Identifier
Created
Classification
Origin
06ROME1308
2006-05-03 08:25:00
UNCLASSIFIED
Embassy Rome
Cable title:  

ITALY: 2005/2006 REPORT TO CONGRESS ON ALLIED

Tags:  JA KS KU MCAP PREL QA SA US MARR IT TC NATO 
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UNCLAS SECTION 01 OF 08 ROME 001308 

SIPDIS

DEPT FOR SENIOR ADVISOR TO A/S FOR POL-MIL AFFAIRS (PM/SNA)
DEPT FOR EUR/WE AND EUR/RPM
SECDEF FOR OSD/PA&E, OASD/ISA/EUR, OASD/ISA/NP,
OASD/ISA/AP, OASD/ISA/NESA, OASD/ISA/BTF

E.O. 12958: N/A
TAGS: JA KS KU MCAP PREL QA SA US MARR IT TC NATO
SUBJECT: ITALY: 2005/2006 REPORT TO CONGRESS ON ALLIED
CONTRIBUTIONS TO COMMON DEFENSE

REF: STATE 223383

UNCLAS SECTION 01 OF 08 ROME 001308

SIPDIS

DEPT FOR SENIOR ADVISOR TO A/S FOR POL-MIL AFFAIRS (PM/SNA)
DEPT FOR EUR/WE AND EUR/RPM
SECDEF FOR OSD/PA&E, OASD/ISA/EUR, OASD/ISA/NP,
OASD/ISA/AP, OASD/ISA/NESA, OASD/ISA/BTF

E.O. 12958: N/A
TAGS: JA KS KU MCAP PREL QA SA US MARR IT TC NATO
SUBJECT: ITALY: 2005/2006 REPORT TO CONGRESS ON ALLIED
CONTRIBUTIONS TO COMMON DEFENSE

REF: STATE 223383


1. This unclassified cable is Embassy Rome,s contribution
to the 2005 ) 2006 Report to Congress on Allied
Contributions to the Common Defense. Post understands from
Reftel, Paragraph 6, that DOD will secure significant
quantitative data, including defense spending data, from
other sources. Post will provide narrative and, where
available, quantitative inputs for Reftel,s questions. For
the purpose of this cable, USD amounts are calculated at USD
1 = Euro 0.83. Embassy point of contact for this report is
Political-Military Officer Lee R. Brown: telephone:
39-4674-2838; e-mail BrownLR@state.gov.

General Political and Economic Developments
--------------

2. Though Italian governments of both the center-left and
the center-right have traditionally supported U.S. foreign
policy objectives, Prime Minister Berlusconi,s leadership
since 2001 has made Italy America,s strongest strategic
partner in continental Europe. Italy sustained roughly
10,000 troops in overseas missions over the course of
2004-2005. Italy contributes troops and economic assistance
in the Balkans, Afghanistan, and Iraq, counters terrorism at
home and abroad, and allies clearly with us on Iran, Syria,
Lebanon, Sudan, and the Broader Middle East. Within NATO,
Italy supports U.S. efforts to transform the Alliance.
Starting with its fall 2004 European Union
Presidency-in-turn, Italy also worked within the EU to
promote a European Security and Defense Policy that
complements rather than duplicates NATO.


3. Following poor results in the April 2005 regional
elections, Prime Minister Silvio Berlusconi reconstituted his
four-party coalition government of the Center-Right. In
national parliamentary elections, scheduled for April 9,
2006, Berlusconi will once again head the center-right

coalition. Former EU Commission President (and former
Italian PM) Romano Prodi will head the center-left coalition
in the elections. During the latter half of 2005, Prodi,s
coalition maintained a small but consistent advantage over
Berlusconi,s coalition in opinion polls. The gap has
narrowed to almost even in the first two months of 2006.


4. Italy has one of the largest economies in the EU and is a
G-8 member, but has enjoyed little growth over the last
several years. In 2004, Italy ranked near the bottom of the
EU 25 in terms of real GDP growth, beating only the
Netherlands, Portugal, and Malta. Over the past five years,
Italy,s economy has eked out average real GDP growth of
0.74. In 2005, GDP growth was 0.2 percent, with growth of
1.25 percent projected for 2006. An aging population and a
swelling entitlement burden have added to Italy,s problems.
Berlusconi,s tax cuts in 2005 did not stimulate the economy,
but instead helped push Italy,s deficit well over the EU
fiscal limit of 3 percent of GDP. Italy,s 2006 budget
includes USD 33 billion in spending cuts and new revenue
measures to shrink the deficit/GDP ratio to the EU-set
ceiling of 3.8 percent for that year. In spite of budgetary
constraints, however, Italy maintained its economic
assistance and training programs targeted on such priority
areas as Afghanistan, Iraq and the Balkans.

Two Years of Defense Budget Cuts
--------------

5. While budget problems so far have not compelled Italy to
scale back its overseas military commitments, Italy has cut
its overall defense budget for two years in a row. In the FY
2005 budget, Italy reduced its defense spending by 6 percent
from FY 2004. For FY 2006, Italy plans to cut its defense
budget by another 5.1 percent (from USD 16.3 to USD 15.5
billion). As a percentage of GDP, 2006 Italian defense
spending will amount to about 0.90 percent. The lack of
economic growth, combined with EU-mandated deficit caps, has
resulted in downward pressure on Italy,s defense operations
budget. The full impact of these budget cuts on Italy,s
military capabilities remains to be seen, but the Italian
Defense Staff already anticipates substantial reductions in
training and operating expenditures. (See Paragraphs 17-20)

Italy,s NATO Contributions
--------------

6. 2004 NATO Contributions: In the Balkans, Italy deployed
5,274 troops within NATO and EU missions. Italy maintained
its key role in KFOR and promoted and facilitated transfer of
SFOR to EUFOR, re-assigning its forces under EU command.
Italy continued training and leading Multinational
Stabilization Units in Bosnia and Kosovo. Following Kosovo
violence in March, 2004, Italy argued for reform of national
caveats that weaken NATO effectiveness. Italy worked within
NATO and bilaterally to promote the Adriatic Initiative. In
Afghanistan, Italy was a major ISAF contributor, while 236
Italian sailors also supported Operation Enduring Freedom
(OEF) in the Indian Ocean. Responding to an urgent NATO
request, Italy deployed a 500-unit NRF battalion to support
Afghan presidential elections in September 2004. Italy
completed planning for Provincial Reconstruction Teams (PRTs)
at Ghazni and Herat, standing down in both cases at
last-minute U.S. requests. In November 2004, NATO accepted
Italy,s renewed offer to lead a PRT and support a
Spanish-led Forward Support Base (FSB),both at Herat. In
the North Atlantic Council (NAC),Italy advocated
establishing the NATO Training Mission in Iraq. In March
2004, then Italian Foreign Minister Franco Frattini traveled
to Brussels to propose enhancing NATO,s political role to
complement its military transformation, an idea the U.S. also
began promoting in 2005.

2004 NATO Force Contributions (Source: MOD / November 2004)

Afghanistan / ISAF Kabul: 1,025
Albania / NATO HQ Tirana: 365
Albania / Second Naval Group: 145
Albania / Expert Delegation: 31
Bosnia / SFOR: 1,110
Macedonia / NATO HQ Skopje: 19
Macedonia / SFOR Logistic Support: 130
Kosovo / KFOR: 3,430
Mediterranean / Active Endeavor: 185


7. 2005 NATO Contributions: In the Balkans, Italy
maintained 3,650 troops under NATO and EU missions while also
serving as EUFOR commander, EUPM commander, and KFOR
commander (see also Paragraph 14). Italy also commanded NATO
HQ Tirana. In Afghanistan, Italy increased its military
presence, took command in March 2005 of a PRT at Herat,
provided crucial assets to the Spanish-led Herat FSB, and
served as ISAF commander-in-turn and Multi-National Brigade
commander, while 236 Italian sailors supported OEF in the
Indian Ocean. Italy pushed for ISAF expansion and command
restructuring while also signing on to SEEBRIG,s mission to
take over ISAF command in 2006. In Iraq, Italy led NATO
countries by conducting three of four NTM training modules.
Italy participated in NATO-led Pakistan earthquake relief
with 246 troops (see Paragraph 27).

2005 NATO Force Contributions (Source: MOD / December 2005)

Afghanistan / ISAF HQ Kabul: 1,766
Afghanistan / ISAF Herat PRT / FSB: 355
Albania / NATO HQ Tirana: 23
Albania / 28th Naval Group: 143
Albania / Expert Delegation: 32
Bosnia / NATO HQ Sarajevo: 12
Iraq / NATO Training Mission: 31
Macedonia / NATO HQ Skopje: 10
Kosovo / KFOR: 2,497
Mediterranean / Active Endeavor: 223


8. Italy hosts both a Land and a Maritime NATO High
Readiness Force (NRF) HQ. During Afghan presidential
elections in September 2004, Italy provided about 500 NRF
land component members to provide extra security. Italy also
stood up the NRF Maritime Force HQ for one year, starting
July 2005.


9. For Italy,s progress in meeting Prague Capabilities
Commitments, please consult official NATO documents. The
most recent account can be found in Annex 6 of AC/281-N
(2005) 0030 ) FINAL. Embassy Rome POC is ready to forward
this document by classified e-mail on request.

OEF
---

10. In Operation Enduring Freedom, Italy has provided a
series of TF-150 frigates, each with approximately 250
people, to patrol the Gulf of Aden as part of &Resolute
Behavior.8 Support activities include: maritime
interdiction operations; intelligence and maritime
surveillance operations; controlling sea lines of
communication; escorting coalition units and related
shipping; and search and rescue operations. In 2005, the
Italian Air Force contributed 75 military personnel and 2
C-130J aircraft operating from Manas Air Base in Kyrgyzstan.
At CENTCOM HQ, Italy maintained 8 military personnel to
support OEF in 2005.

Operation Iraqi Freedom
--------------

11. In 2004, Italy contributed forces through its &Antica
Babilonia8 Iraq deployment consisting of over 3,264 deployed
personnel (November 2004 MOD figures),which represented the
third largest deployment of a coalition force behind the U.S.
and U.K. The Italian Army provided a brigade HQ element, 1
infantry regiment, 1 engineer battalion (including EOD),
close support units (including NBC),1 logistic support
regiment, medical assets, CIMC assets, and an aviation
element (3-Chinook and 4-AB212 helicopters). The Italian
Navy provided 1 naval infantry company and 1 SEAL detachment.
The Italian Air Force provided 1 helicopter detachment
(3-HH3F),1 cargo aircraft detachment (3-C130J),an aircraft
maintenance unit, and a logistics support unit. Finally, the
Italians also provided one 433-personnel Carabinieri
multinational specialized unit, which began training local
police forces. Italy supported US positions at the UN and in
NATO, strongly advocating an increased NATO role in Iraq.
Italy also pressed for an EU police training mission and was
an active participant in the November Iraq Reconstruction
Conference in Sharm el-Sheik.


12. In 2005, Italy sustained its Iraq commitment despite
political controversy resulting from the March 4, 2005
incident in which an Italian intelligence officer was
accidentally killed at a roadblock by U.S. forces while
taking a rescued Italian hostage to the Baghdad airport. The
GOI deployed the PREDATOR system to support the January 2005
elections in Iraq partially in response to a CENTCOM request.
Italy deployed 3,110 military personnel in Iraq during 2005,
including 31 at NATO Training Mission in which Italy led NATO
countries by conducting three of four training modules. By
year,s end, the Carabinieri had trained 10,516 Iraqis in
basic policing techniques over an eighteen-month period.

2005 OIF Force Contributions (Source: MOD / December 2005)

Kuwait/Air Base Logistical Support: 46
Iraq/Nassiriyah: 2,898
Iraq/Bassora: 43
Iraq/Baghdad: 29
Iraq/C.R.I.: 58
Iraq/NATO Training Mission: 31
Iraq/MNSTC-1: 5
Iraq/Experts at MOD Iraq: 3


13. In 2006, Italy announced it would end its "Antica
Balilonia" mission in Iraq at the end of the year, but that
it would keep a substantial presence in Iraq to assist in
reconstruction and continue training security forces,
including in the NATO Training Mission. At January 2006
U.S.-UK-Italy tri-lateral consultations on Iraq, Italy said
it would lead a PRT in Dhi Qar province to support Iraqi
capacity-building efforts and that it would consider
expanding training of Iraqi security forces from other
provinces in new areas (gendarme, special police units, and
possibly border police).

EU / UN / MFO Missions
--------------

14. As a result of the Italian-supported handover of
security responsibilities in Bosnia from NATO to the EU,
Italy,s participation in EU missions grew rapidly in 2005,
with former SFOR troops transferred to EUFOR (see also
Paragraphs 6 and 7). Italy also took command-in-turn of both
EUFOR and EUPM. In 2005 Italy contributed airlift for EU and
NATO use in Darfur Sudan. In December 2005, an Italian
Carabinieri general took command of the EU,s border
monitoring mission at Rafah, Gaza.

2004 non-NATO Balkans Contributions (Source: MOD / November
2004)

Bosnia/EUPM: 23
Balkans/EU Monitoring Mission: 15
Macedonia/EUPOL Proxima: 5
Kosovo/UNMIK: 1

2005 non-NATO Balkans Contributions (Source: MOD / December
2005)

Bosnia/EUFOR: 892
Bosnia/EUPM: 13
Balkans/EU Monitoring Mission: 15
Macedonia/EUPaD (former Proxima): 3
Kosovo/UNMIK: 2


15. Italy contributed military personnel to the
Multinational Force and Observers (2004: 77; 2005: 76) and
various UN operations (2004: 73; 2005: 77) in the Middle East
and Africa.

COESPU
--------------

16. Following President Bush,s and PM Berlusconi,s
agreement at the June 2004 Sea Island G-8 Summit, Italy
established the Center of Excellence for Police Stability
Units (COESPU) at Vicenza to meet long-term G-8 goals for
enhancing international gendarme peacekeeping capability.
The Italian Carabinieri spent about USD 11 million and
committed 143 full-time Carabinieri personnel to COESPU,
while the U.S. provided financial support of USD 10 million
for FY 2005. In December 2005, the first class of 29 senior
officers from Kenya, India, Jordan, Morocco, and Senegal
graduated from COESPU,s high-level course. More courses,
with more countries participating, are scheduled for 2006.

Military Acquisitions
--------------

17. In 2004-2005, Italy continued to upgrade its defense
capabilities, despite significant defense budget cuts. Italy
aimed at increased interoperability with recent and
forthcoming acquisitions and equipment available to support
surveillance, air defense, troop deployments, and allied /
multi-national operations. Italy,s capability for
long-range deployment will be substantially augmented with
the USD 800 million purchase and expected 2006 delivery of
the first of four KC-767 Tankers. Italian airlift resources
were enhanced with the USD 1.7 billion direct commercial sale
of 22 C-130J aircraft and 12 C-27Js for tactical transport
aircraft. Italy,s air-to-air defense has been significantly
upgraded with a USD 759 million lease and delivery of 34 F-16
aircraft as an interim replacement of their F-104s while
waiting for delivery of Eurofighter aircraft. The F-16 lease
will be extended in 2006 for an additional five years (to
2011). The Italian Air Force is the first to achieve
operational status of the Eurofighter Typhoon with the
delivery of 10 (out of 121 ordered) aircraft. The
air-to-ground defense role, currently supported by AV-8B,
CH-47 helicopters, Tornados, and AMX aircraft, will see a
state-of-the-art impact through Italy,s USD 1.028 million
investment in the U.S.-led, nine member nation, F-35 Joint
Strike Fighter (JSF) Program. Italy is the third largest JSF
contributor (behind the United States and Great Britain) to
include Level II partnership. In the long term, Italy plans
on purchasing 131 JSFs. Italy marked considerable ISR
progress with its recently completed USD 63 million purchase
of five Predator Unmanned Aerial Vehicles (UAV) and one
ground station: these new assets were deployed in support of
operations in Iraq.


18. Italian MOD acquisition plans will improve Italy,s
ability to support forces deployed in country or in other
theaters through missile defense and armament programs.
Italy will contribute to 17% (USD 674 million) within a
cooperative development program with Germany and the U.S. for
the Medium Extended Air Defense System (MEADS). Italian
air-to-air armament inventory, already consisting of AMRAAMs,
HARMs, Mavericks, and Stinger ATAL missiles, will be
supplemented with the addition of Advanced Anti-Radiation
Guided Missiles (ARGM),the Meteor Beyond Visual Range
Air-to-Air (BVRAAM) missile, and the AIM120-C Advance Medium
Range Air-to-Air Missile (AMRAAM). Italy,s air-to-ground
armaments, currently consisting of Joint Direct Attack
Munition (JDAM) will be complemented with the addition of the
Long Shot bomb guidance system and Small Diameter Bomb (SDB).
Ground-to-Air Defense systems have been substantially
improved through the acquisition of Stinger Block 1, and
Tube-Launched / Optically-Tracked / Wire Guided (TOW
Missiles) with potential upgrades to include the Avenger
Guided Missile Battery, Multiple Launch Rocket System (MLRS)
and Third Generation Anti-Tank Systems.


19. U.S.-provided training is a fundamental part of Italian
interest in acquiring leading edge weapon systems and
armaments. Italy,s emphasis is on the &operational
function8 of these weapon systems that can only be
accomplished through intensive training. Senior Italian
leadership continues to acquire U.S. military tactics,
strategies, and philosophies at American schools that support
weapon systems with the intent to integrate their forces
within multinational contexts in the face of future
challenges. Additionally, continuous deployments of Italian
forces supporting OEF and OIF have provided them with
first-hand knowledge of sophisticated U.S. equipment. 333
Italian military personnel received U.S. training in 2005.


20. 2006 budget cuts make it less likely that Italy will
propose ambitious new procurement programs in the near
future; indeed, some procurement programs not yet secured
under contract may be threatened. To meet current
procurement commitments, the MOD,s 2006 budget does include
a procurement supplement of USD 66 million this year and for
14 subsequent years, totaling USD 991 million for the MOD,s
Major International and Interforce Programs. In addition,
the Ministry of Productive Activities provided funding in
2006 for the Italian-French Multi-Mission Frigate Program
(FREMM) over the next three years, USD 36, 36, and 90 million
respectively. However, procurement programs not already
under contract, such as the Joint Surveillance and Command
Program (JSCP),MMA, and C-17, may be at risk in coming years.

Defense Industry Capacity-Building
--------------

21. Budget austerity measures and a stagnant economy will
drive the GOI to leverage its defense spending to continue to
gain access to cutting edge technologies as part of a broad
effort to revive the economy. In the face of economic
pressures, the GOI seeks to redouble efforts to use defense
contracts to create jobs and obtain new technology that can
be used to give Italian companies a competitive advantage.
The amount of technology transfer and job creation resulting
from Italian participation continues to weigh heavily in
defense procurement decisions. Disappointment in the outcomes
of previous technology transfer agreements will guarantee
close scrutiny of future projects.


22. In an effort to facilitate increased economic activity,
the Italian Association for Aerospace Industry is working
with the Ministry of Productive Activities to identify
aerospace plants which can form the heart of &Industrial
Basins.8 The goal is to create industrial centers that
enable companies to capitalize on concentrations of knowledge
and skilled labor. Non-aerospace projects are already making
substantial contributions to the regional economies of
Liguria (FREMM),Puglia and Piemonte (Eurofighter and NH-90
helicopter),and Tuscany (C-130J maintenance contracts). The
Augusta Westland/Lockheed Martin successful bid for the
US-101 helicopter for U.S. Presidential airlift support gave
the Italian defense industry entry into what had been a
U.S.-only market.


23. Given the GOI,s goal of using defense contracts to
promote technology transfers and economic growth, it is
possible that future joint projects such as the C-17 and JSCP
could be scaled back or cut unless the GOI and Italian
industry are confident that the economic and tech transfer
benefits of participation outweigh the costs. Italian
overseas deployments have demonstrated the importance of
interoperability between U.S. and Italian forces, but
economic pressures may push the GOI to seek alternative
sources of defense procurement that might better withstand
domestic scrutiny.

Italian Army Modernization
--------------

24. Italy ended the draft in 2004 in favor of an
all-volunteer military. The Italian Army is now seeking to
create a highly mobile force prepared for long deployments
overseas, but provided with a standard of living and pay
structure befitting professional status. The Italian Army is
studying the use of open barracks, which are more attractive
to military families and better integrated with surrounding
communities. Moves to become more expeditionary are centered
around the Army,s Corps Headquarters at Solbiate Olona and
three division commands, two of which are near completion.
Today, six of 11 brigades are heavy, but the Italian Army is
reducing them to three, alongside four medium and four light
brigades. In 2005 the Army created a new intelligence,
surveillance, target acquisition and reconnaissance /
electronic warfare brigade and a psychological operations
regiment, while the establishment of a second
nuclear-biological-chemical detection battalion is still in
progress.


25. According to its modernization plans, the 112,000-strong
Italian Army will include 67,000 deployable soldiers, all of
whom would be available for NATO Article 5 situations. For
crisis-response, 13,000 will be deployable overseas, with
three same-sized contingents ready to rotate, totaling
52,000. The remaining 15,000 deployable soldiers will cover
NATO, EU and national security duties. Of the 45,000
non-deployable troops, 15,000 will work on command and
control, headquarters and training tasks; 30,000 will be
employed by inspectorates, logistics and other units.

Economic Assistance
--------------

26. Budget constraints have shrunk Italy,s overall
development assistance during recent years. In 2004, Italy
gave USD 490 million (Euro 407 million) in worldwide economic
assistance, including grants and credits. Of this, Italy
gave roughly 25 million USD in assistance to the Balkans in

2004. For Afghanistan, Italy pledged USD 174 million (Euro
145 million) from 2004 through 2006, a figure which includes
support for Italy,s role as international coordinator of
Afghan justice sector reform. In 2004, Italy provided USD
27.85 million to support governance capacity of other
nations, often channeling assistance funds through
multi-lateral and non-governmental organizations. Italy has
disbursed USD 75,600,000 in Iraq since 2004 in bilateral
projects or non-IRFFI trust funds, with USD 15,876,000
contributed since 2004 to IRFFI trust funds. No economic
assistance figures are yet available for 2005. FY 2006
overall economic assistance will again be cut substantially,
though Italy is protecting pledged assistance in priority
areas such as Afghanistan and the Balkans.

Disaster Relief / Humanitarian Assistance
--------------

27. In 2004, Italy provided USD 53.55 million in
humanitarian assistance. In 2005 Italy pledged USD 95
million for tsunami relief and USD 27.4 million for Pakistan
earthquake relief (see Paragraph 7). Italy was also among
the first countries to offer assistance following Hurricane
Katrina. After discussion with FEMA, Italy,s Department of
Civil Protection sent a C-130 on September 4 to Washington
with emergency supplies that were later delivered to an Air
Force base near Little Rock.

Non-Proliferation
--------------

28. Italy continued its 2002 ten-year G-8 Global Partnership
commitment of USD 1.2 billion (Euro 1 billion),including its
financial pledge to the bilateral agreement with Russia: 360
million euro over ten years to honor the Italy-Russian
Federation bilateral agreement on the dismantlement of
decommissioned nuclear submarines and the management of
radioactive waste and spent nuclear fuel. However, the 2005
budget crisis induced the Italians to break off negotiations
on a legally binding U.S.-Italy agreement facilitating
Italian financial contribution to the Elimination of Weapons
Grade Plutonium Production Program (part of the Global
Partnership on the Spread of Weapons of Mass Destruction) for
nuclear reactors in Zheleznogorsk and Seversk, Russia. In
June 2005, Italy supported the successful U.S. initiative at
the IAEA Board of Governors meeting to establish a new
Special Committee on Safeguards and Verification. In
November 2005, Italy participated in the GTRI "Gap" Program:
Officials from SOGIN (Society for Managing Nuclear
Facilities) hosted a DOE/NNSA team to discuss finding a
disposition path for, among other nuclear materials,
separated plutonium (Pu) stored in the following facilities:
Saluggia, Casaccia, Trisaia (all in Italy),and Sellafield
(UK).


29. During 2004-2005, Italy was a core participant in the
Proliferation Security Initiative (PSI),taking part in two
PSI exercises and in 2005 activating PSI procedures to search
suspicious containers in Cagliari harbor. Italy has backed
the U.S. and the EU in pressing Iran to observe its
international non-proliferation responsibilities. Italy
worked with the U.S. to block dual use technology exports to
states of concern, demonstrating flexibility in stopping
exports not covered by multilateral agreements. During
2004-2005, Italy participated in two separate U.S.-scripted
exercises to test contingency plans for hypothetical
chemical/biological/nuclear terrorist attacks on U.S.
military facilities at Italian bases. By the end of 2005,
five Italian ports were participating in the Container
Security Initiative: Le Spezia, Genoa, Naples, Gioia Tauro,
and Livorno.

Anti-Terrorism
--------------

30. In 2004-2005, Italy cooperated with the U.S. and with
other governments to disrupt significant operations,
including the arrest of "Mohammad the Egyptian," suspected of
involvement in the Madrid bombings, and has been forthcoming
on several sensitive investigations. The Interior Minister
has made vigorous use of the expulsion option newly available
under Italian law. Magistrates in Rome, Milan, Naples,
Bologna, Turin and Bari have cooperated with DOJ, Legat, NCIS
and other U.S. agencies. With assistance from U.S. agencies,
Italy made significant inroads in dismantling the new Red
Brigades-Communist Combatant Party domestic terrorist
organization and pursued local anarchist suspects. There
were no terrorist acts in Italy against U.S. persons,
businesses, or interests.


31. Under Italy's EU presidency in 2004, the EU designated
Hamas as a terrorist organization. In 2005, Italy supported
U.S. efforts to encourage Syria to abide by international
norms by canceling two high-level Syrian visits. Italian
leaders spoke out strongly against Syrian interference in
Lebanon and condemned the assassinations of leading Lebanese
political figures. Italy forcefully criticized the new
Iranian government's remarks against Israel, and Iran's
intentions to resume nuclear enrichment activities.


32. In 2005, the Italian Council of Ministers approved and
submitted to Parliament, as part of the implementing
legislation of the third EU Money Laundering Directive, a law
allowing seizure and forfeiture of non-financial assets
belonging to terrorists and their supporters. During the
same year, Italy submitted more terrorist names for
consideration by the UNSC 1267 Committee than any other EU
member state. Italy also urged EU members to submit
terrorist names to UNSC 1267 Committee. Italy participated
in U.S.-led training including cyber crime, financial and
transportation protection, and immigration (300 trained).
Cumulative terrorist assets frozen by the Italians were top
among all EU countries. Italian security agencies closely
cooperate with Mission agencies on exploiting available
resources, training, and sharing terrorist-related leads.
Finally, Italy and the U.S. established a strong working
relationship in preparation for the February 2006 Turin
Olympics and both sides have settled on appropriate levels of
cooperation and information sharing.

Changes in U.S. Use of Italian Bases: 2004 - 2005
-------------- --------------

33. While in 2004 Italy provided its normal high level of
support for the roughly 15,000 U.S. military personnel
stationed in Italy, landmark basing changes took place in

2005. Italy agreed to the first stage of the U.S. Army plan
to double its presence at Vicenza with new facilities at Dal
Molin Airfield. Italian and U.S. negotiators completed the
draft Sigonella Technical Arrangement (TA) governing U.S.
Navy use of that facility in Sicily. The Sigonella TA is
expected to be ready for signature in 2006, when negotiations
will also begin on TAs for Camp Darby, Capodichino, and San
Vito. With Italian support, NAVEUR HQ transferred from
London to Naples, while 6th Fleet HQ transferred from Gaeta
to Naples.

Cost Sharing
--------------

34. Italy does not provide cash assistance or replacement in
kind assistance in support of stationed US forces. The
Italian government does not rent or lease property to US
forces. All fixed structures utilized by the US on Italian
military bases are free. Italy provides free utility
connections to base perimeters (but the US pays local utility
companies for the service utilized),free external security
for the bases, and no-fee training ranges. Italy does not
pay salaries for US employees on the bases.

Indirect Cost Sharing
--------------

35. Italy makes significant contributions of land provided
to the US to operate 7 principal military bases and numerous
sites on a cost-free basis. This estimated USD 260,000,000
per year in savings in foregone rent includes access to 3
airbases, 2 homeports, 1 large ammunition and equipment
staging base, and a homeport that possesses the only
maintenance/repair tender ship in the Mediterranean or
Atlantic. Italy provides security forces and anti-terrorist
protection, Carabinieri support for armed personal security
protection of U.S. dignitaries, and a robust
telecommunications infrastructure that carries U.S. military
data and voice signals. Additionally, Italy provides safe
lines of communication (airports, sea ports, railways,
highways, air routes) to allow a high volume of U.S. forces
and equipment. The U.S. Navy heavily uses the military part
of Capodichino airport in Naples, while Italy holds available
other civilian/military airfields for sporadic U.S. uses:
these include Pisa, Elmas, Rimini, Brindisi, Fiumicino,
Ciampino, and Malpensa. Italy also hosts a US/NATO munitions
storage facility.


36. During 2004-2005, Italy increased the number of Italian
armed security forces around military and government
agencies, participated in &Product Sharing8 activity of
Italian military intelligence community, supported the NATO
Combined Air Force Operations Center support, provided
Italian Coast Guard support to protect U.S. naval vessels,
and used Italian Air Force assets to serve as a defensive
shield for U.S. military personnel at Italian bases.

Tax Concessions
--------------

37. Italy provided numerous tax concessions for stationed US
personnel. While post does not have an estimate of the total
value of these concessions, they include:

-- Waiver of the Value Added Tax (VAT) of 20% for official
purchase of services, materials and supplies;
-- Waiver of import duties;
-- Waiver of VAT for POL products;
-- Waiver of VAT in the last 90 days of service members,
tours in Italy;
-- Waiver of VAT on Utilities.
SPOGLI