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Italian Shift Could Loosen Postal Monopolies

The new Italian government under Silvio Berlusconi may help speed the long-stalled liberalization of European postal services by adding Italy to the pro-liberalization bloc led by Germany, Scandinavia and the Netherlands.

Ending domestic monopolies on mail deliveries up to a weight of 200 grams for standard letters and 50 grams for bulk mail is crucial to making direct mail more affordable and allowing more direct marketers to launch Pan-European campaigns.

The European Commission, the executive body that runs the European Union, has pushed for liberalization for years and had targeted Dec. 31, 2002 as the deadline to end postal monopolies. But member support eroded, and the new target is 2007.

The German government had stuck longest with the 2002 target but decided earlier this year to go along with 2007, although economics minister Werner Mueller said last month that the monopoly could end sooner if Europe got going.

This is where Berlusconi could come in. Italy has been part of the “Southern bloc” that includes Greece and Portugal and has supported adamant French opposition to liberalization. The French post office is a major employer, and the introduction of commercial methodologies would lead inevitably to massive cuts in its bloated bureaucracy and thus would add to France's unemployment problems.

But Berlusconi holds free-market economic views, and Italy's post is improving rapidly. Italy's possible defection would weaken the pro-monopoly bloc, which is currently anchored by a French-British alliance.

That could weaken during British Prime Minister Tony Blair's second term. The British post office once led the privatization drive but could never throw off the shackles of government control and of fears that rural post offices would close.

Alastair Tempest, the direct marketing industry's chief lobbyist in Brussels, said that in recent weeks top British postal officials “have been making more liberal noises than in a long time. So they may want to change their attitude and persuade Blair to go along.” A postal strike did not help.

However, Tempest is concerned that liberalization may not take place by 2007. The European Parliament, which in the '90s had favored liberalization, “reneged on everything,” he said.

“What Parliament did was to become more conservative on the issue and oppose change because of liberalization's social impact that could close rural postal counters and infuriate their voters.”

What complicates the European postal situation is globalization. All major players are looking actively for business everywhere — in Europe, the United States and Asia — while happily maintaining domestic monopolies.

“They make no bones about it when you talk to them,” Tempest said. “They say that monopolies give them a competitive advantage and until they lose it, they will use it to the fullest.

“They now face de facto monopolies in every country except Sweden and a liberalized structure in foreign markets, so unless the EC finishes the work it started, mailers could be in a worse situation than they were,” he said.

Much hope for action was put on the Swedish presidency of the EU because Sweden is the only genuinely free postal market in Europe. “But the Swedes haven't done much,” Tempest said.

Belgium takes over the rotating EU presidency next, and “unless they pull a rabbit fully out of the hat in the next six months, the Greeks will put it firmly back when they take over in 2002,” Tempest said. Greece, he said, is adamantly opposed to any liberalization in anything.

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