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

UNCLAS SECTION 01 OF 02 ROME 003006 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/ERA, EB/IFD/OMA 
STATE ALSO PASS TO SEC - FRIEDMAN 
STATE ALSO PASS FRB - O'DAY 
TREASURY FOR DAS SOBEL, MONROE 
                       UNCLASSIFIED 
 
PAGE 02        ROME  03006  01 OF 02  191443Z 
FRANKFURT FOR TREASURY - WALLAR 
 
E.O. 12958: N/A 
TAGS: EFIN EU EU IT ITEFIN
SUBJECT: KEY ADVISOR TO EU PARLIAMENTARIAN ON EU FINANCIAL 
SERVICES ACTION PLAN AND BILATERAL INVESTMENT TREATIES 
 
REF: A. A: STATE 79760 
 
     ¶B. B: STATE 822480 AND PREVIOUS 
 
¶1. (U) THIS IS AN ACTION REQUEST.  SEE PARAGRAPH SIX. 
 
¶2. (SBU) SUMMARY. THE EU'S FINANCIAL SERVICES ACTION PLAN 
(FSAP) REPRESENTS A GIANT STEP FORWARD FOR EUROPE, ARGUED 
ALESSANDRO MARIA POGGIALI, A SENIOR ADVISOR TO EU 
PARLIAMENTARIAN, RENATO BRUNETTA.  WITH DETAILS OF THIS 
ACTION EMERGING FROM THE COMMISSION, POGGIALI DOES NOT EXPECT 
THAT ITALY WILL HAVE ANY STRONG OBJECTIONS. ITALIAN 
INVESTMENT AND FINANCIAL FIRMS ARE, HOWEVER, CONCERNED THAT 
THEY WILL NOT BE COMPETITIVE IN A HARMONIZED EUROPEAN 
FINANCIAL MARKET.  POGGIALI APPRECIATED HEARING U.S. VIEWS ON 
THIS FINANCIAL SERVICES PLAN. ON AN UNRELATED TOPIC, WE 
RAISED USG CONCERNS ABOUT THE TREATMENT OF BILATERAL 
INVESTMENT TREATIES BETWEEN THE U.S. AND CANDIDATE COUNTRIES 
WITH POGGIALI. END SUMMARY. 
 
¶3. (U) PER REFTEL INSTRUCTIONS, WE ARE SETTING UP MEETINGS TO 
DISCUSS THE EU'S FINANCIAL SERVICES ACTION PLAN. WE HAVE 
DISCUSSED REFTEL POINTS WITH OFFICIALS AT THE FINANCE 
MINISTRY, WHO HAD ONLY A VAGUE KNOWLEDGE OF THE PLAN, AND WHO 
INDICATED THAT ALL THE ACTION AND DISCUSSIONS ARE OCCURRING 
                       UNCLASSIFIED 
 
PAGE 03        ROME  03006  01 OF 02  191443Z 
IN BRUSSELS. POGGIALI IS THE SENIOR ADVISOR ON ECONOMIC 
ISSUES TO EU PARLIAMENTARIAN, RENATO BRUNETTA.  AN 
INFLUENTIAL MEMBER OF ITALY'S FORZA ITALIA PARTY, BRUNETTA IS 
PART OF THE PRIME MINISTER'S INNER CIRCLE ON ECONOMIC ISSUES. 
 POGGIALI IS FAMILIAR WITH THE FINANCIAL SERVICES PLAN, AND 
INDICATED HE WILL PLAY A CRITICAL ADVISORY ROLE ON THIS ISSUE 
DURING THE PARLIAMENTARY DEBATE. 
 
¶4. (SBU) ACCORDING TO POGGIALI, THE COMMISSION'S RAPPORTEUR 
FOR THE FINANCIAL SERVICES ACTION PLAN (FSAP) COULD PUBLISH A 
WORKING DOCUMENT BY THE END OF JUNE. UNDER THIS TIMETABLE, 
THERE WILL BE A PARLIAMENTARY EXCHANGE OF VIEWS BEFORE THE 
SUMMER RECESS AND A SECOND EXCHANGE OF VIEWS BY THE END OF 
AUGUST. IF THE PROCESS UNFOLDS SMOOTHLY, A FINAL REPORT COULD 
BE ISSUED IN SEPTEMBER, WITH A COMMITTEE VOTE IN OCTOBER, AND 
A PLENARY VOTE IN NOVEMBER. 
 
¶5. (SBU) WE SHARED WITH POGGIALI REFTEL POINTS, WHICH 
UNDERSCORED THE USG'S GENERAL SUPPORT FOR THE FSAP BUT ALSO 
OUR CONCERN THAT THE PLAN'S IMPLEMENTATION COULD RESULT IN 
DISCRIMINATORY TREATMENT OF U.S. FIRMS.  POGGIALI EMPHASIZED 
THAT SUCH IS NOT THE INTENT OF THE FSAP, AND THAT ITS GOAL IS 
A TRANSPARENT AND COMPETITIVE MARKET.  WE ALSO RAISED OUR 
CONCERNS ABOUT SUCH ISSUES AS "EQUIVALENCY".  (PER REFTEL, 
EQUIVALENCY REFERS TO THE REQUIREMENT FOR FIRMS FROM THIRD 
COUNTRIES THAT OPERATE IN THE EU TO EXPLICITLY COMPLY WITH EU 
PROSPECTUS STANDARDS.) 
 
¶6. (U) ACTION REQUEST: POGGIALI ASKED FOR SPECIFIC POINTS IN 
WRITING THAT SPELL OUT USG CONCERNS. POST BELIEVES THIS WOULD 
BE USEFUL, AND IF A NON-PAPER EXISTS, REQUESTS TEXT AND 
                       UNCLASSIFIED 
 
PAGE 04        ROME  03006  01 OF 02  191443Z 
AUTHORIZATION TO SHARE WITH POGGIALI AND GOI OFFICIALS. 
 
¶7. (SBU) WHEN QUERIED IF THE COMMISSION AND PARLIAMENT ARE 
SEEKING THE ADVICE AND OPINION OF FINANCIAL FIRMS, POGGIALI 
SAID THAT HE HAS SPOKEN WITH OFFICIALS FROM CONSOB (ITALY'S 
EQUIVALENT TO THE SECURITIES AND EXCHANGE COMMISSION) AND 
FROM ABI, THE ITALIAN BANKING ASSOCIATION.  BOTH CONSOB AND 
ABI EXPRESSED STRONG SUPPORT FOR THE FSAP, BUT OFFICIALS ALSO 
UNDERSCORED THEIR CONCERN THAT ITALIAN FINANCIAL FIRMS WILL 
NOT BE ABLE TO COMPETE IN THIS NEW, HARMONIZED MARKET. 
CONCURRING, POGGIALI SAID HE HAS HEARD A GENERAL UNEASE FROM 
ITALIAN FINANCIAL FIRMS, WHO FEAR THAT THEY WILL BE BOXED OUT 
BY OTHER EUROPEAN FINANCIAL FIRMS IN THEIR OWN MARKET. 
(COMMENT: WE ALSO CONCUR. ITALIAN FINANCIAL FIRMS FOCUS 
PRIMARILY ON THE HOME MARKET. FEW FOREIGN INVESTMENT AND 
RETAIL BANKS ARE PRESENT IN THIS MARKET. LABYRINTHINE RULES, 
RED TAPE, MINIMAL NEED FOR STOCK AND BOND OFFERINGS (SINCE 
MOST BUSINESSES ARE SMALL OR MEDIUM-SIZED, AND FAMILY-OWNED) 
GIVE THE ADVANTAGE TO ITALIAN FIRMS AND MAKE THE ITALIAN 
MARKET LARGELY UNATTRACTIVE TO FOREIGN FIRMS. ITALIAN FIRMS 
HAVE NOT VENTURED MUCH BEYOND ITALY'S BORDERS INTO THE REST 
OF THE EU. UNLESS ITALIAN FINANCIAL FIRMS QUICKLY ADOPT A 
MORE COMPETITIVE STRATEGY, WITH AN OPEN, TRANSPARENT AND 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ4495 
 
PAGE 01        ROME  03006  02 OF 02  191444Z 
ACTION EUR-00 
 
INFO  LOG-00   AID-00   CEA-01   CIAE-00  COME-00  CTME-00  DODE-00 
      ITCE-00  SRPP-00  EB-00    EXME-00  E-00     UTED-00  VC-00 
      FRB-00   H-01     TEDE-00  INR-00   IO-00    ITC-01   LAB-01 
      L-00     AC-01    NSAE-00  NSCE-00  OMB-01   OPIC-01  ACE-00 
      SEC-01   SP-00    SSO-00   SS-00    STR-00   TEST-00  USIE-00 
      FMP-00   EPAE-00  DRL-02   G-00     NFAT-00  SAS-00     /010W 
                  ------------------BF801E  191445Z /38 
P 191432Z JUN 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC PRIORITY 4338 
INFO EU CANDIDATE STATES COLLECTIVE PRIORITY 
EU MEMBER STATES COLLECTIVE PRIORITY 
AMCONSUL FLORENCE PRIORITY 
AMCONSUL FRANKFURT PRIORITY 
AMCONSUL MILAN PRIORITY 
AMCONSUL NAPLES PRIORITY 
DEPT OF TREASURY WASHDC PRIORITY 
USEU BRUSSELS PRIORITY 2719 
 
UNCLAS SECTION 02 OF 02 ROME 003006 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/ERA, EB/IFD/OMA 
STATE ALSO PASS TO SEC - FRIEDMAN 
STATE ALSO PASS FRB - O'DAY 
TREASURY FOR DAS SOBEL, MONROE 
                       UNCLASSIFIED 
 
PAGE 02        ROME  03006  02 OF 02  191444Z 
FRANKFURT FOR TREASURY - WALLAR 
 
E.O. 12958: N/A 
TAGS: EFIN EU EU IT ITEFIN
SUBJECT: KEY ADVISOR TO EU PARLIAMENTARIAN ON EU FINANCIAL 
SERVICES ACTION PLAN AND BILATERAL INVESTMENT TREATIES 
 
HARMONIZED MARKET, MANY WILL LOSE GROUND IN ITALY AND 
EFFECTIVELY BE LOCKED OUT OF OTHER EUROPEAN MARKETS. END 
COMMENT.) 
 
BILATERAL INVESTMENT TREATIES 
----------------------------- 
 
¶8. (SBU) TAKING THE OPPORTUNITY TO DISCUSS GENERAL EU 
ECONOMIC ISSUES, WE RAISED USG CONCERNS ABOUT THE 
COMMISSION'S TREATMENT OF BILATERAL INVESTMENT TREATIES, 
ESPECIALLY THOSE THE U.S. HAS WITH ACCESSION STATES (REFTEL 
B).  POGGIALI WAS UNAWARE UNTIL NOW OF THIS CONTROVERSY BUT 
INDICATED HE WILL LOOK FURTHER INTO IT.  COMPETENCY OVER 
INVESTMENT ISSUES, HE NOTED, IS STILL OPEN BETWEEN MEMBER 
STATES AND THE COMMISSION. UPON REFLECTION, HE THOUGHT THAT 
IF OUR CONCERNS ABOUT COMMISSION ACTION ON BITS ARE VALID, 
THIS MAY BE ONE WAY THE COMMISSION IS TRYING TO EXERT 
COMPETENCY OVER THE ISSUE. 
 
¶9. (SBU) POGGIALI ASKED WHETHER THE USG IS IN COMMUNICATION 
WITH COMMISSION OFFICIALS AND ACCESSION STATES, TO WHICH WE 
AFFIRMED POSITIVELY.  ON EU CANDIDATE ISSUES IN GENERAL, HE 
SAID THE U.S. MAY WANT TO CONSIDER WORKING WITH THE "SPONSOR" 
COUNTRY IF THERE IS A SPECIFIC CONCERN RELATED TO A CANDIDATE 
                       UNCLASSIFIED 
 
PAGE 03        ROME  03006  02 OF 02  191444Z 
COUNTRY.  (NOTE: EACH EU CANDIDATE GOVERNMENT HAS A INFORMAL 
"PATRON"; ITALY IS THE SPONSOR FOR BULGARIA, GERMANY FOR 
POLAND. END NOTE.) 
SEMBLER 
 
                       UNCLASSIFIED 
 
> 
 2002ROME03006 - Classification: UNCLASSIFIED