ITALY'S TRADE AND INVESTMENT RELATIONS WITH SOMALIA

UNCLAS SECTION 01 OF 02 ROME 002157 SIPDIS C O R R E C T E D C O P Y (INFORMATION PARAGRAPH 2) SENSITIVE SIPDIS DEPT FOR EUR/WE, EUR/ERA, EB/IFD/ODF, AF/E USEU FOR PATRICIA LERNER E.O. 12958: N/A TAGS: EAID ETRD SO SW IT SUBJECT: ITALY'S TRADE AND INVESTMENT RELATIONS WITH SOMALIA REF: ROME 01870 ROME 00002157 001.2 OF 002 SUMMARY -------------- ¶1. The MFA reports Somalia remains a political priority for Italy (ref A),an assertion bolstered by Italy's providing over 21 million euro in foreign assistance in 2005-2006 and Italy's membership in the Somalia Contact Group. That said, aside from some foreign assistance, Italy's economic ties to its former colony are negligible. With total trade (exports and imports) of 1.52 million euro in the first quarter of 2006, Somalia is Italy's 182nd largest trading partner. End Summary. Investment and Trade -------------- ¶2. Italian exports to Somalia in 2005 were concentrated in cereals (37.42%),vehicles (20.22%),and heavy equipment (13.03%),while imports from Somalia were comprised largely of leather goods, (72.90%). It is likely that additional Italian exports make their way to Somalia via Kenya and other bordering countries. The following figures do not/not reflect this transit trade. -------------- -------------- Italian Trade with Somalia (2001-2006) (all figures in euros) -------------- -------------- -------------- -------------- -------------- Year Exports Imports Total Trade Balance of Trade -------------- -------------- -------------- -------------- -------------- 2001 4,365,489 2,151,402 6,516,891 2,214,087 -------------- -------------- -------------- -------------- -------------- 2002 7,948,663 1,816,595 9,765,257 6,132,067 -------------- -------------- -------------- -------------- -------------- 2003 4,112,106 729,077 4,841,183 3,383,029 -------------- -------------- -------------- -------------- -------------- 2004 4,634,152 128,630 4,762,782 4,505,522 -------------- -------------- -------------- -------------- -------------- 2005 1,884,557 307,251 2,191,808 1,577,306 -------------- -------------- -------------- -------------- -------------- 2005 1,003,980 97,444 1,101,424 906,536 (1Q) -------------- -------------- -------------- -------------- -------------- 2006 1,082,411 440,728 1,523,139 641,683 (1Q) -------------- -------------- -------------- -------------- -------------- ¶3. The Italian export insurance agency, SACE (Export-Import Bank equivalent),has 115 million euros in outstanding trade finance loans for Somalia. A SACE officials described these debts as "uncollectable." ¶4. There is no data available for Italian investments in Somalia. Foreign Assistance -------------- ¶5. Italy's 2006 bilateral foreign assistance supports Somalia's Transitional Federal Government (TFG) with 3.5 million euro in emergency aid and logistics support, and the Intergovernmental Authority on Development (IGAD),a regional body attempting to broker peace in Somalia, with 250,000 euro. Italy also contributes two million euro to the UNDP to disseminate information on the peace process, and to provide 2.7 million euro to the UN's Department of Political Affairs, for peace process and political operations. Italy provided ten million euro to the European Union's Somalia Rehabilitation Program, to finance agriculture, health, and education initiatives over a six-year period (the fund reportedly totals 49 million euro). Italy has not donated to the United Nations 2006 Somalia Consolidated Appeal Process. ¶6. The MFA Overseas Development Cooperation (ODC) officer for Somalia, Giovanni Baticci, told EconOff July 14 that Italy would like to co-host a conference on Somalia with Sweden. However, he noted, the fighting between the Supreme ROME 00002157 002.2 OF 002 Islamic Courts Council militia and warlords, and likely Ethiopian engagement to protect the TFG in Baidoa, had put plans for the conference (originally to be held at the end of 2006) on the back burner. Baticci said the GOI is awaiting the joint UN - World Bank Somalia assessment report, which should be available at the end of July. According to Baticci, the report will help guide future GOI assistance planning. Italy is a member of the Somalia Contact Group (ref A),formed in June 2006, to support dialogue and international engagement in Somalia. Bank of Italy -------------- ¶7. The Bank of Italy (BOI) and the ODC historically provided technical assistance to the Central Bank of Somalia (CBS). The MFA's ODC paid transportation and logistics costs, while the BOI provided the technical expertise. However, since Somalia fired the CBS governor, the BOI has ceased its assistance, and no new funds have been allocated. Comment -------------- ¶8. Although Italy has political and historic ties to Somalia, its economic interests there are negligible. While the MFA will continue focusing political attention on, and providing foreign assistance to, Somalia, trade and investment relations are likely to remain minimal, so long as the current situation in the failed African state continues. End Comment. SPOGLI