US embassy cable - 05ROME2349

C O N F I D E N T I A L  ROME 002349 
 
SIPDIS 
 
 
E.O. 12958: DECL: 07/13/2015 
TAGS: PGOV, PREL, ECON, EAID, EIND, IZ, IT, EUN, IRAQI FREEDOM 
SUBJECT: IRAQ: AMBASSADOR JONES DISCUSSES ECONOMIC AND 
POLITICAL DEVELOPMENTS WITH ITALIAN MFA OFFICIALS 
 
REF: A. STATE 124857 
     B. STATE 127710 
     C. ROME 2348 
 
Classified By: Acting Pol M/C Jonathan Cohen for reasons 1.4 (b) and (d 
) 
 
1. (C) Summary.  Senior Advisor and Coordinator for Iraq 
Policy Ambassador Richard H. Jones updated key Italian MFA 
officials on Iraqi efforts to draft a new constitution, 
including the increased Sunni participation in the drafting 
committee, and US views on UNSCR 1546 and continuing the 
mandate of the coalition forces.  The Italians stressed the 
need to involve Dhi Qar province, where Italian forces are 
located, in the reconstruction efforts.  Italy has dispersed 
approximately 140 million of 200 million Euro pledged at 
Madrid and hopes to come up with up to 100,000 Euro more for 
the constitutional committee secretariat.  Ambassador Jones' 
also participated in meetings on "Engaging the Coalition" 
(Ref C).  End summary. 
 
2. (U) Senior Advisor and Coordinator for Iraq Policy 
Ambassador Richard H. Jones met July 7 with Luigi Maccotta, 
head of the Iraq Task Force at the Italian Ministry of 
Foreign Affairs.  Joining Maccotta were Lino Cardarelli, an 
MFA advisor who previously served in the Program Management 
Office of the Coalition Provisional Authority, and Stefano 
Sturci a new member of the MFA's Iraqi Task Force. 
Ambassador Jones was accompanied by Staff Assistant Matt 
Fuller, Acting Political Minister Counselor, PolOff and 
EconOff. 
 
New Mandate for Coalition Forces 
-------------------------------- 
 
3. (C) Ambassador Jones briefed Maccotta on plans for 
extending UNSCR 1546 beyond the completion of the political 
process.  Noting that the current mandate expires at the end 
of the transition, Jones said the coalition must explore 
options for extending the Multi-National Force mandate, 
either by extending 1546 or passing a new Security Council 
resolution.  Coalition Provisional Authority Order 17 
provides legal protection for all coalition forces, but the 
Iraqi government must decide whether to continue with the 
Order 17 arrangement or perhaps negotiate bilateral Status of 
Forces Agreements (SOFAs) with the United States and other 
coalition partners. 
 
4. (C) Maccotta commented that preserving the "multilateral 
momentum" embodied by UNSCR 1546 and the June Brussels 
conference is very important for Italy.  He observed that 
Russia, France, and some Iraqi Sunnis have recently called 
for a solid timetable for the departure of foreign troops 
from Iraq.  A withdrawal plan based on the successful 
completion of the political transition is too vague for some 
players, Maccotta asserted. 
 
5. (C) In terms of Italian public opinion and PM Berlusconi's 
relations with the Italian Parliament, Maccotta remarked that 
it is crucial that the coalition military presence remain 
"legitimate under a UN umbrella," whether under an extension 
of UNSCR 1546 or a new mandate, and that the Iraqis 
themselves request the continued presence of coalition 
forces.  Maccotta also said it was necessary to prepare an 
"option B" for maintaining a legal mandate for the 
multi-national force into 2006 in case the adoption of a new 
constitution does not go as planned.  Regarding legal 
protection for coalition troops, Maccotta predicted that the 
new Iraqi government would be eager to scrap the Order 17 
arrangement as a relic of the occupation. 
 
New Constitution and Saddam Trial 
--------------------------------- 
 
6. (C) Jones explained that the constitutional committee is 
functioning well and is quickly assimilating the 15 new Sunni 
members.  The committee may even have a draft ready by mid 
July, which would leave a full month for public consultation 
before the August 15 deadline for completion of the document. 
 The Sunnis are now determined to participate in the 
referendum on the new constitution.  Jones, however, remarked 
that the division of powers between the provinces and the 
central government remains a sensitive question, and is 
 
 
likely to be deferred until a later date.  Another 
problematic issue is the disposition of resources; a proposal 
that provincial governments retain 50 percent of oil and gas 
revenues could lead to huge central government deficits and 
reduce the national authority's ability to address health, 
education, and other responsibilities. 
 
7. (C) Maccotta stressed the need to make sure the 
constitution was widely supported prior to the referendum. 
He also recommended that the trial of Saddam Hussein take 
place next year, well after the referendum.  Such a trial 
could "open old wounds" in the Sunni community and it would 
be better for Iraq to focus on inclusion of the Sunnis 
through the December elections.  Jones agreed, but noted that 
the timing of the trial is an Iraqi decision. 
 
Involving Provinces in Reconstruction 
------------------------------------- 
 
8. (C) Commenting on Italian Ambassador De Martino's recent 
visit to Nassiriyah (where most of Italy's 3,000 plus troops 
are based), Maccotta said De Martino sensed a great deal of 
frustration among Iraqis in Dhi Qar province with the central 
government and the lack of reconstruction funds for the 
province.  Provincial officials have asked the Italians for 
$1 billion in aid which, Maccotta said, is far beyond Italy's 
capacity.  Nevertheless, Rome hopes that more reconstruction 
money can be channeled into Dhi Qar and suggested that 
expected donations from Jordan and other Middle East 
countries target this region.  The situation in Dhi Qar is 
stable, Maccotta asserted, but provincial officials want to 
see more tangible benefits from the Italian presence there. 
 
9. (C) Jones responded that the USG is already moving to 
consult more closely with provincial authorities.  Provincial 
Reconstruction and Development Councils (PRDCs) have been set 
up in 15 of 18 Iraqi provinces, and they will help coordinate 
projects with international donors.  The USG has set aside up 
to $725 million in reconstruction funds, to be announced at 
the upcoming conference in Jordan, for projects that will be 
coordinated through the PRDCs.  Maccotta said the PRDCs would 
be a helpful step forward. 
 
Iraq Reconstruction Priorities 
------------------------------ 
 
10. (U) Jones also outlined four projects the USG is 
supporting based on priorities identified by Iraqi officials. 
 These include: 
 
--a National ID card system that will be used to manage 
health and other services; 
 
--removal of shipwrecks from the Shatt al Arab waterway to 
expand access to Iraqi ports, thus removing a major 
bottleneck in the transport system; 
 
--collection of natural gas (currently flared-off at oil 
wells) for use in power generation; and 
 
--the creation of a housing fund to provide access to 
low-cost mortgages. 
 
11. (SBU) None of these projects, Jones said, require a large 
footprint of foreign experts.  Jones commented that the 
combined cost of these projects is about $1 billion and 
additional funding could come in the form of concessionary 
loans from donor countries and the World Bank.  Iraq, 
however, needs to create bodies capable of receiving and 
servicing these loans -- for example, an authority to manage 
the Shatt al Arab waterway. 
 
12. (SBU) Cardarelli stated that an Italian firm had 
previously expressed interest in participating in a national 
ID card project.  He also said he had been involved in 
discussions with Iraqi officials about housing projects. 
Cardarelli agreed with the need to minimize the number of 
foreign experts.  Most of these efforts, Cardarelli remarked, 
could be managed remotely from Jordan or Kuwait, as Iraqi 
personnel are capable of conducting the work on the ground. 
 
New Italy Aid for Water, Health, and Elections 
--------------------------------------------- - 
 
 
13. (U) Jones explained that the upcoming donors' conference 
will focus on implementing a donor coordination mechanism. 
The Iraq Ministry of Planning and a UN donor council will 
play key roles in this new coordination plan. 
 
14. (SBU) Maccotta said Italy will make a Euro 10 million 
donation this year to the International Reconstruction Fund 
Facility for Iraq.  The 2005 donation will be earmarked for a 
UN Food and Agriculture Organization water "master plan" 
project.  In addition, Italy is also in discussion with the 
Italian Red Cross to undertake additional health sector 
projects.  Italy already supports the Medical City Center 
Hospital in Baghdad via the Red Cross, but Italy also wants 
to do health projects with a wider impact, including 
establishment of an emergency medicine system and more 
training assistance. 
 
15. (SBU) In response to reftel demarches, Maccotta revealed 
that Italy will also announce at the Dead Sea conference 
additional training assistance related to the upcoming 
constitutional referendum and national elections.  Italy will 
channel this assistance through the International Training 
Programme for Conflict Management, a program run by the 
Pisa-based university Scuola Superiore Sant'Anna.  Maccotta, 
Federica Ferrari-Bravo, Office Director for Middle East and 
Mediterranean Economic Policies, and four other technical 
experts plan to attend the conference. 
 
16. (SBU) Maccotta said Italy will try to make a small (no 
more that Euro 100,000) donation to the Constitutional 
Committee secretariat, but he indicated such a donation will 
depend on the availability of leftover funds in Italy's 
special budget account for Iraq.  Finally, Italy hopes to 
make a Euro 30 million soft loan to Iraq in 2005, he said. 
 
Italian Spending Nears Euro 1.5 billion 
--------------------------------------- 
 
17. (SBU) Maccotta concluded the meeting with a rundown of 
Italy's Iraq expenditures to date, the bulk of which, Euro 
1.3 billion, has supported Italy's military deployment. 
Italy has disbursed an additional Euro 92 million on the 
civilian side, including bilateral reconstruction assistance 
and security for its diplomatic mission.  Finally, Italy has 
disbursed Euro 47 million via multilateral aid channels 
including the FAO, UNIDO, and UNDP.  Maccotta predicted that 
the GOI will be able to fully disburse its Euro 200 million 
Madrid pledge by 2007. 
 
18. (U) Ambassador Jones has cleared this cable. 
 
BAGHDAD MINIMIZE CONSIDERED 
 
SEMBLER 
 
 
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	2005ROME02349 - Classification: CONFIDENTIAL