ITALY'S BERLUSCONI UNDER POLITICAL PRESSURE;

C O N F I D E N T I A L ROME 001911 SIPDIS E.O. 12958: DECL: 05/17/2014 TAGS: PGOV PREL ECON IT ITALIAN POLITICS SUBJECT: ITALY'S BERLUSCONI UNDER POLITICAL PRESSURE; EXPECTS BOOST FROM MEETINGS WITH PRESIDENT BUSH REF: A. A) ROME 1734 ¶B. B) ROME 1661 ¶C. C) ROME 1567 ¶D. D) 03 ROME 5121 Classified By: POL MINCOUNS THOMAS COUNTRYMAN, REASONS 1.5 (B) AND (D). -------------- SUMMARY -------------- ¶1. (C) The Berlusconi Government is under increasing political pressure in the build-up to June 12-13 European Parliament and local elections. A combination of global and domestic events -- Iraqi prisoner abuse and Italy's purported knowledge thereof, heavy fighting in Italy's sector of Iraq, the lingering hostage crisis, vocal pressure from Italy's large pacifist block to remove troops from Iraq, various economic crises and a near-miss on an EU deficit warning -- has put the governing coalition on the defensive. The pressure is not of the type to bring down the Government, nor to weaken the Prime Minister's intention of staying the course in Iraq. The coalition's prospects in the elections, however, are less than rosy, and a poor outcome will increase tensions between member parties. PM Berlusconi sees his upcoming meetings with the President as a way to boost his electoral chances. END SUMMARY. -------------- EXTERNAL PRESSURES -------------- ¶2. (C) The onslaught of negative international political news, combined with some poor domestic performances, is putting increasing political pressure on the Berlusconi governing coalition in the run-up to June 12-13 European Parliament and local elections. The opposition, sensing weakness, seeks to exploit every advantage -- and to create some from scratch. The flood of images of tortured and humiliated Iraqi prisoners at the hands of some U.S. soldiers, occurring in the Iraqi campaign which Berlusconi devoutly supports, does little to help America's self-proclaimed "closest ally in continental Europe." The opposition-induced "what the Government knew and when it knew it" scandal alleging Italy's complicity in torture cover-up makes matters worse. (The widow of one of the Carbinieri killed in the November 12 bombing in Nasiriya (Ref D) either did or did not suggest her murdered husband told her he had seen prisoner torture and reported it to his superiors. The widow claims her remarks to a journalist were manipulated.) ¶3. (C) Meanwhile, Italy's hostage crisis drags on, with the �0A;three hostages seemingly still alive, but no sign that they will be freed soon -- contributing to an image of an ineffectual government. Intensified fighting throughout Iraq, including in Italy's sector, resulted in one Italian killed and 16 wounded in recent days. These exceptional events overlay the already vocal controversy over the Italian troop presence there. The majority of the Italian public does not support Italian involvement in Iraq (about 70 percent, when asked about the war itself, although only 52 percent supported immediate withdrawal of Italian troops). The far-left political spectrum has taken its cue, endlessly protesting the U.S. presence in Iraq and calling for an immediate withdrawal of Italian troops. ¶4. (C) Until recently, moderates in the center-left opposition had taken the high ground, acknowledging the humanitarian nature of the mission, supporting Italian troops under pressure, but demanding an increased UN role. That changed under the weight of the prison torture reports. In a May 13 meeting led by European Commission President (and opposition leader and expected candidate against Berlusconi in the next national elections) Romano Prodi, the moderate opposition switched tacks to call for the withdrawal of troops, absent "a radical change" before May 20. (PM Berlusconi is slated to appear before Parliament to defend the Government's position on Iraq on May 20, the day after his meeting in Washington with President Bush.) ¶5. (C) The center-left justified its about-face by saying revelations of torture in Iraq erase any concept of a humanitarian mission in Iraq. The opposition plans to craft a resolution to gain the united support of all the left, from the radicals to the moderates. If the resolution calls forthrightly for troop withdrawal, that will be easy going. If the moderates seek to parse what they mean by "radical change," they risk losing those further to the left. This has made the Berlusconi Government's balancing act more delicate, as it seeks to maintain its commitment to building Iraqi democracy while needing a credible showing in upcoming elections. -------------- MEANWHILE, ON THE DOMESTIC FRONT -------------- ¶6. (C) If external events were not enough, Berlusconi has also faced a series of internal challenges, not sufficient to threaten the stability of his coalition, but enough to increase tensions and add to the political perception of a government "on the run." Wildcat strikes at Alitalia, Italy's national flag airline, disrupted domestic and some international flights for over a week. The Government's response -- select a new CEO and offer a government-backed bridge loan -- is under criticism, even from some within the coalition. At the same time, strikes at a FIAT plant resulted in lost production of tens of thousands of automobiles (although the wage agreement part of the package called for only modest wage increases over eighteen months.) Italy barely escaped a pre-election "early warning" for potentially violating the EU's three percent budget deficit/GDP ceiling. (COMMENT: Prodi must not have been asked for his views on that decision. END COMMENT.) ¶7. (C) The Government pushed back, declaring its intent to implement spending cuts, balanced by tax cuts, soon. In one positive economic development, the Senate passed a long-awaited, if modest, pension reform measure that will raise the retirement age -- but this will also require careful explanation to the electorate. The continued bleak economic picture has contributed to an image of a coalition lacking a program, unity and resolve. -------------- IT'S ABOUT VOTES, AND THE PRESIDENT CAN HELP -------------- ¶8. (C) The unrelenting onslaught of negative news makes the Government look weak, and all indicators suggest the center-right coalition parties will see setbacks in June, both in local elections and in the European parliamentary elections. This is normal for mid-term elections, but the trend is exacerbated by current events. The opposition has been quick to seek advantage, with the about-face on keeping troops in Iraq the prime example. The Government has the votes to defeat any resolution introduced by the opposition and will do so. A motion calling for immediate troop withdrawal will not weaken Berlusconi's resolve to keep Italian troops in Iraq; DefMin Martino held the line in an intense "question time" before the Senate May 13. Likewise, the motion is unlikely to cause a rupture in the governing coalition that would bring down the Government; this coalition will hold through and past the elections. ¶9. (C) Such a motion, however, would be extremely popular with the Italian public and a highly effective campaign ploy. The opposition has made little headway with counterproposals on economic issues and has essentially no platform to juxtapose against the governing coalition's. So it sees the advantage in having June 12-13 European Parliament-local elections turn on events in Iraq, on the question of "peace or war." Presented with such an ultimatum, the Italian public is solidly in favor of "peace." A united opposition motion on Iraq will enhance prospects for a poor showing by the four governing coalition member parties, with Berlusconi's Forza Italia and DPM Fini's National Alliance likely to take the biggest hits. ¶10. (C) His upcoming meetings with the President are an integral part of Berlusconi's strategy. For the committed leftist electorate, the encounters are only negative -- but Berlusconi will not win votes from this sector, in any case. For committed rightist voters, the meetings will help, and might convince some to vote for Forza Italia, rather than one of the other coalition partners. (Voting will be proportional, pitting each party against the others in a test of strength.) But the test is Italy's centrist, uncommitted voters. Left, right and center are closely balanced in the Italian electorate. The winning coalition is the one that attracts the center. Berlusconi is banking that the center will be attracted by a Prime Minister who can deal effectively on the international stage, even with the leader of the world's only superpower. ¶11. (C) Some -- mostly those on the far left -- will see the test as being whether Berlusconi can convince the President to ask Secretary Rumsfeld to resign. There are some calls for this, but we doubt the Prime Minister would think of making such a suggestion. Most will look to see whether the President and the Prime Minister interact as equals, whether Italy is involved in the development of a new UN resolution on Iraq, and whether Berlusconi secures a renewed expression of America's determination to see justice done in the torture cases. If so, Berlusconi is betting on a pre-election boost from his contacts with his good friend. ¶12. (U) Minimize considered. Visit Rome's Classified Website: http://www.state.sgov.gov/p/eur/rome/index.cf m SKODON NNNN 2004ROME01911 - Classification: CONFIDENTIAL