Foreign Relations of the United States, 1946, The British Commonwealth, Western and Central Europe, Volume V

SWNCC 271 Part II, 388.1 Peace Treaties—Italy

Draft Financial Agreement Between the United States and Italy⁴⁹

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SWNCC 271/14

[Washington, August 9, 1946.]

Pursuant to the terms of the Military and Civil Affairs Agreement entered into between the Italian Government and Commanding General of the United States Forces in Italy and more specifically to paragraphs 9 a, b and c of the aforementioned agreement, it is further agreed that the following provisions shall govern

a. the conditions under which occupation costs for the direct maintenance of United States forces in Venezia Giulia, Amendola Airport and the Province of Udine will be met by the Italian Government, and

b. the conditions under which the United States Government will pay in dollars on a current basis, for net troop pay of United States troops located in Italy, and for all supplies, services and facilities not covered in paragraphs 8 and 9 a of the parent agreement.

Section I

Occupation Costs for Direct Maintenance of United States Forces in Venezia Giulia, Province of Udine and Support Troops Located at Amendola Airport

1. “Direct Maintenance” as used in this agreement will be construed to mean, the cost of services, supplies and facilities procured in Italy and used by troops physically located in the areas cited in the title of Section I.

2. Transportation costs incident to services, supplies and facilities into or out of these areas, and costs of communication between these areas and other Allied military facilities, will be borne by the United States and Italian Governments on a pro rata basis to be agreed upon between the Commanding General, United States Forces and the Italian Government.

3. a. The Commanding General of the United States Forces or a duly appointed delegate or delegates authorized in writing by him to act in his name, will procure supplies, facilities and services for direct maintenance by purchases with lire funds to be made available by the Italian Government. To facilitate this arrangement the Italian Government will place to the account of the Commanding General, United States Forces, a working balance of—lire, and will provide additional lire, as necessary, to maintain this balance. All expenditures from this account will be supported by vouchers, copies of which will be furnished to the Italian Government.

b. At such time as the United States Forces are withdrawn any balance remaining in the account shall revert to the Italian Government.

4. Purchase orders bearing the certificate of the Commanding General, United States Forces, or his delegates that the supplies, materials, or services are for direct maintenance of occupation forces as defined herein will be presented to the Italian Government as evidence that such supplies are for direct maintenance of United States occupation forces.

5. The technical procedures necessary to implement this agreement shall be determined between the Commanding General of the United States Forces and the Italian Government.

Section II

Procurement of Lire for Troop Pay and for Purchase of Supplies, Materials and Services Other Than for Direct Maintenance as Provided in Section I Hereof

1. a. All lire held by United States Forces on 1 July 1946 and not heretofore paid for will be purchased by United States Forces at the rate of 225 lire to the dollar. A statement of this balance, resulting from all lire drawn prior to 1 July 1946 from the Allied Financial Agency and the Banca d’Italia by the United States armed forces, less lire used by the United States armed forces for all local procurement of goods and services, minus the dollar equivalent already paid the Italian Government by the United States Armed Forces, minus the returns of lire to the Allied Financial Agency and the Banca d’Italia as of 30 June 1946, will be furnished to the Italian Government.

b. After 1 July 1946 the United States forces will purchase lire requirements, in excess of balances held by Army disburing officers on that date, from the Banca d’ltalia or one of its branches with United States Treasury checks.

c. When all United States forces are withdrawn from Italy, settlement will be made for lire balances referred to in paragraph 1 a above by:

(1) return of unused lire to Italian Government, and

(2) payment of United States dollars at the rate of 225 lire to the dollar for the difference between the amount on hand 1 July 1946 and the amount returned to the Italian Government except as modified by paragraph 2 c.

d. The United States forces will use lire balances (see paragraph 1 a) and lire procured by Treasury check, only for the pay, exchange of funds and encashment of dollar instruments authorized by the United States forces or troops and personnel in and under the military establishments, and for procurement of goods and services other than for direct maintenance under provisions of Section I.

e. All local procurement other than for direct maintenance will be paid for with lire balances (reference paragraph 1 a) or lire purchased from the Italian Government with United States Treasury checks.

2. The Italian Government agrees:

a. To instruct the Banca d’Italia and all branches thereof to accept United States Treasury checks from Army disbursing officers in exchange for lire at the rate of 225 lire to the dollar.

b. When United States forces are withdrawn from Italy, to repurchase with United States dollars army holdings as follows:

(1) lire in excess of 1 July 1946 balances (see paragraph 1 a) at the rate of 225 lire to the dollar, except as modified by paragraph c below, provided however, that liability for the repurchase of lire shall not exceed the amount purchased after 1 July 1946 by Treasury check; and

(2) the additional lire converted to dollars for authorized personnel of the United States forces, not to exceed in any event three million five hundred thousand dollars.

c. To protect the United States forces, including official, quasi official and personal funds, in accordance with the provisions of the note of 22 February 1946 from the Italian Ministry of Treasury to the United States Treasury Representative at Rome, against any loss resulting from the devaluation of lire. Provisions of this paragraph will be applicable to paragraph 1 c (2) and shall be taken into consideration in computing amounts due the Italian Government.

d. To advise United States Government in advance of any pending change in the rate of exchange.

Note: The blank space in Section I, paragraph 3, is to be filled in by the Commanding General in accordance with his requirements.

49. Department’s telegram 1602, August 13, 1946, advised the Embassy in Rome that copies of the proposed financial agreement were being forwarded by air pouch (800.515/8–1346).