US embassy cable - 05ROME2679

C O N F I D E N T I A L  ROME 002679 
 
SIPDIS 
 
 
PASS USAID FOR PPC/DCO 
USEU FOR PATRICIA LERNER 
 
E.O. 12958: DECL: 08/12/2015 
TAGS: EAID, EAGR, XA, IT, FAO 
SUBJECT: ITALY UNABLE TO INCREASE AFRICA EMERGENCY AID 
 
REF: A. SECSTATE 109314 
     B. JUNE 30 NATSIOS-DEODATO LETTER 
     C. ROME 1671 
 
Classified By: Acting Economic Minister-Counselor Kathleen Reddy for re 
asons 1.4 (b,d) 
 
1. (SBU) Summary:  Italy is unable to increase its emergency 
humanitarian assistance for Africa due to severe budget 
difficulties.  Italy's overall aid spending levels will 
likely remain at 0.17 percent of GDP (the same level as 2004) 
only because of debt relief, particularly for Ethiopia. 
"Real" aid funds available for programmed assistance and 
emergency relief are actually going down as Italy tries to 
keep its government deficit under control.  Regarding the 
U.K. proposal for an International Finance Facility, many 
Italian aid officials share USG concerns about 
"front-loading" aid, but the Italian Finance Ministry 
supports the concept.  End summary. 
 
2. (U) Drawing from Ref A points, Ambassador Sembler wrote 
Italian Foreign Minister Fini to urge Italy to provide 
additional emergency humanitarian relief for Africa.  USAID 
Administrator Natsios reiterated this message in a June 30 
letter to Giuseppe Deodato, Director General for Development 
Cooperation at the Ministry of Foreign Affairs.  Econoff then 
met August 9 with Gabriele Di Muzio, the MFA's Development 
Cooperation Office Director for Africa, to discuss this 
appeal for more Africa assistance. 
 
Italy Has No Money to Give. 
--------------------------- 
 
3. (SBU) Di Muzio said Italy will not be able to follow the 
U.S. and U.K. lead by increasing emergency humanitarian 
assistance to Africa.  Di Muzio said that given Italy's 
fiscal difficulties, the GOI cannot make any additional 
commitments beyond what has already been budgeted for 2005. 
Italy has, however, made a euro 2.5 million (euro=$1.23) 
contribution to the World Food Program for Niger.  No 
additional money, he said, is available to meet food needs in 
Ethiopia and Eritrea. 
 
4. (C) Di Muzio said that while Africa still receives about 
40 percent of Italian official foreign aid, overall aid 
amounts are shrinking.  Di Muzio cited the example of his own 
office, which handles all bilateral development projects in 
Africa.  Di Muzio requested euro 120 million for 2005 but 
received only euro 70 million (which, he said, has already 
been spent), a big drop from the euro 96 million his office 
received in 2004 and euro 111 million in 2003. 
 
GOI Aid Levels Steady Only Because of Debt Relief. 
--------------------------------------------- ----- 
 
5. (C) On paper, Di Muzio predicted, Italy will maintain an 
aid spending level of 0.17 percent of GDP for 2005 
(approximately euro 2.4 billion, the same level as 2004) but 
only because of debt relief.  For example, Italy this year 
forgave $360 million in bilateral debt to Ethiopia.  In other 
words, Italy's "real" aid budget--money available for 
emergency relief and programmed development projects--is 
actually going down.  The ongoing crisis in Darfur, 
meanwhile, is soaking up ever larger portions of Italy's 
resources for Africa.  Di Muzio said Italy pledged at the 
Oslo conference to disburse euro 60 million in aid to Sudan 
in 2005-2007, and this promise will mean further belt 
tightening for other areas. 
 
Aid Officials Ambivalent About IFF. 
----------------------------------- 
 
6. (C) Di Muzio shed some light on the GOI's position 
regarding the U.K. International Finance Facility (IFF) 
proposal.  He explained that the Italian Finance Ministry, 
without consulting the MFA, has already voiced support for 
the IFF, a mechanism for front-loading aid through the sale 
of bonds (Ref C).  Di Muzio said aid professionals in the MFA 
are not really enthusiastic about the IFF.  Echoing USG 
concerns, Di Muzio commented that many development problems 
cannot be solved simply by spending more money.  He also said 
he and many of his colleagues in the aid wing of the MFA 
believe it is better to strengthen existing channels for 
delivering aid funds rather than creating a new body, with 
the accompanying support staff and overhead.  However, Di 
Muzio predicted, now that the Ministry of Finance is on 
record as favoring the IFF, the GOI will remain passively 
supportive of the idea. 
 
7. (SBU) Italy's official aid community, according to Di 
 
Muzio, is more enthusiastic about new funding ideas such as a 
surcharge on international airline tickets, an international 
lottery, or a tax on global financial transactions (Tobin 
tax).  Italy, Di Muzio said, is "open" in principle to any 
new funding methods to support development assistance. 
BORG 
 
 
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	2005ROME02679 - Classification: CONFIDENTIAL