Cablegate: Italian Conference On Palestinian Reforms And

This record is a partial extract of the original cable. The full text of the original cable is not available.





E.O. 12958: N/A

REF: ROME 1960

1. (SBU) Summary: The MFA organized a conference on "The
Palestinian Future: Reforms and Economic Reconstruction" in
Rome May 28-29. As the MFA told us and the Embassy of Israel
prior to the conference, this was not a political conference
about roadmap implementation but was intended largely for
Italian public opinion and as a preparation for Italy's
presidency of the EU (reftel). Key speakers included FM
Frattini, Italian Minister for Productive Activities Antonio
Marzano, Palestinian Minister of the Economy Maher Al-Masri,
EU Special Envoy for the Middle East Miguel Angel Moratinos,
UN Special Envoy for the Middle East Terje Roed Larsen, and
Russian Special Envoy for the Middle East Andrej Vdovin.
David Hale, Office Director for NEA/IAI, represented the USG
on behalf of NEA A/S Burns. All speakers agreed on the
importance of seezing the current momentum to implement the
roadmap and end the cycle of violence and on the need to
improve the economic conditions of Palestinians. End summary.

2. (SBU) May 28 focused on the reform of the Palestinian
National Authority within the roadmap. FM Frattini
underlined that institutional reform and economic
reconstruction are closely linked and that institutional
reform in Palestine is a prerequisite for a free
market-oriented economy. Moratinos said that the roadmap is
more promising than previous peace initiatives because it
clearly outlined the end goal (a Palestinian state) and
called for an international monitoring mechanism. Vdovin
praised the President's personal commitment to the MEPP, the
Quartet as a mechanism that enables cooperation and not
competition among the US, EU, UN, and Russia, the new
Palestinian government headed by Abu Mazen, and Israel's
acceptance of the roadmap. Hale underlined the depth of the
President's commitment to do all he could to move forward
implementation of the roadmap and to help the parties fulfill
the two-state vision. He calls on the parties to do their
parts: the Palestinians to end violence and terrorism, the
Israelis to ease the humanitarian crisis in the West Bank and
Gaza, and the Arab partners to end all ties to terrorism and
prepare their publics to accept the state of Israel and the
two state solution.

3. (SBU) May 29 focused on the reconstruction of the
Palestinian economy. Al-Masri described the state of the
Palestinian economy (60% poverty rate, 45% unemployment, and
a 60% drop in the GDP in the past 2 years). He mentioned
consolidating all revenues, focusing expenditures only on PA
related activities, and submitting quarterly financial
statements to the legislative council as important reform
steps conducted by his ministry. He said that the private
sector was the backbone of the Palestinian economy, and that
the Palestinians needed the Israeli market to sell their
goods given that their domestic market was too small. He
emphasized the importance of attracting international
investment to the territories but was realistic by saying
that this would not happen until there is security in the
area. Larsen echoed what Al-Masri said by stating that,
despite being optimistic about the holistic approach of the
roadmap, he did not consider the current environment in the
Middle East condusive to economic development.


4. (SBU) The Palestinian Representative in Italy, Nemer
Hamad, criticized the Italian government for its inaction on
Berlusconi's idea of a Marshall Plan type of aid package to
help the Palestinian economy. Ambassador Badini, the MFA's
DG for the Middle East, responded by saying that the idea of
a "Marshall Plan" for the Palestinian economy was not dead
but that it had no EU consensus. He reminded that the
Marshall Plan to Europe was done after WWII ended because an
economic intervention of that scale was not possible before
there was peace. Marzano said that Italy could transfer some
of its best practices to the Palestinians in a way that would
best fit their economy, mostly in the fields of water
management and small/medium size enterprises, where Italy had
a large expertise. Ilan Baruch, the Israeli MFA's Deputy
Director General for Economic Affairs, said that, security
situation permitting, Israel was open-minded about reviving
multilaterals and industrial zones and readmitting
Palestinian workers in Israel to help revive the Palestinian


5. (SBU) Comment: While not breaking any new ground, this
conference was a useful reminder for Italian public opinion
of the importance the GOI places on solving conflicts in the
region and that the MEPP will be one of Italy's top priority
during its fast-approaching EU presidency. The Israeli
Ambassador in Rome, who originally had serious reservations
about this conference (reftel), actually attended parts of
it. The Italian government and Embassy Rome both greatly
appreciated the participation of David Hale in the
conference. End comment.

6. (U) This cable was cleared by NEA/IAI Director David Hale.
2003ROME02472 - Classification: UNCLASSIFIED

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