Analysis by Paolo G. Parovel
The interest of investors and enterprises for the economic regime of the International Free Port and for the fiscal and financial rights of the present-day Free Territory of Trieste keeps rising, because their complete enforcement is an extraordinary deal for everyone. Basically, it means activating the European Singapore, and those who come first will enjoy the greatest advantages.
Because the Free Territory of Trieste has fiscal, financial, and port rights that are not subject to the constraints of the European Union, including the only free port in the world where all States and their enterprises have the right to load, discharge, store, trade, and manufacture their freight, without discriminations (LINK).
The Free Port of Trieste, created in 1719 by Austria, became international under the 1947 Treaty of Peace with Italy that established the Free Territory as new sovereign State. Its role in international economy, for long limited by the Cold War and by the crisis of Yugoslavia, are now topical and strategic.
Investments, however, require legal certainty: in Trieste investors and enterprises must be granted that the authorizations they receive from the administering authorities of the Free Territory and of its International Free Port comply with the special legal instruments that regulate the matter.
The temporary civil administration of the present-day Free Territory of Trieste and of its International Free Port is sub-entrusted to the responsibility of the Italian Government by the Governments of the United States of America and of the United Kingdom of Great Britain and Northern Ireland in their role of primary administrators, on behalf of the United Nations Security Council (LINK).
The administering Italian Government must therefore grant investors, enterprises, the two primary administering Government, as well as to all States and to the whole International Community the legal correctness of authorizations released to economic operators who are willing to work within the Free Territory of Trieste and in its International Free Port.
The problem with legal certainty
The problem is that the administering Italian Government does not grant investors and enterprises legal certainty, because it has not yet regularised the financial regime and the tax system of the Free Territory, instead, it does illegally force it to pay the very burdensome taxes of the Italian State.
Those two serious administrative misconducts are suffocating the economy of the Free Territory, are preventing investors and enterprises from enjoying its remarkable fiscal and financial advantages, are preventing the development of the international Free Port, and constitute a violation of the rights of all States and their enterprises over it.
Also, for the same reasons, the legitimacy of the authorizations released by administering Italian authorities to enterprises willing to work in the International Free Port of Trieste can be put into question by competitors or other hostile subjects at any time.
All investors, enterprises, and States holding the right and interest to enjoy the remarkable economic advantages offered by the Free Territory of Trieste and by its International Free Port do therefore have also there right to request and to obtain that the administering Italian Government regularizes this situation at the earliest possible time.
What it takes to regularise this situation
In order to obtain the enforcement of the correct, overall regime of taxation of Trieste and of its Free Port, the International Provisional Representative of the Free Territory of Trieste – I.P.R. F.T.T. summoned before Court the Italian Government, its Ministry of Economy and Finances, and its Fiscal Agencies (Revenues, State Property, Customs and Monopolies) as well as the public national social security institution, the INPS (LINK).
More than 400 citizens and enterprises have already joined the legal action to support it, and so did also the Free Trieste Movement – Movimento Trieste Libera, the depositary of more than 20,000 signatures of citizens who request the enforcement of the same rights (LINK). The legal action should end between July and September 2018, and it is still open to the new adhesions of citizens, enterprises, and organizations of both the Free Territory of Trieste and all other Countries.
On the other side, granting the legitimacy of authorizations to operate within the International Free Port the Italian only takes the Italian Government to amend its own Decree of 13 July 2017 about the administrative management of the free zones (LINK).
The amendment to the decree must correct illegitimate norms, and any new norm should confirm existing authorizations. This is a very simple act, it requires nothing more than the will of the administering Italian Government, and therefore obtaining it would not require a long time.
The bluff of local bodies in charge of temporary administration
Since decades, the violations of the regime of the Free Port of the Free Territory of Trieste ad of its tax system are fuelling a local system of corruption that, due to this, has all interests to perpetuate those violations by all means, influencing politicians, mass media, and also officers in charge of the Italian temporary civil administration, as well as hiding this situation with restless disinformative campaigns.
But this misleading bluff of a local system of corruption cannot stop States, investors, or enterprises that have the right or the interest to work in the Free Territory and in its International Free Port, and it won’t stop their disputes against the administering Italian Government either.
Time and risks for investors
The question of the correct enforcement of the financial and tax system of the Free Territory of Trieste and of its International Free Port does not constitute a risk for interested investors and enterprises, because it still depends on the outcome of the civil action promoted by the I.P.R. F.T.T.
Investments and settlements of new enterprises can thus take place only after the settlement – before or outside the Court – of the dispute, which can be prompted also by the pressing of interested States and economic operators (LINK).
Instead, investments and settlements of enterprises within the International Free Port del Free Territory of Trieste under authorization of administering Italian authorities before the Government corrects the decree of 13 July 2017 about the administrative management of the free zones are at risk.
This risk depends on the facts that the Italian administration entrusted the management of the International Free Port of Trieste to an Italian officer, who acts as President of an Italian Port Authority (“Autorità di sistema portuale dell’Adriatico orientale” – Port System Authority of the Eastern Adriatic Sea), and did also authorise him to transfer one of the two permanent free zones, that of the Northern Free Port, also called the “porto vecchio” (Old Port).
Said measures are illegitimate, because they constitute breaches of the provisions regarding the legal regime of the International Free Port del Free Territory Trieste, which do not allow removing or transferring permanent free zones, as well as establishing that the management of the Free Port can only be entrusted to a “Director of the Free Port”, who cannot be a citizen of Italy or of any successor State of former Yugoslavia (Treaty of Peace with Italy, Annex VIII, arts. 2, 3, 18).
Failing to comply with those norms gives raise to the nullity and voidness of all acts issued by the Italian Port Authority of Trieste to manage the International Free Port, including the transfers of the Northern Free Port and authorizations to enterprises.
The bluff of the Trieste Port Authority
The President of the Trieste Port Authority appointed in January 2011 tried to restore legal certainty to properly develop the International Free Port until February 2015, when she was substituted with an officer who, instead, supports the misleading bluff of the local system of corruption described above.
But the bluff of the President of the Port Authority causes serious damages to investors and enterprises, because it withholds from them the concrete fact that all authorizations to work in the International Free Port issued in the existing administrative irregularity are illegitimate, therefore impugnable.
The two risk levels of illegitimate authorisations
The illegitimate authorizations issued by the Italian Port Authority of Trieste give raise to two different risk levels for investors and enterprises, both of which can be overcome by the provisional Italian administration with proper measure, that thus should be properly adopted.
Authorizations that prove illegitimate due to being issued by an Italian Port Authority instead of by the Director of the Free Port shall be substituted with a simple amendment to certain provisions of the latest decree of the Italian Government for the administrative management of the free zones.
However, amending the decree is not enough to rectify possible authorizations issued to operators who work in free zones established by the illegitimate transfer of the permanent free zone regime of the Northern Free Port.
Rectifying similar authorizations would require the competent administering authority to discard the decree establishing the illegitimate transfer with a decree that establishes ex novo a free zone in that area, as well as releasing to the enterprises affected new authorizations to work in the new, correctly established free zone.
Until the Director of the Free Port is appointed, the competent administrative authority is the General-Commissioner of the Government in Region Friuli Venezia Giulia in office, being in charge of exercising this part of the powers of the General-Commissioner of the Italian Government in the Territory of Trieste under special trusteeship.
To clarify the relevance of the legal problems caused by the illegitimate attempt to “transfer” the international permanent regime of the Northern Free Port “to other areas” it is necessary explaining the origins and real nature of this operation.
The fraud of the illegitimate “transfer”
The attempt to “transfer to other areas” the international free zone regime by removing it from the Northern Free Port was promoted by Italian politicians, intellectuals and mass media – in good or in bad faith – for years, as if it were an operation for the legitimate, necessary, and advantageous renovation of a port area that had become obsolete.
The truth is exactly the opposite: the port area has strategic relevance, and it suits port uses well, creating new free zones does not require “transferring” the existing ones, doing that is forbidden, and would seriously damage both the International Free Port and the economy of Trieste.
The operation to “transfer” free zones is indeed a huge fraud planned by the local system of corruption at the expenses of all public and private property assets of the administered Free Territory.
First of all, it is necessary knowing that the International Free Port of Trieste consists in two main free zones, the Northern and the Southern (also called “porto vecchio” and “porto nuovo” or the Old and the New Port, because they were built in 1883 and in 1910 respectively), as well as some smaller free zones. Its legal regime does not allow to decrease or to transfer the two main free zones, instead, it allows to extend them. Also, it allows to establish new free zones anywhere within the boundaries of the Free Territory.
Both main free zones are absolutely functional areas of the International Free Port, provided with piers, docks, seawalls, warehouses, squares, and major railways, in addition, they are connected not only by roads, but also by a railroad tunnel, they can be extended with new piers and logistic hubs with 14 to 20 meters deep seabed, and they are served by a specific Industrial Zone.
Also, Trieste’s urban areas do not need to be extended taking over the areas of the Northern Free Port, because the city is facing economic and demographic recession, it already has more than 15,000 empty flat, houses, and shops, and this surplus would significantly impoverish the local estate market.
At the same time as the illegitimate operation against the Northern Free Port, the estate market for productive areas and factories was inflated with the liquidation of the EZIT – Ente per la Zona industriale di Trieste (Organization for the industrial zone of Trieste), achieved by forcing on this body enormous, undue Italian taxes.
To this point, the addition of 70 more hectares of areas and buildings taken from the Northern Free Port to an already depressed local real estate market would make it collapse, with devastating effects on loans and on the patrimonies of companies, citizens, and families.
The collapse of the local real estate marked would literally allow legal and illegal speculators to ransack Trieste by promptly buying the greatest possible number of assets – both private and public – at rock bottom price.
The value of the productive areas bought by this mean, with ordinary destinations of use, would then increase 100 times by transferring the free port regime illegally removed from the Northern Free Port on them.
A summary of the fraud
This operation started in the 1990s by slowly reducing economic activities, maintenance, and structural investments in the Northern Free Port in order to falsely claim, with increasing propagandas, that it would be no longer suitable for port uses, and therefore should be “converted” to become an urban area.
To achieve this goal, the local system of corruption has systematically ignored or censored all evidences of the contrary, including anti-Mafia questions (LINK, in Italian), it sabotaged all initiatives and calls for tender meant to revive economic port activities in the Northern Free Port, and it obtained the scandalous decision of the Court of Trieste to close without investigations the criminal complaints reporting those facts (LINK, in Italian).
In December 2014, this coverage allowed two local PD (the “Partito Democratico”, Italy’s “Democratic Party”) politicians, Francesco Russo and Ettore Rosato, to trick the Italian Parliament into approving, despite lacking jurisdiction on the matter, the illegitimate transfer of the free port regime from the “old port” in order to remove its areas and buildings from State property, hand them over to the Municipality of Trieste for it to sell them, and ultimately transfer all revenues to the Italian Port Authority (LINK, in Italian).
The conflict in legislations that makes this operation unenforceable has now become evident due to art.1, paragraph 66 of Italian Law No. 205/2017, but the Port Authority, the Municipality of Trieste, local politicians and media are absurdly insisting to prevent investors, companies, and public opinion from seeing this legal problem.
The publication of this analysis has the purpose to favor investments and the settlement of enterprises from all State that have the right and interest to enjoy, possibly as first comers, the remarkable advantages offered by the financial and tax regime of the present-day Free Territory of Trieste, sub-entrusted to the temporary civil administration of the Italian Government by the Governments of the United States and of the United Kingdom in their role of primary administrators, on behalf of the UN Security Council.
Our role is to provide investors, enterprises, and the diplomacies of all States concerned, as well as to the provisional administering Government itself, the correct and accurate information needed to obtain the re-establishment of legal certainty on this matter, as well as to clear the field from false information and from the interferences and other minor obstacles we identified.
Because we do believe that, at this point, the pressing of new strategic and economic interests that favor the full development of the international roles of the present-day Free Territory of Trieste and of its Free Port, for the advantage of all parties involved, had become unstoppable.