US embassy cable - 03ROME5694

UNCLAS  ROME 005694 
 
SIPDIS 
 
 
SENSITIVE 
 
DEPT FOR SENIOR ADVISOR TO THE A/S FOR POL-MIL AFFAIRS 
(PM/B) 
DEPT FOR EUR/WE AND EUR/RPM 
SECDEF FOR OSD/PA&E, OASD/ISA/EUR, OASD/ISA/NP, 
OASD/ISA/AP, OASD/ISA/NESA, OASD/ISA/BTF 
 
E.O. 12958: N/A 
TAGS: JA, KS, KU, MCAP, PREL, SA, US, MARR, IT, QU, TC, NATO 
SUBJECT: ITALY: 2004 REPORT TO CONGRESS ON ALLIED 
BURDENSHARING CONTRIBUTION TO THE COMMON DEFENSE 
 
REF: STATE 305999 
 
1. (U) The following is Rome's contribution to the 2004 
burdensharing report to Congress.   For the purpose of this 
cable, US. dollar amounts are calculated at the exchange rate 
of USD 1 = Euro .90 except when noted.  Embassy point of 
contact for this report is Pol-Mil Officer Susanne Rose, tel: 
(39) 06-4674-2831, e-mail RoseSC@state.gov. 
 
POLITICAL SITUATION 
 
2. (U) PM Berlusconi and his center-right coalition remain in 
control of the Parliament.  Despite continued criticism from 
the center-left opposition, this coalition is likely to 
endure through its full term into the spring of 2006 (the 
first post-war government to do so).  Even with some friction 
between coalition parties, the center-right government is 
expected to survive with just a possible reshuffling of some 
government ministers in January.  Its majority in Parliament 
is sufficient to ensure that it can win votes not only on 
controversial domestic issues but also on foreign policy 
issues of concern to the US, such as the fight against 
terrorism and support in Iraq.  The PM remains publicly 
supportive of US policy, most notably in the way he embraced 
military action in Iraq, despite strong opposition in public 
opinion, some elements of Parliament and EU partners such as 
France and Germany. 
 
ECONOMIC SITUATION 
 
3. (U) Italy has the world's sixth largest economy with a 
2002 GDP of about Euro 1.26 trillion (USD 1.33 trillion). 
(Note: Official average exchange rate for 2002 is used 
1$=E0.946). The Government estimates GDP growth at 0.5 
percent in 2003 and 1.5 percent in 2004.  This year, lower 
than expected GDP growth and lower than expected tax revenues 
will result in a deficit/GDP ratio above the 2.5 percent 
target and close to the three percent ceiling of the EU 
Stability and Growth Pact.  The level of public debt, second 
highest among EMU countries as a share of GDP, is expected to 
approximate 106 percent for 2003 and to fall below 100 
percent only by the end of 2007. The GOI plans to reduce the 
debt level gradually to the EMU target level of 60 percent of 
GDP by 2016. 
 
4. (U) The GOI presented its 2004 budget to Parliament on 
October 2.  Parliament must pass the budget by December 31. 
The 2004 budget totals Euro 634.5 billion (USD 705 billion), 
or 46.9 percent of GDP, down from 48.1 percent in 2003.  The 
budget includes revenue increases of Euro 12 billion (USD 
13.3 billion), spending cuts of Euro four billion (USD 4.4 
billion), and a modest stimulus package of Euro five billion 
(USD 5.5 billion). As drafted, two-thirds of the budget bill 
will be based on one-time revenue-raising measures and 
one-third on structural economic reforms.  To make funds 
available for the Euro five billion (USD 5.5 billion) 
stimulus package and to take into account the less favorable 
economic growth outlook, the GOI estimates the 2004 
deficit/GDP ratio will be 2.2 percent. 
5. (U) Elements of the budget package have been presented as 
a "decree law" to accelerate implementation.  The decree-law 
accompanying the budget was approved on November 19. In 
general terms, the 2004 budget is an attempt to stimulate a 
sluggish economy and keep the deficit under control. 
 
DEFENSE POLICY/DEFENSE SPENDING 
 
6. (U) The total MOD funding request for FY 2004 is Euro 19.6 
billion (USD 21.8 billion), up 1.9 percent (or Euro 357 
million, USD 397 million) from the MOD request for FY 2003. 
This 1.9 percent increase, however, approximates zero growth 
in real terms, assuming a two percent inflation rate in 2004. 
 For 2004, MOD appropriations equal 1.45 percent of the GDP, 
compared to 1.48 percent in 2003. Under the draft budget, 
there is a 1.4 percent increase in domestic security spending 
-- mostly personnel spending for the Carabinieri, and a 2.1 
percent increase in "defense function." (Note: The "defense 
function" includes the budgets of the Army, Navy, and Air 
Force, but excludes domestic security and other non-essential 
MOD budget functions.  "Defense function" is the largest 
 
 
sector of the MOD funding. Peacekeeping operations are a 
separate budget item outside of "defense function". End 
Note.) "Defense function" accounts for 1.04 percent of GDP, 
compared to 1.06 percent of GDP in 2003. 
 
7. (SBU) The November 12 terrorist attack on the Italian 
headquarters in Nassiriya, Iraq, according to a Finance 
Ministry Under Secretary, is expected to generate support for 
increased funding for Italian participation in peacekeeping 
missions beyond the 2004 draft budget figures we present 
here. Adding funding for Italy's peacekeeping missions (Euro 
1.2 billion, USD 1.3 billion) to the 2004 MOD budget, total 
defense spending for 2004 increases to Euro 20.8 billion (USD 
23.1 billion) or 1.54 percent of GDP. 
 
Table 1 
Summary of Defense Budget: 2003-2004 
(In billions of USD, unless otherwise indicated) 
 
 
                        FY          FY          Chg   Chg 
                        2003(1)     2004(1)     Pct   Value 
 
1. NATIONAL DEFENSE     15.33       15.65       2.1   .32 
  (as pct of GDP)       (1.06%)     (1.04%) 
 
2. DOMESTIC SECURITY 
   (Carabinieri)        5.05        5.12        7.4   .07 
   (as pct of GDP)      (0.35%)     (0.34%) 
 
3. PENSIONS AND OTHER BENEFITS      1.01  1.02   1.0  .01 
   (as pct of GDP)      (0.08%)     (0.08%) 
 
4. TOTAL MINISTRY 
   OF DEFENSE 
   APPROPRIATIONS       21.39       21.79       1.9   .40 
   (as pct of GDP)      (1.48%)     (1.45%) 
   (as pct of 
    Gov't budget)       (3.08%)     (3.09%) 
 
ADDENDUM A: 
 
5. Italy's 
   Participation 
   To peacekeeping 
   Missions             1.37        1.33        -0.3  -0.04 
   (as pct of GDP)      (0.10%)     (0.09%) 
 
 
6. GRAND TOTAL          22.76       23.12       1.6   .36 
   (as pct of GDP)      (1.58%)     (1.54%) 
   (as pct of 
    Gov't budget)       (3.27%)     (3.29%) 
 
ADDENDUM B: 
 
     GDP (1)            1,445 1,503 
     Exchange rate      0.90  0.90 
 
(1) Source: Government's 2004 budget proposal (September 
2003). 
 
 
INVESTMENT 
 
8. (U) The "defense function" budget funds 1) normal 
operating expenses; 2) reform of the armed forces (personnel 
and operations), and 3) modernization of defense capabilities 
(investment).  Experts consider it essential to appropriate 
30 percent of the defense budget for investment.  Italy's 
2004 defense budget includes only 21.2 percent for 
investment, compared to the figure of 22.7 percent in the 
2003 budget. 
 
9. (SBU) The Defense Ministry highlighted in its supplemental 
note to Parliament that there has been "significant reduction 
of resources for investment." For the second year in a row, 
funds will be cut for the purchase of new aircraft, warships, 
and other equipment for the Army, Navy and Air Force.  The 
Ministry's note also suggests that there might be a need to 
 
 
renegotiate commitments with partner countries. 
 
10. (U) Total investment spending for 2004 is Euro 3.2 
billion (USD 3.55 billion), down by 4.8 percent from 2003. 
Of this amount, Euro 365.4 million (USD 406 million) has been 
allotted for research and development, an increase of 14.3 
percent from 2003. Another Euro 2.63 billion (USD 2.92 
billion), a decline of 6.6 percent from 2003 levels, is 
allocated for defense modernization.  Observers consider an 
optimal annual allotment for defense modernization to be 
around Euro 4.5 billion (USD five billion). Euro 204.6 
million (USD 227.3 million) is earmarked for real estate 
investment, down 9.7 percent from 2003.  The MOD's note on 
the 2004 budget acknowledges that 2003 allotments will have a 
negative impact on multi-year investment programs. 
 
11. (U) Air Force investments of Euro 1.19 billion (USD 1.32 
billion) account for almost forty percent of overall 
investment spending.  These funds will be allocated for: 
 
a.    development of the Eurofighter (the total commitment 
through 2015 is USD 18.1 billion, of which the commitment for 
2004 is Euro 434 million, or USD 482 million); 
 
b.    development of the Joint Strike Fighter (the total 
commitment through 2012 is USD 1.19 billion; the commitment 
for 2004 is Euro 126 million, or USD 140 million) 
 
c.    continuation of the leasing contract for the Tornado 
(the overall commitment through 2015 is USD 1.2 billion, 
while the commitment for 2004 is Euro 186.5 million, or USD 
207.2 million); 
 
d.    purchase of transport airplanes, C130J Lockheed (Euro 
157.2 million, or USD 174.7 million) and tanker Boeing 767 
(Euro 116 million, or USD 128.9 million); and purchase of 
helicopters: Nh90 (Euro 259.1 million, or USD 287.9 million) 
and Eh101 (Euro 56.5 million, or USD 62.8 million). 
 
12. (U) Navy investments (Euro 829 million, or USD 921 
million) account for about 28 percent of total investment 
spending.  These funds are designated for: 
 
a.    construction of the new aircraft carrier Andrea Doria 
(the overall commitment through 2008 is USD 1.4 billion, 
while the commitment for 2004 is Euro 185.9 million, or USD 
206.5 million); 
 
b.    purchase of two escort frigates of the class Orizzonte 
(the overall commitment through 2009 is USD 1.5 billion, 
while the commitment for 2004 is Euro 155 million, or USD 
172.2 million); and 
 
c.    acquisition of two new generation submarines U212A 
(total commitment through 2007 is USD 904 million, while the 
commitment for 2004 is Euro 104.8 million, or USD 116.4 
million). 
 
13. (U) Army investments (Euro 769.6 million, or USD 855.1 
million) represent another 25 percent of overall 
appropriations. 
 
Table 1a 
Summary of National Defense Budget Appropriations: 2003-2004 
(In billions of USD unless otherwise indicated) 
 
 
                        FY          FY          Chg   Chg 
                        2003(1)     2004(1)     Pct   Value 
 
1. Personnel            7.80        8.32        6     .52 
  (as pct of GDP)       (0.51%)     (0.53%) 
 
2. Operations           3.80        3.78        -0.5  -.02 
   (as pct of GDP)      (0.29%)     (0.28%) 
 
3. Investments          3.73        3.55        -4.8  -.18 
   (as pct of GDP)      (0.26%)     (0.24%) 
 
 
4. TOTAL NATIONAL 
   DEFENSE 
   APPROPRIATIONS       15.33       15.65       2.1   .32 
   (as pct of GDP)      (1.06%)     (1.04%) 
   (as pct of 
    Gov't Budget)       (2.21%)     (2.22%) 
 
ADDENDUM: 
 
     GDP (1)            1,445 1,503 
     Gov't Budget       695   705 
     Exchange rate      0.90  0.90 
 
(1) Source: Government's 2004 Budget Proposal (September 
2003). 
 
 
ARMAMENTS COOPERATION/BILATERAL AND MULTILATERAL ACTIVITIES 
 
14. (U) Italy has demonstrated significant progress in the 
areas of armaments cooperation and bilateral and multilateral 
activities.  For example, Italy is the third largest 
contributor to the Joint Strike Fighter Program (after the US 
and UK) with Level II partnership on the System Design and 
Development Phase, for a total investment of $1.028 billion. 
Italy is finalizing production requirements, estimated 
between 150 to 200 aircraft, with a potential to have the 
largest JSF inventory outside of the US.  Expectations are 
that a Production MOU will be signed in the next year to 
capture these details.  For the Medium Extended Air Defense 
System (MEADS) program, Italy entered into a cooperative 
development, along with Germany, to contribute 17 percent of 
the program.  The US, Italy, and Germany are currently 
negotiating the Design and Development Phase of the program. 
Additionally, Italy purchased 22 C-130Js in a $1.7 billion 
direct commercial sale with expected delivery of 19 in 2003 
and the remaining three in 2004, four Boeing 767 Tankers for 
$800 million, and 12 C-27Js for tactical transport aircraft. 
Italy is rapidly becoming an interoperable partner with these 
acquisitions, and the equipment available to support 
deployments and allied and multi-national operations. 
 
15. (U) Italy is set to be on par with other five-power 
nations (the US, UK, France, and Germany) by early next year 
through a RDT&E MOU agreement between the MOD and DOD which, 
once signed, will open the door for several UAV Project 
Agreements. Other significant cooperative activities include 
Italy as a strong advocate of the NATO Airborne Surveillance 
System (AGS) and the recent signing of the MOD-DOD 
Declaration of Principles (DoP) document in October 2003. 
Italy has actively supported various DoP working groups to 
include security and supply.  Italy is extremely interested 
in cooperating with the US on Missile Defense activities with 
a possibility to place a radar site in country. 
 
DIRECT COST SHARING 
 
16. (U) The Italian government does not rent or lease 
property to US forces.  All fixed structures utilized by the 
US on Italian military bases are free. Italy provides free 
utility connections to base perimeters (but the US pays local 
utility companies for services utilized), free external 
security for the bases, and no-fee training ranges.  Italy 
does not pay salaries for any US employees on the bases. 
 
INDIRECT COST SHARING 
 
17. (U) Italy makes significant contributions for land 
provided to the US to operate 7 Principal military bases and 
numerous sites on a cost-free basis.  This $237,434,755 
savings in foregone rent to the US includes access to three 
airbases, two homeports, one large ammunition and equipment 
staging base, and a homeport that possesses the only 
maintenance/repair tender ship in the Atlantic.  A lack of 
this capability could cause consequences to US fleet and 
submarine operations in the Mediterranean.  Italy provides 
security forces and anti-terrorist protection, Carabinieri 
support for armed personal security protection of US 
dignitaries, and a robust telecommunications infrastructure 
carries US military data and voice signals.  In addition, 
 
 
Italy saved the US an additional $10 million in security 
costs for perimeter security of installations and escorts of 
US convoys from Vicenza to Aviano for Operation Iraqi Freedom 
(OIF). 
 
18. (U) Additionally, Italy provides safe lines of 
communication (airports, sea ports, railways, highways, air 
routes) to allow high volume of US forces and equipment, 
three airports with shared civilian/military airfields where 
US aircraft are based, and a US/NATO munitions storage 
facility as an invaluable source of munitions for war on 
terrorism.  The Italian Army contributed 16 Centauro wheeled 
armored vehicles to the US Army, free of charge, for 
prototype experimentation for the STRIKER, US military access 
to military training and exercise ranges, and hotel support 
to deployed forces (Aviano and Sigonella). 
 
19. (U) Italy increased the number of Italian armed security 
forces around military and government agencies, participated 
in "Product Sharing" activity of Italian military 
intelligence community, supports the NATO Combined Air Force 
Operations Center support, provides Italian Coast Guard 
support (terrorism, etc.) and a defensive shield for over 
30,000 US military personnel with Italian Air Force assets. 
Finally, the US has the unequivocal support of senior Italian 
military leaders, the MOD and Parliament. 
 
GRANT AID 
 
20. (U) In 2002, Euro 2.2 billion (USD 2.3 billion), or 0.2 
percent of GDP, was allocated for grant assistance, the 
second lowest amount for all EU members and OECD members. 
(Note: When comparing G8 member countries' aid contributions 
as a percentage of GDP, Italy ranks next to last (the US. 
ranks last). End Note).  Most of Italy's assistance is in the 
form of grants, with a modest portion in loans.  According to 
the MFA, approximately the same amount, Euro two billion (USD 
2.2 billion) was appropriated for 2003, equal to .15 percent 
of GDP.  For 2004, the assistance is even lower: Euro 1.8 
billion (or USD two billion), equal to 0.13 percent of GDP. 
 
21. (U) This figure includes not only the ODA programs 
administered by the Ministry of Foreign Affairs (almost a 
third of the total, bilateral and multilateral assistance), 
but also those programs managed by Treasury and other 
ministries. Italy's ODA assistance has not always been this 
low.  In the early nineties, Italy's ODA assistance budget 
was 0.42 percent of GDP. However, in 1992, in the midst of 
the lira's exchange rate crisis and in an attempt to get 
finances in order to prepare for the European Monetary Union, 
then-Prime Minister Giuliano Amato more than halved Italy's 
spending to 0.2 percent of GDP.  Outlays have hovered close 
to the 1992 levels sinc then. 
 
2003 OFFICIAL DEVELOPMENT ASSISTANCE 
 
2. (U) The MFA has confirmed that Italy's bilatera and 
multilateral ODA will be equal to Euro 657 million (USD 731 
million) for 2003 (roughly one third of Italy's overall ODA). 
 In 2002, the MFA disbursed between 90 to 92 percent of 
available funds.  Through October 2003, the MFA has disbursed 
80 percent of the funding and expects to disburse all funding 
by the end of the year. In 2002, sub-Saharan Africa received 
57 percent of bilateral assistance funding, while the Middle 
East/Asia regions received 18 percent of overall MFA 
bilateral assistance funding; Latin America, another nine 
percent; while the remaining 16 percent went to Europe 
(mostly Albania and the Federal Republic of Yugoslavia). 
 
23. (U) Italy's ODA in 2003 (Euro 657 million, or USD 730 
million) includes funds for debt forgiveness of the twenty 
Highly Indebted Poor Countries (HIPC).  The MFA has already 
signed an agreement with twelve HIPC countries and is 
negotiating with eight others. 
 
ITALY'S MULTILATERAL ASSISTANCE 
 
24. (U) The largest part of Italian international assistance, 
roughly two thirds or 65 percent, is directed through 
multilateral institutions (multilateral development banks, 
 
 
the United Nations, the European Union, etc.). The Ministries 
of Foreign Affairs, Treasury, Defense, Interior, Environment, 
Transport, Productive Activities (Industry), Labor, Justice, 
Communications, Agriculture, and Health expect to contribute 
a total of Euro 1.23 billion, or (USD 1.37 billion), to 
Italy's participation in international organizations in 2004, 
down 5.6 percent, (Euro 72 million, or USD 80 million), from 
2003.  This is slightly less than 0.1 percent of GDP and 
about 0.2 percent of the total government budget. 
 
25. (U) Italy's multilateral assistance is divided into fixed 
and flexible portions.  Ministry of Treasury-administered 
contributions to international financial institutions (IMF, 
IBRD, regional development banks) are fixed.  Outlays are not 
annual, but multi-year. Mandatory contributions to EU 
assistance budgets comprise roughly one-third of all 
multilateral Italian assistance expenditures.  This is the 
one part of the Italian assistance budget that is growing, 
albeit slightly, and likely at the expense of other forms of 
aid. 
 
ITALY'S ODA TO IRAQ AND AFGHANISTAN 
 
26. (U) Italy has allocated for Iraq Euro 15 million (USD 
16.7 million) to the UN flash appeal and other multilateral 
emergency assistance. The MFA Iraq Task Force will disburse 
another Euro 21.6 million (USD 24 million) on diverse 
projects.  On October 24, at the Madrid Donors Conference, 
MFA Frattini announced that Italy will contribute an 
additional Euro 200 million (USD 222.2 million) above 2003 
levels to be disbursed over the next three years (2004-2006). 
 
27. (U) At the Tokyo Donors Conference, Italy pledged Euro 47 
million (USD 52.2 million) for 2002 and 2003.  In 2002, Italy 
exceeded its pledge by giving Euro 65 million.  For 2003, 
Euro 36 million is earmarked. 
 
Table 2 
Italy's OFFICIAL BILATERAL DEVELOPMENT ASSISTANCE 2003-2004: 
2004 Official Budget) 
(In millions of USD unless otherwise indicated) 
 
 
                              FY          FY          Chg. 
Chg. 
                              2003(1)     2004(1)     Pct 
Value 
 
1.MINISTRY OF FOREIGN AFFAIRS 768         640         -16.6% 
-128 
 
  Cooperation for Development 
  Of which: 
  --Aid to LDC's 
 (Less Developed Countries)   731         686         636 
-95 
 
  --Humanitarian               37           4         -87.6 
-33 
    Assistance 
    -- of which: 
    Mediterranean 
    and Middle East            34           1         -97.1 
-33 
 
 
2.TOTAL                       768         640         -16.6% 
128 
  (as pct of 
  Gov't Budget)               (0.11%)     (0.09%) 
 
(1) Source: GOI's 2004 proposed budget. 
 
Table 3 
Contributions to International 
Organizations: 2003-2004: by source 2004 Official Budget) 
 
 
(In millions of USD, unless otherwise indicated) 
 
                        FY    FY    Chg.  Chg. 
                        2003  2004  Pct   Value 
 
1. FOREIGN AFFAIRS      411   417    1.4  6 
 
2. ECONOMY AND FINANCE  557   529   -5.0  -28 
 
3. DEFENSE              164   142   -13.4 -22 
 
4. EDUCATION            3     3     0     0 
 
5. INTERIOR             9     9     0     0 
 
6. ENVIRONMENT          197   194   -1.3  -3 
 
7. INFRASTRUCTURES      1     1     0     0 
 
8. PRODUCTIVE 
ACTIVITIES              16    25    55.8  9 
 
9. LABOR                43    0     -100  -43 
 
10. JUSTICE             1     1     0     0 
 
11. COMMUNICATIONS      7     7     0     0 
 
12. HEALTH              35    35    0     0 
-- of which: 
International 
Peacekeeping 
Missions 
(SEE NOTE BELOW).       14    14    0     0 
 
3. TOTAL (1)            1.44  1.36  -5.6% -0.8 
(as pct of GDP)         (0.10%)     (0.09%) 
(as pct of total 
 Budget)                (0.21%)     (0.19%) 
 
(1) Billions of USD. 
(2) For the medical and health support of Peacekeeping 
Mission personnel. 
 
Source: GOI's 2004 proposed budget. 
 
PEACEKEEPING AND HUMANITARIAN OPERATIONS 
 
28. (U) The 2004 Budget will create an ad-hoc Euro 1.2 
billion (USD 1.33 billion) fund to pay for the cost of 
Italian peacekeeping missions (as indicated in Table  1). 
This will be equal to the cost of Italian peacekeeping 
missions in 2002 (Albania, Kosovo, Afghanistan and Iraq). 
Traditionally, Italy's peacekeeping missions were funded in 
the budget under "unexpected" or "miscellaneous expenses," 
and Parliament had to authorize each use of this fund. This 
procedure was reformed in the 2004 Budget with the creation 
of an ad-hoc fund of Euro 1.2 billion, or USD 1.33 billion. 
(Note: Italy's participation in international peacekeeping 
and humanitarian operations cost Euro 1.24 billion (USD 1.38 
billion) in FY2003.  Of this amount, Euro 734.3 million (USD 
815.9 million) funded operations in the Balkans 
(Bosnia-Herzegovina, Kosovo, Albania), while the remaining 
Euro 497.5 million (USD 552.7 million) funded miscellaneous 
anti-terrorist initiatives (including Iraq peace-keeping); 
and Euro 4.6 million (USD 5.2 million) was disbursed for 
Ethiopia and Eritrea. End Note.) 
 
CONTRIBUTIONS TO UN OPERATIONS 
 
29. (U) Italy supported various United Nations operations to 
include 51 personnel and four helicopters (AB 205) to the UN 
Interim Force in Lebanon (UNFIL), seven observers in Israel 
and Arab countries for United Nations Truce Supervision 
Organization (UNTSO), seven observers along the 
India-Pakistan border for UN Military Observer Group 
(UNMOGIP), one observer to survey the border between Kuwait 
and Iraq under UN Iraq-Kuwait Observer Mission (UNIKOM), five 
observers for the UN Mission for the Referendum in Western 
Sahara (MINURSO), one officer and 58 civilian police for the 
 
 
UN Mission in Kosovo (UNMIK) and 52 personnel for the 
Ethiopia and Eritrea Mission (UNEEM). 
 
CURRENT CONTINGENCY OPERATIONS 
 
30. (U) Significant contributions to OEF and OIF Contingency 
Operations are noted in paragraph 8D.  Italy also has 1500 
personnel deployed in Bosnia-Herzegovina, 2900 in Kosovo, 550 
in Albania, 98 in Macedonia, 590 in the Balkans under 
Multinational Specialized Units (MSU's) and Dakovica the Air 
Port of Debarkation (APOD). 
 
OPERATION IRAQI FREEDOM 
 
31. (U) Italy's substantial support for OIF came from the 
highest levels of the Prime Minister's Office, the Ministry 
of Defense (MOD) and Ministry of the Interior (MOI). 
Political and military personnel provided intense 
coordination for the protection and security of several 
hundred military convoys moving material/manpower through 
staging areas and Aerial Ports of Embarkation. Italy also has 
made telecommunications circuits available that substantially 
reduce the requirement for US military equipment and 
 
personnel needed to support the war on terrorism. 
 
32. (U) Under operation "Antica Babilonia," Italy contributed 
forces that consisted of over 2,700 deployed personnel, 
representing the third largest deployment of a coalition 
force behind the US and UK.  All four military components 
were represented.  The Italian Army provided a brigade HQ, 
two infantry regiments, one engineer battalion (including 
EOD), close support units (including NBC), logistic support 
units, medical assets, and CIMIC assets.  The Italian Navy 
provided one amphibious ship (S.Giusto), helicopters (SH3D), 
and two minesweepers.  The Italian Air Force provided assets 
to include an air detachment HQ, helicopters (HH3F) and air 
transport assets (C130J).  Finally, the Carabinieri deployed 
a MSU regiment, and military police units.  (Comment. 12 
Carabinieri, in addition to five Army personnel and two 
civilians, gave the ultimate sacrifice with their lives in a 
November 12 bomb explosion in Nassiriya that was the first 
combat loss of life for Italy since World War II. End 
comment). 
 
INTERNATIONAL SECURITY ASSISTANCE FORCE (ISAF) 
 
33. (U) The Italian contribution to ISAF currently includes 
530 units, of which 465 are in Kabul and 65 in Abu Dhabi, in 
addition to two officers at Allied Command HQ.  The Italian 
contingent consists of a Security Company for ISAF HQ 
Protection, Engineering Company, including Explosive 
Ordinance (EOD) Teams, a Nuclear Biological Contamination 
Platoon, a Logistics Unit, a Signal Company and numerous Air 
Transportation Assets.  The Italian contingent includes army 
and airforce units and one C-130.  The contingent in Abu 
Dhabi is an interforce group that provide logistical support 
to the contingent in Afghanistan. These commitments received 
Euro 67.7 million (USD 75.2 million) in funding for 2003. 
Italy currently is considering a USG request to lead a PRT in 
Afghanistan. GOI highlighted the need to accompany 
antiterrorism initiatives appropriate initiatives aimed to 
support the reconstruction of Afghanistan. 
 
OPERATION ENDURING FREEDOM 
 
34. (U) Italy played a large role in OEF by providing the 
TF-150 Frigate ESPERO for "Resolute Behavior" with 250 people 
patrolling the Gulf of Aden to conduct 
 Maritime Interdiction Operations, control of the Sea Lines 
of Communication, and the escort of coalition units and 
related shipping.  Under Task Force "Nibbio," Italy also 
deployed a 1000 person strong Battle Group to Afghanistan as 
a light infantry combat unit, combat support unit (Mortar, 
Anti Tank, Engineer, Signal, E.W, T.A, EOD and RBC Teams), 
and combat service support assets (Logistic and Medical 
Teams).  The Italian Air Force contributed 75 personnel and 
two C130J aircraft that operated from the Air Base of Manas 
in Kirghizstan. 
 
PRAGUE CAPABILITIES COMMITMENT 
 
 
35. (U) Italy is making steady progress on its PCC plan, 
despite severe financial constraints worsened by low economic 
growth.  The majority of Italian PCC goals should be 
accomplished by 2007-2010, including bringing four B767 
tanker transports online, expanding NBC forces and equipment, 
standing up two additional army brigades, launching new naval 
combatants, increasing precision-guided munitions, improving 
communications capabilities and acquiring four airborne early 
warning aircraft, two new generation submarines and several 
maritime multipurpose helicopters.  Italy is already a 
participant in the MEADS theater missile defense project and 
a Level II partner in the Joint Strike Fighter program. 
Italy recently purchased four Unmanned Aerial Vehicles from 
the US, which are due to arrive in January 2004. 
 
NATO RESPONSE FORCE 
 
36. (U) Italy hosts both a Land and a Maritime NATO High 
Readiness Force Headquarters that will support the NRF. 
Italian forces are already participating with other allies in 
the types of missions the NRF is designed to conduct, 
including maritime interdictions, embargo operations, 
humanitarian relief and peace enforcement.  Based on lessons 
learned at the Colorado Springs NATO ministerial, the Italian 
government hopes to streamline existing political procedures 
in 2004 to prevent delays in rapid deployment of forces for 
NRF and related operations. 
 
37. (U) Italy has agreed to stand up the Land Component 
Command headquarters for the NRF from July to December 2004 
and again from July to December 2007.  Should there be an NRF 
mission during either of those periods, Italy would likely 
provide a substantial portion of the land component forces 
required.  Italy also has agreed to stand up the NRF Maritime 
Force Command headquarters for one year starting July 2005 
and again starting July 2008. 
 
NATO ENLARGEMENT/PARTNERSHIP FOR PEACE 
 
38. (U)  Italy continues to be a strong proponent of NATO 
enlargement and the Partnership for Peace (PfP) program as 
ways to enhance stability and security in Europe.  With a 
particular focus on the Balkans, Italy has supported the PfP 
program to expand military and political cooperation and 
reinforce democratic principles.  Italy pushed hard to have 
Romania and Bulgaria included in the next round of NATO 
enlargement, and continues to work with Macedonia and Albania 
to bring their political and military institutions up to NATO 
standards.  Prime Minister Silvio Berlusconi has gone so far 
as to encourage Russia to join NATO, and was a key player in 
formalizing the NATO-Russia Council format for greater 
collaboration in areas of mutual concern to Russia and the 
alliance. 
 
COUNTERPROLIFERATION CONTRIBUTIONS 
 
39. (U)  Italy has long been a major contributor to 
nonproliferation and threat reduction efforts, including 
allocating Euro 1 billion for the Global Partnership program. 
  It has promoted the Nuclear Cities Initiative to retrain 
Soviet scientists and rehabilitate "closed" cities, and has 
participated in a number of plutonium disposition programs. 
At a summit in November 2003, Italy and Russia finalized an 
agreement on a chemical weapons detoxification facility at 
Pochep, using Euro 300 million of Italy's Global Partnership 
pledge.  Italy committed another Euro 360 million to be used 
by the Russian Navy over ten years to decommission nuclear 
multi-purpose submarines and store unloaded fuel and 
radioactive materials.   The Italian government currently is 
considering a USG proposal to fund the accelerated shut down 
of a Russian plutonium producing reactor. 
 
40. (U) Italy is a core participant in the Proliferation 
Security Initiative (PSI) to interdict shipments of WMD and 
their means of delivery and will host a PSI air exercise in 
early 2004.   As EU Council President from July to December 
2003, Italy spearheaded the implementation of the EU 
nonproliferation action plan adopted in July 2003 and 
established a new action plan that stresses the importance of 
 
 
cooperation with the US as a basic principle of EU 
nonproliferation efforts.   Italy pressed the EU to produce a 
stronger EU response to Iran's nuclear weapons program and to 
bolster IAEA credibility and access to Iranian sites. 
SEMBLER 
 
 
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 2003ROME05694 - Classification: UNCLASSIFIED