The Ambassador in Italy (Kirk) to the Secretary of State
[Received March 6—3:52 p.m.]
1132. Allied military exports from Italy. In communication dated March 2 to AFHQ Allied Commission points out that in previous memorandum (December 14) AC suggested that AFHQ transmit to CCS the recommendations of AC that: [Page 898]
- Records be kept of all Allied military exports;
- That Italian Govt as offset to its obligations to Allies be credited for supplies exported on military basis prior to September 1, 1945, when combined military responsibility for civilian supply imports terminated;
- That Italian Govt receive current reimbursement in foreign exchange for military exports after September 1, and
- That systems of screening intended military procurement (including exports) against civilian supply programs be instituted.
Reply from AFHQ dated February 25, AC communication continues, states preliminary AFHQ view that:
- Military exports prior to September 1, 1945 are deemed to be proper charge against Italian Govt, and no records of such exports are to be kept;
- That exports after September 1 will be credited to Italian Govt as offset against Italian debt to Allied Govts and
- That immediate need for clear-cut accounting procedure is recognized in order to segregate all military exports costs for ultimate adjustment.
(AFHQ letter February 25 transmits draft administrative memorandum from which it is clear that such accounting would be required only for military exports after September 1.)
AFHQ letter states US military exports have ceased, British much reduced and British administrative instruction being issued will minimize both local and export procurement and assure AC or UNRRA opportunity to screen military requirements against supply programs. AFHQ letter also states it is not feasible to place future military exports on commercial basis.
AC communication March 2, then states that proposed AFHQ administrative memorandum, if issued, would not appear to constitute proper accounting and suggests that question of maintaining suitable records is separate from question of type of credit Italy should receive. Communication concludes by suggesting that decision on financial treatment of military exports involves high policy questions which may be considered in connection with Italian peace treaty and that, in opinion of AC and of UK and US Embassy, the entire matter should be laid before CCS for decision.
In supporting Admiral Stone’s position I am guided not only by considerations of equity and by principle that no nation should help itself to property of an ex-enemy state without proper accounting and eventual adjustment as agreed with other interested parties, but also by my concern lest the Allied Military Commander, without adequate guidance, continue to attempt to determine economic policies beyond the scope of his authority.
Sent Dept 1132, repeated Caserta 368 and London 179 for Reinstein.