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### Viewing cable 09ROME97, ITALY-RUSSIA RELATIONS: THE VIEW FROM ROME

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
09ROME97 | 2009-01-26 11:11 | 2010-12-02 14:02 | SECRET//NOFORN | Embassy Rome

`

    VZCZCXRO4950
    OO RUEHFL RUEHNP
    DE RUEHRO #0097/01 0261148
    ZNY SSSSS ZZH
    O 261148Z JAN 09
    FM AMEMBASSY ROME
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 1502
    INFO RUEHZG/NATO EU COLLECTIVE IMMEDIATE
    RUEHMO/AMEMBASSY MOSCOW IMMEDIATE 4498
    RUEHFL/AMCONSUL FLORENCE IMMEDIATE 3404
    RUEHMIL/AMCONSUL MILAN IMMEDIATE 9782
    RUEHNP/AMCONSUL NAPLES IMMEDIATE 3573
    RHEHNSC/WHITE HOUSE NSC WASHDC IMMEDIATE

` `

    SECRET SECTION 01 of 05 ROME 000097

    NOFORN
    SIPDIS

    DEPT FOR INR/I

    E.O. 12958: DECL: 01/19/2019
    TAGS: PREL PGOV ENRG EPET RS IT
    SUBJECT: ITALY-RUSSIA RELATIONS: THE VIEW FROM ROME
    (C-RE8-02675)

    REF: a) 08 STATE 134386 b) ROME 451

    CLASSIFIED BY: Ronald P. Spogli, Ambassador, for reasons 1.4 (b), (d).

    ¶1. (U) This is a joint Political and Economic Section cable.

    ¶2. (C/NF) Summary. Italy's relationship with Russia is
    complex, encompassing historical ideological sympathies,
    geostrategic calculations, commercial pressure, energy
    dependence, and personal relationships between top leaders.
    The combination of these factors creates a strong tendency
    for Italy's foreign policy to be highly receptive to Russian
    efforts to gain greater political influence in the EU and
    to support Russia's efforts to dilute American security
    interests in Europe. In its relationship with Russia, energy
    is the most important bilateral issue and the quest for
    stable energy supplies from Russia frequently forces
    Italy to compromise on security and political issues.
    A not insignificant concomitant factor is PM
    Berlusconi's desire to be seen as an important
    European player on foreign policy, leading him to
    go where others dare not. End summary.

    Roots of Italian Russophilia: Ideology on the Left, a
    Long-Standing Market Opportunity on the Right
    - - - - - - - - - - - - - - - - - - - - - - - - - -

    ¶3. (C/NF) Until the 2008 parliamentary elections, the Italian
    Communist party and various leftist splinter groups were a
    permanent fixture of the Italian political scene. Throughout the Cold
    War members of the Italian communist movement maintained close
    ties with the Soviet Union, other communist countries, and many
    communist revolutionary movements. Unlike many other communist parties
    around the world, the Italian communist movement remained
    unapologetic in its continued belief in Marxism-Leninism as a viable
    economic alternative to capitalism. While many European leftist
    intellectuals recognize that -- aside from an authoritarian approach to
    governing - - Putin's Russia bears little resemblance to Communist
    ideals, this fact has not deterred Italian communists and other radical
    left politicians from being openly pro-Russia on the basis of
    ideological solidarity. This, combined with the advanced average age o
    most high-level Italian politicians (65-70), prevents many in the
    far left of Italy's political spectrum from moving beyond a worldview
    developed (and apparently frozen) during the Cold War.

    ¶4. (C/NF) Throughout the Cold War, Italian business interests
    frequently skirted the line of what was appropriate in their
    pursuit of the Soviet market. After the collapse of the Soviet
    Union, the explosion of consumer wealth in Russia created massive deman
    for high-end and luxury Italian exports. From 1998 to 2007
    Italian exports to Russia grew by 230 percent, from 2.7 billion Euros
    to 9.5 Billion. Many of Italy's leading businessmen began to see
    Russia as a limitless market that could substitute for loss of export
    revenue from other parts of the world. These businessmen maintain
    strong ties to the pro-business, free-market-oriented politicians on
    the right, including the most visible patron of Italy's business
    elite: PM Silvio Berlusconi.

    Putin Most Influential Figure in Italy's Russia Policy
    - - - - - - - - - - - - - - - - - - - - -- - - - - - -

    ¶5. (C/NF) While Italy's political parties, the MFA and ENI
    exert some influence on Italy's Russia policy, by far the most importan
    factor is the personal attention Putin devotes to the relationship.
    By our reckoning, Putin has held more bilateral meetings with
    sitting Italian PMs in the recent past than any other world leader.
    He was the first world leader to meet with Berlusconi after the 2008
    elections, arriving in Sardegna to visit the PM designate
    before the latter had even been sworn in. Berlusconi believes that
    Putin is his close and personal friend and continues to have more
    contact with Putin than with any other world leader. During the Georgi
    crisis, Berlusconi spoke to Putin on a daily basis for a period of
    almost a week. The basis of the friendship is hard to determine, but
    many interlocutors have told us that Berlusconi believes that
    Putin, a fellow 'tycoon', trusts Berlusconi more than other European
    leader. (A contact in the PM's office told us that their frequent
    meetings are accompanied by exchanges of lavish gifts). Berlusconi
    admires Putin's macho, decisive, and authoritarian governing style,
    which the Italian PM believes matches his own. From the Russian side,
    it appears that Putin has devoted much energy to developing
    Berlusconi's trust.

    ¶6. (S/NF) Contacts in both the opposition center-left PD

    Rome 00000097 002 of 005

    party and Berlusconi's own PdL party, however, have hinted at a more
    nefarious connection. They believe that Berlusconi and his cronies are
    profiting personally and handsomely from many of the energy
    deals between Italy and Russia. The Georgian ambassador in Rome
    has told us that the GOG believes Putin has promised Berlusconi a
    percentage of profits from any pipelines developed by Gazprom in
    coordination with ENI. Whenever we raise the issue of Russia and the P
    with our contacts in PdL, Berlusconi's own party, they have usually
    pointed us to Valentino Valentini, a member of parliament and somewhat
    shadowy figure who operates as Berluscon's key man on Russia, albeit
    with no staff or even a secretary. Valentini, a Russian-speaker who
    travels to Russia several times per month, frequently appears at
    Berlusconi's side when he meets other world leaders. What he does in
    Moscow during his frequent visits is unclear but he is widely
    rumored to be looking after Berlusconi's business interests in Russia.
    Our contacts uniformly deem Valentini, a multilingual former
    interpreter, close to Berlusconi with regard to Russia, but not a polic
    person.

    ¶7. (C/NF) All of our interlocutors - xxxxxxxxxxxx - report that Berlusconi determines
    Italy's policy on Russia single-handedly, neither seeking nor
    accepting counsel. Virtually all are reluctant to confront the PM even
    when he is at his worst on Russia. In November 2008, after a
    disastrous press conference in which, inter alia, the PM described NATO
    expansion, recognition of Kosovo's independence, and missile
    defense as "U.S. provocations" of Russia, GOI officials did a classic
    duck- and-cover. In response to our objections, MFA and PM staff
    sheepishly directed us to the PM himself, rather than deliver
    the unpleasant news to him that he had angered not only the
    Americans but other members of the Contact Group for the Balkans, not t
    mention the Czechs and Poles. Even FM Frattini admits to wielding no
    influence on Berlusconi on Russia. During an early September
    visit to Italy, former VP Cheney confronted Frattini on Italy's
    very public and unhelpful stance on the Georgia conflict. A subdued
    Frattini noted that, while he had strong opinions on the issue, he
    nevertheless received his marching orders from the PM.

    ¶8. (C/NF) Distressingly, Berlusconi treats Russia policy as
    he does his domestic political affairs - tactically and day-to-day.
    His overwhelming desire is to remain in Putin's good graces, and
    he has frequently voiced opinions and declarations that have been
    passed to him directly by Putin. One such example: in the aftermath of
    the Georgia crisis, Berlusconi began (and continues) to insist
    that Georgia was the aggressor and that the GOG was responsible
    for several hundred civilian deaths in South Ossetia.

    No Institutional Leadership on Russia
    - - - - - - - - - - - - - - - - - - -

    ¶9. (C/NF) Trying to determine who might have some influence
    on Berlusconi's Russia policy is not an easy task. One thing is
    certain, however - it is not the foreign policy institutions
    of the GOI. FM Frattini is widely seen as only the messenger for PM
    Berlusconi's Russia policy - indeed he termed himself as much
    to VP Cheney during the latter's September 2008 visit to Rome.
    Within the professional ranks, resources and expertise are scant.
    Italy's MFA contains only one full-time diplomat assigned to cover
    Russia and the countries of the former Soviet Union: the Office
    Director. The Deputy Office Director position and single Desk Officer
    position assigned to cover all the countries of the FSU are vacant.
    Italy's dire budget situation is likely to prevent the hiring of
    additional staff at the MFA for at least two years, according to one MF
    source. The Office Director's direct supervisor - the A/S equivalent
    - is also responsible for the Balkans and the rest of Europe, but
    she, like Frattini, appears to have little or no input to GOI
    Russia policy. The PM's staff does not fare much better. The
    Office of the Diplomatic Advisor is thinly staffed - with only one
    officer assigned to each geographic region. The position covering
    Russia is staffed by a midlevel diplomat who is in the process of being
    transferred. No replacement is likely to be named. As a result, the
    officer covering the Middle East (also the deputy for the office)
    will be forced to take on those duties in addition to his already
    overwhelming portfolio and management duties.

    ¶10. (C/NF) In 2008 the MFA undertook an effort to produce a
    long-term foreign policy strategy for the GOI. In a paper entitled
    "Rapporto 2020" the MFA outlined its strategic vision for the next
    decade and a half. The document notes that geostrategic realities have
    created the need for Italy to adapt its foreign policy with regard to
    Russia and calls for Italy to seek 'a privileged relationship' with
    Moscow in order to press its overwhelmingly preeminent bilateral
    concern: energy.

    Rome 00000097 003 of 005

    Energy Becomes Key Bilateral Issue
    - - - - - - - - - - - - - - - - - -

    ¶11. (C/NF) With virtually no domestic energy reserves, no
    domestic nuclear power, and an ambitious parastatal energy company,
    Italy's key bilateral concern with Russia has become the quest for
    long-term guarantees of energy supplies. The GOI has supported ENI and
    other energy giants' efforts to create a unique partnership with
    Russia and Gazprom for long-term cooperation. ENI, Italy's most
    prominent energy parastatal, wields immense political power; its
    business strategy has focused on complicated geopolitical environments
    generally perceived as overly risky by many of its international
    competitors. ENI's lobbying efforts vis-(-vis the GOI are better
    funded than most government offices. It hosts one diplomatic
    advisor assigned from the MFA. Going by press reports alone, we
    would judge that PM Berlusconi grants its director, Paolo Scaroni, as
    much access as he does his own FM.xxxxxxxxxxxx. Members of political
    parties on both sides of the aisle have told us that ENI is
    one of the leading financial contributors to Italy's many
    think-tanks - many of which produce public diplomacy discussions and
    events on the importance of Italy-Russia relations. At one such event
    in 2007, a conference on Central Asia, representatives from ENI and
    Edison were given 30 minutes each to speak, while the four Foreign
    Ministers and Deputy Foreign Minister of five Central Asian former
    Soviet states were all crammed into a single hour. There is even
    suspicion that ENI maintains journalists on its payroll.

    ¶12. (C/NF) Members of political parties from both sides of
    the aisle have told us that ENI does not limit its dialogue with the
    government to energy issues. One member of the opposition center-left
    PD party told poloffs that ENI's presence in Russia exceeds that of
    Italy's understaffed embassy. While it is unclear how much policy
    coordination occurs between ENI and the Russian political
    structure, the same PD party members noted that ENI had as much contact
    with Russian political and economic leaders as the embassy, if not
    more, and political messages were frequently passed through such
    commercial/economic channels. Back in Rome, ENI maintains
    strong contacts with members of the Italian parliament - something
    the MFA does not do (apart from requested briefings to members of the
    foreign affairs committees).

    An Energy Policy without the Policy
    - - - - - - - - - - - - - - - - - -

    ¶13. (C/NF) ENI and other energy giants have managed to press
    their case quite effectively within the highest ranks of the GOI.
    Italian leaders on both sides of the aisle seem strangely unconcerned
    about dependence on Russian energy. They point out that Italy
    depended on Russian coal during the darkest days of the Cold War with n
    dire consequence. Italians are also lulled into complacency by
    the fact that geographic proximity to North African resources means
    that they are far less dependent on Russia than are the Germans or the
    former Eastern bloc countries.

    ¶14. (C/NF) During a March 2008 visit to ENI Headquarters
    embassy staff were given a briefing on ENI's Russian energy
    operations (available on Embassy Rome's Classified web site). ENI's
    view of the European energy situation was disturbingly similar to that
    of GAZPROM and the Kremlin, and at times laced with rhetorical
    flourishes reminiscent of Soviet-era double-speak: according to ENI,
    the real threat to Western Europe's energy security is not Russia --
    it is Ukraine. The real solution to Europe's energy insecurity,
    according to ENI, lies in more direct pipeline connections to Russian
    gas fields and a need for pipelines that do not go through
    Ukraine - the rationale for the South Stream and Nord Stream pipelines
    (ref b).
    ENI's engineering arm hopes to construct both pipelines using
    experience gained in the construction of the Blue Stream
    pipeline that connects Russia and Turkey under the Eastern portion of
    the Black Sea. Additionally, ENI seeks full partnership with
    Russia on the South Stream project. GOI and ENI contacts have reported
    that the company was having trouble getting a firm Russian
    commitment to this South Stream partnership. The plummeting price of
    hydrocarbons may have reduced the economic incentives for this project,
    but many analysts believe that Russian geo-strategic concerns will
    trump business considerations on this project. The most recent
    Russia- Ukraine gas dispute seems to have revived interest in the
    Nord Stream and South Stream projects, especially among those who see
    Ukraine as the problem.

    Rome 00000097 004 of 005

    ¶15. (C/NF) Italy is not totally blind to the dangers of its
    dependence on Russia, however, and it is taking some steps
    that may prevent an increase in the percentage of their energy that
    they get from Russia. Upon returning to power, Berlusconi announced
    that he would return the country to nuclear power. While the GOI
    seems serious, this project will require eye-popping expenditures,
    long- term commitment, and the resolution of thorny environmental
    problems. Some fear that the nuclear project was launched in response
    to an oil price of $140 per barrel, and wonder if the Italian
    commitment to nuclear power will recede if oil prices stay low. Italy
    is also increasing its use of Liquid Natural Gas and is finishing
    work on a new terminal in the Northern Adriatic. While
    less-than-enthusiastic about the EU's complex Nabucco pipeline, the GOI
    seems to be supporting the smaller-scale Turkey-Greece-Italy pipeline
    project designed to bring Caspian gas to Western Europe. Edison, a
    French company with Italian roots, is trying to determine if it
    should commit to this project. While Azeri gas supplies and
    Turkey's willingness to allow the gas to flow West are unresolved
    issues, Edison believes its project has a chance of succeeding
    because unlike Nabucco, it is small enough -- it believes -- not to
    provoke opposition from Russia. The GOI -- especially powerful
    Minister for Economic Development Scajola -- supports the TGI project
    (in fact GOI officials complain if the U.S. sometimes seems to imply
    that Nabucco should have priority). There is fear that a successful
    launch of South Stream would -- by promising to meet demand -- doom
    both South Stream and Nabucco.

    A Foreign Policy Designed to Deny Russia Nothing
    - - - - - - - - - - - - - - - - - - - - - - - -

    ¶16. (C/NF) The combination of historical ideological
    sympathy, energy dependence, lack of institutional influence, and a
    close personal relationship between Berlusconi and Putin serve to
    provide Russia with an apparently trusted ally, overtly willing to work
    overtime within the EU on Moscow's behalf. Russia can count on Italy
    to support its efforts to remove irritants in its relations with
    the West, including:

    - pressure on/within OSCE to overlook Russia's lack of
    compliance with its legally binding Istanbul commitments on frozen
    conflicts,
    - weak support or even opposition to NATO efforts to build
    closer ties to Georgia and Ukraine,
    - weak initial support for international efforts to recognize
    Kosovo's independence,
    - unhelpful comments on U.S. bilateral Missile Defense plans
    with Poland and Czech Republic,
    - support for Russian President Medvedev's plans to redefine
    European security architecture to undermine OSCE and NATO.
    - support for Russian efforts to undermine EU and US energy
    security initiatives for Europe.

    ¶17. (C/NF) In the past, Berlusconi's highly-prized personal
    relationship with U.S. President Bush was an important
    counterweight to Russian influence, but many pro-U.S. Italian party
    officials on both sides of the aisle have worried to us that Bush's
    departure could tempt Berlusconi to move closer to Russia. For his
    part, Berlusconi has publicly stated that he would like to become a
    bridge between the U.S. and Russia and to "educate a young and
    inexperienced new American president" on how to deal with the Russians.
    If the past is any guide, this will likely mean an intensified
    effort to press the Russian agenda with the U.S.

    Mitigating the Problem: Pushing Back on a Corrosive Influence
    - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

    ¶18. (C/NF) To tackle the problem head-on, Post has deployed
    a robust diplomatic and public affairs strategy targeting key figures
    inside and outside government. Our aim is two-fold: educate our
    interlocutors more profoundly on Russian activities and thus
    the context for U.S. policy, as well as build a counter- weight
    of dissenting opinion on Russia policy, especially within
    Berlusconi's political party. . Since the beginning of the summer, wit
    Berlusconi's return to power and the Georgia crisis, we have
    been engaging with GOI leaders aggressively at all levels. Pol,
    PA and Econoffs have engaged party members, GOI contacts, think
    tanks and even press to provide an alternative narrative to the
    Berlusconi insistence that Russia is a democratic and stable country
    that has been provoked by the West. The effort seems to be paying
    off. The opposition has begun taking jabs at Berlusconi by portraying
    him as choosing the wrong side of the debate. Some in the PdL have
    begun to approach us privately to say that they would like greater
    dialogue with us on the Russia issue, and have indicated their

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    interest in challenging Berlusconi's giddiness about Putin. While we
    have a long way to go in changing the narrative, unfortunately, we have
    help - in the form of a PM who appears increasingly to be the
    mouthpiece of Putin.

    Comment
    - - - -

    ¶19. (C/NF) The bilateral relationship between the U.S. and
    Italy is excellent and encompasses tremendous cooperation
    on many levels and on many fronts.
    Unfortunately, Berlusconi efforts to "repair" the relationship
    between the West and Russia (which as he told the Ambassador in their
    farewell meeting on February 23, "sticks in my gut as a large
    undigested mass") are threatening his credibility and
    becoming a real irritant in our relationship. We can help
    get him back on the right track by sending him a clear signal
    that the U.S. does not need an interlocutor for its important bilateral
    relationship with Russia and that his insistence on undermining existin
    structures and channels based on common interests and shared values
    within the alliance in exchange for short term stability is not a
    strategy Washington wishes to pursue.

    Spogli

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