TWO DEMONSTRATIONS DOWN, ONE GENERAL STRIKE TO GO

UNCLAS SECTION 01 OF 05 ROME 001744

SIPDIS

E.O. 12958: N/A
TAGS: ELAB PGOV PGOV PGOV PGOV PGOV ITALY'>IT ITELAB ITELAB ITELAB ITELAB
SUBJECT: TWO DEMONSTRATIONS DOWN, ONE GENERAL STRIKE TO GO

REFS: A) 01 ROME 3893; B) 01 ROME 6301; C) ROME 1421;
D) ROME 1462
UNCLASSIFIED

PAGE 02 ROME 01744 01 OF 05 081356Z

SUMMARY
--------------

1. STRIKES AND LABOR DEMONSTRATIONS IN ITALY ARE MOUNTING.
WORKING HOURS LOST TO STRIKES IN JANUARY-FEBRUARY WERE NEARLY
1,500 PERCENT HIGHER THAN IN COMPARABLE MONTHS OF 2001.
TRADE UNION CONFEDERATION CGIL ORGANIZED A RECORD MILLION-
PLUS ANTI-GOVERNMENT PROTEST IN ROME 3/23, FOLLOWED 3/26 BY
ITALY-WIDE TRADE UNION RALLIES AGAINST TERRORISM. OVERCOMING
DIFFERENCES, ALL FOUR NATIONAL TRADE UNION CONFEDERATIONS ARE
PLANNING A GENERAL STRIKE 4/16 TO PROTEST PROPOSALS FOR GOI
LABOR LAW REFORM. CONFRONTATION SEEMS TO BE IN THE AIR,
REMINISCENT OF TURMOIL THAT HELPED BRING DOWN THE FIRST
BERLUSCONI GOI IN 1994. MEANWHILE, THE RED BRIGADES' 3/16
ASSASSINATION OF LABOR MINISTRY ADVISER MARCO BIAGI ADDS
FURTHER UNCERTAINTY - RECALLING THE TERRORISM-PLAGUED "YEARS
OF LEAD" OF THE 1970'S-1980'S.


2. BUT SIMILARITIES NOTWITHSTANDING, TIMES HAVE CHANGED.
CURRENT PROBLEMS STEM FROM FUNDAMENTAL SHIFTS IN ITALIAN
SOCIETY. ITALY'S WELTER OF SHORT-LIVED, SHIFTING COALITION
GOVERNMENTS HAS ENDED. A STABLE ALLIANCE THAT HAS EMERGED ON
THE CENTER-RIGHT IS BENT ON USING ITS PARLIAMENTARY MAJORITY
TO ENACT LONG-DELAYED REFORMS. "BIPOLARISM" IS INCOMPLETE ON
THE CENTER-LEFT, HOWEVER, WHERE PREVIOUS POLITICAL ALLIANCES
ARE DECOMPOSING AND NO COHERENT OPPOSITION CAN CHECK THE
GOVERNMENT IN PARLIAMENT. WITH REGARD AT LEAST TO LABOR LAW
REFORM, THIS ROLE HAS BEEN TAKEN UP OUTSIDE THE PARLIAMENTARY
FORUM BY CIVIL SOCIETY'S STRONGEST INSTITUTION, THE 5.4
MILLION-MEMBER TRADE UNION CONFEDERATION CGIL. GOVERNMENT
MISSTEPS CONTRIBUTED TO A CLOSING OF LABOR'S RANKS AND THE
UNCLASSIFIED

PAGE 03 ROME 01744 01 OF 05 081356Z
TRANSFORMATION OF A MINOR ELEMENT IN ITS REFORM PROGRAM
("ARTICLE 18") INTO A TRANSCENDENT SYMBOL OF WORKER RIGHTS
FOR THE UNIONS AND, FOR THE GOI, ITS RIGHT/OBLIGATION TO
GOVERN.


3. THE EMERGING UNION/GOI CONFRONTATION INVOLVES NO
FUNDAMENTAL DIFFERENCES IN GOVERNING PHILOSOPHY OR PROGRAM.
EACH SIDE SUPPORTS DEMOCRACY, MAJORITY RULE, HUMAN RIGHTS,
AND ECONOMIC PROGRESS. FOR THE MOMENT, HOWEVER, THE
CONTENDERS MUST WRESTLE WITH THE CONSEQUENCES OF
PARLIAMENTARY DEMOCRACY'S SHORTCOMINGS AND THOSE OF ITALIAN
SOCIETY'S HIERARCHICAL, NON-EGALITARIAN HERITAGE. END
SUMMARY

PARLIAMENTARY DEMOCRACY: A RETURN TO DEMOCRATIC CENTRALISM
-------------- --------------

4. ONCE UPON A TIME ITALY WAS GOVERNED BY SHORT-LIVED
GOVERNMENTS, COMPOSED OF SHIFTING COALITIONS, THAT HAD A
FACTION-RIDDEN CHRISTIAN DEMOCRATIC (DC) PARTY AT ITS CENTER.
WITH SOME VARIATION, 52 SUCH EXPERIENCES TOOK PLACE BETWEEN
THE REPUBLIC'S PROCLAMATION IN JUNE 1946 AND "BIPOLARISM'S"
EMERGENCE IN MAY 1996. IN SEVERAL CASES, A MINORITY DC
GOVERNED ALONE, TACITLY SUPPORTED BY ALLIES NOT FORMALLY PART
OF THE GOVERNMENT. ALTHOUGH RESPONDING TO PRAGMATIC AND
PERSONALITY CONSIDERATIONS, THE PARTIES PRETENDED TO BE
MOTIVATED BY PARTICULAR IDEOLOGIES - CATHOLICISM, SOCIALISM,
LIBERALISM. THE IDEOLOGIES MADE DECISION-MAKING DIFFICULT,
IF NOT IMPOSSIBLE, FOR GOVERNMENTS THAT RISKED BREAKUP OVER
INTRACTABLE ISSUES. THE CONTINUOUS FORMATION, BREAKUP, AND
RECOMPOSING OF GOVERNMENTS LEFT CITIZENS LITTLE OPPORTUNITY
TO CONTROL THE COMPLEXION OR POLICIES OF GOVERNMENT THROUGH
UNCLASSIFIED

PAGE 04 ROME 01744 01 OF 05 081356Z
THEIR EXERCISE OF THE BALLOT.


5. THAT PERIOD HAS ENDED. IN THE EARLY 1990'S, THE PARTIES
THAT HAD FORMED 50 POST-WWII REVOLVING DOOR GOVERNMENTS
IMPLODED UNDER THE PRESSURE OF JUDICIAL "CLEAN HANDS"
CORRUPTION INVESTIGATIONS. A NEW PARTY (FORZA ITALIA - FI),
FOUNDED BY BUSINESSMAN SILVIO BERLUSCONI, EMERGED AS THE
WINNER OF MAY 1994 ELECTIONS. FI WAS NOMINALLY CENTER-RIGHT
AND DREW MUCH OF ITS SUPPORT FROM FORMER DC VOTERS. IT WAS
NON-IDEOLOGICAL, HOWEVER, PROJECTING ITS FOUNDER'S IMAGE OF
MODERNIZING, BUSINESSLIKE PRAGMATISM. BERLUSCONI FORMED A
GOVERNMENT WITH HELP FROM ANOTHER PRAGMATIST, GIANFRANCO
FINI, WHO SOUGHT TO RESHAPE FASCISM'S POST-WWII HEIR (THE
MSI) INTO A CONSERVATIVE, BUT CONTEMPORARY PARTY (THE
ALLIANZA NAZIONALE - AN). STILL SHORT OF A PARLIAMENTARY
MAJORITY, BERLUSCONI WAS FORCED TO TURN TO THE SOMETIME
SECESSIONIST NORTHERN LEAGUE (LN),LED BY MAVERICK UMBERTO
BOSSI. THE COMBINATION PROVED UNSTABLE, AND BERLUSCONI'S
FIRST ATTEMPT AT GOVERNING ITALY COLLAPSED SEVEN MONTHS AFTER
IT WAS FORMED.


6. LEFT-OF-CENTER PARTIES, LARGELY UNTOUCHED BY THE "CLEAN
HANDS" INVESTIGATIONS, BENEFITED FROM BERLUSCONI'S FAILED
1994 VENTURE. ROMANO PRODI FORMED A GOVERNMENT IN MAY 1996
THAT UNITED UNDER ONE UMBRELLA ALL MAJOR POLITICAL FORMATIONS
TO THE LEFT OF CENTER, WITH CRITICAL SUPPORT IN PARLIAMENT
FROM FAR-LEFT COMMUNIST RENEWAL (RC). PRODI'S GOVERNMENT

UNCLASSIFIED

UNCLASSIFIED PTQ7924

PAGE 01 ROME 01744 02 OF 05 081356Z
ACTION DRL-02

INFO LOG-00 NP-00 AID-00 A-00 CA-01 CCO-00 CEA-01
CIAE-00 COME-00 CTME-00 INL-00 DODE-00 ITCE-00 ANHR-00
WHA-00 SRPP-00 DS-00 EB-00 EXME-00 EUR-00 E-00
UTED-00 VC-00 FRB-00 OBO-00 H-01 TEDE-00 INR-00
ITC-01 LAB-01 L-00 VCE-00 M-00 AC-01 DCP-01
NSAE-00 NSCE-00 OCS-03 OMB-01 OPIC-01 OPR-01 PA-00
PC-01 PM-00 PRS-00 ACE-00 P-00 SCT-00 SP-00
IRM-00 SSO-00 STR-00 TEST-00 TRSE-00 USIE-00 USSS-00
R-00 PMB-00 DSCC-00 G-00 NFAT-00 SAS-00 /016W
-------------- 80AAD4 081356Z /38
R 081306Z APR 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 3151
INFO EUROPEAN POLITICAL COLLECTIVE
DEPT OF LABOR WASHDC
AMCONSUL FLORENCE
AMCONSUL MILAN
AMCONSUL NAPLES

UNCLAS SECTION 02 OF 05 ROME 001744

SIPDIS

E.O. 12958: N/A
TAGS: ELAB PGOV PGOV PGOV PGOV PGOV IT ITELAB ITELAB ITELAB ITELAB
SUBJECT: TWO DEMONSTRATIONS DOWN, ONE GENERAL STRIKE TO GO

DISTINGUISHED ITSELF BY EXERCISING SUFFICIENT INTERNAL
DISCIPLINE (ESPECIALLY FISCAL DISCIPLINE) TO QUALIFY ITALY
UNCLASSIFIED

PAGE 02 ROME 01744 02 OF 05 081356Z
FOR ENTRY INTO THE EUROPEAN MONETARY UNION (EMU). PRODI'S
GOVERNMENT ENDED IN OCTOBER 1998 WHEN RC WITHDREW ITS
SUPPORT. HIS WAS SUCCEEDED BY THREE FURTHER CENTER-LEFT
GOVERNMENTS, WHICH RESEMBLED DC PREDECESSORS IN THAT THEY
CHANGED OFTEN AND ACCOMPLISHED LITTLE. VOTERS REJECTED A
REPEAT CENTER-LEFT OPTION IN MAY 2001 ELECTIONS AND GAVE
BERLUSCONI'S FI A SOLID ENDORSEMENT.


7. THE FI-LED GOVERNMENT BERLUSCONI FORMED IN JUNE 2001
APPEARS STABLE, ENJOYING MAJORITIES IN BOTH PARLIAMENTARY
CHAMBERS EVEN WITHOUT THE VOTES OF UNPREDICTABLE LN ALLY
BOSSI. IN CONTRACT-WITH-AMERICA STYLE, BERLUSCONI CAMPAIGNED
FOR OFFICE ON THE BASIS OF AN ACTIVIST PLATFORM TO WHICH FI'S
POLITICAL ALLIES ALSO SUBSCRIBED. THE UNRESOLVED ISSUES
FACED WITHIN THE GOVERNMENT COALITION ACCORDINGLY CENTER MORE
ON QUESTIONS OF TACTICS AND TIMING THAN PROGRAM. POINTING TO
ELECTION RESULTS AND, AS POLLS REVEAL, HIS CONTINUING
POPULARITY BERLUSCONI SPEAKS OFTEN NOT ONLY OF HIS MANDATE TO
GOVERN BUT OF AN OBLIGATION TO USE HIS CHAMBER AND SENATE
MAJORITIES TO ENACT REFORMIST LEGISLATION. WHILE THE
GOVERNMENT DOESN'T IGNORE ITS BACK BENCH SENATORS AND MP'S,
GOI DECISION MAKING RESTS TODAY, PERHAPS MORE THAN AT ANY
TIME IN THE REPUBLIC'S HISTORY, IN THE HANDS OF A FEW, LIKE-
MINDED POLITICAL LEADERS.

PARLIAMENTARY DEMOCRACY: IMPLOSION ON THE CENTER-LEFT
-------------- --------------

8. ONCE UPON A TIME A DISCIPLINED, OPAQUE ITALIAN COMMUNIST
PARTY (PCI) DOMINATED THE LEFT PORTION OF THE POLITICAL
SPECTRUM AND, AT ITS PEAK, GARNERED ONE OUT OF EVERY THREE
VOTES CAST IN ITALIAN ELECTIONS. ALTHOUGH THE PCI WAS SPARED
UNCLASSIFIED

PAGE 03 ROME 01744 02 OF 05 081356Z
THE FALLOUT OF CLEAN HANDS INVESTIGATIONS, SEISMIC EVENTS
ELSEWHERE (END OF THE BERLIN WALL AND SOVIET EMPIRE'S
COLLAPSE) PROPELLED IT TO REFORM ITSELF. IN 1991 THE BULK OF
PARTY MEMBERS CONVERTED INTO A SOCIAL-DEMOCRATIC PARTY OF THE
DEMOCRATIC LEFT (PDS). HARD-LINE DISSIDENTS EXITED AND
FORMED COMMUNIST RENEWAL (RC). THAT GROUP IN TURN SPLIT IN
1995 AND AGAIN IN 1998 WHILE, ON THE PDS SIDE, EFFORTS TO
UNITE WITH OTHER LEFTIST GROUPS LED THE PARTY TO RENAME
ITSELF (1998) THE DEMOCRATS OF THE LEFT (DS). NOT ALL OLD-
LINE PCI ELEMENTS APPRECIATED THESE MOVES, AND FACTIONALISM
APPEARED IN A NEWLY TRANSPARENT PARTY THAT, IN SUBSEQUENT
ELECTIONS, LOST HALF ITS PUBLIC SUPPORTERS - IN MAY 2001, THE
DS WON BARELY 16 PERCENT OF THE VOTE.


9. MAY 2001 ELECTIONS DEALT SAGGING DS MORALE A FURTHER BLOW
WHEN A COLLECTION OF DS CENTRIST ALLIES, ALL SIGNIFICANTLY
SMALLER THAN THE DS, COALESCED BEFORE THE ELECTIONS (INTO THE
"DAISY") AND EMERGED WITH 14-PLUS PERCENT OF THE VOTE. THIS
DEVELOPMENT LEFT A DIMINISHING DS SUBJECT TO BOTH INTERNAL
STRIFE (SOME FACTIONS SAW SALVATION IN MOVING THE PARTY
FARTHER LEFTWARD, OTHERS IN AFFIRMING A MORE CENTRIST
VOCATION) AND COMPETITION FROM A RELATIVELY EQUAL CENTRIST
PARTNER IN LEADING THE OPPOSITION TO BERLUSCONI. ELECTION
LOSSES AND SQUABBLES AMONG DS AND DAISY LEADERS REVERBERATED
AMONG THE PARTIES' MEMBERS AND SYMPATHIZERS AND CULMINATED,
FEBRUARY 2, 2002, IN A DISASTROUSLY FAILED ANTI-GOI ROME
RALLY. BEFORE A DIMINUTIVE CROWD OF 5,000, A BEVY OF DS AND
DAISY LEADERS HEARD THEMSELVES DENOUNCED AS FAILURES BY FILM
DIRECTOR/DS ACTIVIST NANNI MORETTI, WHO CALLED ON THEM TO
STEP ASIDE.

UNCLASSIFIED

PAGE 04 ROME 01744 02 OF 05 081356Z

10. COMPOUNDING DS/DAISY LEADERS' MISFORTUNES, RANK-AND-FILE
SUPPORTERS ARE INCLINED TO SEEK INSPIRATION AND DIRECTION
OUTSIDE THE PARTIES' STRUCTURE. THE CGIL, WITH 5.4 MILLION
MEMBERS, IS ITALY'S LARGEST TRADE UNION CONFEDERATION. ONCE
SEEN AS THE PCI'S "TRANSMISSION BELT," ITS TRANSFORMATION
INTO A PROFESSIONAL, FULLY AUTONOMOUS TRADE UNION INSTITUTION
WAS COMPLETED UNDER CHARISMATIC SECRETARY GENERAL SERGIO
COFFERATI. THE EMERGENCE OF A UNITED, POWERFUL CENTER-RIGHT,
COMBINED WITH DISINTEGRATION ON THE CENTER-LEFT, CONVINCED
COFFERATI THE CGIL COULD NOT REMAIN A DISINTERESTED OBSERVER.
BREAKING RANKS WITH COLLEAGUE/COMPETITOR TRADE UNION
CONFEDERATIONS CISL AND UIL (WHICH OPPOSED BUT WERE PREPARED
TO DEAL WITH THE BERLUSCONI GOVERNMENT),THE CGIL UNDER
COFFERATI ASSUMED A DE FACTO, IF EXTRA-PARLIAMENTARY
OPPOSITION ROLE (REF A). WHILE FOCUSED ON INTRANSIGENTLY
OPPOSING ELEMENTS IN THE GOI'S LABOR LAW REFORM PACKAGE,
COFFERATI/THE CGIL VENTURED CRITICISM OF THE GOI ON MATTERS
AS VARIED AS THE GOVERNMENT'S EDUCATION POLICY AND ITS
ALLEGED "ANTI-EUROPEAN" OUTLOOK.

EUROPEAN DEMOCRACY: NOT ALL MEN (OR WOMEN) ARE CREATED EQUAL
-------------- --------------

11. ONCE UPON A TIME A KING AND QUEEN OCCUPIED THE ROME
PALACE FROM WHERE POPES HAD RULED MUCH OF ITALY. THEY SAT AT
THE TOP OF A SOCIAL/POLITICAL/ECONOMIC SYSTEM LADDER,
ACCOMPANIED BY PRINCES, PRINCESSES, COUNTS, BISHOPS, AND
OTHER BEINGS OF LESSER RANK AND PRIVILEGE. THEY PERPETUATED,

UNCLASSIFIED

UNCLASSIFIED PTQ7928

PAGE 01 ROME 01744 03 OF 05 081357Z
ACTION DRL-02

INFO LOG-00 NP-00 AID-00 A-00 CA-01 CCO-00 CEA-01
CIAE-00 COME-00 CTME-00 INL-00 DODE-00 ITCE-00 ANHR-00
WHA-00 SRPP-00 DS-00 EB-00 EXME-00 EUR-00 E-00
UTED-00 VC-00 FRB-00 OBO-00 H-01 TEDE-00 INR-00
ITC-01 LAB-01 L-00 VCE-00 M-00 AC-01 DCP-01
NSAE-00 NSCE-00 OCS-03 OMB-01 OPIC-01 OPR-01 PA-00
PC-01 PM-00 PRS-00 ACE-00 P-00 SCT-00 SP-00
IRM-00 SSO-00 STR-00 TEST-00 TRSE-00 USIE-00 USSS-00
R-00 PMB-00 DSCC-00 G-00 NFAT-00 SAS-00 /016W
-------------- 80AAE2 081357Z /38
R 081306Z APR 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 3152
INFO EUROPEAN POLITICAL COLLECTIVE
DEPT OF LABOR WASHDC
AMCONSUL FLORENCE
AMCONSUL MILAN
AMCONSUL NAPLES

UNCLAS SECTION 03 OF 05 ROME 001744

SIPDIS

E.O. 12958: N/A
TAGS: ELAB PGOV PGOV PGOV PGOV PGOV IT ITELAB ITELAB ITELAB ITELAB
SUBJECT: TWO DEMONSTRATIONS DOWN, ONE GENERAL STRIKE TO GO

IN SUM, A SYSTEM AND SET OF ATTITUDES IN ITALY THAT HAD
REMAINED MUCH THE SAME SINCE THE DAYS OF THE ROMAN EMPIRE.
UNCLASSIFIED

PAGE 02 ROME 01744 03 OF 05 081357Z


12. THE KING AND QUEEN LEFT IN JUNE 1946. THEY WERE VOTED
OUT BY POPULAR REFERENDUM. THE REST OF THE SYSTEM STAYED.
IT DIDN'T STAY UNALTERED, BUT CHANGES - PROVOKED BY MILITARY
DEFEAT AND FOREIGN OCCUPATION IN WORLD WAR II - CAME SLOWLY.
THE FIRST ARTICLE OF THE NEW REPUBLIC'S CONSTITUTION,
PROMULGATED IN DECEMBER 1947, PROCLAIMED ITALY A DEMOCRATIC
REPUBLIC, "FOUNDED ON LABOR." INDUSTRIAL GROWTH AND ECONOMIC
RECOVERY IN NORTHERN ITALY HELPED THE TRADE UNIONS GAIN
STRENGTH AND, WITH THE PASSAGE OF TIME, THEY BECAME SOLIDLY
ROOTED INSTITUTIONS. ALTHOUGH THE WORKERS THEY REPRESENTED
HAD NO CONTRACTUALLY EQUAL "EMPLOYERS" TO DEAL WITH, THE
UNIONS USED COLLECTIVE BARGAINING NEGOTIATIONS TO ACHIEVE
ECONOMIC GAINS FROM THEIR "GIVERS OF WORK" ("DATORI DI
LAVORO" IN ITALIAN). POLITICAL GAINS CAME AS A RESULT OF THE
UNIONS' LINKS TO POLITICAL PARTIES: CGIL AND PCI, CISL AND
DC, UIL AND THE SOCIALISTS. UNION GAINS CULMINATED WITH
PASSAGE IN 1970 OF ITALIAN LABOR'S MAGNA CARTA - THE WORKERS
STATUTE. TITLE I OF THAT DOCUMENT HAD 13 ARTICLES "ON THE
WORKER'S DIGNITY AND FREEDOM." THESE COVERED MATTERS SUCH AS
THE WORKER'S RIGHT TO EXPRESS OPINIONS IN THE WORKPLACE AND
TO ENJOY DUE PROCESS IN DISCIPLINARY PROCEEDINGS. TITLE I
ALSO PROHIBITED EMPLOYERS FROM USING SECURITY GUARDS TO
HASSLE WORKERS OR MONITORING THEM WITH AUDIO-VISUAL EQUIPMENT
AND FORBADE SUBJECTING EMPLOYEES TO ROUTINE PHYSICAL SEARCHES
OR MEDICAL INVESTIGATIONS. THE STATUTE'S TITLE II ("ON TRADE
UNION LIBERTIES") INCLUDED AN ARTICLE 18 ON JOB
REINSTATEMENT. THIS PROHIBITED FIRMS EMPLOYING MORE THAN 15
WORKERS FROM FIRING AN INDIVIDUAL WORKER WITHOUT "JUST
CAUSE." WORKERS DETERMINED BY THE COURTS TO HAVE BEEN FIRED
WITHOUT JUST CAUSE WERE ENTITLED TO GET THEIR OLD JOB BACK.
UNCLASSIFIED

PAGE 03 ROME 01744 03 OF 05 081357Z


13. THE 1990'S ELEVATED THE UNIONS TO A NEW LEVEL OF NATIONAL
PROMINENCE. THE COLLAPSE OF THE GOVERNING PARTIES UNDER THE
IMPACT OF "CLEAN HANDS" JUDICIAL INVESTIGATIONS CREATED A
POWER VACUUM IN PARLIAMENT AND WORSENED THE COUNTRY'S ALREADY
DIFFICULT ECONOMIC SITUATION. A TRANSITIONAL GOVERNMENT
UNDER THEN PRIME MINISTER GIULIANO AMATO APPEALED TO
EMPLOYERS AND UNIONS FOR HELP. DISCUSSIONS BEGUN IN 1992 LED
TO FORMAL SIGNING IN 1993 OF THE FIRST "SOCIAL PACT," A 3-WAY
ARRANGEMENT AMONG GOVERNMENT, EMPLOYERS, AND UNIONS THAT, FOR
THE FIRST TIME IN ITALY'S HISTORY, SAW WORKER REPRESENTATIVES
SEATED AT THE COUNTRY'S ECONOMIC/SOCIAL POLICY DECISION-
MAKING TABLE. POLICY DECISIONS TAKEN BY CONSENSUS BUILDING
("CONCERTAZIONE" IN ITALIAN) HELPED STABILIZE THE COUNTRY
POLITICALLY AND ECONOMICALLY FOR THE REST OF THE DECADE.

NO ONE HAS A MONOPOLY ON MISSTEPS
--------------

14. "CONCERTAZIONE" WORKED BUT COULDN'T LAST. PROFESSIONAL
POLITICIANS PAID LIP SERVICE BUT, IN THEIR HABITS, WERE
WEDDED TO EXERCISING POWER (WHEN THEY COULD) BY THEMSELVES.
THE EMERGENCE AFTER MAY 2001 ELECTIONS OF GOVERNMENT BASED ON
A STABLE PARLIAMENTARY MAJORITY MEANT THE UNIONS'
PARTICIPATION IN SOCIAL/ECONOMIC POLICYMAKING WAS NO LONGER
REQUIRED. THE CORRESPONDING LEADERSHIP IMPLOSION OF PARTIES
ON THE CENTER-LEFT MEANT THE UNIONS NOW HAD NEITHER A SEAT AT
THE DECISION-MAKING TABLE NOR A COHERENT OPPOSITION
INTERMEDIARY IN PARLIAMENT. THEIR OPTIONS INVOLVED DIRECT
NEGOTIATION WITH THE GOI (PREFERRED CHOICE OF CISL AND UIL)
OR OPPOSING IT THROUGH STRIKES AND DEMONSTRATIONS (CGIL).

UNCLASSIFIED

PAGE 04 ROME 01744 03 OF 05 081357Z

15. ONE OF THE BERLUSCONI GOVERNMENT'S MAIN OBJECTIVES - AS
HAD BEEN THE CASE WITH CENTER-LEFT GOVERNMENTS BEFORE IT -
WAS TO STIMULATE, MODERNIZE, AND IMPROVE THE COMPETITIVENESS
OF THE ITALIAN ECONOMY. DURING THE ELECTORAL CAMPAIGN,
BERLUSCONI PROMISED BETTER PENSIONS FOR WORKERS, LOWER TAX
BURDENS FOR EMPLOYERS, AND MORE JOBS FOR EVERYONE. ACHIEVING
THESE OBJECTIVES REQUIRED CHANGES IN ITALIAN LABOR LAW.
AMONG OTHER THINGS, BERLUSCONI PROPOSED DECREASING WORKER
DEPENDENCE ON ITALY'S PRECARIOUS GOVERNMENT SOCIAL SECURITY
SYSTEM ("INPS") BY PROVIDING INCENTIVES FOR WORKERS AND
EMPLOYERS TO DIVERT A PORTION OF THEIR INPS PAYMENTS INTO
MARKET-LINKED PRIVATE PENSION FUNDS. HE ALSO PROPOSED
INCENTIVES FOR FIRMS TO INVEST (AND CREATE NEW JOBS) IN
ITALY'S HIGH-UNEMPLOYMENT SOUTH. GIVEN HIS FOCUS ON
PROMOTING EXPORTS, BERLUSCONI DECIDED TO ASSUME THE FOREIGN
MINISTRY PORTFOLIO HIMSELF AFTER THEN-FOREIGN MINISTER RENATO
RUGGIERO "RESIGNED" IN JANUARY 2002, OVERSEEING THAT
MINISTRY'S ASSUMPTION OF A "FOREIGN COMMERCIAL SERVICE" ROLE
IT PREVIOUSLY HAD SHUNNED.


16. THE PROBLEMS UNIONS HAVE WITH GOI PROPOSALS DO NOT
INVOLVE FUNDAMENTAL IDEOLOGICAL DIVERGENCE OVER OBJECTIVES.
HAVING ASSUMED THE ROLE OF THE GOVERNMENT'S SEVEREST CRITIC,
COFFERATI FELT COMPELLED (JUNE 2001) TO STRESS THE CGIL WOULD
NOT OPPOSE THE GOVERNMENT FOR OPPOSITION'S SAKE BUT WOULD
TAILOR RESPONSES TO GOVERNMENT ACTIONS. THE CGIL'S RESPONSE
TO GOI PROPOSALS NEVERTHELESS WAS HOSTILE AND, AS TIME

UNCLASSIFIED

UNCLASSIFIED PTQ7930

PAGE 01 ROME 01744 04 OF 05 081357Z
ACTION DRL-02

INFO LOG-00 NP-00 AID-00 A-00 CA-01 CCO-00 CEA-01
CIAE-00 COME-00 CTME-00 INL-00 DODE-00 ITCE-00 ANHR-00
WHA-00 SRPP-00 DS-00 EB-00 EXME-00 EUR-00 E-00
UTED-00 VC-00 FRB-00 OBO-00 H-01 TEDE-00 INR-00
ITC-01 LAB-01 L-00 VCE-00 M-00 AC-01 DCP-01
NSAE-00 NSCE-00 OCS-03 OMB-01 OPIC-01 OPR-01 PA-00
PC-01 PM-00 PRS-00 ACE-00 P-00 SCT-00 SP-00
IRM-00 SSO-00 STR-00 TEST-00 TRSE-00 USIE-00 USSS-00
R-00 PMB-00 DSCC-00 G-00 NFAT-00 SAS-00 /016W
-------------- 80AAEB 081357Z /38
R 081306Z APR 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 3153
INFO EUROPEAN POLITICAL COLLECTIVE
DEPT OF LABOR WASHDC
AMCONSUL FLORENCE
AMCONSUL MILAN
AMCONSUL NAPLES

UNCLAS SECTION 04 OF 05 ROME 001744

SIPDIS

E.O. 12958: N/A
TAGS: ELAB PGOV PGOV PGOV PGOV PGOV IT ITELAB ITELAB ITELAB ITELAB
SUBJECT: TWO DEMONSTRATIONS DOWN, ONE GENERAL STRIKE TO GO

PASSED, THE CONTRAST BETWEEN ITS STANCE AND THAT OF WILLING-
TO-DEAL CISL AND UIL SHARPENED.
UNCLASSIFIED

PAGE 02 ROME 01744 04 OF 05 081357Z


17. THINGS CHANGED IN NOVEMBER. IN PRESENTING LABOR LAW
PROPOSALS TO PARLIAMENT, THE GOI DOUBLY OFFENDED ALL THREE
CONFEDERATIONS. ITS FIRST OFFENSE INVOLVED SEEKING
AUTHORIZATION ("DELEGA") TO EFFECT SOME LABOR MARKET REFORMS
ON THE BASIS OF GENERAL GUIDELINES APPROVED BY PARLIAMENT,
I.E., WITHOUT VETTING THEM FIRST, VIA "CONCERTAZIONE," WITH
THE UNIONS. ITS SECOND OFFENSE INVOLVED PROPOSALS TO SUSPEND
ARTICLE 18 IN CASES INVOLVING (A) ENCOURAGEMENT FOR SMALL
FIRMS TO GROW (AND CROSS THE 15-WORKER THRESHOLD),(B)
INDUCEMENT FOR FIRMS OPERATING IN THE INFORMAL ECONOMY TO
LEGALIZE THEIR STATUS, AND (C) TRANSFORMING SHORT-TERM LABOR
CONTRACTS INTO "PERMANENT" EMPLOYMENT. FOR THE UNIONS, THIS
REPRESENTED AN UNACCEPTABLE GOVERNMENT ATTACK ON A BASIC
WORKER RIGHT, ONE TO BE RESISTED AT ALL COSTS.


18. THE GOI DID NOT RETREAT, BUT NEITHER DID IT PRESS MATTERS
IN PARLIAMENT. THE DEBATE CONTINUED INSTEAD VIA MEDIA
STATEMENTS AND CONFLICTING SIGNALS FROM ELEMENTS IN THE
GOVERNMENT COALITION. BY THE TIME THE CGIL'S SCHEDULED
QUADRENNIAL CONGRESS MET IN RIMINI (2/6-9),"GENERAL STRIKE"
TALK WAS IN THE AIR. INVITED GUEST SPEAKER LUIGI ANGELETTI
(SECRETARY GENERAL OF UIL) COUNSELED CAUTION. THINGS HAD
CHANGED, HE SAID, WITH THE ELECTION OF A SAFE-MAJORITY
GOVERNMENT. THE UNIONS COULD NOT FORCE A GOVERNMENT CHANGE
BY TAKING TO THE STREETS OR STRIKING, BUT THEY COULD CHANGE
GOVERNMENT POLICY BY WORKING ON PUBLIC OPINION. INVITED
SPEAKER SAVINO PEZZOTTA (SECRETARY GENERAL OF CISL) AGREED.
"SO WE STRIKE," HE SAID; "WHAT DO WE DO THE DAY AFTER?"


19. THE UIL HELD ITS OWN QUADRENNIAL CONGRESS A MONTH LATER
UNCLASSIFIED

PAGE 03 ROME 01744 04 OF 05 081357Z
(3/4-6). BY THEN, THE CGIL HAD ANNOUNCED PLANS FOR A GENERAL
STRIKE APRIL 5. INVITED GUEST SPEAKER COFFERATI DREW
APPLAUSE UNTIL HE TRIED TO JUSTIFY WHAT, FOR UIL DELEGATES,
WAS UNJUSTIFIABLE - CGIL UNILATERALISM. THE CGIL HAD DECIDED
ALONE, COFFERATI EXPLAINED, BECAUSE "CONDITIONS DIDN'T EXIST"
FOR THE CONFEDERATIONS TO DECIDE JOINTLY. LOUD WHISTLES
RESOUNDED. SOME WHISTLES ALSO SOUNDED WHEN GUEST SPEAKER
(LABOR MINISTER) ROBERTO MARONI SPOKE. HOWEVER, MORE-THAN-
POLITE APPLAUSE GREETED HIS ANNOUNCEMENT THE GOI HAD "HEARD"
LABOR'S DETERMINED PROTEST AND WAS REOPENING THE DOOR TO
NEGOTIATIONS. THE APPROACHING CONFLICT, IT SEEMED, WAS OVER.


20. IT WASN'T. "COFFERATI WINS," PROCLAIMED LEFTIST MEDIA.
CGIL INTRANSIGENCE HAD WON THE DAY - THE GOI HAD ABANDONED
THE FIELD. GOI REACTION WAS SWIFT. IT WOULD PROCEED, AN
UNCHARACTERISTICALLY HARSH BERLUSCONI ANNOUNCED, WITH PLANS
TO CHANGE ARTICLE 18. THE CGIL ANNOUNCED PLANS FOR AN ANTI-
BERLUSCONI ROME RALLY 3/23. UIL AND CISL ENDORSED A GENERAL
STRIKE AND SAID THEY WOULD AIM FOR A DATE IN COMMON WITH THE
CGIL. WITH TENSION MOUNTING, RED BRIGADE TERRORISTS STRUCK,
ASSASSINATING LABOR MINISTRY ADVISER MARCO BIAGI 3/19 (REFS C
AND D). FOR SOME, THIS HAD A SOBERING EFFECT. THE CGIL
RALLY, WHICH BROUGHT OVER A MILLION PEOPLE TO ROME'S CIRCUS
MAXIMUS AND VICINITY, ADDED SUPPORT FOR DEMOCRACY AND
REPUDIATION OF VIOLENCE TO ITS GOVERNMENT PROTEST AGENDA.
CGIL JOINED CISL AND UIL IN MOUNTING A NATIONWIDE ANTI-
TERRORIST PROTEST 3/27. BUT IN THE MEANTIME LOOSE CANNONS
FIRED FROM THE GOVERNMENT'S RANKS. ONE MINISTER CALLED THE
3/23 RALLY A "THREAT TO DEMOCRACY;" ANOTHER (BOSSI) SAID
TERRORISTS WERE "THE CHILDREN" OF LABOR PROTESTS. HAVING
THEMSELVES BEEN IN TERRORIST GUNSIGHTS DURING ITALY'S 1970'S-
UNCLASSIFIED

PAGE 04 ROME 01744 04 OF 05 081357Z
1980'S "YEARS OF LEAD," UNION LEADERS EXPLODED. PUTTING
ASIDE THEIR DIFFERENCES, CGIL, CISL, AND UIL SET 4/16 AS
THEIR COMMON GENERAL STRIKE DAY. THE UGL, A FOURTH NATIONAL
TRADE UNION CONFEDERATION GENERALLY SYMPATHETIC TO FINI'S
CONSERVATIVE AN, JOINED THE 4/16 GENERAL STRIKE CALL.
BERLUSCONI DISTANCED HIMSELF FROM HIS MINISTERS' STATEMENTS
WHICH, HE SAID, DID NOT REPRESENT HIS GOVERNMENT'S VIEWS.
USING CONCILIATORY LANGUAGE, HE AND MARONI REITERATED THE
GOI'S OBJECTIVE OF CHANGING ARTICLE 18 BUT INVITED THE UNIONS
TO RESUME DIALOGUE.

AFTER THE GENERAL STRIKE: GROUNDS FOR PRAGMATISM
-------------- ---

21. ITALIANS HAVE SOME SERIOUS ISSUES TO DEAL WITH, AMONG
THEM JOB CREATION, IMMIGRATION, ASSURING RETIREMENT BENEFITS,
WORKER SKILLS TRAINING/UPGRADING, INCREASING/EXTENDING
UNEMPLOYMENT BENEFITS, STIMULATING INVESTMENT. THESE ARE
ISSUES IN WHICH GOVERNMENT, UNIONS, AND EMPLOYERS ALL HAVE A
STAKE; THEY'RE NOT MATTERS THAT EASILY LEND THEMSELVES TO
RESOLUTION BY IDEOLOGY. IN THE FINAL ANALYSIS, REASONABLE
AND PRAGMATIC GOI, BUSINESS, AND UNION OFFICIALS ARE LIKELIER
TO FORM THEIR POSITIONS ON THE BASIS OF ECONOMIC DATA THAN ON
IDEOLOGICAL PRINCIPLE. FOR ALL THE DRAMA ATTENDING THEIR
DISPUTE OVER ARTICLE 18, LEADERS SUCH AS BERLUSCONI, FINI,
COFFERATI, PEZZOTTA, AND ANGELETTI ARE PRAGMATIC MEN, HEADING
PRAGMATIC ORGANIZATIONS. THE ANSWER TO SECRETARY GENERAL
PEZZOTTA'S QUESTION ("WHAT DO WE DO THE DAY AFTER") IS,

UNCLASSIFIED

UNCLASSIFIED PTQ7932

PAGE 01 ROME 01744 05 OF 05 081357Z
ACTION DRL-02

INFO LOG-00 NP-00 AID-00 A-00 CA-01 CCO-00 CEA-01
CIAE-00 COME-00 CTME-00 INL-00 DODE-00 ITCE-00 ANHR-00
WHA-00 SRPP-00 DS-00 EB-00 EXME-00 EUR-00 E-00
UTED-00 VC-00 FRB-00 OBO-00 H-01 TEDE-00 INR-00
ITC-01 LAB-01 L-00 VCE-00 M-00 AC-01 DCP-01
NSAE-00 NSCE-00 OCS-03 OMB-01 OPIC-01 OPR-01 PA-00
PC-01 PM-00 PRS-00 ACE-00 P-00 SCT-00 SP-00
IRM-00 SSO-00 STR-00 TEST-00 TRSE-00 USIE-00 USSS-00
R-00 PMB-00 DSCC-00 G-00 NFAT-00 SAS-00 /016W
-------------- 80AAF5 081357Z /38
R 081306Z APR 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 3154
INFO EUROPEAN POLITICAL COLLECTIVE
DEPT OF LABOR WASHDC
AMCONSUL FLORENCE
AMCONSUL MILAN
AMCONSUL NAPLES

UNCLAS SECTION 05 OF 05 ROME 001744

SIPDIS

E.O. 12958: N/A
TAGS: ELAB PGOV PGOV PGOV PGOV PGOV IT ITELAB ITELAB ITELAB ITELAB
SUBJECT: TWO DEMONSTRATIONS DOWN, ONE GENERAL STRIKE TO GO

"WE'LL TALK SOME MORE."

UNCLASSIFIED

PAGE 02 ROME 01744 05 OF 05 081357Z

22. THEY'LL TALK ABOUT ARTICLE 18'S REAL RELATIONSHIP TO JOB
PROTECTION AND INCREASING EMPLOYMENT. THE ARTICLE "PROTECTS"
WORKERS IN FIRMS WITH MORE THAN 15 EMPLOYEES FROM BEING
UNJUSTLY FIRED. COURTS CAN ORDER WORKERS SO FIRED TO BE
REINSTATED. WHILE THE SIZE OF MOST ITALIAN FIRMS (PERHAPS 7
OUT OF 8) PUTS THEM BELOW THIS CUTOFF, MOST EMPLOY ONLY 5, 6,
OR 7 WORKERS, I.E., THEY COULD DOUBLE IN SIZE AND STILL NOT
CROSS THE 15-WORKER THRESHOLD (AND THUS BE AFFECTED BY THE
GOI'S PROPOSED CHANGES). OF WORKERS WHO WERE "PROTECTED" BY
ARTICLE 18 IN 2001, PERHAPS 100 WON CASES IN COURT; MOST
OPTED FOR COMPENSATION RATHER THAN REINSTATEMENT IN THEIR OLD
POSITION. HOWEVER, WHATEVER PROTECTION OPTION THEY CHOSE IS
LIKELY TO HAVE COME AT A PRICE - LONG MONTHS, PERHAPS YEARS,
OF CASES PROCESSING THROUGH ITALY'S NOTORIOUSLY SLOW COURTS.
THE GOI AND UNIONS ARE BOTH NOW TALKING ABOUT "MEDIATION" AND
"ARBITRATION" - A LIKELY FOCUS FOR FURTHER DISCUSSION.


23. ITALY'S NATIONAL UNEMPLOYMENT RATE IS AN UNSATISFACTORY
9.2 PERCENT. BUT THIS IS AN ARTIFICIAL FIGURE, ONE THAT
HIDES LOW 3.9 PERCENT REGIONAL UNEMPLOYMENT IN THE NORTH
(WHERE SKILLS SHORTAGES ARE GROWING) AND HIGH 18.8 PERCENT
UNEMPLOYMENT IN THE SOUTH. UNEMPLOYMENT IN ITALY'S DYNAMIC
NORTHEAST STANDS AT 3.5 PERCENT (JOBS THERE HAVING GROWN 2.2
PERCENT IN 2001). THIS EMPLOYMENT GROWTH CONTINUES A TREND
BEGUN IN 1998, WHEN "ATYPICAL" JOB CONTRACTS (I.E., FOR PART
TIME AND TEMPORARY WORK) WERE LEGALIZED AND PRIVATE
EMPLOYMENT AGENCIES SUCH AS "MANPOWER" BEGAN OPERATING.
ALTHOUGH THE UNIONS FEARED EMPLOYERS WOULD USE "ATYPICAL"
CONTRACTS AT THE EXPENSE OF "PERMANENT" JOBS, NEW "PERMANENT"
JOBS ACCOUNTED FOR MOST EMPLOYMENT GROWTH IN 2001 AND, AT
MANPOWER, APPROXIMATELY 30 PERCENT (AND, IN PLACES, UP TO 45
UNCLASSIFIED

PAGE 03 ROME 01744 05 OF 05 081357Z
PERCENT) OF WORKERS PLACED IN TEMPORARY JOBS WERE CONVERTED
TO PERMANENT STATUS. THE GOI AND UNIONS WILL HAVE TO
CONSIDER WHY THE ARTICLE 18 BARRIER TO EMPLOYMENT GROWTH, IF
THAT'S WHAT IT IS, PRODUCES SUCH DISPARATE EFFECTS.


24. IF IDEOLOGY PLAYS A ROLE IN UNION/GOVERNMENT DISCUSSIONS,
IT'S LIKELY TO BE THE IDEOLOGY OF A PART OF THE GOI'S AN
COMPONENT, THE "SOCIAL RIGHT." THIS "RIGHT" DOES NOT HAVE A
THATCHERITE GOAL OF SMASHING UNIONS; ITS PATERNALISTIC
CONCERN IS THE "PROTECTION" OF WORKERS, A CONCERN MANIFESTED
IN CLOSE TIES WITH TRADE UNION CONFEDERATION UGL. THEIR
VOICES, URGING CAUTION FROM WITHIN THE GOI, ARE FINDING ECHO
AMONG AT LEAST SOME BUSINESSMEN OUTSIDE WHO SEE NOTHING TO
GAIN FROM GOI/UNION CONFLICT. A PRAGMATIC BERLUSCONI GOI
BENT ON MODERNIZING/GOVERNING ITALY WILL VOTE CHANGES INTO
LAW - BUT ONLY AFTER MUCH MORE TALKING WITH THE UNIONS.

UNCLASSIFIED

>
2002ROME01744 - Classification: UNCLASSIFIED