ITALY-EU: BERLUSCONI STANDS FIRM, BUT PRODI

UNCLAS ROME 002178

SIPDIS


SENSITIVE
FRANFURT FOR WALLAR

E.O. 12958: N/A
TAGS: PREL PGOV ECON IT TU EUN ITALY NATIONAL ELECTIONS
SUBJECT: ITALY-EU: BERLUSCONI STANDS FIRM, BUT PRODI
REVEALS DOUBTS ON TURKISH ACCESSION


1. (U) Sensitive but unclassified; not for Internet
distribution.

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SUMMARY
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2. (SBU) Italian reactions to the French/Dutch rejection
of the EU Constitution are playing out in the context of
national election politics, Italy's own battle with
Brussels over Stability Pact budget/deficit restrictions
and rising concern about illegal immigration. PM
Berlusconi continues to defend both the euro and EU
expansion, but on June 21, former EC President and center-
left leader Romano Prodi surprised many by calling into
question Turkey's accession process. Should Prodi lead
the next government, Italian support for Turkish EU
membership could weaken considerably. END SUMMARY.

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EURO HERE TO STAY
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3. (U) Speaking in Parma at a joint press conference
with European Commission President Jose Manuel Barroso
following the inauguration of the European Food Safety
Authority on June 21, PM Silvio Berlusconi dismissed
calls by Northern League allies to return to the lira,
saying it is "neither possible nor convenient to walk out
of the euro." Berlusconi posited that the Maastricht
Treaty helped contain expenses for Italy and other
countries. It must, however, be interpreted with "some
flexibility" and the EU should assess the possibility of
having a European economic policy, because at the moment,
the European Central Bank can only fight inflation.


4. (U) In an interview June 21 with a small northern
daily newspaper, former European Commission President and
presumed 2006 center-left challenger to Berlusconi Romano
Prodi admitted that the euro "does not work...because
there is no economic development policy," but added that
the "problem is not the euro, but enlargement."

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EUROPE "PAUSES"
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5. (U) According to Berlusconi, "nothing will happen"
after the French and Dutch NOs to the European
Constitutional Treaty and the crisis over EU financial
perspectives. "Europe continues, and there will be more
time to explain the Constitution and reach an agreement
on the budget." Europe is simply undergoing a "pause,"
but the treaty will eventually "see the light," when
people in Europe are fully informed of the benefits that
it will bring to the EU, including the role the Treaty
would allow the EU to play internationally, "on the same
level as the United States, because it gives the go ahead
to European defense and a European army."


6. (U) Berlusconi dismissed coalition partner Northern
League's continuing Euro-skepticism ("Europe is dead,"
party leader Umberto Bossi declared to sympathizers in a
rare public appearance June 19),and said the EU "remains
essential to maintaining peace and security in the
world." The Northern League is "tied to the interests of
its region and its constituents," Berlusconi continued,
but he underscored that the League has not and will not
stop the Government from moving forward on Europe. The
PM nonetheless addressed League concerns when he called
for a Europe "careful to defend its citizens, and not a
Europe of elites and bureaucracy, as we are unfortunately
faced with today." "We need a Europe in which rules do
not drop down from on high," Berlusconi argued, a Europe
with fewer laws, because "many regulations, when dropped
on the various countries, have caused difficulties."

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TURKISH ACCESSION
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7. (U) Berlusconi also reiterated Italy's support for
Turkey's accession to the EU, saying Turkey is an
"important partner because of its geo-strategic position
between Europe and the Muslim world. A Muslim country
that can be democratic and can cooperate with the West"
would be an asset to the future of the EU, he argued.
Therefore, he hoped people in France and Germany "will
change their minds and accept Turkey as a European
country, but this cannot happen tomorrow or the day
after, of course."

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PRODI RETHINKS EXPANSION?
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8. (SBU) Many were shocked the same day to read an
interview by center-left leader and former European
Commission President Romano Prodi in the Italian
northeastern daily "Il Gazzettino," in which he declared
the "real problem is Turkey." Raising concerns later
echoed by current Commission President Barroso, Prodi
stated that the "conditions for Turkey's accession to the
EU in the short or mid-term no longer exist. It is
necessary to rethink" Turkey's future presence in the EU,
because the "referenda indicated strong alarm" about the
country's accession.


9. (SBU) He did not, however, repudiate expansion to
central and eastern Europe and the Balkans, which he had
strongly backed as Commission President. On the
contrary, playing to the local readership, Prodi
suggested that Italy's northeastern region of Veneto,
which has strong economic relations with Romania, would
profit from that country's EU accession.


10. (SBU) Prodi's remarks about Turkey should be seen
partially in the context of the building Italian
political campaign, including internal center-left
politicking. Prodi and Daisy party leader Francesco
Rutelli have been sparring on a number of issues, and
Rutelli in a June 22 press interview essentially accused
Prodi of having rushed EU expansion. According to
Rutelli, "there is only one way out. Stop enlargement
until the Constitutional Treaty is ratified...because a
"Europe of 25 cannot work."


11. (SBU) Not surprisingly, Prodi's comments about
Turkish accession provoked enthusiastic support from the
Northern League, with Reform Minister Roberto Calderoli
applauding: "Bravo, better late than never." The rest of
the governing coalition followed Berlusconi's example in
countering Northern League excesses. DPM/FM Gianfranco
Fini noted that the League's position is "truly in the
minority both in the Government and in Italian public
opinion."

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COMMENT
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12. (SBU) In his press statements, PM Berlusconi
accurately described the Northern League's role in the
coalition's current term: While party representatives
may take "extreme" positions and make inflammatory
speeches in their northern district, in direct appeal to
their voters who crave such rhetoric, the party has not
pressed its Euro-skeptic viewpoint with particular fervor
in Rome. The League is not a threat to Italy's staying
the course on EU expansion or remaining with the euro.


13. (SBU) The Italian economy is officially in
recession, the Government continues to battle Brussels
over EU Stability Pact restrictions on budgets and
deficits, and the man in the street still blames the euro
for many economic woes. Add in growing Italian
discomfort over illegal immigration and historic
antipathy toward Turkey, and you get a formula for
skepticism over EU expansion. While Prodi had likely
factored in all those concerns, his latest statement on
Turkey may be more of a "coming-out" than a change in
position. He has long been lukewarm to Turkish
accession, and Italian support for Turkish EU membership
could weaken considerably should Prodi lead the next
government.

SKODON


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2005ROME02178 - Classification: UNCLASSIFIED