Identifier
Created
Classification
Origin
02ROME3006
2002-06-19 14:32:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Rome
Cable title:  

KEY ADVISOR TO EU PARLIAMENTARIAN ON EU FINANCIAL

Tags:  EFIN EU IT 
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UNCLAS SECTION 01 OF 02 ROME 003006 

SIPDIS

SENSITIVE

STATE FOR EUR/ERA, EB/IFD/OMA
STATE ALSO PASS TO SEC - FRIEDMAN
STATE ALSO PASS FRB - O'DAY
TREASURY FOR DAS SOBEL, MONROE
UNCLASSIFIED

PAGE 02 ROME 03006 01 OF 02 191443Z
FRANKFURT FOR TREASURY - WALLAR

E.O. 12958: N/A
TAGS: EFIN EU EU IT ITEFIN
SUBJECT: KEY ADVISOR TO EU PARLIAMENTARIAN ON EU FINANCIAL
SERVICES ACTION PLAN AND BILATERAL INVESTMENT TREATIES

REF: A. A: STATE 79760


B. B: STATE 822480 AND PREVIOUS

UNCLAS SECTION 01 OF 02 ROME 003006

SIPDIS

SENSITIVE

STATE FOR EUR/ERA, EB/IFD/OMA
STATE ALSO PASS TO SEC - FRIEDMAN
STATE ALSO PASS FRB - O'DAY
TREASURY FOR DAS SOBEL, MONROE
UNCLASSIFIED

PAGE 02 ROME 03006 01 OF 02 191443Z
FRANKFURT FOR TREASURY - WALLAR

E.O. 12958: N/A
TAGS: EFIN EU EU IT ITEFIN
SUBJECT: KEY ADVISOR TO EU PARLIAMENTARIAN ON EU FINANCIAL
SERVICES ACTION PLAN AND BILATERAL INVESTMENT TREATIES

REF: A. A: STATE 79760


B. B: STATE 822480 AND PREVIOUS


1. (U) THIS IS AN ACTION REQUEST. SEE PARAGRAPH SIX.


2. (SBU) SUMMARY. THE EU'S FINANCIAL SERVICES ACTION PLAN
(FSAP) REPRESENTS A GIANT STEP FORWARD FOR EUROPE, ARGUED
ALESSANDRO MARIA POGGIALI, A SENIOR ADVISOR TO EU
PARLIAMENTARIAN, RENATO BRUNETTA. WITH DETAILS OF THIS
ACTION EMERGING FROM THE COMMISSION, POGGIALI DOES NOT EXPECT
THAT ITALY WILL HAVE ANY STRONG OBJECTIONS. ITALIAN
INVESTMENT AND FINANCIAL FIRMS ARE, HOWEVER, CONCERNED THAT
THEY WILL NOT BE COMPETITIVE IN A HARMONIZED EUROPEAN
FINANCIAL MARKET. POGGIALI APPRECIATED HEARING U.S. VIEWS ON
THIS FINANCIAL SERVICES PLAN. ON AN UNRELATED TOPIC, WE
RAISED USG CONCERNS ABOUT THE TREATMENT OF BILATERAL
INVESTMENT TREATIES BETWEEN THE U.S. AND CANDIDATE COUNTRIES
WITH POGGIALI. END SUMMARY.


3. (U) PER REFTEL INSTRUCTIONS, WE ARE SETTING UP MEETINGS TO
DISCUSS THE EU'S FINANCIAL SERVICES ACTION PLAN. WE HAVE
DISCUSSED REFTEL POINTS WITH OFFICIALS AT THE FINANCE
MINISTRY, WHO HAD ONLY A VAGUE KNOWLEDGE OF THE PLAN, AND WHO
INDICATED THAT ALL THE ACTION AND DISCUSSIONS ARE OCCURRING
UNCLASSIFIED

PAGE 03 ROME 03006 01 OF 02 191443Z
IN BRUSSELS. POGGIALI IS THE SENIOR ADVISOR ON ECONOMIC
ISSUES TO EU PARLIAMENTARIAN, RENATO BRUNETTA. AN
INFLUENTIAL MEMBER OF ITALY'S FORZA ITALIA PARTY, BRUNETTA IS
PART OF THE PRIME MINISTER'S INNER CIRCLE ON ECONOMIC ISSUES.
POGGIALI IS FAMILIAR WITH THE FINANCIAL SERVICES PLAN, AND
INDICATED HE WILL PLAY A CRITICAL ADVISORY ROLE ON THIS ISSUE
DURING THE PARLIAMENTARY DEBATE.


4. (SBU) ACCORDING TO POGGIALI, THE COMMISSION'S RAPPORTEUR
FOR THE FINANCIAL SERVICES ACTION PLAN (FSAP) COULD PUBLISH A
WORKING DOCUMENT BY THE END OF JUNE. UNDER THIS TIMETABLE,
THERE WILL BE A PARLIAMENTARY EXCHANGE OF VIEWS BEFORE THE
SUMMER RECESS AND A SECOND EXCHANGE OF VIEWS BY THE END OF
AUGUST. IF THE PROCESS UNFOLDS SMOOTHLY, A FINAL REPORT COULD
BE ISSUED IN SEPTEMBER, WITH A COMMITTEE VOTE IN OCTOBER, AND
A PLENARY VOTE IN NOVEMBER.



5. (SBU) WE SHARED WITH POGGIALI REFTEL POINTS, WHICH
UNDERSCORED THE USG'S GENERAL SUPPORT FOR THE FSAP BUT ALSO
OUR CONCERN THAT THE PLAN'S IMPLEMENTATION COULD RESULT IN
DISCRIMINATORY TREATMENT OF U.S. FIRMS. POGGIALI EMPHASIZED
THAT SUCH IS NOT THE INTENT OF THE FSAP, AND THAT ITS GOAL IS
A TRANSPARENT AND COMPETITIVE MARKET. WE ALSO RAISED OUR
CONCERNS ABOUT SUCH ISSUES AS "EQUIVALENCY". (PER REFTEL,
EQUIVALENCY REFERS TO THE REQUIREMENT FOR FIRMS FROM THIRD
COUNTRIES THAT OPERATE IN THE EU TO EXPLICITLY COMPLY WITH EU
PROSPECTUS STANDARDS.)


6. (U) ACTION REQUEST: POGGIALI ASKED FOR SPECIFIC POINTS IN
WRITING THAT SPELL OUT USG CONCERNS. POST BELIEVES THIS WOULD
BE USEFUL, AND IF A NON-PAPER EXISTS, REQUESTS TEXT AND
UNCLASSIFIED

PAGE 04 ROME 03006 01 OF 02 191443Z
AUTHORIZATION TO SHARE WITH POGGIALI AND GOI OFFICIALS.


7. (SBU) WHEN QUERIED IF THE COMMISSION AND PARLIAMENT ARE
SEEKING THE ADVICE AND OPINION OF FINANCIAL FIRMS, POGGIALI
SAID THAT HE HAS SPOKEN WITH OFFICIALS FROM CONSOB (ITALY'S
EQUIVALENT TO THE SECURITIES AND EXCHANGE COMMISSION) AND
FROM ABI, THE ITALIAN BANKING ASSOCIATION. BOTH CONSOB AND
ABI EXPRESSED STRONG SUPPORT FOR THE FSAP, BUT OFFICIALS ALSO
UNDERSCORED THEIR CONCERN THAT ITALIAN FINANCIAL FIRMS WILL
NOT BE ABLE TO COMPETE IN THIS NEW, HARMONIZED MARKET.
CONCURRING, POGGIALI SAID HE HAS HEARD A GENERAL UNEASE FROM
ITALIAN FINANCIAL FIRMS, WHO FEAR THAT THEY WILL BE BOXED OUT
BY OTHER EUROPEAN FINANCIAL FIRMS IN THEIR OWN MARKET.
(COMMENT: WE ALSO CONCUR. ITALIAN FINANCIAL FIRMS FOCUS
PRIMARILY ON THE HOME MARKET. FEW FOREIGN INVESTMENT AND
RETAIL BANKS ARE PRESENT IN THIS MARKET. LABYRINTHINE RULES,
RED TAPE, MINIMAL NEED FOR STOCK AND BOND OFFERINGS (SINCE
MOST BUSINESSES ARE SMALL OR MEDIUM-SIZED, AND FAMILY-OWNED)
GIVE THE ADVANTAGE TO ITALIAN FIRMS AND MAKE THE ITALIAN
MARKET LARGELY UNATTRACTIVE TO FOREIGN FIRMS. ITALIAN FIRMS
HAVE NOT VENTURED MUCH BEYOND ITALY'S BORDERS INTO THE REST
OF THE EU. UNLESS ITALIAN FINANCIAL FIRMS QUICKLY ADOPT A
MORE COMPETITIVE STRATEGY, WITH AN OPEN, TRANSPARENT AND

UNCLASSIFIED

UNCLASSIFIED PTQ4495

PAGE 01 ROME 03006 02 OF 02 191444Z
ACTION EUR-00

INFO LOG-00 AID-00 CEA-01 CIAE-00 COME-00 CTME-00 DODE-00
ITCE-00 SRPP-00 EB-00 EXME-00 E-00 UTED-00 VC-00
FRB-00 H-01 TEDE-00 INR-00 IO-00 ITC-01 LAB-01
L-00 AC-01 NSAE-00 NSCE-00 OMB-01 OPIC-01 ACE-00
SEC-01 SP-00 SSO-00 SS-00 STR-00 TEST-00 USIE-00
FMP-00 EPAE-00 DRL-02 G-00 NFAT-00 SAS-00 /010W
-------------- BF801E 191445Z /38
P 191432Z JUN 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC PRIORITY 4338
INFO EU CANDIDATE STATES COLLECTIVE PRIORITY
EU MEMBER STATES COLLECTIVE PRIORITY
AMCONSUL FLORENCE PRIORITY
AMCONSUL FRANKFURT PRIORITY
AMCONSUL MILAN PRIORITY
AMCONSUL NAPLES PRIORITY
DEPT OF TREASURY WASHDC PRIORITY
USEU BRUSSELS PRIORITY 2719

UNCLAS SECTION 02 OF 02 ROME 003006

SIPDIS

SENSITIVE

STATE FOR EUR/ERA, EB/IFD/OMA
STATE ALSO PASS TO SEC - FRIEDMAN
STATE ALSO PASS FRB - O'DAY
TREASURY FOR DAS SOBEL, MONROE
UNCLASSIFIED

PAGE 02 ROME 03006 02 OF 02 191444Z
FRANKFURT FOR TREASURY - WALLAR

E.O. 12958: N/A
TAGS: EFIN EU EU IT ITEFIN
SUBJECT: KEY ADVISOR TO EU PARLIAMENTARIAN ON EU FINANCIAL
SERVICES ACTION PLAN AND BILATERAL INVESTMENT TREATIES

HARMONIZED MARKET, MANY WILL LOSE GROUND IN ITALY AND
EFFECTIVELY BE LOCKED OUT OF OTHER EUROPEAN MARKETS. END
COMMENT.)

BILATERAL INVESTMENT TREATIES
--------------


8. (SBU) TAKING THE OPPORTUNITY TO DISCUSS GENERAL EU
ECONOMIC ISSUES, WE RAISED USG CONCERNS ABOUT THE
COMMISSION'S TREATMENT OF BILATERAL INVESTMENT TREATIES,
ESPECIALLY THOSE THE U.S. HAS WITH ACCESSION STATES (REFTEL
B). POGGIALI WAS UNAWARE UNTIL NOW OF THIS CONTROVERSY BUT
INDICATED HE WILL LOOK FURTHER INTO IT. COMPETENCY OVER
INVESTMENT ISSUES, HE NOTED, IS STILL OPEN BETWEEN MEMBER
STATES AND THE COMMISSION. UPON REFLECTION, HE THOUGHT THAT
IF OUR CONCERNS ABOUT COMMISSION ACTION ON BITS ARE VALID,
THIS MAY BE ONE WAY THE COMMISSION IS TRYING TO EXERT
COMPETENCY OVER THE ISSUE.


9. (SBU) POGGIALI ASKED WHETHER THE USG IS IN COMMUNICATION
WITH COMMISSION OFFICIALS AND ACCESSION STATES, TO WHICH WE
AFFIRMED POSITIVELY. ON EU CANDIDATE ISSUES IN GENERAL, HE
SAID THE U.S. MAY WANT TO CONSIDER WORKING WITH THE "SPONSOR"
COUNTRY IF THERE IS A SPECIFIC CONCERN RELATED TO A CANDIDATE
UNCLASSIFIED

PAGE 03 ROME 03006 02 OF 02 191444Z
COUNTRY. (NOTE: EACH EU CANDIDATE GOVERNMENT HAS A INFORMAL
"PATRON"; ITALY IS THE SPONSOR FOR BULGARIA, GERMANY FOR
POLAND. END NOTE.)
SEMBLER

UNCLASSIFIED

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2002ROME03006 - Classification: UNCLASSIFIED