ROME — Italy's defense industry leaders have called on the government to cut red tape on exports, set up a bank to loan cash to international buyers, and beef up government-to-government sales along the lines of the US foreign military sales model.
The proposals were outlined at a conference held in Rome on July 13 by AIAD — the Italian aerospace and defense industry umbrella group — which also produced a new report to convince Italian ministers of the importance of the sector to the Italian economy.
The report claims that each euro invested in Italy's aerospace, defense and security sector generates €2.7 ($2.97) of gross domestic product. The sector, it adds, employs 45,000 people and exports €8.1 billion in goods.
What is missing, AIAD Chairman Guido Crosetto said, is a sustained effort by the government to help exports, and he recommended the US as a model.
"What we need to help exports is a bank that can help finance the buyer, similar to the US Foreign Military Financing [FMF] program," said Crosetto, who was Italy's defense undersecretary between 2008 and 2011.
The US FMF program provides grants and loans to nations purchasing defense equipment through the US government-to-government Foreign Military Sales (FMS) program. Italian state lender Cassa Depositi e Prestiti or export credit agency SACE could be candidates to take on the banking role, Crosetto said.
Italy is not new to offering financing to defense export customers. As part of its sale of M-346 jet trainers to Israel in 2012, it arranged for Italian bank Unicredit to finance the deal.
Crosetto pointed to one lobbying effort by AIAD on the export front that has already paid off. On July 13, the Italian parliament formalized a decree designed to give Italy's procurement office more power to negotiate government-to-government defense sales.
"The ruling creates a new office within the procurement office to better handle sales," Crosetto said. "We want to get to the FMS level where the government can move like a private company in these deals. France is already there."
Next on the agenda was a bid to streamline the red tape covering exports, he said. "Every time a license is issued, a fee must be paid to the ministry by the exporting company, but instead of that money being used to speed up processes, some of it simply goes into government coffers," he said.
"Bureaucracy has improved a lot, but firms still need government approval for the brochures they send to Le Bourget" for the Paris Air Show, he said.
Finally, Crosetto said he was pushing to exempt defense spending from Europe's rule that annual deficits must not exceed 3 percent of GDP.
"It's crazy that the military cannot carry out maintenance or buy fuel with all the threats we are facing," he said.
Italy's defense exports stood at €2.6 billion last year, up 23.3 percent on the year before, but down on the €4.9 billion in sales seen in 2009, which came thanks to the sale of Eurofighters to Saudi Arabia.
Exports linked to intergovernmental programs, which are calculated separately, stood at €338 million. Imports stood at €203 million.
The UK was the top export destination, with 11.54 percent of the total, edging the United Arab Emirates into second place and Poland into third. The US, with €191 million in deals, was fifth. Italy's top exporting firm, with a 22.23 percent share, was helicopter company AgustaWestland, followed by Alenia Aermacchi with just over 21 percent.
One Italian security firm which appears to have struggled recently against government controls on its exports is Hacking Team, a Milan-based company which sold computer spyware that could be installed covertly on a computer and observe all activity. The firm sold its spyware to various law enforcement agencies in Italy, where phone tapping is commonly used, and exported it to a series of countries, including the US. It also did deals with countries with poor human rights records, like Ethiopia.
CEO David Vincenzetti has said that when he realized Ethiopia was using the firm's spyware to spy on a journalist, the company stopped the contract.
Hacking Team's secretive contracts were revealed to the world this month when unknown hackers dumped 400 gigabytes of company information, including thousands of internal emails, onto the Internet, as well wels as information about the spyware source code, prompting managers to warn customers to stop using it.
Some of the emails leaked reveal a struggle last year between Vincenzetti and bureaucrats from Italy's Industry Ministry who were demanding the right of approval of new export deals.
Emails show Vincenzetti claimed that after lobbying his many law enforcement customers in Italy for help, pressure had been put on the Industry Ministry, which backed down.
Email: tkington@defensenews.com
Tom Kington is the Italy correspondent for Defense News.
