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

UNCLAS SECTION 01 OF 09 ROME 000556 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR SENIOR ADVISOR TO A/S FOR POL-MIL AFFAIRS (PM/SNA) 
DEPT FOR EUR/WE AND EUR/RPM 
SECDEF FOR OSD/PA&E, OASD/ISA/EUR, OASD/ISA/NP, 
OASD/ISA/AP, OASD/ISA/NESA, OASD/ISA/BTF 
 
E.O. 12958: N/A 
TAGS: JA KS KU MCAP PREL QA SA US MARR IT TC NATO
SUBJECT: ITALY: 2005/2006 REPORT TO CONGRESS ON ALLIED 
CONTRIBUTIONS TO COMMON DEFENSE 
 
REF: STATE 223383 
 
¶1.  The following is Embassy Rome,s contribution to the 2005 
) 2006 Report to Congress on Allied Contributions to the 
Common Defense.  Post understands from Reftel, Paragraph 6, 
that DOD will secure significant quantitative data, including 
defense spending data, from other sources.  Post will provide 
narrative and, where available, quantitative inputs for 
Reftel,s questions.  For the purpose of this cable, USD 
amounts are calculated at USD 1 = Euro 0.83.  Embassy point 
of contact for this report is Political-Military Officer Lee 
¶R. Brown: telephone: 39-4674-2838; e-mail BrownLR@state.gov. 
 
General Political and Economic Developments 
------------------------------------------- 
¶2.  Though Italian governments of both the center-left and 
the center-right have traditionally supported U.S. foreign 
policy objectives, Prime Minister Berlusconi,s leadership 
since 2001 has made Italy America,s strongest strategic 
partner in continental Europe.  Italy sustained roughly 
10,000 troops in overseas missions over the course of 
2004-2005.  Italy contributes troops and economic assistance 
in the Balkans, Afghanistan, and Iraq, counters terrorism at 
home and abroad, and allies clearly with us on Iran, Syria, 
Lebanon, Sudan, and the Broader Middle East.  Within NATO, 
Italy supports U.S. efforts to transform the Alliance. 
Starting with its fall 2004 European Union 
Presidency-in-turn, Italy also worked within the EU to 
promote a European Security and Defense Policy that 
complements rather than duplicates NATO. 
 
¶3.  Following poor results in the April 2005 regional 
elections, Prime Minister Silvio Berlusconi reconstituted his 
four-party coalition government of the Center-Right.  In 
national parliamentary elections, scheduled for April 9, 
2006, Berlusconi will once again head the center-right 
coalition.  Former EU Commission President (and former 
Italian PM) Romano Prodi will head the center-left coalition 
in the elections.  During the latter half of 2005, Prodi,s 
coalition maintained a small but consistent advantage over 
Berlusconi,s coalition in opinion polls. The gap has 
narrowed to almost even in the first two months of 2006. 
 
¶4.  Italy has one of the largest economies in the EU and is a 
G-8 member, but has enjoyed little growth over the last 
several years.  In 2004, Italy ranked near the bottom of the 
EU 25 in terms of real GDP growth, beating only the 
Netherlands, Portugal, and Malta.  Over the past five years, 
Italy,s economy has eked out average real GDP growth of 
0.74.  In 2005, GDP growth was 0.2 percent, with growth of 
1.25 percent projected for 2006.  An aging population and a 
swelling entitlement burden have added to Italy,s problems. 
Berlusconi,s tax cuts in 2005 did not stimulate the economy, 
but instead helped push Italy,s deficit well over the EU 
fiscal limit of 3 percent of GDP.  Italy,s 2006 budget 
includes USD 33 billion in spending cuts and new revenue 
measures to shrink the deficit/GDP ratio to the EU-set 
ceiling of 3.8 percent for that year.  In spite of budgetary 
constraints, however, Italy maintained its economic 
assistance and training programs targeted on such priority 
areas as Afghanistan, Iraq and the Balkans. 
 
Two Years of Defense Budget Cuts 
-------------------------------- 
¶5.  While budget problems so far have not compelled Italy to 
scale back its overseas military commitments, Italy has cut 
its overall defense budget for two years in a row.  In the FY 
2005 budget, Italy reduced its defense spending by 6 percent 
from FY 2004.  For FY 2006, Italy plans to cut its defense 
budget by another 5.1 percent (from USD 16.3 to USD 15.5 
billion).  As a percentage of GDP, 2006 Italian defense 
spending will amount to about 0.90 percent.  The lack of 
economic growth, combined with EU-mandated deficit caps, has 
resulted in downward pressure on Italy,s defense operations 
budget.  The full impact of these budget cuts on Italy,s 
military capabilities remains to be seen, but the Italian 
Defense Staff already anticipates substantial reductions in 
training and operating expenditures.  (See Paragraphs 17-20) 
 
Italy,s NATO Contributions 
-------------------------- 
¶6.  2004 NATO Contributions:  In the Balkans, Italy deployed 
5,274 troops within NATO and EU missions.  Italy maintained 
its key role in KFOR and promoted and facilitated transfer of 
SFOR to EUFOR, re-assigning its forces under EU command. 
Italy continued training and leading Multinational 
Stabilization Units in Bosnia and Kosovo.  Following Kosovo 
violence in March, 2004, Italy argued for reform of national 
caveats that weaken NATO effectiveness.  Italy worked within 
NATO and bilaterally to promote the Adriatic Initiative.  In 
Afghanistan, Italy was a major ISAF contributor, while 236 
Italian sailors also supported Operation Enduring Freedom 
(OEF) in the Indian Ocean.  Responding to an urgent NATO 
request, Italy deployed a 500-unit NRF battalion to support 
Afghan presidential elections in September 2004.  Italy 
completed planning for Provincial Reconstruction Teams (PRTs) 
at Ghazni and Herat, standing down in both cases at 
last-minute U.S. requests.  In November 2004, NATO accepted 
Italy,s renewed offer to lead a PRT and support a 
Spanish-led Forward Support Base (FSB), both at Herat.  In 
the North Atlantic Council (NAC), Italy advocated 
establishing the NATO Training Mission in Iraq.  In March 
2004, then Italian Foreign Minister Franco Frattini traveled 
to Brussels to propose enhancing NATO,s political role to 
complement its military transformation, an idea the U.S. also 
began promoting in 2005. 
 
2004 NATO Force Contributions (Source: MOD / November 2004) 
 
Afghanistan / ISAF Kabul: 1,025 
Albania / NATO HQ Tirana: 365 
Albania / Second Naval Group: 145 
Albania / Expert Delegation: 31 
Bosnia / SFOR: 1,110 
Macedonia / NATO HQ Skopje: 19 
Macedonia / SFOR Logistic Support: 130 
Kosovo / KFOR: 3,430 
Mediterranean / Active Endeavor: 185 
 
¶7.  2005 NATO Contributions:  In the Balkans, Italy 
maintained 3,650 troops under NATO and EU missions while also 
serving as EUFOR commander, EUPM commander, and KFOR 
commander (see also Paragraph 14).  Italy also commanded NATO 
HQ Tirana.  In Afghanistan, Italy increased its military 
presence, took command in March 2005 of a PRT at Herat, 
provided crucial assets to the Spanish-led Herat FSB, and 
served as ISAF commander-in-turn and Multi-National Brigade 
commander, while 236 Italian sailors supported OEF in the 
Indian Ocean.  Italy pushed for ISAF expansion and command 
restructuring while also signing on to SEEBRIG,s mission to 
take over ISAF command in 2006.  In Iraq, Italy led NATO 
countries by conducting three of four NTM training modules. 
Italy participated in NATO-led Pakistan earthquake relief 
with 246 troops (see Paragraph 27). 
 
2005 NATO Force Contributions (Source: MOD / December 2005) 
 
Afghanistan / ISAF HQ Kabul: 1,766 
Afghanistan / ISAF Herat PRT / FSB: 355 
Albania / NATO HQ Tirana: 23 
Albania / 28th Naval Group: 143 
Albania / Expert Delegation: 32 
Bosnia / NATO HQ Sarajevo: 12 
Iraq / NATO Training Mission: 31 
Macedonia / NATO HQ Skopje: 10 
Kosovo / KFOR: 2,497 
Mediterranean / Active Endeavor: 223 
 
¶8.  Italy hosts both a Land and a Maritime NATO High 
Readiness Force (NRF) HQ.  During Afghan presidential 
elections in September 2004, Italy provided about 500 NRF 
land component members to provide extra security.  Italy also 
stood up the NRF Maritime Force HQ for one year, starting 
July 2005. 
 
¶9.  For Italy,s progress in meeting Prague Capabilities 
Commitments, please consult official NATO documents.  The 
most recent account can be found in Annex 6 of AC/281-N 
(2005) 0030 ) FINAL.  Embassy Rome POC is ready to forward 
this document by classified e-mail on request. 
 
OEF 
--- 
¶10.  In Operation Enduring Freedom, Italy has provided a 
series of TF-150 frigates, each with approximately 250 
people, to patrol the Gulf of Aden as part of &Resolute 
Behavior.8  Support activities include: maritime 
interdiction operations; intelligence and maritime 
surveillance operations; controlling sea lines of 
communication; escorting coalition units and related 
shipping; and search and rescue operations.  In 2005, the 
Italian Air Force contributed 75 military personnel and 2 
C-130J aircraft operating from Manas Air Base in Kyrgyzstan. 
At CENTCOM HQ, Italy maintained 8 military personnel to 
support OEF in 2005. 
 
Operation Iraqi Freedom 
----------------------- 
¶11.  In 2004, Italy contributed forces through its &Antica 
Babilonia8 Iraq deployment consisting of over 3,264 deployed 
personnel (November 2004 MOD figures), which represented the 
third largest deployment of a coalition force behind the U.S. 
and U.K.  The Italian Army provided a brigade HQ element, 1 
infantry regiment, 1 engineer battalion (including EOD), 
close support units (including NBC), 1 logistic support 
regiment, medical assets, CIMC assets, and an aviation 
element (3-Chinook and 4-AB212 helicopters).  The Italian 
Navy provided 1 naval infantry company and 1 SEAL detachment. 
 The Italian Air Force provided 1 helicopter detachment 
(3-HH3F), 1 cargo aircraft detachment (3-C130J), an aircraft 
maintenance unit, and a logistics support unit.  Finally, the 
Italians also provided one 433-personnel Carabinieri 
multinational specialized unit, which began training local 
police forces.  Italy supported US positions at the UN and in 
NATO, strongly advocating an increased NATO role in Iraq. 
Italy also pressed for an EU police training mission and was 
an active participant in the November Iraq Reconstruction 
Conference in Sharm el-Sheik. 
 
¶12.  In 2005, Italy sustained its Iraq commitment despite 
political controversy resulting from the March 4, 2005 
incident in which an Italian intelligence officer was 
accidentally killed at a roadblock by U.S. forces while 
taking a rescued Italian hostage to the Baghdad airport.  The 
GOI deployed the PREDATOR system to support the January 2005 
elections in Iraq partially in response to a CENTCOM request. 
 Italy deployed 3,110 military personnel in Iraq during 2005, 
including 31 at NATO Training Mission in which Italy led NATO 
countries by conducting three of four training modules.  By 
year,s end, the Carabinieri had trained 10,516 Iraqis in 
basic policing techniques over an eighteen-month period. 
 
2005 OIF Force Contributions (Source: MOD / December 2005) 
 
Kuwait/Air Base Logistical Support: 46 
Iraq/Nassiriyah: 2,898 
Iraq/Bassora: 43 
Iraq/Baghdad: 29 
Iraq/C.R.I.: 58 
Iraq/NATO Training Mission: 31 
Iraq/MNSTC-1: 5 
Iraq/Experts at MOD Iraq: 3 
 
¶13.  In 2006, Italy announced it would end its "Antica 
Balilonia" mission in Iraq at the end of the year, but that 
it would keep a substantial presence in Iraq to assist in 
reconstruction and continue training security forces, 
including in the NATO Training Mission.  At January 2006 
U.S.-UK-Italy tri-lateral consultations on Iraq, Italy said 
it would lead a PRT in Dhi Qar province to support Iraqi 
capacity-building efforts and that it would consider 
expanding training of Iraqi security forces from other 
provinces in new areas (gendarme, special police units, and 
possibly border police). 
 
EU / UN / MFO Missions 
---------------------- 
¶14.  As a result of the Italian-supported handover of 
security responsibilities in Bosnia from NATO to the EU, 
Italy,s participation in EU missions grew rapidly in 2005, 
with former SFOR troops transferred to EUFOR (see also 
Paragraphs 6 and 7).  Italy also took command-in-turn of both 
EUFOR and EUPM.  In 2005 Italy contributed airlift for EU and 
NATO use in Darfur Sudan.  In December 2005, an Italian 
Carabinieri general took command of the EU,s border 
monitoring mission at Rafah, Gaza. 
 
2004 non-NATO Balkans Contributions (Source: MOD / November 
2004) 
Bosnia/EUPM: 23 
Balkans/EU Monitoring Mission: 15 
Macedonia/EUPOL Proxima: 5 
Kosovo/UNMIK: 1 
 
2005 non-NATO Balkans Contributions (Source: MOD / December 
2005) 
 
Bosnia/EUFOR: 892 
Bosnia/EUPM: 13 
Balkans/EU Monitoring Mission: 15 
Macedonia/EUPaD (former Proxima): 3 
Kosovo/UNMIK: 2 
 
¶15.  Italy contributed military personnel to the 
Multinational Force and Observers (2004: 77; 2005: 76) and 
various UN operations (2004: 73; 2005: 77) in the Middle East 
and Africa. 
 
COESPU 
------ 
¶16.  Following President Bush,s and PM Berlusconi,s 
agreement at the June 2004 Sea Island G-8 Summit, Italy 
established the Center of Excellence for Police Stability 
Units (COESPU) at Vicenza to meet long-term G-8 goals for 
enhancing international gendarme peacekeeping capability. 
The Italian Carabinieri spent about USD 11 million and 
committed 143 full-time Carabinieri personnel to COESPU, 
while the U.S. provided financial support of USD 10 million 
for FY 2005.  In December 2005, the first class of 29 senior 
officers from Kenya, India, Jordan, Morocco, and Senegal 
graduated from COESPU,s high-level course.  More courses, 
with more countries participating, are scheduled for 2006. 
 
Military Acquisitions 
--------------------- 
¶17.  In 2004-2005, Italy continued to upgrade its defense 
capabilities, despite significant defense budget cuts.  Italy 
aimed at increased interoperability with recent and 
forthcoming acquisitions and equipment available to support 
surveillance, air defense, troop deployments, and allied / 
multi-national operations.  Italy,s capability for 
long-range deployment will be substantially augmented with 
the USD 800 million purchase and expected 2006 delivery of 
the first of four KC-767 Tankers.  Italian airlift resources 
were enhanced with the USD 1.7 billion direct commercial sale 
of 22 C-130J aircraft and 12 C-27Js for tactical transport 
aircraft.  Italy,s air-to-air defense has been significantly 
upgraded with a USD 759 million lease and delivery of 34 F-16 
aircraft as an interim replacement of their F-104s while 
waiting for delivery of Eurofighter aircraft.  The F-16 lease 
will be extended in 2006 for an additional five years (to 
2011).  The Italian Air Force is the first to achieve 
operational status of the Eurofighter Typhoon with the 
delivery of 10 (out of 121 ordered) aircraft.  The 
air-to-ground defense role, currently supported by AV-8B, 
CH-47 helicopters, Tornados, and AMX aircraft, will see a 
state-of-the-art impact through Italy,s USD 1.028 million 
investment in the U.S.-led, nine member nation, F-35 Joint 
Strike Fighter (JSF) Program.  Italy is the third largest JSF 
contributor (behind the United States and Great Britain) to 
include Level II partnership.  In the long term, Italy plans 
on purchasing 131 JSFs.  Italy marked considerable ISR 
progress with its recently completed USD 63 million purchase 
of five Predator Unmanned Aerial Vehicles (UAV) and one 
ground station: these new assets were deployed in support of 
operations in Iraq. 
¶18.  Italian MOD acquisition plans will improve Italy,s 
ability to support forces deployed in country or in other 
theaters through missile defense and armament programs. 
Italy will contribute to 17% (USD 674 million) within a 
cooperative development program with Germany and the U.S. for 
the Medium Extended Air Defense System (MEADS).  Italian 
air-to-air armament inventory, already consisting of AMRAAMs, 
HARMs, Mavericks, and Stinger ATAL missiles, will be 
supplemented with the addition of Advanced Anti-Radiation 
Guided Missiles (ARGM), the Meteor Beyond Visual Range 
Air-to-Air (BVRAAM) missile, and the AIM120-C Advance Medium 
Range Air-to-Air Missile (AMRAAM).  Italy,s air-to-ground 
armaments, currently consisting of Joint Direct Attack 
Munition (JDAM) will be complemented with the addition of the 
Long Shot bomb guidance system and Small Diameter Bomb (SDB). 
 Ground-to-Air Defense systems have been substantially 
improved through the acquisition of Stinger Block 1, and 
Tube-Launched / Optically-Tracked / Wire Guided (TOW 
Missiles) with potential upgrades to include the Avenger 
Guided Missile Battery, Multiple Launch Rocket System (MLRS) 
and Third Generation Anti-Tank Systems. 
 
¶19.  U.S.-provided training is a fundamental part of Italian 
interest in acquiring leading edge weapon systems and 
armaments.  Italy,s emphasis is on the &operational 
function8 of these weapon systems that can only be 
accomplished through intensive training.  Senior Italian 
leadership continues to acquire U.S. military tactics, 
strategies, and philosophies at American schools that support 
weapon systems with the intent to integrate their forces 
within multinational contexts in the face of future 
challenges. Additionally, continuous deployments of Italian 
forces supporting OEF and OIF have provided them with 
first-hand knowledge of sophisticated U.S. equipment.  333 
Italian military personnel received U.S. training in 2005. 
 
¶20.  2006 budget cuts make it less likely that Italy will 
propose ambitious new procurement programs in the near 
future; indeed, some procurement programs not yet secured 
under contract may be threatened.  To meet current 
procurement commitments, the MOD,s 2006 budget does include 
a procurement supplement of USD 66 million this year and for 
14 subsequent years, totaling USD 991 million for the MOD,s 
Major International and Interforce Programs.  In addition, 
the Ministry of Productive Activities provided funding in 
2006 for the Italian-French Multi-Mission Frigate Program 
(FREMM) over the next three years, USD 36, 36, and 90 million 
respectively.  However, procurement programs not already 
under contract, such as the Joint Surveillance and Command 
Program (JSCP), MMA, and C-17, may be at risk in coming years. 
 
Defense Industry Capacity-Building 
---------------------------------- 
¶21.  Budget austerity measures and a stagnant economy will 
drive the GOI to leverage its defense spending to continue to 
gain access to cutting edge technologies as part of a broad 
effort to revive the economy.  In the face of economic 
pressures, the GOI seeks to redouble efforts to use defense 
contracts to create jobs and obtain new technology that can 
be used to give Italian companies a competitive advantage. 
The amount of technology transfer and job creation resulting 
from Italian participation continues to weigh heavily in 
defense procurement decisions. Disappointment in the outcomes 
of previous technology transfer agreements will guarantee 
close scrutiny of future projects. 
 
¶22.  In an effort to facilitate increased economic activity, 
the Italian Association for Aerospace Industry is working 
with the Ministry of Productive Activities to identify 
aerospace plants which can form the heart of &Industrial 
Basins.8  The goal is to create industrial centers that 
enable companies to capitalize on concentrations of knowledge 
and skilled labor.  Non-aerospace projects are already making 
substantial contributions to the regional economies of 
Liguria (FREMM), Puglia and Piemonte (Eurofighter and NH-90 
helicopter), and Tuscany (C-130J maintenance contracts).  The 
Augusta Westland/Lockheed Martin successful bid for the 
US-101 helicopter for U.S. Presidential airlift support gave 
the Italian defense industry entry into what had been a 
U.S.-only market. 
 
¶23.  Given the GOI,s goal of using defense contracts to 
promote technology transfers and economic growth, it is 
possible that future joint projects such as the C-17 and JSCP 
could be scaled back or cut unless the GOI and Italian 
industry are confident that the economic and tech transfer 
benefits of participation outweigh the costs.  Italian 
overseas deployments have demonstrated the importance of 
interoperability between U.S. and Italian forces, but 
economic pressures may push the GOI to seek alternative 
sources of defense procurement that might better withstand 
domestic scrutiny. 
 
Italian Army Modernization 
-------------------------- 
¶24.  Italy ended the draft in 2004 in favor of an 
all-volunteer military.  The Italian Army is now seeking to 
create a highly mobile force prepared for long deployments 
overseas, but provided with a standard of living and pay 
structure befitting professional status.  The Italian Army is 
studying the use of open barracks, which are more attractive 
to military families and better integrated with surrounding 
communities.  Moves to become more expeditionary are centered 
around the Army,s Corps Headquarters at Solbiate Olona and 
three division commands, two of which are near completion. 
Today, six of 11 brigades are heavy, but the Italian Army is 
reducing them to three, alongside four medium and four light 
brigades. In 2005 the Army created a new intelligence, 
surveillance, target acquisition and reconnaissance / 
electronic warfare brigade and a psychological operations 
regiment, while the establishment of a second 
nuclear-biological-chemical detection battalion is still in 
progress. 
 
¶25.  According to its modernization plans, the 112,000-strong 
Italian Army will include 67,000 deployable soldiers, all of 
whom would be available for NATO Article 5 situations. For 
crisis-response, 13,000 will be deployable overseas, with 
three same-sized contingents ready to rotate, totaling 
52,000.  The remaining 15,000 deployable soldiers will cover 
NATO, EU and national security duties.  Of the 45,000 
non-deployable troops, 15,000 will work on command and 
control, headquarters and training tasks; 30,000 will be 
employed by inspectorates, logistics and other units. 
 
Economic Assistance 
------------------- 
¶26.  Budget constraints have shrunk Italy,s overall 
development assistance during recent years.  In 2004, Italy 
gave USD 490 million (Euro 407 million) in worldwide economic 
assistance, including grants and credits.  Of this, Italy 
gave roughly 25 million USD in assistance to the Balkans in 
¶2004.  For Afghanistan, Italy pledged USD 174 million (Euro 
145 million) from 2004 through 2006, a figure which includes 
support for Italy,s role as international coordinator of 
Afghan justice sector reform.  In 2004, Italy provided USD 
27.85 million to support governance capacity of other 
nations, often channeling assistance funds through 
multi-lateral and non-governmental organizations.  Italy has 
disbursed USD 75,600,000 in Iraq since 2004 in bilateral 
projects or non-IRFFI trust funds, with USD 15,876,000 
contributed since 2004 to IRFFI trust funds.  No economic 
assistance figures are yet available for 2005.  FY 2006 
overall economic assistance will again be cut substantially, 
though Italy is protecting pledged assistance in priority 
areas such as Afghanistan and the Balkans. 
 
Disaster Relief / Humanitarian Assistance 
----------------------------------------- 
¶27.  In 2004, Italy provided USD 53.55 million in 
humanitarian assistance.  In 2005 Italy pledged USD 95 
million for tsunami relief and USD 27.4 million for Pakistan 
earthquake relief (see Paragraph 7).  Italy was also among 
the first countries to offer assistance following Hurricane 
Katrina.  After discussion with FEMA, Italy,s Department of 
Civil Protection sent a C-130 on September 4 to Washington 
with emergency supplies that were later delivered to an Air 
Force base near Little Rock. 
 
Non-Proliferation 
----------------- 
¶28.  Italy continued its 2002 ten-year G-8 Global Partnership 
commitment of USD 1.2 billion (Euro 1 billion), including its 
financial pledge to the bilateral agreement with Russia:  360 
million euro over ten years to honor the Italy-Russian 
Federation bilateral agreement on the dismantlement of 
decommissioned nuclear submarines and the management of 
radioactive waste and spent nuclear fuel.  However, the 2005 
budget crisis induced the Italians to break off negotiations 
on a legally binding U.S.-Italy agreement facilitating 
Italian financial contribution to the Elimination of Weapons 
Grade Plutonium Production Program (part of the Global 
Partnership on the Spread of Weapons of Mass Destruction) for 
nuclear reactors in Zheleznogorsk and Seversk, Russia.  In 
June 2005, Italy supported the successful U.S. initiative at 
the IAEA Board of Governors meeting to establish a new 
Special Committee on Safeguards and Verification.  In 
November 2005, Italy participated in the GTRI "Gap" Program: 
Officials from SOGIN (Society for Managing Nuclear 
Facilities) hosted a DOE/NNSA team to discuss finding a 
disposition path for, among other nuclear materials, 
separated plutonium (Pu) stored in the following facilities: 
Saluggia, Casaccia, Trisaia (all in Italy), and Sellafield 
(UK). 
 
¶29.  During 2004-2005, Italy was a core participant in the 
Proliferation Security Initiative (PSI), taking part in two 
PSI exercises and in 2005 activating PSI procedures to search 
suspicious containers in Cagliari harbor.  Italy has backed 
the U.S. and the EU in pressing Iran to observe its 
international non-proliferation responsibilities.  Italy 
worked with the U.S. to block dual use technology exports to 
states of concern, demonstrating flexibility in stopping 
exports not covered by multilateral agreements.  During 
2004-2005, Italy participated in two separate U.S.-scripted 
exercises to test contingency plans for hypothetical 
chemical/biological/nuclear terrorist attacks on U.S. 
military facilities at Italian bases.  By the end of 2005, 
five Italian ports were participating in the Container 
Security Initiative: Le Spezia, Genoa, Naples, Gioia Tauro, 
and Livorno. 
 
Anti-Terrorism 
-------------- 
¶30.  In 2004-2005, Italy cooperated with the U.S. and with 
other governments to disrupt significant operations, 
including the arrest of "Mohammad the Egyptian," suspected of 
involvement in the Madrid bombings, and has been forthcoming 
on several sensitive investigations.  The Interior Minister 
has made vigorous use of the expulsion option newly available 
under Italian law.  Magistrates in Rome, Milan, Naples, 
Bologna, Turin and Bari have cooperated with DOJ, Legat, NCIS 
and other U.S. agencies.  With assistance from U.S. agencies, 
Italy made significant inroads in dismantling the new Red 
Brigades-Communist Combatant Party domestic terrorist 
organization and pursued local anarchist suspects.  There 
were no terrorist acts in Italy against U.S. persons, 
businesses, or interests. 
 
¶31.  Under Italy's EU presidency in 2004, the EU designated 
Hamas as a terrorist organization.  In 2005, Italy supported 
U.S. efforts to encourage Syria to abide by international 
norms by canceling two high-level Syrian visits.  Italian 
leaders spoke out strongly against Syrian interference in 
Lebanon and condemned the assassinations of leading Lebanese 
political figures.  Italy forcefully criticized the new 
Iranian government's remarks against Israel, and Iran's 
intentions to resume nuclear enrichment activities. 
 
¶32.  In 2005, the Italian Council of Ministers approved and 
submitted to Parliament, as part of the implementing 
legislation of the third EU Money Laundering Directive, a law 
allowing seizure and forfeiture of non-financial assets 
belonging to terrorists and their supporters.  During the 
same year, Italy submitted more terrorist names for 
consideration by the UNSC 1267 Committee than any other EU 
member state.  Italy also urged EU members to submit 
terrorist names to UNSC 1267 Committee.   Italy participated 
in U.S.-led training including cyber crime, financial and 
transportation protection, and immigration (300 trained). 
Cumulative terrorist assets frozen by the Italians were top 
among all EU countries.  Italian security agencies closely 
cooperate with Mission agencies on exploiting available 
resources, training, and sharing terrorist-related leads. 
Finally, Italy and the U.S. established a strong working 
relationship in preparation for the February 2006 Turin 
Olympics and both sides have settled on appropriate levels of 
cooperation and information sharing. 
 
Changes in U.S. Use of Italian Bases: 2004 - 2005 
--------------------------------------------- ---- 
¶33.  While in 2004 Italy provided its normal high level of 
support for the roughly 15,000 U.S. military personnel 
stationed in Italy, landmark basing changes took place in 
¶2005.  Italy agreed to the first stage of the U.S. Army plan 
to double its presence at Vicenza with new facilities at Dal 
Molin Airfield.  Italian and U.S. negotiators completed the 
draft Sigonella Technical Arrangement (TA) governing U.S. 
Navy use of that facility in Sicily.  The Sigonella TA is 
expected to be ready for signature in 2006, when negotiations 
will also begin on TAs for Camp Darby, Capodichino, and San 
Vito.  With Italian support, NAVEUR HQ transferred from 
London to Naples, while 6th Fleet HQ transferred from Gaeta 
to Naples. 
 
Cost Sharing 
------------ 
¶34.  Italy does not provide cash assistance or replacement in 
kind assistance in support of stationed US forces.  The 
Italian government does not rent or lease property to US 
forces.  All fixed structures utilized by the US on Italian 
military bases are free.  Italy provides free utility 
connections to base perimeters (but the US pays local utility 
companies for the service utilized), free external security 
for the bases, and no-fee training ranges.  Italy does not 
pay salaries for US employees on the bases. 
 
Indirect Cost Sharing 
--------------------- 
¶35.  Italy makes significant contributions of land provided 
to the US to operate 7 principal military bases and numerous 
sites on a cost-free basis.  This estimated USD 260,000,000 
per year in savings in foregone rent includes access to 3 
airbases, 2 homeports, 1 large ammunition and equipment 
staging base, and a homeport that possesses the only 
maintenance/repair tender ship in the Mediterranean or 
Atlantic.  Italy provides security forces and anti-terrorist 
protection, Carabinieri support for armed personal security 
protection of U.S. dignitaries, and a robust 
telecommunications infrastructure that carries U.S. military 
data and voice signals.  Additionally, Italy provides safe 
lines of communication (airports, sea ports, railways, 
highways, air routes) to allow a high volume of U.S. forces 
and equipment.  The U.S. Navy heavily uses the military part 
of Capodichino airport in Naples, while Italy holds available 
other civilian/military airfields for sporadic U.S. uses: 
these include Pisa, Elmas, Rimini, Brindisi, Fiumicino, 
Ciampino, and Malpensa.  Italy also hosts a US/NATO munitions 
storage facility. 
 
¶36.  During 2004-2005, Italy increased the number of Italian 
armed security forces around military and government 
agencies, participated in &Product Sharing8 activity of 
Italian military intelligence community, supported the NATO 
Combined Air Force Operations Center support, provided 
Italian Coast Guard support to protect U.S. naval vessels, 
and used Italian Air Force assets to serve as a defensive 
shield for U.S. military personnel at Italian bases. 
 
Tax Concessions 
--------------- 
¶37.  Italy provided numerous tax concessions for stationed US 
personnel.  While post does not have an estimate of the total 
value of these concessions, they include: 
 
-- Waiver of the Value Added Tax (VAT) of 20% for official 
purchase of services, materials and supplies; 
-- Waiver of import duties; 
-- Waiver of VAT for POL products; 
-- Waiver of VAT in the last 90 days of service members, 
tours in Italy; 
-- Waiver of VAT on Utilities. 
SPOGLI