US embassy cable - 05ROME3585

C O N F I D E N T I A L SECTION 01 OF 03 ROME 003585 
 
SIPDIS 
 
E.O. 12958: DECL: 10/26/2015 
TAGS: PREL, PGOV, CVIS, IT, ITALY NATIONAL ELECTIONS, ITALIAN POLITICS, IRAQI FREEDOM 
SUBJECT: SCENESETTER FOR PM BERLUSCONI'S OCTOBER 31 MEETING 
WITH THE PRESIDENT 
 
 
Classified By: Ambassador Spogli, for reasons 1.4 (b)(d). 
 
1.  (C)  Summary.  PM Berlusconi specifically requested this 
meeting, and a spring address to a joint session of Congress, 
to bolster his prospects in Italy's April elections.  Behind 
in the polls and facing his toughest campaign, Berlusconi 
will juxtapose his proactive and pro-U.S.foreign policy with 
that of his likely center-left opponent, Romano Prodi, who 
prefers to follow an EU foreign policy lead and has called 
for a timetable to withdraw Italian troops from Iraq.  GOI 
officials are concerned about a potential terrorist attack, 
either during the Turin Winter Olympics or the spring 
elections. 
 
2.  (C)  Berlusconi will seek: (a) presidential statements of 
support on shared values; (b) support for extending in 2005 
the UN mandate on Iraq; (c) tangible progress on a plan to 
enhance Iraqi security capabilities and allow a coordinated 
drawdown of Italian forces; and (d) the President's possible 
intervention to waive or delay new passport requirements for 
continued Italian participation in the Visa Waiver Program. 
We should: (a)  offer appropriate praise for Italy's foreign 
policy support without jeopardizing our relationship with 
Prodi; and (b) engage Berlusconi on Russia and Iran.  End 
Summary 
 
Italian Elections 
----------------- 
 
3.  (C)  PM Silvio Berlusconi prides himself on his warm 
relationship with the President and has carefully planned 
this meeting and a spring address to a joint session of 
Congress (he meets Speaker Hastert before going to the White 
House) to bolster his prospects in Italy's national 
elections, tentatively scheduled for April 9.  Berlusconi's 
center-right coalition is down eight points in the polls, 
undermined by internal leadership spats and continued 
economic stagnation.  The center-left also is plagued by 
internal disputes but former European Commission President 
Romano Prodi just won a triumphant electoral victory in the 
primaries.  Pending electoral law changes may slightly 
increase the odds for the center-right, and it is too early 
to deal Berlusconi out.  However, most political observers 
predict Prodi's center-left coalition will win in April. 
 
Iraq: Seeking a Way Forward 
--------------------------- 
 
4.  (C)  We expect Berlusconi will juxtapose his proactive, 
pro-U.S. foreign policy with that of Prodi, who prefers to 
follow an EU foreign policy lead and has publicly called for 
a timetable to withdraw Italian troops from Iraq.  Berlusconi 
has remained adamant that Italian troops will stay in Iraq 
until the security situation warrants, and the Iraqi 
government requests, a drawdown of Italian troops. The 
center-right has already accused Prodi of encouraging 
terrorist attacks on Italy through reckless calls for 
withdrawal.  However, Italian public opinion remains 
overwhelmingly opposed to the war in Iraq and Berlusconi will 
be under increasing pressure to make public statements about 
plans to withdraw troops.  He will be reassured by 
commitments of continued high-level consultations but would 
better appreciate progress in enhancing Iraqi security 
capabilities in a way that allows measured Italian drawdowns 
by April. Italy is also seeking an extension of the UN Iraq 
mandate by the end of the year; the Italian presence is 
premised on the UN mandate, and Parliament will vote in 
January on the next six-months of funding for thier troops. 
Italy also feels that the mandate extension should 
specifically reference political progress in Iraq. 
 
5.  (C)  We can and will work with a Prodi-led government 
should the center-left win next year.  Despite Prodi's calls 
for a withdrawal timetable, other elements of his center-left 
coalition have assured us that Italy will not make any 
dramatic Zapatero-style actions and will coordinate changes 
in troop levels with both us and the Iraqi government.  Prodi 
himself has hinted at a compromise formula involving 
continued Italian involvement in Iraq for reconstruction 
initiatives. 
 
Strongest Ally in Continental Europe 
------------------------------------ 
 
6.  (C)  Berlusconi will be seeking Presidential statements 
of support on shared values for our freedom agenda and praise 
for Italy's substantial commitment of resources overseas.  In 
addition to being the third largest contributor of troops to 
MFN-I, Italy also funds reconstruction and justice projects 
in Iraq, leads ISAF, a PRT and a justice initiative in 
Afghanistan, just took over KFOR command, pledged $3 million 
to the UN Fund for Democracy, indicated it will fund the new 
Foundation for the Future, co-hosts Democracy Assistance 
Dialogue initiatives with Turkey and Yemen, and provided 
earthquake and hurricane relief for Pakistan and New Orleans. 
 We want to provide appropriate praise without jeopardizing a 
potential future relationship with a center-left government. 
 
Budget Woes 
----------- 
7.  (C)  High public debt, rising social welfare costs and a 
stagnant economy are limiting Berlusconi's ability to 
maneuver in the face of growing domestic economic discontent. 
 Pocketbook issues will drive the campaign and be 
Berlusconi's biggest challenge, although Prodi has yet to 
offer any credible alternative economic policy.  The draft 
budget now being debated by the Italian Parliament must be 
approved by the end of the year, and it appears it will 
include painful cuts in many sectors.  This includes 
potentially dramatic (to about .85% of GDP) cuts in the 
defense budget and a 20% reduction in the overseas deployment 
budget that could undermined Italy's ability to sustain its 
overseas commitments. 
 
Terrorist Threat Looms Large 
---------------------------- 
 
8.  (C)  Following the London bombings, the GOI approved a 
strong anti-terrorism law and began a crackdown of arrests 
and deportations of illegal immigrants and suspected 
terrorists.  However, Italy continues to be targeted in 
fundamentalist websites, and many Italian officials expect 
Italy will be attacked in the near future.  They are worried 
specifically about a potential attack during either the 
February Turin Olympics or the spring elections.  We continue 
to work closely with the GOI on security preparations and 
intelligence sharing for the Olympics as well as on 
increasing readiness for possible attacks on USG facilities 
or London/Madrid scenarios. 
 
UN Reform/Iran/Russia/Balkans 
----------------------------- 
 
9.  (C)  Berlusconi is likely to thank you for U.S. support 
in opposing the G-4 plan for UNSC reform; while Italy's 
specific concern is blocking Germany from obtaining a seat, 
they support our view that any changes to the Security 
Council should be based on a wide consensus of support within 
the UN.  As Iran's largest European trading partner, Italy 
remains concerned that it has been excluded from the EU-3 
negotiations and complains that the EU-3 has not sufficiently 
consulted other EU member states. Italy shares our concern 
about proliferation and supports moving the issue to the 
UNSC.  Overall, however, Italy favors engagement over 
confrontation and will be concerned about the economic losses 
associated with potential sanctions.  Berlusconi and Putin 
remain good friends, and Berlusconi continues to insist he 
has delivered our messages of concern about Putin's 
increasingly anti-democratic actions.  Another nudge from the 
President would strengthen our message.  Italy remains fully 
engaged on the Balkans and supports a continued international 
presence in Bosnia and Kosovo until there is international 
consensus that both entities have made sufficient progress on 
democratic reforms.  The candidacy of Amb. Laura Mirachian 
for the post of the High Representative in Bosnia is of key 
interest to the Italians.  They have lobbied strongly for USG 
support, arguing that Italy's high military profile deserves 
an equally strong policy voice.  Department and Embassy 
officers who have met with Mirachian believe she shares our 
outlook for the future of the region.  While she has not 
received official USG support at this point, the USG does not 
want to be seen as opposing her candidacy, since she could 
emerge as the front-runner. 
 
Visa Waiver Program 
------------------- 
 
10.  (SBU) DHS has confirmed that there will be no blanket 
waiver, no official policy favoring parole, and no exceptions 
to the October 26, 2005 requirement for digitized photos in 
passports for any beneficiary of the Visa Waiver Program 
(VWP).  The GOI plans to issue machine readable passports 
with digitized photographs in five Italian Prefectures: Rome, 
Milan, Naples, Palermo and Cagliari, with the possibility of 
successive extension to other Prefectures.  Italians who 
obtain passports after October 26 from Prefectures other than 
these five offices, or who obtain passports from an Italian 
Consulate abroad, will require a U.S. visa.  U.S. consular 
sections in Italy are working with airlines and travel 
agencies to ensure that Italian passengers caught unaware of 
the change in visa requirements are directed to the closest 
Embassy or Consulate for expeditious visa processing. 
 
11.  (C)  President Ciampi, FM Fini and senior aides to PM 
Berlusconi have all raised the VWP issue with the Ambassador, 
insisting that the new requirements will be a major 
embarrassment to Berlusconi just when he is trying to use his 
U.S. connections to improve his election prospects. 
Berlusconi may ask the President to intervene to fix the 
problem, arguing that Italy is a staunch partner in the war 
on terror and is in the process of implementing previously 
announced U.S. requirements for biometric passports. 
SPOGLI