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Cablegate: Italy: 2004 Report to Congress On Allied

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

UNCLAS ROME 005694

SIPDIS


SENSITIVE

DEPT FOR SENIOR ADVISOR TO THE A/S FOR POL-MIL AFFAIRS
(PM/B)
DEPT FOR EUR/WE AND EUR/RPM
SECDEF FOR OSD/PA&E, OASD/ISA/EUR, OASD/ISA/NP,
OASD/ISA/AP, OASD/ISA/NESA, OASD/ISA/BTF

E.O. 12958: N/A
TAGS: JA KS KU MCAP PREL SA US MARR IT QU TC NATO
SUBJECT: ITALY: 2004 REPORT TO CONGRESS ON ALLIED
BURDENSHARING CONTRIBUTION TO THE COMMON DEFENSE

REF: STATE 305999

1. (U) The following is Rome's contribution to the 2004
burdensharing report to Congress. For the purpose of this
cable, US. dollar amounts are calculated at the exchange rate
of USD 1 = Euro .90 except when noted. Embassy point of
contact for this report is Pol-Mil Officer Susanne Rose, tel:
(39) 06-4674-2831, e-mail RoseSC@state.gov.

POLITICAL SITUATION

2. (U) PM Berlusconi and his center-right coalition remain in
control of the Parliament. Despite continued criticism from
the center-left opposition, this coalition is likely to
endure through its full term into the spring of 2006 (the
first post-war government to do so). Even with some friction
between coalition parties, the center-right government is
expected to survive with just a possible reshuffling of some
government ministers in January. Its majority in Parliament
is sufficient to ensure that it can win votes not only on
controversial domestic issues but also on foreign policy
issues of concern to the US, such as the fight against
terrorism and support in Iraq. The PM remains publicly
supportive of US policy, most notably in the way he embraced
military action in Iraq, despite strong opposition in public
opinion, some elements of Parliament and EU partners such as
France and Germany.

ECONOMIC SITUATION

3. (U) Italy has the world's sixth largest economy with a
2002 GDP of about Euro 1.26 trillion (USD 1.33 trillion).
(Note: Official average exchange rate for 2002 is used
1$=E0.946). The Government estimates GDP growth at 0.5
percent in 2003 and 1.5 percent in 2004. This year, lower
than expected GDP growth and lower than expected tax revenues
will result in a deficit/GDP ratio above the 2.5 percent
target and close to the three percent ceiling of the EU
Stability and Growth Pact. The level of public debt, second
highest among EMU countries as a share of GDP, is expected to
approximate 106 percent for 2003 and to fall below 100
percent only by the end of 2007. The GOI plans to reduce the
debt level gradually to the EMU target level of 60 percent of
GDP by 2016.

4. (U) The GOI presented its 2004 budget to Parliament on
October 2. Parliament must pass the budget by December 31.
The 2004 budget totals Euro 634.5 billion (USD 705 billion),
or 46.9 percent of GDP, down from 48.1 percent in 2003. The
budget includes revenue increases of Euro 12 billion (USD
13.3 billion), spending cuts of Euro four billion (USD 4.4
billion), and a modest stimulus package of Euro five billion
(USD 5.5 billion). As drafted, two-thirds of the budget bill
will be based on one-time revenue-raising measures and
one-third on structural economic reforms. To make funds
available for the Euro five billion (USD 5.5 billion)
stimulus package and to take into account the less favorable
economic growth outlook, the GOI estimates the 2004
deficit/GDP ratio will be 2.2 percent.
5. (U) Elements of the budget package have been presented as
a "decree law" to accelerate implementation. The decree-law
accompanying the budget was approved on November 19. In
general terms, the 2004 budget is an attempt to stimulate a
sluggish economy and keep the deficit under control.

DEFENSE POLICY/DEFENSE SPENDING

6. (U) The total MOD funding request for FY 2004 is Euro 19.6
billion (USD 21.8 billion), up 1.9 percent (or Euro 357
million, USD 397 million) from the MOD request for FY 2003.
This 1.9 percent increase, however, approximates zero growth
in real terms, assuming a two percent inflation rate in 2004.
For 2004, MOD appropriations equal 1.45 percent of the GDP,
compared to 1.48 percent in 2003. Under the draft budget,
there is a 1.4 percent increase in domestic security spending
-- mostly personnel spending for the Carabinieri, and a 2.1
percent increase in "defense function." (Note: The "defense
function" includes the budgets of the Army, Navy, and Air
Force, but excludes domestic security and other non-essential
MOD budget functions. "Defense function" is the largest


sector of the MOD funding. Peacekeeping operations are a
separate budget item outside of "defense function". End
Note.) "Defense function" accounts for 1.04 percent of GDP,
compared to 1.06 percent of GDP in 2003.

7. (SBU) The November 12 terrorist attack on the Italian
headquarters in Nassiriya, Iraq, according to a Finance
Ministry Under Secretary, is expected to generate support for
increased funding for Italian participation in peacekeeping
missions beyond the 2004 draft budget figures we present
here. Adding funding for Italy's peacekeeping missions (Euro
1.2 billion, USD 1.3 billion) to the 2004 MOD budget, total
defense spending for 2004 increases to Euro 20.8 billion (USD
23.1 billion) or 1.54 percent of GDP.

Table 1
Summary of Defense Budget: 2003-2004
(In billions of USD, unless otherwise indicated)


FY FY Chg Chg
2003(1) 2004(1) Pct Value

1. NATIONAL DEFENSE 15.33 15.65 2.1 .32
(as pct of GDP) (1.06%) (1.04%)

2. DOMESTIC SECURITY
(Carabinieri) 5.05 5.12 7.4 .07
(as pct of GDP) (0.35%) (0.34%)

3. PENSIONS AND OTHER BENEFITS 1.01 1.02 1.0 .01
(as pct of GDP) (0.08%) (0.08%)

4. TOTAL MINISTRY
OF DEFENSE
APPROPRIATIONS 21.39 21.79 1.9 .40
(as pct of GDP) (1.48%) (1.45%)
(as pct of
Gov't budget) (3.08%) (3.09%)

ADDENDUM A:

5. Italy's
Participation
To peacekeeping
Missions 1.37 1.33 -0.3 -0.04
(as pct of GDP) (0.10%) (0.09%)


6. GRAND TOTAL 22.76 23.12 1.6 .36
(as pct of GDP) (1.58%) (1.54%)
(as pct of
Gov't budget) (3.27%) (3.29%)

ADDENDUM B:

GDP (1) 1,445 1,503
Exchange rate 0.90 0.90

(1) Source: Government's 2004 budget proposal (September
2003).


INVESTMENT

8. (U) The "defense function" budget funds 1) normal
operating expenses; 2) reform of the armed forces (personnel
and operations), and 3) modernization of defense capabilities
(investment). Experts consider it essential to appropriate
30 percent of the defense budget for investment. Italy's
2004 defense budget includes only 21.2 percent for
investment, compared to the figure of 22.7 percent in the
2003 budget.

9. (SBU) The Defense Ministry highlighted in its supplemental
note to Parliament that there has been "significant reduction
of resources for investment." For the second year in a row,
funds will be cut for the purchase of new aircraft, warships,
and other equipment for the Army, Navy and Air Force. The
Ministry's note also suggests that there might be a need to


renegotiate commitments with partner countries.

10. (U) Total investment spending for 2004 is Euro 3.2
billion (USD 3.55 billion), down by 4.8 percent from 2003.
Of this amount, Euro 365.4 million (USD 406 million) has been
allotted for research and development, an increase of 14.3
percent from 2003. Another Euro 2.63 billion (USD 2.92
billion), a decline of 6.6 percent from 2003 levels, is
allocated for defense modernization. Observers consider an
optimal annual allotment for defense modernization to be
around Euro 4.5 billion (USD five billion). Euro 204.6
million (USD 227.3 million) is earmarked for real estate
investment, down 9.7 percent from 2003. The MOD's note on
the 2004 budget acknowledges that 2003 allotments will have a
negative impact on multi-year investment programs.

11. (U) Air Force investments of Euro 1.19 billion (USD 1.32
billion) account for almost forty percent of overall
investment spending. These funds will be allocated for:

a. development of the Eurofighter (the total commitment
through 2015 is USD 18.1 billion, of which the commitment for
2004 is Euro 434 million, or USD 482 million);

b. development of the Joint Strike Fighter (the total
commitment through 2012 is USD 1.19 billion; the commitment
for 2004 is Euro 126 million, or USD 140 million)

c. continuation of the leasing contract for the Tornado
(the overall commitment through 2015 is USD 1.2 billion,
while the commitment for 2004 is Euro 186.5 million, or USD
207.2 million);

d. purchase of transport airplanes, C130J Lockheed (Euro
157.2 million, or USD 174.7 million) and tanker Boeing 767
(Euro 116 million, or USD 128.9 million); and purchase of
helicopters: Nh90 (Euro 259.1 million, or USD 287.9 million)
and Eh101 (Euro 56.5 million, or USD 62.8 million).

12. (U) Navy investments (Euro 829 million, or USD 921
million) account for about 28 percent of total investment
spending. These funds are designated for:

a. construction of the new aircraft carrier Andrea Doria
(the overall commitment through 2008 is USD 1.4 billion,
while the commitment for 2004 is Euro 185.9 million, or USD
206.5 million);

b. purchase of two escort frigates of the class Orizzonte
(the overall commitment through 2009 is USD 1.5 billion,
while the commitment for 2004 is Euro 155 million, or USD
172.2 million); and

c. acquisition of two new generation submarines U212A
(total commitment through 2007 is USD 904 million, while the
commitment for 2004 is Euro 104.8 million, or USD 116.4
million).

13. (U) Army investments (Euro 769.6 million, or USD 855.1
million) represent another 25 percent of overall
appropriations.

Table 1a
Summary of National Defense Budget Appropriations: 2003-2004
(In billions of USD unless otherwise indicated)


FY FY Chg Chg
2003(1) 2004(1) Pct Value

1. Personnel 7.80 8.32 6 .52
(as pct of GDP) (0.51%) (0.53%)

2. Operations 3.80 3.78 -0.5 -.02
(as pct of GDP) (0.29%) (0.28%)

3. Investments 3.73 3.55 -4.8 -.18
(as pct of GDP) (0.26%) (0.24%)


4. TOTAL NATIONAL
DEFENSE
APPROPRIATIONS 15.33 15.65 2.1 .32
(as pct of GDP) (1.06%) (1.04%)
(as pct of
Gov't Budget) (2.21%) (2.22%)

ADDENDUM:

GDP (1) 1,445 1,503
Gov't Budget 695 705
Exchange rate 0.90 0.90

(1) Source: Government's 2004 Budget Proposal (September
2003).


ARMAMENTS COOPERATION/BILATERAL AND MULTILATERAL ACTIVITIES

14. (U) Italy has demonstrated significant progress in the
areas of armaments cooperation and bilateral and multilateral
activities. For example, Italy is the third largest
contributor to the Joint Strike Fighter Program (after the US
and UK) with Level II partnership on the System Design and
Development Phase, for a total investment of $1.028 billion.
Italy is finalizing production requirements, estimated
between 150 to 200 aircraft, with a potential to have the
largest JSF inventory outside of the US. Expectations are
that a Production MOU will be signed in the next year to
capture these details. For the Medium Extended Air Defense
System (MEADS) program, Italy entered into a cooperative
development, along with Germany, to contribute 17 percent of
the program. The US, Italy, and Germany are currently
negotiating the Design and Development Phase of the program.
Additionally, Italy purchased 22 C-130Js in a $1.7 billion
direct commercial sale with expected delivery of 19 in 2003
and the remaining three in 2004, four Boeing 767 Tankers for
$800 million, and 12 C-27Js for tactical transport aircraft.
Italy is rapidly becoming an interoperable partner with these
acquisitions, and the equipment available to support
deployments and allied and multi-national operations.

15. (U) Italy is set to be on par with other five-power
nations (the US, UK, France, and Germany) by early next year
through a RDT&E MOU agreement between the MOD and DOD which,
once signed, will open the door for several UAV Project
Agreements. Other significant cooperative activities include
Italy as a strong advocate of the NATO Airborne Surveillance
System (AGS) and the recent signing of the MOD-DOD
Declaration of Principles (DoP) document in October 2003.
Italy has actively supported various DoP working groups to
include security and supply. Italy is extremely interested
in cooperating with the US on Missile Defense activities with
a possibility to place a radar site in country.

DIRECT COST SHARING

16. (U) The Italian government does not rent or lease
property to US forces. All fixed structures utilized by the
US on Italian military bases are free. Italy provides free
utility connections to base perimeters (but the US pays local
utility companies for services utilized), free external
security for the bases, and no-fee training ranges. Italy
does not pay salaries for any US employees on the bases.

INDIRECT COST SHARING

17. (U) Italy makes significant contributions for land
provided to the US to operate 7 Principal military bases and
numerous sites on a cost-free basis. This $237,434,755
savings in foregone rent to the US includes access to three
airbases, two homeports, one large ammunition and equipment
staging base, and a homeport that possesses the only
maintenance/repair tender ship in the Atlantic. A lack of
this capability could cause consequences to US fleet and
submarine operations in the Mediterranean. Italy provides
security forces and anti-terrorist protection, Carabinieri
support for armed personal security protection of US
dignitaries, and a robust telecommunications infrastructure
carries US military data and voice signals. In addition,


Italy saved the US an additional $10 million in security
costs for perimeter security of installations and escorts of
US convoys from Vicenza to Aviano for Operation Iraqi Freedom
(OIF).

18. (U) Additionally, Italy provides safe lines of
communication (airports, sea ports, railways, highways, air
routes) to allow high volume of US forces and equipment,
three airports with shared civilian/military airfields where
US aircraft are based, and a US/NATO munitions storage
facility as an invaluable source of munitions for war on
terrorism. The Italian Army contributed 16 Centauro wheeled
armored vehicles to the US Army, free of charge, for
prototype experimentation for the STRIKER, US military access
to military training and exercise ranges, and hotel support
to deployed forces (Aviano and Sigonella).

19. (U) Italy increased the number of Italian armed security
forces around military and government agencies, participated
in "Product Sharing" activity of Italian military
intelligence community, supports the NATO Combined Air Force
Operations Center support, provides Italian Coast Guard
support (terrorism, etc.) and a defensive shield for over
30,000 US military personnel with Italian Air Force assets.
Finally, the US has the unequivocal support of senior Italian
military leaders, the MOD and Parliament.

GRANT AID

20. (U) In 2002, Euro 2.2 billion (USD 2.3 billion), or 0.2
percent of GDP, was allocated for grant assistance, the
second lowest amount for all EU members and OECD members.
(Note: When comparing G8 member countries' aid contributions
as a percentage of GDP, Italy ranks next to last (the US.
ranks last). End Note). Most of Italy's assistance is in the
form of grants, with a modest portion in loans. According to
the MFA, approximately the same amount, Euro two billion (USD
2.2 billion) was appropriated for 2003, equal to .15 percent
of GDP. For 2004, the assistance is even lower: Euro 1.8
billion (or USD two billion), equal to 0.13 percent of GDP.

21. (U) This figure includes not only the ODA programs
administered by the Ministry of Foreign Affairs (almost a
third of the total, bilateral and multilateral assistance),
but also those programs managed by Treasury and other
ministries. Italy's ODA assistance has not always been this
low. In the early nineties, Italy's ODA assistance budget
was 0.42 percent of GDP. However, in 1992, in the midst of
the lira's exchange rate crisis and in an attempt to get
finances in order to prepare for the European Monetary Union,
then-Prime Minister Giuliano Amato more than halved Italy's
spending to 0.2 percent of GDP. Outlays have hovered close
to the 1992 levels sinc then.

2003 OFFICIAL DEVELOPMENT ASSISTANCE

2. (U) The MFA has confirmed that Italy's bilatera and
multilateral ODA will be equal to Euro 657 million (USD 731
million) for 2003 (roughly one third of Italy's overall ODA).
In 2002, the MFA disbursed between 90 to 92 percent of
available funds. Through October 2003, the MFA has disbursed
80 percent of the funding and expects to disburse all funding
by the end of the year. In 2002, sub-Saharan Africa received
57 percent of bilateral assistance funding, while the Middle
East/Asia regions received 18 percent of overall MFA
bilateral assistance funding; Latin America, another nine
percent; while the remaining 16 percent went to Europe
(mostly Albania and the Federal Republic of Yugoslavia).

23. (U) Italy's ODA in 2003 (Euro 657 million, or USD 730
million) includes funds for debt forgiveness of the twenty
Highly Indebted Poor Countries (HIPC). The MFA has already
signed an agreement with twelve HIPC countries and is
negotiating with eight others.

ITALY'S MULTILATERAL ASSISTANCE

24. (U) The largest part of Italian international assistance,
roughly two thirds or 65 percent, is directed through
multilateral institutions (multilateral development banks,


the United Nations, the European Union, etc.). The Ministries
of Foreign Affairs, Treasury, Defense, Interior, Environment,
Transport, Productive Activities (Industry), Labor, Justice,
Communications, Agriculture, and Health expect to contribute
a total of Euro 1.23 billion, or (USD 1.37 billion), to
Italy's participation in international organizations in 2004,
down 5.6 percent, (Euro 72 million, or USD 80 million), from
2003. This is slightly less than 0.1 percent of GDP and
about 0.2 percent of the total government budget.

25. (U) Italy's multilateral assistance is divided into fixed
and flexible portions. Ministry of Treasury-administered
contributions to international financial institutions (IMF,
IBRD, regional development banks) are fixed. Outlays are not
annual, but multi-year. Mandatory contributions to EU
assistance budgets comprise roughly one-third of all
multilateral Italian assistance expenditures. This is the
one part of the Italian assistance budget that is growing,
albeit slightly, and likely at the expense of other forms of
aid.

ITALY'S ODA TO IRAQ AND AFGHANISTAN

26. (U) Italy has allocated for Iraq Euro 15 million (USD
16.7 million) to the UN flash appeal and other multilateral
emergency assistance. The MFA Iraq Task Force will disburse
another Euro 21.6 million (USD 24 million) on diverse
projects. On October 24, at the Madrid Donors Conference,
MFA Frattini announced that Italy will contribute an
additional Euro 200 million (USD 222.2 million) above 2003
levels to be disbursed over the next three years (2004-2006).

27. (U) At the Tokyo Donors Conference, Italy pledged Euro 47
million (USD 52.2 million) for 2002 and 2003. In 2002, Italy
exceeded its pledge by giving Euro 65 million. For 2003,
Euro 36 million is earmarked.

Table 2
Italy's OFFICIAL BILATERAL DEVELOPMENT ASSISTANCE 2003-2004:
2004 Official Budget)
(In millions of USD unless otherwise indicated)


FY FY Chg.
Chg.
2003(1) 2004(1) Pct
Value

1.MINISTRY OF FOREIGN AFFAIRS 768 640 -16.6%
-128

Cooperation for Development
Of which:
--Aid to LDC's
(Less Developed Countries) 731 686 636
-95

--Humanitarian 37 4 -87.6
-33
Assistance
-- of which:
Mediterranean
and Middle East 34 1 -97.1
-33


2.TOTAL 768 640 -16.6%
128
(as pct of
Gov't Budget) (0.11%) (0.09%)

(1) Source: GOI's 2004 proposed budget.

Table 3
Contributions to International
Organizations: 2003-2004: by source 2004 Official Budget)


(In millions of USD, unless otherwise indicated)

FY FY Chg. Chg.
2003 2004 Pct Value

1. FOREIGN AFFAIRS 411 417 1.4 6

2. ECONOMY AND FINANCE 557 529 -5.0 -28

3. DEFENSE 164 142 -13.4 -22

4. EDUCATION 3 3 0 0

5. INTERIOR 9 9 0 0

6. ENVIRONMENT 197 194 -1.3 -3

7. INFRASTRUCTURES 1 1 0 0

8. PRODUCTIVE
ACTIVITIES 16 25 55.8 9

9. LABOR 43 0 -100 -43

10. JUSTICE 1 1 0 0

11. COMMUNICATIONS 7 7 0 0

12. HEALTH 35 35 0 0
-- of which:
International
Peacekeeping
Missions
(SEE NOTE BELOW). 14 14 0 0

3. TOTAL (1) 1.44 1.36 -5.6% -0.8
(as pct of GDP) (0.10%) (0.09%)
(as pct of total
Budget) (0.21%) (0.19%)

(1) Billions of USD.
(2) For the medical and health support of Peacekeeping
Mission personnel.

Source: GOI's 2004 proposed budget.

PEACEKEEPING AND HUMANITARIAN OPERATIONS

28. (U) The 2004 Budget will create an ad-hoc Euro 1.2
billion (USD 1.33 billion) fund to pay for the cost of
Italian peacekeeping missions (as indicated in Table 1).
This will be equal to the cost of Italian peacekeeping
missions in 2002 (Albania, Kosovo, Afghanistan and Iraq).
Traditionally, Italy's peacekeeping missions were funded in
the budget under "unexpected" or "miscellaneous expenses,"
and Parliament had to authorize each use of this fund. This
procedure was reformed in the 2004 Budget with the creation
of an ad-hoc fund of Euro 1.2 billion, or USD 1.33 billion.
(Note: Italy's participation in international peacekeeping
and humanitarian operations cost Euro 1.24 billion (USD 1.38
billion) in FY2003. Of this amount, Euro 734.3 million (USD
815.9 million) funded operations in the Balkans
(Bosnia-Herzegovina, Kosovo, Albania), while the remaining
Euro 497.5 million (USD 552.7 million) funded miscellaneous
anti-terrorist initiatives (including Iraq peace-keeping);
and Euro 4.6 million (USD 5.2 million) was disbursed for
Ethiopia and Eritrea. End Note.)

CONTRIBUTIONS TO UN OPERATIONS

29. (U) Italy supported various United Nations operations to
include 51 personnel and four helicopters (AB 205) to the UN
Interim Force in Lebanon (UNFIL), seven observers in Israel
and Arab countries for United Nations Truce Supervision
Organization (UNTSO), seven observers along the
India-Pakistan border for UN Military Observer Group
(UNMOGIP), one observer to survey the border between Kuwait
and Iraq under UN Iraq-Kuwait Observer Mission (UNIKOM), five
observers for the UN Mission for the Referendum in Western
Sahara (MINURSO), one officer and 58 civilian police for the


UN Mission in Kosovo (UNMIK) and 52 personnel for the
Ethiopia and Eritrea Mission (UNEEM).

CURRENT CONTINGENCY OPERATIONS

30. (U) Significant contributions to OEF and OIF Contingency
Operations are noted in paragraph 8D. Italy also has 1500
personnel deployed in Bosnia-Herzegovina, 2900 in Kosovo, 550
in Albania, 98 in Macedonia, 590 in the Balkans under
Multinational Specialized Units (MSU's) and Dakovica the Air
Port of Debarkation (APOD).

OPERATION IRAQI FREEDOM

31. (U) Italy's substantial support for OIF came from the
highest levels of the Prime Minister's Office, the Ministry
of Defense (MOD) and Ministry of the Interior (MOI).
Political and military personnel provided intense
coordination for the protection and security of several
hundred military convoys moving material/manpower through
staging areas and Aerial Ports of Embarkation. Italy also has
made telecommunications circuits available that substantially
reduce the requirement for US military equipment and

personnel needed to support the war on terrorism.

32. (U) Under operation "Antica Babilonia," Italy contributed
forces that consisted of over 2,700 deployed personnel,
representing the third largest deployment of a coalition
force behind the US and UK. All four military components
were represented. The Italian Army provided a brigade HQ,
two infantry regiments, one engineer battalion (including
EOD), close support units (including NBC), logistic support
units, medical assets, and CIMIC assets. The Italian Navy
provided one amphibious ship (S.Giusto), helicopters (SH3D),
and two minesweepers. The Italian Air Force provided assets
to include an air detachment HQ, helicopters (HH3F) and air
transport assets (C130J). Finally, the Carabinieri deployed
a MSU regiment, and military police units. (Comment. 12
Carabinieri, in addition to five Army personnel and two
civilians, gave the ultimate sacrifice with their lives in a
November 12 bomb explosion in Nassiriya that was the first
combat loss of life for Italy since World War II. End
comment).

INTERNATIONAL SECURITY ASSISTANCE FORCE (ISAF)

33. (U) The Italian contribution to ISAF currently includes
530 units, of which 465 are in Kabul and 65 in Abu Dhabi, in
addition to two officers at Allied Command HQ. The Italian
contingent consists of a Security Company for ISAF HQ
Protection, Engineering Company, including Explosive
Ordinance (EOD) Teams, a Nuclear Biological Contamination
Platoon, a Logistics Unit, a Signal Company and numerous Air
Transportation Assets. The Italian contingent includes army
and airforce units and one C-130. The contingent in Abu
Dhabi is an interforce group that provide logistical support
to the contingent in Afghanistan. These commitments received
Euro 67.7 million (USD 75.2 million) in funding for 2003.
Italy currently is considering a USG request to lead a PRT in
Afghanistan. GOI highlighted the need to accompany
antiterrorism initiatives appropriate initiatives aimed to
support the reconstruction of Afghanistan.

OPERATION ENDURING FREEDOM

34. (U) Italy played a large role in OEF by providing the
TF-150 Frigate ESPERO for "Resolute Behavior" with 250 people
patrolling the Gulf of Aden to conduct
Maritime Interdiction Operations, control of the Sea Lines
of Communication, and the escort of coalition units and
related shipping. Under Task Force "Nibbio," Italy also
deployed a 1000 person strong Battle Group to Afghanistan as
a light infantry combat unit, combat support unit (Mortar,
Anti Tank, Engineer, Signal, E.W, T.A, EOD and RBC Teams),
and combat service support assets (Logistic and Medical
Teams). The Italian Air Force contributed 75 personnel and
two C130J aircraft that operated from the Air Base of Manas
in Kirghizstan.

PRAGUE CAPABILITIES COMMITMENT


35. (U) Italy is making steady progress on its PCC plan,
despite severe financial constraints worsened by low economic
growth. The majority of Italian PCC goals should be
accomplished by 2007-2010, including bringing four B767
tanker transports online, expanding NBC forces and equipment,
standing up two additional army brigades, launching new naval
combatants, increasing precision-guided munitions, improving
communications capabilities and acquiring four airborne early
warning aircraft, two new generation submarines and several
maritime multipurpose helicopters. Italy is already a
participant in the MEADS theater missile defense project and
a Level II partner in the Joint Strike Fighter program.
Italy recently purchased four Unmanned Aerial Vehicles from
the US, which are due to arrive in January 2004.

NATO RESPONSE FORCE

36. (U) Italy hosts both a Land and a Maritime NATO High
Readiness Force Headquarters that will support the NRF.
Italian forces are already participating with other allies in
the types of missions the NRF is designed to conduct,
including maritime interdictions, embargo operations,
humanitarian relief and peace enforcement. Based on lessons
learned at the Colorado Springs NATO ministerial, the Italian
government hopes to streamline existing political procedures
in 2004 to prevent delays in rapid deployment of forces for
NRF and related operations.

37. (U) Italy has agreed to stand up the Land Component
Command headquarters for the NRF from July to December 2004
and again from July to December 2007. Should there be an NRF
mission during either of those periods, Italy would likely
provide a substantial portion of the land component forces
required. Italy also has agreed to stand up the NRF Maritime
Force Command headquarters for one year starting July 2005
and again starting July 2008.

NATO ENLARGEMENT/PARTNERSHIP FOR PEACE

38. (U) Italy continues to be a strong proponent of NATO
enlargement and the Partnership for Peace (PfP) program as
ways to enhance stability and security in Europe. With a
particular focus on the Balkans, Italy has supported the PfP
program to expand military and political cooperation and
reinforce democratic principles. Italy pushed hard to have
Romania and Bulgaria included in the next round of NATO
enlargement, and continues to work with Macedonia and Albania
to bring their political and military institutions up to NATO
standards. Prime Minister Silvio Berlusconi has gone so far
as to encourage Russia to join NATO, and was a key player in
formalizing the NATO-Russia Council format for greater
collaboration in areas of mutual concern to Russia and the
alliance.

COUNTERPROLIFERATION CONTRIBUTIONS

39. (U) Italy has long been a major contributor to
nonproliferation and threat reduction efforts, including
allocating Euro 1 billion for the Global Partnership program.
It has promoted the Nuclear Cities Initiative to retrain
Soviet scientists and rehabilitate "closed" cities, and has
participated in a number of plutonium disposition programs.
At a summit in November 2003, Italy and Russia finalized an
agreement on a chemical weapons detoxification facility at
Pochep, using Euro 300 million of Italy's Global Partnership
pledge. Italy committed another Euro 360 million to be used
by the Russian Navy over ten years to decommission nuclear
multi-purpose submarines and store unloaded fuel and
radioactive materials. The Italian government currently is
considering a USG proposal to fund the accelerated shut down
of a Russian plutonium producing reactor.

40. (U) Italy is a core participant in the Proliferation
Security Initiative (PSI) to interdict shipments of WMD and
their means of delivery and will host a PSI air exercise in
early 2004. As EU Council President from July to December
2003, Italy spearheaded the implementation of the EU
nonproliferation action plan adopted in July 2003 and
established a new action plan that stresses the importance of


cooperation with the US as a basic principle of EU
nonproliferation efforts. Italy pressed the EU to produce a
stronger EU response to Iran's nuclear weapons program and to
bolster IAEA credibility and access to Iranian sites.
SEMBLER


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2003ROME05694 - Classification: UNCLASSIFIED

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