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UNCLAS  ROME 002815 
 
SIPDIS 
 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV PREL IT ITALIAN POLITICS
SUBJECT: ITALY:  AN INTERLUDE IN THE UNENDING GOVERNMENT 
REVIEW 
 
REF:  A) ROME 2630, B) ROME 2280 
 
SENSITIVE BUT UNCLASSIFIED; NOT FOR INTERNET DISTRIBUTION. 
 
------------------- 
SUMMARY AND COMMENT 
------------------- 
¶1.  (SBU)  Italy's governing coalition may have reached a 
moment of respite from disagreements, which have plagued it 
since the spring elections.  The interlude may not endure 
long, but as one contact joked, "Berlusconi would certainly 
make history if his were the first government to fall during 
summer vacation."  The unwillingness of the leaders of the 
coalition partners to assume actual positions of power 
within the Government is indicative of their intent to 
maintain a distinct image and their right to voice dissent, 
thereby seeking to enhance their standing before their own 
electorate.  (Prime Minister Berlusconi may occasionally 
wish he had the same luxury of standing on the outside 
calculating where to gain the greatest advantage.) 
 
¶2.  (SBU)  It is a somewhat gloomy picture for an ambitious 
prime minister, but the Government is intact, and indeed 
ministerial changes were few.  Those willing to bet that the 
coalition will last until 2006 are fewer than before, and 
more analysts contemplate the possibility of national 
elections tacked onto the 2005 regional vote.  But many 
remain convinced that this Government will stick together 
for its full term, whether because some parties (Northern 
League on the right, and probably most of the opposition, 
despite its current swagger) are unready to go to the polls; 
because Berlusconi is determined to make history by leading 
the first post-war government to serve a full term; or out 
of a sense of responsibility to its electorate.  On issues 
of greatest importance to the U.S. -- chiefly support for 
Iraq reconstruction -- we expect no diminished support from 
this ally.  On issues vital to Italy's own future, however, 
decision-making may be slow and tortured -- or simply 
inevitably postponed.  END SUMMARY AND COMMENT. 
 
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THE CENTER-RIGHT'S UNENDING VERIFICA 
------------------------------------ 
¶3.  (SBU)  The July 16 appointment of technocrat Domenico 
Siniscalco to replace Giulio Tremonti as Finance Minister 
(septel), and the expected announcement that Northern League 
Coordinator Roberto Calderoli will become Minister of Reform 
after League leader Umberto Bossi's resignation, bring a 
truce to the battle over "internal review" in the Berlusconi 
Government in the wake of June elections.  We would not 
suggest that the "verifica" is over; we rather expect it to 
be the permanent state of being for the remainder of this 
Government.  However, we do not for the time being foresee 
further ministerial changes. 
 
¶4.  (SBU)  The government partners who gained the most (in 
relative terms) in the recent elections, National Alliance 
(AN) and Union of Christian Democrats of the Center (UDC), 
had the chance to obtain major positions of power in the 
government, with AN President Fini apparently in line for 
the Finance Ministry and UDC Secretary Follini reportedly 
offered virtually any ministry he wanted.  Instead, both 
leaders remain "outside," part of the government, but not 
heading a ministry that would tie them directly to its 
policies -- making perennial carping an easier option. 
Northern League (Lega) Secretary Bossi, either in disgust at 
his partners' "betrayal" of federalist reforms he favors or 
due to ongoing illness and weakness, has joined them, 
leaving his position as Minister for Reforms in order to 
assume a seat in the European Parliament.  (COMMENT:  We 
tend to think Bossi's resignation was prompted primarily by 
his illness, but the party took advantage of the 
announcement to drive home a point to AN and UDC.  Likewise, 
Lega leaders were probably politically reticent to tell 
voters that Bossi was too weak to continue serving in the 
Government.  A final calculation may consider that the 
League's cherished devolution program is facing perhaps its 
final crunch, and the party needs a strong, active leader to 
manage the program to conclusion.  END COMMENT.) 
 
---------------------------- 
WHY REJECT POLITICAL SPOILS? 
---------------------------- 
¶5.  (SBU)  It is the complaint and review process that 
serves the smaller coalition partners, more than "winning" 
an argument.  Italy's parties are positioning themselves for 
the next elections (whether held separately or 
simultaneously).  Both regional and national elections favor 
coalition building, as the more parties in a coalition, the 
 
 
more votes that coalition receives.  To retain its 
electorate, a party must remain visible and distinguish 
itself from both its partners and its competitors. 
Criticism, even of its own Government's programs, provides 
visibility for party leaders.  It is one way to convince 
voters that their party, and their party's leader, count in 
the government and are bringing them tangible benefits. 
 
¶6.  (SBU)  Fini gained a great deal from the maneuvering. 
He got rid of Tremonti, who pushed programs which at best 
did not help AN's electoral appeal, and in some cases may 
have hurt the party's standing.  (AN has a strong populist 
faction that relies on government employment and benefits.) 
With Tremonti sidelined and Bossi physically weakened, Fini 
perhaps shaped a "Fini-Berlusconi Axis" to replace the 
"Northern Triangle" of Berlusconi-Bossi-Tremonti, gaining a 
more visible role in the process and ensuring (at least for 
now) that Berlusconi will consult him before making 
important decisions. 
 
¶7.  (SBU)  Follini, for all his recalcitrance, seemingly 
gained little from his stalling.  He may have overplayed his 
hand, but we speculate that he never intended to accept a 
government ministry.  His goal all along was to prove 
himself to his electorate and gain visibility.  He also 
wanted to remind Berlusconi and his other Government 
partners not to take his small centrist party for granted. 
His eventual rejection of the European Parliament seat he 
won in the elections tends to confirm his intention of 
remaining the semi-loyal ally, quick to criticize government 
policies, but not prepared to quit the coalition. 
 
¶8.  (SBU)  A more sinister theory suggests a Fini-Follini 
axis to weaken Berlusconi in the run-up to the next 
elections, paving the way for a different coalition.  Such a 
plan, however, bumps into problems of both numbers and 
compatibility.  Berlusconi and his Forza Italia (FI) are the 
bridge between AN and UDC, which come from very different 
backgrounds even if their approaches occasionally align.  If 
one assumes FI would evaporate without Berlusconi -- 
possible, but not guaranteed -- then FI voters would indeed 
likely gravitate toward these two parties, as did center- 
right protest votes in the last elections.  But a center- 
right coalition without the Berlusconi glue would be tenuous 
at best; neither Fini nor Follini (nor any other center- 
right leader currently on the horizon) yet demonstrates 
Berlusconi's charisma and authority.  Finally, the dream of 
a "true center" of UDC and other former Christian Democrats 
remains mathematically unlikely without significant changes 
to Italy's electoral law. 
 
---------------------------- 
WHERE IS THE GOVERNMENT NOW? 
---------------------------- 
¶9.  (SBU)  The Government remains, with all partners 
continuing to swear allegiance.  None was willing to push to 
the brink and create a true government crisis (contrary to 
opposition declarations), although all, to some degree, have 
contributed to an image of an emasculated coalition limping 
through to an end, whether after five years or sooner. 
Berlusconi remains strong enough, and indeed the only one 
strong enough, to keep the allies together, although his 
partners have gone to great lengths to prove to him that he 
needs them as much as they need him.  On international 
policies, particularly those like Iraqi support of greatest 
importance to the U.S., we expect little change.  On 
domestic policy, however, the Government faces a tough road. 
It must pass some kind of economic reform to have any hope 
of maintaining its (joint) electorate, but with each partner 
angling to protect its own vested interests, compromise to 
reach a meaningful end is unlikely, whether on devolution of 
power to the regions, tax and spending cuts, or pension 
reform.  Lots of bickering and policies achieving only the 
lowest common denominator seem the most likely outcomes. 
 
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FINAL COMMENT 
------------- 
¶10.  (SBU)  To win elections, and more importantly, to form 
a government, Italian parties have to create coalitions that 
can run a campaign with some degree of unity.  The center- 
right is showing anything but and has damaged itself 
significantly -- if not yet irrevocably -- in the process. 
Partners should be aware that, outside a coalition, they 
have everything to lose and nothing to gain; the League's 
own experience stands as example.  For now, however, the 
opposition center-left (with the luxury of being out of 
power) appears more unified and coherent than the center- 
right. 
 
 
SEMBLER 
 
 
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	2004ROME02815 - Classification: UNCLASSIFIED