North-South Dualism and the European Union. Where is the Italy System Headed? - This article deal with the dualistic nature of the Italy System and its evolution from the 1950s to the present day, arguing that it went through a prolonged stage as essential leverage for the economy as a whole to achieve rapid development, and that as from the mid-1970s it progressively became a critical aspect, holding back the economy, seen as the cause of an unprecedented northern problem and general economic decline. The latter thesis is based on a dangerous financial illusion now leading to the launch of a reform going under the misnomer of fiscal federalism. Critical illustration is provided of the problems and prospects that this confused institutional evolution conjures up on the horizon.