ECONOMIC DEVELOPMENT MINISTER SCAJOLA'S U.S. VISIT TO STRESS NUCLEAR ENERGY AND OTHER COMMERCIAL COLLABORATION

C O N F I D E N T I A L SECTION 01 OF 03 ROME 000878



NOFORN

SIPDIS



DOE FOR INTERNATIONAL ENERGY COOPERATION DAS YOSHIDA

DOE FOR OFFICE OF NUCLEAR ENERGY DAS MCGINNIS

DOC FOR ENERGY AND ENVIRONMENTAL INDUSTRIES OFFICE SARAH

LOPP

USTR FOR AUSTR CHRISTOPHER WILSON

STATE FOR L JULIE HERR



E.O. 12958: DECL: 07/29/2019

TAGS: ECON, EINV, ENRG, PREL, IT

SUBJECT: ECONOMIC DEVELOPMENT MINISTER SCAJOLA'S U.S. VISIT

TO STRESS NUCLEAR ENERGY AND OTHER COMMERCIAL COLLABORATION



REF: A. ROME 815

B. ROME 283

C. ROME 207

D. 08 ROME 1577

E. 08 ROME 1191



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Classified By: CDA Elizabeth Dibble for reasons 1.4 b and d



1. (C/NF) Summary: Economic Development Minister Claudio

Scajola plans to visit the U.S. September 27 to October 3.

He is keen to sign a nuclear energy agreement with DOE

Secretary Chu focusing on both nuclear energy R&D, as well

as nuclear industrial cooperation. A nuclear energy

cooperation agreement has been under discussion between DOE

and the Ministry for some time. The Italian desire to expand

its reach, or to accompany an R&D agreement with a joint

statement on industrial cooperation, marks a potentially

important development in U.S.-Italian cooperation in the

nuclear power sector. U.S. nuclear suppliers are supportive

of the approach in order to match recent Frano-Italian

nuclear industrial cooperation agreements. (See para 9 for

guidance request.) Scajola also intends to showcase Italian

exports, visit the Finnmecanica helicopter production

facility near Philadelphia and a Westinghouse nuclear plant

in Western Pennsylvania. In reaction to the Embassy's very

active program on innovative entrepreneurship, Scajola will

also visit Silicon Valley to investigate opportunities

created by high-tech innovators and firms. Post views the

visit as a critical opportunity for the U.S. to counteract a

decided Italian tilt toward French nuclear technology and to

open the door to lucrative contracts for U.S. firms as

Italy's nuclear restart gets underway. End Summary.



MINISTER SCAJOLA SEPTEMBER 27 TO OCTOBER 3 U.S. VISIT

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2. (C/NF) During a July 17 meeting with EcMin and FCS
<br />Counselor, the Ministry of Economic Development's Diplomatic

Advisor Daniele Mancini confirmed Economic Development

Minister Scajola's plans to visit the U.S. from September 27

to October 3. (See para 6 for a notional schedule already

developed by the Italian Embassy in Washington.) According

to Mancini, Minister Scajola sees this as an important visit

due to his desire to demonstrate that the Italian nuclear

sector is open to U.S. companies, despite French domination

of the nuclear power agenda in recent months. Mancini added

that other objectives of the visit will be to promote Italian

products, stress the importance of innovation using U.S.

centers of business excellence as examples, and encourage

U.S. - Italian industrial/business cooperation.



ITALY WANTS A MODIFIED NUCLEAR ENERGY AGREEMENT

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3. (C/NF) Mancini emphasized Minister Scajola's keen interest

in following up on discussions he had with Energy Secretary

Chu during the G8 Energy Ministerial in May in Rome. Scajola

wants to sign a nuclear energy cooperation agreement with DOE

during a September 29 Washington call on Secretary Chu.

However, Mancini stated that beyond a limited focus on

scientific research cooperation (i.e. the exchange of staff

and research information),Minister Scajola would like a

somewhat broader agreement in order to facilitate U.S. -

Italian industrial cooperation on nuclear energy sector

development. Mancini said that what Scajola has in mind is

something similar to the nuclear energy cooperation agreement

signed by Italy and France (ref B and separate cable to

follow) last February. In addition, Mancini said that

Minister Scajola is not interested in linking the proposed

nuclear cooperation agreement to past agreements signed by

previous governments. (Note: in an earlier meeting, Mancini

told us that Minister Scajola wants to present this agreement

to the GOI as a brand new agreement between the current

Italian and U.S. governments. end note)



4. (C/NF) Scajola's Energy Security Director General



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subsequently told us that he would recommend to Scajola that

he sign the current scientific R&D based nuclear energy

cooperation agreement, as there may not be enough time to

make the substantial changes that Scajola envisions before he

visits Washington. In order to meet Scajola's desire for a

more expansive agreement, the DG favors a joint statement of

intent, or a similar formula, that would serve as the basis

for the conclusion of a more formal agreement in the future.

Our sources rather confidently predict that Scajola will

endorse this option. Post will follow up to determine what

option Scajola embraces.



5. (C/NF) U.S.-based nuclear energy technology companies GE

and Westinghouse have told us that a more specific

nuclear energy industrial cooperation agreement (akin to what

Scajola has in mind) might be crucial to opening the

Italian nuclear energy market to U.S. companies. GE and

Westinghouse have expressed concerns that the current form

of the nuclear energy cooperation agreement is limited to

fostering USG - GOI scientific cooperation but does not

provide for GOI commitments towards facilitating U.S. -

Italian private sector cooperation. These companies see

such an accord as an important counterweight to the

Italian-French nuclear energy cooperation agreement signed

last February between PM Berlusconi and President Sarkozy.

The Franco-Italian agreement provided the political base of

support for the Italian and French parastatals ENEL and EdF's

agreement to build four Areva nuclear plants in

Italy. According to GE and Westinghouse, the French

government and companies have used these agreements as an

effective platform with which to continue their aggressive

lobbing of the GOI to keep competitors out of the Italian

nuclear market. Without a similar agreement from the U.S.

side, both GE and Westinghouse fear that French nuclear

technology and services will become the de-facto choice for

Italy, locking U.S. companies out of a lucrative market

potentially worth billions of dollars. Reliable Italian

energy industry contacts who want Italy to have its options

open to chose the best nuclear technology available have

expressed the same concerns to Post. They further tell us

that a U.S.-Italy agreement whereby both countries agree to

work towards facilitating private sector nuclear energy

development cooperation will create crucial Italian political

buy-in for U.S. nuclear technology.



NOTIONAL SCHEDULE FOR SCAJOLA VISIT

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6. (SBU) Minister Scajola's full U.S. schedule accents some

familiar themes, but the stress on nuclear energy, aerospace

cooperation, and innovative entrepreneurship are highlights.



September 27 - New York City arrival and participation at a

National Italian American Foundation sponsored event;



September 28 - a "Made in Italy" commercial promotion

organized by the Italian Institute for Foreign Trade (ICE),

followed by a meeting with Italian entrepreneurs;



September 29 - separate meetings in Washington with

Department of Energy (DOE) Secretary Chu, including the

signing of the nuclear energy cooperation agreement, and with

the U.S. Trade Representative Ron Kirk (Note: topics

of discussion with Ambassador Kirk TBD, but IPR may be a

topic);



September 30/October 1 - visits to the 1) Augusta-Westland

helicopter production plant near Philadelphia, 2) Beaver

Valley nuclear power station in Pennsylvania (Note: Minister

Scajola has accepted Westinghouse's invitation to

tour this plant and Westinghouse is presumably working with

the Italian Embassy in Washington on the arrangements, and 3)

a Pittsburgh manufacturing plant owned by Italian company

Ansaldo;



October 2 and 3 - tour of Silicon Valley in the San Francisco



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Bay area, including meetings with high-tech

entrepreneurs and institutions, to explore innovation

opportunities of potential benefit to Italian companies.



COMMENT

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7. (C/NF) Scajola's desire for a more specific U.S.-Italian

nuclear energy cooperation agreement that can lay the

groundwork for market access by U.S. companies is a welcome

development. We had previously voiced skepticism

to the Italians about such an agreement, but the positive

views offered by Westinghouse and GE have caused us to

rethink this issue. Given the in-roads made by French

competitors, and with more than just a whiff of unsavory

business practices in the air, Post has repeatedly engaged

the GOI to urge a level-playing field for U.S. nuclear

technology and services companies. We are glad to see this

as the first concrete sign that the Italians have come around

to our view that instead of locking themselves into French

technology, Italy would benefit from opening up its future

nuclear sector to competition. As a result of our engagement,

likely combined with a pragmatic realization of the

technology advantages that U.S. nuclear technology companies

offer, the GOI appears to want to keep its options open.

During our July 17 meeting, for example, Mancini stressed

that that the GOI has not locked Italy into French nuclear

technology despite the (politically-arranged) ENEL-EdF deal.

Quoting Scajola, Mancini told us that, "We have not promised

anything to anyone," and that "Italy will have more than one

nuclear technology." If the Italians want a more fine-tuned

nuclear energy cooperation agreement for U.S. nuclear

technology companies to provide them with other options, we

should do what we can to provide them with one. U.S. nuclear

energy technology companies could also not agree more.



8. (C/NF) Based on this, we suggest that any U.S. - Italian

nuclear energy cooperation statement or agreement that

Washington considers include at least the following elements:

A) a declaration of intent about the willingness of the U.S.

and Italy to eliminate any obstacle toward bilateral

industrial and commercial cooperation; B) cooperation in the

field of nuclear safety, specifically in harmonization of

regulations and standards which would be accepted in both

countries; C) cooperation in safety-related research; D)

support for the development of industrial partnerships

concerning design and engineering, supply of components and

systems, joint ventures in third countries, and cooperation

in decommissioning of nuclear power plants.



REQUEST FOR GUIDANCE

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9. (C/NF) Post requests guidance to respond to questions by

the Ministry of Economic Development inquiry on: 1) whether

changes can be made to the current nuclear energy cooperation

draft agreement to reflect Minister Scajola's preference for

specific language on working to facilitate U.S.-Italian

private sector cooperation in nuclear energy sector

development; or 2) if Washington Agencies see time as too

short before Minister Scajola's visit in late September, what

alternate scenarios might be possible? We would specifically

be interested in knowing whether Secretary Chu and Minister

Scajola might sign a joint declaration of intent to work

together in the area of nuclear industrial policy.

DIBBLE