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### Viewing cable 03ROME5694, ITALY: 2004 REPORT TO CONGRESS ON ALLIED

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Reference ID | Created | Released | Classification | Origin
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03ROME5694 | 2003-12-23 11:24 | 2011-08-25 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Rome

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    UNCLAS  ROME 005694

    SIPDIS

    SENSITIVE

    DEPT FOR SENIOR ADVISOR TO THE A/S FOR POL-MIL AFFAIRS
    (PM/B)
    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 SA US MARR IT QU TC NATO
    SUBJECT: ITALY: 2004 REPORT TO CONGRESS ON ALLIED
    BURDENSHARING CONTRIBUTION TO THE COMMON DEFENSE

    REF: STATE 305999

    ¶1. (U) The following is Rome's contribution to the 2004
    burdensharing report to Congress.   For the purpose of this
    cable, US. dollar amounts are calculated at the exchange rate
    of USD 1 = Euro .90 except when noted.  Embassy point of
    contact for this report is Pol-Mil Officer Susanne Rose, tel:
    (39) 06-4674-2831, e-mail RoseSC@state.gov.

    POLITICAL SITUATION

    ¶2. (U) PM Berlusconi and his center-right coalition remain in
    control of the Parliament.  Despite continued criticism from
    the center-left opposition, this coalition is likely to
    endure through its full term into the spring of 2006 (the
    first post-war government to do so).  Even with some friction
    between coalition parties, the center-right government is
    expected to survive with just a possible reshuffling of some
    government ministers in January.  Its majority in Parliament
    is sufficient to ensure that it can win votes not only on
    controversial domestic issues but also on foreign policy
    issues of concern to the US, such as the fight against
    terrorism and support in Iraq.  The PM remains publicly
    supportive of US policy, most notably in the way he embraced
    military action in Iraq, despite strong opposition in public
    opinion, some elements of Parliament and EU partners such as
    France and Germany.

    ECONOMIC SITUATION

    ¶3. (U) Italy has the world's sixth largest economy with a
    2002 GDP of about Euro 1.26 trillion (USD 1.33 trillion).
    (Note: Official average exchange rate for 2002 is used
    1$=E0.946). The Government estimates GDP growth at 0.5
    percent in 2003 and 1.5 percent in 2004.  This year, lower
    than expected GDP growth and lower than expected tax revenues
    will result in a deficit/GDP ratio above the 2.5 percent
    target and close to the three percent ceiling of the EU
    Stability and Growth Pact.  The level of public debt, second
    highest among EMU countries as a share of GDP, is expected to
    approximate 106 percent for 2003 and to fall below 100
    percent only by the end of 2007. The GOI plans to reduce the
    debt level gradually to the EMU target level of 60 percent of
    GDP by 2016.

    ¶4. (U) The GOI presented its 2004 budget to Parliament on
    October 2.  Parliament must pass the budget by December 31.
    The 2004 budget totals Euro 634.5 billion (USD 705 billion),
    or 46.9 percent of GDP, down from 48.1 percent in 2003.  The
    budget includes revenue increases of Euro 12 billion (USD
    13.3 billion), spending cuts of Euro four billion (USD 4.4
    billion), and a modest stimulus package of Euro five billion
    (USD 5.5 billion). As drafted, two-thirds of the budget bill
    will be based on one-time revenue-raising measures and
    one-third on structural economic reforms.  To make funds
    available for the Euro five billion (USD 5.5 billion)
    stimulus package and to take into account the less favorable
    economic growth outlook, the GOI estimates the 2004
    deficit/GDP ratio will be 2.2 percent.
    ¶5. (U) Elements of the budget package have been presented as
    a "decree law" to accelerate implementation.  The decree-law
    accompanying the budget was approved on November 19. In
    general terms, the 2004 budget is an attempt to stimulate a
    sluggish economy and keep the deficit under control.

    DEFENSE POLICY/DEFENSE SPENDING

    ¶6. (U) The total MOD funding request for FY 2004 is Euro 19.6
    billion (USD 21.8 billion), up 1.9 percent (or Euro 357
    million, USD 397 million) from the MOD request for FY 2003.
    This 1.9 percent increase, however, approximates zero growth
    in real terms, assuming a two percent inflation rate in 2004.
     For 2004, MOD appropriations equal 1.45 percent of the GDP,
    compared to 1.48 percent in 2003. Under the draft budget,
    there is a 1.4 percent increase in domestic security spending
    -- mostly personnel spending for the Carabinieri, and a 2.1
    percent increase in "defense function." (Note: The "defense
    function" includes the budgets of the Army, Navy, and Air
    Force, but excludes domestic security and other non-essential
    MOD budget functions.  "Defense function" is the largest

    sector of the MOD funding. Peacekeeping operations are a
    separate budget item outside of "defense function". End
    Note.) "Defense function" accounts for 1.04 percent of GDP,
    compared to 1.06 percent of GDP in 2003.

    ¶7. (SBU) The November 12 terrorist attack on the Italian
    headquarters in Nassiriya, Iraq, according to a Finance
    Ministry Under Secretary, is expected to generate support for
    increased funding for Italian participation in peacekeeping
    missions beyond the 2004 draft budget figures we present
    here. Adding funding for Italy's peacekeeping missions (Euro
    1.2 billion, USD 1.3 billion) to the 2004 MOD budget, total
    defense spending for 2004 increases to Euro 20.8 billion (USD
    23.1 billion) or 1.54 percent of GDP.

    Table 1
    Summary of Defense Budget: 2003-2004
    (In billions of USD, unless otherwise indicated)

                            FY          FY          Chg   Chg
                            2003(1)     2004(1)     Pct   Value

    ¶1. NATIONAL DEFENSE     15.33       15.65       2.1   .32
      (as pct of GDP)       (1.06%)     (1.04%)

    ¶2. DOMESTIC SECURITY
       (Carabinieri)        5.05        5.12        7.4   .07
       (as pct of GDP)      (0.35%)     (0.34%)

    ¶3. PENSIONS AND OTHER BENEFITS      1.01  1.02   1.0  .01
       (as pct of GDP)      (0.08%)     (0.08%)

    ¶4. TOTAL MINISTRY
       OF DEFENSE
       APPROPRIATIONS       21.39       21.79       1.9   .40
       (as pct of GDP)      (1.48%)     (1.45%)
       (as pct of
        Gov't budget)       (3.08%)     (3.09%)

    ADDENDUM A:

    ¶5. Italy's
       Participation
       To peacekeeping
       Missions             1.37        1.33        -0.3  -0.04
       (as pct of GDP)      (0.10%)     (0.09%)

    ¶6. GRAND TOTAL          22.76       23.12       1.6   .36
       (as pct of GDP)      (1.58%)     (1.54%)
       (as pct of
        Gov't budget)       (3.27%)     (3.29%)

    ADDENDUM B:

         GDP (1)            1,445 1,503
         Exchange rate      0.90  0.90

    (1) Source: Government's 2004 budget proposal (September
    2003).

    INVESTMENT

    ¶8. (U) The "defense function" budget funds 1) normal
    operating expenses; 2) reform of the armed forces (personnel
    and operations), and 3) modernization of defense capabilities
    (investment).  Experts consider it essential to appropriate
    30 percent of the defense budget for investment.  Italy's
    2004 defense budget includes only 21.2 percent for
    investment, compared to the figure of 22.7 percent in the
    2003 budget.

    ¶9. (SBU) The Defense Ministry highlighted in its supplemental
    note to Parliament that there has been "significant reduction
    of resources for investment." For the second year in a row,
    funds will be cut for the purchase of new aircraft, warships,
    and other equipment for the Army, Navy and Air Force.  The
    Ministry's note also suggests that there might be a need to

    renegotiate commitments with partner countries.

    ¶10. (U) Total investment spending for 2004 is Euro 3.2
    billion (USD 3.55 billion), down by 4.8 percent from 2003.
    Of this amount, Euro 365.4 million (USD 406 million) has been
    allotted for research and development, an increase of 14.3
    percent from 2003. Another Euro 2.63 billion (USD 2.92
    billion), a decline of 6.6 percent from 2003 levels, is
    allocated for defense modernization.  Observers consider an
    optimal annual allotment for defense modernization to be
    around Euro 4.5 billion (USD five billion). Euro 204.6
    million (USD 227.3 million) is earmarked for real estate
    investment, down 9.7 percent from 2003.  The MOD's note on
    the 2004 budget acknowledges that 2003 allotments will have a
    negative impact on multi-year investment programs.

    ¶11. (U) Air Force investments of Euro 1.19 billion (USD 1.32
    billion) account for almost forty percent of overall
    investment spending.  These funds will be allocated for:

    a.    development of the Eurofighter (the total commitment
    through 2015 is USD 18.1 billion, of which the commitment for
    2004 is Euro 434 million, or USD 482 million);

    b.    development of the Joint Strike Fighter (the total
    commitment through 2012 is USD 1.19 billion; the commitment
    for 2004 is Euro 126 million, or USD 140 million)

    c.    continuation of the leasing contract for the Tornado
    (the overall commitment through 2015 is USD 1.2 billion,
    while the commitment for 2004 is Euro 186.5 million, or USD
    207.2 million);

    d.    purchase of transport airplanes, C130J Lockheed (Euro
    157.2 million, or USD 174.7 million) and tanker Boeing 767
    (Euro 116 million, or USD 128.9 million); and purchase of
    helicopters: Nh90 (Euro 259.1 million, or USD 287.9 million)
    and Eh101 (Euro 56.5 million, or USD 62.8 million).

    ¶12. (U) Navy investments (Euro 829 million, or USD 921
    million) account for about 28 percent of total investment
    spending.  These funds are designated for:

    a.    construction of the new aircraft carrier Andrea Doria
    (the overall commitment through 2008 is USD 1.4 billion,
    while the commitment for 2004 is Euro 185.9 million, or USD
    206.5 million);

    b.    purchase of two escort frigates of the class Orizzonte
    (the overall commitment through 2009 is USD 1.5 billion,
    while the commitment for 2004 is Euro 155 million, or USD
    172.2 million); and

    c.    acquisition of two new generation submarines U212A
    (total commitment through 2007 is USD 904 million, while the
    commitment for 2004 is Euro 104.8 million, or USD 116.4
    million).

    ¶13. (U) Army investments (Euro 769.6 million, or USD 855.1
    million) represent another 25 percent of overall
    appropriations.

    Table 1a
    Summary of National Defense Budget Appropriations: 2003-2004
    (In billions of USD unless otherwise indicated)

                            FY          FY          Chg   Chg
                            2003(1)     2004(1)     Pct   Value

    ¶1. Personnel            7.80        8.32        6     .52
      (as pct of GDP)       (0.51%)     (0.53%)

    ¶2. Operations           3.80        3.78        -0.5  -.02
       (as pct of GDP)      (0.29%)     (0.28%)

    ¶3. Investments          3.73        3.55        -4.8  -.18
       (as pct of GDP)      (0.26%)     (0.24%)

    ¶4. TOTAL NATIONAL
       DEFENSE
       APPROPRIATIONS       15.33       15.65       2.1   .32
       (as pct of GDP)      (1.06%)     (1.04%)
       (as pct of
        Gov't Budget)       (2.21%)     (2.22%)

    ADDENDUM:

         GDP (1)            1,445 1,503
         Gov't Budget       695   705
         Exchange rate      0.90  0.90

    (1) Source: Government's 2004 Budget Proposal (September
    2003).

    ARMAMENTS COOPERATION/BILATERAL AND MULTILATERAL ACTIVITIES

    ¶14. (U) Italy has demonstrated significant progress in the
    areas of armaments cooperation and bilateral and multilateral
    activities.  For example, Italy is the third largest
    contributor to the Joint Strike Fighter Program (after the US
    and UK) with Level II partnership on the System Design and
    Development Phase, for a total investment of $1.028 billion.
    Italy is finalizing production requirements, estimated
    between 150 to 200 aircraft, with a potential to have the
    largest JSF inventory outside of the US.  Expectations are
    that a Production MOU will be signed in the next year to
    capture these details.  For the Medium Extended Air Defense
    System (MEADS) program, Italy entered into a cooperative
    development, along with Germany, to contribute 17 percent of
    the program.  The US, Italy, and Germany are currently
    negotiating the Design and Development Phase of the program.
    Additionally, Italy purchased 22 C-130Js in a $1.7 billion
    direct commercial sale with expected delivery of 19 in 2003
    and the remaining three in 2004, four Boeing 767 Tankers for
    $800 million, and 12 C-27Js for tactical transport aircraft.
    Italy is rapidly becoming an interoperable partner with these
    acquisitions, and the equipment available to support
    deployments and allied and multi-national operations.

    ¶15. (U) Italy is set to be on par with other five-power
    nations (the US, UK, France, and Germany) by early next year
    through a RDT&E MOU agreement between the MOD and DOD which,
    once signed, will open the door for several UAV Project
    Agreements. Other significant cooperative activities include
    Italy as a strong advocate of the NATO Airborne Surveillance
    System (AGS) and the recent signing of the MOD-DOD
    Declaration of Principles (DoP) document in October 2003.
    Italy has actively supported various DoP working groups to
    include security and supply.  Italy is extremely interested
    in cooperating with the US on Missile Defense activities with
    a possibility to place a radar site in country.

    DIRECT COST SHARING

    ¶16. (U) 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 services utilized), free external
    security for the bases, and no-fee training ranges.  Italy
    does not pay salaries for any US employees on the bases.

    INDIRECT COST SHARING

    ¶17. (U) Italy makes significant contributions for land
    provided to the US to operate 7 Principal military bases and
    numerous sites on a cost-free basis.  This $237,434,755
    savings in foregone rent to the US includes access to three
    airbases, two homeports, one large ammunition and equipment
    staging base, and a homeport that possesses the only
    maintenance/repair tender ship in the Atlantic.  A lack of
    this capability could cause consequences to US fleet and
    submarine operations in the Mediterranean.  Italy provides
    security forces and anti-terrorist protection, Carabinieri
    support for armed personal security protection of US
    dignitaries, and a robust telecommunications infrastructure
    carries US military data and voice signals.  In addition,

    Italy saved the US an additional $10 million in security
    costs for perimeter security of installations and escorts of
    US convoys from Vicenza to Aviano for Operation Iraqi Freedom
    (OIF).

    ¶18. (U) Additionally, Italy provides safe lines of
    communication (airports, sea ports, railways, highways, air
    routes) to allow high volume of US forces and equipment,
    three airports with shared civilian/military airfields where
    US aircraft are based, and a US/NATO munitions storage
    facility as an invaluable source of munitions for war on
    terrorism.  The Italian Army contributed 16 Centauro wheeled
    armored vehicles to the US Army, free of charge, for
    prototype experimentation for the STRIKER, US military access
    to military training and exercise ranges, and hotel support
    to deployed forces (Aviano and Sigonella).

    ¶19. (U) Italy increased the number of Italian armed security
    forces around military and government agencies, participated
    in "Product Sharing" activity of Italian military
    intelligence community, supports the NATO Combined Air Force
    Operations Center support, provides Italian Coast Guard
    support (terrorism, etc.) and a defensive shield for over
    30,000 US military personnel with Italian Air Force assets.
    Finally, the US has the unequivocal support of senior Italian
    military leaders, the MOD and Parliament.

    GRANT AID

    ¶20. (U) In 2002, Euro 2.2 billion (USD 2.3 billion), or 0.2
    percent of GDP, was allocated for grant assistance, the
    second lowest amount for all EU members and OECD members.
    (Note: When comparing G8 member countries' aid contributions
    as a percentage of GDP, Italy ranks next to last (the US.
    ranks last). End Note).  Most of Italy's assistance is in the
    form of grants, with a modest portion in loans.  According to
    the MFA, approximately the same amount, Euro two billion (USD
    2.2 billion) was appropriated for 2003, equal to .15 percent
    of GDP.  For 2004, the assistance is even lower: Euro 1.8
    billion (or USD two billion), equal to 0.13 percent of GDP.

    ¶21. (U) This figure includes not only the ODA programs
    administered by the Ministry of Foreign Affairs (almost a
    third of the total, bilateral and multilateral assistance),
    but also those programs managed by Treasury and other
    ministries. Italy's ODA assistance has not always been this
    low.  In the early nineties, Italy's ODA assistance budget
    was 0.42 percent of GDP. However, in 1992, in the midst of
    the lira's exchange rate crisis and in an attempt to get
    finances in order to prepare for the European Monetary Union,
    then-Prime Minister Giuliano Amato more than halved Italy's
    spending to 0.2 percent of GDP.  Outlays have hovered close
    to the 1992 levels sinc then.

    2003 OFFICIAL DEVELOPMENT ASSISTANCE

    ¶2. (U) The MFA has confirmed that Italy's bilatera and
    multilateral ODA will be equal to Euro 657 million (USD 731
    million) for 2003 (roughly one third of Italy's overall ODA).
     In 2002, the MFA disbursed between 90 to 92 percent of
    available funds.  Through October 2003, the MFA has disbursed
    80 percent of the funding and expects to disburse all funding
    by the end of the year. In 2002, sub-Saharan Africa received
    57 percent of bilateral assistance funding, while the Middle
    East/Asia regions received 18 percent of overall MFA
    bilateral assistance funding; Latin America, another nine
    percent; while the remaining 16 percent went to Europe
    (mostly Albania and the Federal Republic of Yugoslavia).

    ¶23. (U) Italy's ODA in 2003 (Euro 657 million, or USD 730
    million) includes funds for debt forgiveness of the twenty
    Highly Indebted Poor Countries (HIPC).  The MFA has already
    signed an agreement with twelve HIPC countries and is
    negotiating with eight others.

    ITALY'S MULTILATERAL ASSISTANCE

    ¶24. (U) The largest part of Italian international assistance,
    roughly two thirds or 65 percent, is directed through
    multilateral institutions (multilateral development banks,

    the United Nations, the European Union, etc.). The Ministries
    of Foreign Affairs, Treasury, Defense, Interior, Environment,
    Transport, Productive Activities (Industry), Labor, Justice,
    Communications, Agriculture, and Health expect to contribute
    a total of Euro 1.23 billion, or (USD 1.37 billion), to
    Italy's participation in international organizations in 2004,
    down 5.6 percent, (Euro 72 million, or USD 80 million), from
    ¶2003.  This is slightly less than 0.1 percent of GDP and
    about 0.2 percent of the total government budget.

    ¶25. (U) Italy's multilateral assistance is divided into fixed
    and flexible portions.  Ministry of Treasury-administered
    contributions to international financial institutions (IMF,
    IBRD, regional development banks) are fixed.  Outlays are not
    annual, but multi-year. Mandatory contributions to EU
    assistance budgets comprise roughly one-third of all
    multilateral Italian assistance expenditures.  This is the
    one part of the Italian assistance budget that is growing,
    albeit slightly, and likely at the expense of other forms of
    aid.

    ITALY'S ODA TO IRAQ AND AFGHANISTAN

    ¶26. (U) Italy has allocated for Iraq Euro 15 million (USD
    16.7 million) to the UN flash appeal and other multilateral
    emergency assistance. The MFA Iraq Task Force will disburse
    another Euro 21.6 million (USD 24 million) on diverse
    projects.  On October 24, at the Madrid Donors Conference,
    MFA Frattini announced that Italy will contribute an
    additional Euro 200 million (USD 222.2 million) above 2003
    levels to be disbursed over the next three years (2004-2006).

    ¶27. (U) At the Tokyo Donors Conference, Italy pledged Euro 47
    million (USD 52.2 million) for 2002 and 2003.  In 2002, Italy
    exceeded its pledge by giving Euro 65 million.  For 2003,
    Euro 36 million is earmarked.

    Table 2
    Italy's OFFICIAL BILATERAL DEVELOPMENT ASSISTANCE 2003-2004:
    2004 Official Budget)
    (In millions of USD unless otherwise indicated)

                                  FY          FY          Chg.
    Chg.
                                  2003(1)     2004(1)     Pct
    Value

    1.MINISTRY OF FOREIGN AFFAIRS 768         640         -16.6%
    -128

      Cooperation for Development
      Of which:
      --Aid to LDC's
     (Less Developed Countries)   731         686         636
    -95

      --Humanitarian               37           4         -87.6
    -33
        Assistance
        -- of which:
        Mediterranean
        and Middle East            34           1         -97.1
    -33

    2.TOTAL                       768         640         -16.6%
    128
      (as pct of
      Gov't Budget)               (0.11%)     (0.09%)

    (1) Source: GOI's 2004 proposed budget.

    Table 3
    Contributions to International
    Organizations: 2003-2004: by source 2004 Official Budget)

    (In millions of USD, unless otherwise indicated)

                            FY    FY    Chg.  Chg.
                            2003  2004  Pct   Value

    ¶1. FOREIGN AFFAIRS      411   417    1.4  6

    ¶2. ECONOMY AND FINANCE  557   529   -5.0  -28

    ¶3. DEFENSE              164   142   -13.4 -22

    ¶4. EDUCATION            3     3     0     0

    ¶5. INTERIOR             9     9     0     0

    ¶6. ENVIRONMENT          197   194   -1.3  -3

    ¶7. INFRASTRUCTURES      1     1     0     0

    ¶8. PRODUCTIVE
    ACTIVITIES              16    25    55.8  9

    ¶9. LABOR                43    0     -100  -43

    ¶10. JUSTICE             1     1     0     0

    ¶11. COMMUNICATIONS      7     7     0     0

    ¶12. HEALTH              35    35    0     0
    -- of which:
    International
    Peacekeeping
    Missions
    (SEE NOTE BELOW).       14    14    0     0

    ¶3. TOTAL (1)            1.44  1.36  -5.6% -0.8
    (as pct of GDP)         (0.10%)     (0.09%)
    (as pct of total
     Budget)                (0.21%)     (0.19%)

    (1) Billions of USD.
    (2) For the medical and health support of Peacekeeping
    Mission personnel.

    Source: GOI's 2004 proposed budget.

    PEACEKEEPING AND HUMANITARIAN OPERATIONS

    ¶28. (U) The 2004 Budget will create an ad-hoc Euro 1.2
    billion (USD 1.33 billion) fund to pay for the cost of
    Italian peacekeeping missions (as indicated in Table  1).
    This will be equal to the cost of Italian peacekeeping
    missions in 2002 (Albania, Kosovo, Afghanistan and Iraq).
    Traditionally, Italy's peacekeeping missions were funded in
    the budget under "unexpected" or "miscellaneous expenses,"
    and Parliament had to authorize each use of this fund. This
    procedure was reformed in the 2004 Budget with the creation
    of an ad-hoc fund of Euro 1.2 billion, or USD 1.33 billion.
    (Note: Italy's participation in international peacekeeping
    and humanitarian operations cost Euro 1.24 billion (USD 1.38
    billion) in FY2003.  Of this amount, Euro 734.3 million (USD
    815.9 million) funded operations in the Balkans
    (Bosnia-Herzegovina, Kosovo, Albania), while the remaining
    Euro 497.5 million (USD 552.7 million) funded miscellaneous
    anti-terrorist initiatives (including Iraq peace-keeping);
    and Euro 4.6 million (USD 5.2 million) was disbursed for
    Ethiopia and Eritrea. End Note.)

    CONTRIBUTIONS TO UN OPERATIONS

    ¶29. (U) Italy supported various United Nations operations to
    include 51 personnel and four helicopters (AB 205) to the UN
    Interim Force in Lebanon (UNFIL), seven observers in Israel
    and Arab countries for United Nations Truce Supervision
    Organization (UNTSO), seven observers along the
    India-Pakistan border for UN Military Observer Group
    (UNMOGIP), one observer to survey the border between Kuwait
    and Iraq under UN Iraq-Kuwait Observer Mission (UNIKOM), five
    observers for the UN Mission for the Referendum in Western
    Sahara (MINURSO), one officer and 58 civilian police for the

    UN Mission in Kosovo (UNMIK) and 52 personnel for the
    Ethiopia and Eritrea Mission (UNEEM).

    CURRENT CONTINGENCY OPERATIONS

    ¶30. (U) Significant contributions to OEF and OIF Contingency
    Operations are noted in paragraph 8D.  Italy also has 1500
    personnel deployed in Bosnia-Herzegovina, 2900 in Kosovo, 550
    in Albania, 98 in Macedonia, 590 in the Balkans under
    Multinational Specialized Units (MSU's) and Dakovica the Air
    Port of Debarkation (APOD).

    OPERATION IRAQI FREEDOM

    ¶31. (U) Italy's substantial support for OIF came from the
    highest levels of the Prime Minister's Office, the Ministry
    of Defense (MOD) and Ministry of the Interior (MOI).
    Political and military personnel provided intense
    coordination for the protection and security of several
    hundred military convoys moving material/manpower through
    staging areas and Aerial Ports of Embarkation. Italy also has
    made telecommunications circuits available that substantially
    reduce the requirement for US military equipment and

    personnel needed to support the war on terrorism.

    ¶32. (U) Under operation "Antica Babilonia," Italy contributed
    forces that consisted of over 2,700 deployed personnel,
    representing the third largest deployment of a coalition
    force behind the US and UK.  All four military components
    were represented.  The Italian Army provided a brigade HQ,
    two infantry regiments, one engineer battalion (including
    EOD), close support units (including NBC), logistic support
    units, medical assets, and CIMIC assets.  The Italian Navy
    provided one amphibious ship (S.Giusto), helicopters (SH3D),
    and two minesweepers.  The Italian Air Force provided assets
    to include an air detachment HQ, helicopters (HH3F) and air
    transport assets (C130J).  Finally, the Carabinieri deployed
    a MSU regiment, and military police units.  (Comment. 12
    Carabinieri, in addition to five Army personnel and two
    civilians, gave the ultimate sacrifice with their lives in a
    November 12 bomb explosion in Nassiriya that was the first
    combat loss of life for Italy since World War II. End
    comment).

    INTERNATIONAL SECURITY ASSISTANCE FORCE (ISAF)

    ¶33. (U) The Italian contribution to ISAF currently includes
    530 units, of which 465 are in Kabul and 65 in Abu Dhabi, in
    addition to two officers at Allied Command HQ.  The Italian
    contingent consists of a Security Company for ISAF HQ
    Protection, Engineering Company, including Explosive
    Ordinance (EOD) Teams, a Nuclear Biological Contamination
    Platoon, a Logistics Unit, a Signal Company and numerous Air
    Transportation Assets.  The Italian contingent includes army
    and airforce units and one C-130.  The contingent in Abu
    Dhabi is an interforce group that provide logistical support
    to the contingent in Afghanistan. These commitments received
    Euro 67.7 million (USD 75.2 million) in funding for 2003.
    Italy currently is considering a USG request to lead a PRT in
    Afghanistan. GOI highlighted the need to accompany
    antiterrorism initiatives appropriate initiatives aimed to
    support the reconstruction of Afghanistan.

    OPERATION ENDURING FREEDOM

    ¶34. (U) Italy played a large role in OEF by providing the
    TF-150 Frigate ESPERO for "Resolute Behavior" with 250 people
    patrolling the Gulf of Aden to conduct
     Maritime Interdiction Operations, control of the Sea Lines
    of Communication, and the escort of coalition units and
    related shipping.  Under Task Force "Nibbio," Italy also
    deployed a 1000 person strong Battle Group to Afghanistan as
    a light infantry combat unit, combat support unit (Mortar,
    Anti Tank, Engineer, Signal, E.W, T.A, EOD and RBC Teams),
    and combat service support assets (Logistic and Medical
    Teams).  The Italian Air Force contributed 75 personnel and
    two C130J aircraft that operated from the Air Base of Manas
    in Kirghizstan.

    PRAGUE CAPABILITIES COMMITMENT

    ¶35. (U) Italy is making steady progress on its PCC plan,
    despite severe financial constraints worsened by low economic
    growth.  The majority of Italian PCC goals should be
    accomplished by 2007-2010, including bringing four B767
    tanker transports online, expanding NBC forces and equipment,
    standing up two additional army brigades, launching new naval
    combatants, increasing precision-guided munitions, improving
    communications capabilities and acquiring four airborne early
    warning aircraft, two new generation submarines and several
    maritime multipurpose helicopters.  Italy is already a
    participant in the MEADS theater missile defense project and
    a Level II partner in the Joint Strike Fighter program.
    Italy recently purchased four Unmanned Aerial Vehicles from
    the US, which are due to arrive in January 2004.

    NATO RESPONSE FORCE

    ¶36. (U) Italy hosts both a Land and a Maritime NATO High
    Readiness Force Headquarters that will support the NRF.
    Italian forces are already participating with other allies in
    the types of missions the NRF is designed to conduct,
    including maritime interdictions, embargo operations,
    humanitarian relief and peace enforcement.  Based on lessons
    learned at the Colorado Springs NATO ministerial, the Italian
    government hopes to streamline existing political procedures
    in 2004 to prevent delays in rapid deployment of forces for
    NRF and related operations.

    ¶37. (U) Italy has agreed to stand up the Land Component
    Command headquarters for the NRF from July to December 2004
    and again from July to December 2007.  Should there be an NRF
    mission during either of those periods, Italy would likely
    provide a substantial portion of the land component forces
    required.  Italy also has agreed to stand up the NRF Maritime
    Force Command headquarters for one year starting July 2005
    and again starting July 2008.

    NATO ENLARGEMENT/PARTNERSHIP FOR PEACE

    ¶38. (U)  Italy continues to be a strong proponent of NATO
    enlargement and the Partnership for Peace (PfP) program as
    ways to enhance stability and security in Europe.  With a
    particular focus on the Balkans, Italy has supported the PfP
    program to expand military and political cooperation and
    reinforce democratic principles.  Italy pushed hard to have
    Romania and Bulgaria included in the next round of NATO
    enlargement, and continues to work with Macedonia and Albania
    to bring their political and military institutions up to NATO
    standards.  Prime Minister Silvio Berlusconi has gone so far
    as to encourage Russia to join NATO, and was a key player in
    formalizing the NATO-Russia Council format for greater
    collaboration in areas of mutual concern to Russia and the
    alliance.

    COUNTERPROLIFERATION CONTRIBUTIONS

    ¶39. (U)  Italy has long been a major contributor to
    nonproliferation and threat reduction efforts, including
    allocating Euro 1 billion for the Global Partnership program.
      It has promoted the Nuclear Cities Initiative to retrain
    Soviet scientists and rehabilitate "closed" cities, and has
    participated in a number of plutonium disposition programs.
    At a summit in November 2003, Italy and Russia finalized an
    agreement on a chemical weapons detoxification facility at
    Pochep, using Euro 300 million of Italy's Global Partnership
    pledge.  Italy committed another Euro 360 million to be used
    by the Russian Navy over ten years to decommission nuclear
    multi-purpose submarines and store unloaded fuel and
    radioactive materials.   The Italian government currently is
    considering a USG proposal to fund the accelerated shut down
    of a Russian plutonium producing reactor.

    ¶40. (U) Italy is a core participant in the Proliferation
    Security Initiative (PSI) to interdict shipments of WMD and
    their means of delivery and will host a PSI air exercise in
    early 2004.   As EU Council President from July to December
    2003, Italy spearheaded the implementation of the EU
    nonproliferation action plan adopted in July 2003 and
    established a new action plan that stresses the importance of

    cooperation with the US as a basic principle of EU
    nonproliferation efforts.   Italy pressed the EU to produce a
    stronger EU response to Iran's nuclear weapons program and to
    bolster IAEA credibility and access to Iranian sites.
    SEMBLER

    NNNN
     2003ROME05694 - Classification: UNCLASSIFIED

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