Foreign Relations of the United States, 1946, Council of Foreign Ministers, Volume II

C.F.M. Files: Lot M–88: Box 2079: CFM Documents

Report by the Committee of Economic Experts²⁶

secret
CFM(46)(NY)30

New York, November 26, 1946.

Draft Peace Treaty With Italy

annex iii

economic and financial provisions relating to ceded territories

(As agreed by Economic Committee, Nov. 25, 1946)

Note: Paragraphs newly agreed upon are indicated by marginal notes. Newly agreed parts of paragraphs are underlined.

1. The Successor State shall receive, without payment, Italian State and para-statal property within territory ceded to it under the present Treaty, as well as all relevant archives and documents of an administrative character or historical value concerning the territory in question, or relating to property transferred under this paragraph.

The following are considered as State or para-statals property for the purposes of this article: movable and immovable property of the Italian State, of local authorities and of public institutions and publicly owned companies and associations, as well as movable and immovable property formerly belonging to the Fascist Party or its auxiliary organizations.

[New paragraph]27	1A. All transfers of Italian State and para-statal property as defined in paragraph 1 above, after September 3, 1943, shall be deemed null and void. The foregoing provisions shall not, however, extend to lawful acts relating to current operations of State and para-statal Agencies in so far as they concern the sale, within normal limits, of goods ordinarily produced by them or sold in the execution of normal commercial arrangements [or in the normal course of governmental administrative activities]*
[New paragraph]	1B. Italian submarine cables connecting points in Ceded Territory, or connecting a point in Ceded Territory with a point in other territory of the Successor State, shall be deemed to be Italian property in the Ceded Territory, despite the fact that lengths of these cables may lie outside territorial waters. Italian submarine cables connecting a point in Ceded Territory with a point outside the jurisdiction of the Successor State shall be deemed to be Italian property in Ceded Territory so far as concerns the terminal facilities and the lengths of cables lying within territorial waters of the Ceded Territory.
[New paragraph]	1C.† The Italian Government shall transfer to the Successor State all objects of artistic, historical or archaeological value belonging to the cultural heritage of the Ceded Territory, which, while that territory was under Italian control, were removed therefrom without payment and are held by the Italian Government or Italian public institutions.

2. The Successor State shall make arrangements for the conversion into its own currency of Italian currency held within the Ceded Territory by persons continuing to reside in the said territory or juridical persons continuing to carry on business there. Full proof of the source of the funds to be converted may be required from their holders.

[Newly agreed paragraph]

3. The government of the Successor State shall be exempt from the payment of the Italian public debt; but it will assume the obligations of the Italian Government towards holders who continue to reside in the Ceded Territory, or who, being juridical persons, retain their siège social or principal place of business there, in so far as these obligations correspond to that portion of this debt which has been issued prior to June 10, 1940, and is attributable to public works [and civil administrative services]‡ of benefits to the said territory [and not attributable directly or indirectly to military purposes]§

Full proof of the source of such holdings may be required from the holders.

Italy and the Successor State shall conclude arrangements to determine the portion of the Italian public debt referred to in this paragraph and the methods for giving effect to these provisions.

4. Special arrangements shall be concluded between Italy and the Successor State to govern the conditions under which the obligations of Italian public or private social insurance organizations towards the inhabitants of the Ceded Territory and a proportionate part of the reserves accumulated by the said organizations shall be transferred to similar organizations of the Successor State.

Similar arrangements shall also be concluded between Italy and the Successor State to govern the obligations of public and private social insurance organizations, whose siège social is in the Ceded Territory, with regard to policy holders or subscribers residing in Italy.

[New paragraph]

4A. “Italy shall continue to be liable for the payment of civil [or military]|| pensions earned for service under the Italian State, municipal or other local government authorities as on the date of the coming into force of the present Treaty, by persons who under the Treaty acquire the nationality of the Successor State, including pension rights not yet matured. Arrangements shall be concluded between Italy and the Successor State providing for the method by which this liability shall be discharged.”

5. The property, rights and interests of Italian nationals permanently resident in the Ceded Territories at the date of the coming into force of the present Treaty shall, provided they have been lawfully acquired, be respected on a basis of equality with the rights of nationals of the Successor State.

The property, rights and interests within the Ceded Territory of other Italian nationals and also of Italian juridical persons, provided they have been lawfully acquired, shall be subject only to such legislation as may be enforced from time to time regarding the property of foreign nationals and juridical persons generally.

Such property, rights and interests shall not be subject to retention or liquidation under the provisions of Article 69 of the present Treaty but shall be restored to their owners freed of any measures of this kind, or from any other measure of transfer, compulsory administration or sequestration taken between September 3, 1943 and the date of the coming into force of the present Treaty.

[The Successor States will take over, free of charge, the property, rights and interests of all Italian concessionary or public utility undertakings, such as water, gas and electricity supply, or transport undertakings, and in such cases the Italian Government shall undertake to pay equitable compensation to the interested parties.]^¶

6. Persons who opt for Italian nationality and move to Italy shall be permitted, after the settlement of any debts or taxes due from them in Ceded Territory, to take with them their movable property and transfer their funds, provided such property and funds were lawfully acquired. No export or import duties will be imposed in connection with the moving of such property. Further they shall be permitted to sell their movable and immovable property under the same conditions as nationals of the Successor State.

The removal of property to Italy will be effected under conditions and within the limits agreed upon between Italy and the Successor State.

The conditions and the time-periods of the transfer of the funds, including the proceeds of sales, shall likewise be agreed.

[New paragraph]

6A. The property, rights and interests of former Italian nationals, resident in the Ceded Territories, who become nationals of another State under the present Treaty, which exist in Italy at the time of the coming into force of the present Treaty, shall be respected by Italy in the same measure as the property, rights and interests of United Nations nationals generally.

Such persons are authorized to effect the transfer and the liquidation of their property, rights and interests under the same conditions and within the periods stipulated in paragraph 6 of this Annex.

[Newly agreed paragraph]

7. Companies incorporated under Italian law and having siège social in the Ceded Territory, which wish to remove siège social to Italy, shall likewise be dealt with under the provisions of paragraph 6 of this Article, provided that more than fifty percent of the capital of the company is owned by persons usually resident outside the Ceded Territory, or by persons who have opted under the present Treaty to move to Italy, and provided also that the greater part of the activity of the company is carried on outside the Ceded Territory.

8. Debts owed by persons in Italy to persons in the Ceded Territory or by persons in the Ceded Territory to persons in Italy shall not be affected by the cession. Italy and the Successor State undertake to facilitate the settlement of such obligations. As used in this paragraph, the term “persons” includes juridical persons.

9. The property in Ceded Territory of the United Nations and their nationals, if not already freed from Italian measures of sequestration or control and returned to its owner, shall be returned in the condition in which it now exists.^**

[Newly agreed paragraph]

10. The Italian Government recognizes that the Brioni Agreement of August 10, 1942 is null and void. It undertakes to participate with the other signatories of the Rome Agreement of May 29, 1923 in any negotiations having the purpose of introducing into its provisions the modifications necessary to ensure the equitable settlement of the annuities which it provides.

10A. [Italy shall return property unlawfully removed during the war from Ceded Territory to Italy. Paragraphs 2, 3, 4, 5, and 6 of Article 65 shall govern the application of this obligation except as regards property provided for elsewhere in this Annex.]^††

[New Paragraph]

10B. “Italy shall return to the Successor State in the shortest possible time any ships in Italian possession which were owned on September 3, 1943 by natural persons resident on Ceded Territory who acquire the nationality of the Successor State under the present Treaty or by Italian juridical persons having and retaining siège social in the Ceded Territory, except any ships which have been the subject of a bona fide sale.”

[New Paragraph]

10C. Italy and the Successor States shall conclude agreements providing for a just and equitable apportionment of the property of any existing local authority whose area is divided by any boundary settlement under the present Treaty, and for a continuance of necessary communal services to the inhabitants not specifically covered in other parts of the Treaty.

Similar agreements shall be concluded for a just and equitable allocation of rolling stock and railway equipment and of dock and harbour craft and equipment, as well as for any other outstanding economic matters not covered by the present Annex.

11. The provisions of this Annex shall not apply to the former Italian Colonies.^‡‡

Note: Pending agreement on the Statute of the Free Territory of Trieste, the United States Delegation does not consider that this Annex applies to the Free Territory of Trieste and is of the opinion that special provisions may be required.

26. This Report incorporates those amendments and additions to Annex III of the Draft Peace Treaty with Italy which were agreed upon by the Committee of Economic Experts and were included in their Third Report, CFM (46) (NY)29, November 26, 1946, not printed. That Third Report stated that before reaching a final decision, the Committee invited representatives of the Greek and Yugoslav Delegations to meet with it for the purpose of explaining their proposed amendments. An opportunity was also afforded the Italian Government to present its views in the presence of the Greek and Yugoslav representatives, and to answer questions by the Committee and the Greek and Yugoslav representatives. The Greek and Yugoslav representatives were later given an opportunity to reply to the Italian observations.

    This Report was examined by the Council of Foreign Ministers at its 10th Meeting, November 28, 1946. For the decisions of the Council with regard to Annex III as set forth here, see the United States Delegation Minutes and the Record of Decisions of that Council meeting, pp. 1324 and 1337.

27. Brackets throughout this document appear in the source text.
28. The U.S.S.R. representative considers the words in brackets too wide and vague. [Footnote in the source text.]
29. [The French representative is opposed to the inclusion of this provision.] Footnote in the source text.
30. The U. K., U. S., and French representatives wish the inclusion of the first bracketed phrase, which the U. S. S. R. representative opposes. [Footnote in the source text.]
31. The U. S. S. R. representative wishes the inclusion of the second bracketed phrase, which the U. K, U. S., and French representatives oppose. [Footnote in the source text.]
32. The U.S. representative reserves his opinion regarding the inclusion of the bracketed words. [Footnote in the source text.]
33. The U.S.S.R. representative supported the bracketed paragraph. The U.K. and U.S. representatives felt that it involved a reparation question and should not be considered by the Committee. The French representative considered that it was linked to reparation but that it could have been usefully considered by the Committee. [Footnote in the source text.]
34. It is agreed that the question of compensation by Italy in case restoration of property is impossible should be studied in relation to other appropriate provisions of the Treaty. [Footnote in the source text.]
35. U.S.S.R. proposal, supported by U.K. representative. The French and U.S. representatives reserved their position. [Footnote in the source text.]
36. When a decision is reached on Italian colonies, the question has to be reconsidered. [Footnote in the source text.]