The Uneasy Progress of High-Speed Trains and Railway Liberalization

An d Ye t It Mo v e s : Th e Un e a s y Pr o g r e s s o f Hi g h -Sp e e d Tr ai n s a n d Rai l w ay Liberalization

Mauro Tebaldi

On 5 December 2009, Prime Minister Silvio Berlusconi, together with the director-general of the Ferrovie dello Stato (FS), Mauro Moretti, officially opened the new high-speed/high-capacity railway line, linking Turin, Milan, and Salerno at the central station in Milan.1 The work, which had taken almost 40 years to complete, had involved the laying of just less than 1,000 kilometers of track that is specially designed to carry high-speed trains. The following day, the high-speed train service provided by Trenitalia began operating on the line with the latest ETR (Elettro Treno Rapido) 500 Frecciarossa and ETR 600 Frecciargento trains. The year 2010, therefore, marked the official operational start of the project that had first been drawn up by FS in the early 1960s with the aim of providing high-speed rail links for the main Italian cities along a north-south axis in response to two clear challenges—the growing competition from airlines2 and an increasing preference for road use.3 Although 2010 marks an important stage in the development of high-speed/high-capacity railways in Italy, it should be pointed out that it represents only a partial completion of what had been a long- standing and somewhat drawn-out policy that had been characterized by infighting, vetoes, poor planning strategies, judicial investigations, financial problems, and bitter disputes within the three main areas

Notes for this chapter begin on page 257. And Yet It Moves 239 of public policy: the infrastructural, the operational, and the technological. As far as the infrastructural area is concerned, it should suffice to remember that the executive planning of the cross-border lines—especially the Turin-Lyon line (i.e., one of the mainstays of the European high-speed network)—remains in a stalemate position, and there appears to be no simple solution. As for the operational area, the spotlight moves to the controversial process of liberalization of the Italian railway market, which is due to be completed in 2010, and the ways in which this will actually become reality within the strategic sector of high-speed trains. Finally, when considering the technological area, it will be necessary to await the outcome of the intricate dealings (horse-trading, collusion, competition, etc.) between politicians, financial bodies, railway operators, and various Italian and international manufacturers of the sub-systems (rolling stock, signal- ing equipment, energy supply, and other earthing systems) that make up the technological puzzle that high-speed systems involve. It is easy to infer that, while the three areas outlined above can be analyzed separately, there are strong correlations between these dimensions and that one may influence another, as we will attempt to show in this chapter. It is equally obvious that, within each area, the description of the “facts of the year” cannot neglect a careful analysis of what had been inherited from the past and of the main contextual factors that have influenced decisions and actions. In exploring these considerations, we shall attempt first of all to examine the framework of opportunities and restrictions provided by the European Union within the area of high-speed rail developments. We will then show, for each of the relevant dimensions, the evolution of public policy over time, its current state of development, and its future prospects.

The European Union and High-Speed Railways: Technological Heterogeneity and Integration

When we examine the starting point for the development of high- speed rail networks and the actual shape that they took, a variety of technological characteristics can be seen in the European countries in which the system has been implemented. The heterogeneity of the system is of some importance, and it occurred as a consequence of various factors that came into play: (1) the specific socio-economic and territorial needs of the single states; (2) the strategies adopted by the governing authorities within the context of their respective transport policies; (3) the condition of the rail companies, in terms of financial, administrative, and planning resources; and (4) the capacity 240 Mauro Tebaldi

of industries, especially domestic ones, to formulate new technological solutions and to overcome the barriers impeding decision-making processes. While this led to numerous projects and technologies, there is widespread agreement that two different conceptions of the high- speed rail network—the French and the German—gained the upper hand over the others, due to the extent of the networks that they had already built and to the commercial success of the technologies that they had utilized, both within and outside Europe. These conceptions brought about two development models, each put into practice via a number of strategic, organizational, and managerial steps, which made it difficult to integrate the two systems and to enable them to work together. The French system (TGV) was designed exclusively for the transport of passengers between large metropolitan areas, and, in order to achieve this objective, special lines were built on which trains could reach average speeds of around or above 350 kilometers per hour. The German system (ICE), on the other hand, was designed to cater to mixed transport (passengers and freight) between urban centers, including medium-sized ones, with considerable use of existing conventional track, duly upgraded, to carry trains traveling at a range of speeds, but normally not above 300 kilometers per hour. These strategic differences led to differing technological concepts—taking into account the rolling stock, the energy supply, and the high-speed railway infrastructure—both at the planning stage and during the building stage.4 The two models took shape between the early 1980s and the 1990s, forming natural poles of attraction for any other countries (and railway construction companies) who either sought to emulate them or, at the very least, take them into account when they showed an interest in moving into the high-speed market. This was certainly the case in Spain and in Italy, although there were significant innova- tions (particularly in Italy) as a result of the plans of the rail companies and the technological status of domestic industries. It is also widely known that, in light of this degree of heterogeneity, the EU had, from the early 1990s, launched an ambitious development plan for an integrated European high-speed network.5 The measures taken by the EU institutions are underpinned by two objectives: first, eliminating the artificial barriers created over time by the individual states and promoting and supporting the building of a fully compatible network along high-priority routes; second, setting rules that operators and financial supporters would have to abide by in order to run the program under free-trade conditions. Taking the latter consideration first, among the main points in the reorganization program, the Commission focused on the liberalization of the railway And Yet It Moves 241 market through a series of directives, starting in the early 1990s up to the last “railway packet” of 2007, as a fundamental condition for the achievement of the other objectives. Through these measures, the Community executive laid down, within a time frame ending on 1 January 2010, the following organizational and operational criteria for rail transport: (1) the independence of rail service providers within an environment of competition in the free market of rail transport; (2) a clear separation between companies providing the infrastructure and those providing and selling transport services; (3) the right of access to national networks for individual companies or international groups of rail transport providers; and (4) the creation within each member state of a regulating authority that would supervise and set standards for the rail industry. As far as support activities are concerned, thanks to the relevant article (XV) of the Treaty of Amsterdam, the EU has recognized the development of the main transport networks (the Trans-European Transport Networks, or Ten-T) as a vital instrument for the economic and social integration of the Continent, whose actual realization would need to guarantee fast and reliable links between conurbations, large and medium-sized, and outlying regions in the EU—hence, the pre-eminent role attributed to the creation of a high-speed European network. With this aim in mind, as far back as 1990, the Commission laid out the European master plan for the high-speed network, to be completed by 2010. At the Essen Summit of December 1994, the Com- mission’s Christopherson Group selected a list of 14 priority projects, 9 of which involved the building of high-speed rail lines. With the enlargement of the EU, the key projects of the European high-speed network were further extended by the Van Miert Group in 2003 and confirmed by Decision No. 884/2004/CE, which placed Italy at the heart of three priority projects: Project 1, along the Berlin-Verona- Bologna-Rome-Reggio Calabria-Palermo rail line; Project 6, along the Lyon-Turin-Milan-Trieste-Ljubljana-Budapest line; and Project 24, which links Genoa, Milan, Basel, and Rotterdam. To enable these large-scale infrastructural developments to take place, the EU set aside sufficient funds (up to a maximum of 20 percent, rising to 30 percent for cross-border sections) for the priority projects of common interest and co-financed feasibility studies (up to 50 percent of their cost) in specific Ten-T budget lines,6 via the Cohesion Fund and the European Regional Development Fund. It also offered guarantees on loans, reduced interest rates, and, in some cases, made direct loans through the European Investment Bank. As for commit- ments undertaken, on 5 December 2008, the Commission established that the Community financing for priority high-speed projects in Italy 242 Mauro Tebaldi in the Ten-T balance should reach a total of approximately 1.6 billion euros (table 10.1) for the 2008–2013 period.

TABLE 10.1 EU financing and required state financing for priority Ten-T projects for high-speed railways in the Italian territory (millions of euros)

Priority EU Ten-T Financing Projects 2008–2013 Required State Financing 2008– Beyond Total after 2013 2014 2008

1 (Berlin–Palermo) 844.8 9,500 14,670 24,170 6 (Lyon–Budapest) 751.2 6,600 27,200 33,800 24 (Genova–Rotterdam) 5.1 950 8,060 9,010 Total 1,601.1 17,050 49,930 66,980

Source: Author’s elaboration of data from the European Commission and from the Ministry of Infrastructure and Transport; Ance-Direzione Economic Affairs and Study Centre, “Trans-European Transport Networks (Ten-T): An Outline of the Current position,” 4 December 2008.

Alongside the decision on financing, on 4 February 2009, the Com- mission published a green paper with a significant title: “Ten-T: A Review of the Policy.” Its aim was to set in motion a deep process of review of the policy on the integration of the trans-European transport network, involving both a redefinition of the infrastructural priorities of an enlarged Europe and an attempt to correct the main flaws—in terms of planning, financing, and implementation of priority projects—that had been revealed by the individual national cases. In the new Community plan for the Ten-T scheme, the central role of the high-speed rail network has been retained, but it has been accompanied by an evaluation of the specific importance of individual national routes (and therefore opportunities for their financing and refinancing) within a two-level structure. A distinction has been drawn between an overriding “central network,” on which the EU’s main driving force would be concentrated, and a “global network,” which would be in a subordinate position.7 After a first round of public consultations, the Commission proceeded, in the first months of 2010, to activate the oper- ative phase of the reform, inviting national institutions and stakehold- ers to submit, by 15 September 2010, further ideas that would outline more efficient planning methods, more effective financial instruments to meet the real investment requirements, and mechanisms for both decision-making and coordination that would be capable of reducing the current gap between planning and implementation. And Yet It Moves 243

The Infrastructural Dimension and the Modernization and Sustainability of High-Speed Railways

In the history of Italian railways, the theme of speeding up the transport system has always been given full attention on a formal level, while the practical implementation of this goal has, from the very beginning, been marked by complicated and contradictory events. This is illustrated by the case of the first stage of the project to qua- druple the high-speed network, the Rome-to-Florence rail line (the Direttissima), which was completed in 1992—that is, 22 years after the work had begun and more than 30 years after the idea had first been advanced.8 In the early 1980s, a debate began between the supporters of two different conceptions of the modernization of rail transport. Each the- ory was accepted for over a decade by both the state railway company and the ministries (Treasury and Transport) that take responsibility for it, without a clear preference being indicated. One conception involved the speeding up of existing lines and the construction of tilting trains, which are designed to counteract centrifugal force at high speeds. The other recommended the creation of an innovative technological system that would run alongside the conventional one and would cater specifically to high-speed train traffic. The financial and organizational crisis affecting the rail company brought a halt to the second type of project. It did not come back into consideration as an achievable prospect—or indeed as a high-priority one—until the early 1990s, following a deep restructuring of the company, during which the new limited company known as TAV (Treno Alta Velocità SpA) was founded in 1991 as a concessionaire of FS. The aim of the new company was to plan, build, and run the new fast lines as a business.9 In almost 20 years of activity, and following two company reorganiza- tions, TAV has carried out the work on the high-speed project up to the present-day state of the network, which has grown fourfold in the last five years (table 10.2), with a significant reduction (from 20 to 40 percent) of the “fully operational” traveling times on the main stretches of the Turin-Salerno rail route, compared to conventional lines. Although the development of high-speed infrastructure is described by FS and by the various ministers of transport who have succeeded one another over the course of the last 20 years as one of the main means of modernization of the country, and despite the fact that it draws a high degree of political support from both sides of the national political divide, during the last 12 months it has raised many of the same important questions that have accompanied it since construction first began. We refer first of all to the environmental concerns raised 244 Mauro Tebaldi 0.3 0.3 0.3 0.3 0.5 0.5 0.5

United 74 74 74 74 Kingdom 113 113 113 – – – – – – 2.9

– – – – – – 120 Netherlands 0.8 0.8 0.8 1.8 1.8 2.5 3.2

Italy 970 248 248 248 562 562 744 2.8 2.8 2.8 2.8 3.4 3.4 3.6

France 1,961 1,540 1,540 1,540 1,540 1,872 1,872 2.1 2.1 2.2 2.5 3.0 3.2 3.2

Spain 1,516 1,614 1,069 1,069 1,090 1,272 1,594 2.5 3.3 3.3 3.6 3.6 3.6 3.6

Germany 875 1,196 1,196 1,285 1,285 1,285 1,285

4.5 4.5 4.5 4.5 4.5 4.5 6.9

Belgium 209 137 137 137 137 137 137 Expansion of the high-speed network in Italy and in other European countries (km and km/km² of area)

TABLE 10.2 10.2 TABLE 2003 2004 2005 2006 2007 2008 2009 Note: Length of lines and of sections of lines on which trains reach top speeds of 250 over kilometers per hour during at least one stage of the journey. dello Stato; Gruppo Source: http://ec.europa.eu/transport/publications/statistics; Conto Ferrovie nazionale dei trasporti 2008–2009. Year Year And Yet It Moves 245 by opponents living in the Alpine trans-border areas and in those parts of the Apennines to be crossed by the new lines. The well-known and emblematic case of the Lyon-Turin line10 constitutes a heated conflict between the center of the country and the periphery, where the pro-TAV justifications of the governments that have alternated in the last three legislatures, regardless of their political make-up, have met opposition from a local movement that brings together leading civic representatives (local committees, environmental groups, various types of associations), groups of experts (in particular, academics from the Turin Polytechnic), and representatives of political parties (primarily, but not exclusively, from the left) with the aim of safeguarding the valleys affected by the project.11 Furthermore, members of local institutions—led by the mayors of small communes in the low Val di Susa and Val Sangone and the presidents of the Mountain Com- munities, who formed one single institution in 2009—have joined the anti-TAV protest movement. The strategic decisions of the political parties have confirmed the intensity and the significance of the conflict, as they show how and to what extent territorial cleavage brings together parties from both poles, with solid support for the project, in spite of differing opinions about how best to proceed with it, at a central and regional level, but with strong opposition at the local level in the majority of communes in the low-lying areas of the Val di Susa. The only exceptions to this pattern can be found in the parties of the radical left (the Commu- nist Refoundation Party and the Greens), who maintain a strong and unyielding opposition to TAV at all territorial levels. Within this area of conflict, the Technical Observatory, made up of experts nominated by the communes and by the mountain communities, which was set up in the autumn of 2006, continued, up to the end of 2009, to play a key role between the two sides, working hard to mediate and to search for alternative solutions (e.g., new routes, compensation packages, and ways of reducing environmental impact) so as to unblock the decision-making situation with the agreement of both sides, but without success.12 The administrative elections of June 2009 showed a high degree of support throughout the low-lying valleys for the local political groups that were most strongly opposed to the project. In 12 communes, there were anti-TAV civic lists to vote for, and these achieved a high degree of success in the elections, enabling them to form alliances with center-left parties. As a result of these pacts, the mayors and local councilors opposed to high-speed railways succeeded in electing Sandro Plano as president of the newly formed Mountain Community. A Democratic Party (PD) member, Plano was strongly critical of the 246 Mauro Tebaldi

TAV project and openly opposed to the position taken by his own party at the national, regional, and provincial levels. The events that took place in January 2010 seemed to indicate the beginning of a change, in view of the new line taken unilaterally by the pro-TAV political bloc, formed by the central government with substantial support from the regional and provincial PD. This new tactic had two main goals: first, to disrupt local opposition to TAV, and, second, at the same time to enable the preliminary geological work (needed for drilling the tunnels and laying the first track) to proceed. In order to achieve the first objective, the government sent a formal note on 7 January to the Piedmont region and the province of Turin, requiring them to redefine the criteria for local representation on the Technical Observatory in an effort to give more decision-making power to the territorial administrations that favored the project. To this end, the government’s note specified that only “communes … that explicitly declare their willingness to participate in the best possible realization of the work while ensuring the safeguarding and enhance- ment of the territory and respecting the European deadlines” should be included in the Observatory. It is obvious that this was an attempt to reduce the power of the local institutions that were most strongly opposed to any proposal for compromise, particularly the Mountain Community, which would no longer be represented. As a result of this obligatory redefinition, the activities of the Observatory proceeded with reduced numbers, as 24 of the 48 communes belonging to the Mountain Communities of Val di Susa and Val Sangone refused to nominate their technical representatives to join a body whose legiti- macy they did not acknowledge. As far as the second objective is concerned, drilling began on 12 January in the sites selected for preliminary geological tests required for the new trans-border project, which envisages a route of roughly 80 kilometers between Settimo Torinese and the border with France, of which 72 kilometers would be in tunnels and 8 along the surface. Only 2.8 kilometers of the latter, according to this project, would pass through Val di Susa.13 The reaction of the anti-TAV movement was immediate, and it quickly spread through all parts of the low-lying Val di Susa, with sit-ins and other forms of protest that have continued, despite the early suspension of the testing work, right up to the period in which this study was completed (October 2010). In fact, the construction work on the line, begun in January with preliminary studies, had already been halted by the spring and looked destined to remain at a standstill yet again in the autumn. The scant attention that the environmental impact had hitherto received from national and local administrators, as well as general And Yet It Moves 247 contractors involved in the building of TAV infrastructures with a high hydro-geological impact (such as the route of the Bologna-Florence line), is also illustrated by the exemplary first degree sentence handed out in March 2009 by the Florence Tribunal. This sentence punished those responsible for environmental damage caused by TAV construction work in the Mugello region with 26 penal convictions and ordered them to pay damages of 150 million euros. Alongside the environmental issue, the infrastructural development of the TAV system raises the problem of the sustainability of its costs, with the overall amount reaching the estimated figures calculated by the National Building Association shown in table 10.1. Apart from the funds released by the Community, the financing of the TAV project is currently provided entirely by the state. The share of private investment capital, initially expected by TAV to make up 60 percent of the total capital, soon turned out to be an unachievable target. Having accepted the failure of the private-public partnership, in a climate of organizational restructuring caused in part by judicial proceedings, which, halfway through the 1990s, hit the management of FS and then of TAV, in 1997 the organizational and financial set- up of the high-speed scheme changed. As far as the finances were concerned, FS took over the share previously held by private inves- tors, marking a definitive end to the project-financing model. As for the company restructuring, TAV merged with the Rete Ferroviaria Italiana (RFI), the single body of the FS group that took responsibility, in a monopolistic way, for the infrastructural management of the Italian rail network. A paper presented in March 2007 by FS’s Moretti at the Eighth Commission of the Senate (on Public Works and Communication), albeit based on projections considered optimistic by some commenta- tors, provides clear evidence of the growing gap between the higher building costs of the Italian TAV network in comparison to those of other European countries (table 10.3). These figures, although taking into account the objective difficulties caused by the orographic characteristics of the territory and the different technological approaches of the projects, point to a degree of inefficiency in the building of the high-speed network. This inefficiency was identified on 24 December 2007 by the Authority for the Supervision of Public Contracts (AVCP), which is responsible for overseeing public contracts for work projects, services, and supplies. The AVCP’s investigation into the work man- aged by TAV SpA leaves no room for doubt when it states that, from the results of inspections, “the inconsistency of the planning in the early stages for the initial contractual relations and the subsequent gaps in the executive planning carried out by the general contractor brought 248 Mauro Tebaldi

TABLE 10.3 Construction costs of the infrastructure for high-speed trains in Italy, France, and Spain (millions of euros)

Lines Planned and Country Lines Built under Construction Length of Average Length of Average lines (km) cost/km lines (km) cost/km

Italy* 564 32 647 45 France** 1,548 10 990 13 Spain*** 1,090 9 1,490 15

Note: * 2007 data; ** 2006 data; *** 2005 data. Source: Author’s elaboration of RFI data; A. Giuricin, “Trenitalia tra mercato, sussidi e polemiche,” IBL Focus, no. 126 (2009): 2, http://www.brunoleoni.it.

about an unusual frequency of anomalies and an abnormal delay in the implementation timescale.”14 Looking through the document, it is easy to identify the main factor that, according to the AVCP itself, explains the Italian anomaly in the delays and the cost of modifica- tions as the work proceeded. This factor consists in the initial decision to hand the work over to general contractors (without putting it out to tender) through conventions that take responsibility away from the parent company, removing any risk caused by any increases in costs or delays in carrying out the work. This would lead to a lack of clar- ity in management planning, given the impossibility of analyzing ex ante the actual costs, along with the relevant likelihood of increases. It would also present general contractors with an opportunity to make extra profits, given their strategic position as intermediaries between TAV and the various sub-contractors. When examining more carefully the motives behind the decision in the early 1990s to award infrastructural TAV work to general contractors (e.g., ENI, Fiat, IRI), it is possible to perceive the main thrust of Italian rail transport policy from World War II to the end of the twentieth century. On the one side, the national industrial oligopolies involved in civil building works and in technological sub-systems formed consortiums in order to obtain, without having to compete, orders and financial packages spread out over periods of many years. On the other side, there was the government, with significant levels of support from the opposition and from unions, making investments of public money to provide employment opportunities for some of the leading industries in the country. A recent element of flexibility regarding the distribution of finances for large-scale infrastructural projects, among which are the Ten-T And Yet It Moves 249 high-speed lines, was regulated in the 2010 budget, which reintro- duced “the possibility for CIPE [Inter-ministerial Committee for Eco- nomic Programming] to finance public works—particularly those that fall within the Legge Obiettivo—on the basis of ‘building lots’ and no longer only for ‘functional lots.’”15 Single parts of projects (e.g., one stretch of a high-speed line) can therefore reach the building stage, regardless of the time and method of their functional integration with the totality of the project. The logic underlying this measure is obvious, as it allows the opening of some construction sites, unblocking stalled projects identified as high priority, even when the planning and consensus requirements that would guarantee the completion of the project are not met. But it is also clear that there is a hidden danger within this logic, as it legitimizes the building of works that are of no use if not integrated into the overall infrastructure—for example, in the case of high-speed train networks, given the huge technical problems in linking these to conventional train lines—as well as an obvious increase in costs when the building of infrastructural sections that prove to be unusable for decades actually takes place, as our national history teaches us.16

The Management of High-Speed Service within the Process of the Liberalization of Rail Transport

As has been suggested above, the politics of high-speed rail in Italy is strongly linked to the affairs of the state rail company, which, from the second half of the 1980s, underwent a slow process of redefinition of roles and of strategic objectives. Considered one of the key priorities for both administrators and politicians, the reform of FS, right up to the early 1990s, focused on the problem of the image of the sector, rather than on making a real attempt to change it.17 If the transformation of the company promoted by Law No. 210/1985 did not, as expected, lead to the autonomous running of the newly formed company, the compulsory administration that ensued gave rise to new hope for change, at least as far as correcting the disastrous balance sheets were concerned. The heads of the two administration teams running the company over the period from the late 1980s to the early 1990s (first Schimberni, then Necci) aimed to restructure FS along three main lines of development: (1) the internal reorganization of the company; (2) the establishment of new relations between the state and the rail companies; and (3) concrete progress on the “high-speed plan,” which had long been one of the company’s main technological- infrastructural projects. Following an initial period of research into the 250 Mauro Tebaldi

various strategic options as part of the “new deal” for the railways during the Schimberni administration, the high-speed project was firmly included as a high-priority one, thereby becoming an ideal test case to check the operational dynamism of the new business model for FS (introduced in 1992), after having received a boost from the EU’s first “railway package.” All this, in fact, needs to be considered within the wider context that we examined earlier in the first section and that, in a word, con- templates the full liberalization of rail transport in EU countries as of 2010. As seen in table 10.4, the process of liberalization in Italy is further advanced than it is in France, but it is behind that in Germany, particularly in the local public transport sector. In this sector, recent measures have slowed down the liberalization process still further, introducing an upper limit of 12 years for public service contracts, whether they are awarded after a competitive tender or as a result of private negotiations (Law No. 33/2009), and eliminating the obliga- tion to put the contracts out for tender (Law No. 99/2009).

TABLE 10.4 Liberalization of rail transport in France, Germany, and Italy

Local Public Medium-Long-Distance Country Freight Transport Travel International National

France Contestable Non-contestable Contestable Non-contestable Germany Contestable Contestable Contestable Contestable (with reciproc- ity for foreign companies) Italy Contestable Contestable Contestable Contestable (choice, for (with reciproc- (with reciproc- regions, between ity for foreign ity for foreign tender and pri- companies) companies) vate negotiations)

Source: Author’s elaboration of FS data.

The census of certified rail operators in December 2010, carried out by the National Agency for the Safety of the Railways,18 reveals the figures and the make-up of the new competitive system as it is unfolding in the country: no fewer than 33 companies, some public and some private, some national and some foreign, qualify to compete for the And Yet It Moves 251 running of rail services on the Italian railway network. Of these 33 firms, all of which hold a license and a safety certificate, 16 are com- peting for the passenger market, largely in the local public transport sector, in spite of the restrictions recently placed on competition in this sector by national legislation. If we now consider the medium-long-distance segment, and within that area high-speed trains (i.e., competitors for the most attractive market sector by far), only two companies currently qualify to bid for service contracts. Apart from the incumbent company, Trenitalia, which has already begun operating on new high-speed lines with its ETR 500 and ETR 600 trains, only the private company Nuovo Trasporto Viaggiatori (NTV) has received the necessary authorization. This company was founded by Luca Cordero di Montezemolo and Diego Della Valle, along with other Italian entrepreneurs. NTV planned to commence operations in September 2011 (now postponed to early 2012) along the entire high-speed north-south route in Italy, and it is preparing to compete on the international lines, thanks to a strategic alliance with the French national rail company, SNCF, which holds a 20 percent share of the company, and with Alstom, the largest manufacturer of high-speed trains in Europe, from whom NTV has acquired a fleet of 25 trains, currently being supplied. Two questions have been raised by the liberalization of high-speed rail, and these dominate the debate at the moment. The first concerns the dynamics of infra-systemic competition and could be summarized as follows: to what extent is the high-speed system that is taking shape in Italy truly competitive? Some authoritative observers point to the advantageous position enjoyed by Trenitalia, which currently has a monopoly, compared to its potential competitors. This advantage takes concrete shape, for example, in the timetabling of the use of the tracks, whereby the incumbent company (as is actually the case) can try to saturate the supply, limiting the time slots available for other operators on the lines and thereby creating a considerable barrier to any other company that wishes to compete.19 The president of NTV, Montezemolo, complains that this makes it particularly difficult to carry out tests on the tracks for the suitability of the Alstom AGV Italo train to be used by the new private operator. This advantageous position is made even stronger as the links become closer between the operating bodies (of both the service and the network) and the owners of the system (Trenitalia and RFI, which are both public companies belonging to the FS SpA group) and as the impartial safeguards provided by an authority responsible for monitor- ing the transport market become weaker. This authority is currently 252 Mauro Tebaldi

non-existent, despite numerous attempts to establish one since 1996, with various decree laws becoming stranded, unsurprisingly, in Parlia- ment. In fact these failures have been challenged and punished by the Commission, which in June 2010 referred Italy, along with 12 other member states, to the European Court of Justice for not applying cor- rectly and fully the European legislation that should form the basis of the process of liberalization (the previously mentioned first railway package). The breaches denounced in particular by the Community executive included (1) the insufficiency of measures taken to guarantee the independence of the managers of the railway infrastructures from the rail operators, (2) the inadequacy of arrangements made for the charges payable for access to the network, and (3) the absence of an independent regulatory authority. The second important question being raised in the debate concerns inter-systemic competition, that is, the unbalanced competition that is developing between the high-speed system and the conventional one. While the former is gaining an ever-greater market share, the latter—subsidized by the state for medium-long-distance travel (express trains, night trains, Eurostar service, and inter-city trains running a deficit) and by the regions for local public transport— continues to play a key role, particularly for commuters on local and regional routes.20 This is known as “universal service” (as opposed to “market service,” within which high-speed rail falls), which the state and the regions must guarantee via service contracts in which minimum levels of quality and quantity of services provided, as well as compensation payments to operators for any cost-revenue deficit, are set out. One of the main problems arises because, in spite of the infrastructural and functional distinctions between them, the high-speed lines have to cross the conventional lines in the city junctions, where there are no specially equipped stations to keep the two different systems on separate lines. The greater flow of high-speed train traffic, which has to take priority over regional and inter-regional traffic, ends up causing bottlenecks at stations that serve both passenger and freight trains, bringing further delays to local rail services.21 In addition, progressive optimization of universal service costs by Trenitalia led to an evident impoverishment in the quality of services provided, due to the lack of investments. In the complaints presented to FS by con- sumer associations, much emphasis is placed on the unfair treatment that commuters using local rail services are subjected to as a result of the undue preferential treatment reserved for high-speed trains in the strategic choices made by the monopolistic company in charge of the networks, infrastructures, and services. And Yet It Moves 253

Technological Dimensions and the Competitive Context of the Italian Rail Industry: Continuity or Change?

While it is considered an example of innovative technology, the high- speed train has a long history in Italy, going back to projects and pro- totypes of electric trains (with speeds of over 200 kilometers per hour) that had been designed as far back as the fascist period in the technical offices and workshops owned by FS.22 However, it was not until halfway through the 1980s that FS “rediscovered” high-speed trains and simultaneously set in motion two different strategies for technological development: (1) a more conservative way forward, based on the utilization of the existing conventional track and the commercial- ization of a tilting train (the ETR 450 Pendolino), capable of taking narrow bends on those same lines at high speeds; and (2) a more innovative action plan that involved designing and building a newly conceived train (the ETR 500), equipped with the technology needed to enable it to maintain speeds close to or exceeding 250 kilometers per hour on specially built track. In 1986, the Consorzio Trevi (Treno Veloce Italiano) was set up with the aim of carrying out the technical planning and testing of the ETR 500. The consortium was composed of the major domestic electro-mechanical groups (Breda, ABB Tecno- masio, Ansaldo, Fiat, Firema). Ten years later, the first generation of ETR 500 trains, whose design and construction had been entrusted to the Fiat plant in Savigliano, came into operation in the Trenitalia fleet, working alongside the established ETR 450 trains. As this brief summary shows, the evolution of high-speed train technology tells an “Italian story.” This is no coincidence, we could add, given the pattern of development for railway technology that has always prevailed, from the early days of nationalization, led by the rolling stock department of FS, at least in the planning and design stages of the functional specifications. Alongside that, and dependent on it, with linkages that have gradually taken on the characteristics of a symbiotic relationship, there has been the growth of the domestic railway industry, protected by guarantees that industrial production would be taken up by the rail company by perpetuating the model of “historic quotas,” that is, regular orders shared out to national firms via a process of private negotiation. Underpinning this system of financial relations is the systematic effort on the part of the parties forming the government to utilize public spending for mass transport systems as a way of building consensus. Steering the allocation of public funds for infrastructure and for transport services not only influ- ences employment figures as a result of large impact measures, but also makes it possible to build and maintain good relations with the 254 Mauro Tebaldi industry and the unions. The obvious and fundamental drawback of this model is the underhanded preservation of high levels of employment throughout the railway sector—on both the demand side and the supply side—which falls outside the laws of the marketplace. In any case, the arrival of high-speed trains brought huge changes to the technology of Italy’s railways. The massive introduction of electronic techniques within the high-speed systems and sub-systems reflected an integrated and interdisciplinary approach to rail transport, attainable through the activation of new relations between purchasers/ operators and manufacturers, with the responsibility for research and technological development falling mainly on the latter. All this called for a rethinking of the relations between FS and rail manufacturers, which had originally been modeled on an organizational approach that was unsuitable for innovation and research. This change came about later than it had with the major foreign companies, particularly in France and Germany, which had begun operating actively in the high-speed markets starting in the early 1980s and therefore, in reality, had set the technological standards in this field. The change was accelerated, moreover, by the European legislation on competition, which came into force in the early 1990s and required rail operators to follow criteria of economic efficiency. It also stipulated that public orders should be awarded after a proper process of competitive tendering, open to international groups, and no longer via private negotiations with national suppliers. With these two factors driving change, there was considerable external pressure to open up the internal market and to restructure the Italian railway industry. However, there was considerable resistance to change from the existing public operator, the national rail manufacturers, and the unions in the sector, all of whom had developed a robust front based on common interests. Their stance received support from those in political control, the Ministry of Economy and Finance, and the Ministry of Infrastructure and Transport. Therefore, the Italian market for high-speed rolling stock and technological equipment developed along these opposing lines of tension, while also having other characteristics of its own. The way in which this took shape in reality was exemplified by the unfolding of the competition for the major supply of 50 high-speed trains that was set in motion by Trenitalia in November 2009. The competition was marked by a number of controversies23 and a contested outcome. The decision made on 9 August 2010 to award the order (worth about 1.5 billion euros) to the Italian consortium formed by Ansaldo- Breda (part of the Finmeccanica group) and Bombardier (a Canadian company with significant investments in Italy) was challenged by the And Yet It Moves 255

French competitor Alstrom in the Lazio Regional Administrative Tribu- nal, which ruled in favor of the appeal without, however, suspending the tender process.24 At the heart of the French argument was an accu- sation of an unfair bias toward the Italian-Canadian consortium that led to a “push” toward the decision to award the contract to them for technical and economic reasons that would be considered improper. On the other hand, FS’s Moretti, supported by the Ministry of Infra- structure and Transport, did not hide his belief in the superiority of the Italian bid compared to the French one, arguing that it provided a bet- ter package, from both a technological and financial viewpoint. While these skirmishes were taking place, a taste of the old protectionism surfaced in Moretti’s criticisms of Alstom, made in the early months of 2010, regarding the unreliability of some of the French manufacturer’s safety equipment already installed on the Italian TAV lines, which had led to Alstom being suspended from FS’s list of approved suppliers.25

Conclusion: What Now for High-Speed Trains in Italy?

The year 2010 has been an important year for high-speed trains in Italy. It may be argued that it represents the end of a first, crucial stage in the realization of the biggest infrastructural intervention financed by the Italian government, with the help of the European Union, in the last 40 years. However, when examined carefully, the result is at an intermediate stage, and the project can be seen as still not fully implemented—as an unfinished work in many ways. From an economic point of view, it is also debatable in some respects.26 The unfinished state of the project concerns first of all the infrastructure, as the Italian high-speed rail network is not integrated with the rest of Europe,27 and it appears to be difficult to achieve this, given the delays that have accumulated both in the building of the trans-border track and at city junctions, not to mention the ineffectiveness of the use of public funds allocated so far. This negative opinion cannot be revised even if we consider the results of the fundamental liberalization of the rail market, which should, according to EU law, form a basic organizational and operating condition to justify such a huge public investment, in view of the expected benefits. This liberalization, both in the running of the service and in the purchasing of rolling stock and other installa- tions in the system, would appear to be contradicted by the strong ties and apparent collusion between various interest groups.28 An overall reading of this long and emblematic process of policy- making seems to reinforce the interpretation that sees the fundamental problem of public policy on rail transport in Italy as having a low 256 Mauro Tebaldi

degree of institutionalization, that is, a low level of autonomy, organizational cohesion, efficiency, and budgeting coherence.29 Seen from this perspective, the widespread power of local movements and political actors that hampers the construction of the sub-Alpine stretch, on the one hand, and the power of economic groups that tend to steer the award of the infrastructural works, as well as the technology linked to TAV, in a distributive and protectionist way, on the other hand, repre- sent two sides of the same coin. There is a high degree of porousness between political and institutional circles and the interests at play, which results in a low level of efficiency and fairness. The events of 2010, especially those regarding the infrastructure (junctions and routes) of the TAV network, continue to point to a decision-making process that is driven intermittently by the various levels of government and characterized by several elements. First, there has been a low degree of salience and efficacy of the preventive strategies on the part of the political-administrative “center.” Second, any attempts to resolve these issues by means of a rational-synoptic approach, along with any solutions that have been proposed, have met with failure. Third, it has proved impossible to build a sufficiently strong consensus, by means of instruments of inclusive governance (such as the Osservatorio Tecnico della Torino-Lione), around alternative projects. To these elements we should add the problematic rap- port, on a political level, between the Community executive and the national executive. Whereas the former has pressed for intervention programs to be put into action, failing which the European funding would be curtailed, the Italian government has tried to achieve a difficult balance between the construction of the high-speed tracks promoted by the minister of infrastructure and transport, Altero Mat- teoli, and the reluctance to fund such costly projects on the part of the minister of the economy and finance, Giulio Tremonti. Nor should we be surprised, in a situation such as the one outlined above, at the difficulty with which the liberalization of the rail market has proceeded, given that it is heavily influenced by the advantageous position of the monopolistic provider and by the distributive collusion between this provider, the vast majority of the political class, the unions, and the national rail industry. As far as this is concerned, it is also worth noting the political division that cuts across all the political parties, separating the few people “in favor” and the many “against” the creation of an independent authority to oversee competition in the rail sector, in spite of what has been established in terms of EU regula- tions and pressure from the Commission. Even today, therefore, in the high-speed rail sector, as in other economic sectors, the dispute between the supporters of a competitive And Yet It Moves 257 regime regulated by a truly independent body that is not swayed by political and economic groups and the promoters of state intervention in the marketplace with direct political control is far from being resolved.30 It will be interesting to observe, in future years, how and to what extent the synergy between the two main standardizing factors involved in the European high-speed train market—the Community- legislative factor and the technological one—may influence the levels of institutionalization of public policy to improve its efficiency, its effectiveness, and its fairness.

Acknowledgments

I wish to thank Carlo Scarpa for his comments on an earlier version of this chapter. — Translated by David Bull

Notes

1. The concept of “high capacity” means a railway line that—due to specific traffic control instruments (both on the ground and on the trains)—makes it possible to achieve a higher frequency of usage, and also of mixed freight and passenger services, compared to conventional lines. 2. L. Cillis, “Alitalia e Ferrovie, duellanti alla riscossa,” La Repubblica, 14 October 2010. 3. E. Livini, “La grande Yalta delle ferrovie,” La Repubblica-Affari & Finanza, 25 October 2010. 4. For the technological equipment on TAV trains, see B. Cirillo, L. Comastri , P. L. Guida, and A. Ventimiglia, L’alta velocità ferroviaria (Rome: CIFI, 2009). 5. For a full treatment of the EU’s development plan for an integrated high-speed network, see M. Tebaldi, “La politica dei trasporti,” in L’Unione europea: Le politiche pubbliche, ed. S. Fabbrini and F. Morata (Rome: Laterza, 2002), 193–221. 6. See Regulation No. 680/2007 of the European Parliament and Council, which established the general principles for the granting of financial contributions from the Community in the sector of trans-European transport and energy networks. 7. For further information on this distinction, see the Commission’s working document COM(2010) 212 of 4 May 2010. 8. S. Maggi, Le ferrovie (Bologna: Il Mulino, 2008). 9. M. Morisi and M. Tebaldi, Tra interessi e istituzioni locali: La tratta appenni- nica dell’alta velocità in Toscana (Turin: Giappichelli, 2001). 10. For a political scientist’s reconstruction of this case, see L. Bobbio, “Decision- Making in the Val di Susa Case: Too Rigid or Too Soft?” in Italian Politics: The 258 Mauro Tebaldi

Center-Left’s Poisoned Victory, ed. J.-L. Briquet and A. Mastropaolo (New York: Berghahn, 2007), 171–188. See also D. della Porta and G. Piazza, Le ragioni del no (Milan: Feltrinelli, 2008). 11. A. Boitani, M. Ponti, and F. Ramella, “Tav: Le ragioni liberali del no,” IBL Briefing Paper, no. 41, 16 April 2007, http://www.brunoleoni.it. 12. N. Podestà, Conflitti territoriali e strumenti di confronto: L’esperienza dell’Osservatorio per il nuovo collegamento ferroviario Torino-Lione (Rome: Aracne, 2009). 13. P. Griseri, “La vittoria dei No-Tav, il tracciato in galleria,” La Repubblica, 19 May 2010. 14. AVCP, Risoluzione del Consiglio (Rome: AVCP, 2007). 15. A. Boitani and M. Ponti, “A volte ritornano: I lotti non funzionali,” 12 January 2010, http://www.lavoce.info. 16. Regarding the debate on the definition of costs of high-speed trains in relation to the benefits that can be obtained, please see, with regard to the Turin-Lyon line, “Tav Torino-Lione: Vale la spesa?” 12 February 2010, http://www.lavoce.info. 17. Maggi, Le ferrovie. 18. See http://www.ansf.it (accessed 3 December 2010). 19. A. Giuricin, “Trenitalia tra mercato, sussidi e polemiche,” IBL Focus, no. 126 (2009): 2, http://www.brunoleoni.it. 20. M. Tebaldi, ed., La governance della mobilità locale (Bologna: Il Mulino, 2010). 21. V. Congedo, “La sicurezza del treno lento,” 13 April 2010, http://www.lavoce.info. 22. V. Foti, Dall’Etr 200 al Frecciarossa: Treni italiani ad alta velocità (Reggio Calabria: Città del sole, 2009). 23. G. Santilli, “Rischia il flop la gara Fs per i 50 treni dell’alta velocità,”Il Sole 24 Ore, 16 March 2010. 24. I. Ciuti, “Il Tar non blocca la gara: A Breda i 50 supertreni Tav,” La Repubblica Firenze, 1 October 2010. 25. A. Mangiarotti, “L’Alta velocità come l’aereo: Tariffe diverse per giorno e ora,” Corriere della Sera, 17 February 2010. 26. See, for example, the recent summary provided by P. Beria, R. Grimaldi, and M. Ponti, “Nel tunnel dell’alta velocità,” 14 July 2010, http://www.lavoce. info. See also the analysis carried out by A. Boitani, “Infrastrutture, costi alti, tempi lunghi, utilità incerta,” 19 September 2010, http://www.lavoce.info. 27. O. Baccelli, “Valichi, quant’è lontana l’Europa?” La Repubblica Affari & Finanza, 26 April 2010. 28. A. Malan, “Biancaneve e i sette nodi (delle ferrovie),” Il Sole 24 Ore, 21 Decem- ber 2009. 29. See M. Tebaldi, La politica dei trasporti (Bologna: Il Mulino, 1999). 30. A. Boitani, “Liberalization Interrupted,” in Italian Politics: Frustrated Aspira- tions for Change, ed. M. Donovan and P. Onofri (New York: Berghahn, 2008), 157–176.