US embassy cable - 05ROME3697

C O N F I D E N T I A L ROME 003697 
 
SIPDIS 
 
DEPT. FOR EUR/RPM AND EUR/WE; OSD FOR DASD FATA 
 
E.O. 12958: DECL: 11/02/2015 
TAGS: PREL, MOPS, MARR, ECON, IT, NATO, IRAQI FREEDOM 
SUBJECT: ITALIAN DEFENSE BUDGET: PM'S OFFICE SEES PROPOSED 
BUDGET AS PROBLEMATIC, WORKING TO IMPROVE IT 
 
Classified By: Ambassador Ronald Spogli.  Reasons 1.4 b and d. 
 
1. (C) After hearing in the past few weeks from the Chief of 
the Italian Defense General Staff and the Minister of Defense 
that cuts envisioned by the proposed Italian defense budget 
for 2006 would put Italian defense spending in the range of 
0.85-to-0.9 percent of GDP, jeopardizing Italian 
participation in overseas peacekeeping and defense 
procurement programs, Ambassador raised the issue with 
Undersecretary to the Prime Minister, Gianni Letta, on 
November 2.  Ambassador pointed out that: 1) defense spending 
by a NATO Ally and G-8 member well below 1 percent of GDP 
would send a bad signal to NATO aspirants who were being told 
by the Alliance to spend at least 2 percent; 2) the U.S. was 
concerned that the proposed budget could put at risk the 
important contributions Italy was making in overseas 
deployments in Iraq, Afghanistan, the Balkans and elsewhere; 
and 3) that the proposed budget would hamper Italy's ability 
to participate in critical defense procurement programs in 
which the U.S. was Italy's main partner. 
 
2. (C) Letta said the Prime Minister's office agreed that the 
proposed defense budget was a problem, recognized the very 
important Italian activities that would be put at risk by the 
cuts, and noted that there had been some miscalculations 
concerning defense requirements when the overall budget 
proposal was put together.  He assured the Ambassador that 
the GOI was working to improve the defense budget before a 
final national budget package was completed and approved by 
parliament in the coming weeks. 
 
3. (C) Comment: Both the CHOD and the DefMin urged us to 
raise our concerns (which they of course share) over the 
defense budget with the PM or Letta, with the hope that 
hearing it from us, the senior GOI leaders might revisit the 
issue.  From Letta's reaction, it seemed the PM's office 
already knew it had a problem that needed to be addressed. 
Hopefully, our having weighed in will steer the matter 
decisively in the right direction.  We will continue to 
closely monitor the work on the defense budget in the weeks 
ahead. 
SPOGLI