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Reference ID	Created	Released	Classification	Origin
03ROME2330	2003-05-28 08:06	2011-08-30 01:44	UNCLASSIFIED//FOR OFFICIAL USE ONLY	Embassy Rome

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

UNCLAS SECTION 01 OF 06 ROME 002330 
 
SIPDIS 
 
PARIS FOR NSF REP SCHINDEL 
DEPT FOR OES/STC AND STAS, EUR/WE 
 
WHITE HOUSE FOR OSTP 
USDOC FOR TA MILLICK 
 
SENSITIVE 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02330  01 OF 06  310644Z 
 
E.O. 12958: N/A 
TAGS: TSPL KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY IT ITTSPL ITTSPL ITTSPL ITTSPL ITTSPL
SUBJECT: SWEEPING ITALIAN RESEARCH REFORMS SWEEP OUT CNR 
PRESIDENT BIANCO BUT MAY NOT SWEEP IN INDUSTRIAL INNOVATION 
 
REF:  A)02 ROME 2147, B) 02 ROME 4032, C) 02 ROME 3727 D) 
ROME 2080 
 
SENSITIVE BUT UNCLASSIFIED.  NOT FOR INTERNET DISTRIBUTION. 
 
¶1.  (SBU) SUMMARY:  TAKEN IN SCHUMPETERIAN TERMS, ITALY IS 
POORLY POSITIONED AT PRESENT TO GENERATE OR BENEFIT IN EARLY 
STAGES FROM THE "LONG WAVES" OF RESEARCH, INVENTION, AND 
INNOVATION WHICH CHARACTERIZE MAJOR TECHNOLOGICAL PARADIGM 
SHIFTS LIKE INFORMATION COMMUNICATION TECHNOLOGY (ICT), 
BIOTECHNOLOGY, OR NANOTECHNOLOGY.  WHILE ITALY CAN AND DOES 
GENERATE SCIENTIFIC BREAKTHROUGHS, ESPECIALLY IN 
HISTORICALLY STRONG DISCIPLINES SUCH AS MEDICINE AND 
PHYSICS, AND CAN PRODUCE BRILLIANT INNOVATIONS, IT DOES NOT 
HAVE AT PRESENT EITHER THE NECESSARY LEVEL OF R AND D 
FUNDING AT THE NATIONAL LEVEL OR THE CRITICAL MASS OF 
KNOWLEDGE CHARACTERISTIC OF INTERNATIONAL TECHNOLOGY 
CLUSTERS.  ITALIAN ATTEMPTS TO BUILD THESE LINKS TO DATE - 
VIA SCIENCE AND TECHNOLOGY PARKS, CENTERS OF EXCELLENCE OR 
DESIGNATED TECHNOLOGY "POLES" OR REGIONS - HAVE ACHIEVED 
LIMITED SUCCESS.  ITALIAN INDUSTRY CONTINUES TO PLACE TOO 
MUCH CONFIDENCE ON HIGH TECHNOLOGY TO GROW NEXT GENERATION 
BUSINESS, WHETHER NEW OR TRANSFORMATIONS OF EXISTING 
INDUSTRIES.  LAST, THE CULTURE OF RESEARCHERS IN ITALY - 
HIGHLY INDEPENDENT, COMPETITIVE - CONTINUES TO CONFOUND 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02330  01 OF 06  310644Z 
EFFORTS TO DERIVE ECONOMIC RETURNS FROM PUBLIC INVESTMENT. 
THE REFORMS OF MINISTER FOR EDUCATION, UNIVERSITY AND 
RESEARCH (MIUR) LETIZIA MORATTI ARE INTENDED TO IMPROVE THE 
EFFICIENCY OF RESEARCH "THROUGHPUTS" TO INDUSTRY, AND TO 
CONVINCE INDUSTRY TO INVEST MORE IN R AND D, IN ACCORDANCE 
WITH EU STRATEGIES.  THE RESIGNATION OF FORMER CNR PRESIDENT 
LUCIO BIANCO (REF D), UNDER FIRE FROM THE MINISTER FOR THE 
LAST HALF YEAR, COULD BE A SIGNIFICANT STEP ALONG THE PATH 
TO REFORM.  NEW CNR COMMISSIONER DESIGNATE ADRIANO DE MAIO 
TOLD US ON MAY 20 THAT HE PLANS TO MOVE ON MORATTI'S PROGRAM 
WITH A MINIMUM OF TALK AND A MAXIMUM OF ACTION.  END 
SUMMARY. 
 
--------------------------------------- 
CNR REFORM REDUX? BACKGROUND AND STATUS 
--------------------------------------- 
 
¶2. (U)  ON JAN. 31, 2003 THE COUNCIL OF MINISTERS ISSUED A 
DRAFT DECREE TO REFORM THREE RESEARCH INSTITUTES (THE 
NATIONAL RESEARCH COUNCIL - CNR, THE SPACE AGENCY - ASI, AND 
THE NATIONAL INSTITUTE OF ASTROPHYSICS - INAF).  WHILE 
REFORM FOR ASI AND INAF IMPLIES MINOR CHANGES, THE CNR WOULD 
BE RADICALLY RESTRUCTURED, AND THE COUNCIL OF MINISTERS 
DECIDED TO APPOINT A COMMISSIONER (PROF. ADRIANO DE MAIO) TO 
OVERSEE THE REFORM.  CURRENT CNR PRESIDENT LUCIO BIANCO 
APPEALED TO THE ADMINISTRATIVE REGIONAL COURT (TAR) WHICH 
SUSPENDED HIS DISMISSAL ON FEB. 20.  ON MAY 13, BIANCO 
RESIGNED WHEN HE LEARNED THAT THE RESEARCH REFORM PROPOSAL 
HAD BEEN SUPPORTED BY THE TECHNICAL ADVISORS OF THE COUNCIL 
OF MINISTERS, WHICH APPROVED THE REFORM LAW DECREES ON MAY 
16 (REF D). 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02330  01 OF 06  310644Z 
 
¶3. (U) THE LATEST REORGANIZATION CONFIRMED A SERIES OF 
INITIATIVES THAT DATES FROM 1999 (REFS A-C).  THE 1999 
REFORM, WHICH CONSOLIDATED THE MORE-THAN-300 INSTITUTES OF 
CNR INTO 108, TURNED OUT TO SIMPLY RENAME THE HEADS OF THE 
INSTITUTES TO DIVISION DIRECTOR POSITIONS AND FAILED TO 
ACHIEVE THE ECONOMIES OF SCALE OR INTERDISCIPLINARY ACTIVITY 
INTENDED BY THE REFORM.  ONE POSITIVE ACHIEVEMENT WAS THE 
INTRODUCTION OF A PEER-REVIEW SYSTEM FOR THE EVALUATION OF 
RESEARCH PROPOSALS. 
 
¶4. (U) CNR WAS HELD UP TO PUBLIC SCRUTINY FOR ITS MORIBUND 
WAYS SEVERAL TIMES IN THE FALL OF 2001 IN NATURE MAGAZINE, 
PARTICULARLY IN ITS INTERNATIONAL SEARCH FOR NEW CNR 
INSTITUTE DIRECTORS, ALL OF WHOM TURNED OUT ULTIMATELY TO BE 
ITALIAN AND FORMER CNR DIRECTORS.  ACCORDING TO A PRESS 
ARTICLE, THE CORTE DEI CONTI (THE SUPREME ADMINISTRATIVE 
COURT) COMMENTED ON THE CNR REFORM IN AUGUST 2002: "108 
INSTITUTES SURVIVED A REFORM WHICH ESSENTIALLY WAS LIMITED 
TO AGGREGATIONS WITHOUT A STRATEGIC DESIGN AND JUST MOVED 
INSTITUTES INTO OTHER INSTITUTES INSTEAD OF CLOSING THEM. 
MOREOVER, THE FACT THAT THE INSTITUTES ARE LOCATED 
[GEOGRAPHICALLY] FAR FROM EACH OTHER INCREASES THE RISK OF 
DUPLICATIVE ACTIVITY THAT WAS TYPICAL OF THE PREVIOUS CNR 
ORGANIZATION AND THUS SUBSTANTIALLY BETRAYS THE AIM OF THE 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ8139 
 
PAGE 01        ROME  02330  02 OF 06  310645Z 
ACTION OES-00 
 
INFO  LOG-00   AID-00   CIAE-00  DINT-00  DODE-00  DOEE-00  SRPP-00 
      EB-00    EUR-00   E-00     UTED-00  VC-00    TEDE-00  INR-00 
      IO-00    L-00     VCE-00   AC-01    NSAE-00  NSCE-00  NSF-01 
      OIC-02   PM-00    PRS-00   ACE-00   SP-00    SSO-00   SS-00 
      TEST-00  T-00     USIE-00  EPAE-00  PMB-00   G-00     SAS-00 
        /004W 
                  ------------------6D7D50  310645Z /21 
R 280806Z MAY 03 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 0103 
USDOC WASHDC 
WHITE HOUSE WASHDC 
INFO AMCONSUL MILAN 
AMCONSUL FLORENCE 
AMCONSUL NAPLES 
EU MEMBER STATES COLLECTIVE 
 
UNCLAS SECTION 02 OF 06 ROME 002330 
 
SIPDIS 
 
PARIS FOR NSF REP SCHINDEL 
DEPT FOR OES/STC AND STAS, EUR/WE 
 
WHITE HOUSE FOR OSTP 
USDOC FOR TA MILLICK 
 
SENSITIVE 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02330  02 OF 06  310645Z 
 
E.O. 12958: N/A 
TAGS: TSPL KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY IT ITTSPL ITTSPL ITTSPL ITTSPL ITTSPL
SUBJECT: SWEEPING ITALIAN RESEARCH REFORMS SWEEP OUT CNR 
PRESIDENT BIANCO BUT MAY NOT SWEEP IN INDUSTRIAL INNOVATION 
 
REFORM."  CNR HAS 8082 EMPLOYEES, 4319 RESEARCHERS, 2643 
TECHNICIANS, AND 1120 ADMINISTRATIVE PERSONNEL.  FOR 2003, 
THE CNR WILL RECEIVE 544 MILLION EURO AND SPEND 413 MILLION 
IN SALARIES, AND 50 MILLION IN OPERATIONS AND MAINTENANCE. 
ONLY 81 MILLION EURO ARE LEFT FOR RESEARCH PROJECTS. 
 
---------------------------- 
THE 2003 REFORM - HIGHLIGHTS 
---------------------------- 
 
¶5. (U) RESEARCH MINISTER MORATTI'S 2003 REFORM REORGANIZES 
THE CNR INTO EIGHT LARGER DEPARTMENTS THAT WOULD USE BOTH 
PUBLIC AND PRIVATE FUNDS FOR OPERATIONS AND RESEARCH.  THE 
DEPARTMENTS, ALSO CALLED "MACRO-AREAS", WILL BE: 
 
1)   BIOTECHNOLOGIES 
2)   MEDICAL SCIENCE AND TECHNOLOGIES 
3)   MATERIALS SCIENCE AND TECHNOLOGIES (INCLUDING 
   NANOTECHNOLOGIES) 
4)   ENVIRONMENT AND EARTH SCIENCES AND TECHNOLOGIES 
5)   INFORMATION AND COMMUNICATION SCIENCES AND TECHNOLOGIES 
6)   ADVANCED PRODUCTION SYSTEM SCIENCES AND TECHNOLOGIES 
7)   JURIDICAL AND ECONOMIC SCIENCES 
8)   HUMANISTIC SCIENCES 
 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02330  02 OF 06  310645Z 
THE EIGHT DEPARTMENTS WILL 1) COORDINATE THE INSTITUTES 
WITHOUT DUPLICATION OF ACTIVITY; 2) ALLOCATE FUNDS ACCORDING 
TO THE PROGRAMS AUTHORIZED BY A NEW ADMINISTRATIVE BOARD; 3) 
ENTER INTO THE EUROPEAN EXCELLENCE NETWORK, AND PROMOTE 
INTERNATIONAL CONTACTS; AND 4) SUPPORT COOPERATION WITH THE 
INDUSTRIAL SECTOR. 
 
¶6. (U)  THE NEW REFORM ALSO PROVIDES FOR: 
-  CREATION OF AN ADMINISTRATIVE BOARD - A GOVERNING BODY - 
COMPOSED OF THE CNR PRESIDENT AND SIX PROMINENT 
SCIENTISTS/MANAGERS NOMINATED BY THE MINISTRY, THE STATE- 
REGION CONFERENCE, THE UNIVERSITIES RECTORS CONFERENCE, THE 
CHAMBERS OF COMMERCE, AND CONFINDUSTRIA (INDUSTRIES 
ASSOCIATION). 
- A NEW SCIENTIFIC COUNCIL (20 MEMBERS NOMINATED BY THE 
ADMINISTRATIVE BOARD, THE CNR PRESIDENT, THE CNR 
RESEARCHERS, AND THE NATIONAL COUNCIL OF ECONOMY AND LABOR) 
- A NEW EVALUATION COMMITTEE (EIGHT CNR-EXTERNAL MEMBERS 
NOMINATED BY THE MINISTRY, THE STATE-REGION CONFERENCE, THE 
UNIVERSITIES RECTORS CONFERENCE, THE CHAMBERS OF COMMERCE) 
- A NEW COUNCIL OF DEPARTMENTS DIRECTORS (CNR PRESIDENT, DG, 
AND DIRECTORS) 
- A NEW AUDITORS' COMMITTEE (THREE MEMBERS NOMINATED BY THE 
RESEARCH MINISTRY AND BY THE ECONOMY MINISTRY) 
 
--------------------------------------------- ------- 
ITALIAN SCIENTISTS ARE DIVIDED BY WHOSE OX IS GORED 
--------------------------------------------- ------- 
 
¶7. (SBU)  RESEARCHERS ARE DIVIDED INTO TWO GROUPS:  ONE 
GROUP FAVORING MORATTI'S REFORM WROTE THE MINISTER A LETTER 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02330  02 OF 06  310645Z 
LAST FEBRUARY OFFERING COOPERATION TO IMPROVE THE ITALIAN 
RESEARCH SYSTEM.  ACCORDING TO THE PRESS, THIS GROUP 
SUPPORTS THE REFORM'S CONCENTRATION OF FUNDS TO A FEW 
SPECIFIC OBJECTIVES, AND THE INTEGRATION OF ITALIAN RESEARCH 
INTO THE EU RESEARCH NETWORK.  THIS GROUP INCLUDES ENZO 
BOSCHI, THE PRESIDENT OF THE NATIONAL INSTITUTE OF 
GEOPHYSICS, ENRICO GARACI, THE PRESIDENT OF THE NATIONAL 
INSTITUTE OF HEALTH, SERGIO VETRELLA, THE PRESIDENT OF THE 
ITALIAN SPACE AGENCY, AND ENZO IAROCCI, THE PRESIDENT OF THE 
NATIONAL INSTITUTE OF PHYSICS. 
 
¶8. (SBU) SCIENTISTS OPPOSING MORATTI'S REFORM - MAINLY CNR 
RESEARCHERS - BELIEVE THE PLAN WILL INTRODUCE TOP-DOWN 
GOVERNMENT CONTROL OF RESEARCH PRIORITIES AND THUS CHANGE 
THE PRESENT ARRANGEMENT OF ALLOWING CNR RESEARCHERS TO 
DEVELOP THEIR OWN AGENDA AND PROJECTS BOTTOM-UP.  ON FEB. 
12, 2003, PROF. BIANCO SAID THAT "THIS GOVERNMENT 
(BERLUSCONI'S) CUTS THE FUNDS AND PILOTS THE MANAGEMENT OF 
WHAT IS LEFT."  IN PARTICULAR, BIANCO AND OTHER MEMBERS OF 
THE CURRENT BOARD OF DIRECTORS, OPPOSED THE CREATION OF THE 
NEW DEPARTMENTS, WHICH WOULD INCREASE THE "CENTRAL 
BUREAUCRACY".  COMMENT:  ACTUALLY, THE WHOLE POINT OF THE 
MORATTI REFORM IS TO REDUCE THE CNR BUREAUCRACY, WHICH WAS 
UNRESPONSIVE TO DIRECT INSTRUCTIONS FROM THE MINISTRY DURING 
BIANCO'S TENURE.  END COMMENT. 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ8140 
 
PAGE 01        ROME  02330  03 OF 06  310645Z 
ACTION OES-00 
 
INFO  LOG-00   AID-00   CIAE-00  DINT-00  DODE-00  DOEE-00  SRPP-00 
      EB-00    EUR-00   E-00     UTED-00  VC-00    TEDE-00  INR-00 
      IO-00    L-00     VCE-00   AC-01    NSAE-00  NSCE-00  NSF-01 
      OIC-02   PM-00    PRS-00   ACE-00   SP-00    SSO-00   SS-00 
      TEST-00  T-00     USIE-00  EPAE-00  PMB-00   G-00     SAS-00 
        /004W 
                  ------------------6D7D5B  310645Z /21 
R 280806Z MAY 03 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 0104 
USDOC WASHDC 
WHITE HOUSE WASHDC 
INFO AMCONSUL MILAN 
AMCONSUL FLORENCE 
AMCONSUL NAPLES 
EU MEMBER STATES COLLECTIVE 
 
UNCLAS SECTION 03 OF 06 ROME 002330 
 
SIPDIS 
 
PARIS FOR NSF REP SCHINDEL 
DEPT FOR OES/STC AND STAS, EUR/WE 
 
WHITE HOUSE FOR OSTP 
USDOC FOR TA MILLICK 
 
SENSITIVE 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02330  03 OF 06  310645Z 
 
E.O. 12958: N/A 
TAGS: TSPL KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY IT ITTSPL ITTSPL ITTSPL ITTSPL ITTSPL
SUBJECT: SWEEPING ITALIAN RESEARCH REFORMS SWEEP OUT CNR 
PRESIDENT BIANCO BUT MAY NOT SWEEP IN INDUSTRIAL INNOVATION 
 
--------------------------------------------- ------- 
RESEARCHERS:  TURN IN YOUR LAB COATS AND TEST TUBES! 
--------------------------------------------- ------- 
 
¶9. (U) BIANCO AND RESEARCHERS OPPOSED TO THE MORATTI REFORM 
ORGANIZED ON FEB. 12, 2003 A DEMONSTRATION IN FRONT OF THE 
PARLIAMENT, WHERE THEY LEFT THEIR WHITE COATS AND LAB TUBES. 
THEY CLAIMED THE REFORM WAS PREPARED WITHOUT CONSULTING CNR 
RESEARCHERS, AND INTRODUCED NEW GOVERNMENT CONTROLS IN A 
LESS-AND-LESS FUNDED RESEARCH ENVIRONMENT.  NOTE:  MEMBERS 
OF THE CENTER-LEFT MINORITY COALITION WERE REPORTED TO BE 
PART OF THE DEMONSTRATION.  END NOTE.  MORATTI EXPLAINED TO 
THE PARLIAMENT THAT CNR HAD TO BE GOVERNED TEMPORARILY BY A 
COMMISSIONER BECAUSE PRESIDENT BIANCO STRONGLY OPPOSED THE 
REFORM.  BIANCO REPLIED THAT HE HAD REPEATEDLY ASKED THE 
MINISTER TO ADDRESS THE PRO'S AND CON'S OF THE 1999 REFORMS 
AND CNR COMMENTS ON THE 2002 RESEARCH GUIDELINES ISSUED BY 
MORATTI. 
 
¶10. (U) ON MARCH 11, BIANCO EXPLAINED THE RESEARCHERS' 
PERPLEXITY ABOUT THE MORATTI REFORMS BEFORE THE PARLIAMENT 
AND THE MINISTER.  ACCORDING TO THE PRESS, THE FINAL LAW 
DECREES APPROVED ON MAY 16 HAVE INCORPORATED A FEW CHANGES 
DURING THEIR APPROVAL PROCEDURE THROUGH SIX PARLIAMENTARY 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02330  03 OF 06  310645Z 
COMMITTEES.  THE FINAL TEXT IS NOT YET AVAILABLE. 
 
¶11. (SBU) ON MAY 20, PROF. ADRIANO DE MAIO, WHO WILL BE 
APPOINTED AS CNR COMMISSIONER THE WEEK OF MAY 26 - TOLD 
ESTCOUNS HIS PRIORITIES FOR THE CNR REFORM: 
-  DEVOTE MORE CNR FUNDS TO RESEARCH, BY REDUCING THE 
ADMINISTRATIVE STAFF AND COSTLY NON-RESEARCH 
INFRASTRUCTURES. 
-  TRANSFORM CNR IN A RESEARCH AGENCY AND ENCOURAGE MOBILITY 
OF RESEARCHERS FROM UNIVERSITIES TO CNR TO ALLOW YOUNGER 
RESEARCHERS TO FLOW TO CNR. 
-  IMPLEMENT AN EVALUATION SYSTEM FOR RESEARCH RESULTS. 
-  CONCENTRATE FUNDS IN FEW STRATEGIC SECTORS (DE MAIO 
MENTIONED:  NEW MATERIALS, NANOTECHNOLOGY, ICT, ENERGY) 
WHICH COULD DEVELOP INDUSTRIAL APPLICATIONS, AND IN FEW 
CENTERS OF "EXCELLENCE" (E.G.: LECCE, MILAN, TRENTO, 
TRIESTE, AND NAPLES). 
 
¶12. (SBU) COMMENT:  WE DO NOT KNOW HOW FAR DE MAIO WILL BE 
ABLE TO GO, ESPECIALLY IN REDUCING OR MOVING LONG-ENTRENCHED 
CNR BUREAUCRATS AND ADMINISTRATORS TO OTHER MINISTRIES; OR 
CONCENTRATING THE FUNDS IN ONE CENTER PER STRATEGIC SECTOR, 
THEREBY EXPECTING THE ITALIAN RESEARCHERS TO OVERCOME THEIR 
OFTEN DISADVANTAGEOUS COMPETITION AND AVERSION TO MOVE FROM 
NORTH TO SOUTH.  HOWEVER, DE MAIO APPEARED EXPERIENCED AND 
EAGER TO ACT, AND WAS CERTAINLY OPTIMISTIC ABOUT REACHING 
HIS TARGETS GIVEN THE RESEARCH MINISTER'S SUPPORT.  END 
COMMENT. 
 
---------------------------------- 
GUIDELINES FOR RESEARCH EVALUATION 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02330  03 OF 06  310645Z 
---------------------------------- 
 
¶13. (U) AS PART OF THE 2003 REFORM, MINISTER MORATTI ALSO 
RELEASED NEW GUIDELINES FOR EVALUATION OF RESEARCH PROPOSALS 
AND RESULTS.  NOTE. RESEARCH EVALUATION WAS INTRODUCED FOR 
THE FIRST TIME IN THE 1999 REFORM, BUT ONLY FOR PROPOSALS 
(I.E. NO RESEARCH FINDINGS NEEDED TO BE REPORTED BY 
SUPPORTED RESEARCHERS).  END NOTE.  THE GUIDELINES PROVIDE 
FOR THE APPOINTMENT OF ABOUT 150 PEER-REVIEWERS "WHO MUST BE 
EXTERNAL TO THE GOI RESEARCH INSTITUTES" AND SHOULD INCLUDE 
FOREIGN RESEARCHERS.  THE EVALUATION WILL INCLUDE QUALITY, 
ORIGINALITY, INNOVATION, INTERNATIONAL COOPERATION, AND THE 
ECONOMIC IMPACT OF SUPPORTED PROJECTS. 
 
------------------------------ 
2002 GOI PUBLIC RESEARCH FUNDS 
------------------------------ 
     AGENCY                        MILLIONS EURO 
 
ASI - ITALIAN SPACE AGENCY              638 
CNR                                     544 
INFN - NUCLEAR PHYSICS                  287 
INFM - PHYSICS OF MATTER                 24 
INGV - GEOPHYSICS AND VULCANOLOGY        21 
OGS - OCEANOGRAPHY AND GEOPHYSICS        11 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ8141 
 
PAGE 01        ROME  02330  04 OF 06  310646Z 
ACTION OES-00 
 
INFO  LOG-00   AID-00   CIAE-00  DINT-00  DODE-00  DOEE-00  SRPP-00 
      EB-00    EUR-00   E-00     UTED-00  VC-00    TEDE-00  INR-00 
      IO-00    L-00     VCE-00   AC-01    NSAE-00  NSCE-00  NSF-01 
      OIC-02   PM-00    PRS-00   ACE-00   SP-00    SSO-00   SS-00 
      TEST-00  T-00     USIE-00  EPAE-00  PMB-00   G-00     SAS-00 
        /004W 
                  ------------------6D7D60  310646Z /21 
R 280806Z MAY 03 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 0105 
USDOC WASHDC 
WHITE HOUSE WASHDC 
INFO AMCONSUL MILAN 
AMCONSUL FLORENCE 
AMCONSUL NAPLES 
EU MEMBER STATES COLLECTIVE 
 
UNCLAS SECTION 04 OF 06 ROME 002330 
 
SIPDIS 
 
PARIS FOR NSF REP SCHINDEL 
DEPT FOR OES/STC AND STAS, EUR/WE 
 
WHITE HOUSE FOR OSTP 
USDOC FOR TA MILLICK 
 
SENSITIVE 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02330  04 OF 06  310646Z 
 
E.O. 12958: N/A 
TAGS: TSPL KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY IT ITTSPL ITTSPL ITTSPL ITTSPL ITTSPL
SUBJECT: SWEEPING ITALIAN RESEARCH REFORMS SWEEP OUT CNR 
PRESIDENT BIANCO BUT MAY NOT SWEEP IN INDUSTRIAL INNOVATION 
 
INAF - ASTROPHYSICS                       8 
UNIVERSITY                              134 
ISS - INSTITUTE OF HEALTH                 7 
IRCSS - BIOMEDICAL RESEARCH             183 
                                      ------- 
TOTAL                                   1,857 
 
NOTE:  EMBASSY HAS LITTLE CONFIDENCE IN THE COMPLETENESS AND 
RELIABILITY OF THESE FIGURES, WHICH HAVE BEEN TAKEN FROM 
SEVERAL BOTH PRIVATE AND PUBLIC SOURCES.  END NOTE. 
--------------------------------------------- ----- 
THE OTHER SIDE OF THE COIN - INDUSTRIAL INNOVATION 
--------------------------------------------- ----- 
 
¶14. (U) IN SPITE OF ITS PRE-ELECTION PROMISES, THE 
BERLUSCONI GOVERNMENT SINCE 2001 HAS NOT TRANSLATED ITS 
RHETORICAL SUPPORT FOR SCIENCE AND INNOVATION INTO A BETTER- 
FUNDED, MORE COMPETITIVE RESEARCH PROGRAM FOR ITALY.  GOI 
RESEARCH FUNDING, ADJUSTED FOR INFLATION, IS STILL IN 
DECLINE: COMPARED TO 2002 LEVEL, CNR FUNDS WILL DECLINE BY 2 
PCT IN 2003 AND BY AS MUCH AS 10 PCT IN 2004.  IN ADDITION, 
THERE IS A LOW INDUSTRIAL RESEARCH CAPACITY AND A LOW 
MEASURED INVESTMENT BY SME COMPANIES IN R AND D. 
UNCOMPETITIVE SALARIES AND BUREAUCRACY IN RESEARCH AGENCIES 
HAVE CONTRIBUTED TO A "BRAIN DRAIN" OF TOP ITALIAN 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02330  04 OF 06  310646Z 
SCIENTISTS TO THE U.S. AND OTHER COUNTRIES. 
 
¶15. (U) SOMEWHAT UNREALISTICALLY, THE INDUSTRIAL COMMUNITY, 
DESPITE THE LOW OVERALL EXPENDITURES ON R AND D, AND TWENTY 
YEARS OF LOW RANKING IN INNOVATION AND COMPETITIVENESS IN 
OECD AND EU STATISTICS, CONTINUES TO BELIEVE R AND D SHOULD 
DRIVE THE FUTURE OF ITALIAN INDUSTRY.  ITALY'S CHIEF 
FINANCIAL PAPER "IL SOLE-24 ORE," HAS FEATURED MANY ARTICLES 
ON THE SHORTCOMINGS OF THE ITALIAN RESEARCH SYSTEMS IN THE 
LAST THREE MONTHS.  LOW TOTAL INVESTMENT IN R AND D, POOR 
LINKAGES BETWEEN RESEARCH AND INDUSTRY (TRUE OF BOTH CNR 
INSTITUTES AND UNIVERSITIES), COMPOUNDING FACTORS, WHICH 
OFTEN SLOW INVESTMENT (INFLEXIBLE LABOR, GOVERNMENT 
BUREAUCRACY), AGING INDUSTRIES LIKE CHEMICALS, AND SLOW 
ENTRY INTO TECHNOLOGY PARADIGM SHIFT ARENAS LIKE ICT AND 
BIOTECHNOLOGY, ALL SUGGEST CHANGE IS NEEDED. 
CONFINDUSTRIA'S VICE PRESIDENT GIANCARLO CERUTTI HAS CALLED 
ON THE ITALIAN GOVERNMENT TO CREATE A BRIDGE BETWEEN THE 
WORLD OF INDUSTRY AND THAT OF THE UNIVERSITY.  OTHERS SEE IN 
PATENT LAW AND PRACTICE A KEY IMPEDIMENT, POINTING OUT THAT 
THE PRODUCTIVITY OF ITALIAN RESEARCHERS, MEASURED IN 
SCIENTIFIC CITATIONS PER EURO INVESTED IS SECOND IN THE G-7 
TO ONLY GREAT BRITAIN.  HOWEVER, IN TERMS OF PATENTS, ITALY 
LAGS THE LEADERS BADLY.  IN THE LAST FIVE YEARS, THE NUMBER 
OF PATENTS FILED BY CNR HAS DECLINED 41 PCT WITH RESPECT TO 
THE PRECEDING FIVE YEARS. 
 
¶16. (U) EVEN FEWER PATENTS FIND THEIR WAY TO INNOVATIONS. 
ACCORDING TO A MARCH 2003 PRESS REPORT, CNR MANAGES TO 
LICENSE AND TRANSFER ONLY 20 PERCENT OF PATENTS FILED; THE 
POLITECNICO IN MILAN HAS LICENSED ONLY ONE PATENT IN THE 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02330  04 OF 06  310646Z 
LAST THREE YEARS.  CNR TRANSFERS TO INDUSTRY ONLY 7 PCT OF 
THE PATENTS TRANSFERRED OR LICENSED BY MIT.  FROM SALES AND 
ROYALTIES OF PATENTS MIT DERIVES 10 PCT OF ITS ANNUAL BUDGET 
WHILE CNR DERIVES LESS THAN 0.1 PCT OF ITS RESEARCH BUDGET 
FROM SUCH TRANSFERS.  TO PUT THE NAIL IN THE ITALIAN 
INNOVATION COFFIN, IN TERMS OF RESEARCH-BASED SPIN-OFF'S, SO 
FAR CNR HAS LAUNCHED ONLY 3, THE POLITECNICO ONLY 2, WHILE 
AMERICAN UNIVERSITIES LAUNCHED 450 IN THE YEAR 2000 ALONE. 
 
¶17. (U) ALL COMMENTATORS AGREE ON THE LACK OF SYNERGY 
BETWEEN RESEARCHERS, INDUSTRIAL INNOVATORS, AND THE 
FINANCIAL AND GOVERNMENT COMMUNITIES.  MOST INDUSTRIALISTS 
ARE QUICK TO BLAME THE GOVERNMENT AND LOW LEVELS OF PUBLICLY 
FUNDED RESEARCH, BUT THE BLAME, IF ANY IS TO BE ATTRIBUTED, 
HAS TO BE SHARED.  ACCORDING TO THE 2002 EUROPEAN INNOVATION 
SCOREBOARD, NONE OF THE TOP TEN REGIONS FOR INNOVATION IN 
EUROPE IS IN ITALY.  AMONG FOURTEEN INDICATORS IN THE EU 
(E.G. SCIENCE AND ENGINEERING GRADUATES /20-29 YEARS; 
POPULATION WITH TERTIARY EDUCATION; PUBLIC R AND D/GDP; 
BUSINESS R AND D/GDP; HIGH TECH MANUFACTURING VALUE ADDED, 
ETC), ITALY LEADS IN NO CATEGORY.  WHILE THE OVERALL REPORT 
IS FLAWED, AND INDICATORS GENERALLY NOT INTEGRATED DUE TO 
DIFFERENT TIME PERIODS FOR DATA SETS, ITALY IS NEAR THE 
BOTTOM OF THE EU LADDER IN PERCENTAGE OF POPULATION WITH 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ8142 
 
PAGE 01        ROME  02330  05 OF 06  310646Z 
ACTION OES-00 
 
INFO  LOG-00   AID-00   CIAE-00  DINT-00  DODE-00  DOEE-00  SRPP-00 
      EB-00    EUR-00   E-00     UTED-00  VC-00    TEDE-00  INR-00 
      IO-00    L-00     VCE-00   AC-01    NSAE-00  NSCE-00  NSF-01 
      OIC-02   PM-00    PRS-00   ACE-00   SP-00    SSO-00   SS-00 
      TEST-00  T-00     USIE-00  EPAE-00  PMB-00   G-00     SAS-00 
        /004W 
                  ------------------6D7D68  310646Z /21 
R 280806Z MAY 03 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 0106 
USDOC WASHDC 
WHITE HOUSE WASHDC 
INFO AMCONSUL MILAN 
AMCONSUL FLORENCE 
AMCONSUL NAPLES 
EU MEMBER STATES COLLECTIVE 
 
UNCLAS SECTION 05 OF 06 ROME 002330 
 
SIPDIS 
 
PARIS FOR NSF REP SCHINDEL 
DEPT FOR OES/STC AND STAS, EUR/WE 
 
WHITE HOUSE FOR OSTP 
USDOC FOR TA MILLICK 
 
SENSITIVE 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02330  05 OF 06  310646Z 
 
E.O. 12958: N/A 
TAGS: TSPL KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY IT ITTSPL ITTSPL ITTSPL ITTSPL ITTSPL
SUBJECT: SWEEPING ITALIAN RESEARCH REFORMS SWEEP OUT CNR 
PRESIDENT BIANCO BUT MAY NOT SWEEP IN INDUSTRIAL INNOVATION 
 
TERTIARY EDUCATION (25-64 YEARS OF AGE - 10.3 PCT COMPARED 
TO THE EU AVERAGE OF 21.2 PCT) AND KNOWLEDGE CREATING 
BUSINESS EXPENDITURES ON R AND D.  YET ITALY IS NEAR THE EU 
AVERAGE IN PERCENTAGE OF EMPLOYMENT IN MEDIUM HIGH TECH 
MANUFACTURING (2001 DATA) AND EMPLOYMENT IN HIGH TECH 
SERVICES. 
 
¶18. (U) ATTEMPTS TO STRENGTHEN THE LINKAGE BETWEEN THE 
RESEARCH COMMUNITY AND INDUSTRIAL SECTORS ARE MANY, FROM 
RESEARCH CONTRACTS AWARDED TO UNIVERSITIES, TO THE 
ESTABLISHMENT OF A NATIONAL NETWORK OF TECHNOLOGY AND 
SCIENCE PARKS, TO THE DESIGNATION OF NATIONAL CENTERS OF 
EXCELLENCE (A PROJECT BEGUN TWO YEARS AGO, WHICH HAS LARGELY 
COLLAPSED), TO THE DESIGNATION BY THE MARKETING OF RESEARCH 
OF ITALIAN REGIONS AS "POLES" FOR TECHNOLOGY INNOVATIONS 
(E.G. TORINO FOR ICT, VENETO FOR NANOTECHNOLOGIES).  THE 
DATA OVERALL SUGGESTS THAT WHILE THESE GOVERNMENT LED AND 
FINANCED INTERVENTIONS YIELD SOME RESULTS, THE PROBLEMS 
IDENTIFIED ABOVE PERSIST.  IN A RECENT VISIT TO THE 
UNIVERSITY OF TRIESTE AND THE AREA SCIENCE PARK, ESTCOUNS 
REVIEWED DATA WHICH SUGGEST THAT THE "HIGH-TECH" STRATEGY OF 
THE REGION OF FRIULI-VENEZIA-GIULIA IN THE NORTHEAST OF 
ITALY HAS SIGNIFICANT SHORTCOMINGS.  A REVIEW OF THE 
TRADITIONAL INDUSTRIES OF THE REGION--FURNITURE, PAPER, FOOD 
INDUSTRIES-- AND THE INVESTMENT STRATEGIES OF THE AREA PARK 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02330  05 OF 06  310646Z 
AND THE SURROUNDING INTERNATIONAL RESEARCH CENTERS - ICGEB 
AND ICTP, MADE CLEAR THAT THERE ARE MANY OPPORTUNITIES FOR 
EDUCATION IN SCIENCE AND ENGINEERING, BUT MANY FEWER FOR 
RELEVANT EMPLOYMENT IN LOCAL INDUSTRY.  ACCORDINGLY, TRIESTE 
EXPERIENCES AN "OUT-MIGRATION" OF ITS BEST-EDUCATED TO 
MILANO, TORINO, AND HIGH-TECH AREAS OUTSIDE OF ITALY. 
WITHIN THE SCIENCE PARK ITSELF THERE ARE A NUMBER OF SPIN- 
OFF COMPANIES, BUT THEIR PRODUCTION IS MORE LIKELY TO BE 
RELATED TO THE RESEARCH CENTERS THAN TO LOCAL INDUSTRY. 
ACCORDINGLY, THEY STAY SMALL, HAVE CUSTOMERS OUT-OF-THE- 
REGION, AND LITTLE PROSPECT FOR GROWTH.  THEY REMAIN IN THE 
SCIENCE PARK FOR THE SIMPLE REASON OF SUBSIDIZED SPACE FOR 
LABS AND OFFICE.  SINCE THE SCIENCE PARK DOES NOT HAVE A 
LIMIT ON THE TIME PERIOD SPIN-OFFS MAY REMAIN UNDER 
SUBSIDIZED CONDITIONS (A GO AND GROW POLICY) A SMALL COMPANY 
PROVIDING A HIGHLY SPECIALIZED PRODUCT, LIKE TESTING OR 
DIAGNOSTIC EQUIPMENT, WITH A LIMITED MARKET CAN SURVIVE 
UNDER THESE SUBSIDY CONDITIONS-POTENTIALLY TAKING SPACE FROM 
NEWER SPIN-OFFS WITH BETTER PROSPECTS FOR GROWTH.  NOR HAS 
AREA SCIENCE PARK OR THE REGION DEVELOPED A SUCCESSFUL 
INTERNAL MARKETING STRATEGY OR INCENTIVES TO ATTRACT FOREIGN 
COMPANIES OR INVESTMENTS TO CREATE A SERIOUS INTERNATIONAL 
INNOVATION CLUSTER.  THE SAME STORY COULD BE TOLD FOR OTHER 
SCIENCE OR TECHNOLOGY PARKS IN ITALY, WITH AREA PARK IN 
TRIESTE, THE OLDEST, BEST DOCUMENTED, AND GENERALLY REGARDED 
AS THE MOST SUCCESSFUL. 
 
----------------------------- 
WHY DOES ITALY BEAT THE ODDS? 
----------------------------- 
 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02330  05 OF 06  310646Z 
¶19. (U) DESPITE ALL THESE NEGATIVES--LOW DOMESTIC PUBLIC AND 
PRIVATE R AND D, POOR LINKAGES BETWEEN RESEARCHERS AND 
INDUSTRY, LOW LEVELS OF INNOVATION AND FEW REGIONAL 
INNOVATION CLUSTERS--IT REMAINS TRUE THAT ITALIAN RESEARCH 
IS HIGHLY REGARDED INTERNATIONALLY, AND THAT ITALIAN 
MANUFACTURED GOODS HAVE A REPUTATION FOR HIGH QUALITY. 
EXPLANATIONS LIE IN THE EVIL WAYS OF AVERAGING, AND IN THE 
STRUCTURE OF MEASURING R AND D AND INNOVATION. 
 
¶20. (SBU) WHILE ONLY ANECDOTAL DATA IS AVAILABLE, INTERVIEWS 
WITH UNIVERSITY AND INSTITUTE RESEARCHERS POINT IN SEVERAL 
CONSISTENT DIRECTIONS.  FIRST IS A GENERATION GAP, WITH MANY 
RESEARCHERS NOW IN MID-CAREER BRINGING MORE INTERNATIONAL 
EXPERIENCE (AND ASSOCIATED EXTERNAL FUNDING) TO THEIR 
LABORATORIES.  THE MORE COMPETITIVE NATURE OF INTERNATIONAL 
FUNDS HAS SHARPENED THE QUALITY OF RESEARCH PROPOSALS AND 
THE NEED FOR QUALITY RESULTS.  ALTHOUGH NO RELIABLE DATA ON 
EXTRAMURAL FUNDING IS AVAILABLE (DE MAIO CONFIRMED THIS ON 
MAY 20), EMBASSY BELIEVES THAT FUNDING FROM EU AND NON-EU 
SOURCES LIKE NIH COMPRISE A SIGNIFICANT PART OF THE 
FINANCIAL RESOURCES OF THE BEST ITALIAN RESEARCHERS, 
CREATING A TWO-TIER SYSTEM WHICH SOME RESEARCHERS RECEIVE 
SIGNIFICANTLY LARGER SHARES OF FUNDING BASED ON QUALITY OF 
RESEARCH.  THE DISTRIBUTION OF FUNDING IN ITALY WOULD BE AN 
INTERESTING TOPIC FOR STUDY.  WHILE THERE IS NOTHING 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ8143 
 
PAGE 01        ROME  02330  06 OF 06  310647Z 
ACTION OES-00 
 
INFO  LOG-00   AID-00   CIAE-00  DINT-00  DODE-00  DOEE-00  SRPP-00 
      EB-00    EUR-00   E-00     UTED-00  VC-00    TEDE-00  INR-00 
      IO-00    L-00     VCE-00   AC-01    NSAE-00  NSCE-00  NSF-01 
      OIC-02   PM-00    PRS-00   ACE-00   SP-00    SSO-00   SS-00 
      TEST-00  T-00     USIE-00  EPAE-00  PMB-00   G-00     SAS-00 
        /004W 
                  ------------------6D7D6F  310647Z /21 
R 280806Z MAY 03 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 0107 
USDOC WASHDC 
WHITE HOUSE WASHDC 
INFO AMCONSUL MILAN 
AMCONSUL FLORENCE 
AMCONSUL NAPLES 
EU MEMBER STATES COLLECTIVE 
 
UNCLAS SECTION 06 OF 06 ROME 002330 
 
SIPDIS 
 
PARIS FOR NSF REP SCHINDEL 
DEPT FOR OES/STC AND STAS, EUR/WE 
 
WHITE HOUSE FOR OSTP 
USDOC FOR TA MILLICK 
 
SENSITIVE 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02330  06 OF 06  310647Z 
 
E.O. 12958: N/A 
TAGS: TSPL KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY KSCA TBIO TPHY IT ITTSPL ITTSPL ITTSPL ITTSPL ITTSPL
SUBJECT: SWEEPING ITALIAN RESEARCH REFORMS SWEEP OUT CNR 
PRESIDENT BIANCO BUT MAY NOT SWEEP IN INDUSTRIAL INNOVATION 
 
PARTICULARLY NEW OR STARTLING ABOUT THIS FINDING, IT DOES 
HELP EXPLAIN HOW SOME WORLD-CLASS ITALIAN SCIENTISTS STAY 
WORLD-CLASS.  IT ALSO SUPPORTS THE CONVICTION OF MINISTER 
MORATTI AND MANY OF THE SCIENTISTS WE KNOW THAT THERE IS A 
CONSIDERABLE DRAG EFFECT OF LESS PRODUCTIVE RESEARCHERS ON 
INSTITUTE AND UNIVERSITY PAYROLLS. 
 
¶21. (U) EXPLAINING WHY ITALY CONTINUES TO SUCCEED WITH 
INNOVATION IN INDUSTRY REQUIRES ADDITIONAL UNDERSTANDINGS. 
CHARACTERIZED BY SMES, WITH MOST COMPANIES HAVING FEWER THAN 
100 EMPLOYEES, ITALIAN INDUSTRY IS AGILE BUT HAS LITTLE IN- 
HOUSE MONEY AVAILABLE FOR APPLIED RESEARCH DEPARTMENTS, 
NEVER MIND RESEARCH LABS ENGAGED IN FUNDAMENTAL RESEARCH. 
SINCE THIS KIND OF RANDD IS THE FORM TYPICALLY MEASURED BY 
STATISTICAL SURVEYS OF INNOVATION AT THE FIRM LEVEL, IT'S 
NOT SURPRISING THAT ITALY SCORES LOW, NEAR THE BOTTOM OF THE 
OECD.  HOWEVER, TWO IMPORTANT FORMS OF INCREMENTAL 
INNOVATION ARE OVERLOOKED OR ONLY INCOMPLETELY CAPTURED BY 
THE USUAL STATISTICAL REPORTS.  FIRST IS ONGOING PRODUCT 
DEVELOPMENT, WHICH EVEN SMALL FIRMS DO AS A MATTER OF 
SURVIVAL, CHANGING MATERIALS, ASSEMBLY PROCEDURES, FIT AND 
FINISH (PAINTS, COATINGS, POLISHING OF SURFACES), AND 
IMPROVING QUALITY CONTROL TO REDUCE PRODUCTION COSTS, 
INCREASE RELIABILITY, AND IMPROVE COMPETITIVENESS IN THE 
MARKET PLACE.  THE SECOND INNOVATION STRATEGY OFTEN ONLY 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02330  06 OF 06  310647Z 
INCOMPLETELY CAPTURED BY STATISTICS IS THE INTRODUCTION OF 
NEW PRODUCTION METHODS VIA NEW MANUFACTURING PROCESSES AND 
EQUIPMENT.  OFTEN NO R AND D IS REQUIRED, BECAUSE THE 
TECHNOLOGIES ARE SUFFICIENTLY MATURE AND ALREADY 
DEMONSTRATED.  FOR A SMALL COMPANY, NEW PRODUCTION MACHINERY 
CAN SUBSTANTIALLY REDUCE COSTS BY USING LESS MATERIALS STOCK 
IN PRODUCTION (FURNITURE MANUFACTURING, FOR EXAMPLE), 
INCREASING UNIFORMITY AND FIT OF COMPONENTS, AND BY 
INCREASING WORKER PRODUCTIVITY AND HENCE REDUCING COSTS PER 
UNIT OF OUTPUT.  AND OF COURSE, SMALL AGILE FIRMS ENGAGED IN 
CUSTOM PRODUCTION OFTEN FACE THE NEED TO INVENT TOOLS AND 
TECHNOLOGIES TO MEET THE NEEDS OF DIVERSE CLIENTS, AND THEIR 
"WETWARE" IS OFTEN MORE IMPORTANT THEN THEIR EQUIPMENT BASE. 
 
------------------------------------------ 
CONCLUSION - MISSING OR CATCHING THE WAVE? 
------------------------------------------ 
 
¶22. (SBU) ITALIAN R AND D FROM BASIC SCIENCE TO INDUSTRIAL 
INNOVATION HAS TWO FLAWS AND TWO STRENGTHS.  THE FLAWS ARE 
TOO LITTLE MONEY OVERALL, AND A BELIEF BY THE GOVERNMENT 
THAT SHIFTING SOME MONEY FROM BASIC RESEARCH TO APPLIED 
RESEARCH OF COMMERCIAL RELEVANCE WILL BE ENOUGH TO ENCOURAGE 
INDUSTRY TO MORE ACTIVELY "PULL" RESEARCH RESULTS INTO THE 
ITALIAN ECONOMY.  HOWEVER, LEAVING ASIDE BIG PLAYERS LIKE 
PARASTATAL FINMECCANICA, WHICH INVESTED 350 MILLION EUROS IN 
R AND D LAST YEAR, FEW ITALIAN COMPANIES HAVE THE KNOW-HOW 
OR AVAILABLE MONEY TO LOOK VERY FAR UPSTREAM FOR NEW 
TECHNOLOGIES.  EVEN FINMECCANICA DENIES TWO-THIRDS OF ITS 
TOTAL R AND D REPORTED EXPENDITURES OF ONE BILLION EUROS 
FROM PUBLIC SOURCES, MAINTAINS NO BASIC RESEARCH STRUCTURES, 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02330  06 OF 06  310647Z 
AND JUST SIX MONTHS AGO INITIATED ITS FIRST EVER STRATEGIC 
MAPPING OF TECHNOLOGY NEEDS AND ACQUISITION TARGETS. 
GIANCARLO GRASSO, THE FIRST CTO, TOLD ESTCOUN MAY 21 THAT 
FINMECCANICA IS STILL ABOUT DECLARATION OF INTENT THAN 
ACCOMPLISHMENT. 
 
¶23. (SBU) ITALIAN STRENGTHS ARE AT EXACT OPPOSITE ENDS OF 
DISCOVERY-INVENTION-INNOVATION PROCESS, AND THIS EXPLAINS 
THE LARGE GAP BETWEEN THE INTERESTS OF RESEARCH INSTITUTES 
AND INDUSTRY, THE HISTORICALLY LOW LEVELS OF SUCCESSFUL 
COOPERATION BETWEEN THEM, AND THE GREAT DIFFICULTY THE 
ITALIAN GOVERNMENT OR THE COMBINATION OF LOCAL, REGIONAL, 
AND NATIONAL GOVERNMENTS WILL FACE IN CREATING THE SHORTER 
AND MORE NUMEROUS LINKAGES THAT WOULD FOSTER KNOWLEDGE 
CLUSTERS AT THE RELEVANT INTERFACES OF RESEARCH AND 
INDUSTRY, AND IN ATTRACTING INTERNATIONAL COMPANIES AND 
INVESTMENT CAPITAL NEEDED TO CREATE THE CRITICAL MASS NEEDED 
FOR A GLOBALLY COMPETITIVE INTERNATIONAL CLUSTER.  ITALY HAS 
A LONG WAY TO GO IF IT WANTS TO CATCH THE NEXT LONG WAVE. 
SKODON 
 
                       UNCLASSIFIED 
 
> 
 2003ROME02330 - Classification: UNCLASSIFIED

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