MEP GIORGIO NAPOLITANO ON EU REFORM;

C O N F I D E N T I A L SECTION 01 OF 02 ROME 000763

SIPDIS

DEPT FOR EUR/ERA, EUR/WE

E.O. 12958: DECL: 02/14/2007
TAGS: ECON EU IT EU IT PREL PRELECON
SUBJECT: MEP GIORGIO NAPOLITANO ON EU REFORM;
CONSTITUTIONAL CONVENTION - "WE MUST PUT OUR HOUSE IN ORDER"


CLASSIFIED BY: DCM WILLIAM P. POPE. REASON: 1.5 (B)(D).
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1. (C) SUMMARY. ON FEBRUARY 12, DURING A WIDE-RANGING
DIALOGUE WITH POL AND ECON OFFICERS, ITALIAN MEP AND
PRESIDENT OF THE EP'S CONSTITUTIONAL AFFAIRS COMMITTEE
GIORGIO NAPOLITANO EMPHASIZED THAT EU REFORM AND STREAMLINING
WAS ABSOLUTELY ESSENTIAL IF THE UNION IS TO FUNCTION
EFFECTIVELY WITH 25 MEMBERS. THE EU MUST ADOPT THE NEW
CONSTITUTION BY THE END OF 2003 TO ENSURE A SMOOTH
ENLARGEMENT PROCESS IN 2004. THE NEW DOCUMENT MUST PROVIDE A
FRAMEWORK FOR ENHANCED COOPERATION AMONG NATIONAL LAW
ENFORCEMENT, JUDICIAL AND INTELLIGENCE BODIES. IT MUST ALSO
DEFINE PRINCIPLES AND PROTECT THE RIGHTS OF INDIVIDUALS, AND
DEFINE EXCLUSIVE COMPETENCIES OF THE EU AS WELL AS SHARED
EU/MEMBER STATES' COMPETENCIES. NAPOLITANO ALSO SAID THAT
THE EU NEEDS A CONSTITUTIONAL COMMITMENT TO COORDINATE
BUDGET, FISCAL AND ECONOMIC POLICIES. THE ORGANIZATION MUST
ALSO GRAPPLE SOON WITH THE FINANCIAL BURDENS OF ENLARGEMENT.
END SUMMARY


2. (C) NAPOLITANO SAID THAT THE EU MUST UNDERGO SIGNIFICANT
REFORM AND STREAMLINING TO PREPARE FOR ENLARGEMENT AND TO
MAKE THE ORGANIZATION MORE RESPONSIVE AND ACCOUNTABLE TO ITS
MEMBER STATES AND INDIVIDUAL EUROPEAN CITIZENS. "WE MUST PUT
OUR HOUSE IN ORDER," HE EMPHASIZED. THE METHOD BY WHICH THE
EU BUREAUCRACY HAS EXPANDED OVER THE YEARS, WHICH HE
DESCRIBED AS A STEP BY STEP INCREMENTAL CREEP, HAS PRODUCED A
PLETHORA OF CONTRADICTORY AND CONFUSING RULES AND
REGULATIONS. NAPOLITANO AVERRED THAT THIS HAS CREATED AN
ALMOST IMPOSSIBLE SITUATION WITH 15 MEMBERS, BUT AT 25 IT
WILL BRING THE ORGANIZATION TO A STANDSTILL. REFORM,
THEREFORE, IS "ABSOLUTELY NECESSARY." ENLARGEMENT REQUIRES A
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POLITICAL AND INSTITUTIONAL "REFOUNDING" OF THE COMMUNITY,
NAPOLITANO CONTINUED. HE SEES A NEED TO "REASSERT THE
PRINCIPLES, VALUES AND STRATEGIC GOALS" OF THE EU.


3. (C) NAPOLITANO FORESEES A RELATIVELY SHORT PROCESS FOR
THE CONSTITUTION'S ADOPTION (IF THAT IS WHAT THE DOCUMENT
ENDS UP BEING CALLED); A ONE YEAR CONVENTION, BEGINNING MARCH
1, FOLLOWED BY A SHORT PAUSE, AND THE INTER-GOVERNMENTAL
CONFERENCE (IGC). THE IGC SHOULD BE A SHORT PROCESS BECAUSE
GOVERNMENTS AND NATIONAL PARLIAMENTS WILL RECEIVE REGULAR
REPORTS DURING THE CONVENTION, SO THERE SHOULD BE NO REAL
SURPRISES FOR THE IGC. HE UNDERSCORED HIS BELIEF THAT THE
CONCLUDING SESSION OF THE IGC, PRESIDED OVER BY
HEADS-OF-STATE, MUST ADOPT THE FINAL DOCUMENT BY THE END OF
THE ITALIAN EU PRESIDENCY (E/O '03). THIS HAS NOTHING TO DO
WITH GIVING ITALY THE HONOR OF ANOTHER "TREATY OF ROME."
THERE ARE "OBJECTIVE, PRACTICAL" REASONS FOR AIMING FOR THIS
DATE. ENLARGEMENT WILL TAKE PLACE IN 2004. ALL NEW
PARAMETERS, FROM WEIGHTED VOTING, TO FINANCIAL CONTRIBUTIONS
AND RECEIPTS, TO DIVISIONS OF COMPETENCIES AMONG BRUSSELS,
MEMBER STATES, AND THE REGIONS, MUST BE IN PLACE IN ORDER TO
ENSURE AN ORDERLY ENLARGEMENT PROCESS. A DIRECT FINANCING
MECHANISM MUST BE ESTABLISHED. EP ELECTIONS AND THE
SELECTION OF A NEW COMMISSION ALSO OCCUR IN 2004. ALL THIS,
ACCORDING TO NAPOLITANO, WILL REQUIRE DECISIONS BASED ON THE
CONSTITUTION.


4. (C) NAPOLITANO ENVISIONS A CONSTITUTION THAT WILL
SIMPLIFY AND STREAMLINE THE EU. THE DOCUMENT MUST STRENGTHEN
THE EU'S ROLE IN CERTAIN AREAS, SUCH AS EXTERNAL AND
INTERNAL SECURITY. THIS IS PARTICULARLY TRUE POST-9/11. THE
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STRUGGLE AGAINST GLOBAL AND INTERNAL TERRORISM AND ORGANIZED
CRIME CANNOT BE ACCOMPLISHED BY ANY ONE STATE ALONE. THE NEW
CONSTITUTION MUST RECOGNIZE POST-9/11 REALITIES AND PROVIDE
THE FRAMEWORK FOR ENHANCED COOPERATION AMONG NATIONAL LAW
ENFORCEMENT, JUDICIAL AND INTELLIGENCE BODIES. NAPOLITANO
SAID THAT THE DOCUMENT MUST INSTITUTIONALIZE A STRONG FOREIGN
POLICY OFFICE, WHICH EXISTS NOW LARGELY DUE TO JAVIER
SOLANA'S REPUTATION AND PERSONALITY. HE ALSO SAW A NEED FOR
ENHANCED COOPERATION AMONG MEMBER STATES ON IMMIGRATION AND
ASYLUM POLICY. HE RECOGNIZED THE CHALLENGES ASSOCIATED WITH
CRAFTING A COMMON DEFENSE POLICY, GIVEN THE SENSITIVITIES OF
NEUTRAL MEMBER STATES SUCH AS IRELAND, FINLAND AND SWEDEN.
THUS, HE SUGGESTED A SOLUTION ALLOWING SOME MEMBER STATES TO
AGREE TO A COMMON DEFENSE POLICY AND OTHERS TO OPT OUT (AS
WITH ADOPTION OF THE EURO).


5. (C) NAPOLITANO DOES NOT FORESEE A RISK OF CREATING A
"SUPERSTATE" THAT WILL THREATEN MEMBER STATES' NATIONAL
SOVEREIGNTY, BUT THE CONVENTION MEMBERS MUST BE PREPARED TO
DEAL WITH THE "PSYCHOSIS" OF THOSE AMONG THEM WHO WANT TO USE
THE CONVENTION PROCESS TO "DILUTE" THE EU'S POLITICAL UNION
BACK TO A SIMPLE CUSTOMS UNION. "THE CONSTITUTION CAN NOT BE
JUST A DIVISION OF LABOR. IT MUST DEFINE PRINCIPLES AND
RIGHTS OF INDIVIDUALS." "THE COURT OF JUSTICE SHOULD BE THE
INSTITUTION RESPONSIBLE FOR DECIDING ISSUES OF SUBSIDIARITY,"
NAPOLITANO CONTINUED. HE THOUGHT THAT THE CONSTITUTION
SHOULD DEFINE EXCLUSIVE COMPETENCIES OF THE EU, AS WELL AS

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INFO LOG-00 NP-00 AGRE-00 AID-00 ACQ-00 CEA-01 CIAE-00
COME-00 CTME-00 INL-00 DODE-00 DOTE-00 SRPP-00 DS-00
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TEDE-00 INR-00 ITC-01 LAB-01 L-00 VCE-00 AC-01
DCP-01 NSAE-00 NSCE-00 OMB-01 OPIC-01 PA-00 PM-00
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SS-00 STR-00 TRSE-00 T-00 USIE-00 EPAE-00 SNIS-00
NISC-00 PMB-00 DSCC-00 DRL-02 G-00 NFAT-00 SAS-00
SWCI-00 /011W
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FM AMEMBASSY ROME
TO SECSTATE WASHDC PRIORITY 0176
INFO EU CANDIDATE STATES COLLECTIVE
EU INTEREST COLLECTIVE
EU MEMBER STATES COLLECTIVE

C O N F I D E N T I A L SECTION 02 OF 02 ROME 000763

SIPDIS

DEPT FOR EUR/ERA, EUR/WE

E.O. 12958: DECL: 02/14/2007
TAGS: ECON EU IT EU IT PREL PRELECON
SUBJECT: MEP GIORGIO NAPOLITANO ON EU REFORM;

CONSTITUTIONAL CONVENTION - "WE MUST PUT OUR HOUSE IN ORDER"
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PAGE 02 ROME 00763 02 OF 02 150705Z

SHARED COMPETENCIES, LEAVING OTHER AREAS TO THE MEMBER
STATES, BUT EXPECTED THAT THE CONSTITUTION WOULD INCLUDE A
MECHANISM FOR MEMBER STATES DECIDING TO YIELD MORE COMPETENCE
TO THE EU.


6. (C) NAPOLITANO SAW ECONOMIC AND FINANCE POLICY AS
ANOTHER AREA IN WHICH CONSTITUTIONAL DECISIONS WERE REQUIRED.
"CAN YOU HAVE A EUROPEAN CENTRAL BANK, WITHOUT POLITICAL
RESPONSIBILITY OR ECONOMIC OR FISCAL POLICIES, MAKING
MONETARY POLICY? CAN YOU HAVE THE FED WITHOUT THE TREASURY
OR PRESIDENT?" HE ASKED. THE EUROPEAN CENTRAL BANK, IN HIS
VIEW, MUST BE ACCOMPANIED BY SOME LEVEL OF EU ECONOMIC AND
FISCAL POLICY RESPONSIBILITY. "WE NEED A CONSTITUTIONAL
COMMITMENT TO COORDINATE BUDGET, FISCAL AND ECONOMIC POLICIES
WITHIN THE EU."


7. (C) THE FINANCIAL BURDENS OF ENLARGEMENT, STRUCTURAL
FUNDS AND THE COMMON AGRICULTURAL POLICY, HAVE YET TO BE
RESOLVED, NOTED NAPOLITANO. HE CALLED THE POSSIBLE SOLUTION
"REALLY AN UNKNOWN." THE IDEA OF HAVING A CAP OF FOUR
PERCENT OF GDP ON STRUCTURAL FUNDS FOR THE NEW ENTRANTS HAD
SOME LOGIC, BUT "IT IS QUESTIONABLE, BECAUSE OF THE OVERSIZED
EXPECTATIONS IN THESE COUNTRIES. IT WON'T BE EASY TO LIMIT
IT LIKE THIS." HE ADDED THAT "TAKING IN EASTERN EUROPEAN
COUNTRIES WITH LOW GDPS DOES NOT MAKE OUR POORER REGIONS ANY
RICHER." HE SUGGESTED THAT THE PARAMETER FOR STRUCTURAL
FUNDS WOULD HAVE TO CHANGE -- IT COULD NO LONGER BE 50
PERCENT OF AVERAGE EU GDP, BECAUSE THIS AVERAGE WILL FALL
WITH ENLARGEMENT. HE CALLED THE COMMON AGRICULTURAL POLICY
"A BIG PUZZLE" AND DECLARED THAT THE ADDITION OF POLAND WAS A
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MAJOR PROBLEM IN THIS CONTEXT.


8. (C) COMMENT: NAPOLITANO WAS NOT SPECIFIC REGARDING WHICH
MEMBERS OF THE CONVENTION HE PERCEIVED AS WANTING TO "DILUTE"
THE EU'S POWERS. IF HE HAD IN MIND ANY OF HIS FELLOW ITALIAN
DELEGATES TO THE CONVENTION, HE DID NOT SHOW HIS HAND. HE
REFERRED TO ONE OF THE CONVENTION VICE PRESIDENTS, FORMER
ITALIAN PM AND SOCIALIST PARTY MEMBER GIULIANO AMATO, AS
"PROFESSIONAL AND BALANCED" IN HIS APPROACH TO REFORM. THIS
WAS NOT SURPRISING, GIVEN NAPOLITANO'S MEMBERSHIP IN THE OLD
ITALIAN COMMUNIST PARTY. BUT HE WAS ALSO RELUCTANT TO
CRITICIZE DIRECTLY ANOTHER OF ITALY'S DELEGATES, DEPUTY PRIME
MINISTER, AND HEAD OF THE RIGHT WING NATIONAL ALLIANCE (AN)
PARTY, GIANFRANCO FINI, SAYING ONLY THAT FINI WAS NEW TO THE
PROCESS AND HAD NOT ELABORATED A POSITION. NAPOLITANO TOLD
US HE HAD A CONVERSATION WITH FINI RECENTLY, DURING WHICH
FINI EXPRESSED AN INTEREST IN REACHING A "COMMON POSITION"
WITH THE EP'S CENTER-LEFT ON INSTITUTIONAL REFORM. IF THIS
TYPE OF DIALOGUE CONTINUES AMONG ITALIAN DELEGATES IN
BRUSSELS, ITALY COULD BE POSITIONED TO MAKE A MEANINGFUL AND
LASTING CONTRIBUTION TO THE CONVENTION, AND THEREFORE TO
FUTURE EUROPEAN POLITICAL AND ECONOMIC INFRASTRUCTURES. IN
THIS REGARD, ITALY COULD HAVE LEADERSHIP POTENTIAL,
ESPECIALLY IF THE ITALIAN DELEGATION DEMONSTRATES A GREATER
RIGOR IN EXAMINING AND PROPOSING A STRATEGY FOR DEALING WITH
THE DIFFICULT ECONOMIC AND POLITICAL ISSUES THAN WAS IN
EVIDENCE DURING THIS DISCUSSION WITH NAPOLITANO. END
COMMENT
SEMBLER

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2002ROME00763 - Classification: CONFIDENTIAL