Foreign Relations of the United States, Diplomatic Papers, 1945, Europe, Volume IV

740.00119 EW/11–1645: Telegram

The Chargé in Italy (Key) to the Secretary of State

Rome, November 16, 1945—1 p.m.
[Received November 17—4:03 p.m.]

3563. Embassy has received note verbale from Foreign Office bearing date November 5¹¹ alluding to “numerous newspaper reports” and declarations from foreign sources with respect to a project alleged to have been formulated by US Govt under which (a) each of United Nations would be authorized to take possession of Italian properties located within their jurisdiction up to the amount to be demanded eventually from Italy as reparations and (b) industrial plants for war production which are not readily convertible into plants for peace production would have to be delivered by Italy to the Four Great Powers. Note states that Italian Govt has received no communication on the subject. Characterizing subject as of extreme importance, Foreign Office note submits its observations relative thereto which are summarized in the following:

(1) War damages have enormously reduced Italy’s agricultural and industrial productive capacity so that any plan envisaging transferable margin of income for payment of reparations would be completely unrealizable. Italy, which is grateful for comprehension of its straits which US has demonstrated, feels obliged to set forth reasons why the alleged project described in the newspapers would not differ substantially from actual payment of reparations. War damages suffered by Italy during 20 months while it was fighting at side of Allies are vast and greatly exceed those of pre-armistice period. To these damages must be added looting of assets, especially those of productive character, by Germany and heavy financial loans to so-called Fascist Republic and other damages suffered in Far East resulting from declaring war against Japan. These great damages connected with a war conducted by Allies and with Italy’s cobelligerent status justify Italy’s right to restoration of materials and appropriate compensation from Germany and Japan rather than demands by Allies for reparations from Italy.

(2) Italians abroad who without connection with Fascist regime have attained their economic position by hard work and have made a valuable contribution to economy of countries giving them hospitality would be directly hit by the taking over of their property and Italian state would be unable adequately to indemnify them as effective indemnification would not be made with any sum in Italian lire. Payment to them by Italy of lire which could not be utilized abroad would not benefit them while it would greatly aggravate the situation of Italian budget as it would require issuance of large sums of new paper money.

(3) Impoverishment of Italians abroad which project would cause would dry up emigrants remittances which in pre-war period represented 10% of positive items in Italy’s balance of payments and the contraction of which would have especially grave effects at a time when other positive items such as marine freights and tourist expenditures are notably reduced.

(4) The taking over of Italian property abroad would damage the situation of Italian banking and industrial enterprises having foreign operations with consequent repercussions on Italian internal situation.

(5) The alleged project would provide grave psychological and other obstacles to the emigration of Italian labor to foreign countries, a movement the resumption of which will benefit world economy and will be essential to prevent lowering of Italian standard of living. Almost certainly a reverse movement would set in thus augmenting unemployment in Italy if Italians abroad find the fruit of their labor nullified at one stroke.

(6) Apart from foregoing considerations, there have been recent reports that certain countries referring explicitly to the alleged project have taken or are about to adopt measures very close to that of taking possession of Italian properties. Aside from damaging moral and material consequences of such measures and the alarm to Italians collectivity abroad which they have caused, the Italian Govt is obliged to point out that these measures are contrary to well established principles of International Law. Only by the peace treaty on the basis of the will of the contracting parties can the final disposition of such property be decided and measures cannot be taken in advance which would prejudice such decision. While therefore appropriate steps in this connection will be taken by Italy with the govts adopting measures of this kind, it begs the American Govt to use its good offices so that the situation of Italian property abroad will not be aggravated.

(7) If reports received by Italian Govt are correct, Italy faces the threat of being deprived in part of its industrial plants. While Italy by no means wishes to keep specific war industries or anti-economic industries alive, it needs to conserve and transform for peaceful uses almost all of its industrial equipment. This is needed to create employment for large masses of workers and to increase exportation which is the only means by which foreign exchange for the purchase of indispensable foods and materials can be obtained.

(8) Italian assets abroad are situated in countries to which far Jess damage has been caused by Italy than the amount of the assets located in such countries and the taking possession of these assets would not only be out of proportion to reparations but would be contrary to the alleged project’s spirit. It would be more to be expected that damages suffered by each of the United Nations be listed and described to the Italian Govt and that the latter, after agreements have been duly made regarding their amount, agree with each of the nations concerned as to the best method of indemnification. Amounts to be paid would have to be calculated obviously by considering positive as well as negative items. Italy has sustained heavy expenses in many of the countries which might eventually request reparations to the permanent economic benefit of those countries and in others thousands of Italian prisoners have worked at reduced pay. These matters should without fail be taken into account.

(9) With regard to damages which foreign properties in Italy have suffered the simplest measure would undoubtedly be to provide indemnification for these by reconstruction immovable property and restoring movable property or by other equivalents.

(10) The first world war demonstrated the danger of imposing burdens on exhausted peoples which prevent their recovery and hence the recovery of world economy. Italy then one of the victors collaborated for economic world solidarity and renounced indemnities and reparations from Austria although it would have been the chief beneficiary. Now Italy, which completely broke its solidarity with the conquered states in 1943 and is a cobelligerent, expects treatment involving equal comprehension in the interest not only of Italy itself but of world reconstruction and pacification.

Text of note follows by pouch.¹³

Key

11. Not printed.
13. Despatch 2686, November 21, 1945, with enclosures, not printed.