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Cablegate: Italy: Pressing Our Priorities with the Next

VZCZCXRO9739
OO RUEHFL RUEHKW RUEHLA RUEHROV
DE RUEHRO #0454/01 1020950
ZNY SSSSS ZZH
O 110950Z APR 08
FM AMEMBASSY ROME
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0125
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHMIL/AMCONSUL MILAN PRIORITY 9350
RUEHFL/AMCONSUL FLORENCE PRIORITY 3008
RUEHNP/AMCONSUL NAPLES PRIORITY 3157
RHEHNSC/WHITE HOUSE NSC WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY

S E C R E T SECTION 01 OF 04 ROME 000454

SIPDIS

NOFORN
SIPDIS

E.O. 12958: DECL: 04/11/2018
TAGS: PGOV PREL IT
SUBJECT: ITALY: PRESSING OUR PRIORITIES WITH THE NEXT
GOVERNMENT STARTING NEXT WEEK

REF: A. ROME 435
B. ROME 246

Classified By: Ambassador Ronald Spogli, for reasons 1.4 (b) and (d).

1. (C) Summary. Italy's upcoming elections and period of
government formation will give us an opportunity to press our
agenda with renewed vigor after four months with a caretaker
government and more than two years with a government hampered
by far left partners. While our relationship with the Prodi
government was good, our relations with the next government
promise to be better, maybe much better. We anticipate
making progress on the agenda below should Veltroni make a
surprise come-from-behind victory, and excellent progress
should Berlusconi be returned to power. Regardless of who
wins, we intend to begin meeting with likely members of the
new government as soon as possible after elections, during
the period of government formation in April and early May, to
lay down markers on our key policy priorities and the
direction we would like to see Italian policy take. We also
welcome senior USG visitors to press our agenda, including
between the elections and the seating of a new government.
We intend to take up: the tone of the relationship; Iran;
Afghanistan; Energy Security/Russia; Iraq; MEPP;
Lebanon/Syria; Basing/Pol-Mil issues; economic
competitiveness; foreign assistance; climate change; and law
enforcement cooperation. End Summary.

Improving the Tone of the Relationship
--------------------------------------

2. (C) Though the Prodi government generally pursued policies
we supported, it felt the need to make gratuitous
anti-American statements to shore up its far-left
constituents. Such comments detracted from important
discussions on the Middle East, Balkans, and Iran. While
both leading candidates in Italy's election are pro-American,
we should, nevertheless, encourage the incoming government to
recognize that tone matters in the bilateral relationship and
to exercise discipline to avoid unhelpful rhetoric.

Iran
----

3. (C/NF) Italy has felt marginalized from key Iran
discussions since the last Berlusconi government and could
play a ""spoiler"" role on Iran until/unless it feels properly
included in the decision making framework. Regardless of who
wins, we plan to engage early and often to encourage Italy to
share our sense of urgency on Iran, and to show that the
policy of targeted financial action has worked. Our case
will be helped by being able to share information linking
Iranian banks with Iranian proliferators in order to
encourage Italian support for more stringent measures both
within the UNSC and the EU against Iran. We will discourage
the new government from having high-level visits to/from
Tehran, and from allowing new significant Italian investment
in the Iranian energy sector.

4. (C/NF) A Berlusconi or Veltroni government may be more
inclined than was Prodi to take on Iran. However, no Italian
government can ignore the large pre-existing trade
relationship with Iran. It also will be difficult to
convince the Italians to abandon interest in energy
development in Iran, when third parties are anxious to fill
in after the departure of any firm from Iran and Italy's own
choices for energy suppliers includes a number of other ""bad
actors"".

Afghanistan
-----------

5. (S/NF) We expect a more forward-leaning approach to
Afghanistan from the next Italian government. However, both
Berlusconi and Veltroni will be reluctant to place Italian
soldiers at increased risk. We will urge Italy to take
greater ownership for its Command Region (RC-West), which is
facing a worsening security situation and has the lowest
troop level of the five ISAF regions. We will press Italy
to authorize its troops to take a more active approach
against insurgent activity in Herat and Farah provinces and
to ease or drop geographic caveats that prohibit Italian
troops from crossing into RC-South. We will also lay down a
strong marker objecting to past practices of paying
protection money and negotiating deals for the release of
hostages. The next Italian government will continue to face
budgetary and Constitutional constraints on Italian missions
overseas, and any significantly increased deployment to
Afghanistan could require a drawdown elsewhere (e.g. in
Lebanon or Kosovo).

6. (C/NF) We will also encourage the Italians to do more
Afghan police training, a field in which they excel, by
expanding the Guardia di Finanza training of Afghan Border
Police, stepping up Carabinieri police training currently
being considered (ANCOP, ANP training with U.S. Marines), and
expanding Italian participation in EUPOL. Finally, we will
encourage the new government to expand judicial sector reform
and capacity-building efforts and take the lead on
encouraging donors to contribute to the Justice Reform
component of the Afghan Reconstruction Trust Fund (ARTF).

Energy Security/Russia
----------------------

7. (C/NF) The Prodi government has been reluctant to
confront Russia on many issues because of its dependence on
Russian energy supplies. We will encourage the new Italian
government to set as a priority the formulation of a national
energy policy that realistically addresses the country's
growing need for energy and its worrisome energy dependence
on Russia. Nuclear power and renewable energy sources should
be looked at as parts of the plan. Italy should also exert
leadership at the European level, pushing for an EU energy
policy that would address the Union's very worrisome
dependence on Russia.

8. (C/NF) We will suggest using the influence that comes from
the GOI's partial ownership of Eni to stop the company from
being the ""spearhead of Gazprom."" This would probably
require new leadership at Eni. Also, we will seek to ensure
that Eni fully cooperates on projects (such as renewable
energy and LNG terminals), that are intended to reduce
Italy's dependence on Russian gas, and encourage the use of
GOI influence on Eni to force the company to cooperate with
Italian and EU-level energy diversification efforts.

9. (C/NF) In private, Veltroni has expressed a willingness to
tackle Italy's dependence on Russia (ref B), but recent
public comments indicate he might not be prepared to
challenge Russia. Berlusconi has a very close personal
relationship with Putin. Former FM Gianfranco Fini told the
Ambassador that because of that, all Russia policy would be
personally handled by Berlusconi, who recently expressed
sympathy for Russia's unhappiness with feeling ""surrounded by
NATO."" Getting a better Italian approach to Russia will be
extremely challenging regardless of election results.

Iraq
----

10. (C/NF) In Iraq, we should consider asking Italy to
augment its contingent to NTM-I and to maintain its PRT
presence in Dhi Qar. We would also like to see Italy's MFA
Iraq Task Force, led by the able former Italian Ambassador to
Iraq Gianludovico De Martino, remain in operation. The next
government may be willing to give a little more in Iraq, as
both France and Germany recently have. We will push Italy to
make specific commitments on police training and NTM-I at the
Iraq Compact meeting in Stockholm in late May.

Middle East Peace Process
-------------------------

11. (C/NF) Both Berlusconi and Veltroni would be more
inclined to adopt a pro-Israeli policy than Prodi was. We
will strongly impress upon the next GOI the importance of
Italy continuing to work through the Quartet on the peace
process and refraining from public calls for dialogue with
and expressions of sympathy for Hamas. Veltroni's pro-Israel
stance could be tempered if Massimo D'Alema remains FM.

Lebanon/Syria
-------------

12. (C/NF) Much of Berlusconi's party opposes Italy's UNIFIL
role because it was a project of the Center-Left, in their
view set up for failure with weak ROE in a dangerous location
leaving Italian troops unable to adequately protect
themselves or conduct a robust mission effectively. Though he
recently pledged to maintain the Italian presence, and even
invigorate the disarmament of Hizballah, we intend to stress
to him personally, or to Veltroni should he win, how much we
value Italy's contributions to UNIFIL II in Lebanon, and that
we would like to see them continue. We will also encourage
the next GOI to more firmly press Syria and Iran to stop
interfering in Lebanese internal affairs, and to halt the
flow of foreign fighters into Iraq. A Veltroni government in
particular will need to be reminded that high-level visits
to/from Damascus are damaging to international efforts and
will be badly received by the U.S. and others.

AFRICOM, CoESPU
---------------

13. (C/NF) We will work with EUCOM, AFRICOM, OSD and the
Department on early engagement with the new GOI on plans to
set up an AFRICOM Army component command at SETAF in Vicenza.
We will also encourage the new government to strengthen
Italian staffing and financial contributions to Vicenza's
Center of Excellence for Stability Police Units (CoESPU) --
which was a creation of the last Berlusconi government -- to
enable CoESPU to successfully train Formed Police Units
headed to Darfur under UNAMID. Army base expansion at Dal
Molin is moving forward with the contract awarded. We will
reach out to the new key players to support the able Dal
Molin commissioner Paolo Costa and to keep the project on
track.

Economic Competitiveness
------------------------

14. (SBU) Bringing GDP growth rates up to at least the
average for the EU should be economic policy objective number
one for the new government. It is not for us to prescribe
the precise measures it should take, but the problems are
well known: labor market rigidity, a burdensome bureaucracy,
a dysfunctional justice system, corruption, organized crime,
shortcomings in the educational system, an environment that
is hostile to new business and only weakly supportive of
innovation, etc. We will maintain our Partnership for Growth
Program and find a way to expand Fulbright BEST program --
two initiatives we have taken to encourage entrepreneurship,
business exchanges, with a view to both stronger U.S. -
Italian economic/commercial ties and longer-term economic
strength of this strategic partner.

15. (U) We will press Italy to enforce its intellectual
property laws, and suggest as an early objective for the new
government having Italy taken off the USG's ""301 Watch List""
for IPR violators. The only way off this list is for the new
government to demonstrate a real willingness to significantly
improve IPR protection in Italy.

16. (SBU) Basing promotions and research funding allocation
on merit in Italian academia is something that we and most
Italians believe should be done immediately, but which is
probably politically impossible. However, we will encourage
the new government to take some important steps to promote
innovation, for example, by urging universities to give equal
credit for an approved patent as for a publication, and
taking into account the special needs of start-ups and
research investment in Italian tax and regulatory systems.

Foreign Assistance
------------------

17. (SBU) On Iraq, we will urge continued high-level
attention and encourage the Italians not to fold Iraq
operations into routine MFA desk officer responsibilities
(see also para 10). We will push for Italian assistance
levels to be maintained, if not expanded, and will seek early
assurances that Italian commitment and assistance to their
PRTS in both Afghanistan and Iraq continue. In particular,
we'll push Italy to increase its civilian assistance at the
June Afghan Donors' Conference in Paris. In the past two
years, Italy has made progress towards meeting its G8
assistance goals for sub-Saharan Africa, but needs to do more
in the areas of education and promoting good governance. We
will encourage them to do so.

Climate Change/MEM
------------------

18. (SBU) The new government may designate a new lead for the
Major Economies (ME) negotiations on energy security and
climate change. We will ask that it be someone who can play
an active role, and continue Italy's support for us on key
points as we head toward a ME leaders summit on the margins
of the June G8 summit in Japan. As Chair of the 2009 G8
Summit, Italy will be a key player in efforts to reach a
global agreement on climate change by December 2009. When we
get down to negotiating binding commitments, and we seek EU
compromises in order to get an agreement that the U.S.
Congress can support, we need a reliable interlocutor in the
Italian Government, who understands economics as well as the
environment.

Law Enforcement and Counter-Terrorism Cooperation
--------------------------------------------- ----

19. (C) We will press the new government to implement
extradition and MLAT agreements signed in May 2006. We will
expand our sharing of law enforcement databases now that we
have signed an HSPD-6 agreement with the Italian government.
We will also immediately engage on counter-terrorism issues.

Comment
-------

20. (U) We look forward to working with Washington on rapidly
moving forward this ambitious, important and promising agenda.
SPOGLI

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