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

UNCLAS  ROME 000402 
 
SIPDIS 
 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV ECON IT ITALIAN POLITICS
SUBJECT: PM BERLUSCONI LOOKING FOR EXIT STRATEGY ON 
GOVERNMENT CHECK-UP 
 
REF: A. 03 ROME 3679 
     ¶B. ROME 184 
     ¶C. 03 ROME 5639 
 
¶1.  (SBU) Summary.  The end of Italy's EU Presidency has 
compelled PM Berlusconi to address longstanding demands by 
two junior coalition partners for more say over policy 
making.  The painstaking attempt to appease them without a 
major cabinet reshuffle may finally be drawing to a close. 
Vice PM Fini, in particular, wants more influence for himself 
and his party on economic matters.  Berlusconi, loath to 
diminish significantly the authority of Forza Italia Finance 
Minister Tremonti, is working on a compromise that could 
include a new kitchen cabinet with NEC-like responsibilities. 
 Fini needs enough increased visibility to help ensure that 
his National Alliance party does well in the June European 
Parliament elections.  The difficulty in concluding the 
government "check-up" underscores that the center-right is 
far from being a unified bloc and Berlusconi, while 
authoritative, remains more a final arbiter than chief 
executive.  U.S. interests could take a small hit if 
speculation that anti-GMO Agriculture Minister Alemanno could 
be given authority over food safety pans out.  End Summary. 
 
 
¶2.  (SBU) As we foreshadowed in ref A, the conclusion of 
Italy's EU presidency has forced  PM Berlusconi to treat 
seriously the longstanding request by two of his junior 
coalition partners for a reexamination of government 
responsibilities.  The push for a government check-up 
(verifica) was set into motion by Vice PM Gianfranco Fini 
following the center-right's poor performance in local 
elections last May.  Fini argued that his National Alliance 
(AN) party needed more visibility on public 
policy--especially economic decision making--to convince 
voters that AN could deliver concrete benefits.  Fini was 
joined in this mini-crusade by Marco Follini, leader of the 
moderate UDC (Union of Christian Democrats of the Center). 
Bush-league political maneuvering over the check-up is 
turning an outpatient exam into a protracted operation that 
is consuming the government's energy and checking its ability 
to map out a way forward post-EU presidency. 
 
¶3.  (SBU) Each demandeur, but especially Fini whose role as 
Vice PM is overshadowed by key ministers, has a keen interest 
in accruing more decision making authority in a government 
whose economic policy has been dominated by a "directoire" 
composed of PM Berlusconi, Finance Minister Tremonti (Forza 
Italia), and Northern League party secretary Umberto Bossi. 
The divide within the coalition is not only personal, but 
also ideological and geographical.  The National Alliance and 
UDC tend to represent southern-based interests with a strong 
stake in the Welfare State.  On the other hand, the League, 
and to an extent Forza Italia, have their political base in 
northern Italy, where the demand for market-based approaches 
to public policy issues is somewhat more pronounced. 
 
¶4.  (SBU) What has been a tortured and opaque process may be 
nearing the end game.  At this stage, there are two virtual 
certainties: there will not be a major cabinet reshuffle, and 
 Tremonti, strengthened by his robust response to the 
Parmalat debacle (ref B), will remain the principal decision 
maker on economic policy.  While Berlusconi has an interest 
in appeasing Fini (Note: A loyal ally and increasingly 
popular politician whose party commands at least 12 percent 
of the national vote, according to recent polls. End Note) 
and, to a lesser extent, Follini, he must do so in a manner 
amenable to other Forza Italia heavyweights and the League. 
Press reports and discussions with our contacts suggest that 
multiple and not necessarily mutually exclusive outcomes are 
possible. 
 
¶5.  (SBU) Fini could be given direct responsibility over the 
obscure but at times important Interministerial Committee for 
Economic Programming, which inter alia has responsibility for 
setting price controls on public services, e.g. national toll 
roads and electricity rates, and some budget authority. 
Adolfo Urso (AN), Vice Minister for Trade under Minister for 
Produtive Activities Antonio Marzano, could be promoted to 
ministerial rank with sole responsibility for a new 
independent trade bureaucracy -- boosting the party, though 
not Fini personally.  Fini replacing Marzano now seems less 
likely than one week ago.  Creation of a kitchen cabinet 
(gabinetto di consiglio) made up of the coalition's party 
leaders who would have some undefined influence over economic 
policy is still on the table.  Whether such an inner core 
 
 
would be buttressed by turning the weak economics department 
attached to the PM's office into an NEC-equivalent, and how a 
new body might lash up to the Finance Ministry are unclear. 
One troubling possibility is that anti-GMO Agriculture 
Minister Gianni Alemanno (also AN) could be given authority 
over food safety, which is now handled by the Health 
Ministry.  The UDC, which has been less vocal of late, stands 
to gain a few more undersecretary positions. 
 
¶6.  (SBU) Fini's dilemma is that a mere shifting around of 
portfolios could well seem like meager gruel to an electorate 
anxious about holding on to publicly-financed privileges. Nor 
would it be much of a follow-up to his dramatic repudiation 
of AN's Fascist roots during a historic trip to Israel last 
November. With the June 13 European Parliamentary (EP) 
elections now in plain view, Fini will need enough new power 
-- and certainly more visibility -- to make a convincing case 
to AN's key constituencies (national and local bureaucrats, 
military officials, the southern underclass) that he and the 
party can impact policies affecting their interests. 
 
¶7.  (SBU) The Vice PM will get some bounce out of a revised 
government program that reportedly will include a paean to 
"collegiality in economic policy making".  The current 
patchwork of options available to Fini, an able politician, 
should allow him to finesse the check-up into a minor 
victory.  We think a possible outcome is that Fini will take 
half a loaf now, pin his hopes on performing well at the EP 
elections (Note: To this end, the National Alliance has hired 
a U.S. political consulting firm.  End Note.), and then 
likely re-open the bidding. 
 
¶8.  (SBU)  Comment.  The difficulty in concluding the 
check-up is indicative of the government's persistent 
heterogeneity.  We repeat our past refrain that the 
center-right is at no risk of breaking apart.  Nevertheless, 
on internal issues it has yet to find a set of guiding 
principles (as it has successfully done on foreign policy) 
that naturally lead to a discrete set of policy outcomes. 
The government's failure on February 3 to push through 
Parliament a revised broadcast reform bill (ref C), now back 
in Committee, highlights the current state of fragmentation. 
 
¶9.  (SBU) Comment Cont.  Continued emphasis on party identity 
and visibility--manifested in the center-right's inability to 
form a unified government list for the EP elections--suggests 
that the governing coalition will remain a collection of 
self-interested groups rather than a unified bloc.  One 
immediate impact on U.S. interests is that Berlusconi, far 
and away the dominant player in the government, must still be 
more a mediator and ultimate reconciler of competing 
interests than chief executive.  As we have seen on biotech, 
this can result in some of our equities taking a back seat to 
the need to keep peace within the coalition. End Comment. 
 
SEMBLER 
 
 
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	2004ROME00402 - Classification: UNCLASSIFIED