US embassy cable - 03ROME5665

C O N F I D E N T I A L  ROME 005665 
 
SIPDIS 
 
 
NOFORN 
 
DEPT FOR EUR/WE, EUR/ERA 
 
E.O. 12958: DECL: 12/09/2013 
TAGS: PREL, IT, EUN 
SUBJECT: ITALY'S EU PRESIDENCY HAS UNEVEN SUCCESS BUT 
DELIVERS ON U.S. SECURITY INTERESTS 
 
REF: A. ROME 4133 
     B. ROME 4564 
     C. BRUSSELS 4892 
     D. ROME 3237 
     E. ROME 5150 
     F. BRUSSELS 5622 
 
Classified By: DCM EMIL SKODON FOR REASONS 1.5 (B) AND (D) 
 
1. (C) SUMMARY. Against the backdrop of EU members' 
continuing divisions over Iraq, Italy's EU Presidency managed 
to further U.S. interests in fighting terrorism and in 
keeping the EU's defense and security policy in accord with 
NATO and the Berlin-Plus agreement - in line with Italy's 
Presidency goal of strengthening transatlantic ties.  Italy 
also succeeded in meeting other key EU Presidency goals of 
enlarging the EU and improving border control.  It was less 
effective, however, in resolving U.S.-EU differences on 
economic and trade issues, notably regarding genetically 
modified organisms. In addition, the Italian EU Presidency's 
economic growth initiative to increase investment, 
transportation, and telecommunications did not fulfill its 
lofty ambitions, particularly on infrastructure projects, but 
resulted in the Council's endorsement of public/private 
investments to improve competitiveness and reduce 
unemployment. 
 
2. (C)  Italy's failure to bring about approval of the EU 
draft Constitution is likely to be its EU Presidency legacy. 
Much of the European press and a number of EU 
parliamentarians have blamed Prime Minister Silvio Berlusconi 
for not being able to mediate member states' implacable 
differences on voting rights. Berlusconi decided it was 
better to end the InterGovernmental Conference (IGC) rather 
than preside over a weekend of futile haggling. He deserves 
some credit for meeting with EU government leaders to attempt 
to forge consensus and for proposing last-minute compromises, 
but ultimately could not overcome Spain and Poland's 
determination to hold on to the voting advantages they fought 
for at the Nice Treaty, and France's refusal to compromise on 
the Convention's QMV formula. END SUMMARY. 
 
Two Presidencies 
---------------- 
 
3. (C)  Berlusconi's senior diplomatic advisor (NSA 
equivalent), Giovanni Castellaneta, told DCM that Italy's 
tenure should be viewed from two perspectives - the normal 
residency responsibilities and the IGC.  He emphasized that 
the Prime Minister was pleased with the overall Presidency 
results and the concluding documents approved in Brussels. 
Italy was particularly proud of the statement on 
Transatlantic relations authored by Italy and approved by the 
final Council.  He was pleased with the public statement of 
gratitude by A/S Jones.  Italy will continue to push for 
stronger US-EU ties during upcoming Presidencies, he 
promised. 
 
4. (C)  Both Castellaneta and MFA office director for EU 
Institutional Affairs Giuseppe Buccino-Grimaldi laid the 
blame for the IGC's failure to agree on a draft in two 
corners.  Most important was the Spanish/Polish unwillingness 
to bend on Nice voting arrangements.  The other was France's 
reluctance to compromise in good faith on the QMV formula 
laid out in the original Convention draft.  All other issues 
had been agreed to or would have been adopted with some 
modification, emphasized Buccino.  The big question now is 
whether the areas already agreed will be frozen while QMV 
negotiations continue.  DCM put this question to a number of 
EU member COMs and DCMs at President Ciampi's holiday 
reception for the Diplomatic Corps on December 19, and 
received the full range of answers -- yes, no, and maybe. 
Ireland will have its hands full managing this process while 
at the same time presiding over an EU preoccupied with formal 
enlargement in May, elections in Spain and Poland and for the 
European Parliament.  For all these reasons, Buccino opined 
that the treaty would not be ready for another attempt at 
consensus until the Dutch Presidency in the second half of 
2004. 
 
ESDP in Accord with Berlin-Plus 
------------------------------- 
 
 
5.  (C)  Italy's failure to unite EU members in resolving 
voting rights differences has also put on the shelf for now 
its provisions for structured cooperation, a single foreign 
minister, and a watered-down mutual defense clause that may 
have satisfied neutral EU states but appeared to no longer 
obligate all members to come to one another's defense.  The 
EU defense planning capabilities decided on prior to the 
Summit, however, are intact.  The proposal -- welcomed by 
NATO SYG Robertson and in accordance with the Berlin-Plus 
agreement reinforcing NATO/EU cooperation -- creates an 
independent EU military planning cell that will link EU 
military officers in national military headquarters to 
coordinate operations in which NATO does not participate. 
According to this plan, a NATO liaison officer will sit at 
the EU military office, and the EU will have a staff at 
SHAPE.  Castellaneta -- who was involved in drafting this 
proposal with his British, French, and German colleagues -- 
was particularly pleased that it set out a clear hierarchy of 
preferences for EU planning: NATO as the "natural choice," 
then Berlin-plus, then an EU national headquarters lead, and 
only when none of these apply a recourse to an EUMS-led 
approach.   European defense policy also evolved during the 
Italian EU Presidency to enhance capabilities for gendarmerie 
and humanitarian forces deployment before or after military 
conflict and a European Defense Agency that will coordinate 
research, development, and arms purchases. 
 
6.  (C)  The European Council's final declaration under the 
Italian EU Presidency states that the EU is committed to 
multilateralism and "a strong UN," and it begins and ends 
with statements that the transatlantic relationship is 
"irreplaceable and essential."  In order to underscore the 
importance of these ties, Foreign Minister Franco Frattini 
invited Secretary Powell to the EU foreign ministers' Nov. 18 
working lunch in Brussels, an initiative that fostered 
goodwill; the final Summit declaration refers to the 
"positive results" of that meeting. 
 
Fighting Terrorism and WMD 
-------------------------- 
 
7.  (C)  Frattini played a key role in persuading the EU to 
declare Hamas a terrorist organization and freeze its assets; 
EU consensus on blocking assets for charities that support 
Hamas and suspected terrorists in Italy and abroad remains a 
problem, however, but Castellaneta insisted that Italy would 
continue to push the issue within the EU.  MFA POLDIR Aragona 
has told DCM the same, but cautioned that it will be 
difficult to get some other EU members to move more quickly. 
Italy led the EU in adopting a position on strengthening 
international treaties against weapons of mass destruction 
(including the nuclear non-proliferation treaty, IAEA rules, 
the treaty banning nuclear tests and experiments, conventions 
on biological and chemical weapons, and the Hague code of 
conduct against proliferation of ballistic missiles). The EU 
also passed a measure requiring all future EU treaties to 
include a clause against WMD proliferation. 
 
Boosting Enlargement: Italy's Investment in the Future 
--------------------------------------------- --------- 
 
8.  (C)  Italy made considerable progress in achieving one of 
its key presidency goals of advancing the EU candidacies of 
Turkey, Balkan countries, and former Soviet states -- an 
accomplishment that promises to promote stability in fragile 
democracies.  At the Dec. 12 Council, Italy succeeded in 
pushing for early accession -- January 1, 2007 -- of Bulgaria 
and Romania.  It greatly encouraged Turkey's path to reform, 
stressing the importance of using Ankara's influence to 
facilitate a Cyprus settlement.  Castellaneta pointed to the 
encouraging gains made by the anti-Denktash Parliamentarians 
in the elections, and promised to work closely with his Irish 
counterpart to keep the pressure on all sides to continue 
reform. 
 
Iraq 
---- 
 
9. (C) Italy demonstrated leadership as President by pledging 
200 million Euro for Iraq reconstruction at the Madrid 
conference, the second largest amount by an EU member state. 
Italian efforts to get the EU to show stronger political 
support for coalition efforts in Iraq were generally 
 
 
unsuccessful; even the final European Council declaration was 
only a minor improvement over previous 
lowest-common-denominator language. 
 
EU Outreach 
----------- 
 
10. (C)  Italy did not meet all of its ambitious MEPP goals 
but held several conferences to further the peace process, 
including the AHLC Palestinian donors conference, where Rome 
pledged 77 million euro, and a Euromed Partnership Conference 
that facilitated meetings among Arab and Israeli foreign 
ministers.  In its EU Presidency declarations and during 
meetings with Israeli leaders in November, Italy took a 
balanced approach of moderate support for Israel (including 
new bilateral agreements on technical cooperation) while 
condemning Israel's security wall incursion into Palestinian 
territory; it worked to further Palestinian development while 
pressing Palestinian leaders to crack down on terrorism. 
Italy reaffirmed that the roadmap is still the only viable 
peace plan on the table. 
 
11. (SBU) Italy was successful in turning the EU's attention 
back towards the Balkans in the wake of the war in Iraq.  The 
Presidency successfully used the EU's Balkan Stabilization 
and Association process to push continued reform throughout 
the region, especially in Albania and Croatia.  Under Italy's 
watch, the EU police follow-on to NATO in Macedonia continued 
to provide a stable security environment around Tetovo and 
other areas of ethnic tension, and has been praised by some 
EU member states as the first Berlin-plus operation and as 
proof that the EU can deploy into (somewhat) hostile areas. 
Italy was also instrumental in clarifying the transition 
phase of an EU Berlin-plus SFOR follow-on, which will occur 
only in close consultation with NATO (and the US) and would 
continue to include a small NATO contingent even after the EU 
is fully deployed. 
 
12. (C) The EU-Russia Summit in November resulted in a number 
of cooperation agreements, but Berlusconi sent the wrong 
message to Moscow when he defended President Vladimir Putin 
on the issues of Russia's human rights record in Chechnya and 
its arrest of energy czar Khodorkhovsky -- remarks that 
prompted a rare censure from the European Parliament. 
Frattini later led the EU in joining Secretary Powell to warn 
Russia about adhering to its promises to withdraw troops from 
Georgia and Moldova and respect human rights. 
 
13. (C) During Italy's Presidency, the EU urged Tehran to 
suspend uranium enrichment activities and agree to the IAEA 
Additional Protocols on Safeguards.  The EU also has 
denounced torture and human rights violations in Iran but 
agreed to continue dialogue with Tehran. Castellaneta said 
that the EU debate on how to deal with Iran will continue, 
and emphasized Italy's view that the International Community 
(IC), while continuing to be tough with Iran, should also 
keep open communications lines.  Iran has received a warning 
from the IC on its nuclear program and will therefore be more 
cautious in the future, he averred.  Under the right 
conditions, Iran could be used as a tool to promote regional 
stability. Luigi Maccotta, head of the MFA's Iran and Iraq 
office, told Poloff that, in terms of Iran policy, the EU 
Presidency had been a disappointment.  The EU, he explained, 
prefers to pursue a policy of engagement with Tehran, 
favoring carrots over sticks.  The IAEA Board of Governors 
criticism in November of Iran's nuclear policies, followed 
shortly by a UN resolution condemning Iranian human rights 
policies, both fall in the latter category.  (Comment. 
Tehran postponed FM Frattini,s trip to Iran earlier this 
month, immediately following Italian support for the UN 
resolution, in order to express its pique at the Italians. 
Maccotta said the trip has not been rescheduled but will be, 
since dialogue is paramount to the Italians.  End comment). 
Maccotta added, however, that these events did lay down 
markers so that Iran knows exactly where it stands with the 
EU, which could alleviate any ambiguities in future dialogue. 
 
 
14.  (SBU) Near the end of the EU Presidency, a high-level 
Italian diplomat led an EU delegation to both Pyongyang and 
South Korea to express EU concerns about North Korea's 
nuclear program and to push for six-party nuclear talks. 
 
 
15.  (C)  Bilateral and EU meetings with Ukraine President 
Leonid Kuchma were important in keeping Ukraine within the EU 
sphere on the heels of Kiev's increasing economic alliances 
with Russia.  MFA Counselor for NIS Affairs told poloffs that 
Berlusconi recommended to Kuchma that Ukraine could bolster 
its EU aspirations by increasing its efforts to help broker a 
solution to the Moldova/Transnistrian conflict. 
 
Breakthroughs on Justice and Home Affairs 
----------------------------------------- 
 
16.  (C)  Concerns about combating a dramatic rise in illegal 
immigration from North Africa over the last decade moved 
Italy to push European border security to the top of the JHA 
agenda, paving the way for the establishment an EU Border 
Management Agency and enhancing the EU's capacity to combat 
illegal immigration across maritime borders.  On the law 
enforcement front, there was moderate progress in beefing up 
Europol while a new Framework Decision established an EU-wide 
basis for the definition of criminal acts and penalties in 
the field of drug trafficking.    In addition, the Presidency 
was able to secure JHA Council political support for the EC 
to finalize its proposal on biometrics in visas and residency 
permits -- a decision endorsed by leaders at the EU summit. 
 
Trade and Economic Issues 
------------------------- 
 
17. (C)  The Italian EU Presidency had some economic 
successes but none helpful to US policy.  Italy abstained on 
the EU vote to lift a ban on genetically modified corn, 
reflecting a major rift among the GOI ministries on the 
issue.  Italy also lent little weight to resolve the impasse 
with the EU on the proposed Galileo satellite system signals 
that interfere with U.S. military navigational warfare 
capability and instead has preferred to leave the issue with 
European Commission experts.  Similarly, with the Passenger 
Name Recognition issue, Italy overcame the objections of its 
national data privacy authority on the transfer of passenger 
data to the U.S., then left negotiations at the EU level to 
the Commission. 
 
18.  (SBU) The Italian Presidency made progress in the 
financial arena: achieving consensus on a European takeover 
code -- capping the end of 15 years of infighting; making 
progress on the Investment Services and Transparency 
Directives; and advancing agreement on the Financial Services 
Action Plan, which is designed to create a single harmonized 
EU securities market.  Italy, in response to U.S. approaches, 
included language in the preamble to the Takeover Directive 
to ensure that U.S. firms will not be disadvantaged by the 
Directive.  On the down side, under Italy's EU watch Italian 
Finance Minister Tremonti led the European Council in 
supporting the suspension of the Stability Pact in order to 
accommodate French and German deficits, leading to still 
resounding recriminations from smaller countries alleging 
double standards and hypocrisy (but not "unilateralism"). 
 
19.  (SBU) Italy claimed success in realizing one of its key 
goals, a European economic growth initiative that continues 
the Lisbon agenda of increasing economic competitiveness.  At 
the final Summit, the European Council endorsed Italy's plan 
to invest in infrastructure, research, and education using 
public (national governments and the European Investment 
Bank) and private sector funds. 
 
The Berlusconi Factor 
--------------------- 
 
20.  (C)  Berlusconi's leadership of the EU Presidency was 
marred by controversy from his suspended bribery trial, his 
verbal gaffes offending other EU leaders, coalition tensions, 
and his government's declining popularity ratings. 
Berlusconi and EU Commission President Romano Prodi indulged 
in spats motivated in part by their domestic political 
rivalry: Berlusconi scheduled Prodi as the last speaker at 
the IGC opening in October; Prodi, poll respondents' most 
popular choice to lead the Left in the next Italian national 
elections, published a manifesto for the European left widely 
viewed as a challenge to Berlusconi's center-right 
government. During the Presidency, Berlusconi's government 
faced several challenges, including internal squabbling over 
legislation and from widespread but largely ineffective 
 
 
transportation strikes and demonstrations against proposed 
pension reform legislation. 
 
21.  (C)  Berlusconi -- a leader for whom personal 
relationships are paramount -- became one of the few EU 
Presidents to be censured by the European Parliament after he 
spoke out in defense of Russian President Putin's human 
rights record in Chechnya and the arrest of Yukos chairman 
Khodorkhovsky.  While there's no love lost between Berlusconi 
and the Brussels bureaucracy, Berlusconi has been, on the 
other hand, an ardent friend of Washington and -- in spite of 
Italian public disapproval of the Iraq war and the loss of 19 
Italians to a terrorist attack in Iraq -- an eloquent 
defender of U.S. efforts to fight terrorism. 
 
Comment 
-------- 
 
22.  (C)  Italy's slow start lowered expectations for a 
successful conclusion to its EU Presidency.  Despite the IGC 
collapse over QMV, Italy nevertheless ironed out with other 
EU transatlanticists a European security policy in accord 
with NATO and led the EU to contribute to the fight against 
terrorism.  For these reasons, we give the Italian EU 
Presidency a "B" grade reflecting its uneven success overall 
but its support for U.S. foreign policy interests.  The 
transatlantic successes of this EU Presidency set the stage 
for continued EU-US cooperation in future Presidencies. 
SEMBLER 
 
 
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 2003ROME05665 - Classification: CONFIDENTIAL