VZCZCXRO8815
PP RUEHAG RUEHROV RUEHSR
DE RUEHRO #0004 0021645
ZNY CCCCC ZZH
P 021645Z JAN 09
FM AMEMBASSY ROME
TO RUEHC/SECSTATE WASHDC PRIORITY 1405
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHMU/AMEMBASSY MANAGUA PRIORITY 0263
RUEHTG/AMEMBASSY TEGUCIGALPA PRIORITY 0236
RUEHRN/USMISSION UN ROME PRIORITY 0194
RUEHBS/USEU BRUSSELS PRIORITY 4726

C O N F I D E N T I A L ROME 000004 
 
SIPDIS 
 
WHA/CEN: KRAAIMOORE 
 
E.O. 12958: DECL: 01/01/2019 
TAGS: EAID PGOV PREL NU
SUBJECT: ITALY TO FOLLOW EU POSITION ON AID TO NICARAGUA 
 
REF: A. STATE 132044 
     ¶B. ROME 1219 
 
Classified By: Acting Deputy Chief of Mission Barbara A. Leaf 
for reasons 1.4 (b) and (d). 
 
 ¶1.   (C) Summary: Econoff and Poloff delivered ref A 
demarche on suspension of aid to Nicaragua.  Italy will seek 
a common EU position in responding to the flawed 9 November 
elections.  Italy will likely not suspend its sanitation 
project run through the Managua municipal government, but it 
will probably refrain from funding new projects through the 
Government of Nicaragua (GON).  End Summary. 
 
¶2.    (C) On 30 December Econoff and Poloff presented to 
Michele Pala, MFA Office Director for Central America, reftel 
A demarche concerning suspension of aid channeled through the 
Nicaraguan government following the flawed 9 November 
municipal elections.  "We will move in coordination with our 
European colleagues, and there are no major differences on 
this issue," said Pala.  Pala noted that Italy had signed the 
November 18th Donors' Group letter and supported the European 
Commission's December 10 statement condemning Managua's 
behavior prior to and during the election.  He did not commit 
to the suspension of existing bi-lateral aid, saying, "It's 
too early to close the door...we need dialogue."  However, he 
also said Italy was unlikely to commence new projects with 
the Nicaraguan government given the current political 
climate. 
 
¶3.    (C) Pala noted that bi-lateral Italian aid to Nicaragua 
remains small; indeed, Italy lacks a local office and manages 
programs from Honduras.  On 22 December Econoff met with 
Leonardo Costa, office director for the Americas in the 
Development Cooperation bureau of the MFA, and Giovanna 
Barille, a technical expert on Italian aid to Latin America, 
to discuss the mechanics of Italian aid to Nicaragua. 
According to Costa and Barille, Italy's main projects are an 
agricultural program in northwest Nicaragua and a sanitation 
project run through the municipal government of Managua.  The 
former is funded by 5m euros in soft loans and a 2.5m euro 
grant, while the latter is midway through a four year 
project, valued at 3.7m euros.  A small amount of money is 
channeled through UNICEF and NGOs.  Italy does not provide 
budgetary support to the GON, according to Costa and Pala. 
Costa said it could be technically difficult to suspend 
ongoing projects because many are based on bi-lateral 
negotiated agreements that cannot be cancelled quickly. 
 
¶4.    (C) Pala said relations between Managua and the EU 
remained tense.  In his view, the Government of Nicaragua 
sees developed countries as owing it assistance, and it 
resents conditions imposed by donors.  In the wake of the EC 
decision to suspend $32m in budget support for 2009, Pala 
said that Italian diplomat Francesca Mosca, EC Head of 
Delegation for Central America, resident in Managua, was 
subject to "brutal insults" by the GON.  The Nicaraguan 
Ambassador to the EU was summoned in protest, according to 
Pala. 
 
¶5.    (C) Comment: We previously reported impending cuts of 
60% in Italy's foreign assistance for 2009 (ref B).  Given 
the lower priority which Italy has traditionally accorded 
Latin America for foreign assistance, it is unlikely Italy 
would have initiated new projects in Nicaragua regardless of 
the conduct of the elections.  Based on the comments of Pala, 
Costa and Barille, Italy will follow the EU common position 
on aid disbursed through GON channels, but will likely not go 
further.  End Comment. 
SPOGLI