US embassy cable - 03ROME2472

UNCLAS  ROME 002472 
 
SIPDIS 
 
 
SENSITIVE 
 
NEA FOR BURNS, SATTERFIELD, AND HALE 
 
E.O. 12958: N/A 
TAGS: IT, PREL, KPAL, EAID, IS 
SUBJECT: ITALIAN CONFERENCE ON PALESTINIAN REFORMS AND 
ECONOMIC RECONSTRUCTION 
 
REF: ROME 1960 
 
1. (SBU) Summary: The MFA organized a conference on "The 
Palestinian Future: Reforms and Economic Reconstruction" in 
Rome May 28-29.  As the MFA told us and the Embassy of Israel 
prior to the conference, this was not a political conference 
about roadmap implementation but was intended largely for 
Italian public opinion and as a preparation for Italy's 
presidency of the EU (reftel).  Key speakers included FM 
Frattini, Italian Minister for Productive Activities Antonio 
Marzano, Palestinian Minister of the Economy Maher Al-Masri, 
EU Special Envoy for the Middle East Miguel Angel Moratinos, 
UN Special Envoy for the Middle East Terje Roed Larsen, and 
Russian Special Envoy for the Middle East Andrej Vdovin. 
David Hale, Office Director for NEA/IAI, represented the USG 
on behalf of NEA A/S Burns.  All speakers agreed on the 
importance of seezing the current momentum to implement the 
roadmap and end the cycle of violence and on the need to 
improve the economic conditions of Palestinians.  End summary. 
 
2. (SBU) May 28 focused on the reform of the Palestinian 
National Authority within the roadmap.  FM Frattini 
underlined that institutional reform and economic 
reconstruction are closely linked and that institutional 
reform in Palestine is a prerequisite for a free 
market-oriented economy.  Moratinos said that the roadmap is 
more promising than previous peace initiatives because it 
clearly outlined the end goal (a Palestinian state) and 
called for an international monitoring mechanism.  Vdovin 
praised the President's personal commitment to the MEPP, the 
Quartet as a mechanism that enables cooperation and not 
competition among the US, EU, UN, and Russia, the new 
Palestinian government headed by Abu Mazen, and Israel's 
acceptance of the roadmap.  Hale underlined the depth of the 
President's commitment to do all he could to move forward 
implementation of the roadmap and to help the parties fulfill 
the two-state vision.  He calls on the parties to do their 
parts: the Palestinians to end violence and terrorism, the 
Israelis to ease the humanitarian crisis in the West Bank and 
Gaza, and the Arab partners to end all ties to terrorism and 
prepare their publics to accept the state of Israel and the 
two state solution. 
 
3. (SBU) May 29 focused on the reconstruction of the 
Palestinian economy. Al-Masri described the state of the 
Palestinian economy (60% poverty rate, 45% unemployment, and 
a 60% drop in the GDP in the past 2 years).  He mentioned 
consolidating all revenues, focusing expenditures only on PA 
related activities, and submitting quarterly financial 
statements to the legislative council as important reform 
steps conducted by his ministry.  He said that the private 
sector was the backbone of the Palestinian economy, and that 
the Palestinians needed the Israeli market to sell their 
goods given that their domestic market was too small.  He 
emphasized the importance of attracting international 
investment to the territories but was realistic by saying 
that this would not happen until there is security in the 
area.  Larsen echoed what Al-Masri said by stating that, 
despite being optimistic about the holistic approach of the 
roadmap, he did not consider the current environment in the 
Middle East condusive to economic development. 
 
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BERLUSCONI'S "MARSHALL PLAN" 
---------------------------- 
 
4. (SBU) The Palestinian Representative in Italy, Nemer 
Hamad, criticized the Italian government for its inaction on 
Berlusconi's idea of a Marshall Plan type of aid package to 
help the Palestinian economy.  Ambassador Badini, the MFA's 
DG for the Middle East, responded by saying that the idea of 
a "Marshall Plan" for the Palestinian economy was not dead 
but that it had no EU consensus.  He reminded that the 
Marshall Plan to Europe was done after WWII ended because an 
economic intervention of that scale was not possible before 
there was peace.  Marzano said that Italy could transfer some 
of its best practices to the Palestinians in a way that would 
best fit their economy, mostly in the fields of water 
management and small/medium size enterprises, where Italy had 
a large expertise.  Ilan Baruch, the Israeli MFA's Deputy 
Director General for Economic Affairs, said that, security 
situation permitting, Israel was open-minded about reviving 
multilaterals and industrial zones and readmitting 
Palestinian workers in Israel to help revive the Palestinian 
 
 
economy. 
 
5. (SBU) Comment: While not breaking any new ground, this 
conference was a useful reminder for Italian public opinion 
of the importance the GOI places on solving conflicts in the 
region and that the MEPP will be one of Italy's top priority 
during its fast-approaching EU presidency.  The Israeli 
Ambassador in Rome, who originally had serious reservations 
about this conference (reftel), actually attended parts of 
it.  The Italian government and Embassy Rome both greatly 
appreciated the participation of David Hale in the 
conference.  End comment. 
 
6. (U) This cable was cleared by NEA/IAI Director David Hale. 
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 2003ROME02472 - Classification: UNCLASSIFIED