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

C O N F I D E N T I A L SECTION 01 OF 04 ROME 000453 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 02/14/2016 
TAGS: PGOV PREL IT IQ ITALY NATIONAL ELECTIONS ITALIAN POLITICS
SUBJECT: SCENESETTER FOR PM BERLUSCONI'S VISIT TO 
WASHINGTON, FEBRUARY 27 TO MARCH 1 
 
 
Classified By: Deputy Chief of Mission Anna Borg for reasons 1.4 (b) an 
d (d). 
 
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SUMMARY 
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¶1. (C) PM Berlusconi is seeking an election campaign bounce 
from his carefully timed visit to Washington to address a 
joint session of Congress and his meeting with the President. 
 Elections are two months away and the campaign is in full 
gear following President Ciampi's dissolution of parliament 
on February 11.  (Polling will take place April 9 and 10.) 
Claiming to be slightly ahead in a private poll he 
commissioned, Berlusconi seeks to outpace the opposition by 
showing that his pro-U.S. foreign policy has its benefits, 
and that a close and continuing partnership with world's only 
superpower is good for Italy. 
 
¶2. (C) Summary continued.  Berlusconi has pushed Italy to be 
active and visible around the world despite tough budgetary 
constraints and a gloomy economic outlook that will make 
future Italian commitments more difficult.  The GOI has 
weathered stiff public opposition to Italy's participation in 
Iraq, and has made its contributions in Afghanistan a point 
of national pride.  After deploying more troops to the 
Balkans than any other nation, Italy wants to be more 
involved in the Balkan political processes and seeks U.S. 
recognition of its potential good offices in negotiating with 
Iran on the nuclear issue.  GOI reluctance to be tough with 
Russia is a direct result of Berlusconi's close personal ties 
with President Putin.  This winter's cold snap has sharpened 
domestic anxieties over the prospect of energy rationing in 
the midst of the campaign.  End summary. 
 
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Final Stretch Before Elections . . . 
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¶3. (C) US-Italy relations traditionally have been strong 
regardless of the party in power, but have been especially 
close under Prime Minister Berlusconi and his center-right 
coalition government.  Despite the ups and downs since 2001, 
Berlusconi's government has brought remarkable stability to 
Italian politics.  He is the first prime minister since World 
War II to maintain the same coalition (four parties) for a 
full legislative term.  Berlusconi is trying to keep the 
opposition on the defensive by accusing them of having a 
limited vision of Italy's role abroad, poor intra-coalition 
harmony, and poking at the opposition's perceived weakness on 
law and order issues.  Most published polls show the 
center-left continues to hold the edge, but observers do not 
discount Berlusconi's ability to narrow the gap in the run-up 
to election day.  In recent weeks, Berlusconi has managed to 
set the tone in the campaign debate, exploiting allegations 
of center-left impropriety in a financial scandal, quickly 
approving anti-crime and anti-drug legislation in the last 
days of the legislature, and blitzing the talk show circuit. 
 
¶4. (C) The nine-party center-left opposition, led by former 
EU Commission President (1999-2004) and former Italian PM 
(1996-98) Romano Prodi, lists economic growth, employment, 
education, tax policy, and the environment as some of its 
policy priorities.  Prodi's coalition has tried to show a 
united front but is often plagued by internal disputes, which 
will complicate its ability to govern if elected.  If the 
center-left wins, the opposition's reformist leaders are 
prepared to reorient Italy,s foreign policy more toward the 
EU, favor multilateral initiatives over bilateral or 
unilateral ones, and tone down Italy,s relations with the 
US.  The center-left, however, is unlikely to radically shift 
the bilateral relationship.  Prodi and his moderate allies 
continue to signal that the center left will reach out to 
Washington as it did when Prodi was first prime minister. 
However, the relative strength on the far left parties will 
determine his ability to steer a moderate course. 
 
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. . . And The Economy is the Achilles Heel. 
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¶5. (C) Despite his public boldness in foreign policy, 
Berlusconi has not effectively used his solid legislative 
majority to transform Italy into a more flexible and 
competitive economy.  High public debt, the EU Stability and 
Growth Pact deficit ceiling, rising social welfare costs, and 
a stagnant economy, all limit the GOI,s ability to increase 
or sustain Italy,s long-term international presence in 
global hot spots.  The current budget foresees a 27 percent 
reduction in overseas economic assistance and large cuts (to 
about 0.90 percent of GDP) in the defense budget, including a 
20 percent reduction in the peacekeeping budget.  Public 
pessimism over persistent unemployment and complaints over 
high prices (blamed partly and erroneously on the transition 
to the euro) are factors that will play into the election and 
against the Berlusconi government.  These critical 
limitations mean that we should prioritize our requests for 
Italian troop deployments, economic assistance and 
reconstruction funds, and other expenditures that could 
severely outpace Italy's ability to contribute.  We should 
also share our economic best practices to help make Italy 
more economically vibrant. 
 
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Continued Engagement on Iraq 
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¶6. (C) Berlusconi's close personal relationship with the 
President has served as a key factor in maintaining Italian 
military contributions in Iraq in the face of significant 
domestic opposition.  In addition to being among the top 
troop contributors in Iraq (with nearly 3,000 troops), and 
funding a variety of reconstruction projects, the GOI has 
indicated it will seek to expand its non-military role there, 
and has offered to lead a Provincial Reconstruction Team 
(PRT) in Dhi Qar province.  The GOI has publicly announced 
that it will gradually draw down Italian troops, but has said 
that it will do so only in close consultation with other 
coalition partners and the Iraqi government, and according to 
conditions on the ground.  The center-left opposition has 
followed suit, coming close to mirroring the government's 
strategy. 
 
¶7. (C) Berlusconi has skillfully taken Iraq off the campaign 
agenda for the opposition but Italian involvement there 
remains unpopular domestically.  Berlusconi will seek 
recognition for Italy's role in Iraq, support for its troop 
drawdown, and a reaffirmation that Italy remains a key 
partner in establishing Iraq's stability and security.  It is 
important for Italy to stress the success of the Italian 
presence there, and highlight the civilian aspects of Italian 
support as Iraqis begin to take ownership of their security. 
The first-ever trilateral talks with the U.S. and UK on Iraq 
in late January provided the GOI a much-needed confidence 
boost because it reinforced Italy's relevance as a key 
coalition partner.  We should thank the Italians for their 
steadfast support on Iraq and encourage continued 
consultations as they proceed with their drawdown plans. 
 
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Iran: Bring Us Into the Tent 
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¶8. (C) The GOI shares U.S. and EU concern over Iran's nuclear 
aspirations and the anti-Israel rhetoric coming out of 
Tehran.  Italy supports the U.S. "100 percent" on the Iranian 
nuclear issue, including referral to the UN Security Council, 
and they continue to stress to the Iranians the need to 
suspend enrichment activities to restore the confidence of 
the international community.  Both Berlusconi and FM Fini 
issued sharp public rejoinders after President Ahmadinejad's 
declarations against Israel. 
 
¶9. (C) Italians are dismayed, however, by their continued 
exclusion from the so-called EU-3 negotiations and the more 
recent "P5 plus 2" meeting in London.  As Iran's largest 
trading partner in Europe and dependent on Iranian oil, Italy 
believes the stakes are too high not to be included, and they 
assert they can play a useful role at the negotiating table. 
The GOI welcomed the meeting in London in late January 
between Undersecretary of State Burns and MFA PolDir Terzi on 
Iran.  Terzi proposed a "friends of the Secretary General" 
group to consider next steps on Iran at the UN.  We should 
commend Berlusconi on his government's public stance, and 
reinforce with him the importance of maintaining a solid 
international front.  We should also underscore our intention 
to keep engaging Italy on Iran as we did in London. 
 
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Still Active in Afghanistan 
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¶10. (C) Unlike Iraq, Italy's ISAF participation, with around 
2,200 troops, enjoys strong bipartisan political support.  In 
August, Italy took over command of ISAF for a period of nine 
months.  Italy also commands the Provincial Reconstruction 
Team (PRT) in Herat, supports the Forward Support Base (FSB) 
under Spanish command, and leads the multilateral effort to 
reform the Afghan judiciary.  Italy,s total financial 
support for Afghanistan's September parliamentary elections 
was four million Euros (about USD 4.8 million).  The GOI has 
made a special effort to insulate economic assistance to 
Afghanistan from cuts falling heavily elsewhere.  That said, 
even with a smaller pie, the GOI could probably do more to 
increase Italy's contribution to the post-Bonn reconstruction 
process.  We should thank the Italians for their strong and 
consistent participation in Afghanistan, despite budgetary 
constraints, but urge them to find ways to enhance their 
contributions in Afghanistan as they draw down in Iraq. 
 
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The Balkans Is Our Backyard 
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¶11. (C) The Italians have been engaged in peacekeeping and 
stability efforts in the former Yugoslavia since the early 
1990s.  They regard the Western Balkans to be in their 
neighborhood and insist on playing a major military and 
policy role.  They currently hold the command of KFOR and 
EUFOR.  A probable referendum on independence in Montenegro 
and the beginning of negotiations on the future status of 
Kosovo will present significant challenges to the 
international community.  Italy is prepared to take a 
leadership role in ensuring the continued stability and 
security of the region, but is concerned that without close 
international coordination and U.S. support, Italy's 
interests will be overlooked.  The recent rejection of an 
Italian as High Representative in Bosnia was seen by the GOI 
as an indication that neither the major EU powers nor the 
U.S. have sufficient faith in the GOI to lead the 
international community in the region.  We should give 
Berlusconi a dual message of appreciation for past efforts 
and a pledge to remain in close contact as the events unfold 
in the Balkans. 
 
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Too Cozy With Russia? 
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¶12. (C) Berlusconi enjoys a close and informal relationship 
with Russian president Putin.  We are concerned that this 
relationship could weaken international criticism of Russia 
at a time when the Russian Federation (GORF) is reversing 
democratic reforms.   In November 2005, the GOI was prepared 
to support GORF demands to remove language from a 
ministerial-level OSCE declaration calling on Russia to live 
up to its Istanbul commitments in Moldova and Georgia.  In 
February 2006, during a visit by Russian FM Lavrov, Fini 
publicly blamed the recent fuel crisis on the Ukraine, 
despite assurances from contacts at the Italian Ministry of 
Foreign Affairs that Fini understood the crisis to be 
primarily the result of Russian negative behavior.  We should 
highlight to Berlusconi that Russia's pattern of resisting 
democratic change, undermining international organizations, 
manipulating internal politics in neighboring countries, and 
using its fuel exports for political purposes, is a threat to 
global stability and requires direct and sometimes public 
criticism. 
 
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A Looming Energy Crisis? 
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¶13. (C) Senior government officials and energy analysts say 
Italy will likely experience a critical energy shortage this 
winter because of an unexpected cold spell and miscalculation 
of Italy's consumption of natural gas.  Italy's strategic gas 
reserves may not be sufficient to generate electricity for 
the remainder of the winter, according to our sources, and 
reduced gas flows from Russia have exacerbated the shortage. 
The problem is made worse because Italy, because of newer, 
more efficient, gas-fired electric plants, is a net exporter 
of electricity to other parts of Europe.  In a worst-case 
scenario, analysts say, Italy might stop exporting 
electricity, passing on shortages to other parts of the EU. 
Shifting the pain outside Italy may prove more palatable 
during an election season than incurring the consequences of 
energy rationing at home. 
SPOGLI