VZCZCXRO7273
OO RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHRO #2076/01 2020912
ZNR UUUUU ZZH
O 210912Z JUL 06
FM AMEMBASSY ROME
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5434
INFO RUCNRAQ/IRAQ COLLECTIVE PRIORITY
RUEHROV/AMEMBASSY VATICAN PRIORITY 0433
RUEHFL/AMCONSUL FLORENCE PRIORITY 1593
RUEHMIL/AMCONSUL MILAN PRIORITY 7391
RUEHNP/AMCONSUL NAPLES PRIORITY 1682
RUEHNO/USMISSION USNATO PRIORITY 2804
RUEKJCS/SECDEF WASHDC PRIORITY
RUEHRO/USDAO ROME IT PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHMFIUU/USCENTCOM MACDILL AFB FL PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 ROME 002076 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR NEA, EUR/WE AND S/I 
 
E.O. 12958: N/A 
TAGS: PARM PREL UNSC PGOV EAID IZ IT
SUBJECT: SCENESETTER FOR CODEL COLE 
 
REF: A. STATE 115260 
 
     ¶B. ROME 1955 
 
ROME 00002076  001.2 OF 002 
 
 
¶1. Embassy Rome warmly welcomes the visit of Codel Cole. 
Please find below background information to serve as a 
scenesetter for visit. 
 
¶2.  U.S.-Italy relations traditionally have been strong 
regardless of the party in power.  The Center Left's April 
9-10 election victory should not significantly change the 
substance of our bilateral relationship, despite the new 
government's well-known opposition to the war in Iraq.  PM 
Prodi has announced plans to withdraw all Italian troops by 
the end of 2006.  However, the Prodi government also has 
pledged to increase its reconstruction assistance in Iraq. 
The new government has stated it will favor multilateral 
initiatives over bilateral or unilateral ones, especially in 
Iraq, where Italy is pushing for stronger EU, UN, and NATO 
roles. 
 
A Fragile Coalition... 
---------------------- 
 
¶3.  Prodi leads a diverse coalition of allies ranging from 
centrist oriented Catholic parties to radical communists. 
During the election campaign, the center-left coalition was 
often plagued by internal disputes, with the radical-left 
assuming an increasingly high-profile role.  Radical left 
parties scored significant gains, winning roughly 12 percent 
of the vote and capturing 38 of the potential 158 center-left 
seats in the Senate, making them essential to a future Prodi 
government. 
 
¶4. Political commentators believe this combination could 
complicate Prodi's ability to govern.  Indeed, the current 
debate over funding of Italy's overseas missions highlights 
differences within the coalition.  The Italian government 
issued a decree June 30 approving financing for these 
missions, including Iraq, through the end of 2006, which 
Parliament must approve within 60 days.  The House approved 
the decree on July 19 with four members, all from the extreme 
left Communist Renewal, voting against.  The Senate, where 
the Prodi government has only a razor-thin majority, will 
begin consideration on July 24. 
 
...With Significant Economic Handicaps 
-------------------------------------- 
 
¶5. High public debt and budget deficits, rising social 
welfare costs, persistent unemployment and a stagnant economy 
all limit Italy's financial ability to increase or sustain 
Italy's overseas missions.  The current budget has reduced 
foreign assistance by 27 percent and defense spending by ten 
percent (to about 0.90 percent of GDP).  Peacekeeping 
funding, carried as a separate line item outside the budget, 
was cut by 20 percent for 2006. Nevertheless, the Prodi 
government has pledged to continue and even increase its 
reconstruction efforts in Iraq. 
 
Shift to Civilian Cooperation in Iraq 
------------------------------------- 
 
¶6. Italy, with approximately 1,600 troops located in Dhi Qar 
Province in the British sector, is the third largest troop 
contributor in Iraq after the U.S. and UK.  Before the April 
elections, the Berlusconi government announced a timetable 
for the gradual drawdown of Italian troops with the aim of 
repatriating most by year end and transforming the mission 
into a primarily civilian one.  Prodi, in an effort to 
distinguish his government's policies from those of the 
previous government, and citing an electoral mandate for 
complete troop withdrawal, has announced he will withdraw all 
troops by the end of 2006.  However, Italy will continue its 
reconstruction efforts and has pledged to strengthen 
political, civilian, and humanitarian cooperation and support 
for the Iraqi government. 
 
¶7. Italy's reconstruction assistance focuses primarily on 
three geographic areas:  Baghdad, Dhi Qar province, and 
Kurdistan.   The Italian government has spent (or allocated) 
 
ROME 00002076  002.2 OF 002 
 
 
all of the 200 million Euros pledged at the October 2003 
Madrid summit, primarily in the fields of training, technical 
assistance and institution building (including support for 
Iraqi public administration, e-government, and electoral 
assistance), the health sector, water resource management, 
agriculture, the environment, infrastructure, and cultural 
heritage recovery.  Supplement funds have been disbursed by 
other Italian Ministries (Defense, Environment, Scientific 
Research, Agriculture, Cultural Heritage, Technological 
Innovation), organizations such as the Italian Red Cross and 
National Research Council, and many universities. 
 
¶8. The June 30 decree includes 129.38 million Euro for the 
military mission in Iraq, including the cost for troop 
withdrawals, which the decree specifies will be completed by 
the "end of autumn."   An additional 30 million is designated 
for humanitarian, stabilization, and reconstruction 
assistance (compared to 15 million for the previous six-month 
period, a 100 percent increase). 
 
¶9. Italy was the third Paris Club member to announce a 
cancellation of Iraqi debt, agreeing in October 2005 to 
cancel 80 percent of Iraq's debt to Italy, amounting to 2.4 
billion Euro. 
 
¶10. Italy leads three of out four modules in the NATO 
Training Mission in Iraq (NTM-I) at al-Rustamiyah, providing 
the NTM-I deputy and 32 others conducting staff college-type 
training.  In addition, Italy has contributed 1 million Euro 
to the NTM-I trust fund.  On July 20, a seven-member Italian 
Military Advisory and Liaison Team (MALT) began a six-month 
deployment whose purpose is to oversee the Iraqi security 
forces that will soon take over force protection for NTM-I. 
Italy has also expressed interest in providing Carabinieri 
trainers for NTM-I once NATO members agree to expand the 
mission to include training for Iraqi security forces. 
Italy's Carabinieri forces in Dhi Qar province already have 
trained over 10,000 Iraqi security forces, and approximately 
one hundred Iraqi staff officers have received training at 
the Italian war college in Rome. 
 
¶11. Italy also participates in the EU's integrated rule of 
law mission (EUJUST LEX), which provides training for senior 
Iraqi officials in the area of crime investigation.  The 
Italian Ministry of Justice led two courses in the year 
ending June 30, 2006, at a cost of approximately 300,000 
Euro,  and intends to provide a third course this year for an 
additional cost of 500,000 Euro. 
 
Host to the Multinational Force and Observers (MFO) 
--------------------------------------------- ------ 
 
¶12. The Multinational Force and Observers (MFO), 
headquartered in Rome, is an independent international 
organization created by agreement between the Arab Republic 
of Egypt and the State of Israel.  The MFO also has offices 
in Cairo and Tel Aviv.  The United States, along with Egypt 
and Israel, provides most of the MFO funding. The MFO's 
Director General, Ambassador Jim Larocco, is a retired U.S. 
Foreign Service Officer who previously served as U.S. 
Ambassador to Kuwait. 
 
¶13. The MFO,s mission is to supervise the implementation of 
the security provisions of the 1979 Egyptian-Israeli Treaty 
of Peace. Contingents from 11 countries, including Italy, 
participate in the activities of the MFO.  Italy, in addition 
to providing the MFO headquarters in Rome, has provided the 
MFO,s Coastal Patrol Unit since 1982, currently comprising 
nearly 80 personnel (mostly Coastal Patrol Units) and three 
ships.  Since March 2004, the MFO Force Commander in the 
Sinai has also been an Italian, Brigadier General Roberto 
Martinelli. 
SPOGLI