ITALY: CENTER RIGHT NEEDS DRASTIC CHANGES TO WIN,

C O N F I D E N T I A L ROME 001785

SIPDIS


E.O. 12958: DECL: 25X1-HUMAN
TAGS: PGOV ECON IT ITALY NATIONAL ELECTIONS
SUBJECT: ITALY: CENTER RIGHT NEEDS DRASTIC CHANGES TO WIN,
ACCORDING TO MOI TRADE VICE MINISTER URSO

REF: ROME 1623

Classified By: DCM EMIL SKODON, REASON 1.4 (D).

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SUMMARY AND COMMENT
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1. (C) Vice Minister of Productive Activities Adolfo Urso
told the Ambassador May 16 that the center-right coalition
seems destined for defeat in the next national elections
unless it takes drastic measures soon. Urso believes a
larger, more unified center-right party needs to be created,
with a leader less polarizing than PM Berlusconi. Urso's
preferred candidate to lead the new party would be Chamber of
Deputies President Casini, who could potentially attract more
supporters of the center-left than Urso's own party leader,
Gianfranco Fini. The Vice Minister said the onus is on
Berlusconi to decide whether he wants to lead the
center-right to defeat, something Urso believes is likely
given Italy,s poor economic performance, which overshadows
the government's accomplishments over the last four years.
We believe many of Urso's colleagues may find his argument
persuasive and could agree that the right might do well to
select another leader, perhaps offering Berlusconi the
Presidency. Likewise, selecting the personable, attractive
Casini to lead the right could well, as Urso suggested, put
the center-left in disarray, making it rethink its choice of
the prosaic Prodi and opening the coalition to internecine
warfare among its leaders for heading the left's ticket. END
SUMMARY AND COMMENT.


2. (C) The Ambassador's farewell call on Vice Minister of
Productive Activities Adolfo Urso (who is responsible for
Italian foreign trade policy) turned into a candid political
discussion about the future of Italy,s center-right
governing coalition. Urso, a leading member of the National
Alliance (AN, the second-largest party in the coalition) and
an ally of Foreign Minister/Deputy Prime Minister/AN party
leader Gianfranco Fini, told the Ambassador that the
coalition needed to take two decisive steps if it hopes to
win Italy,s next national elections: 1) a larger, united
center-right political entity needed to be created, and 2)
this new party needed a more attractive, less polarizing
figure than PM Berlusconi to lead it to victory.

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RIGHT NEEDS SINGLE CENTRIST PARTY...
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3. (C) Urso envisioned an expanded center-right political
party incorporating AN, Forza Italia (FI ) Berlusconi's
party, the largest in the governing coalition) and the
smaller, more centrist Union of Christian Democrats of the
Center (UDC). A larger, more cohesive party closer to the
political center was needed in order to attract a larger
percentage of the Italian electorate, Urso said. Such a
party needed to be firmly planted in the European tradition,
with Christian roots and an Atlanticist orientation. The
party must also be national in scope, with a base throughout
the country. (Note: AN and UDC have support throughout the
country. The constituencies of FI and remaining coalition
partner Northern League are concentrated in northern Italy.)
Urso rejected the possibility that Umberto Bossi's Northern
League could be integrated within the new party, since it did
not have a national orientation and would be viewed
unfavorably by other mainstream center-right parties
elsewhere in Europe, with which the new party would hope to
be associated. Urso did not exclude the formation of a
political coalition between the new party and the League
(among other parties),however.

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...AND A NEW LEADER
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4. (C) Urso told us that he did not foresee Berlusconi's
being able to lead the center-right to another victory in the
next elections, unless the campaign focused on non-economic
issues, which he thought unlikely. Given his support to Fini
within AN, Urso surprised us by saying he did not think the
time was ripe for Fini to lead the center-right either. Urso
noted that, though Fini might attract more voters than
Berlusconi, his presence at the head of the coalition would
jeopardize its continued cohesion given the views of some of
the smaller parties in the center-right. (Comment: We
assume this was a reference to those who still dwell on AN's
Fascist past. Fini, with Urso's support, has moved AN toward
the center, away from its dark ancestry. Some years ago, it
would have been anathema even to think of AN in a centrist
grouping. End Comment.)



5. (C) Rather, in Urso's view, the most electable candidate
to lead a new, larger center-right party was Pier Ferdinando
Casini, the President of the Chamber of Deputies and former
president of one of UDC's founding parties. Casini would be
able to placate important political groupings, such as the
Catholic church, while also appealing to centrist voters who
have gravitated to the center-left because of their
disaffection with Berlusconi. Urso suggested that with
Casini leading the center-right into the elections, the
center-left would have second thoughts about the electability
of its own current leader, former PM (and former European
Commission President) Romano Prodi. Urso asserted that a
Casini candidacy would provoke a "crisis" in the center-left.

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BUT WILL BERLUSCONI AGREE?
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6. (C) Berlusconi will have to decide whether he wants to
lead the center-right to an apparent defeat next year, or
swallow his pride and let another leader take over, according
to Urso. Berlusconi should welcome the creation of a larger
party incorporating FI, Urso said, as the best way to ensure
the survival of its ideals once Berlusconi passes from the
political scene. Urso did not predict whether Berlusconi
would step aside )- but he commented that the decision was
Berlusconi's to make, as Urso could not envision either the
creation of a larger center-right party or the advent of a
new center-right leader unless Berlusconi were to acquiesce.
Urso said the results of the May 16 elections in the Sicilian
city of Catania would be a strong test for Berlusconi )- the
loss of the FI candidate for mayor (Berlusconi's personal
physician) in this FI stronghold would further weaken
Berlusconi politically. (Note: Umberto Scapagnini, FI's
physician mayor, handily retained his seat, leading
Berlusconi to comment that the center-right "wins with me,
but loses without me.")

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WHAT THE GOVERNMENT HAS (AND HASN'T) ACCOMPLISHED
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7. (C) Urso lamented the current unpopularity of the
governing coalition, despite much good that had been
accomplished in the last four years. He listed a more robust
foreign policy and increased and more effective attention to
defense and national security issues as well as attention to
moral issues. The government's prime failure was in not
turning around the Italian economy. Urso told the Ambassador
that, in hindsight, after the September 11 terrorist attacks,
the Berlusconi government (then just a few months old) should
have declared a national economic emergency and implemented
drastic reforms to jump-start economic conditions. Instead,
the government pinned its hopes on an eventual economic
recovery, which occurred in many other parts of the world,
but not in Europe. (Recent statistics indicate Italy went
into recession in the last quarter of 2004.) If the upcoming
electoral campaign revolves around Italy,s lackluster
economy, as Urso predicts, the center-right seems destined to
lose. Another Berlusconi-led campaign might squeak back into
power only if outside events divert the electorate's
attention from the economy, he added.

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CHINESE TEXTILES
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8. (C) In addition to discussing Italian politics, the
Ambassador also raised the issue of Chinese textile imports,
noting the USG decision of May 13 to invoke safeguards on
certain textile imports from China. Urso, who has been among
the most vocal European trade officials on the threat such
imports post to European industry (Reftel),said he hoped the
U.S. decision would help spur the European Commission to take
final action soon. (He acknowledged the fear that any
closing of the U.S. market might push the Chinese to export
more aggressively to Europe.) Urso hoped that EU Trade
Commissioner Mandelson would move the EU's own safeguards
inquiry forward before the French vote on the EU constitution
at the end of May, though he said he could not be sure
Mandelson would do so.

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COMMENT: URSO MAY MAKE SENSE
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9. (C) Urso's analysis may seem dead on to many on the
center-right. It would take enormous effort by Berlusconi to
recoup the personal popularity he has lost, not only from the
center-right's setbacks in 2004 and 2005 balloting, but even


more perhaps with his inability to carry through on the
economic promises that were among his most appealing features
to voters. The dream of being rich like the self-made
Berlusconi was a tremendous attraction to at least some
Italians.


10. (C) If the right is convinced Berlusconi cannot again
lead it to victory, what would it take to persuade him to
step aside? The promise of the Presidency of the Republic
might be an appropriate incentive; it is a position with
great stature, normally reserved for an elder statesman. To
fulfill the promise, however, the coalition would need a very
strong majority. Normally, Parliament selects the President
with at least a nod toward consensus among governing and
opposition parties. Berlusconi would never win support from
the left, so the right would have to count on a solid and
significant coalition. That, however, might serve as a
further enticement to the parties to work together to secure
a significant electoral victory.


11. (C) Casini is not necessarily the obvious
standard-bearer for a new "center" center-right party --
although it is his dream to lead such a party. UDC is only
the third party in the current coalition, and its electoral
results have done little beyond keeping the party in
Parliament: 3.2% in 2001 national elections, 5.9% in 2004
European Parliament elections, and 6.1% in 2005 regional
voting. While these results are not directly comparable to
each other, they might suggest an upward trend or a move
toward the center in the Italian electorate.


12. (C) Casini may bring lower negatives than other
potential right leaders. Compared directly to AN's Fini, the
more likely prospect in terms of electoral weight, Casini
comes from the more neutral Christian Democratic past, viewed
against the Fascist cloud which hovers distantly over Fini.
Fini has worked intensely, and with considerable success, to
push that cloud away, winning plaudits from Italian Jewish
organizations and Israel, but World War II and Benito
Mussolini may not be far enough away for some Italians,
especially centrists and left-leaners, to accept him at the
top of the ticket. Besides the dream of being rich,
Berlusconi and Forza Italia also offered Italians a fresh
alternative to two discredited Italian pasts -- the Fascists,
and the Christian Democrats (DC) brought down in 1990s
corruption scandals. If FI is now discredited, the young,
handsome Casini, coming from the DC past, may be the more
palatable return to the tried and true.


13. (C) While routine center-left disarray has lately
attracted less attention against the greater distraction of
the center-right's implosion, the left coalition remains
troubled. The "Union" (the coalition led by Romano Prodi)
did quite well in 2004 and 2005 voting, but in May 15-16
local balloting in Sicily, Francesco Rutelli's Daisy, the
most centrist party in the center-left coalition, gained a
higher percentage of the vote than the larger Democrats of
the Left (DS) in Catania (12.5% versus 5.5%),and pulled
almost even in Enna (22.5% versus 24.3%). This, combined
with long-standing animosity between Prodi and Rutelli, and
DS's history of incorporating smaller parties (which later
lose their independent name, symbol -- and leadership
positions),led Rutelli to move away from the left's unified
electoral list. Daisy has (for now) declared it will run its
own ticket for proportional voting, although it would
necessarily still run in a center-left coalition for majority
seats. Extrapolating a move to the center within the left,
as well as the right, from these developments (a bit
presumptuous),they could support Urso's contention that the
electorate may be ready for a more centrist option in the
next national elections.


14. (C) Prodi's asset to the center-left is, ironically,
his lack of charisma. Not only does it soothe other
potential center-left leaders, who can feel quietly superior,
but it may work to his advantage in a contest with
Berlusconi, who alienates many with his too-abundant
personality. In a contest with the personable Casini,
however, the left may see Prodi's stolid, professorial
demeanor fade in its appeal. Thus, when Urso suggests a
Casini candidacy could throw the left into disarray, we think
he has a point. The coalition does not have far to go to
reach that state. It is not automatic, however, that Casini
would generate enthusiasm and guarantee turnout on the right
end of the political spectrum, as did Berlusconi. In a poll
published April 30 in leftist La Repubblica, Fini
consistently outscored Casini in a sampling of center-right
voters. Even among UDC voters, 52% listed Fini as the person
"preferred to lead the Council of Ministers," compared to 33%
for Casini and 53% for UDC Secretary Marco Follini.
(Respondents apparently could give more than one name, as


totals exceed 100%.) Of course, the goal of a more centrist
center-right party would be to attract new voters, beyond
those already committed to the center-right.

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2005ROME01785 - Classification: CONFIDENTIAL