ITALY TO FOLLOW EU POSITION ON AID TO NICARAGUA

C O N F I D E N T I A L ROME 000004 SIPDIS WHA/CEN: KRAAIMOORE E.O. 12958: DECL: 01/01/2019 TAGS: EAID PGOV PREL NU SUBJECT: ITALY TO FOLLOW EU POSITION ON AID TO NICARAGUA REF: A. STATE 132044 ¶B. ROME 1219 Classified By: Acting Deputy Chief of Mission Barbara A. Leaf for reasons 1.4 (b) and (d). ¶1. (C) Summary: Econoff and Poloff delivered ref A demarche on suspension of aid to Nicaragua. Italy will seek a common EU position in responding to the flawed 9 November elections. Italy will likely not suspend its sanitation project run through the Managua municipal government, but it will probably refrain from funding new projects through the Government of Nicaragua (GON). End Summary. ¶2. (C) On 30 December Econoff and Poloff presented to Michele Pala, MFA Office Director for Central America, reftel A demarche concerning suspension of aid channeled through the Nicaraguan government following the flawed 9 November municipal elections. "We will move in coordination with our European colleagues, and there are no major differences on this issue," said Pala. Pala noted that Italy had signed the November 18th Donors' Group letter and supported the European Commission's December 10 statement condemning Managua's behavior prior to and during the election. He did not commit to the suspension of existing bi-lateral aid, saying, "It's too early to close the door...we need dialogue." However, he also said Italy was unlikely to commence new projects with the Nicaraguan government given the current political climate. ¶3. (C) Pala noted that bi-lateral Italian aid to Nicaragua remains small; indeed, Italy lacks a local office and manages programs from Honduras. On 22 December Econoff met with Leonardo Costa, office director for the Americas in the Development Cooperation bureau of the MFA, and Giovanna Barille, a technical expert on Italian aid to Latin America, to discuss the mechanics of Italian aid to Nicaragua. According to Costa and Barille, Italy's main projects are an agricultural program in northwest Nicaragua and a sanitation project run through the municipal government of Managua. The former is funded by 5m euros in soft loans and a 2.5m euro grant, while the latter is midway through a four year project, valued at 3.7m euros. A small amount of money is channeled through UNICEF and NGOs. Italy does not provide budgetary support to the GON, according to Costa and Pala. Costa said it could be technically difficult to suspend ongoing projects because many are based on bi-lateral negotiated agreements that cannot be cancelled quickly. ¶4. (C) Pala said relations between Managua and the EU remained tense. In his view, the Government of Nicaragua sees developed countries as owing it assistance, and it resents conditions imposed by donors. In the wake of the EC decision to suspend $32m in budget support for 2009, Pala said that Italian diplomat Francesca Mosca, EC Head of Delegation for Central America, resident in Managua, was subject to "brutal insults" by the GON. The Nicaraguan Ambassador to the EU was summoned in protest, according to Pala. ¶5. (C) Comment: We previously reported impending cuts of 60% in Italy's foreign assistance for 2009 (ref B). Given the lower priority which Italy has traditionally accorded Latin America for foreign assistance, it is unlikely Italy would have initiated new projects in Nicaragua regardless of the conduct of the elections. Based on the comments of Pala, Costa and Barille, Italy will follow the EU common position on aid disbursed through GON channels, but will likely not go further. End Comment. SPOGLI