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C O N F I D E N T I A L ROME 001191 
 
SIPDIS 
 
EEB FOR CBA/FRANK MERMOUD 
EEB FOR SPECIAL ENVOY GRAY 
EEB FOR DAS HENGEL 
EEB FOR DAS BRYZA 
STATE PASS TO DOC DAS JAIME ESTRADA AND DOE DAS DENNIS 
MIOTLA 
 
E.O. 12958: DECL: 09/17/2018 
TAGS: EINV ENRG ETRD ETTC IT KNNP

SUBJECT: PROTECTING U.S. INTERESTS AS ITALY GOES NUCLEAR 


 
REF: ROME 1184 
 
Classified By: Economic Minister Counselor Thomas Delare for reasons 1. 
4b and d 
 
¶1. (C) Summary: The Berlusconi Government tells us it is 
serious about re-launching the Italian nuclear energy sector. 
If the GOI actually follows through, there will be tens of 
billions of dollars in commercial contracts. Already, we see 
high-level lobbying by British, French and Russian government 
leaders, all of whom are apparently seeking to ensure that 
their firms participate in this potentially enormous project. 
Italy will be making key decisions in the next 6 to 12 
months; the USG should weigh in with the GOI to ensure that 
U.S. firms face a level playing field.  We should also push 
for the GOI to factor energy security considerations into its 
decision-making.  GOI officials tell us that Russian nuclear 
energy technology and companies could win contracts to build 
Italian nuclear power plants. POTUS may want to discuss USG 
interests on these issues with Berlusconi during his October 
Washington visit. End Summary. 
 


¶2. (C) The new Berlusconi government followed through on its 
election platform promise and announced last May that it 
intends to bring back nuclear power to Italy.  On September 
16, EmbOffs met with Daniele Mancini, Diplomatic Advisor to 
the Ministry for Economic Development, to get an up-date on 
progress in this endeavor. Mancini told EmbOffs that the GOI 
is committed to reviving Italy's nuclear energy program, with 
a goal of starting construction of nuclear energy plants in 
five years.  Mancini explained that Economic Development 
Minister Scajola's objective is to achieve an Italian energy 
mix of 50 percent traditional sources (oil and clean coal), 
25 percent renewable and 25 percent nuclear. Mancini told us 
Italy would be purchasing nuclear power plants 
""off-the-shelf"", and added that the exact procedure under 
which the purchasing decisions would be made is still 
unclear. Asked if the GOI would be purchasing plants 
directly, or if an Italian firm would be tasked with managing 
the sub-contracting, Mancini reiterated that these aspects 
are still unknown. He made strong references, however, to 
Italian electricity parastal ENEL, and suggested it will have 
a key role in the process (i.e. prime contractor).  On next 
practical steps, Mancini said the GOI expects to have by 
year's end an approved plan for the storage of nuclear waste 
and the identification of 4 to 5 sites where the new nuclear 
plants will be built.  The decision process on choosing who 
will build the plants will follow. 
 



¶3. (C) Mancini's comments suggests that the French and the 
Russians are already maneuvering and lobbying for contracts. 
Firms from both companies may enjoy advantages derived from 
already established ties with ENEL. Mancini said that ENEL 
has already entered the nuclear field indirectly through 
business deals with the French and Russians, and that 
Minister Scajola has scheduled Fall visits to France and 
Finland to learn more about the new nuclear plants being 
built there. (Note: ENEL has a deal with France's EDF for a 
12 percent stake on its new nuclear plants, the first new one 
being built by French Areva in Flamanville.  ENEL also bought 
a nuclear power plant in Slovakia built by the Russians, 
thereby acquiring Russian nuclear technology -- it is 
developing expertise on how to run it. Areva is building 
Finland's newest nuclear plant at Olkiluoto. End note). 
 


¶4. (C) On a separate September 11 meeting with EconOff and 
FCS officers, Westinghouse representatives raised concerns 
about French and Russian competition.  Westinghouse said it 
is interested in participating in a future Italian nuclear 
energy sector, and would offer to build the company's newest 
nuclear plant model (the AP 1000).  Due to ENEL's French and 
Russian business deals referenced above, however, 
Westinghouse is concerned that the GOI will only consider 
French or Russian nuclear technology options for the building 
of power plants.  In addition, ENEL reportedly told 
Westinghouse that the French and the Russians are lobbying 
the GOI at very  high levels, but that the GOI is not hearing 
from the U.S. 
 



¶5. (C) Mancini also told us that foreign governments and 
companies have started lobbying the GOI, and said 
Westinghouse and its Italian partner Ansaldo Nucleare had 
already scheduled to meet with him (Note: Germany's E.ON CEO 
was in Rome on September 10 - 11 to discuss energy business 
opportunities and, according to press reports, met with 
Under-Secretary Gianni Letta, Environment Minister Stefania 
Prestigiacomo and the President of Italian Energy Authority 
Sandro Ortis. End note). 
 


¶6. (C) Comment: We too have noticed that the GOI is being 
lobbied by foreign governments at very high levels in an 
effort to sway the Italians on its choice of nuclear 
technology.  During his September 10 trip to the UK, we 
understand from press reports that Berlusconi discussed 
nuclear energy cooperation with Gordon Brown. Moreover, 
energy cooperation is likely to be a topic of discussion 
during Berlusconi's scheduled November 7 trip to Russia, with 
the signing of some type of energy cooperation agreement 
already foreshadowed.  Who Italy chooses to build its nuclear 
power plants has important implications for U.S. interests. 
Given ENEL's nuclear business stake with French EDF, its 
growing commercial deals with Russia and Berlusconi's close 
relationship with Putin, there is a possibility of an Italian 
top down decision to go with either French or Russian nuclear 
technology.  In addition, corruption is pervasive in Italy, 
and we fear that it may be one of the factors we will have to 
contend with as this matter evolves.  Either French or 
Russian choice will shut U.S. companies out of of potentially 
lucrative business opportunities. More importantly, a 
decision to choose Russian nuclear technology will make Italy 
further dependent on Russia for its energy supplies, 
decreasing its energy security. 
 


¶7. (C) Comment continued:  That said, there is still time for 
the U.S. to weigh in on Italy's choice of nuclear technology 
partners.  That decision will likely be made at the top 
echelons of the GOI, and we should engage at the highest 
levels if we want to ensure favorable consideration of U.S. 
companies and protection of U.S. geo-political/energy 
security interests.  We recommend that Italy's nuclear power 
options be on the USG's agenda during Berlusconi's Washington 
October visit. 
 


¶8. (C) Comment continued: The up-coming visits by Department 
of Energy DAS Dennis Miotla, Department of Commerce DAS Jaime 
Estrada/State CBA Special Representative Frank Mermoud and 
Special Envoy Boyden Gray are excellent opportunities to 
start engaging with the GOI, and to present U.S. nuclear 
technology as a strong option to be considered. We recommend 
that the DAS's, Special Representative and Special Envoy be 
prepared to comment on U.S. views on possible Russian 
participation in Italy's nuclear power program.  The visiting 
officials should also be prepared to remind their Italian 
interlocutors of their obligations to carry out a fair and 
transparent bidding process for future nuclear energy 
contracts. These visits will be an excellent start for USG 
efforts on this subject, but it is important to realize that 
competitor countries are weighing in at the highest levels; 
in our efforts to protect U.S. commercial and geopolitical 
interests, we should be prepared to do the same. End comment. 
SPOGLI "