US embassy cable - 02ROME1091

UNCLAS SECTION 01 OF 04 ROME 001091 
 
SIPDIS 
 
BRUSSELS ALSO FOR USEU 
DEPT FOR EUR/WE, EUR/ERA 
DEPT PASS TREAS FOR OASIA HARLOW, JONES 
STATE PASS FRB FOR GUST 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, IT, EUN 
SUBJECT:  THE EURO CHANGEOVER IN ITALY 
 
REF: (A) 2002 MILAN 14 (B) 01 ROME 6222 
(C) 01 MILAN 728  (D) 01 MILAN 666 
 
THIS REPLACES ROME 01059 DATED FEBRUARY 28, 2002, WHICH WAS 
CANCELLED. 
 
1. SUMMARY: ITALYS TRANSITION TO THE EURO WENT SMOOTHLY, WITH 
ONLY A FEW SNAGS  PRINCIPALLY IN THE SOUTH.  ITALIANS STOPPED 
USING LIRE ON FEBRUARY 28, ALTHOUGH THE BANKING ASSOCIATION, 
AT THE REQUEST OF THE BANK OF ITALY, HAS EXTENDED THE DEADLINE 
FOR EXCHANGING LIRE FOR EUROS UNTIL JUNE 30.  OPINIONS ARE 
MIXED ABOUT THE INFLATIONARY IMPACT OF THE CHANGEOVER. 
OFFICIAL DATA SHOW A MODEST IMPACT, WHILE CONSUMER 
ASSOCIATIONS ARGUE THAT THE INFLATIONARY EFFECT WAS FAR 
HIGHER, BUT NOT CAPTURED BY OFFICIAL STATISTICS. ITALYS FIRST 
COUNTERFEIT EUROS HAVE BEEN FOUND. END SUMMARY. 
 
A LONG CHANGEOVER 
-------------------- 
 
2.  THE ITALIAN EURO CHANGEOVER PERIOD WAS ONE OF THE LONGEST 
AMONG THE 12 EU COUNTRIES THAT ADOPTED THE NEW CURRENCY. 
GERMANY, NETHERLANDS, IRELAND AND FRANCE ALREADY FINISHED 
THEIR CHANGEOVER.  ITALY WAS TO HAVE FINISHED BY FEBRUARY 28, 
BUT, AT THE REQUEST OF THE CENTRAL BANK, THE ITALIAN BANKING 
ASSOCIATION EXTENDED THE CHANGEOVER PERIOD FOR FOUR ADDITIONAL 
MONTHS UNTIL THE END OF JUNE. THE EURO WILL BE THE ONLY LEGAL 
CURRENCY IN ITALY STARTING MARCH 1, BUT CUSTOMERS MAY CHANGE 
LIRE INTO EUROS, FREE OF CHARGE, AT BANKS UNTIL JUNE 30. 
THERE WILL BE SOME CONDITIONS: THE MAXIMUM ALLOWED PER 
EXCHANGE WILL BE 1,000,000 LIRE (516 EURO) PER DAY FOR 
CHECKING ACCOUNT HOLDERS BUT ONLY 500,000 (258 EURO) DAILY FOR 
OTHER CUSTOMERS.  LARGER TRANSACTIONS WILL REQUIRE MORE 
NOTICE.  POST OFFICES, WHICH ACCEPT CURRENCY PAYMENTS FOR 
UTILITIES, SAVINGS PLANS, ETC., ARE CONSIDERING EXTENDING THE 
CHANGEOVER PERIOD. AFTER MID-JUNE, CUSTOMERS MAY STILL CHANGE 
LIRE INTO EUROS AT BANK OF ITALY BRANCHES UNTIL FEBRUARY 2012, 
FREE OF CHARGE. 
 
3.  ITALY IS NOT THE ONLY COUNTRY OF THE EURO-ZONE THAT HAS 
EXTENDED THE CHANGEOVER PERIOD FOR BANKS.  BANKS IN FRANCE, 
LUXEMBOURG, PORTUGAL, AND SPAIN WILL EXCHANGE NATIONAL 
CURRENCY FOR EUROS, FREE OF CHARGES, UNTIL END-JUNE.  ANOTHER 
FOUR COUNTRIES (AUSTRIA, FINLAND, GREECE AND IRELAND) ARE 
DISCUSSING A POSSIBLE EXTENSION.  IN THE NETHERLANDS, EXCHANGE 
WILL BE POSSIBLE UNTIL THE END OF 2002. 
 
CHANGEOVER DATA 
------------------ 
 
4.  THE ITALIAN CHANGEOVER WENT SMOOTHLY, BUT THERE ARE STILL 
LIRE BANKNOTE CIRCULATING, NOTICEABLY IN SUPERMARKETS, 
SHOPPING CENTERS, MALLS AND RESTAURANTS. THE OVERALL VALUE OF 
LIRE CIRCULATING IN ITALY AT THE END OF 2001 WAS 120 TRILLION 
LIRE, EQUIVALENT TO 62 BILLION EURO.  ACCORDING TO THE BANK OF 
ITALY, MORE THAN 1.6 BILLION LIRE BANKNOTE HAVE BEEN WITHDRAWN 
FROM CIRCULATION, VALUED AT ABOUT 90 TRILLION LIRE (46.5 
BILLION EURO).  THERE ARE REMAINING 30 TRILLION LIRE (15.5 
BILLION EURO) OR 25 PERCENT OF LIRE VALUE STILL IN 
CIRCULATION.  MOST LARGE LIRE BANKNOTES HAVE BEEN EXCHANGED 
FOR EUROS.  DESPITE THE SUCCESS OF THE CHANGEOVER, 1.6 BILLION 
LIRE IN BANKNOTES ARE EXPECTED TO REMAIN IN CIRCULATION AFTER 
FEBRUARY 28, MOSTLY IN SMALL DENOMINATIONS.  THE EXTENSION OF 
THE LIRA/EURO EXCHANGE DEADLINE IS EXPECTED TO HELP SMALL 
SHOPKEEPERS, THE ELDERLY AND OTHER GROUPS THAT HAVE BEEN SLOW 
TO ACCEPT THE EURO CHANGEOVER. 
 
5.  ACCORDING TO THE ITALIAN BANKING ASSOCIATION, DURING THE 
CHANGEOVER, ITALIAN BANKS HAVE WITHDRAWN 100 TRILLION LIRE 
(51.6 BILLION EURO) SO FAR AND ARE EXPECTED TO WITHDRAW 
ANOTHER 110 TRILLION (56.8 BILLION EURO) BY THE END OF 
FEBRUARY. (COMMENT: THE DATA REFER TO LIQUIDITY CONVERTED FROM 
LIRE TO EURO SO FAR, WITH NO IMPACT ON OVERALL LIQUIDITY.) 
 
INCREASE OF CREDIT CARD USE 
--------------------------- 
 
6.  CREDIT CARD USE IN ITALY HAS INCREASED SIGNIFICANTLY IN 
THE PAST SIX MONTHS.  ACCORDING TO LUCIANA STRIPPOLI OF 
AMERICAN EXPRESS ITALY, THE NUMBER OF AMEX CARDS REQUESTED IN 
2001 GREW BY 35 PERCENT, WITH THE LARGEST INCREASE REGISTERED 
IN THE LAST QUARTER OF THE YEAR, RIGHT BEFORE THE EUROS 
INTRODUCTION.  THE NUMBER OF TRANSACTIONS WITH AMEX CREDIT 
CARDS INCREASED BY 20 PERCENT IN JANUARY 2002 OVER THE 
CORRESPONDING MONTH IN 2001.  STRIPPOLI SAID THAT IT IS HARD 
TO QUANTIFY THE IMPACT OF THE INTRODUCTION OF THE EURO, BUT 
BELIEVES MOST CONSUMERS REQUESTED A CREDIT CARD BECAUSE THEY 
FELT MORE SECURE USING A CARD INSTEAD OF CASH.  MAURIZIO 
CARTOCCI, MANAGING DIRECTOR OF SERVIZI INTERBANCARI, ITALYS 
FIRST ISSUER OF CREDIT CARDS, SAID THERE WAS AN INCREASE IN 
CREDIT CARD TRANSACTIONS OF 15-18 PERCENT IN THE FIRST WEEKS 
OF THE YEAR.  SSB (SOCIETY OF BANKING SERVICES) SAID THAT 
TRANSACTIONS USING DEBIT CARDS REGISTERED A 57 PERCENT 
INCREASE IN THE FIRST WEEKS OF THE EURO. 
 
ONE- AND TWO-CENT COINS DEBATE 
------------------------------ 
 
7.  LATE IN JANUARY, ECONOMY MINISTER GIULIO TREMONTI 
MENTIONED THAT GOI IS CONSIDERING FOLLOWING FINLANDS LEAD AND 
ELIMINATING ITS SMALLEST EURO COINS.  TREMONTI TOLD REPORTERS 
THAT GETTING RID OF THE TINY ONE- AND TWO-CENT COINS WOULD 
CERTAINLY WIN THE FAVOR OF ITALIAN CITIZENS AND SAID HE WAS 
CAREFULLY CONSIDERING THE IDEA.  BUT THE MINISTER, WHO WAS 
CRITICIZED AS A EURO-SKEPTIC IN THE WAKE OF HIS COOL 
RESPONSE TO THE INTRODUCTION OF THE NEW SINGLE CURRENCY, 
STRESSED THAT SUCH DECISIONS SHOULD NOT BE UNILATERAL. CALLS 
FOR SUCH A PRACTICE ARE GAINING MOMENTUM IN ITALY.  THE MAYOR 
OF THE NORTHEASTERN CITY OF TREVISO, GIANCARLO GENTILINI, SAID 
THAT HE HAD WRITTEN TO TREMONTI URGING THE ELIMINATION OF THE 
COINS.  GENTILINI SAID HE HAD HAD NUMEROUS COMPLAINTS FROM 
CITIZENS EXASPERATED BY THESE TWO MICROSCOPIC COINS.  OUR 
WALLETS ARE ALREADY STUFFED TO OVERFLOWING WITH THE BIGGER 
COINS.  THE CENTS WERE FINE BEFORE WORLD WAR II, WHEN MANY 
PEOPLE DIED WITHOUT EVER TASTING THE JOY OF HANDLING A 
THOUSAND LIRE BANKNOTE. 
 
8.  GIANCARLO DEL BUFALO, OF THE EURO COMMITTEE OF THE 
MINISTRY OF ECONOMY AND FINANCE, DEFENDED THE EURO-CENTS, 
WHICH ALLOWED A MORE PRECISE CONVERSION OF LIRE PRICES INTO 
EURO PRICES.  ECHOING THE OPINION OF FINANCE MINISTRY 
UNDERSECRETARY VITO TANZI, DEL BUFALO SAID THE MARKET WOULD BE 
THE ULTIMATE ARBITRATOR OF THE TYPE OF COINS USED. 
 
PUBLIC OPINION 
----------------- 
 
9.  ACCORDING TO A MID-FEBRUARY SURVEY BY THE UNION OF ITALIAN 
CHAMBERS OF COMMERCE AND THE POLLING COMPANY TAGLIACARNE 
INSTITUTE, THE CHANGEOVER WAS SMOOTH. THE SUPPLY OF EUROS IN 
BANK CHANNELS WAS SUFFICIENT IN MOST CASES: ONLY 17 PERCENT OF 
THOSE POLLED HAD PROBLEMS WITH OBTAINING EUROS AT BANKS. POST 
OFFICES DID EVEN BETTER: ONLY 11 PERCENT OF THOSE POLLED HAD 
PROBLEMS OBTAINING EUROS AT POST OFFICES.  WITH RESPECT TO 
PRICE HIKES, 37 PERCENT SAID THAT EURO PRICES FOR GOODS AND 
SERVICES HAD INCREASED FROM THE LIRE PRICES. (THIS CONTRASTS 
WITH A MUCH GREATER NUMBER -- 55 PERCENT OF THOSE SURVEYED 
WHO SAID IN JANUARY THAT EURO PRICES WERE HIGHER.) THE POLL 
SHOWED A LARGE DIFFERENCE BETWEEN NORTHERN AND SOUTHERN ITALY 
IN TERMS OF EURO SUPPLY AND PRICE INCREASES.  FORTY-ONE 
PERCENT OF THOSE SURVEYED IN THE SOUTH SAID THEY HAD 
SIGNIFICANT DIFFICULTIES AT THE POST OFFICE, WHILE ANOTHER 32 
PERCENT SIGNALED THE SAME DIFFICULTIES AT BANKS.  SEVENTY- 
SEVEN PERCENT OF THE SAMPLE SURVEYED IN THE SOUTH LAMENTED 
UNJUSTIFIED PRICE INCREASES. 
 
10.  IN THE SOUTH, LONG LINES AT BANKS AND POST OFFICES 
PERSISTED THROUGH THE END OF JANUARY.  EVEN AS THE FEBRUARY 28 
DEADLINE APPROACHED, MANY TRANSACTIONS IN SMALL SHOPS WERE 
STILL BEING CARRIED OUT IN LIRE.  TAXIMETERS, WHICH HAD BEEN 
CONVERTED TO EUROS IN ROME SOON AFTER THE NEW YEAR, STILL 
SHOWED PRICES IN LIRE IN NAPLES AS RECENTLY AS LATE FEBRUARY. 
SHOPKEEPERS IN NAPLES FREQUENTLY HAVE PROBLEMS MAKING CHANGE, 
AS MOST CASH DRAWERS CONTAIN FAR MORE LIRE THAN EUROS. 
DESPITE THE INITIAL CONFUSION, AND THE CONTINUING RESISTANCE 
TO THE NEW CURRENCY, BANCO DI NAPOLI OFFICIALS MINIMIZED THE 
PROBLEMS WITH THE CHANGEOVER IN THE SOUTH.  THEY BELIEVE THAT 
THE PROCESS OF ADAPTATION WILL ACCELERATE QUICKLY ONCE THE 
LIRA LOSES ITS VALUE AS LEGAL TENDER. 
 
INFLATIONARY IMPACT OF THE CHANGEOVER 
------------------------------------- 
 
11.  ANECDOTAL EVIDENCE SHOWS THAT, IN SEVERAL SECTORS, PRICES 
WERE ROUNDED UP TO FACILITATE THE EURO CONVERSION.  ONLY AFTER 
FIRST QUARTER RESULTS ARE IN WILL A MORE COMPLETE PICTURE BE 
POSSIBLE.  OFFICIAL STATISTICS INDICATE A 0.5 PERCENT INCREASE 
IN PRICES FROM THE PREVIOUS MONTH BOTH IN JANUARY AND 
FEBRUARY.  IN PARTICULAR, PRICE FIGURES FROM TWENTY ITALIAN 
CITIES, RELEASED ON FEBRUARY 21, INDICATE THAT THE YEAR-TO- 
YEAR INFLATION RATE INCREASED FROM 2.4 PERCENT IN DECEMBER AND 
JANUARY TO 2.5 PERCENT IN FEBRUARY.  CENTRAL BANK CONTACTS SAY 
A 0.7 PERCENT INCREASE IN INFLATION IS LIKELY IN THE FIRST 
QUARTER BECAUSE OF THIS ROUNDING UP. THIS INCREASE WILL NOT BE 
EASILY ABSORBED DURING THE YEAR AND COULD PUSH THE YEARLY 
AVERAGE INFLATION RATE CLOSE TO TWO PERCENT.   THERE WAS SOME 
ROUNDING DOWN AS WELL, WHICH COMPENSATED FOR A SMALL AMOUNT OF 
THE ROUNDING UP. 
 
12.  THE RESEARCH DEPARTMENT OF ITALYS LARGEST INDUSTRIAL 
ASSOCIATION, CONFINDUSTRIA, CONSIDERS THE ACCELERATION OF 
INFLATION A TEMPORARY EFFECT OF THE CHANGEOVER, AND BELIEVES 
THAT THE DECELERATION WILL START IN THE NEXT TWO MONTHS. 
HOWEVER, AS A RESULT OF THE FIRST TWO MONTHS OF 2002, THE 
CONFINDUSTRIA ESTIMATE OF AN INFLATION RATE OF 1.5 PERCENT IN 
2002 HAS HAD TO BE REVISED UPWARD TO ABOUT 2.0 PERCENT.  THE 
MINISTRY OF ECONOMY AND FINANCE AND THE MINISTRY OF PRODUCTIVE 
ACTIVITIES CONTINUE TO TRUST IN THE ANTI-INFLATIONARY 
MECHANISMS SET UP BY THE GOI, AND PREDICT THAT THE CHANGEOVER 
WILL HAVE ONLY A MODEST INFLATIONARY IMPACT.  OTHER GOI 
CONTACTS PREDICT THAT ADDITIONAL PRICE INCREASES MAY OCCUR ON 
MARCH 1, WHEN THE LIRA IS TAKEN OUT OF CIRCULATION.  CARLO 
RIENZI, PRESIDENT OF THE LEADING CONSUMER ASSOCIATION, 
CODACONS, FORESEES SUBSTANTIAL PRICE INCREASES STARTING MARCH 
1, WHEN LIRE PRICES WILL NO LONGER BE POSTED FOR COMPARISON. 
FROM THAT DAY, JUNGLE LAW WILL PREVAIL, RIENZI SAID. 
 
13.  THE CONSUMER ASSOCIATIONS, ADICONSUM, CODACONS AND UNIONE 
CONSUMATORI, SAY THAT THE INFLATIONARY IMPACT IS HIGHER THAN 
THE GOI HAS REPORTED. THESE ASSOCIATIONS PLAN TO APPEAL TO 
ISTAT, THE CENTRAL INSTITUTE OF STATISTICS, WHICH IS IN CHARGE 
OF THE CALCULATION AND THE PUBLICATION OF THE PRICE DATA, 
REQUESTING THE COMPOSITION OF THE NEW INDEX AND THE 
METHODOLOGY FOR CALCULATION OF PRICE INCREASES.  ACCORDING TO 
THE ASSOCIATIONS, THE JANUARY DATA DO NOT MEASURE THE REAL 
INFLATIONARY IMPACT OF THE EURO CHANGEOVER, WHICH, THEY SAY, 
MAY EQUAL AN AVERAGE INFLATION OF THREE PERCENT THIS YEAR. 
THE ASSOCIATIONS ESTIMATE THAT PRICES WILL INCREASE BY 14 
PERCENT IN 2002 ON AVERAGE, WITH A LOSS OF PURCHASING POWER OF 
557.77 EURO (USD 490) A YEAR PER HOUSEHOLD, APPROXIMATELY 40 
TO 50 EUROS PER MONTH.  THE CONSUMER ASSOCIATIONS RECENTLY 
PUBLISHED A PAMPHLET HIGHLIGHTING PRICE INCREASES.  HIGHWAY 
TOLLS ROSE BY 2.21 PERCENT, NATIONAL TELEVISION FEES BY 1.46 
PERCENT, LOTTERY TICKET PRICES BY 1.6 PERCENT FROM 5,000 LIRE 
(EURO 2.58) TO THREE EUROS.  IN MILAN, PUBLIC TRANSPORTATION 
TICKETS INCREASED BY 29.1 PERCENT, FROM 1,500 LIRE (EURO 0.77) 
TO ONE EURO. 
 
MONEY-LAUNDERING AND COUNTERFEITING 
----------------------------------- 
 
14.  THE EURO HAS BLACK-MARKET BENEFITS THAT THE DOLLAR CANNOT 
MATCH.  THE SINGLE CURRENCY GLIDES WITHOUT A TRACE ACROSS A 
NEWLY BORDER-LESS EUROPE IN BILLS DENOMINATED IN LARGE VALUES 
SCARCELY SEEN IN THE REGION.  THE E500 NOTE  THE HIGHEST 
DENOMINATION - IS ALSO ABOUT FIVE TIMES THE VALUE OF THE 
LARGEST DOLLAR NOTE IN CIRCULATION, THE USD 100 BILL.  WHETHER 
MEASURED BY WEIGHT OR VOLUME, THIS MEANS MORE EUROS CAN BE 
JAMMED INTO A BRIEFCASE THAN DOLLARS OR OLD EUROPEAN 
CURRENCIES. ACCORDING TO THE MINISTRY OF ECONOMY AND FINANCE, 
THE ARRIVAL OF THE EURO INCREASED THE RISKS OF MONEY- 
LAUNDERING.  THE PERIOD OF DOUBLE CIRCULATION LIRA-EURO 
REPRESENTS THE LAST CHANCE FOR HOLDERS OF ITALIAN LIRE OF 
ILLICIT ORIGIN TO TRY TO RECYCLE THROUGH THE CONVERSION IN 
EURO OR THROUGH THE PURCHASE OF GOODS AND INVESTMENTS. 
 
15.  ON FEBRUARY 19, LAW ENFORCEMENT OFFICIALS SEIZED NEAR 
ROME 25,000 COUNTERFEIT 50 AND 200 EURO BANKNOTES.  THIS IS 
THE FIRST SEIZURE OF COUNTERFEIT BANKNOTES IN ITALY, WHICH 
WERE APPARENTLY OF HIGH QUALITY.  COMMENT: THERE HAS NOT BEEN 
A NOTABLE INCREASE IN COUNTERFEIT CURRENCY IN ITALY. LAW 
ENFORCEMENT OFFICIALS AT POST  AND IN ITALY IN GENERAL -- 
SAID THAT THEY EXPECTED A SIGNIFICANT UPSWING IN COUNTERFEIT 
EUROS IN THE FIRST WEEKS AFTER ITS INTRODUCTION, AS 
COUNTERFEITERS TESTED THE MARKETS AWARENESS ABOUT THE 
EUROS APPEARANCE.  HOWEVER, THE EUROS SECURITY FEATURES SEEM 
TO HAVE DISSUADED COUNTERFEITING, LAW ENFORCEMENT OFFICIALS AT 
POST COMMENTED. 
 
THE THAI THREAT & OTHER STORIES 
--------------------------------- 
 
16.  THE EURO HAS ITS DOUBLES.  THANKS TO THE SIMILARITY 
BETWEEN THE OLD 500 LIRE COINS AND THE TWO-EURO COINS (BOTH 
BI-METALLIC AND WITH ALMOST THE SAME WEIGHT) IN THE FIRST DAYS 
OF THE CHANGEOVER, MANY OLD 500 LIRE COINS HAVE BEEN ACCEPTED 
FOR SMALL PAYMENTS IN PLACE OF THE TWO-EURO COINS. THE 500- 
LIRE COIN IS VERY SIMILAR, BUT IS WORTH ONLY ONE-EIGHTH (26 
EURO CENTS) OF A TWO-EURO COIN. 
 
17.  UNFORTUNATELY, THERE IS ANOTHER THREAT.  THE THAI 10-BAHT 
COIN IS A PERFECT TWIN OF THE TWO-EURO COIN, BUT IS WORTH ONLY 
25 EURO CENTS.  ANECDOTALLY, WE HAVE HEARD THAT SOME TEN-BAHT 
COINS HAVE BEEN USED IN AUTOMATIC CIGARETTE AND BEVERAGE 
DISPENSING MACHINES. 
 
ROME MISCELLANY 
------------------ 
 
18.  LESS THAN ONE THIRD OF ROMES 365 AUTOMATIC BUS TICKET 
DISPENSERS ACCEPT EURO COINS.  ATAC, THE ROME CITY 
TRANSPORTATION AGENCY, PROMISED THAT ALL WOULD ACCEPT EUROS BY 
THE END OF FEBRUARY.  AN ESTIMATED FIVE-PERCENT OF GASOLINE 
STATIONS DID NOT ACCEPT EURO BANKNOTES BY THE END OF FEBRUARY. 
BY MARCH 1, ALL PARKING METERS WILL ACCEPT THE EURO. 

COMMENT 
------- 
 
19.  DESPITE THE INITIAL INCONVENIENCE, THE ITALIAN TRANSITION 
WAS SMOOTHER AND FASTER THAN EXPECTED AND MORE ITALIANS 
ACCEPTED EUROS EARLIER THAN EXPECTED. TOO MANY SMALL LIRE 
BANKNOTES STILL CIRCULATE OR AT LEAST REMAIN TO BE EXCHANGED. 
THE BANKING ASSOCIATIONS DECISION TO PROLONG THE ACCEPTANCE 
PERIOD FOR LIRE SEEMS WISE, GIVEN THE 1.6 BILLION LIRA 
BANKNOTES (WITH AN OVERALL VALUE OF 15.5 BILLION EURO) IN 
CIRCULATION. THE ORIGINAL FEBRUARY 28 DEADLINE FOR EXCHANGING 
THESE NOTES MIGHT HAVE MEANT A LAST MINUTE CRUNCH, WHICH COULD 
HAVE CAUSED SERIOUS DELAYS IN BANKS AND POST OFFICES.  WE ARE 
MONITORING THE INFLATIONARY IMPACT OF THE CHANGE TO EUROS, AND 
WILL CONTINUE TO DO SO IN THE MONTHS AHEAD.  WE WILL ALSO KEEP 
ON EYE ON WHETHER THERE IS ANY DOWNWARD PRESSURE ON PRICES (OR 
INCREASED DEMAND FOR GREATER EFFICIENCIES) AS ITALIANS BEGIN 
TO NOTICE COST DIFFERENTIALS FOR THEIR HIGH-PRICED GOODS AND 
SERVICES COMPARED TO THEIR EURO-ZONE NEIGHBORS.  END COMMENT 
 
SEMBLER