860S.00/2–2047: Telegram
The United States Representative on the Trieste Commission of Inquiry (Glasser) to the Secretary of State
secret
Caserta, February
20, 1947—9 a. m.
24. From Glasser Trieste. Re No. D–129 subject Reurtel No. [7] 14 February.32
- 1.
- Trieste commission set February 25 as final date for completion of report.33 Glasser leaving Trieste 26 February for Washington by fastest means.
- 2.
- Substantial agreement has been reached on budgetary reform which if effectively carried out would attain balanced internal budget for first fiscal year. However there is also large extraordinary budget the size of which is conditional upon political and economic conditions within the free territory such as extra police force, subsidy on bread, public works program to absorb unemployment. There may be disagreement within the commission on provision for such extraordinary items in the budget.
- 3.
- There is substantial agreement on the favorable foreign exchange prospects for the free territory after the first fiscal year. However there will probably be disagreement on the need for external assistance for basic foods during first fiscal year. The Russian view is the basic needs of the free territory can be supplied principally from Yugoslavia under the compensation trade agreement involving the bulk of the free territory’s economy aid that reliance should be placed on Yugoslavia from the beginning.
- 4.
- There will probably be disagreement on the time when the new currency should be introduced and on the nature of the new bank of issue. The acquisition of a gold and foreign exchange reserve behind the new issue may be a matter of disagreement. Both Italy and Yugoslavia expressed willingness to contribute to such a reserve and to welcome the participation of the hinterland countries although they disagree as to the form in which the contributions should be made. The commission will not have time to study the organization of the banking system.
- 5.
- There may be minor disagreements on the character of the customs regime, particularly as to the extent to which barriers are to be set up against Italian trade.
- 6.
- In general there has been agreement on the determination of facts and then as agreements have been limited to the solutions of problems which will face the free territory.
- 7.
- Both Italy and Yugoslavia governments have expressed their desire to assist the free territory to solve its economic and financial problems and to make real contributions to that end. There may be disagreement within the commission as to the extent to which it is desirable to place reliance on such offers of assistance. In addition, both Yugoslavia and Italy expressed the desire for the hinterland countries, Switzerland, Austria, Czechoslovakia and Hungary to participate in providing assistance to the free territory.
Repeated Rome for personal attention Ambassador as number 11.
[
Glasser
]