By Steve Scherer and Francesca Piscioneri
PALMI, Italy (Reuters) - Most southern Italian businessmen do not cross the 'Ndrangheta mafia. Gaetano Saffioti did, and paid a high price.
The owner of a successful cement business near the small town of Palmi, Saffioti in 2002 became one of only 30 people to turn state's witness against Calabria's 'Ndrangheta.
That year, out of deference to the mobsters or fear, 55 of his 60 employees quit, local banks closed his accounts, and his clients shunned him. His company's sales fell 97 percent, and he and his family have lived under 24-hour armed guard ever since.
"Most businessmen learn to live with the 'Ndrangheta," Federico Cafiero de Raho, chief prosecutor in the region's largest city, Reggio Calabria, said of the crime syndicate with a global reach and deep pockets thanks to narcotics.
"It is the arbiter of who can do what in the economy," added Cafiero de Raho, whose court resides in a city that even saw its local government dissolved in 2012 because it had been infiltrated by the group.
While the 'Ndrangheta (pronounced en-DRANG-eta) flourishes, Calabria, the poorest of Italy's 20 regions with a population of almost 2 million, has seen no benefit for its local economy.
Calabria is a natural and historical treasure. It has almost 500 miles (800 km) of pristine beaches. The Apennine mountains rise thousands of feet in the interior, and hillsides tumble down to the sea, covered in cacti and century-old olive groves.
Once at the heart of the Greek and Roman empires, evocative ruins dot the coastline. The Riace bronzes, considered two of the most spectacular sculptures of the ancient world, were pulled out of the crystal clear waters of the Ionian coast.
But like the rest of the Mezzogiorno -- Italy's six southern regions plus the islands of Sicily and Sardinia -- Calabria has suffered seven straight years of recession and is challenging Prime Minister Matteo Renzi's efforts to fuel a recovery.
From 2008 to 2014, output in Calabria, which forms the toe of Italy's boot, shrank more than 11 percent. Unemployment is three times that of the north and annual per capita output is 15,800 euros ($17,600), the weakest in the country.
In July, Svimez research institute said 744,000 people left the Mezzogiorno between 2001 and 2014, and more than 70 percent of the emigrants were under the age of 34. The body warned of a "a permanent state of underdevelopment" in a region also home to separate mafia groups in Sicily, Campania and Puglia.
Renzi has promised to tackle the mob and offer a "master plan" for the withered south in coming weeks. But filing cabinets in Rome are full of failed economic initiatives for the south and well-meaning anti-mob plans that have achieved little.
For Saffioti, the reason growth has stubbornly failed to take root in Calabria is because the 'Ndrangheta chokes it off.
"The 'Ndrangheta wants a hand in everything," Saffioti, 54, told Reuters. "If Calabria were wealthy, there would be no need for the 'Ndrangheta. Real growth would marginalize it."
Thanks to Saffioti's testimony and closed circuit video recordings he made when he paid the mob, 48 'Ndrangheta members from nine different crime families went to jail. According to his own records and testimony, he paid the equivalent of 2.5 million euros in extortion over 18 years.
He could have fled and assumed a new identity as part of the witness protection program, but he chose to stay.
Now both his home and adjacent business are surrounded by 4-metre (13-foot) concrete walls, barbed wire, towering spotlights and dozens of video cameras. Four police stand on duty.
"It looks like Guantanamo," quips the bearded and bear-like Saffioti. "But I'm very happy to have rid my life of that scum. I'm a free man now."
For many, the Italian mob evokes images from the fictional "Godfather" movies or "The Sopranos" TV series, but the 'Ndrangheta's power is real and thriving on the euro zone's southern periphery in the 21st century.
Over the past two decades, the 'Ndrangheta, which takes its meaning from 'strong man' in ancient Greek, has eclipsed its more storied Sicilian cousin Cosa Nostra by becoming Europe's biggest cocaine broker and establishing criminal colonies across the globe, prosecutor Cafiero de Raho told Reuters.
But the 'Ndrangheta business model, he says, requires it to be a local power broker with broad consensus, especially among businessmen, politicians, and the Church.
The 'Ndrangheta's role as an intermediary -- from job provider to lender of last resort -- dates back to the creation of Italy 150 years ago, when a northern king conquered the south. The mob has long cultivated a warped sort of colonial mentality where the state is considered a foreign occupier.
"Whoever is born here must follow the unwritten rules of a parallel state. To buy or sell a property or open a business, you go to the 'Ndrangheta, not the bureau of commerce," Saffioti said, adding that no deal was too small.
Before he turned state's witness, he had a job pouring concrete in the nearby town of Polistena. Though he was going to earn only some 250 euros ($280) for the work, the local boss, Giovanni Longo, demanded his cut.
"He told me it wasn't a question of money, but of respect. He said: 'It's like when you go visit someone's home, you knock on the door. You don't just walk in."
In 2001, a mafia hit man shot Longo dead.
DAVID VS GOLIATH
David Bumbaca, whose seaside restaurant and bathing area in Locri is just the kind of economic activity the area needs, is weighing up whether his future lies there.
Over the past year because he refused to pay extortion "as a matter of principle", two of his cars were burned, two men wearing ski masks tried to beat him up in front of his home, and he received an anonymous letter with a death threat.
"My problems began when I started to be visibly successful," Bumbaca said, sitting in a shaded corner of his restaurant, which specializes in fresh seafood salad and other local treats.
The 46-year-old Bumbaca got a business degree in northern Italy, but he says he returned out of love for Calabria.
"Now I don't know how long my love of this land will hold out. I'm thinking more about selling and moving away than investing at this point," he said. "It's not a good situation for my family, and these things weigh on you."
For now, in part because magistrates and police are among his regular clients, he is holding out. He has reported the threats to police, but he does not want to become a state's witness like Saffioti.
"I admire the people who make those choices. I just don't know if I could do it. I want to be with my family and live a safe life. I don't want to be anyone's hero," he said.
(Editing by Crispian Balmer and Mark John)