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The South Tyrol Success Story Italy's German-Speaking Province Escapes the Crisis

The German-speaking Italian province of South Tyrol has defied the economic crisis with almost full employment and a healthy economy. Its success is partly due to its paternalistic governor, Luis Durnwalder, who has ruled the province practically as his personal fiefdom since 1989. Resentment of Rome is growing in the region, which once belonged to Austria.

Reinhold Messner was the first mountain climber to ascend all of the world's peaks taller than 8,000 meters (26,246 feet) above sea level. But in his native South Tyrol, there are those who see him as nothing but a well-traveled denigrator of his own country.

Messner, with his trademark shaggy beard and thick, wavy hair, is sitting in the courtyard of Sigmundskron Castle in front of his Messner Mountain Museum in the city of Bolzano, sipping a glass of red wine. He is gushing about the merits of his native South Tyrol, an autonomous province of Italy that used to be part of Austria until the end of World War I and that is home to speakers of German, Italian and the local language Ladin. It's a far cry from the outbursts of rage for which he is known. "We are doing well here in South Tyrol," says Messner. "We are living in the promised land, and that's Durni's achievement."

The man Messner calls "Durni" is Luis Durnwalder, who has been president of South Tyrol since 1989. Many residents of the province, including both German- and Italian-speaking South Tyroleans, practically worship Durnwalder for his shrewdness and down-to-earth personality. But for Messner, who has made sarcastic remarks about Durnwalder in the past, the praise represents something of an about-face. "I wasn't in favor of Durnwalder at first, because I didn't want the province to be run by a farmer like that," says Messner. "But I was wrong about him."

Highly Successful

The numbers speak volumes about Durnwalder's achievements. No provincial governor in Italy has been in office longer -- or has been as successful. His province, a region of mountains and valleys stretching from the Brenner Pass to the Salurner Klause, rivals Italy's most productive regions, highly industrialized Lombardy and the Valle d'Aosta, in GDP per capita (see graphic).

The small province of South Tyrol, also referred to as Alto Adige, is little more than half the size of the US state of Connecticut and is a land of mountains, forests, apple orchards and vineyards. Nevertheless, it is so prosperous that it can pay its governor a better salary than that earned by US President Barack Obama.

As Durnwalder makes his way up the hill at Sigmundskron Castle, it's clear that he is aware of his market value. In fact, he is so busy greeting his fans that he almost overlooks the world-famous mountaineer Messner. The choice of Sigmundskron Castle as the site of their meeting is significant. Tens of thousands protested at Sigmundskron Castle in 1957, chanting "los von Trient" ("away from Trento"), setting the course for the province's autonomy.

The so-called "South Tyrol Package," signed in 1972, guarantees the governments of the two provinces of South Tyrol and Trentino, which together make up the autonomous region of Trentino/South Tyrol, extensive autonomy from Rome. "But it was only Durni who managed to transform autonomy into economic success," says Messner, who threatened to emigrate to Patagonia years ago because of the political monoculture in South Tyrol. "Today," says Durnwalder, "20 horses couldn't drag Messner away from this place."

Virtually Full Employment

In the difficult summer of 2010, South Tyrol is like a small beacon of prosperity surrounded by doom and gloom. Despite the economic crisis, there is almost no unemployment in the area surrounding the capital Bolzano (known in German as Bozen), and the province is debt-free. By comparison, Italy as a whole has the highest government debt, as a percentage of the country's gross domestic product, in the entire euro zone. Within the last half-century, 19 prime ministers have been sworn in in Rome. In South Tyrol, on the other hand, there has been only one change in the province's top job during the same period -- from its "über-father" Silvius Magnago to Durnwalder.

For the last 21 years, Durnwalder has made sure that his realm, a place where both lemon trees and edelweiss bloom, takes full advantage of its strengths. Investors exploit the bilingualism of many South Tyrolese to capture southern markets. Vacationers flock to the region, not only to tour the Dolomites and visit "Törggelen" festivals, which showcase local food and wine in the autumn, but also because of its new boutique hotels and museums. In 2009, South Tyrol registered 28 million overnight stays in its hotels and guesthouses.

Messner, with his five mountain museums scattered around South Tyrol, is part of the attraction. In this sense, he contributes indirectly to the success of Durnwalder's party, the South Tyrolean People's Party (SVP), which has ruled the province with an absolute or relative majority since 1948. But when it comes to the issues he cares about, like raising money for new projects or securing approval to place statues of Buddha in the ruins of a 1,000-year-old Tyrolean castle, the mountain-climbing legend doesn't even bother with ordinary party officials. "I only talk to the governor," says Messner.

'Enlightened Prince'

Many in South Tyrol feel the same way, including the petitioners who show up in front of the government headquarters building in Bolzano as early as 4 a.m. to be the first in line when Durnwalder starts his daily office hours for citizens at 6 a.m. -- an opportunity for ordinary people to tell him about their biggest problems. The governor's leadership style is reminiscent of that of an "enlightened prince," scoffs Arnold Tribus, publisher of the Neue Südtiroler Tageszeitung. Members of the government whisper that Durnwalder, the son of a mountain farmer in the Puster Valley, runs the province "like a big farm."

There is undoubtedly something of the stubborn old farmer in Durnwalder, who is finding it difficult to relinquish power. Although he announced that he would retire in 2013, after almost a quarter century in power, it is no longer clear whether he truly intends to do so.

Anyone who meets Durni, perhaps when he is visiting the Finailhof farm in the Schnals Valley, almost 2,000 meters (6,560 feet) above sea level, realizes that he is a man who has trouble letting go. It's obvious in the matter-of-fact way he distributes slices of roast lamb to the guests sitting around the dining table, as if he were in his own house, or in the way he proudly shows off his female companion, who calls him "Papi," and their one-year-old daughter. Durnwalder, who will soon turn 69, is clearly doing his best to show that he still has what it takes.

According to Durnwalder, polls show that more than two-thirds of citizens in the province have no idea who could replace him -- a conclusion that seems to surprise no one less than Durnwalder himself. He rattles off the names of Italian prime ministers, including Giulio Andreotti, Romano Prodi and current Prime Minister Silvio Berlusconi, and points out that he has always gotten along with whoever was in power in Rome. "Basically, the people down there are proud of us."

Paying for the South

Although the numbers have been rising recently, an unemployment rate of 2.9 percent in 2009, at the height of the economic crisis, meant full employment in South Tyrol. The GDP per capita is 30 percent higher than the national average and twice as high as in Sicily. Meanwhile Rome, as required by the Italian constitution, "only" returns 90 percent of collected taxes to Bolzano, compared to the 100 percent that goes to the Sicilian capital Palermo. South Tyrol, says Durnwalder, is unwilling to help pay for the good life for residents of southern Italy. "Even down there they also have the option of working," he points out.

But Rome has recently upped the pressure. This year, Durnwalder is expected to contribute €500 million ($630 million), or 10 percent of the province's budget, to the financially strapped central government. Rome still owes its northernmost province €3 billion, which it is effectively paying in kind. The control of some 21 money-losing train stations, military barracks, post offices and almost all national roads on South Tyrol territory has already been transferred to the Durnwalder administration. Durnwalder says he has always managed to work out solutions with Berlusconi, "as long as Biancofiore isn't running around down there and telling everybody that her fellow South Tyroleans are being mistreated by the barbarians."

He is referring to Michaela Biancofiore, a long-legged, blonde native of Bolzano with Italian roots, who is a member of the parliament in Rome for Silvio Berlusconi's People of Freedom party and who is close to Berlusconi. At the end of last year, she made sure that all of Italy knew that she had celebrated her birthday at Berlusconi's villa, and that she had thanked the prime minister by sending him a cake decorated with a cartoon depicting his last appearance in Bolzano, in which Berlusconi could be seen holding out his extended middle finger.

'Without South Tyrol, Italy Would Have Many Fewer Problems'

On this evening, Biancofiore, who has just tottered across Walther Square in Bolzano, orders a grapefruit juice in a downtown hotel. Then she lets loose, speaking in Italian: "South Tyrol is a piece of land that could have been painted by God. But without South Tyrol, Italy would have many fewer problems. I like Durnwalder. But it would be nice if he would only spend the money that's earned in his province, instead of constantly collecting government money."

If Rome, in response to the economic crisis, transfers even more responsibilities to Bolzano, South Tyrol could turn into a "state within a state," says Biancofiore, who is notorious among Rome's German-speaking subjects for her slogan, "a tricolore in front of every farm," referring to the Italian flag. According to Biancofiore, "Italian federalism is under threat."

Although the days when Tyrolean separatists in Italy would blow up utility poles are long past, men like Thomas Widmann, the provincial transportation minister who is seen as a possible successor to Durnwalder, have now institutionalized the quest for independence. In areas like the judiciary, Italy is "closer to a Third World country than Europe," Widmann says. Citing Rome's empty coffers, he says that South Tyrol ought to "do everything possible to separate itself from this country -- preferably through complete financial autonomy."

One leading SVP politician offers a more derisive but no less devastating take on the situation. He says that for religious people, at least, it's good news that the Italian state still exists, despite the complete breakdown of some of its key government institutions. "It's proof positive that there is indeed life after death."

Losing Its Edge

However, even in South Tyrol, this arrogance is increasingly out of place. Recent studies show that the province is starting to lose its competitive edge and is suffering from a lack of new academic talent, and that its future prospects are not good. Durnwalder's realm is lacking the basic conditions for success in the globalized economic world. For decades, German-speaking South Tyroleans sought to stave off outside infiltration, a policy that now makes the province less attractive to foreign companies. The number of bilingual young people is declining and commercial property prices are virtually unaffordable. A hectare (2.2 acres) of land in the Bolzano area now goes for about €1 million.

"Nowhere is there as much economic freedom as there is in our province -- for our people, of course," Durnwalder slyly points, when the conversation turns to obstacles to outside investment.

Despite these efforts, the changes in the bastion of South Tyrol can no longer be overlooked. The minute the governor leaves his office he sees groups of Moroccans and Pakistanis gathered in the parks near the bus terminal. Romanians, Poles and Slovaks work long hours in the region's apple orchards, which are protected by anti-hail netting. "Anyone who complains about this is a bigot," says Transportation Minister Widmann. "Many of us don't want to pick apples anymore. Prosperity makes you lazy."

The Problems of a Monoculture

In the village of Margreid, Alois Lageder says that his business depends on seasonal workers from Eastern Europe. Producing an average of 1.5 million bottles of wine a year, he is South Tyrol's biggest private vintner -- and its most unconventional. When he launched the business, his goal was to develop "a strong brand that is independent of South Tyrol." Today he exports his wine to places as far away as Russia and China.

Lageder, a tall, blue-eyed man who wears moccasins without socks, operates his vineyards according to the principles of biodynamic agriculture, which is based on the teachings of the Austrian philosopher Rudolf Steiner. He plays classical music to the grape juice as it ferments in oak barrels. He has quartz ground up under a copper beech in the courtyard and applies the powder to grape leaves during the correct phase of the moon. And he philosophizes about "winegrowing in the solar age," and about renewable energy and the effects of global warming. "We will need new grape varieties," he says.

Lageder was already a pioneer among vintners in the 1970s, in the days when South Tyrol was known mainly for inexpensive wine that was sold by the liter, and when the vineyards around Lake Kaltern were producing plenty of rotgut. Today Lageder is 60 and still deeply involved in his life's work. "South Tyrol's problem is monoculture," says Lageder, "in agriculture and in politics."

The vintner has had his share of quarrels with Governor Durnwalder. The two men butted heads when Lageder called upon the provincial government to increase funding for research instead of spending its money on vanity projects. On another occasion, Lageder, an art lover and president of Bolzano's Museion Museum of Modern and Contemporary Art, incurred the governor's wrath when he refused to have a controversial piece by German artist Martin Kippenberger, which depicted a crucified frog holding a beer mug, removed before the pope's 2008 visit. "Durnwalder was in the middle of an election campaign at the time," says Lageder, "and the thing with the frog supposedly cost him up to 20,000 votes. Things were finished between us after that."

Traditional Region at a Crossroads

Durnwalder could be accused of double standards, in his desire to promote modern art but only when it attracts well-heeled tourists and isn't off-putting to Catholic voters. But the consummate political survivor is used to walking a thin line. For instance, when he talks about his younger days, when he was nicknamed "Brother Norbertus" and already had one foot in the priesthood, he hopes that the story will convince moral conservatives to overlook his womanizing younger days.

But the governor, contradictions and all, is also an embodiment of modern-day South Tyrol, an old farming region at a crossroads -- between isolation and globalization, deeply rooted folk beliefs and secularism.

If Durnwalder quits politics, the conflicts will become even more visible. The SVP now has only a very thin majority in the provincial parliament. Parties from the nationalist German-speaking and right-wing Italian camps threaten to shake the tectonics of the political landscape in South Tyrol.

Even Durnwalder's avowed supporters, like businessman Michael Seeber, have become critical of the long-time governor, arguing that he is jeopardizing the future of his homeland with his blend of "South Tyrolean state socialism" and feudalistic behavior. Seeber, the most successful industrialist in Durnwalder's realm, owns a company that is building cable cars for the 2014 Winter Olympics in Sochi, supplies light-rail urban transit systems for cities worldwide and makes wind turbines.

The Limits of Growth

"We here in South Tyrol have reached the limits of growth," says Seeber. "It's time we finally opened the doors and acknowledged that we are part of a united Europe. And that the decisions are now being made in Brussels, where they won't be paying as much attention to our small population of 500,000 people as they do in Rome."

Of course, crafty Luis Durnwalder knows this too. But South Tyrol is still part of Italy, and Italy is still trying to stave off a national bankruptcy with rigid austerity programs. For now, the governor's biggest concern is finding ways to prevent Rome from imposing new burdens on his province.

At the last budget meeting in the spring, Durnwalder effectively told Italian Finance Minister Giulio Tremonti that when it comes to rescuing the government's finances, South Tyrol could only offer Rome the following piece of unfortunate news: We have no money, we are unable to print money and, therefore, we can give you almost nothing.

The words Durnwalder used were an Italian translation of a famous quote in South Tyrolean dialect. It was originally said by Andreas Hofer, a Tyrolean patriot and military hero who was executed in the city of Mantua in February 1810.

Translated from the German by Christopher Sultan