ITALY-CHINA: FINI - LI MEETING DOOMED AFTER EU

C O N F I D E N T I A L ROME 001005

SIPDIS


E.O. 12958: DECL: 03/22/2015
TAGS: PREL ETTC CM IT EUN EXPORT CONTROLS
SUBJECT: ITALY-CHINA: FINI - LI MEETING DOOMED AFTER EU
STATEMENT

REF: STATE 49288

Classified By: Pol M/C Thomas Countryman for reasons 1.4 (b) and (d).


1. (C) Summary. The March 18 meeting of Foreign Ministers
Fini and Li was a disappointment for both sides, according to
the Italian MFA. Li made no headway in pushing for a lifting
of the EU arms embargo, getting instead public and private
lectures from Fini on human rights. So, he gave nothing to
the Italians on their top foreign policy priority, reform of
the UN Security Council. The laboriously negotiated joint
communique was scrapped. Italy would strongly favor a US-EU
Strategic dialogue on China, as well as high-level Italian-US
consultations on China, DPRK and other Asian topics. End
Summary


2. (C) On March 22, Pol M/C and poloff met with Ambassador
Claudio Pacifico, MFA Director General for Asia to discuss
the March 18 meeting between FM Fini and Chinese FM Li.
Before describing that meeting, Pacifico gave an overview of
Italy,s relations with China. He noted that Italian
business interests are constantly pushing the GOI to improve
the relationship with China in order to advance commerical
opportunities. Pacifico said Italy is falling behind
Germany, France and others in that competition. The MFA
must balance this important priority with popularly supported
principles on human rights, as well as the MFA's current
highest priority, preventing UN Security Council reform from
disadvantaging Italy.


3. (C) Pacifico stressed that Italy has never been in favor
of lifting the EU China Arms Embargo but that the position
has evolved from strong opposition to a more flexible stance
over the past six months. Within the EU, Italy has focussed
on tying the lift to improved human rights performance and to
a strengthened code of conduct. During President Ciampi,s
state visit to Beijing in December, Italy took a more forward
leaning approach by stating that Italy would be willing to
consider lifting the embargo as the Chinese made improvements
on human rights issues. Pacifico said that Italian
reservations on the lift had been hard to maintain as other
EU members, especially the UK, gradually dropped their
opposition. Unlike other EU countries (UK, France, Germany,
Spain),the Italian Government does not face any internal
pressure from the Italian arms and military equipment sector
to lift the embargo. He summarized Italy's current position
as "Italy is willing to work to lift the embargo but not
immediately and not automatically and only after the Chinese
take positive actions on human rights issues." This
position, Pacifico explained, is necessary to maintain its
bilateral relations with China, but should not be taken to
indicate support for lifting the embargo. POL MC drew from
Ref A to reiterate strong USG opposition to lifting of the
arms embargo.

FMs' Meeting
--------------

4. (C) Pacifico stated that a great deal of preparation,
including several straight days work by a bilateral working
group, had gone into setting up FM Li,s visit on March 18.
However, due to the negative statement by the EU on the
recently enacted "anti-secessionist" law, the stop in Rome
was plagued by "bitterness" from the moment of arrival.
Pacifico bluntly called the meeting a "failure" for both
sides. Planned signings for negotiated agreements were
abandoned, including an agreed statement on UNSC reform. FM
Fini stood by the EU statement on the "anti-secessionist" law
and FM Li defended the law stating, as he had in his meeting
with PM Berlusconi, that the law gave priority to peaceful
means and that military force would be used only as a last
resort. Fini offered no encouragement on a rapid lifting on
the embargo, saying only that the EU would address it; Li was
visibly bothered by this response. Both in the private
meeting and in his public comments, Fini said that Italy
understood the importance of Taiwan to China, and the Chinese
need to understand the importance of human rights standards
to all Europeans. Pacifico stated that "perhaps the only
positive aspect of the meeting was that the Chinese received
a very clear message that they must reconsider their actions
and rethink their approach." Pacifico said that at the
bilateral level the meeting did not help achieve any Italian
objectives and focus on the "anti secessionist" law did not
leave much time to discuss other issues. The new MFA Office
Director for East Asia, Gianlucca Grandi, who also attended


the meeting, described the exchange as "the toughest meeting
between Ministers I have ever seen."


5. (C) As an example of Chinese behavior, Pacifico mentioned
that the Chinese brought up their concerns about official
Taiwanese participation in Vatican ceremonies in the event of
the Pope's passing away and in the subsequent appointment
festivities for the new Pope. The Italians told him this was
in bad taste. Fini urged Li to normalize relations with the
Vatican. (Pacifico told us that the Deputy Prime Minister of
Taiwan will be visiting Rome and the Vatican for the
inauguration of the new Taiwanese 'embassy' to the Holy See
in the near future. This was not mentioned to the Chinese)


6. (C) Pacifico stated that the Ministers briefly discussed
North Korea, and Italy recognized China as playing a positive
role on that issue. A brief economic discussion focused on
WTO regulations and the need for the Chinese to respect trade
regulations and stop dumping practices. (Note: A sudden
surge in cheap Chinese textiles and shoe imports to has
become a hot issue in Italian domestic politics this month,
with coalition allies of Berlusconi demanding barriers to
dumping). The Chinese agreed to take a look at the issue,
and in turn asked for Italian support in gaining market
economy, designation. Pacifico, however, felt the Chinese
showed no real acceptance on making efforts to restrain their
market practices.

Call for Consultations
--------------

7. (C) Pacifico was disappointed by Chinese behavior and
called for increased direct consultation with U.S.
counterparts in Washington on China and East Asia. He also
proposed setting up an informal closed consultative group of
selected EU countries (UK, France, Germany, Spain, Italy) and
the U.S. to discuss China and other Asian issues,
particularly the DPRK. Pol M/C agreed to forward these
suggestions to Washington, stating that the USG is interested
in a strategic dialogue on China with the EU.

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2005ROME01005 - Classification: CONFIDENTIAL