740.00119 Control (Italy)/10–2346
The Chargé in Italy (Key) to the Secretary of State
Sir: I have the honor to report that the Italian Ministry of Foreign Affairs on October 19 delivered an undated Aide-Mémoire to Admiral Stone, Chief Commissioner of the Allied Commission, for transmittal to the Commanding General of American armed forces in Italy, wherein the views of the Italian Government are expressed concerning the draft of a new Military and Civil Affairs Agreement, and the related Financial Agreement. Those documents were delivered to the Government for its consideration and comment on June 14 and on September 3, 1946, respectively.
A copy of the original Aide-Mémoire in Italian, and a translation which was made in the Embassy and concurred in by Admiral Stone, are attached hereto. A summary of the Italian reaction was reported to the Department by telegram no. 4058 dated October 23, 1946.63
The Aide-Mémoire, doubtless because it was drafted earlier, contains no reference to the decision of the United States to grant to Italy the “suspense account” dollars in reimbursement for non-troop-pay expenditures in A.M. lire by our armed forces. In view of that action on our part and of the Italian negative reaction to the negotiation of a new Civil Affairs Agreement, it would no longer appear to be untimely or in any way damaging to our position to withdraw both the [Page 866]Civil Affairs and Financial Agreements, should the Department so desire, and possibly to substitute therefor a proposal to modify the situation with respect to requisitions.
In the light of such a possibility, the Embassy wishes to record its impression that the objections of United States military authorities to the retroactive feature in the Financial Agreement, referred to in the Department’s memorandum of conversations dated September 18 and in the Embassy’s telegram 3900 of September 26,64 appear to arise very largely out of the undoubted difficulties involved in obtaining accurate and acceptable figures on the value of requisitions since July 1, 1946 and on the value of public services, including transportation and communications, which have neither been paid for in lire nor formally requisitioned. It would also appear that the army authorities may foresee some difficulty in obtaining appropriations to cover the repayment in dollars for requisitions after July 1, the value of which is unknown but thought to be of considerable importance.
In view of these objections, the Embassy is of the opinion that if the War Department so desires, in its reply concerning the financial aspects of the Italian Aide-Mémoire, it would appear reasonable and practical to emphasize to the Italian Government the extent to which the suspense account and troop pay dollars already cover the bulk of the direct cost to Italy of our forces during the entire occupation, to reaffirm our willingness to recognize any additional expenditures not already covered by dollar payment, such as requisitions, as credits to the Italian Government which may be offset against its recognized debt to us for civilian supplies, and to assure the Government, while requesting its cooperation, that every effort will be made by our armed forces to place all outstanding requisitions on a current cash payment basis at the earliest possible moment.
If it is true that dollar transfers now being made from the “suspense account” will cover the occupation expenditures other than requisitions in Venezia-Giulia and the Province of Udine, assurance in that sense might be added to the foregoing. Reference to the matter might simply be omitted if, on the contrary, a division of occupation costs as between Venezia-Giulia and the rest of Italy is in fact being established unilaterally by the United States.
The foregoing comments have not been discussed with the military in this theatre and are submitted only for the Department’s background information.
Counselor for Economic Affairs