US embassy cable - 03ROME5639

UNCLAS  ROME 005639 
 
SIPDIS 
 
 
STATE FOR EUR/WE 
 
E.O. 12958: N/A 
TAGS: PGOV, IT, ITALIAN POLITICS 
SUBJECT: PRESIDENT CIAMPI SENDS CONTROVERSIAL MEDIA REFORM 
BILL BACK TO PARLIAMENT 
 
REF: ROME 5557 
 
1. Summary:  Italian President Ciampi declined to sign draft 
legislation reforming Italy's media sector December 15 and 
sent the bill back to Parliament.  Ciampi cited technical 
legal conflicts and broader concerns about the legislation's 
potential constraints on media pluralism in a further- 
liberalized media sector.  The President's action is an 
uncommon but by no means unprecedented detour in the 
legislative process.  Berlusconi and his coalition partners 
must now decide either to send the legislation back to 
Ciampi as-is or, more likely, make some technical 
adjustments in Parliament to address Ciampi's legal points. 
We expect the broad reform measures included in the 
legislation eventually will be implemented, but Berlusconi 
will pay a steeper price than expected to again shepherd the 
reform bill through Parliament.  For coalition partners 
looking ahead to a possible cabinet shuffle in January, 
Christmas may come a little early this year.  End Summary. 
 
Ciampi's Surprise 
----------------- 
 
2. President Ciampi confounded most observers' predictions 
(including ours - reftel) by declining to sign the "Gasparri 
Law" (named for the communications minister) liberalizing 
further Italy's media sector, instead sending it back to 
Parliament on December 15.  The legislation, approved by 
Parliament December 2 (reftel), eliminated distinctions 
among media properties (creating an "integrated 
communications system"), set a timetable for initial 
privatization of public broadcaster RAI and lifted limits on 
broadcast media holdings, restrictions on cross-ownership of 
media properties and caps on advertising spending.  These 
provisions effectively legitimized Prime Minister 
Berlusconi's current media holdings and would have nullified 
a constitutional court decision directing one of 
Berlusconi's three broadcast networks to convert to digital 
transmission (in order to respect the cap on broadcast media 
holdings).  Critics charged that the legislation would 
reinforce Berlusconi's dominance of Italian media, as did 
such organizations as Journalists Without Borders, and 
implored the President not to sign it. 
 
3. In sending the "Gasparri Law" back to Parliament, Ciampi 
cited three principal concerns for his decision: 
 
-- the conflict between the legislation's one year phase-in 
period, and a constitutional court decision requiring an 
assessment of pluralism in the media by the end of 2003; 
 
-- the absence of a clear mechanism to correct any 
"deficiencies in pluralism" under the new media system that 
were identified by a watchdog commission; and 
 
-- the potential for individual companies to create a 
"dominant position" absent caps on the percentage of revenue 
that broadcast media properties could earn from advertising. 
In this case, Ciampi is echoing concerns from print media 
that, absent advertising revenue caps, advertising will 
flood out of print media to broadcast outlets.  This revenue 
shift would jeopardize many newspapers' bottom line and, 
therefore, reduce pluralism and undermine freedom of the 
press. 
 
Government Regrouping For Interim Fix... 
---------------------------------------- 
 
4. The Berlusconi Government reacted calmly, characterizing 
the President's decision as a normal feature of the 
legislative process, albeit one used only uncommonly.  A 
small group drawn from the leadership of all four coalition 
members immediately began discussing options and plotting 
strategy for responding to Ciampi's decision.  Essentially, 
the Berlusconi Government, via its parliamentary majority, 
has two choices: 
 
-- send the legislation back to Ciampi, as-is and 
unmodified; 
 
-- return the bill to the lower-house Chamber for 
adjustments to address at least some of the concerns that 
Ciampi noted; after votes by both houses, the modified bill 
would then go back to Ciampi for signature. 
 
Whichever route the Government elects to take, Ciampi must 
sign the law when it next lands on his desk. 
 
5. Most observers think the Government will select the 
second option, and early press backgrounding after the 
initial coalition consultations would seem to support that 
assessment.  Resubmitting the legislation as-is to Ciampi 
would risk having it referred almost immediately to the 
 
 
constitutional court (where a likely adverse ruling would 
prompt modifications to the law anyway) and renew domestic 
and international criticism of the Government's approach to 
press freedom and media pluralism. However, parliamentary 
fine-tuning is not without risk.  Elements of the coalition, 
especially in the National Alliance, held their noses to 
approve the legislation, and others, especially Chamber 
President Casini, are wary of appearing to rubber-stamp 
legislation that inter alia benefits the Prime Minister. 
Moreover, with a "review" -- and possible reshuffle -- of 
the cabinet due in January (post-Italian EU presidency), 
ambitious coalition partners angling for more prominent 
roles, notably Deputy PM Fini, may set a steep price for 
their continuing collaboration on the media reform 
legislation. 
 
6. First, though, the Government must figure out how to 
"save" two networks -- Mediaset's private Rete 4 network and 
the public RAI 3 -- from prior law and court rulings that 
effectively put both out of business on December 31.  Rete 4 
remains under judicial order to convert to satellite or 
digital transmissions beginning January 1, something it has 
not prepared to do.  Under separate 1997 legislation passed 
by the center-left Dini Government, RAI's third channel 
legally will no longer be able to accept advertising on the 
same date, and there's no money in the national budget to 
offset the loss of revenue.  The Government reportedly is 
contemplating a decree that would maintain the status quo 
for one or two months, providing a window during which 
Parliament could adjust the Gasparri legislation. 
 
7. Comment:  A popular and widely-respected President, 
Ciampi is well-attuned to the moods and undercurrents 
coursing through Italian society.  In this case, he 
evidently decided public and private grumblings about the 
Gasparri law, spiced perhaps with some choice foreign 
commentary, merited suggesting that Parliament take another 
look at the legislation.  This society still revolves 
principally around old, interlocking networks of family, 
friendship and business.  Print media companies have been 
crying foul over the potential loss of advertising revenue 
that would flow to television absent the current advertising 
revenue caps.  In this case, Ciampi appears to have heeded 
their calls, and those of the opposition, for another look 
at this legislation.  In doing so, he also outmaneuvered the 
coalition by issuing his decision before the majority could 
pass pending conflict-of-interest legislation designed to 
defuse the opposition's charges.  Ciampi's maneuver 
ultimately should not forestall, or alter substantially, the 
media liberalization package.  But it is likely to raise its 
price for Berlusconi.  End Comment. 
 
 
NNNN 
	2003ROME05639 - Classification: UNCLASSIFIED