THE FUTURE OF THE BERLUSCONI COALITION: FRACTIOUS

C O N F I D E N T I A L ROME 003679

SIPDIS


E.O. 12958: DECL: 08/12/2013
TAGS: PGOV PREL IT ITALIAN POLITICS
SUBJECT: THE FUTURE OF THE BERLUSCONI COALITION: FRACTIOUS
SOUND AND FURY, BUT STAYING TOGETHER

REF: A. ROME 2799

B. ROME 2529

C. ROME 2674

D. ROME 2284

E. ROME 3047

Classified By: CHARGE EMIL SKODON, REASONS 1.5 (B) AND (D).


1. (C) SUMMARY: Summer doldrums and August vacation have
not interrupted front-page squabbling in the Italian
government coalition, once perceived as a tight, cohesive
group in stark contrast with the fractured center-left
opposition. Public spats can be expected to continue as
Italy enters a long spell of campaigning for increasingly
important European and local elections after a relatively
calm two-year interval. Nonetheless, our money remains on
the Government's staying power, in part because the
center-left opposition is more badly split than the
governing coalition. Berlusconi, we think, wants to claim
his place in history as the first post-War Italian Prime
Minister to serve a full term, and will do his utmost -- if
often entering late into the fray -- to keep his unruly
"boys" together. His coalition partners may be
increasingly temperamental and demanding, worrying about
their own electoral futures, but so far, they indicate --
however grudgingly -- that they will stick it out.
Berlusconi pays a price for mollifying them: substantial
policy paralysis. The question is whether the large chunk
of traditionally centrist voters who took a chance on him
will continue to do so when his coalition fails to deliver
the meat of its ambitious, oft-touted reforms. END
SUMMARY.


2. (SBU) We expect to see tensions within the
center-right governing coalition exhibited publicly with
varying intensity and intervening lulls from now until the
next national elections, whether those come in 2006 or are
called earlier. In one recent example, the smallest and
most centrist coalition partner, Union of Christian
Democrats of the Center (UDC),threatened to join the
opposition in voting for a no-confidence motion against
Justice Minister Roberto Castelli (a member of the
third-largest coalition partner, the Northern League).
They were upset that Castelli had held up a request for
judicial assistance from the U.S. under the Mutual Legal
Assistance Treaty (MLAT) on the basis of a recently-passed
law granting immunity from prosecution to incumbents of
Italy's five highest institutional offices (Presidents of
the Republic, Senate, Chamber of Deputies, and
Constitutional Court, and the Prime Minister; see Ref A).
The MLAT request was initiated by Italian magistrates
investigating the "Mediaset" case alleging tax fraud and
false accounting in a Berlusconi firm's purchase of TV
rights to U.S. films.


3. (C) Castelli initially took the view that the new law
prevented not just prosecutions per se, but also arguably
investigations, despite fairly clear language to the
contrary (at least to our reading; see Ref B). UDC cried
foul. The PM stepped in and restored order; the MLAT
request went forward. The vote of no confidence failed,
with all coalition members joining to defeat it. (NOTE:
Some media inaccurately reported a "refusal to act" on the
MLAT request by Embassy's Justice Attache. In fact, the
Ministry of Justice, acting in its capacity as "Central
Authority" under the Mutual Legal Assistance Treaty,
forwarded the MLAT request to the Embassy DOJ Attache on
June 11. As the request was being processed for
forwarding, the Ministry rescinded it in order to review
the applicability of the new law, only to resubmit it to us
several weeks later. Upon its resubmission, the MLAT
request was forwarded to the U.S. Attorney's office in Los
Angeles for execution. The USG and its actions were an
incidental footnote in a domestic political dispute -- even
in the furthest left-leaning papers. END NOTE.)


4. (SBU) Two other controversies also erupted into recent
public sparring within the coalition. On August 1,
Parliament passed a long-debated bill reducing sentences
for some prisoners. The measure is intended to alleviate
overcrowding in Italian prisons (which are approaching 140
percent of designed capacity),and by extension, to respond
to a call for clemency from Pope John Paul II. In this
case, the Northern League (Lega) and the second coalition
partner National Alliance (AN) objected to the original
legislation, accusing UDC (which sponsored the clemency
bill) of going beyond the Government's agreed, get-tough
law and order platform. An intra-coalition compromise
reduced both the scope and length of sentence reductions.


5. (SBU) The other ongoing controversy involves calls,


pushed primarily by Berlusconi's Forza Italia (FI),for
investigations into the "politicized judiciary" in the wake
of charges of "massive corruption" by a Milan tribunal in
its ruling on a corruption case against several Berlusconi
associates (Ref D and septel). This is, in part,
discussion of long-standing proposals for such an
investigation, but even within the coalition, renewed calls
coming on the heels of a verdict unfavorable to the PM drew
internal rebuke. Ironically, the issues that have made a
public splash thus far deal with relatively easy stuff.
The more substantive issues yet to come -- devolution and
pension reform to name two -- portend deeper, and thus
possibly noisier, divisions.


6. (C) So, what gives with the vaunted stability of the
Berlusconi coalition, with its strong parliamentary
majority? Is government collapse in the works? Are we
witnessing the segue to Italy's 59th government since the
Republic's founding? We think not. This is a coalition,
and coalitions are messy. The May administrative elections
(Ref C),insignificant as they were overall, disturbed the
balance within the coalition and prompted calls for a
reconsideration of internal power distribution. Italy will
hold EU Parliamentary elections in 2004, another round of
local elections with some significant prizes in 2005, and
national elections not later than 2006. Europarliamentary
elections, the next test, use straight proportional voting;
parties show their strength by running strong individual
campaigns. (The center-left is discussing breaking with
common wisdom and past practice and running a single-ticket
coalition in these elections. We doubt they will do so, in
the end -- on both left and right, these elections provide
an important barometer for individual parties to see where
they stand, for better or worse.) This is what we see as
perhaps the strongest impetus to coalition sniping:
jockeying for individually strong party showings in the
next elections.


7. (SBU) The long hot summer caused by a record heat wave
is another. Not only are tempers frayed (possibly not a
significant factor in the political squabbling, although it
is being used as justification for any number of homicides
and brawls nationwide),but politicians must keep their
names before voters. How else to do so, besides getting in
the media, which one can rarely do by praising others.
Attacks and criticism are called for, even cannibalistic
attacks on one's fellow coalitioners. Even if summer
eventually ends (a prospect for which weather forecasters
are giving us little hope),the need for visibility in the
run-up to elections (in whichever year) will provoke
continued arguments, as will continuing disparities
regarding economic policy, especially between die-hard
reformers and cautious political tacticians.


8. (SBU) The center-right coalition has held up well, for
a melange of four disparate parties. Forza Italia, a
business-oriented, conservative party, has focused much
rhetoric on the need for economic reforms in order to give
all Italians the hopes of mimicking the success of party
leader Silvio Berlusconi. More than that, it is a party
with one strong leader. Berlusconi is undisputedly the
glue that holds the coalition together, but he has also
used his Government's strength to protect his personal
interests. (Which is not to say that at least some of the
legislation that has protected the Prime Minister is not
good policy, as well.) National Alliance, with its roots
in Italian Fascism, is seeking to remake its image as a
mainstream center-right party and mostly concurs with FI
policies. AN's leader, Deputy PM Gianfranco Fini, is
succeeding in burnishing his institutional image. But Fini
also faces a strong populist wing within AN, pushing for
more government largesse.


9. (C) The coalition's two "poles" are the Northern
League and UDC. The Lega is a regionally-focused party
whose overwhelming policy goal is to "liberate" the north
from the "burden" of supporting the poorer south. Its
stringent immigration and crime control policies put it
further at odds, in particular with the smallest coalition
member, Catholic-oriented UDC. Lega leader Umberto Bossi's
fiery and uncompromising rhetoric to followers at rallies
in his northern Italy power base is a constant source of
friction with especially the two "nationally-oriented"
coalition partners, AN and UDC. (Some observers, at least,
perceive FI, like the Lega, as largely a creature of the
north, despite its strong support in, inter alia, Sicily
and Apuglia. They cite Berlusconi's Milan business
background and support for his business-oriented policies
in Italy's northern commercial centers. Indeed, many
intra-coalition disputes end up with strong regional
overtones, with UDC and/or AN backing Italy's southern


region against the Northern League, and Berlusconi's FI
called in as referee.)


10. (C) Finally, UDC (successor to Italy's traditional
Christian Democratic (DC) party),nostalgic for Italy's
decades of bloated government and unbridled budget deficits
under DC leadership, is often odd man out in the
coalition. It shares fewer of the right-leaning
perspectives of its partners, but still relishes having
party leader Pier Ferdinando Casini as President of the
Chamber of Deputies and an acknowledged part of the
Government's power team. (The former Christian Democrats
have flirted with uniting as a "centrist block," and some
probably still dream of the old glory days. Casini,
however, has firmly ruled out any alliance shifting his
part of the grouping to the left, which curtails their
flexibility.)


11. (C) Elections underscore the divisions. When
pressed, however, most party representatives across the
coalition say they remain better off within the coalition
than outside of it. At least to our faces, they insist the
coalition will hold, although it will take more of
Berlusconi's time keeping the disputes under control and
restoring discipline. As tensions rise, the number of
calls for the PM to hold member parties' feet to the fire
has increased. UDC and AN want him to rein in Bossi. Some
in FI want him to remind UDC of its proper place. AN wants
more recognition for its stable and responsible role, often
putting coalition interests ahead of its own, even at the
occasional expense of the party's public image. Even
Senate President Pera (FI) recently expressed frustration
to the Ambassador with Berlusconi's failure to "correct
problems" in the coalition.


12. (C) Berlusconi himself has strong motivation to keep
all four members firmly in the coalition. If either the
Lega or UDC were to leave, the coalition would survive --
but the remaining smaller "extreme" coalition partner would
gain disproportionate influence, making the balancing act
that much more difficult. In the end, however, being in
government gives coalition members and their constituents
more than they can get on the outside. In the end,
political support for Berlusconi remains relatively strong,
despite some erosion. And, there is really no other
coalition to which the partners could turn. (Even if parts
of UDC could function comfortably in a center-left
coalition, the fragments would be too small to serve as
king maker.) Therefore, we wager the Government will hold
through Italy's EU Presidency term, and indeed, we think it
will likely go full course.


13. (C) Perhaps more tellingly than what Government
coalition members say, opposition leaders share this
assessment of the Government's durability. The largest
center-left party, Democrats of the Left (DS),has
developed a theory that Berlusconi could seek to force
early elections, perhaps saying he lacked the full support
of his own coalition and therefore must have the renewed
mandate of the Italian people. (NOTE: Elections can only
be called by President of the Republic Ciampi, who could
also urge another try at forming a coalition or appoint a
technical caretaker government. END NOTE.) But even as
they lay out the scenario, DS members admit it is not a
likely one. One thing attracted our attention, however:
EU Commission President Romano Prodi might not be able to
run if elections were held before the expiration of his
curtailed term in November 2004. He would have to resign
as Commission President, which he has said he would not
do. Prodi is considered by most to be the only potential
candidate with real staying power against Berlusconi. He is
the only tested politician who might be able to pull
together a center-left even more fractured, diverse, and
ideologically split than the governing coalition.


14. (C) In the end, we are willing to bet a small sum
that Berlusconi's lust for the limelight, his thirst to
hold a significant and perpetual place in Italian history
(and maybe to serve in the future as President of the
Republic),will encourage him to do what it takes to keep
his coalition in place at least until he is the
longest-serving premier (May 4, 2004),but better until he
becomes the first PM to serve a full electoral term. He
also has a strong personal incentive to serve out his full
term (and be re-elected to another): As soon as he is out
of office, he faces the resumption of his Milan corruption
trial (Ref A) and a probable guilty verdict (either because
he actually is guilty or because the judges have already
determined their verdict, depending on one's point of
view). As the center-right leader with the stature and
proven success record to keep the parts together, we think


he can succeed, as long as the two smaller partners
continue to believe they are better off in, than out of,
the coalition. We are not certain if he realizes that his
role as broker, arbiter, and undisputed final authority for
the coalition will become increasingly time-consuming. It
is widely reported that he dislikes the negative public
image generated by public intra-coalition squabbling. It
is also rumored that he finds the role of tough guy
distasteful, and as tensions build more publicly, in at
least some occasions a tough guy is needed -- and no one
else in the coalition has the stature to impose order.


15. (C) There is a price to preserving coalition harmony
and making history, however -- policy paralysis. Much of
Berlusconi's fence-mending involves massaging coalition
members' divergent positions on key policy issues, notably
pension reform, immigration and trimming further state
spending. In this case, though, "massaging" often means
"delaying action." It is a solid formula for maintaining
the coalition, but one that may play poorly with some
centrist voters who gave Berlusconi and Forza Italia a
chance in hopes that their results-oriented "Contract with
Italy" offered something other than Italian
politics-as-usual. The center-left's inability to offer a
coherent alternative reduces the political costs to policy
inaction for Berlusconi, however. The emergence of a
strong "anti-Berlusconi" around whom the opposition could
unite might change that calculation. At this point,
however, it is by no means certain that Prodi could play
that role if he returned to domestic politics, and there
are few other contenders on the opposition's horizons.
Skodon


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2003ROME03679 - Classification: CONFIDENTIAL