JPRS ID: 8442 TRANSLATIONS ON WESTERN EUROPE

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000100050013-1
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• Document Page Count: 24
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JPRS L/8442
7 May 1979
TRANSLATIONS ON WESTERN EUROPE
(FOUO 27/79> . ~ .
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NOTE
' JpR5 publicaeions conCain tnformaCinn primarily from fnreign
newsp~pers, per~odic~ls ~nd books, buC also from news ~g~ncy
transmissions and br~adcaeCs. Mgterials from foreign-language
sourc~s are tr~nsl~ted; Chose from ~nglish-language sources
are eranscribed or reprineed, wieh ehe original phr~sing and
oCher characCerisCics reCained.
Headlines, ediCorigl reports, and maCerial enclosed in brackets
are supplied by JPR5. Processing indicaCors such as [TexC]
or [Excerpt] in Che firsC line of each iCem, or following Che
lasC line of a brief, indicate how Che originr~l information was -
processed. Where no proce~sino ~ndicaCor is ~iven, Che infor-
maCion was summarized or e~tracCed.
Unfamiliar nQmes rendered phoneCically or Cransliterated are -
enclosed in parentheses. Words or names preceded by a ques- `
tion mark and enclosed in parentheses were not clear in the
ori;inal but have been supplied asappropriate in context.
Other unattribuCed parenthetical notes withi.n the body of an
i.tem originaCe with Che source. Times wiCt.in items gre as
given by source.
~
The conCenCs of Chis publicarion in no way represenC the poli-
cies, views or aCtiCudes of the U.S. Government.
I~
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\
J'PR5 L/8442
i May 1979
TRANSLATIONS ON WESi'ERN EUROPE
(FOUO 27/79)
C~NTENTS � PAGE
_ THEATER 'NUCLEAR FORCES
ITAI,Y
I3riefa
Missile Pur.chase Delayed 1
COl7N7'RY SECTIQN
- FRANCE
Massive Airbus Ordere Noted
(AIR & COSMOS~ 7 Apr 79) 2
A~r France Affected by World Air Transport Changes -
(AIR & COSMOS, 7 Apr 79) 4
Aerospace Ex~orts Worth 17,154,000,000 Francs in 1978
(AIR ~ COSMOS, 10 Mar 79) 7
~
13riefs
SDECE Deputy Director 9 '
Naval Base Changes 9
ITr`LY
Soviet Dilemma Over PRC Flnergence in World Area Analyzed
(Frane Barbieri; LA STAMPA, 19 Apr 79) 10
_ Report on Public Finance Estimates for 1974
(Mario Bt~ldassarri; IT. SOLE-24 ORE, 23 Mar 79) 13
- 8- IIII - H1E - 150 FOUO] -
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TH~ATER NUCLEAR FOItCES ~+~,y
BRIFFS
MISSILE P'IktCEASE DELAYED--The current budge~ o~ the Stalian ground forces, ~
contrary to whe,t had been planned~ wi,11, not permi.t the acquieition �f the
MEI Siatel eurface-to-air missile. ~?aris A~ & COSMOS in French 21 Ap~ ?9
p 3?7
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COUNTRY SECTION FRANCE
_ MASSIVE AIRBUS ORDERS NOTED
- Paria AIR & COSMOS in French 7 Apr 79 p 39
~Article: "Maeaive Airbus Ordera"] ~
[Text] The early part of thg week was marked by massive order.~ :~r the
Airbua A3'~~1 wide-body transport. Theae new orders follow the recent
announcement of Swissair's initial firm order and Air France's lettei of
i~tent to purchase.
Luf~~,hansa: 25 Firm Ordera, 25 Optiona
Lufthansa German Airlinea placed firm ordera for 25 Airbus A310's and
took optiona for an additional 25. The firm orders alone represent an
inveatment of DM1.5 billion, or Fr3.45 billion. Deliveries will be from
1983 through 1990.
This huge contract was signed last Monday in Colo~ne at the German sirline's
main office by Dr Herbert Culmann, airline chairman, and Reinhardt Abraham,
_ the executive board's member in charge of technical matters. Abraham
personally had considerable influence on the design of the Airbus A310
and worked in Glose caordination with Swissair's president, Armin Baltena-
weiler on the design. Signing for A.irbus Induatrie were Bernard Lathiere,
the managing dibector, and Roger Beteille, c:~e general manAgeY. This con-
tract muat atill be ratified by the airline's supervisory boa:.a, but there ~
is no doubt the board will give ita approval.
Unlike Swissair that has onted for a Pratt & Whitney engine, Lu�thansa
chose the General Electric CF6-80 ~urbofan engine. '!'his engine cansumes
8 percent lesa fuel than the CF6-50 which powers all of the German air-
line's other high capacity aircraft: Boeing 747, DC-IO-30, and Airbus
A300. All of Lufthansa's large transports will thus be equipped with
CF6 engines, a standardization policy that has obvious advantages from a
- maintenance standpoint.
Lufthansa's A310 will be configured for 211 passengers, with 18 in first
class. The A310's will partly replace the a3rline's Boeing 727's on routes
- in Europe and to North Africa and the Middle East.
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Commenting on the choice of the A31Q over the Boeing 767, LufChans~'8
~tntement eaid that alChough bhe two aircraft were comparable, the A310
wne chosen because of itg commonaliCy with the A300B2 and B4, 11 of which
Ctie airl3ne will place in service laCe thie year. The German airline's
etatement also sa~d rhat due Co the A310's large fuaelage diameter, it
can carry ca~ntainers and pallete identical to those uaed in other high
capacity airc:raft. This capabiliCy is an important factor in Che aircraft's
profitabillt~.
KLM Orders 20 A310's
Tn Schiphol last Tuesday, KLM Royal Dutch Airlinea s3gned a contract for ~
a firm order of 10 Airbue A310's at a coat of J billion guildera. Presi-
dent S. Orlandini and Mr Van Amei~den signed for KLM~ Messra Beteille and
Krook for Airbus Industrie. The Dutch airiine also took options on 10 ~
additional aircraft. Like Lufthansa's, iCLM's A310's will be poa~ered by
the General ElecCric CF6-SOA Curbofan engine.
P'our of the 10 aircraft ordered by KLM wi11 be delivered in 1983 and eix
in 1984 and 1985. Configured for 210 paeaengera--8 seats abreast--Chese
aircraft will replace part of KLM's DC-9's and DC-8's on routes in Europe
and to North Africa and the Middle East.
KLM called this purchase the largeat one-time order in its hisCory.
Commenting on this order, KLM cited, like Lufthansa, the A310's advantageous
freight carrying capabilitiea plus ita fuel saving capabilities and the _
quietnesa of the new engines.
The A310 purchase will be financed partia],ly from the airline's own reserves -
and partially with long-term credit obtained in cooperation with Airbus
Industrie and General Electric.
Air Afrique Will Alao Order Airbus Transports
At a press conference in hbidjan last week, Aouasou Koffi, president of -
the multination~i~ airline Air Afrique, announced his airline had decided
to purchase chr�ee e~i. cbus tranaports : o~ae A300B4 to be delivered in 1981
; and two A310's to be delivered later. -
COr?RIG~iT: AIR & COSMOS, Paris, 1979
8041
CSO: 3100
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COUNTRY SECTION FRANCE
,
AIR FRANCE AFFECTED BY WORLD AIR TRANSPORT CNANGES
Paris AIR & COSMOS in French 7 Apr 79 p 41
[ArCicle: "Air France Copea With Upheavals in World Air Tranaport"~
[Text] Gilbert Perol, Aiz France's managing director, was the guest
apeaker at last week's meeting of the Aeronautics and Space Public Rela-
Ciona Society, a meeting chaired by Etienne Aaum. The theme of Perol's
remarka was the democratization of air transport.
PoliCical Aspects of Air Tranaport DemocratizaCion.
Perol's speech was given the very same day it was learned the Civil
AeronauCica Board had recommended to President Carter that he re~ect Air
~ France's proposed Vacances (vacations] summer fare. As ~usti.fication for
thta re~ection, the CA.B pointed to the French Government's refubal to
authorize the very lc?w fares proposed by Braniff and TWA for various
~ United StaCes-France flights. Perol said he was convinced a compromise
would ultimately be reached that would end thia stand-off in conatructive
fashion.*
' Perol discuesed another current problem, the one created by fare ad~uat-
ments made necessary by OPEC's new inc.sease in oil pricea. Perol said fare
hikes must follow, as rapidly as possible~ this increase in one of the
principal factors determining air tranaport operating coats. This problem
is ~expected to be aettled at the IATA [International Air Transport Aasocia-
tion] conference in Geneva early this week. Pero1 revealed that Air France's
fuel bill this year will reach Fr 1.6 billion.
Perol dwelt at length on tbe political aspects of the democratization
of air tranaport. He analyzed three ma~or elements of this problem:
*This propoeal was approved late in the week by President Carter and
rederal officials.
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g. The United States' aCCempC Co regain g predominanC posiCion in the
international air trnnaport market.
b. The di~pute between regular c~rriers and charter carriera.
c. Attemptp Cn chnnge marketing ey~Cem~a and prnc:riceR.
Basic Principles of Air France's Policy ~
These different elemenCs are creating very atrong ahock waves. Air France
is going to pit itself againat them by basing its policy on the following
_ principles outlined by Perol.
- a. Air France wanta to move wiCh the timea. It wi11 play the game
uccording.to the rules of the timea, knowing full well what riska Che
game involves.
b. Air France takes an experimental and empirical attitude koward
upheavals in the market. The market is unquestiona~.l,y the governing
factor. BuC Air France remains determined to provide a certain quslity
of service.
c. Air France has no imperialiatic design. It doea noC want to do every-
Ching. Charter carriers have their place, in~luding Air France's sub-
sidiary, ACI [Air CharCer International]. So do commuCer airlines. But
the role of both charters and commuters will change.
d. The nati_onal airline is motivated by a desire to operate profiCably.
For this reaeon, it hopes the higher fuel prices wt.ll be completely and
: directly passed on to airline customers. It would not he fair to pass -
this increase on to the taxpayers. Likewise each passenger must pay a
fair price for the service rendered him and must not subsidize his neighbor.
Under an honest pricing policy, airlines muat not be required to subsidize
[he hotel industry or organizera of package toura and vacations.
e. Air France must serve French sir transport. Perol showed thaC during
the past 20 years, France is the only country to have maintained its
- status and position in international air transport. Our commercial avia-
tion accounts for slightly more than 7 percent of all world air transport.
U. S. commercial aviation accounts for only twice as much international
air tranaport as we do compared with fx~e times as much 20 ,years ago.
~3ritish commercial aviation accounts for only 1.2 times as much as we do
compared with twice as much 20 years ago. Air France is determined to
act and compete in such a way as to ensure that France maintains this
_ position in international air transport.
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In opening hie remarks, Perol estimated that Che percentage of the French
- population currently using air tranaport muAr. be about 8 percenC. He
_ ~~mphc~ai~ed that while air transport remr~ins the prer~gative of priWileged
uHe rA, coneider~ble progre~s has already been noted in the categories
c~f pnssengera, euch ~s senior citizena or customerR from a11 areas of
France outeide of Paris.
COP~'IRIGHT: AYR & COSMOS~ Paris, 1979
8041
CSO: 3100 �
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COi1N'CItY SLCTI:ON rRANCE `
A~RO~PACE ~XPORTS WORTI-i i7,i54,oo0,00o FRANCS IN 1978
Par3s A~R 8o COSMOS in French 10 Mar 79 P 9
[iJnsi~tr~ibuted art3.cle: "French Aerospace Exports for 1978:
F.r i7,~.,4 M~.~.i~.on~~ ]
[Tex~L-~ The Pool ot' rrench Aeronautical and Aerospaco Indus-
_ trie:~ (G:LrAS~ ha~ receni;l.y publ3shed detailed information re- -
~rirdint; its 1~78 exports. The direct orders coming from for-
- cifm countries over the course of last year attained a total
value of Fr 17,154 million as opposed to Fr 23,830 million in
1977 ~r.d 9,71o million in i976.
Included within this total are only the firm orders exclus3ve
of' the options. As for materials produced throu~h internation-
- nl cooperation~ only the French portion has been included. The
value of this portion represents Fr 8~312 million, or 48.5 per-
cent of the total orders.
The distribution by activity groups is as follows:
I~`r g,8g2 million ~of which 4,614 million represent the result
of cooperative efforts~ for airframes and completed aircraft; _
l~r 1,4'~6 million ~of which 906 million represent the result of
cooperative efforts~ for helicopters;
T~'r 1,964 million (of which 935 million represent the result of
- cooperative efforts~ for motors;
rr 2,161 million (of which 1~502 million represent the result
- o.f cooperative efforts~ for aircraft and clearance.
rr 1,690 million (of which 356 million represent the result of
coo~~er~t~ive eflorts~ for;equipment and electronic systems.
The orders are distributed geographically as follows:
I~;I~:C countries : Fr 4~ 814 million ( 28 .07 percent
Countries of the free zone: 417 million (1.85 percent~;
United States: 2,200 million ~12.82 percent~;
The Remainder of the world: 9,823 million (57.26 percent~
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GIP`AS ha~ drawn up a chart showing ~he propor~3on of exports
w3.th3n ~ho tot;al business i'igure correeponding ~o the ch3ef
pro~rame: -
AIRDUS INDUSTRIES: A.300: 86.3 percent;
ALROSPATSALE: Alouotte ZII: 82 percent; Lama: 91 percent;
Gaze~.le: 75 percent; Super Frelon: 7 2 percent; Puma: 70 per-
- cent; Dauph3.n: 86 percent; Ecureull~A-5tar: 97 percen~; i6
types of missile: 50.7 percent.
DASSAULT-BREGUET: Mirage IIZ and 5: 64.5 percent; Mira~e I{`-1: _
58 percent; A1pha Jet: 59 percent; Mystere ~~alcon-20: 92 per-
cent; Mystere Falcon-10: 93 percent; Mystere Falcon-5~: 99 P~~'-
cent.
SL;P~CAT: Ja~uar: 57 percent.
MATRA: ~30: 45 percent; 550 Magic~ 60 percent; Crotale: 20
percont; Otomats 100 percent; Durandal: ].00 percent.
SNI:CMA: Atar 9-C : 70 percent; Atai� 9-K-50: 65 percent .
- SNrCMA~TURBOM~CA: Larzac-04; 21 porcent.
TURBOMECA: Taking its total. production into account: 66 percent. -
LIG}{T AIRCRAFT: Nfudry: 30 percent; Robin: 47 percent; Reims- _
Aviation: 82 percent; Socata: 44 percent =
COPYRIGHT: Air 8a Cosmos~ Paris, 1979
8117
cso: 3100
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COUNTRY S~CTION F'RANCE
- BRZEFS
SD~C~ DEPUTY DIRECTOR--M9.chel Bouleau, who served ~n Africa prior ~o
becoming an administrative subgrefect, has ,just been appointed deputy ~
d:Lrector of administration and ~'inance of the French intelligence aer-
vice ~.e., the SDEC~. Acting as deputy to Jean Bontoux, appointed
last ear Bouleau will be in charge of a 478-million-franc budget.
~ex~ ~Pa,rie VALEIJRS AGTUEI~I,ES in French ?..3 Apr 79 p 2~
NAVAL HASE CHANGES--The navy in cutting back on its overseas bases.
� Of ~he five overseas bases available to the ~hip~ Roya,le (Papeete,
Dakar, Fort-de-~ance, Reunion and D,jibouti), only Pa,peete will con-
tinue to operate its sriip repai.r facility needed because of the nurlear
_ tests program's requirements. The navy ~cn~r] prefers to provide its -
combe,t fleet with logieticial support based on the new fuel supply
ahips, repair shipa and sup ort veasels, all considered leas vulner-
able tha.n bases on shore .~extJ ~taxis VALEURS ACT(JEf~LES in French -
23 AI~' 79 p 2~
Cso: 3100
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CnUNTItY S~CTION ITALY
50VL~7' nIL~MMA OVE~t PRC ~M~RGENCE IN WOItLD AR~A ANALYZ~D
- Turin LA STAMPA in Italian 19 Apr 79 pp 1~ 2 LD
[Article by Frane Barbieri: "Moscow ACtempCs Dialog wiCh Bei~ing tn Contain
We~tern ThrueC")
(TextJ In a surprise diplomatic note Gromyko has suggested to Bei~ing the
eigning of a document laying down the principles of relatior~s between the
two huge countries engaged in latent conflict. The document appears to
be chiefly an act of recognition by Moacow of China as a third world power.
We ar~ a long way from the poesibillty of Moscow turning the tables ar~~
- using the "Chinese card" against the United States. It is simply a move--
, skillful, at any rate, and how effective, we ahall see--to prevent Washing-
ton from being able to use the same card against Moscow.
China's emergence on the world scene, accomplished ~y Hua and Deng in
- rather a peremptory manner, has now become an irreversible fact. Although
- the Kremlin's hopes of being able to manipulate Chinese policy from its
position as sole center of a monolithic communist world evaporated long
ago, Moscow believed that it ~ould at lea8t keep China out of the main
world disputes by relying largely on Mao's self-i~olation tendencies.
When this objective vanished too, the Soviet Government *ecently found it-
self confronted with difficult option: To negotiate with Beijing through
Washington, thus giving the Americans ehe power to detcrmine the levels of
tension and detente along the Siberian borders. The rscent arguments in
the U.S. State Department over the need to mediate between the two
communist powers raust have seemed to Moscow paradoxical, to say the least. -
In all probability this is haw they appeared to Beijing as well.
Gromyko's move would seem a logical reaction to this situation. The
Kremlin is attempting a sharing game with Beijing, trying to prevent the
weigl~t of the Asian subpower from falling entirely on the American side
in the bipolar relationship between the two super~owers. The Moscow docu-
ment constitutea the diplomatic response to the increasingly complex
Chinese question." A response which must not be confused with the positions
assumed by Moecow on the same theme within the intercommunist context.
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On tl~~ diplnmatic front, in nther word~, it expreege~ ir~ gmen~biliey Co
ne~;~ti.r~tione and pegceful co~xi~Cence, elnng Che lin~~ o� the principle~
n~?~itl~~d Cd r.elntiond with ~hll Countries. On th~ id~nlogicnl, ittter-
c:~nununiHt front~ co~xl~Cence i~ inconceivable for Ch~ 5ovieCe under gny
circumgCgncee.
One nf ehe Cdp ~urocotmnunisC p~reon~litiee spoke t~ m~ some Cime ago about
the presaures exereed by Magcow to aline Che ~uropean parCieg more closely
with Sovi~t position~. A CPSU repreeentative who came Co vi~it him told
him: "You mietakenly believe that even in Che face of the most diverse
challenges and provocntiong on your pare Che reaeCi~n wiLl xlways be
rational and modergte. Be cgreful because even we c~n lose our patienC~
and tgke hasty stepa for which we will gll pay Che price l~t~r. In shnrr,
th~ bnlance of power end our Politburo'a aetiCUde can also chan~e for ehe:
wors~." The 5ovieC was referring tc Carter's challenge~ to the aCtempt to
~ncircle the USSR, gbnve all to the EurocommunisCs' criticaL reservationg
abouC the Kremlin's policy. Ne wae gpplying strong pressure to foil gny
~urocommuniet aCtempt to aesume an �ntermediate position in Che conf:i~cC
with China. Leea persigtenC attempts have been made tn unify the posi-
tiona of the allied gover.c~mente.
' [t te known for certain that the Kremlin did noC expect China to react with
a militury intervention to the provocation carried out against it in
Cambodia. Faced unexpectedly wiCh the Chinese attack, the Soviet leaders
immediately dismissed the idea of direcC reprisals along the Siberien
borders: It would have been the start of a war with no foreseeable end.
They opted however for a commitment by all the counCries in the Soviet
ramp on the Vietnameae front. It turns out in fact that bodies of volun-
teers to be aent to Indochina were being organized and trained in all the
Warsaw Puct armies apart from Romania. The Chineae withdrawal, announced
from the outset but implemented hurriedly perhaps, partly to avoid this
highly dangerous trap devi8ed by the Russians, meant that the "volunteer
operation" was curtailed. But the "China question" did not disappear with
it.
We have information about the difficulties encountered by the officers
given the task of training the expeditionary corps for Indochina in
explaininR to the younQ soldiers in political and ideological terms the
reasons for the conflitt with the most populous socialist country. A
~imple theory had been devised whereby the grass roots of Chinese society
I~ad remained socialist but the leaders had deviated from the proper revolu-
tionary path. The theory innnediately proved inadequate inasmuch as the
volunteers were destined to fire in V~etnam againat the "grass roots," in
ott~er words, ordinary Chinese soldiers, and not againsr the leaders. A
piece of nonaense, typical of all wars, which acquirea a, special a?nd
almost transcendental value in a society obsessed by ideology. In fact
there Was an immediate outburst of ideological discussion on what Marxiat
label should be attributed to Chinese society and the Chinese state. This
was necessary to explain the reasons and mativea for an armed conflict.
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NUIt U1~ t~ I.C: i AI. U51: UNLY
'fhe int~rpreegeion~ mnde by ehe differenC pgrCie~ were ndt intended tn
destroy th~ uttiCy gnd Cr~ate g flaw in relntions between the socialiat
partie~ ~nd countries and the 5oviet Union. The conclu~idn wa~ that the
~ r~~olute and uncompromisiag atruggle ~gaineC Bei~ing'~ Cheory and praxie -
~re an ingepareble part of Che fight aggin~t imperi~liem and capiCaligm.
China, ~nd nnt ~u~t it~ leaderg~ thug bECbfi~B a capiCaltet counery.
Ponomarev'g elabnr~t~ fnrmul~tiong wiil gerve as a background for furt~er
- "monolithizgtion" of Che eaetern bloc~ at leaet Co foresCall any poseible
temptation to make overturea toward China. China ie becoming g facCor,
if noC of polnrization at any raCe of diveraificaCion, in Che communist
worlc:. Mogcow cgnnot accept iC as a vartant or aleernative form cf
sociali~m wiChoaC loeing iC~ own h~g~mnnic or perhaps charioTaatic posi- -
tion. Nence it was necessary to place China in Marxiet terme on Che other
side of the barrier~ among the "class eaemies."
When it comes to explaining Ch~ reasone why itttercommuniat wara erupt
the Kremlin theoreeician's theaes have nothing very new to say: They `
adhere ro the religious formula that wars are always triggered off by
capitaliam (the reason why, in Ponorarev's syllogism, China could not
fail to become capitelist). The extent to which such a formula is
~ defensible was seen on the guest of honor platform at the recent PCI
Congress, wh~re the 5oviet Pelshe was obliged to sit beaide the Chinege
ambassador, who had certainly not been placed there in tribute to hie
country'g convereion to capitalism.
Wich reference to ideology, the Kremlin has tried to make the conflict ~
- with Beijing coincide w~th the communist movement's struggle against
Washington. But the approach has proved rather unworkable. The "diversi-
fied" parties, one of the main onea being the PCI, are already seeking
their "silk route" which will lead them Co Bei~ing. Behind the dogmatic
- plans outlined by Ponomarev, it turns out Chat even in Mo~cow, among
Brezhnev's actual aclvisers ~Aleksandrov), a pragmatic pro�alem is being
posed: Even though it is "capitalist" China does exist, gnd sooner or
later it will be neceasary to negotiate with a country as dectaive for
the world's future, if for no other reason than to avoid any breakdown -
in coexiatence. But when and how to negotiate? By Waiting far and
encouraging the fall of the preseet leadership or by using Washington as
an intermediary? Hen~e we arrive at Gromyko'g note, in contrast Co
Ponotnarev's attitude: Diplomatic praga~atism and ideological rigor form
a duality inherent in the whole of Sov~et policy and are often contradic-
tory only in appearance.
COPYRIC}tT: 1979 Editr. LA STAMPA S.p.A.
CSO: '3140
12
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~Ott 0~'~tCrAL US~ nNLY
COUN'TItY 5~CTION ITALY
R~POitT ON PUBLIC ~'INANC~ ESTIMATES ~'Ott 19~9
Mi1an IL SOLE-'l4 OttE 3n Tti~li~n 'l3 Mar 79 p 3
_ [Artfcle by Mario Baldass~rri]
CText] After L�he roport on 1979 requir~ments for the
State and publ3c corporations, at last they
are giv3ng us the figvxes, even for publi~
ffnance.
~rom time tio tim~ we learn of events which, wh~n we read of them,
~eem to be anything but sensational; as time goes by, however,
it turns out that they may well make a reeounding impact on a
nation~s political and civic habits. The recent "Report on Es~i-
mated Requirements of the Expande~ Public Sector for 1979," aub-
mitted by the Treasury Minister on $ March, is certainly one such
event.
It markr~ a turning point of major s~gnificance in that heralded
process of greater clarity and comprehensiveness in public ac-
counting started under the Stammati administration and carried
now by the Pandolfi administration to a level which only a short
while ago would have seemed sheereet fantasy.
� Preparation of an annual operating budget, a 3-year budget, and
a full accounting every 3 years on Treasury operations are in fact
- tangible evidence of a"figures-and-data culture" which ought to
replace ballpark approach of ideological rhetoric and prejudice
which frequently dominate debate over our country~s economic po-
licy.
The scale and the analytical thoroughness of the accounting ren-
dered in the recent report (not only were the overall books of
the State covered, but so, for the first time, were the books of
every corpor~tion and agenc~r in the public sector) unquestionably
imply fairly long lead-times for the mental effort inWOlved in
gathering and digesting all the data contained in th~ document.
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~OR O~~ICIAL US~ ONLY
3 Koys to valu~~ion
g~yond thc~sn boundar~.e~, 3.t do~s seem possib~.e, however, oven
on ~ f~.rs~t read3.ng, tio s~.ng1~ ou~ tihr~~ difFerent~ keyg tio va~lur~-
tion:
~he cons3.stiency ~mon~ ~he forecgg~s wh3.ah were gradually
~ormulabed over ~h~ cours~ o~ 1978 and the3.r comp~ri~on w3th
bhe perform~nCe recnrd an~i ~he f3.na1 balance for ~hat year;
b. tlie scale and stiruoture which the booka o~ bhe s~at~-owned
aQCtor h~ve t~ken in bhe four trimes~~rs of 19~8;
c. thc~ Forncns~a~ for 1979 and the econom3c policy maneuvers now _
:~11~~CS~'i@t~ as a means to ~?chieve control over tihe growbh in enlarged
publ:.c, ~ector requirements. _
Table T showa the forec~sts, in ter~:.s of annual cash flow~ as
oontained in the sever~~. quarter3.y reporbs �rom the Treas~ury and
the parformance records actually cr.alked up in 1978. In connec-
tiion witih these data~ three considerations emerge as most signi-
Ficant. t
We can see~ in the first p1a~E1~ that ~he p~t~~rn of reve;nues and
expenditure~ was steadier fchan had been predicted in aev~sral
cases.
_ In the second place, most of the growth in expenditures seems to -
be increasingly stronger than the increase in ac:tual revenues.
In this sense, therefore, t~he State budget begins'to laok a good
deal like a puppy chasing its tail. Although revenues were hi.gher
than anticipated, they failed to keep pace with the upward spiral
in actual expenditures. ,As a consequence, the requircments of
the State-owned sector swelled from th~ 2~,00~ billion predicted
in the March 1y78 report to 28,760 billion in the final account-
ing.
And in the third and last pl.ace, the intern~sl structure of reve-
nues and expenditures seems to have taken on a different shape
From what was expected. In the revenue column, for one thing,
direct taxes accounte~.for more than did indirect taxes. In the
~rea of expenditures, ~rediction shortfalls were almost invaria-
bly imputable to higher operating costs. .
The various adjustmen~s made i.n the forecasts in August and No-
vember of last year, however, were largely traceable to action
taken by th~e government a~~d Parliament. To this extent, there-
fore, they do not indfcate actual errors in forecasting. That
sort of genuine error, however, looms larger when you compare the
dat~s from the November report with the actual year-end figures as -
contained in the recent March report.
14
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I~'Oit UI�'~'rC:LAL U5C I~NLY
- ~.IllgfNUC~p bl C.Ati5.~ DL�,1. 5CT7nR~ 5'CA7'ALB (11 ANIvO 197i r~~. ~
PItk:Vt51U~1 ~ l:U`5UN'flVu
~1 P?~eviyinni de~t
~ Consunti~o
Mag~to 79 AQo~to '78 No~em, '78 v 3~,~2,~7g
A � Hflancio 5tato 2~ '
t�~nr.~r~ ;rcpt~ 3 so,too st.boo st,eao
a) `1'rl it~tnrle ~ +I,600 42.800 {J.300 52,92J
bitettc 19.200 ' 19.650 Ip.B~ ~4,:80
b~Jirrttc ~ 4~
b? ~~t?r~ tr~bw,i~ie 7~ 8.500 1~.ISO 22,~to 22,;dt1
s.eoo e.. s.3a3
fl � 5pe.~~ tot~ ! 76.230 81,,100 82,Oi0
al Curirnti 65,100 66.d30 R3.J~8
~ bl Cunte rrpiiul~~ 14J50 16.300 ' 15.b00 6A.1~0
II[ � Uisa~~anio 5tu~o ([1�Ti 29.~ t53.8
26,130 30,:50 34.435
H~� il' � Dita~�unzo pc~rinne 9Q0
~li lesn~tiria 1-a~ancul ~'2.~~ -1,6iS
_
V� Fxbbi~, ~e~tore statale 27,030 29.630
~ ~ ~ � 2A.0.0 'e.'F4
fil Lc trc pr~~i~iom qui p~esentate ~ono rantenute nelle ~Ylationl trimrsiraii a1 31 3 al I
~1!6/7t ed ~t .1~1'0:79; il cunwntt~~o a con~enutu nelln relatione al 31'12;~;8 pre,cn~ata ti
1,4 S/J/79� Valorl fn miliardi di lire.
I
TAt3LE I: CASN ~t~QUZFt~MENTS IN THE STATE SECTOR (1) , 1978
~OR~CASTS AND FINAL REPORT
KEY
Final as of
1. Forecasts for MAY August November 78 3i Dec ~8
2. 5tatie Budget Non-tax revenues
3� Total revenues ~ 8. Total expenditures
4� Trom taxes 9. Operating
S. Direct 10. Capital
G. Ind.irect 11. State deficit (II-I)
1'l. Treasury management deficit
(less carryover)
13. State sector requirements
14. Thc three �orecasts shown here ar~e contain~d in the quarterly
r�eports for 31 March, 30 June, and 30 Sept~*:mber 1978; the
iirial balance is contained in the 19~8 year-end report pre-
sented on $ March 19~9. Amounts shown in billions of lire.
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A~ yau can c~ne~ tiha "surpr3.ses" 3.nvolved by oomparison wi~h ~he
~stim~~es~ made 4 mon~h~s ago are due ~o gr~~ter ti~x-der3ved ro~
venues h3.gher by 1~ z30 bi~.l~.on 13.r~ bu~ are of�~se~ by ~
grea~er cash ou~l~y~up by 1~308 bi~.l3.on 1ira. We al~o h~d ~~~g
carryov~r on the "Treasury managem~n~ books ( a short,�a~.1 0~, -
~ same~hing 13.ke 550 b31.1ion lire ) th~n w~s expected. , On t;h~ whole~
~he~n~ th~ requ3remen~s o� the State ~ector were more than ~00
bi113.on 13re more th~n ~he Novembor forec~ss~ cal~.ed �or.
~rnm the dat~ 3.n the sever~l quarter~.y repor~~ released by the
Treagury~ it is possfble to recons~;~uct the �lows that acbus~.ly ~
_ bonk place in each quar~er of 1978� These datF~~ shdwn on Tttble
'l~ provide a second pro~3le of valuat3.on~ in connec~3on with which '
bwo m~ jor considera~3.~n~ come to m3.nd.
~n the ~irst place, we can ase how much time it bakea for ~he
"publ.3c corporations" to process the funds transferred to them
from the State in~o ~ctual expenditures. What really happens is
that when the cenbral government pays oub appropriationa ahead of
time, thua tr3.ggering a bigger defici~ in the Treasury accoun~s
(as we see happened in the first quarti~r oF 197$), the '~Treasury
managemen~" books show a fat surplus; dn the other hand, when
- ~he accumulation o� def3ca.ts in bhe State budget slows down, the
accounts of the State-owned corporations~ on the whole, tend to
show a deficit.
Above and beyond these factors, we can see, however, that the
requirements of the State sector came close to 6~000 billion lire
in the firat two quarters of the year, dropped to around $,000
billion in the third quarter, and,only "exploded" in the final
quarter to top 11~000 :~illion lire.
In the second place, tihen, we find this "anomalous" behavior in
the closing 3 months of the year which, all by themselves, made
up more than 37 percent of the entire requirement for 19~8.
This phenomenon can be partially explained by the elimination of
the January supplemental budget, which may have brought on a
stepped-up spending pace in the final weeks of the year.
~ I3cyond this purely "bookkeeping" aspect, it w~.ll be interesting
to find out whether thesse expenditures, largely to transfers from -
the State budget account, turn i.nto actual outlays during the -
first quarter of 1979 particularly, or instead ~~:rn up as "re-
e~ntries" in the Treasury~s management account for the other pub-
lic corporations. In this case, and to the degree to which it
can be demonstrated, we could argue that the overa~.~ requirements
of the State sector, from the economic point of viea, were actually
smallcr in 19~8 than we are led to be2ieve, from a"bookkeeping"
point of view, by the accounts embodiedl in the report.
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' ~ox nr~~crnL us~ oNLY
T,1H t !
_ F,1Bri(SnG~O D( C19S.1 DL�L SETTORE STATALE ANNO 1978 - FOTLII.A'LION~ TRI~t~,�
STR,V.[: DEL ~ABE115(?GNO
l~ 1� trim, P,trim. J' trim. 4� trim~ Tolale
A � Bilancio Stato
i� E:ntrale to I 3~~ 10,1/l+ 11.801 ti,V~9 17,tl11 51Q:3
n) Tributa~~~}~ 8,;350 10,680 12.0U3 13.~~J5 ~1'?0
Uirrt~r 3.250 5.~50 6.078 ~,2?2 ?L~~?~ _
liidirrttr 6~ 5.000 5,~1.10 3,927 h.4:3 ::.~PO
bl Exu�a�t~ibutai9e 7~ 1,8% 1.127 1,934 ;.a(~, ~,~J3
- tt � 5p.~.e bt U 8~ � t9,tA0 15.IAb .0.539 ?3.y.;a t~i :eR
:?1 Currrntl 15.:~.'. . 12.6h6 17,141 r16 h?,t:u
M1 Con1o ca~i ale lU~ ~.ONS , 2,51~ 2.79e 5.A~13 1~.3?8
ili � Di.a~;~ruo 5iato (If � I1 9AJ4 3,37J 6.SFU tl.~t8 3U.J~5
i. _
'1/.IV - Di;~~~ntu ;rctfone ,121 2.391 2.6?I -1.585 - 3'1U -i,e;5
~ di t~,urr~ia 1-;t~~intoi �
I V� Fah"!a settore st~tale Z3 ~ 6.643 6.064 g.995 11058 ~?S.7N1
~
TABLE 2: CASH REQUIREMENTS ZN THE STATE SECTOR FOR 1978:
- QUARTERLY FORMATION OF REQUIREMENTS
_ l. ls~ quarter 2nd quarter 3rd quarber 4th quarter TOTAL ~
2. S~ate budget 8. Total expenditures
3s Total revenues 9. Operating expenditures -
4. From taxes 10. Capital expenditures
/
S. Direct taxes 11. State deficit (II-I) -
b. Indirect taxes 12. Treasury management deficit -
(less carryover)
7� Non-tax revenues 13. State sector requirements
Some passibility that, this phenomenon just may have occurred
emerges from the data contained in the supplement to the Bank
of Italy BULLETIN, which deals with the formation and utiliza-
tion of the currency base. In its issue for 20 March 1979, the
BUII.LETIN reports a balance of 676 billion lire in the current
expenditures requirement account of the Sta~e sector.
If this situation were to persist through February an1 March,
~hc; likclihood of their being an overlapping between the "book-
keepin~" size of the requirement and its "econ~:.iically signifi-
- cant" size.might be increased to certainty.
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I3eyond tho~e "dot~i~.od oxp~.~nabions" b~ ~l'lb 1.97$ ~ina1 report,
_ how~vnr~ ib t~ooms considerabl,y mor~ prom3eing to be g3ven the
ah.~nce to a~sess~ L�he compl.ex ecdnom3.c policy maneuvera that are
to be mounted 3n the course o~ i979�
-
- '1'lie Maneuvc~r Fac~ora
As raaders w3.11 remember~ thia maneuver3ng was 3ni~3a11y auggested -
_ in the "Pandol�i documen~~' 1as~ August~ and has since been pressed
anew and further spelled out in both the 3-Year P~.an and in the
- Report of last 5 March. _
TABLE 3: ECONOMIC POLYCY MANEUVERS FOR 1979 TO CONTAIN
EXPANDED PUBI,IC SECTOR REQUIREMENTS -
' 1. Propost~ dell'agosto '78 Q ~ Propo~ta del meno 1979
, N ' ~1
' i� Mlnoii ~pose 3~ ~ J,7~0 N ~ 1,770 21
- ~li cui:
n1 Pcncioni 1~~ 1.100 670 =
b) Spe~a ~onilnria ~ 1 10(1 S00
ct F:nll I~~c~ll, tra~~ ( 500 ~(1
d) ~1in~i9 oneri inlerea~~ 7~ 3Sf1 3(N1
fl � Mnpgierl entret. g~ J.000 ~0 4.0.10 !d