French Alpine tunnel gets red signal from Italy's transport ministry




  • In World
  • 2019-02-12 12:49:29Z
  • By By Stefano Bernabei

By Stefano Bernabei

ROME (Reuters) - A Franco-Italian railway link would be a waste of public money and have a "strongly negative" financial impact, Italy's transport ministry said on Tuesday in a report that will heighten tensions within the coalition.

Work has already started on a 58-km (36-mile) tunnel that cuts through the Alps and is forecast to cost 8.6 billion euros ($9.7 billion), with France and the European Union joining with Italy to foot the bill.

The whole rail link, which is backed by the ruling League party but fiercely opposed by its government partner the 5-Star Movement, has a price tag of more than 20 billion euros, Italy's transport ministry says.

The 79-page cost-benefit analysis estimated that the cost of building the so-called TAV route and its projected economic return produced a negative balance of between 7.0-7.8 billion euros ($7.9-$8.8 billion).

"As everyone can now see for themselves, the numbers of this economic and transport analysis are extremely negative," said Transport Minister Danilo Toninelli, a 5-Star politician who commissioned the contested report.

"It is now up to the government to make a decision."

The far-right League says the line connecting the French city of Lyon with Turin is vital to Italy's export-driven economy. It made no immediate comment on Tuesday.

5-Star has repeatedly said it will never sanction the project while it remains in power. League leader Matteo Salvini has suggested a referendum to decide the matter.

OFF THE RAILS

A separate analysis published by Italy's transport ministry predicted that it could cost up to 1.3 billion euros to halt work at this stage through possible contract penalties.

France agreed last December to freeze new contracts on the tunnel boring operation until the Italian government, which took office last June, had completed the cost-benefit analysis.

Relations between Paris and Rome have since deteriorated and President Emmanuel Macron last week recalled France's ambassador to Rome following a war of words with both the League and 5-Star, which have accused Paris of undermining Italy's economic, foreign and migrant policies.

France and Italy are respectively each others' second biggest trading partners and business leaders on both sides of the Alps say the TAV will facilitate commerce.

Rome is also at loggerheads with the European Commission over its plans for an expansive, 2019 budget. However, Toninelli said these disputes had no bearing over the TAV analysis.

"I want to stress that the negative evaluation of the Turin-Lyon link that emerges from this analysis is not against the EU or against France," he said.

(Reporting by Stefano Bernabei and Giselda Vagnoni; Writing by Crispian Balmer; Editing by Alexander Smith)

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