US embassy cable - 04ROME4268

C O N F I D E N T I A L  ROME 004268 
 
SIPDIS 
 
 
E.O. 12958: DECL: 11/05/2014 
TAGS: PGOV, PINR, PREL, IT, ITALIAN POLITICS 
SUBJECT: TOUGH BARGAINING ON ITALIAN GOVERNMENT PORTFOLIOS 
 
Classified By: POL MINCOUNS THOMAS COUNTRYMAN, REASONS 1.5 (D). 
 
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SUMMARY 
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1.  (C)  Negotiations to fill Government positions, including 
that of Foreign Minister, resulting from Rocco Buttiglione's 
nomination and subsequent withdrawal as Italy's European 
Commissioner are caught up in domestic politics, especially 
an internal coalition struggle over the Government's tax 
reform proposal.  We expect little clarity before November 9. 
END SUMMARY. 
 
2.  (C)   The nomination of European Policies Minister Rocco 
Buttiglione to be Italy's European Commissioner, and his 
October 30 withdrawal from consideration to help defuse the 
crisis to incoming President Barroso's new Commission in the 
wake of complaints about Buttiglione's references to 
homosexuals and women's roles, has triggered a mini-cascade 
of job openings in a coalition Government whose partners were 
already struggling for greater visibility and seeking to 
position themselves for Spring 2005 regional and subsequent 
national elections.  The announcement by Barroso of Foreign 
Minister Franco Frattini as his choice for EU Commissioner 
for Justice and Home Affairs has heightened bargaining for 
the prized Foreign Ministry slot. 
 
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TAXES, BUDGET ARE KEY 
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3.  (C)  Bargaining for actual positions is part and parcel 
of negotiations on the Government's budget and tax proposals, 
as well as other internal policy debates.  Deputy Prime 
Minister and President of second coalition partner National 
Alliance (AN), Gianfranco Fini, is pushing for a fourth and 
higher income tax bracket for the richest, which would hit 
Berlusconi squarely in his pocket.  Both AN and coalition 
partner Union of Christian Democrats of the Center (UDC) are 
seeking greater budget largesse for the south and others in 
their populist constituencies. 
 
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FINI AND THE FOREIGN MINISTRY 
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4.  (C)  If the rumored appointment of Fini as Foreign 
Minister does not hinge exclusively on the budget and taxes, 
the other significant factor could be his independence.  PM 
adviser and chief diplomatic "fixer" for Berlusconi, Gianni 
Letta, told us at the Embassy's election-watch party that 
Berlusconi strongly prefers to keep the MFA for his own Forza 
Italia (FI) party.  Another contact in Letta's office told us 
November 5 that nothing had changed in this regard.  Given 
rampant press speculation that the job is his, however, for 
Fini not to be appointed at this point would be another loss 
of face for one of the Prime Minister's generally more loyal 
and less troublesome allies -- but one who is increasingly 
seeking to address his electorate and emphasize his 
independence, traits which do not make him a more appealing 
FM choice for Berlusconi.  Fini underscored his loyalty and 
his foreign policy credentials in November 5 press remarks, 
and AN Senator Giuseppe Consolo told the Ambassador Fini was 
still in line for the position. 
 
5.  (C)  A possible permutation -- raised to us by an AN 
spokesman many months ago -- could be moving FI Defense 
Minister Antonio Martino (who was Foreign Minister during 
Berlusconi's first government) to the MFA and putting Fini at 
Defense, but we still suspect Berlusconi wants to make as few 
switches as possible.  Fini still seems the most likely 
choice for FM, but Berlusconi is going to want him to concede 
AN's proposal for a fourth tax bracket.  This would be a 
fairly blatant concession seen from the perspective of Fini's 
voters, just those he is trying to impress by his 
independence. 
 
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POWER STRUGGLE IN UDC 
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6.  (C)  Meanwhile, some reports suggest Buttiglione may not 
want to return to his previous portfolio of Minister for 
European Policies.  His appointment to the Commission was 
believed in part to be a reward for exerting a controlling 
influence over fellow party member, UDC leader Marco Follini, 
and Buttiglione may be determined to secure what he perceives 
as a "promotion."  (If Buttiglione does not resume his 
portfolio, indications are it would go to current UDC MFA 
Under Secretary for the Americas, Mario Baccini.)  But if 
Buttiglione lays aside his previous portfolio, he could more 
freely challenge Follini's hold on UDC leadership.  When the 
party was created from three smaller Christian Democrat 
successor parties, there was a struggle between the two for 
leadership.  Follini holds the title, but not with complete 
 
ease. 
 
7.  (C)  Berlusconi is still trying to tie Follini more 
closely to the Government, with Follini again being pressed 
to accept the Deputy Prime Minister slot -- possibly a co-DPM 
with Fini.  (A DPM is not constitutionally required and the 
position has traditionally been a symbolic one.  However, 
giving Fini the MFA and allowing him to retain the DPM title 
might increase his stature to a degree unacceptable to 
Berlusconi.)  Most reports and our contacts, however, 
indicate Follini continues to resist.  As he has since the 
Government was formed, Follini seeks to retain a degree of 
"independence," not going so far as to withdraw from the 
Government, but maintaining the flexibility to complain and 
criticize as if from the outside.  This tendency only 
increased with the coalition's relatively poor showing in the 
spring and recent by-elections. 
 
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AND THE NORTHERN LEAGUE 
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8.  (C)  The Northern League (Lega) continues to push for 
former Finance Minister Tremonti to get a position, and had 
urged that he be named to replace Buttiglione in Brussels. 
There are indications now that the Lega may be suggesting 
Tremonti as a potential deputy prime minister, something 
guaranteed to infuriate those in AN and UDC who forced 
Tremonti, and his abrasive style, out of the cabinet this 
past summer.  We think that particular outcome unlikely, but 
Berlusconi will be under pressure from the League to match 
anything he gives Fini and the AN. 
 
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NOVEMBER 9 RESOLUTION? 
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9.  (C)  A meeting of the coalition party leaders -- together 
with PM adviser Letta and Berlusconi foreign affairs adviser 
and former FM Gianni De Michelis -- will take place the 
evening of November 9.  We think it unlikely that resolution 
of the Foreign Minister appointment will come before this 
meeting, unless coalition members start making concessions. 
(Letta was out of his office all of Friday, November 5, and 
we suspect he will be hard at work throughout the weekend, 
pressing coalition members to resolve outstanding issues.) 
The tough bargaining over who will hold which spot in the 
next phase of this Berlusconi Government continues; we do not 
expect to have clarity before the middle of next week. 
 
 
SEMBLER 
 
 
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	2004ROME04268 - Classification: CONFIDENTIAL