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cable 10ROME1

VISITING WITH A RECUPERATING BERLUSCONI

Classified By: Ambassador David H. Thorne.

1. C) Summary: The Ambassador visited recuperating Prime Minister Silvio Berlusconi at his Lombardy estate for a private luncheon December 30. The Ambassador had suggested he visit Berlusconi after the Prime Minister was assaulted at a Milan rally in mid-December. Accompanied by Gianni Letta, the Undersecretary in the Prime Minister’s office and effectively Berlusconi’s second in command, Ambassador flew up for the meeting on the Prime Minister’s plane. Bandaged and bruised from the December attack, Berlusconi was nonetheless upbeat and eager to show off his new project for training Italy’s elite and share his thoughts on European leaders and domestic politics. Berlusconi was effusive about U.S.-Italian relations and Letta promised action on roping in ENI operations in Iran and pushing ahead on Megaports. End Summary

The Recuperating Prime Minister

2. C) Following the Ambassador’s call to Gianni Letta suggesting the Ambassador visit the Prime Minister during his recuperation, Letta, the Undersecretary in the Prime Minister’s Office, invited Ambassador Thorne to accompanied him to Milan on December 30 for a private afternoon with the Prime Minister. The three hour session, held in Italian, involved only the Prime Minister, Letta and the Ambassador, and included a visit to Berlusconi’s latest endeavor, a private training school for Italy’s elite, and a wide-ranging lunch with the two top decision makers in the Italian government.

3. C) Berlusconi was still bandaged and scarred from the assault in early December where a mentally unstable man hurled a die cast model of Milan’s cathedral at his head. Berlusconi noted that the missile had struck a glancing blow to his cheek, cutting him, breaking his nose and some of his teeth, but if it had hit him straight on “it would have killed” him. Letta recounted separately that Berlusconi had slumped into a depression following the attack – “he’s an impresario, he wants everyone to love him “ – but that had snapped out of it and was on the mend. Letta also noted that their tour of Berlusconi’s new project site was the Prime Minister’s first excursion outdoors since his release from the hospital.

U.S.-Italy: A Prized Relationship

4. C) In luncheon discussions, Berlusconi unabashedly stated that he prized Italy’s relationship with the U.S. and that his government stood ready to help us, whatever the issue. He noted that Italy owed the United States a debt of gratitude for salvation during World War II, and for protection throughout the Cold War. On Afghanistan, basing issues, and other tough problems, Italy was committed to helping the U.S. get to the right solution. He noted that he hoped that the Italian increase in Afghanistan would help President Obama and address the situation on the ground.

Berlusconi on European Leaders

5. C) The Prime Minister and Letta also gave their run down of current European political leadership. Berlusconi assessed that Sarkozy’s star was clearly waning in European circles and that the French President did not command the same influence he did a year ago. Letta was less convinced, noting to the Ambassador that both Berlusconi and Sarkozy were “big dogs angling for the same spotlight.” Berlusconi recounted how he had played an instrumental role in the Spring in persuading a reluctant Erdogan to accept Danish PM Rasmussen as the new NATO Secretary General, overcoming the Turkish President’s profound irritation at Rasmussen for not silencing Kurdish language radio stations despite numerous requests. On Russia, Berlusconi felt that Putin and Medvedev got along well, respected each other, and had an effective relationship. In fact, farewells after lunch were unexpectedly cut short by an incoming call from Putin.

Iran: Appalled by violence, Will try to rope in ENI

6. C) On Iran, Berlusconi noted that he was appalled by the Iranian crackdown. He offered the capabilities of the Italian intelligence services and assured full sharing of information gathered on the internal dynamics in Tehran. Letta, as the supervising authority over Italy’s intelligence services, assured the Ambassador of a continuation of our already excellent bilateral cooperation on the issue. Letta also promised that he would talk to ENI CEO Scaroni about the energy giant’s ongoing operations in Iran and, if he could, persuade them to halt activities.

Megaports – GOI to determine POC

7. C) In response to the U.S. request to move forward on Megaports, Letta told the Ambassador that the issue would be discussed at the Council of Ministers meeting on January 8 and that they would be in contact soon thereafter to convey which ministry would have lead in the GOI for implementing the project and as such be the primary interlocutor for our Embassy.

Italy’s Courts – Problem Number One

8. C) Berlusconi forthrightly identified the magistratura – Italy’s judiciary and courts — as Italy’s “biggest problem” and told the Ambassador that he was ready to forge an alliance with the center left opposition to implement judicial reform. He noted that a legal system where issues were never definitively resolved — where you can be absolved of a crime and yet have the case resurrected later – sapped Italy’s political and economic system. He argued that this is what has happened in his own case, where he has been cleared in the past but the same charges keep on returning repeatedly. He said that he had allies in the opposition on the need for reform, including PD Leader Bersani. Letta cautioned the government won’t know if it has the clout to deliver on such an idea unless it secures a decent showing in regional elections in March 2010.

Smart Guys in the Opposition

9. C) Berlusconi and Letta displayed a great deal of respect for opposition leaders. Berlusconi praised the Democratic Party Leader, Pier Luigi Bersani as a “straight shooter” who was fair with a top rate intellect. Separately Letta was also complimentary about former Prime Minister (and archrival) Massimo D’Alema who he credited with showing courage and integrity during the Balkans crisis and taking some very tough decisions. Letta noted that D’Alema’s prickliness and “smartest guy in the room” demeanor made dealing with him a chore, but acknowledged his judgment and political effectiveness, which was why Berlusconi backed him for the EU Foreign Minister position despite their differences. Letta told the Ambassador that he did not have a clear judgment on how DiPietro will play in domestic politics and looked forward to future conversations. On other domestic political issues, Letta thought that the current estrangement between the governing PDL party and Sicilian President Lombardo was a minor issue and they would patch it up quickly.

Worried about a flat 2010

10. C) Both Berlusconi and Letta expressed concern about the limited prospects for economic growth in 2010. Berlusconi thought that Italy had weathered the past year of the financial crisis fairly well but thought it would be a challenge to produce enough growth in 2010 to start replacing jobs lost. The Prime Minister was less concerned that a financial meltdown in Greece would have EU-wide impact. He said that he had a good relationship with Greek PM Papendreou and was confident that he could right the situation.

New Media – Important for Liberty

11. C) In response to the Ambassador’s questions to the Prime Minister about the role of the internet, Berlusconi shot back “it’s important for liberty.” New media – particularly Facebook which has been instrumental in the past month in organizing a national “No Berlusconi Day” and more controversially in continuing to host “Kill Berlusconi” pages – has vexed the GOI, – but the Prime Minister stated that he felt the evolving media was both critical to the future and also to the preservation of liberty. But he felt there needed to be better tuned controls to prevent the most extreme use of the new outlets.

The Berlusconi Leadership Academy

12. C) The Prime Minister commenced the visit by personally conducting a guided tour of his most recent project, a private academy to train Italy’s brightest young minds. Berlusconi led Letta and the Ambassador on a personal tour of a newly rehabbed Lombardy estate that will serve as the home of the enterprise. The completely renovated 17th century country mansion, Villa Gernetto, will house a special school set to open in March for one hundred of Italy’s most talented young leaders, completely funded from Berlusconi’s personal fortune. The Prime Minister intends to choose the students himself and he envisions an environment where Italy’s best and brightest live and study, taught by world leaders “like Blair and Clinton.”

13. C) The Ambassador’s intimate afternoon with Italy’s two top decision makers was both a testament to the priority Berlusconi gives the U.S.-Italy relationship but also perhaps a sign that the GOI has achieved its long-sought level comfort and ease with the Obama administration. It is also a dividend of the Ambassador’s cultivation of the relationship with Letta, which has opened up a personal channel to the Prime Minister. The Italian press coverage of the following day clearly took this message from what they viewed as an extraordinary private session. The Prime Minister was clear that he expects to be called upon to deliver for the U.S., which he will do out of principle, not self-interest. Despite being given numerous openings, neither the Prime Minister nor Letta asked for anything from the U.S. during the lengthy luncheon. A striking aspect of the session was Letta’s clear position as co-regent, with Berlusconi deferring regularly to his colleague and with Letta airing opposing points of view to his boss during the luncheon.

cable 08ROME1386

BERLUSCONI’S COMMENTS ON MISSILE DEFENSE AND KOSOVO CREATE FIRESTORM IN ITALY

Classified By: Barbara A. Leaf, Acting Deputy Chief of Mission

1. (C) During a press conference on the margins of the Italy-Turkey summit in Izmir on November 12, Italian PM Berlusconi said that the U.S. had “provoked” Russia by unilaterally recognizing Kosovo’s independence, pressing forward on Missile Defense, and inviting Ukraine and Georgia to have a closer relationship with NATO. While Berlusconi’s latest comments are a culmination of a string of inflammatory and unhelpful comments in support of Putin that began shortly after Berlusconi took office this year, these latest statements went considerably further in attempting to place the blame for Russia’s paranoia on the U.S. Additionally, Berlusconi appears to be encouraging his own government and Russia to disregard the current administration and lobby the incoming U.S. President to take a softer line on Russia. At the same time, he has attempted to portray himself as the primary interlocutor between Putin and the West, and particularly with the U.S. As a result of Berlusconi’s latest comments, post reached out to interlocutors at all levels to register our dismay at the latest barrage of Berlusconisms. Our contacts universally responded with a combination of dismay, dismissal or shoulder-shrugging. In an effort at damage-control, FM Frattini dispatched a senior MFA official the following morning to see the A/DCM and ‘clarify’ the GOI,s stance. Instead, he took back a terse message to the FM that such comments risk substantial and lasting damage to Italy,s credibility in Washington. End summary.

2. (C) During a press conference with Turkish PM Erdogan on November 12 in Izmir, PM Berlusconi said the U.S. had “provoked” Russia by unilaterally recognizing Kosovo’s independence, pressing forward with Missile Defense and encouraging Ukraine and Georgia to have a closer relationship with NATO. Berlusconi’s latest comments represent a continuation of a long campaign of support for Putin since the Italian PM returned to power this year. In addition to his latest comments, Berlusconi has supported Russian initiatives to create a new security architecture in Europe to supersede NATO and OSCE, has insisted that Putin acted appropriately during the Georgia-Russia conflict, and has opposed NATO expansion on the basis that it presents a threat to Russia. He has even called for Russia to be a full member of the EU – a comment he made at a time when the EU was considering whether to continue business as usual with Russia in the aftermath of the Georgia-Russia conflict.

3. (C) Most disturbingly, Berlusconi has attempted to portray himself to Russia and the EU as the principal interlocutor between the transatlantic community, and in particular the U.S., and Russia. He has repeatedly called on the U.S. to take a softer line with Russia on virtually all democratic and security issues and has even called on his government and Russia to look beyond the current administration to the incoming U.S. President in order to achieve these goals.

4. (C) Following this latest set of remarks, we reached out to virtually every senior interlocutor on Russia within the GOI and in Berlusconi,s own center-right coalition. The Ambassador called DPM Letta. A/DCM called FM Frattini’s chief of staff, the MFA Director General for Europe, the National Security Advisor, and a member of parliament from Berlusconi’s party. Poloff reached out to the Acting Director of the MFA Russia Office, the Director of the Security Planning Department, the diplomatic advisors to Berlusconi, and members of Berlusconi’s party. We expressed our concern that Berlusconi’s attempts at ‘creating dialogue’ with Russia were, in fact, creating greater tension and undermining common efforts to bring stability to the Balkans, and portraying the successful and peaceful expansion of the Euro-Atlantic space as a threat to Russia. In an apparent effort at damage-control, FM Frattini sent a senior member of his staff, Policy Planning Director Maurizio Massari, the day after Berlusconi,s remarks to call on A/DCM to ‘clarify’ GOI policy.

5. (C) Massari (as did virtually all of our interlocutors) told A/DCM that the PM was accustomed to making off-the-cuff remarks that should not be interpreted as policy statements per se. Massari said that Frattini was urging the U.S. to look to Italy’s strong bilateral cooperation rather than Berlusconi’s comments as an indication of the strength of the relationship and the direction of Italian policy. Italy’s foreign policy remained strongly Atlanticist; Berlusconi, according to Massari, had meant to be constructive and wanted to take a positive role in creating understanding between its key strategic partners, the U.S. and Russia. The comments had not been meant to criticize the U.S.

6. (C) A/DCM countered that the PM’s statements risked damaging to our efforts to bring stability to the Balkans by calling into question the basis for Kosovo’s independence – a process that Italy had been a part of from the beginning. Additionally, Berlusconi,s comments ran headlong into sensitive negotiations with Russia on confidence building measures, as well as Czech and Polish internal deliberations on ratification of Missile Defense. By characterizing Ukrainian and Georgian NATO aspirations as inherently threatening to Russia, Berlusconi was casting doubt on a process which had produced significant reforms in aspirant countries that are looking to join the community of democratic nations.

7. (C) A/DCM told Massari that the GOI gave every appearance that the U.S. was experiencing a power vacuum. The current administration was still in charge, and the incoming one had made that abundantly clear. By encouraging his own government and Russia to speak past the current administration and offer ‘advice’ to the President-Elect, Berlusconi was losing credibility for Italy as a reliable partner, which he could ill afford to do, given the challenges ahead of us in Afghanistan and elsewhere. A/DCM added that the new administration would conduct its own diplomacy and would not need Berlusconi as ‘a bridge’ to engage in a dialogue with Russia on either a bilateral or multilateral basis.

8. (C) Massari, in obvious discomfort, said he ‘fully understood’ the U.S. perspective on Berlusconi,s recent stream of commentary, said he would take this message back to FM Frattini in detail. He also asked for our thoughts on how to avoid any further ‘misunderstandings’ of this nature. He said he would recommend that the FM make a statement clarifying Italy’s support for Kosovo and NATO expansion. He also said he would advise the FM to talk to Berlusconi about the degree to which his comments on the US/Russia relationship, Georgia, MD and other issues had irritated Washington. A/DCM ended the conversation by suggesting that PM refrain from making any further offers to guide the new U.S. administration in its relationship with Russia.

9. (C) Comment. All of our interlocutors were at visible pains to underscore that they understood the PM’s comments in Izmir had crossed the line. All, however, particularly party officials, reiterated that Berlusconi does not listen to the advice of his own experts in crafting his approach with other states. On Russia, Berlusconi takes this to an extreme, not only conducting his own brand of foreign policy, but on a tactical basis, as a way of gaining favor with his Russian interlocutors – with whom many (including his own party officials) suspect he has a personally and financially enriching relationship. All of our contacts stated that it might be difficult to reign him in and, somewhat fatalistically, encouraged us to ignore his comments. One senior MFA official went so far as to suggest Ambassador take up the issue directly with Berlusconi and asked us to let her know what Berlusconi offered as his justification for his remarks, since, she said, she had no insight whatsoever as to what had animated his remarks on Kosovo and MD.

10. (C) It will be all the more important that Berlusconi and his advisors hear a similarly blunt warning about the direction of Italy,s Russia policy during in any bilats or pull-asides on the margins of the upcoming G-20 summit.

cable 08ROME1406

SCENESETTER FOR YOUR DECEMBER 3 VISIT TO ROME

Classified By: Ambassador Ronald P.

1. (C) Summary. The political conditions in Italy are dramatically different from the conditions that existed when you last visited in July 2006. Silvio Berlusconi has returned to power after two years of a divided and ineffectual Prodi government. Berlusconi enjoys unparalleled levels of public support and his broad base of power has allowed us to make good progress in advancing our agenda, including successfully pressing for significant reductions on caveats imposed on Italian troops in Afghanistan by the previous government and approval of a major and crucial base expansion at Vicenza. During your visit, I hope you can publicly announce the establishment of AFRICOM,s Army and Navy subcomponent commands in Italy, an important symbol of the strength of our close bilateral security relationship.

2. (C) Our reenergized cooperation with Berlusconi, however, does not extend to all issues. Berlusconi’s close, personal relationship with Putin has translated into Italian support for nearly every Russian initiative intended to weaken transatlantic support for NATO expansion and our efforts to curb the Kremlin’s worst instincts. On Iran, after a period of Italian support for U.S. and EU efforts to resolve the nuclear issue, Italy’s policy has become unfocused and even critical of the international process. I hope you can let Berlusconi know that Italy’s renegade initiatives to soften international and transatlantic positions on Russia and Iran can only serve to create confusion and reduce collective security. On the economic front, Italy’s banks have avoided the worst of the financial meltdown, but the broader economy will suffer from the ensuing global economic slow-down. End Summary.

Domestic Politics: Berlusconi Firmly in Control

3. (C) Prime Minister Silvio Berlusconi is in an enviable position domestically, enjoying so comfortable a majority in Parliament that he can pass virtually any legislation without the support of the opposition. He used his first months back in government to deliver results on election promises, though long-term solutions to most problems are still needed. The trash problem in Naples is not yet permanently solved, but the streets are cleared and troops are keeping dumps and incinerators open. Public worries about street crime have been addressed by a sweeping new security law. A public finance law has overhauled the annual budget process, which traditionally has eaten up months of Parliament’s time, but Italy’s faltering economy casts doubt on whether budget targets will be met. Berlusconi’s government drafted and passed these laws mostly without consulting the center-left opposition, which has grown more fragmented and less effective. Most foreign policy initiatives will be directed by Berlusconi personally without the need of any legislation.

4. (C) Berlusconi has made a few missteps, such as his awkward attempt at a joke, in referring to President-Elect Obama as “suntanned”, and center-left contacts argue that the honeymoon period may end soon. Clearly Berlusconi’s current level of popularity is unsustainable over the long run, but predictions that the wind is changing already are premature. The center right’s first major electoral test will be the European elections in June, which will be a critical moment for the center left to evaluate whether it needs new leadership and for the center right to see if it continues to enjoy such high levels of approval from the Italian people.

Transatlantic Relationship: All Russia All the Time

5. (C) Berlusconi’s close personal (and, some suspect, financial) relationship with Putin has led him to champion unquestioningly every initiative the Kremlin has rolled out. Italy’s Russia policy is his personal game, one which he conducts on a tactical basis to gain the trust and favor of his Russian interlocutors. He consistently rejects the strategic advice of his demoralized, resource-starved, and increasingly irrelevant Foreign Ministry in favor of his business cronies, many of whom are deeply dug into Russia’s European energy strategy. As a result of his short-sighted obsession with Russia, Berlusconi has thrown his support behind Medvedev’s calls for a new security architecture in Europe to supersede NATO and OSCE, has publicly called for Ukrainian and Georgian NATO aspirations to be put on hold in deference to Russian sensitivities, has called on President-Elect Obama to withdraw support for Missile Defense, and continues to insist that Russia acted properly during the Georgia-Russia conflict. He has even called on the EU to admit Russia as a member. Most disturbingly, Berlusconi has attempted to portray himself inside the EU as the bridge between the U.S. and Russia. In practice, this has meant that the GOI has consistently worked to water down EU stances on Russia, and tried to derail U.S.-led efforts to contain Moscow’s worst instincts. His efforts to encourage greater “dialogue” have created more confusion between Russia and the transatlantic community, not less. We have pushed back forcefully on this (ref a) but you can provide a sense of realism to Berlusconi by letting him know that his efforts are working against U.S. and transatlantic efforts.

Muddying the Waters on Iran

6. (C) Berlusconi came into power with a tough public stance on Iran and showed himself eager to support the P5-plus-1. This initial clarity has given way to an unfocused, even critical policy with respect to building international consensus for further sanctions. FM Frattini recently questioned the efficacy of the P5 1 approach in public comments, and reached out to Iran,s nuclear negotiator, Saeed Jalili, to invite him to Rome for consultations. Even while working within the EU framework to discuss further national measures, working-level GOI officials continue to question the efficacy of further sanctions.

Economic Crisis: Banks OK, but economy suffers

7. (C) Stodgy, old fashioned banking practices allowed Italy to avoid being directly hit by the global financial melt-down. Italian banks simply did not engage in the kind of sub-prime lending that got others in trouble, and Italian banks did not buy significant amounts of the toxic derivatives that are causing so much trouble around the globe. But Italy is being affected by the results of the financial crisis: Italian stock prices have plummeted, stirring fears of possible foreign buy-outs of Italian firms, and Italy’s already shaky economy will be hard-hit by the global recession that was sparked by the financial crisis. As for Italy’s preferred response to the crisis, the Italians seem to be following Sarkozy’s lead, and seem to share his enthusiasm for major reform of the international finance institutions. As is the case in many other countries, Italy is also looking at the possibility of government support for industries hurt by the recession.

8. (C) Italy’s Finance Minister, Giulio Tremonti, often supports protectionist, anti-globalization positions, but in the ongoing discussion of the financial crisis we expect Italy to adhere to the more moderate consensus policies hammered out by the EU.

Little Room for Expanding Presence in Afghanistan

9. (C) Italy is the sixth-largest contributor to ISAF with 2,200 troops, a PRT in Herat, and command of RC-West. Berlusconi has made good on his pledge to President Bush last June to remove geographic caveats and send 34 Carabinieri to train Afghan police, and he has promised to address allegations of Italian protection payments to insurgent leaders. Additionally, FM Frattini has announced his intention to host a G8 Ministerial on Afghanistan with a special focus on providing a regional solution to the Afghan-Pakistan border region. But the Italians now say that new troop deployments above the Parliamentary-approved cap of 2,300 troops will be impossible for budgetary reasons, and that its only new contribution to ISAF this fall will be in the form of four Tornado jet fighters. Italy has also been cool toward our requests to provide donor support to ANA expansion and election preparation, citing budgetary concerns. You should stress that Italy’s decision to reduce defense expenditures (which will put them even further below the NATO-recommended threshold of 1% of GDP) is of major concern to us, and it risks making Italy a less reliable partner in international security operations, just at a point when the need for greater contributions from partners may grow in Afghanistan.

Rolling out AFRICOM

10. (C) Your visit will provide an opportunity to highlight our cooperation on Africa through Italy’s hosting of portions of AFRICOM. GOI officials were initially hesitant to sign off, due to concerns over how and under what circumstances U.S. forces in Italy might deploy to potential conflict zones in Africa. The GoI eventually agreed to the establishment of AFRICOM’s Army and Navy subcomponent commands in existing facilities in Italy on October 1, but asked us to delay announcing the move (ref b). The South East Europe Task Force (SETAF) in Vicenza has assumed the Army component functions and a component of NAVEUR in Naples is now fulfilling the naval functions. Italian concerns focused on SETAF and hinged on two issues — one legal and the other local and political. The classified 1954 Bilateral Infrastructure Agreement (BIA) limits U.S. basing in Italy exclusively to troops deployed for NATO purposes. After long negotiations, the GOI accepted our broad interpretation of the BIA and the NATO SOFA as applicable to the AFRICOM subcomponents due to their role in supporting NATO Operations in Africa and their availability for other NATO missions as required. But the GOI asked for us to delay public announcement of the shift due to local controversy over the expansion of the base in Vicenza to the Dal Molin airfield.

11. (C) The GOI responded positively to our proposal for a joint announcement of the shift during your visit to Italy. A joint statement acknowledging the establishment of the two entities would allow us to highlight the security assistance and humanitarian aspects of AFRICOM’s mission and also divorce the issue as much as possible from base expansion controversy in Vicenza. It will also provide an opportunity to showcase the synergies between AFRICOM and the GOI’s own efforts to encourage stability in Africa and also their excellent work at training primarily African peacekeepers through its Center of Excellence for Stability Police Units (COESPU), a joint U.S.-Italian G8 initiative which is also located in Vicenza.

When Will the Honeymoon End?

12. (C) Most of our contacts within Berlusconi’s own party as well as in the center left expect this government’s honeymoon period to end in the first half of 2009, as Italians focus on the nation’s systemic problems that have no easy solution, most importantly the economy. Democratic Party officials tell us that they see the declining standard of living among the middle class as the greatest opportunity to gain strength before the European elections in June. Should the rescue efforts for Alitalia remain unresolved in the face of continued strikes or should the protests against education reform gain traction with a broader segment of the electorate, Berlusconi’s popularity will suffer.

Conclusion

13. (C) Berlusconi’s shoot-from-the-hip style and frequent gaffes frequently create bumps in the relationship with the U.S. Nevertheless, he staunchly supports and admires the U.S. and its people. Despite its economic malaise, Italy remains a close and influential partner and will continue to be an important ally for the U.S. in NATO, the region and the world. Your visit will be an important sign of the strength and closeness of the bilateral relationship and I am delighted that you are taking the opportunity to visit Rome.

cable 09ROME97

ITALY-RUSSIA RELATIONS: THE VIEW FROM ROME

Classified : Ronald P. Spogli, Ambassador.

1. (U) This is a joint Political and Economic Section cable.

2. (C/NF) Summary. Italy’s relationship with Russia is complex, encompassing historical ideological sympathies, geostrategic calculations, commercial pressure, Energy dependence, and personal relationships between top leaders. The combination of these factors creates a strong tendency for Italy’s foreign policy to be highly receptive to Russian efforts to gain greater political influence in the EU and to support Russia’s efforts to dilute American security interests in Europe. In its relationship with Russia, Energy is the most important bilateral issue and the quest for stable energy supplies from Russia frequently forces Italy to compromise on security and political issues. A not insignificant concomitant factor is PM Berlusconi’s desire to be seen as an important European player on foreign policy, leading him to go where others dare not. End summary.

Roots of Italian Russophilia: Ideology on the Left, a Long-Standing Market Opportunity on the Right

3. (C/NF) Until the 2008 parliamentary elections, the Italian Communist party and various leftist splinter groups were apermanent fixture of the Italian political scene. Throughout the Cold War members of the Italian communist movement maintained close ties with the Soviet Union, other communist countries, and many communist revolutionary movements. Unlike many other communist parties around the world, the Italian communist movement remained unapologetic in its continued belief in Marxism-Leninism as a viable economic alternative to capitalism. While many European leftist intellectuals recognize that, aside from an authoritarian approach to governing, Putin’s Russia bears little resemblance to Communist ideals, this fact has not deterred Italian communists and other radical left politicians from being openly pro-Russia on the basis ofideological solidarity. This, combined with the advanced average age o most high-level Italian politicians (65-70), prevents many in the far left of Italy’s political spectrum from moving beyond a worldview developed (and apparently frozen) during the Cold War.

4. (C/NF) Throughout the Cold War, Italian business interests frequently skirted the line of what was appropriate in their pursuit of the Soviet market. After the collapse of the Soviet Union, the explosion of consumer wealth in Russia created massive deman for high-end and luxury Italian exports. From 1998 to 2007 Italian exports to Russia grew by 230 percent, from 2.7 billion Euros to 9.5 Billion. Many of Italy’s leading businessmen began to see Russia as a limitless market that could substitute for loss of export revenue from other parts of the world. These businessmen maintain strong ties to the pro-business, free-market-oriented politicians on the right, including the most visible patron of Italy’s business elite: PM Silvio Berlusconi.

Putin Most Influential Figure in Italy‘s Russia Policy

5. (C/NF) While Italy’s political parties, the MFA and ENI exert some influence on Italy’s Russia policy, by far the most importan factor is the personal attention Putin devotes to the relationship. By our reckoning, Putin has held more bilateral meetings with sitting Italian PMs in the recent past than any other world leader. He was the first world leader to meet with Berlusconi after the 2008 elections, arriving in Sardegna to visit the PM designate before the latter had even been sworn in. Berlusconi believes that Putin is his close and personal friend and continues to have more contact with Putin than with any other world leader. During the Georgi crisis, Berlusconi spoke to Putin on a daily basis for a period of almost a week. The basis of the friendship is hard to determine, but many interlocutors have told us that Berlusconi believes that Putin, a fellow ‘tycoon’, trusts Berlusconi more than other European leader. (A contact in the PM’s office told us that their frequent meetings are accompanied by exchanges of lavish gifts). Berlusconi admires Putin’s macho, decisive, and authoritarian governing style, which the Italian PM believes matches his own. From the Russian side, it appears that Putin has devoted much energy to developing Berlusconi’s trust.

6. (S/NF) Contacts in both the opposition center-left PD  party and Berlusconi’s own PdL party, however, have hinted at a more nefarious connection. They believe that Berlusconi and his cronies are profiting personally and handsomely from many of the Energy deals between Italy and Russia. The Georgian ambassador in Rome has told us that the GOG believes Putin has promised Berlusconi a percentage of profits from any pipelines developed by Gazprom in coordination with ENI. Whenever we raise the issue of Russia and the Pwith our contacts in PdL, Berlusconi’s own party, they have usually pointed us to Valentino Valentini, a member of parliament and somewhat shadowy figure who operates as Berluscon’s key man on Russia, albeit with no staff or even a secretary. Valentini, a Russian-speaker who travels to Russia several times per month, frequently appears at Berlusconi’s side when he meets other world leaders. What he does in Moscow during his frequent visits is unclear but he is widely rumored to be looking after Berlusconi’s business interests in Russia. Our contacts uniformly deem Valentini, a multilingual former interpreter, close to Berlusconi with regard to Russia, but not a polic person.

7. (C/NF) All of our interlocutors – xxxxxxxxxxxx – report that Berlusconi determines Italy’s policy on Russia single-handedly, neither seeking nor accepting counsel. Virtually all are reluctant to confront the PM even when he is at his worst on Russia. In November 2008, after a disastrous press conference in which, inter alia, the PM described NATO expansion, recognition of Kosovo’s independence, and missile defense as “U.S. provocations” of Russia, GOI officials did a classic duck- and-cover. In response to our objections, MFA and PM staff sheepishly directed us to the PM himself, rather than deliver the unpleasant news to him that he had angered not only the Americans but other members of the Contact Group for the Balkans, not to mention the Czechs and Poles. Even FM Frattini admits to wielding no influence on Berlusconi on Russia. During an early September visit to Italy, former VP Cheney confronted Frattini on Italy’s very public and unhelpful stance on the Georgia conflict. A subdued Frattini noted that, while he had strong opinions on the issue, he nevertheless received his marching orders from the PM.

8. (C/NF) Distressingly, Berlusconi treats Russia policy as he does his domestic political affairs – tactically and day-to-day. His overwhelming desire is to remain in Putin’s good graces, and he has frequently voiced opinions and declarations that have been passed to him directly by Putin. One such example: in the aftermath of the Georgia crisis, Berlusconi began (and continues) to insist that Georgia was the aggressor and that the GOG was responsible for several hundred civilian deaths in South Ossetia.

No Institutional Leadership on Russia

9. (C/NF) Trying to determine who might have some influence on Berlusconi’s Russia policy is not an easy task. One thing is certain, however – it is not the foreign policy institutions of the GOI. FM Frattini is widely seen as only the messenger for PM Berlusconi’s Russia policy – indeed he termed himself as much to VP Cheney during the latter’s September 2008 visit to Rome. Within the professional ranks, resources and expertise are scant. Italy’s MFA contains only one full-time diplomat assigned to cover Russia and the countries of the former Soviet Union: the Office Director. The Deputy Office Director position and single Desk Officer position assigned to cover all the countries of the FSU are vacant. Italy’s dire budget situation is likely to prevent the hiring of additional staff at the MFA for at least two years, according to one MF source. The Office Director’s direct supervisor – the A/S equivalent – is also responsible for the Balkans and the rest of Europe, but she, like Frattini, appears to have little or no input to GOI Russia policy. The PM’s staff does not fare much better. The Office of the Diplomatic Advisor is thinly staffed – with only one officer assigned to each geographic region. The position covering Russia is staffed by a midlevel diplomat who is in the process of being transferred. No replacement is likely to be named. As a result, the officer covering the Middle East (also the deputy for the office) will be forced to take on those duties in addition to his already overwhelming portfolio and management duties.

10. (C/NF) In 2008 the MFA undertook an effort to produce a long-term foreign policy strategy for the GOI. In a paper entitled “Rapporto 2020” the MFA outlined its strategic vision for the next decade and a half. The document notes that geostrategic realities have created the need for Italy to adapt its foreign policy with regard to Russia and calls for Italy to seek ‘a privileged relationship’ with Moscow in order to press its overwhelmingly preeminent bilateral concern: energy.

Energy Becomes Key Bilateral Issue

11. (C/NF) With virtually no domestic energy reserves, no domestic nuclear power, and an ambitious parastatal energy company, Italy’s key bilateral concern with Russia has become the quest for long-term guarantees of energy supplies. The GOI has supported ENI and other energy giants’ efforts to create a unique partnership with Russia and Gazprom for long-term cooperation. ENI, Italy’s most prominent energy parastatal, wields immense political power; its business strategy has focused on complicated geopolitical environments generally perceived as overly risky by many of its International competitors. ENI’s lobbying efforts vis-(-vis the GOI are better funded than most government offices. It hosts one diplomatic advisor assigned from the MFA. Going by press reports alone, we would judge that PM Berlusconi grants its director, Paolo Scaroni, as much access as he does his own FM.xxxxxxxxxxxx. Members of political parties on both sides of the aisle have told us that ENI is one of the leading financial contributors to Italy’s many think-tanks – many of which produce public diplomacy discussions and events on the importance of Italy-Russia relations. At one such event in 2007, a conference on Central Asia, representatives from ENI and Edison were given 30 minutes each to speak, while the four Foreign Ministers and Deputy Foreign Minister of five Central Asian former Soviet states were all crammed into a single hour. There is even suspicion that ENI maintains journalists on its payroll.

12. (C/NF) Members of political parties from both sides of the aisle have told us that ENI does not limit its dialogue with the government to energy issues. One member of the opposition center-left PD party told poloffs that ENI’s presence in Russia exceeds that of Italy’s understaffed embassy. While it is unclear how much policy coordination occurs between ENI and the Russian political structure, the same PD party members noted that ENI had as much contact with Russian political and economic leaders as the embassy, if not more, and political messages were frequently passed through such commercial/economic channels. Back in Rome, ENI maintains strong contacts with members of the Italian parliament – something the MFA does not do (apart from requested briefings to members of the foreign affairs committees).

An Energy Policy without the Policy

13. (C/NF) ENI and other energy giants have managed to press their case quite effectively within the highest ranks of the GOI. Italian leaders on both sides of the aisle seem strangely unconcerned about dependence on Russian energy. They point out that Italy depended on Russian coal during the darkest days of the Cold War with no dire consequence. Italians are also lulled into complacency by the fact that geographic proximity to North African resources means that they are far less dependent on Russia than are the Germans or the former Eastern bloc countries.

14. (C/NF) During a March 2008 visit to ENI Headquarters embassy staff were given a briefing on ENI’s Russian Energy operations (available on Embassy Rome’s Classified web site). ENI’s view of the European energy situation was disturbingly similar to that of GAZPROM and the Kremlin, and at times laced with rhetorical flourishes reminiscent of Soviet-era double-speak: according to ENI, the real threat to Western Europe’s energy security is not Russia –it is Ukraine. The real solution to Europe’s energy insecurity, according to ENI, lies in more direct pipeline connections to Russian gas fields and a need for pipelines that do not go through Ukraine – the rationale for the South Stream and Nord Stream pipelines (ref b). ENI’s engineering arm hopes to construct both pipelines using experience gained in the construction of the Blue Stream pipeline that connects Russia and Turkey under the Eastern portion of the Black Sea. Additionally, ENI seeks full partnership with Russia on the South Stream project. GOI and ENI contacts have reported that the company was having trouble getting a firm Russian commitment to this South Stream partnership. The plummeting price of hydrocarbons may have reduced the economic incentives for this project, but many analysts believe that Russian geo-strategic concerns will trump business considerations on this project. The most recent Russia- Ukraine gas dispute seems to have revived interest in the Nord Stream and South Stream projects, especially among those who see Ukraine as the problem.

15. (C/NF) Italy is not totally blind to the dangers of its dependence on Russia, however, and it is taking some steps that may prevent an increase in the percentage of their energy that they get from Russia. Upon returning to power, Berlusconi announced that he would return the country to nuclear power. While the GOI seems serious, this project will require eye-popping expenditures, long- term commitment, and the resolution of thorny environmental problems. Some fear that the nuclear project was launched in response to an oil price of $140 per barrel, and wonder if the Italian commitment to nuclear power will recede if oil prices stay low. Italy is also increasing its use of Liquid Natural Gas and is finishing work on a new terminal in the Northern Adriatic. While less-than-enthusiastic about the EU’s complex Nabucco pipeline, the GOI seems to be supporting the smaller-scale Turkey-Greece-Italy pipeline project designed to bring Caspian gas to Western Europe. Edison, a French company with Italian roots, is trying to determine if it should commit to this project. While Azeri gas supplies and Turkey’s willingness to allow the gas to flow West are unresolved issues, Edison believes its project has a chance of succeeding because unlike Nabucco, it is small enough — it believes — not to provoke opposition from Russia. The GOI — especially powerful Minister for Economic Development Scajola — supports the TGI project (in fact GOI officials complain if the U.S. sometimes seems to imply that Nabucco should have priority). There is fear that a successful launch of South Stream would — by promising to meet demand – doom both South Stream and Nabucco.

A Foreign Policy Designed to Deny Russia Nothing

16. (C/NF) The combination of historical ideological sympathy, energy dependence, lack of institutional influence, and a close personal relationship between Berlusconi and Putin serve to provide Russia with an apparently trusted ally, overtly willing to work overtime within the EU on Moscow’s behalf. Russia can count on Italy to support its efforts to remove irritants in its relations with the West, including: pressure on/within OSCE to overlook Russia’s lack of compliance with its legally binding Istanbul commitments on frozen conflicts, weak support or even opposition to NATO efforts to build closer ties to Georgia and Ukraine, – weak initial support for international efforts to recognize Kosovo’s independence, – unhelpful comments on U.S. bilateral Missile Defense plans with Poland and Czech Republic, – support for Russian President Medvedev’s plans to redefine European security architecture to undermine OSCE and NATO. – support for Russian efforts to undermine EU and US Energy security initiatives for Europe.

17. (C/NF) In the past, Berlusconi’s highly-prized personal relationship with U.S. President Bush was an important counterweight to Russian influence, but many pro-U.S. Italian party officials on both sides of the aisle have worried to us that Bush’s departure could tempt Berlusconi to move closer to Russia. For his part, Berlusconi has publicly stated that he would like to become a bridge between the U.S. and Russia and to “educate a young and inexperienced new American president” on how to deal with the Russians. If the past is any guide, this will likely mean an intensified effort to press the Russian agenda with the U.S.

Mitigating the Problem: Pushing Back on a Corrosive Influence

18. (C/NF) To tackle the problem head-on, Post has deployed a robust diplomatic and public affairs strategy targeting key figures inside and outside government. Our aim is two-fold: educate our interlocutors more profoundly on Russian activities and thus the context for U.S. policy, as well as build a counter- weight of dissenting opinion on Russia policy, especially within Berlusconi’s political party. . Since the beginning of the summer, wit Berlusconi’s return to power and the Georgia crisis, we have been engaging with GOI leaders aggressively at all levels. Pol, PA and Econoffs have engaged party members, GOI contacts, think tanks and even press to provide an alternative narrative to the Berlusconi insistence that Russia is a democratic and stable country that has been provoked by the West. The effort seems to be paying off. The opposition has begun taking jabs at Berlusconi by portraying him as choosing the wrong side of the debate. Some in the PdL have begun to approach us privately to say that they would like greater dialogue with us on the Russia issue, and have indicated their interest in challenging Berlusconi’s giddiness about Putin. While we have a long way to go in changing the narrative, unfortunately, we have help – in the form of a PM who appears increasingly to be the mouthpiece of Putin.

19. (C/NF) The bilateral relationship between the U.S. and Italy is excellent and encompasses tremendous cooperation on many levels and on many fronts. Unfortunately, Berlusconi efforts to “repair” the relationship between the West and Russia (which as he told the Ambassador in their farewell meeting on February 23, “sticks in my gut as a large undigested mass”) are threatening his credibility and becoming a real irritant in our relationship. We can help get him back on the right track by sending him a clear signal that the U.S. does not need an interlocutor for its important bilateral relationship with Russia and that his insistence on undermining esisti structures and channels based on common interests and shared values within the alliance in exchange for short term stability is not a strategy Washington wishes to pursue.

09ROME649

SCENESETTER FOR ITALIAN PM BERLUSCONI’S JUNE 15VISIT TO WASHINGTON

Classified By: Elizabeth L. Dibble, Charge d’Affaires.

1. (C/NF) Mr. President, your meeting with Italian PM Silvio Berlusconi comes at a time when his closest advisors fear Italy is losing the credibility and influence that it enjoyed in Washington under the previous U.S. administration. In fact, while Italy has been a stalwart partner and participant in nearly every U.S.-led security operation around the world since the end of the Cold War, domestic political foibles and economic malaise are diluting its international influence. Italy continues to support our efforts in Afghanistan, Lebanon, Iraq, and the Balkans, but its diplomatic, economic and military institutions, which the Berlusconi government and its predecessors have starved for resources, are sorely stretched. Berlusconi and his government have tried to compensate for Italy’s failure to invest in its instruments of national power by presenting Italy as a mediator and interlocutor with difficult actors on major international issues. This self-appointed role has sometimes complicated international efforts. On Iran, for example, Italy’s role under the previous government gave Tehran the impression that the international community was divided. More recently, GOI actions have provided a European platform for Russia’s efforts to challenge NATO security interests in Europe. Berlusconi will certainly present himself as the best hope for moderating Russian behavior and will seek a signal from you that he has a mandate to speak on the West’s behalf. He will also seek to use Italy’s G8 presidency to address issues far beyond the scope and effectiveness of the organization. We should discourage both instincts. Italy has an important voice in the Euro-Atlantic community, but its efforts have proven constructive only when undertaken in coordination with the U.S. and other key allies.

Berlusconi the Politician

2. (C/NF) Our relationship with Berlusconi is complex. He is vocally pro-American and has helped address our interests on many levels in a manner and to a degree that the previous government was unwilling or unable to do, since his return to power last spring as well as in his previous turns in government. In his first 90 days in office, he approved a controversial U.S. base expansion that had been halted by bureaucratic inaction and anti-American political opposition; eliminated caveats on Italian troops in Afghanistan; and allowed us to base two of three AFRICOM component commands in Italy. At the same time, he has criticized Missile Defense, NATO enlargement and support for Kosovo’s independence as American provocations of Russia. He claimed Russian PM Putin’s military push into Georgia in August 2008 was necessary to end the bloodshed of innocents caused by Georgian President Saakashvili. He displays an overweening self-confidence born of stable and strong political popularity that has made him deaf to dissenting opinion. The strict control he exercises over his government and party inhibits his staff from giving him unpleasant messages. His unorthodox governing style, coupled with his frequent verbal gaffes and high-profile scandals (including public bickering with his wife about his alleged philandering), have caused many, including some inside the U.S. government, to dismiss him as feckless, vain, and ineffective as a modern European leader.

3. (C/NF) His shortcomings notwithstanding, marginalizing Berlusconi would limit important cooperation with a key ally.  Berlusconi is one of Europe’s most enduring politicians whose popularity in Italy will guarantee that he will influence Italian politics for many years still to come. He has arrested the trend of weak, short-lived Italian governments that has plagued this country since the end of the Second World War. When successfully engaged, he has shown the willingness to adopt policies, however unpopular, in line with ours — including support for an expanded NATO role in Afghanistan and Turkey’s membership in the EU. When ignored, he seeks to carve out a visible, international, and frequently unhelpful role for himself. Dealing with Berlusconi, therefore, requires a careful balance of close coordination with him and his key advisors while avoiding giving the impression that he can speak on our behalf with many of the world’s difficult actors.

4. (C/NF) Italy held elections for the European Parliament on June 6 and 7, which reaffirmed Berlusconi’s People of Liberty (PDL) party as Italy’s largest party, reaching 35 percent, well ahead of the main opposition Democratic Party’s 26 percent. While Berlusconi does not have a competitive rival in the center left, his party missed the 40 percent mark that it was aiming for, and witnessed the growth of xenophobic coalition ally Northern League (LN). PDL is a personality-driven party, whose members tell us that the ideology is little more than “Berlusconismo.” The missed target of 40 percent can be attributed to an over-ambitious Berlusconi, as well as the turnout-depressing effects of weeks of personal attacks by the center left in the runup to the election that included allegations of fiscal and sexual impropriety. An enduring result of the election will be the heightened competition between PDL and LN, who now dominate Italian politics. LN’s tough stands on security and against immigration have won broad approval, even as Berlusconi has tried to stem the flow of PDL voters to LN by descending to the anti-immigrant rhetoric usually favored by the Northern League. Additionally, after this mild electoral setback, we can expect Berlusconi to use his White House meeting and his hosting of the G8 to underscore to Italians the important figure he cuts on the world stage.

Economic Crisis

5. (C) Prudent (some would say stodgy) banking practices allowed Italy to avoid the global financial sector meltdown. Italy’s banks simply did not engage in sub-prime lending, and they did not buy the toxic assets that caused so much trouble in the U.S. and elsewhere. But Italy has not been able to avoid the pain of the worldwide recession that has followed the financial crisis. Italy’s economic growth rate — which was relatively low even before the crisis — has dropped precipitously owing to sharp contractions in its export markets and falling domestic demand. Unemployment is expected to exceed eight percent this year and to rise further in 2010. Government tax revenues are, not unexpectedly, off sharply. Italy’s already high level of government debt and the debt ceilings that come with EU membership significantly limit the government’s ability to provide fiscal stimulus for the economy.

G8

6. (C/NF) Berlusconi’s stewardship of his G8 Presidency has been marked by a proliferation of Ministerial and sub-ministerial meetings coupled with a last-minute change of summit venue from Sardinia to the earthquake-stricken city of L’Aquila that took even his Sherpa by surprise. He and his cabinet tend to regard Italy’s G8 year more as an opportunity to curry favor with G8 outsiders such as Egypt, Spain, and Libya than as a tool to address the world’s problems. However, his desire to prevent the G8 from taking a back seat to the G20 on his watch has driven an ambitious agenda that may make useful contributions on climate change, Africa, development, and food security. He will be eager to work with you to build a legacy of G8 deliverables that will bear the Italian label. The Major Economies Forum meeting during the G8 summit, which will include the leaders of 17-plus countries that emit over 80 percent of global emissions, will be an important chance to mobilize high-level consensus in the run-up to the December UN climate change talks in Copenhagen.

Guantanamo Detainees

7. (C/NF) Berlusconi welcomed your decision to close Guantanamo, and has publicly and repeatedly underscored Italy’s desire to support the move by taking detainees. FM Frattini recently outlined for AG Holder the efforts Italian officials have been making within the EU to negotiate a common EU framework that will open the door to individual country agreements with the U.S. While the junior partner in Berlusconi’s coalition opposes taking any detainees, Berlusconi has made it clear that he views this as a moral commitment to support the U.S.

Russia

8. (C/NF) Dependence on Russian energy, lucrative and frequently nontransparent business dealings between Italy and Russia, and a close, personal relationship between Berlusconi and Putin have distorted the PM’s view to the point that he believes much of the friction between the West and Russia has been caused by the U.S. and NATO. Berlusconi believes he, acting as a mediator, can restore a spirit of dialogue and cooperation between Europe, the U.S. and Russia, but largely on Russia’s terms, through indefinitely postponing NATO’s outreach to Ukraine and Georgia, diluting the EU’s efforts to promote democracy in Belarus, and undermining OSCE’s important role in promoting human and democratic values across the whole of Europe. Berlusconi has publicly proposed to mediate your relationship with Russian President Medvedev and is hoping you will give him a signal, however small, that he has your blessing to do so. Instead, you can let him know that we believe that issues of security that affect the transatlantic community should be addressed by the Alliance at large, and that the U.S. is not prepared to sacrifice values in exchange for short-term stability predicated on Russian promises of good behavior. And we will react — and expect others who share these values to do so as well — when Russia crosses a red-line, for instance in threatening the sovereignty of neighboring states.

Energy

9. (C/NF) Berlusconi’s close personal ties with Putin and the very strong corporate ties between Italian energy parastatal ENI and Russia’s Gazprom often put Italy squarely at odds with USG efforts to reduce Europe’s dependence on Russian energy. For example, the Italian government is deeply ambivalent about energy projects that would help Europe diversify its energy imports, while at the same time it is supportive of other projects that would increase Europe’s Russian energy dependency. ENI, 30-percent owned by the Italian Government, often dictates GOI energy policy and uses its influence, through the GOI, to block EU energy market liberalization plans. Italy is taking some steps, however, in the right direction, by supporting energy projects that will diversify its own energy sources. It would be helpful if you could raise with Berlusconi long-standing USG concerns about European energy security, emphasizing that increasing the flow of Russian gas around Ukraine is not the same as a policy seeking a true diversity of energy sources, routes and technologies.

10. (C) The Berlusconi Government is pursuing plans to bring back nuclear power to Italy. U.S.-based companies Westinghouse and GE face stiff competition from foreign rivals, particularly France, whose governments are heavily lobbying the GOI. A word to Berlusconi that the U.S. expects this to be a fair and transparent competition is critical if U.S. firms are to have a fair chance to bid for Italian nuclear energy projects.

Iran

11. (C/NF) With Italy frustrated by its exclusion from the P5-plus-1 negotiating circle, Berlusconi will highlight Italy’s would-be role as an interlocutor between the West, Israel and Iran, claiming excellent relations with all parties involved. He may also push for the U.S. to drop the P5 1 framework altogether. Italian officials were thrilled by your commitment to embark upon direct diplomatic engagement with Iran, but cannot resist the impulse to try to be “present at the creation.” FM Frattini has worked strenuously to lock in high-level Iranian attendance at the June 26-27 Afghanistan-Pakistan Outreach meeting, hoping thereby to play host to the first U.S.-Iranian ministerial encounter in decades.

Libya

12. (C/NF) Berlusconi has continued Italy’s policy of developing an expanded relationship with Libya, largely in order to stem the tide of irregular migration from Libyan shores, but also to gain advantageous access to Libya’s oil reserves for Italian firms, mainly ENI. As follow-up to the 2008 Libya-Italy Friendship Treaty — which committed Libya to sterner measures to deter irregular migrants from entering Italy from its shores, but also offered 5 billion USD in development assistance — Libyan leader Qadhafi will pay an historic first official visit to Rome June 10-12, just before Berlusconi’s Washington visit. As the current African Union President, Qadhafi will be at the G8 Summit in L’Aquila and we anticipate Berlusconi may lobby you to meet with the Libyan leader during your visit.

A Partner in Security

13. (C/NF) Berlusconi has maintained a significant military commitment in Afghanistan (2,600 troops, mostly in Italy’s Regional-Command West), but has dropped from fourth- to sixth-largest ISAF contributor as other countries like France and Canada have augmented their troop levels. At Stasbourg-Kehl, his government pledged modest increases to cover election security which, if made permanent, would put Italy back in the top tier of ISAF contributors. He has also  supported the creation of the NATO Training Mission in Afghanistan, doubling the number of Carabinieri police trainers to over 100. Italy has been an anemic contributor to international aid efforts in Afghanistan and Pakistan and has cut overall foreign assistance by more than 60 percent in this year’s budget. However, Berlusconi knows this is a priority area for the U.S. and will likely respond positively if you press him to do more in the region.

14. (C) Our shared security interests with Italy go beyond Afghanistan. U.S. facilities in Italy provide unmatched freedom of action and are critical to our ability to project stability into the Mediterranean, Middle East and North Africa. We have 15,000 U.S. military on six Italian bases and these installations host some of our most advanced capabilities deployed outside the U.S. Our bases and activities out of Italy are not uniformly popular, but PM Berlusconi, in this government as in his last, has made preserving this security relationship a priority, and the GOI has invariably come through on our top requests, despite domestic political risks. The GOI has approved the expansion of our base at Vicenza to consolidate the 173rd Airborne Brigade, the deployment of the USAF Global Hawk UAV in Sicily, and the establishment of AFRICOM Army and Navy Component Commands on Italian soil. Italy’s leadership in other overseas missions helps us concentrate our forces on our top priorities. In addition to its troops in Afghanistan, Italy currently has 2,300 in the Balkans, 2,400 in Lebanon, and is the leading contributor to the NATO Training Mission in Iraq.

15. (C/NF) The robust U.S.-Italian relationship provides us with major national security benefits in our military missions overseas, our own power projection, and on a broad law enforcement agenda, but the Prime Minister is an erratic steward. It might be tempting to dismiss Berlusconi as a frivolous interlocutor, with his personal foibles, public gaffes and sometimes unpredictable policy judgment, but we believe this would be a mistake. Despite his faults, Berlusconi has been the touchstone of Italian politics for the last 15 years, and every indication is that he will be around for years to come. When we are able to successfully engage him in pursuit of our common objectives, he has proved an ally and friend to the United States. He respects and admires the U.S., and is eager to build a strong and successful relationship with you.

09ROME1187

ITALY: SCANDALS TAKING TOLL ON BERLUSCONI’S PERSONAL AND POLITICAL HEALTH

Classified By: Ambassador David H. Thorne.

1. (C/NF) SUMMARY. Though PM Berlusconi’s parliamentary majority is strong, and nobody is yet willing to predict his political demise, a growing list of scandals, adverse court decisions and health issues have weakened him and led some erstwhile Berlusconi allies to begin hedging their bets on his political longevity. In a souring political environment, talk of conspiracy theories often trumps real political debate and distracts the Berlusconi government from pursuing, or even developing, a coherent political agenda. END SUMMARY.

PRIVATE MATTERS WEIGHING ON BERLUSCONI

2. (SBU) After a long hot spring and summer of personal and professional scandals, PM Berlusconi, returning from the August recess appeared briefly rejuvenated by a successful G8 summit and continued popularity with his base. However, the first of several blows fell on October 7 when a civil court ruled that the Berlusconi family’s flagship business, Finnivest, must pay a rival company Euro 750 million for damages occurred as a result of a Finnivest lawyer bribing a judge in a decision involving both companies. Two days later, the Italian Constitutional Court concluded that one of the Berlusconi government’s first pieces of legislation, a 2008 law postponing criminal investigations against Berlusconi and other senior officials, was unconstitutional (REFTEL). As a result, Italian magistrates have, once again, taken up several long-standing criminal cases against Berlusconi, with one case due to resume as early as November.

3. (C/NF) Two officials XXXXXXXXXXXX in separate conversations with the Embassy, recently described the Prime Minister in strikingly similar terms. XXXXXXXXXXXX told the Ambassador October 23 that Berlusconi is “physically and politically weak,” describing the normally hyperactive Berlusconi as “not energetic.” XXXXXXXXXXXX told an Embassy political officer October 22 that, “we are all worried about his health,” noting that Berlusconi has fainted three times in public in recent years and that his medical tests have come back “a complete mess.” XXXXXXXXXXXX said Berlusconi’s frequent late nights and penchant for partying hard mean he does not get sufficient rest. The Italian press reported October 27 that Berlusconi has a mild case of scarlet fever, which he reportedly contracted from his grandchild. (Note: Berlusconi dozed off briefly during the Ambassador’s initial courtesy call in September, and looked distracted and tired at an October 19 event attended by the Ambassador. End note.)

4. (C/NF) XXXXXXXXXXXX termed Berlusconi overwhelmed with private concerns. He noted that Berlusconi has felt alienated from his family since his wife, Veronica Lario, set off a public uproar by publishing an open letter last spring asking for a divorce and accusing the 74-year old PM of consorting with minors. Lario is reportedly asking for fifty percent of Berlusconi’s personal assets plus Euro 100 million in yearly support. At the same time, according to XXXXXXXXXXXX, Berlusconi is afraid he will need to liquidate important business assets to make the Euro 750 million payment ordered by a civil court. XXXXXXXXXXXX added that a Palermo-based mafia investigation involving XXXXXXXXXXXX Berlusconi ally and confidant already convicted of ties to organized crime could turn into a damaging public spectacle.

LEADING TO CONSPIRACY THEORIES

5. (C/NF) A number of Embassy contacts have described a political environment dominated by conspiracy theories. In the wake of the two court rulings, Berlusconi accused President of the Republic Napolitano of working against him and lashed out emotionally against the judicial system, in general. XXXXXXXXXXXX told the Ambassador that Berlusconi’s outburst had led to “frosty” relations with Napolitano and said the episode has made him appear weak. Several PdL officials have hinted darkly to us that “institutional forces” are trying to unseat Berlusconi. (Note: In Italian political parlance, “institutional forces” can serve to mean one of many groups operating and wielding influence behind the scenes: business groups, intelligence services, freemasons, the Vatican, the magistracy, the United States, etc. While Italians are notably conspiracy-minded, their paranoia — at least as far as Italian domestic politics go — has historically been well-founded. End note.)

6. (C/NF) XXXXXXXXXXXX confided that Berlusconi believes the Italian intelligence services might have deliberately entrapped him in his alleged affair involving a minor. During XXXXXXXXXXXX’s conversation with the Embassy political officer, Berlusconi called XXXXXXXXXXXX to confide that an arrest was imminent of four Italian Carabinieri believed to be blackmailing the Lazio regional governor with a sex-tape. (Note: The story of the Lazio governor and a transsexual prostitute exploded in the press a few days later. End note.)  XXXXXXXXXXXX told the Embassy officer that this case has convinced Berlusconi that he cannot trust his own intelligence services. Separately, on October 21, Northern League leader Umberto Bossi, commenting on Berlusconi’s troubles, told the Ambassador that organized crime figures had probably set the trap for Berlusconi on some of the sex scandals, but that nobody denies that Berlusconi willingly went for the bait.

7. (C/NF) In a replay of the foreign press-induced scandals of last spring and summer, a London Times article accusing Italian troops in Afghanistan of paying off Taliban insurgents sparked speculation in and out of the GoI that the USG might have leaked the information to discredit the Berlusconi government. Moreover, it is not uncommon these days for PdL politicians to speculate– via the press or even directly to Embassy officers– that the new U.S. administration would like to see the Berlusconi government fall; some even believe the USG is actively undermining Berlusconi. The Ambassador recently probed  XXXXXXXXXXXX and Foreign Minister Franco Frattini to determine whether they shared this belief; both averred that they thought Berlusconi’s relationship with the US administration was strong.

AND PALACE INTRIGUE

8. (C/NF) One of Berlusconi’s would-be heirs, Chamber of Deputies President Gianfranco Fini, picked one of his periodic fights with Berlusconi in September, ostensibly over euthanasia and living wills, but the real issues were Berlusconi’s non-democratic leadership style inside the party and the growing weight of the Northern League (LN). More recently, the powerful Minister of Economy, Giulio Tremonti, has openly challenged Berlusconi on fiscal policy, leading to talk simultaneously of his possible resignation as well as the possibility he was seeking to eventually succeed Berlusconi. In response to a direct question from the Ambassador,  XXXXXXXXXXXX said there was a small, but unlikely, possibility the government could fall. XXXXXXXXXXXX told us Tremonti, Fini and former Minister of Interior Giuseppe Pisanu are laying the groundwork for a post-Berlusconi succession struggle but felt the government remained stable for the time being.

AS WELL AS ERRATIC DECISIONS

9. (C/NF) Media mogul Berlusconi might be gaffe-prone when speaking off the cuff, but he has historically shown himself astute at strategic messaging. Those skills were noticeably absent in a recent incident which provoked both criticism and head-scratching from Berlusconi friend and foe alike. Ahead of a three-day trip to Russia to celebrate Vladimir Putin’s birthday in mid-October, Berlusconi put out a press line that the visit was a “strictly private affair.” This announcement was met with disbelief and some mockery. Adding to the mystery, however, the day before his departure, Berlusconi canceled his participation in the state visit of Jordan’s King Abdullah of Jordan, staying in Milan with the explanation that he was feeling under the weather. Berlusconi, who prides himself on his personal relationships with key Middle East interlocutors thus, unavoidably, left the impression that, in choosing private fun over statecraft, he was husbanding his flagging energies for a blow-out party at Putin’s private dacha. With the further news that Berlusconi was accompanied on the trip solely by Valentino Valentini, an unofficial intermediary/bagman who serves as Berlusconi’s interpreter, Italy’s political class openly questioned whether Berlusconi was going to Russia principally because the scrutiny of his private time by Italian and foreign photographers had made parties in Italy too risky for the time being.

COMMENT

10. (C/NF) Sex scandals, criminal investigations, family problems and financial concerns appear to be weighing heavily on Berlusconi’s personal and political health, as well as on his decision-making ability. It is too early to begin speculating about Berlusconi’s political demise, and Berlusconi has a well-known knack for rebounding. However, though most are trying hard not to be too obvious about it, some of Berlusconi’s own lieutenants have apparently decided it is not too early to begin laying the groundwork for “il dopo,” as Italians call the potential post-Berlusconi era. In this souring political environment, conspiracy theories have all but supplanted serious political debate. Septel will address the implications of Berlusconi’s fortunes on how we do business with the government.

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