US embassy cable - 03ROME3679

C O N F I D E N T I A L  ROME 003679 
 
SIPDIS 
 
 
E.O. 12958: DECL: 08/12/2013 
TAGS: PGOV, PREL, IT, ITALIAN POLITICS 
SUBJECT: THE FUTURE OF THE BERLUSCONI COALITION:  FRACTIOUS 
SOUND AND FURY, BUT STAYING TOGETHER 
 
REF: A. ROME 2799 
     B. ROME 2529 
     C. ROME 2674 
     D. ROME 2284 
     E. ROME 3047 
 
Classified By: CHARGE EMIL SKODON, REASONS 1.5 (B) AND (D). 
 
1.  (C)  SUMMARY:  Summer doldrums and August vacation have 
not interrupted front-page squabbling in the Italian 
government coalition, once perceived as a tight, cohesive 
group in stark contrast with the fractured center-left 
opposition.  Public spats can be expected to continue as 
Italy enters a long spell of campaigning for increasingly 
important European and local elections after a relatively 
calm two-year interval.  Nonetheless, our money remains on 
the Government's staying power, in part because the 
center-left opposition is more badly split than the 
governing coalition.  Berlusconi, we think, wants to claim 
his place in history as the first post-War Italian Prime 
Minister to serve a full term, and will do his utmost -- if 
often entering late into the fray -- to keep his unruly 
"boys" together.  His coalition partners may be 
increasingly temperamental and demanding, worrying about 
their own electoral futures, but so far, they indicate -- 
however grudgingly -- that they will stick it out. 
Berlusconi pays a price for mollifying them: substantial 
policy paralysis.  The question is whether the large chunk 
of traditionally centrist voters who took a chance on him 
will continue to do so when his coalition fails to deliver 
the meat of its ambitious, oft-touted reforms.  END 
SUMMARY. 
 
2.  (SBU)  We expect to see tensions within the 
center-right governing coalition exhibited publicly with 
varying intensity and intervening lulls from now until the 
next national elections, whether those come in 2006 or are 
called earlier.  In one recent example, the smallest and 
most centrist coalition partner, Union of Christian 
Democrats of the Center (UDC), threatened to join the 
opposition in voting for a no-confidence motion against 
Justice Minister Roberto Castelli (a member of the 
third-largest coalition partner, the Northern League). 
They were upset that Castelli had held up a request for 
judicial assistance from the U.S. under the Mutual Legal 
Assistance Treaty (MLAT) on the basis of a recently-passed 
law granting immunity from prosecution to incumbents of 
Italy's five highest institutional offices (Presidents of 
the Republic, Senate, Chamber of Deputies, and 
Constitutional Court, and the Prime Minister; see Ref A). 
The MLAT request was initiated by Italian magistrates 
investigating the "Mediaset" case alleging tax fraud and 
false accounting in a Berlusconi firm's purchase of TV 
rights to U.S. films. 
 
3.  (C)  Castelli initially took the view that the new law 
prevented not just prosecutions per se, but also arguably 
investigations, despite fairly clear language to the 
contrary (at least to our reading; see Ref B).  UDC cried 
foul.  The PM stepped in and restored order; the MLAT 
request went forward.  The vote of no confidence failed, 
with all coalition members joining to defeat it.  (NOTE: 
Some media inaccurately reported a "refusal to act" on the 
MLAT request by Embassy's Justice Attache.  In fact, the 
Ministry of Justice, acting in its capacity as "Central 
Authority" under the Mutual Legal Assistance Treaty, 
forwarded the MLAT request to the Embassy DOJ Attache on 
June 11.  As the request was being processed for 
forwarding, the Ministry rescinded it in order to review 
the applicability of the new law, only to resubmit it to us 
several weeks later.  Upon its resubmission, the MLAT 
request was forwarded to the U.S. Attorney's office in Los 
Angeles for execution.  The USG and its actions were an 
incidental footnote in a domestic political dispute -- even 
in the furthest left-leaning papers.  END NOTE.) 
 
4.  (SBU)  Two other controversies also erupted into recent 
public sparring within the coalition.  On August 1, 
Parliament passed a long-debated bill reducing sentences 
for some prisoners.  The measure is intended to alleviate 
overcrowding in Italian prisons (which are approaching 140 
percent of designed capacity), and by extension, to respond 
to a call for clemency from Pope John Paul II.  In this 
case, the Northern League (Lega) and the second coalition 
partner National Alliance (AN) objected to the original 
legislation, accusing UDC (which sponsored the clemency 
bill) of going beyond the Government's agreed, get-tough 
law and order platform.  An intra-coalition compromise 
reduced both the scope and length of sentence reductions. 
 
5.  (SBU)  The other ongoing controversy involves calls, 
 
 
pushed primarily by Berlusconi's Forza Italia (FI), for 
investigations into the "politicized judiciary" in the wake 
of charges of "massive corruption" by a Milan tribunal in 
its ruling on a corruption case against several Berlusconi 
associates (Ref D and septel).  This is, in part, 
discussion of long-standing proposals for such an 
investigation, but even within the coalition, renewed calls 
coming on the heels of a verdict unfavorable to the PM drew 
internal rebuke.  Ironically, the issues that have made a 
public splash thus far deal with relatively easy stuff. 
The more substantive issues yet to come -- devolution and 
pension reform to name two -- portend deeper, and thus 
possibly noisier, divisions. 
 
6.  (C)  So, what gives with the vaunted stability of the 
Berlusconi coalition, with its strong parliamentary 
majority?  Is government collapse in the works?  Are we 
witnessing the segue to Italy's 59th government since the 
Republic's founding?  We think not.  This is a coalition, 
and coalitions are messy.  The May administrative elections 
(Ref C), insignificant as they were overall, disturbed the 
balance within the coalition and prompted calls for a 
reconsideration of internal power distribution.  Italy will 
hold EU Parliamentary elections in 2004, another round of 
local elections with some significant prizes in 2005, and 
national elections not later than 2006.  Europarliamentary 
elections, the next test, use straight proportional voting; 
parties show their strength by running strong individual 
campaigns.  (The center-left is discussing breaking with 
common wisdom and past practice and running a single-ticket 
coalition in these elections.  We doubt they will do so, in 
the end -- on both left and right, these elections provide 
an important barometer for individual parties to see where 
they stand, for better or worse.)  This is what we see as 
perhaps the strongest impetus to coalition sniping: 
jockeying for individually strong party showings in the 
next elections. 
 
7.  (SBU)  The long hot summer caused by a record heat wave 
is another.  Not only are tempers frayed (possibly not a 
significant factor in the political squabbling, although it 
is being used as justification for any number of homicides 
and brawls nationwide), but politicians must keep their 
names before voters.  How else to do so, besides getting in 
the media, which one can rarely do by praising others. 
Attacks and criticism are called for, even cannibalistic 
attacks on one's fellow coalitioners.  Even if summer 
eventually ends (a prospect for which weather forecasters 
are giving us little hope), the need for visibility in the 
run-up to elections (in whichever year) will provoke 
continued arguments, as will continuing disparities 
regarding economic policy, especially between die-hard 
reformers and cautious political tacticians. 
 
8.  (SBU)  The center-right coalition has held up well, for 
a melange of four disparate parties.  Forza Italia, a 
business-oriented, conservative party, has focused much 
rhetoric on the need for economic reforms in order to give 
all Italians the hopes of mimicking the success of party 
leader Silvio Berlusconi.  More than that, it is a party 
with one strong leader.  Berlusconi is undisputedly the 
glue that holds the coalition together, but he has also 
used his Government's strength to protect his personal 
interests.  (Which is not to say that at least some of the 
legislation that has protected the Prime Minister is not 
good policy, as well.)  National Alliance, with its roots 
in Italian Fascism, is seeking to remake its image as a 
mainstream center-right party and mostly concurs with FI 
policies.  AN's leader, Deputy PM Gianfranco Fini, is 
succeeding in burnishing his institutional image.  But Fini 
also faces a strong populist wing within AN, pushing for 
more government largesse. 
 
9.  (C)  The coalition's two "poles" are the Northern 
League and UDC.  The Lega is a regionally-focused party 
whose overwhelming policy goal is to "liberate" the north 
from the "burden" of supporting the poorer south.  Its 
stringent immigration and crime control policies put it 
further at odds, in particular with the smallest coalition 
member, Catholic-oriented UDC.  Lega leader Umberto Bossi's 
fiery and uncompromising rhetoric to followers at rallies 
in his northern Italy power base is a constant source of 
friction with especially the two "nationally-oriented" 
coalition partners, AN and UDC.  (Some observers, at least, 
perceive FI, like the Lega, as largely a creature of the 
north, despite its strong support in, inter alia, Sicily 
and Apuglia.  They cite Berlusconi's Milan business 
background and support for his business-oriented policies 
in Italy's northern commercial centers.  Indeed, many 
intra-coalition disputes end up with strong regional 
overtones, with UDC and/or AN backing Italy's southern 
 
 
region against the Northern League, and Berlusconi's FI 
called in as referee.) 
 
10.  (C)  Finally, UDC (successor to Italy's traditional 
Christian Democratic (DC) party), nostalgic for Italy's 
decades of bloated government and unbridled budget deficits 
under DC leadership, is often odd man out in the 
coalition.  It shares fewer of the right-leaning 
perspectives of its partners, but still relishes having 
party leader Pier Ferdinando Casini as President of the 
Chamber of Deputies and an acknowledged part of the 
Government's power team.  (The former Christian Democrats 
have flirted with uniting as a "centrist block," and some 
probably still dream of the old glory days.  Casini, 
however, has firmly ruled out any alliance shifting his 
part of the grouping to the left, which curtails their 
flexibility.) 
 
11.  (C)  Elections underscore the divisions.  When 
pressed, however, most party  representatives across the 
coalition say they remain better off within the coalition 
than outside of it.  At least to our faces, they insist the 
coalition will hold, although it will take more of 
Berlusconi's time keeping the disputes under control and 
restoring discipline.  As tensions rise, the number of 
calls for the PM to hold member parties' feet to the fire 
has increased.  UDC and AN want him to rein in Bossi.  Some 
in FI want him to remind UDC of its proper place.  AN wants 
more recognition for its stable and responsible role, often 
putting coalition interests ahead of its own, even at the 
occasional expense of the party's public image.  Even 
Senate President Pera (FI) recently expressed frustration 
to the Ambassador with Berlusconi's failure to "correct 
problems" in the coalition. 
 
12.  (C)  Berlusconi himself has strong motivation to keep 
all four members firmly in the coalition.  If either the 
Lega or UDC were to leave, the coalition would survive -- 
but the remaining smaller "extreme" coalition partner would 
gain disproportionate influence, making the balancing act 
that much more difficult.  In the end, however, being in 
government gives coalition members and their constituents 
more than they can get on the outside.  In the end, 
political support for Berlusconi remains relatively strong, 
despite some erosion.  And, there is really no other 
coalition to which the partners could turn.  (Even if parts 
of UDC could function comfortably in a center-left 
coalition, the fragments would be too small to serve as 
king maker.)  Therefore, we wager the Government will hold 
through Italy's EU Presidency term, and indeed, we think it 
will likely go full course. 
 
13.  (C)  Perhaps more tellingly than what Government 
coalition members say, opposition leaders share this 
assessment of the Government's durability.  The largest 
center-left party, Democrats of the Left (DS), has 
developed a theory that Berlusconi could seek to force 
early elections, perhaps saying he lacked the full support 
of his own coalition and therefore must have the renewed 
mandate of the Italian people.  (NOTE:  Elections can only 
be called by President of the Republic Ciampi, who could 
also urge another try at forming a coalition or appoint a 
technical caretaker government.  END NOTE.)  But even as 
they lay out the scenario, DS members admit it is not a 
likely one.  One thing attracted our attention, however: 
EU Commission President Romano Prodi might not be able to 
run if elections were held before the expiration of his 
curtailed term in November 2004.  He would have to resign 
as Commission President, which he has said he would not 
do.  Prodi is considered by most to be the only potential 
candidate with real staying power against Berlusconi. He is 
the only tested politician who might be able to pull 
together a center-left even more fractured, diverse, and 
ideologically split than the governing coalition. 
 
14.  (C)  In the end, we are willing to bet a small sum 
that Berlusconi's lust for the limelight, his thirst to 
hold a significant and perpetual place in Italian history 
(and maybe to serve in the future as President of the 
Republic), will encourage him to do what it takes to keep 
his coalition in place at least until he is the 
longest-serving premier (May 4, 2004), but better until he 
becomes the first PM to serve a full electoral term.  He 
also has a strong personal incentive to serve out his full 
term (and be re-elected to another):  As soon as he is out 
of office, he faces the resumption of his Milan corruption 
trial (Ref A) and a probable guilty verdict (either because 
he actually is guilty or because the judges have already 
determined their verdict, depending on one's point of 
view).  As the center-right leader with the stature and 
proven success record to keep the parts together, we think 
 
 
he can succeed, as long as the two smaller partners 
continue to believe they are better off in, than out of, 
the coalition.  We are not certain if he realizes that his 
role as broker, arbiter, and undisputed final authority for 
the coalition will become increasingly time-consuming.  It 
is widely reported that he dislikes the negative public 
image generated by public intra-coalition squabbling.  It 
is also rumored that he finds the role of tough guy 
distasteful, and as tensions build more publicly, in at 
least some occasions a tough guy is needed -- and no one 
else in the coalition has the stature to impose order. 
 
15.  (C)  There is a price to preserving coalition harmony 
and making history, however -- policy paralysis.  Much of 
Berlusconi's fence-mending involves massaging coalition 
members' divergent positions on key policy issues, notably 
pension reform, immigration and trimming further state 
spending.  In this case, though, "massaging" often means 
"delaying action."  It is a solid formula for maintaining 
the coalition, but one that may play poorly with some 
centrist voters who gave Berlusconi and Forza Italia a 
chance in hopes that their results-oriented "Contract with 
Italy" offered something other than Italian 
politics-as-usual.  The center-left's inability to offer a 
coherent alternative reduces the political costs to policy 
inaction for Berlusconi, however.   The emergence of a 
strong "anti-Berlusconi" around whom the opposition could 
unite might change that calculation.  At this point, 
however, it is by no means certain that Prodi could play 
that role if he returned to domestic politics, and there 
are few other contenders on the opposition's horizons. 
Skodon 
 
 
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	2003ROME03679 - Classification: CONFIDENTIAL