SCENESETTER FOR CODEL COLE

UNCLAS SECTION 01 OF 02 ROME 002076

SIPDIS

SIPDIS

DEPT FOR NEA, EUR/WE AND S/I

E.O. 12958: N/A
TAGS: PARM PREL UNSC PGOV EAID IZ IT
SUBJECT: SCENESETTER FOR CODEL COLE

REF: A. STATE 115260


B. ROME 1955

ROME 00002076 001.2 OF 002



1. Embassy Rome warmly welcomes the visit of Codel Cole.
Please find below background information to serve as a
scenesetter for visit.


2. U.S.-Italy relations traditionally have been strong
regardless of the party in power. The Center Left's April
9-10 election victory should not significantly change the
substance of our bilateral relationship, despite the new
government's well-known opposition to the war in Iraq. PM
Prodi has announced plans to withdraw all Italian troops by
the end of 2006. However, the Prodi government also has
pledged to increase its reconstruction assistance in Iraq.
The new government has stated it will favor multilateral
initiatives over bilateral or unilateral ones, especially in
Iraq, where Italy is pushing for stronger EU, UN, and NATO
roles.

A Fragile Coalition...
--------------


3. Prodi leads a diverse coalition of allies ranging from
centrist oriented Catholic parties to radical communists.
During the election campaign, the center-left coalition was
often plagued by internal disputes, with the radical-left
assuming an increasingly high-profile role. Radical left
parties scored significant gains, winning roughly 12 percent
of the vote and capturing 38 of the potential 158 center-left
seats in the Senate, making them essential to a future Prodi
government.


4. Political commentators believe this combination could
complicate Prodi's ability to govern. Indeed, the current
debate over funding of Italy's overseas missions highlights
differences within the coalition. The Italian government
issued a decree June 30 approving financing for these
missions, including Iraq, through the end of 2006, which
Parliament must approve within 60 days. The House approved
the decree on July 19 with four members, all from the extreme
left Communist Renewal, voting against. The Senate, where
the Prodi government has only a razor-thin majority, will
begin consideration on July 24.

...With Significant Economic Handicaps
--------------


5. High public debt and budget deficits, rising social
welfare costs, persistent unemployment and a stagnant economy
all limit Italy's financial ability to increase or sustain
Italy's overseas missions. The current budget has reduced
foreign assistance by 27 percent and defense spending by ten
percent (to about 0.90 percent of GDP). Peacekeeping
funding, carried as a separate line item outside the budget,
was cut by 20 percent for 2006. Nevertheless, the Prodi
government has pledged to continue and even increase its
reconstruction efforts in Iraq.

Shift to Civilian Cooperation in Iraq
--------------


6. Italy, with approximately 1,600 troops located in Dhi Qar
Province in the British sector, is the third largest troop
contributor in Iraq after the U.S. and UK. Before the April
elections, the Berlusconi government announced a timetable
for the gradual drawdown of Italian troops with the aim of
repatriating most by year end and transforming the mission
into a primarily civilian one. Prodi, in an effort to
distinguish his government's policies from those of the
previous government, and citing an electoral mandate for
complete troop withdrawal, has announced he will withdraw all
troops by the end of 2006. However, Italy will continue its
reconstruction efforts and has pledged to strengthen
political, civilian, and humanitarian cooperation and support
for the Iraqi government.


7. Italy's reconstruction assistance focuses primarily on
three geographic areas: Baghdad, Dhi Qar province, and
Kurdistan. The Italian government has spent (or allocated)

ROME 00002076 002.2 OF 002


all of the 200 million Euros pledged at the October 2003
Madrid summit, primarily in the fields of training, technical
assistance and institution building (including support for
Iraqi public administration, e-government, and electoral
assistance),the health sector, water resource management,
agriculture, the environment, infrastructure, and cultural
heritage recovery. Supplement funds have been disbursed by
other Italian Ministries (Defense, Environment, Scientific
Research, Agriculture, Cultural Heritage, Technological
Innovation),organizations such as the Italian Red Cross and
National Research Council, and many universities.


8. The June 30 decree includes 129.38 million Euro for the
military mission in Iraq, including the cost for troop
withdrawals, which the decree specifies will be completed by
the "end of autumn." An additional 30 million is designated
for humanitarian, stabilization, and reconstruction
assistance (compared to 15 million for the previous six-month
period, a 100 percent increase).


9. Italy was the third Paris Club member to announce a
cancellation of Iraqi debt, agreeing in October 2005 to
cancel 80 percent of Iraq's debt to Italy, amounting to 2.4
billion Euro.


10. Italy leads three of out four modules in the NATO
Training Mission in Iraq (NTM-I) at al-Rustamiyah, providing
the NTM-I deputy and 32 others conducting staff college-type
training. In addition, Italy has contributed 1 million Euro
to the NTM-I trust fund. On July 20, a seven-member Italian
Military Advisory and Liaison Team (MALT) began a six-month
deployment whose purpose is to oversee the Iraqi security
forces that will soon take over force protection for NTM-I.
Italy has also expressed interest in providing Carabinieri
trainers for NTM-I once NATO members agree to expand the
mission to include training for Iraqi security forces.
Italy's Carabinieri forces in Dhi Qar province already have
trained over 10,000 Iraqi security forces, and approximately
one hundred Iraqi staff officers have received training at
the Italian war college in Rome.


11. Italy also participates in the EU's integrated rule of
law mission (EUJUST LEX),which provides training for senior
Iraqi officials in the area of crime investigation. The
Italian Ministry of Justice led two courses in the year
ending June 30, 2006, at a cost of approximately 300,000
Euro, and intends to provide a third course this year for an
additional cost of 500,000 Euro.

Host to the Multinational Force and Observers (MFO)
-------------- --------------


12. The Multinational Force and Observers (MFO),
headquartered in Rome, is an independent international
organization created by agreement between the Arab Republic
of Egypt and the State of Israel. The MFO also has offices
in Cairo and Tel Aviv. The United States, along with Egypt
and Israel, provides most of the MFO funding. The MFO's
Director General, Ambassador Jim Larocco, is a retired U.S.
Foreign Service Officer who previously served as U.S.
Ambassador to Kuwait.


13. The MFO,s mission is to supervise the implementation of
the security provisions of the 1979 Egyptian-Israeli Treaty
of Peace. Contingents from 11 countries, including Italy,
participate in the activities of the MFO. Italy, in addition
to providing the MFO headquarters in Rome, has provided the
MFO,s Coastal Patrol Unit since 1982, currently comprising
nearly 80 personnel (mostly Coastal Patrol Units) and three
ships. Since March 2004, the MFO Force Commander in the
Sinai has also been an Italian, Brigadier General Roberto
Martinelli.
SPOGLI