ITALIAN DEFENSE BUDGET: PM'S OFFICE SEES PROPOSED

C O N F I D E N T I A L ROME 003697

SIPDIS

DEPT. FOR EUR/RPM AND EUR/WE; OSD FOR DASD FATA

E.O. 12958: DECL: 11/02/2015
TAGS: PREL MOPS MARR ECON IT NATO IRAQI FREEDOM
SUBJECT: ITALIAN DEFENSE BUDGET: PM'S OFFICE SEES PROPOSED
BUDGET AS PROBLEMATIC, WORKING TO IMPROVE IT

Classified By: Ambassador Ronald Spogli. Reasons 1.4 b and d.


1. (C) After hearing in the past few weeks from the Chief of
the Italian Defense General Staff and the Minister of Defense
that cuts envisioned by the proposed Italian defense budget
for 2006 would put Italian defense spending in the range of
0.85-to-0.9 percent of GDP, jeopardizing Italian
participation in overseas peacekeeping and defense
procurement programs, Ambassador raised the issue with
Undersecretary to the Prime Minister, Gianni Letta, on
November 2. Ambassador pointed out that: 1) defense spending
by a NATO Ally and G-8 member well below 1 percent of GDP
would send a bad signal to NATO aspirants who were being told
by the Alliance to spend at least 2 percent; 2) the U.S. was
concerned that the proposed budget could put at risk the
important contributions Italy was making in overseas
deployments in Iraq, Afghanistan, the Balkans and elsewhere;
and 3) that the proposed budget would hamper Italy's ability
to participate in critical defense procurement programs in
which the U.S. was Italy's main partner.


2. (C) Letta said the Prime Minister's office agreed that the
proposed defense budget was a problem, recognized the very
important Italian activities that would be put at risk by the
cuts, and noted that there had been some miscalculations
concerning defense requirements when the overall budget
proposal was put together. He assured the Ambassador that
the GOI was working to improve the defense budget before a
final national budget package was completed and approved by
parliament in the coming weeks.


3. (C) Comment: Both the CHOD and the DefMin urged us to
raise our concerns (which they of course share) over the
defense budget with the PM or Letta, with the hope that
hearing it from us, the senior GOI leaders might revisit the
issue. From Letta's reaction, it seemed the PM's office
already knew it had a problem that needed to be addressed.
Hopefully, our having weighed in will steer the matter
decisively in the right direction. We will continue to
closely monitor the work on the defense budget in the weeks
ahead.
SPOGLI