US embassy cable - 03ROME4237

C O N F I D E N T I A L  ROME 004237 
 
SIPDIS 
 
 
E.O. 12958: DECL: 09/12/2013 
TAGS: ECON, IT, PREL, EAID, KWBG, UN 
SUBJECT: PM BERLUSCONI'S MIDDLE EAST "MARSHALL PLAN" 
 
REF: TEL AVIV 5266 
 
Classified By: Economic Minister Counselor Scott Kilner for reasons 1.5 
 (b) and (d). 
 
 1.  (C) SUMMARY: Embassy officers met on September 12 with 
Ambassador Mario Sica, the Foreign Ministry's new point 
person for Prime Minister Berlusconi's Middle East "Marshall 
Plan."  Sica said he would travel to Washington the week of 
September 29 to discuss the plan; this would follow 
discussion by G-8 experts in Dubai September 22.  He outlined 
the principal features of what he expects  would be a 
three-year plan beginning in 2005 and costing around USD one 
billion per year.  Emboffs suggested areas of the plan that 
would need to be clarified in Sica's Washington meetings, and 
recommended additional appointments for him.  Sica stressed 
PM Berlusconi's strong political interest in the success of 
the plan. END SUMMARY. 
 
2.  (C) Since completing his assignment as Italy's ambassador 
to Cairo, Mario Sica has for the past month led the MFA's 
work on PM Berlusconi's proposal for a "Marshall Plan" for 
the Middle East.  Recently returned from a trip to the region 
(Reftel), Sica laid out the key features of the plan for 
EcMin, PolMin, and visiting EUR/WE deskoff (notetaker). 
Noting a lack of long term planning in the Palestine 
Authority, Sica said Italy saw its role as a catalyst for the 
international community to act. While the original Marshall 
Plan was a useful comparison, it was important to remember 
that it was a case of one country giving to many.  With 
Palestine, many would be giving to one.  Sica emphasized that 
the plan must be financially significant.  Italy considers 
USD one billion per year over three years an appropriate 
target.  Because the plan should focus on development and 
reconstruction, not emergency relief, it should begin in 
2005.  Finally, the plan should have a regional scope.  It 
should focus on Palestine, while at the same time encouraging 
relations with neighboring countries, principally Egypt, 
Jordan and Israel.  Based on his recent meetings in Israel, 
Sica thought the Israeli government would take a practical 
and supportive approach to the initiative, though he 
speculated that Jewish American groups would be more 
skeptical. 
 
3.  (C) Sica said Italy was aware of the political 
implications of giving aid to the Palestinians.  He felt 
planning would be vital and should be done by Palestinians 
with the advice of the World Bank, the European Commission, 
and an ad hoc task force of donors.  Politically, it would be 
important to have a high-level appeal and announcement of a 
rough figure for the plan.  Italy is considering options for 
a framework, perhaps having G8 Foreign Ministers announce the 
plan as part of the "Evian mandate." 
 
4.  (C) EcMin cautioned that the plan must take into account 
security and the political situation.  Sica thought it could 
be done in spite of the current security situation.  While 
the plan does require a Palestinian governmental structure, 
other reconstruction efforts, for example in Gaza, are 
underway.  International donors could provide political 
guarantees to encourage private sector involvement in 
economic development.  EcMin pointed out that a similar 
discussion is underway with regard to Iraq, noting the 
Brussels Core Group meeting and the upcoming Madrid donors' 
conference.  There is an ongoing effort to secure minimum 
commitments: with existing budgetary difficulties in donor 
countries this presents a real challenge.  Sica noted that 
the assistance required for Iraq was of an entirely different 
order of magnitude, and he hoped donors would see the amounts 
needed for Palestine as relatively small. 
 
5.  (C) PolMin reminded Sica that the original Marshall Plan 
focused on democratic values, not dollar values.  Assistance 
of this kind can create the conditions for democratic 
institutions and free markets.  While the biggest hurdle for 
the Middle East Marshall plan may be identifying the 
necessary funds, the biggest obstacle to implementation would 
be PA Chairman Arafat's history of diverting funds from the 
 
international community for his own purposes.  In the past, 
there have been insufficient controls on donor funds, 
especially from the EU. A new plan would need to emphasize 
careful controls.  PolMin also noted that the US, EU members 
and other donors might be reluctant to lose a separate 
identity for their contributions to the Palestinians.  The 
GOI may wish to study, as a precedent, the Stability Pact for 
Southeast Europe, which provided an umbrella for bilateral 
and multilateral development spending in the Balkans without 
creating a controlling bureaucracy.  PolMin added that the 
President's strategic vision for the Middle East goes beyond 
settlement of disputes to transforming the society and 
economics of the region.  The GOI should consider how its 
proposal could support not only the roadmap but this broader 
objective. 
 
6.  (C) Sica accepted these points, and suggested that the 
solution to the problem of diverting funds could be an ad hoc 
donor task force.  He said that President Bush had voiced 
support for the Middle East Marshall plan when he met 
Berlusconi at Crawford in July, and had noted that the G-8 
would be a better choice than the EU for monitoring 
implementation.  With the President providing strategic 
vision, the plan could be made to work. 
 
7.  (C) Sica envisioned the US share of the plan to be 
between 20 and 50 percent of the USD one billion per year. 
Italy's share would be decided by Finance Minister Tremonti, 
but Sica thought it should not be less than 10 percent. 
This, he said, is the price of the region.  The Palestinians 
must be removed from the lives of despondency and inaction 
they have come to expect: their hopelessness is the cause of 
the Intifadda. 
 
8.  (C) EcMin recommended that Sica schedule appropriate 
meetings with the Bureau of Near Eastern Affairs while in 
Washington.  His scheduled appointment  with Under Secretary 
Larson would of course be essential, but the political 
dimension of the plan should also be raised with NEA. 
 
9.  (C) COMMENT: It was clear from Sica's presentation that 
Berlusconi cares deeply about a "Marshall Plan" for the 
Middle East and will be looking for others to sign on.  From 
accounts of internal EU discussions we have heard previously 
from the MFA, it was probably a wise move to seek a G-8 
umbrella rather than one from Brussels.  The plan, however, 
is in its early stages.  Sica has delayed his planned travel 
to Washington for two weeks, during which he will accompany 
FinMin Tremonti to Dubai.  It will be instructive to see if 
Sica arrives in Washington with a developed, convincing 
agenda.  END COMMENT. 
SEMBLER 
 
 
NNNN 
	2003ROME04237 - Classification: CONFIDENTIAL