Understanding Italy’s 17 April oil drilling referendum

I have been trying to get to grips with the 17 April referendum on offshore drilling in Italy for the purposes of a short news piece for Wanted in Rome.

However, reading around the subject in both English and Italian has left me totally befuddled.

There is a huge amount of information available but little of it seems to clarify what is actually at stake, and the wording of the referendum question doesn’t exactly help matters either (see photo below).

The question makes specific reference to two existing laws (the first on environmental protection dating to 2006 and the second the 2016 budget law, approved definitively by parliament at the end of last year) but without entering into the merits of the cited provisions, making an on-line search for the full texts unavoidable.

However, this immediately threw me into even greater confusion since the part of the 2006 law implicated in the referendum (the third sentence of the 17th paragraph of article 6) doesn’t appear to exist.

No matter: reading on it becomes clear that this missing sentence has in fact been substituted by a clause in the 2016 budget law establishing that existing licences for off-shore oil and gas prospecting and drilling are exempt from a ban on hydrocarbon exploration and production activities in Italy within 12 nautical miles of the coast for the useful life of the fields and in compliance with safety and environmental standards.

Put more simply, under the terms of the 2016 budget operating oilfields in territorial waters can have their concessions extended until the exhaustion of gas or oil.

So the main theme of the 17 April referendum is not whether oil companies should be allowed to drill in territorial waters – this is already banned for new projects – but rather how long existing concessions should last.

To paraphrase the referendum question, Italians are being asked if they want the exemption clause to be repealed so oilfields operating within 12 nautical miles of the coast are closed once their concessions expire, even if there are still resources in the subsoil.

They are not being asked to make an outright stand against oil drilling, and they are certainly not being asked to address the (crucial) issue of renewable energy as an alternative to fossil fuels.

On a practical level, my understanding is that only three oilfields – Eni’s Guendalina and Edison’s Rospo in the Adriatic sea and Edison’s Vega in the Sicily Channel ­– are directly implicated in the outcome.

Assuming the quorum is reached (which is unlikely), and if the yes vote (to repeal the exemption to the drilling ban for the useful life of the oilfield) prevails, the concessionaires will be obliged to stop activities once their licences expire, mocking massive investment so far.

If the no vote prevails, things will carry on as normal and Italy will have wasted over 300 million euros of taxpayer money.

It seems to me to be a no-win situation.

Surely it would be better to use the referendum tool to address more urgent ethical issues facing Italy, such as same-sex marriage and adoption, end-of-life provisions and, why not, surrogate motherhood?

So far with the very vocal exception of health minister Beatrice Lorenzin (New Centre Right) the debate on this last issue has been defined almost entirely by men.

It would be interesting to know what the other half of the country thinks about it.


Evaluating the Jobs Act in light of the figures

I don’t know about you, but my eyes glaze over every time I have to look at figures. However, I decided to overcome my habitual resistance when Italy’s national statistics institute Istat released its provisional employment data for September. The reason: I was trying to get to grips with the new labour market reform otherwise known as the Jobs Act for a story on prime minister Matteo Renzi’s reform agenda and I wanted to know whether the measures were actually achieving the stated aim of bringing down high unemployment and creating more stable jobs. Well, in the immediate term it seems they are.

The figures show a 0.9 per cent rise in employment year on year despite a less than brilliant GDP growth rate, suggesting that the upturn cannot be attributed to economic recovery alone. Rather, it is also the combined result of the Jobs Act and exemptions on social security contributions for employers taking on new steady hires this year.

The number of people in work in September rose by 192,000 over the same month in 2014, Istat said. Over the same period the number of people on permanent employment contracts rose by 113,000 and on fixed-term contracts by 107,000. Simultaneously the number of self-employed fell by 28,000. Ergo: more jobs and more stable jobs. Exactly what the government set out to achieve.

Of course much will now depend on whether the incentives for employers become permanent (economy minister Pier Carlo Padoan has said they will not and already in next year’s budget currently before parliament they have already been reduced considerably with respect to this year) and, to an even greater extent, on how Italy latches onto recovery after the longest and deepest recession since World War II. To quote one informed observer, economist and statistician Gabriele Olini, labour market reform has gone as far as it can; now it is up to economic and industrial policy to do the rest.