865.00/4–1247: Telegram
The Ambassador in Italy (Dunn) to the Secretary of State
urgent
797. Recent conversations with officials Foreign Ministry reveal their grave concern over present financial crisis and economic prospects of nation in immediate future (see mytel 763, April 91). In an informal talk with member my staff some officials of Sforza’s cabinet brought up question of US aid to Greece and Turkey. They advanced the view that loans of 100,000,000 to 200,000,000 dollars for Austria, Greece or Turkey, on the basis of relative populations, would indicate-that a loan of around 800,000,000 would be needed to ensure similar stability for Italy. A substantial loan of that character would they said enable Italian Government to establish sound basis for recovery (they suggested a 2-year program) which would have a healthy psychological effect upon the Italian people and their cooperation and confidence in making the program work, at the same time providing infinitely more effective propaganda for the US than we now obtain from our present policy of aid in various forms and doses, which, while admittedly lifesaving for Italy and a heavy sacrifice for the American people, has only succeeded in maintaining local economy on a hand to mouth basis year after year.
Implications for Italy of proposed US aid to Greece and Turkey have of course not been lost upon government here. From conversations with Sforza’s young men we have impression Italian Government will take every opportunity during next few months to point out similarity of Italian economic and political problems with those of Greece and Turkey and that Tarchiani has been ordered home for instructions (see Secdel 1440, April 92) principally with that policy in mind.
Sent Department repeated Moscow 42.