earlier than expected.
The reform law will require a series of extra decrees to make it effective, which will require approval by the two defense commissions in the Italian Parliament.
As for Finmeccanica, CEO Giuseppe Orsi has told investors he would seek to make asset sales, primarily civil, worth 1 billion euros ($1.3 billion) by year’s end to help reduce the group’s climbing debt. Selling the civil units will also help the group focus on aerospace and defense activities.
Finmeccanica has held talks to sell its civil energy unit, Ansaldo Energia, to Germany’s Siemens, while the Italian government has helped launch an alternative joint offer for Ansaldo from its strategic investment fund with a group of Italian businesses.
On the political front, Monti’s government lost its parliamentary support this month. Originally appointed to steer Italy out of its financial crisis in November 2011 following the resignation of Prime Minister Silvio Berlusconi, Monti was due to step aside in April, but the withdrawal of support this month from Berlusconi’s Freedom People Party prompted Monti to say he would see that Italy’s 2013 budget is passed by Christmas, then resign.
The government will officially remain in office until elections, expected in the second half of February, although the parliament will be dissolved.
A source close to Finmeccanica denied that Monti’s resignation would leave talks over Ansaldo Energia adrift.
“The sale of assets is unlikely to be impacted by the political situation,” he said. “It may happen in the first months of 2013, but it will move ahead.”
One analyst said sell-offs of civil activity and the ongoing restructuring were fundamental to Finmeccanica’s bid to boost its battered value in the financial market.
“If Finmeccanica can continue to restructure, it can boost its share price, which will serve it well should it want to negotiate alliances in the market,” he said. “If it doesn’t, then it will be put on life support and remain isolated, and may also find it difficult to compete in export markets.”
If the sell-off is not completed by the election, and if the election is won by the center-left Democratic Party, which leads in the polls, it could meet stiff opposition from the incoming government.
“There could be partners found for civil units like Ansaldo Energia, but they have potential for growth and should stay within the perimeter of the group,” said Stefano Fassina, the Democratic Party’s industrial adviser.
“We do not now expect any movement on this before the end of the government,” he added, “and it would be very serious if management now altered the ownership of assets. Finmeccanica is state-controlled and should refer any such moves to parliament.”
Asked if the party would seek to bring in a new CEO at Finmeccanica if it took office, Fassina said, “We are interested in industrial strategy, and on the basis of that, we will consider management.”
The party’s defense adviser, Emanuele Fiano, added that procurement would be more closely tied to geopolitical strategy, should the party win the election.
“We would aim for all acquisitions made in the next parliament to be subject to a political analysis of what Italy’s aims are,” he said.
The purchase of F-35 joint strike fighters would undergo that analysis, Fiano said.
“You can’t just say, let’s have less JSFs; it is complicated. But if we do decide to specialize within the EU, it may involve less air power. Either way, we will have that debate in parliament.”
That would be aided by a new measure handing veto power over defense procurements to the defense commissions of the parliament’s lower house and Senate. Hitherto, the commissions’ opinions have been nonbinding.
New Military Chiefs
As Italy gears up for a change of government, new heads of the Navy, Air Force and General Staff have been appointed.
The current head of the Navy, Adm. Luigi Binelli Mantelli, was named to lead the General Staff, with Adm. Giuseppe De Giorgi stepping into his shoes at the Navy. Gen. Pasquale Preziosa, a former Air Force attaché in Washington, was named head of the Air Force, taking over from Gen. Giuseppe Bernardis.
Bernardis will step down having secured two key procurement ambitions: the leasing of a signals intelligence jet — which may be renewed — and the acquisition of airborne early warning jets, despite sinking budgets. He also singled out the full qualification of Italy’s new Boeing aerial refueling planes as a milestone during his mandate.
“During the Libya campaign [last year], we were able to qualify the tankers for use with the entire fleet,” Bernardis said.
The Air Force also has been given the political permission to arm its fighter jets in Afghanistan.
“This gives satisfaction, and we are maximizing the avoidance of collateral damage in operations,” he said.