VZCZCXRO4559
OO RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSR
DE RUEHRO #1406/01 3241033
ZNY CCCCC ZZH
O 191033Z NOV 08
FM AMEMBASSY ROME
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1186
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE IMMEDIATE
RUEHBUL/AMEMBASSY KABUL IMMEDIATE 0440
RUEHMO/AMEMBASSY MOSCOW IMMEDIATE 4475
RUEHFL/AMCONSUL FLORENCE IMMEDIATE 3303
RUEHMIL/AMCONSUL MILAN IMMEDIATE 9669
RUEHNP/AMCONSUL NAPLES IMMEDIATE 3460
RHEHNSC/WHITE HOUSE NSC WASHDC IMMEDIATE
RUEKJCS/SECDEF WASHDC IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 03 ROME 001406 

SIPDIS 

FROM THE AMBASSADOR TO THE SECRETARY 

EO 12958 DECL: 11/15/2018 
TAGS PREL, PGOV, NATO, IT 
SUBJECT: SCENESETTER FOR YOUR DECEMBER 3 VISIT TO ROME 

REF: A) ROME 1386 B) ROME 1320
ROME 00001406 001.2 OF 003

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

¶1. (C) Summary. 1. (C) Summary. The political conditions in Italy are dramatically different from the conditions that existed when you last visited in July 2006. Silvio Berlusconi has returned to power after two years of a divided and ineffectual Prodi government. Berlusconi enjoys unparalleled levels of public support and his broad base of power has allowed us to make good progress in advancing our agenda, including successfully pressing for significant reductions on caveats imposed on Italian troops in Afghanistan by the previous government and approval of a major and crucial base expansion at Vicenza. During your visit, I hope you can publicly announce the establishment of AFRICOM,s Army and Navy subcomponent commands in Italy, an important symbol of the strength of our close bilateral security relationship.

¶2. (C) Our reenergized cooperation with Berlusconi, however, does not extend to all issues. Berlusconi’s close, personal relationship with Putin has translated into Italian support for nearly every Russian initiative intended to weaken transatlantic support for NATO expansion and our efforts to curb the Kremlin’s worst instincts. On Iran, after a period of Italian support for U.S. and EU efforts to resolve the nuclear issue, Italy’s policy has become unfocused and even critical of the international process. I hope you can let Berlusconi know that Italy’s renegade initiatives to soften international and transatlantic positions on Russia and Iran can only serve to create confusion and reduce collective security. On the economic front, Italy’s banks have avoided the worst of the financial meltdown, but the broader economy will suffer from the ensuing global economic slow-down. End Summary.

Domestic Politics: Berlusconi Firmly in Control
- - - - - - - - - - - - - - - - - - - - - - - - 

¶3. (C) Prime Minister Silvio Berlusconi is in an enviable position domestically, enjoying so comfortable a majority in Parliament that he can pass virtually any legislation without the support of the opposition. He used his first months back in government to deliver results on election promises, though long-term solutions to most problems are still needed. The trash problem in Naples is not yet permanently solved, but the streets are cleared and troops are keeping dumps and incinerators open. Public worries about street crime have been addressed by a sweeping new security law. A public finance law has overhauled the annual budget process, which traditionally has eaten up months of Parliament’s time, but Italy’s faltering economy casts doubt on whether budget targets will be met. Berlusconi’s government drafted and passed these laws mostly without consulting the center-left opposition, which has grown more fragmented and less effective. Most foreign policy initiatives will be directed by Berlusconi personally without the need of any legislation.

¶4. (C) Berlusconi has made a few missteps, such as his awkward attempt at a joke, in referring to President-Elect Obama as “suntanned”, and center-left contacts argue that the honeymoon period may end soon. Clearly Berlusconi’s current level of popularity is unsustainable over the long run, but predictions that the wind is changing already are premature. The center right’s first major electoral test will be the European elections in June, which will be a critical moment for the center left to evaluate whether it needs new leadership and for the center right to see if it continues to enjoy such high levels of approval from the Italian people.

Transatlantic Relationship: All Russia All the Time
- - - - - - - - - - - - - - - - - - - - - - - - - - - 

¶5. (C) Berlusconi’s close personal (and, some suspect, financial) relationship with Putin has led him to champion unquestioningly every initiative the Kremlin has rolled out. Italy’s Russia policy is his personal game, one which he conducts on a tactical basis to gain the trust and favor of his Russian interlocutors. He consistently rejects the strategic advice of his demoralized, resource-starved, and increasingly irrelevant Foreign Ministry in favor of his business cronies, many of whom are deeply dug into Russia’s
ROME 00001406 002.2 OF 003
European energy strategy. As a result of his short-sighted obsession with Russia, Berlusconi has thrown his support behind Medvedev’s calls for a new security architecture in Europe to supersede NATO and OSCE, has publicly called for Ukrainian and Georgian NATO aspirations to be put on hold in deference to Russian sensitivities, has called on President-Elect Obama to withdraw support for Missile Defense, and continues to insist that Russia acted properly during the Georgia-Russia conflict. He has even called on the EU to admit Russia as a member. Most disturbingly, Berlusconi has attempted to portray himself inside the EU as the bridge between the U.S. and Russia. In practice, this has meant that the GOI has consistently worked to water down EU stances on Russia, and tried to derail U.S.-led efforts to contain Moscow’s worst instincts. His efforts to encourage greater “dialogue” have created more confusion between Russia and the transatlantic community, not less. We have pushed back forcefully on this (ref a) but you can provide a sense of realism to Berlusconi by letting him know that his efforts are working against U.S. and transatlantic efforts.

Muddying the Waters on Iran
- - - - - - - - - - - - - - 

¶6. (C) Berlusconi came into power with a tough public stance on Iran and showed himself eager to support the P5-plus-1. This initial clarity has given way to an unfocused, even critical policy with respect to building international consensus for further sanctions. FM Frattini recently questioned the efficacy of the P5 1 approach in public comments, and reached out to Iran,s nuclear negotiator, Saeed Jalili, to invite him to Rome for consultations. Even while working within the EU framework to discuss further national measures, working-level GOI officials continue to question the efficacy of further sanctions.

Economic Crisis: Banks OK, but economy suffers
- - - - - - - - - - - - - - - - - - - - - - - - 

¶7. (C) Stodgy, old fashioned banking practices allowed Italy to avoid being directly hit by the global financial melt-down. Italian banks simply did not engage in the kind of sub-prime lending that got others in trouble, and Italian banks did not buy significant amounts of the toxic derivatives that are causing so much trouble around the globe. But Italy is being affected by the results of the financial crisis: Italian stock prices have plummeted, stirring fears of possible foreign buy-outs of Italian firms, and Italy’s already shaky economy will be hard-hit by the global recession that was sparked by the financial crisis. As for Italy’s preferred response to the crisis, the Italians seem to be following Sarkozy’s lead, and seem to share his enthusiasm for major reform of the international finance institutions. As is the case in many other countries, Italy is also looking at the possibility of government support for industries hurt by the recession.

¶8. (C) Italy’s Finance Minister, Giulio Tremonti, often supports protectionist, anti-globalization positions, but in the ongoing discussion of the financial crisis we expect Italy to adhere to the more moderate consensus policies hammered out by the EU.

Little Room for Expanding Presence in Afghanistan
- - - - - - - - - - - - - - - - - - - - - - - - - 

¶9. (C) Italy is the sixth-largest contributor to ISAF with 2,200 troops, a PRT in Herat, and command of RC-West. Berlusconi has made good on his pledge to President Bush last June to remove geographic caveats and send 34 Carabinieri to train Afghan police, and he has promised to address allegations of Italian protection payments to insurgent leaders. Additionally, FM Frattini has announced his intention to host a G8 Ministerial on Afghanistan with a special focus on providing a regional solution to the Afghan-Pakistan border region. But the Italians now say that new troop deployments above the Parliamentary-approved cap of 2,300 troops will be impossible for budgetary reasons, and that its only new contribution to ISAF this fall will be in the form of four Tornado jet fighters. Italy has also been cool toward our requests to provide donor support to ANA expansion and election preparation, citing budgetary
ROME 00001406 003.4 OF 003
concerns. You should stress that Italy’s decision to reduce defense expenditures (which will put them even further below the NATO-recommended threshold of 1% of GDP) is of major concern to us, and it risks making Italy a less reliable partner in international security operations, just at a point when the need for greater contributions from partners may grow in Afghanistan.

Rolling out AFRICOM
- - - - - - - - - - 

¶10. (C) Your visit will provide an opportunity to highlight our cooperation on Africa through Italy’s hosting of portions of AFRICOM. GOI officials were initially hesitant to sign off, due to concerns over how and under what circumstances U.S. forces in Italy might deploy to potential conflict zones in Africa. The GoI eventually agreed to the establishment of AFRICOM’s Army and Navy subcomponent commands in existing facilities in Italy on October 1, but asked us to delay announcing the move (ref b). The South East Europe Task Force (SETAF) in Vicenza has assumed the Army component functions and a component of NAVEUR in Naples is now fulfilling the naval functions. Italian concerns focused on SETAF and hinged on two issues -- one legal and the other local and political. The classified 1954 Bilateral Infrastructure Agreement (BIA) limits U.S. basing in Italy exclusively to troops deployed for NATO purposes. After long negotiations, the GOI accepted our broad interpretation of the BIA and the NATO SOFA as applicable to the AFRICOM subcomponents due to their role in supporting NATO Operations in Africa and their availability for other NATO missions as required. But the GOI asked for us to delay public announcement of the shift due to local controversy over the expansion of the base in Vicenza to the Dal Molin airfield.

¶11. (C) The GOI responded positively to our proposal for a joint announcement of the shift during your visit to Italy. A joint statement acknowledging the establishment of the two entities would allow us to highlight the security assistance and humanitarian aspects of AFRICOM’s mission and also divorce the issue as much as possible from base expansion controversy in Vicenza. It will also provide an opportunity to showcase the synergies between AFRICOM and the GOI’s own efforts to encourage stability in Africa and also their excellent work at training primarily African peacekeepers through its Center of Excellence for Stability Police Units (COESPU), a joint U.S.-Italian G8 initiative which is also located in Vicenza.

When Will the Honeymoon End?
- - - - - - - - - - - - - - - - - - - - - - - - 

¶12. (C) Most of our contacts within Berlusconi’s own party as well as in the center left expect this government’s honeymoon period to end in the first half of 2009, as Italians focus on the nation’s systemic problems that have no easy solution, most importantly the economy. Democratic Party officials tell us that they see the declining standard of living among the middle class as the greatest opportunity to gain strength before the European elections in June. Should the rescue efforts for Alitalia remain unresolved in the face of continued strikes or should the protests against education reform gain traction with a broader segment of the electorate, Berlusconi’s popularity will suffer.

Conclusion
- - - - - - 

¶13. (C) Berlusconi’s shoot-from-the-hip style and frequent gaffes frequently create bumps in the relationship with the U.S. Nevertheless, he staunchly supports and admires the U.S. and its people. Despite its economic malaise, Italy remains a close and influential partner and will continue to be an important ally for the U.S. in NATO, the region and the world. Your visit will be an important sign of the strength and closeness of the bilateral relationship and I am delighted that you are taking the opportunity to visit Rome. SPOGLI