865.51/5–747: Telegram
The Ambassador in Italy (Dunn) to the Secretary of State
1078. This is telegram No. 3.
1. Tasca1 in accordance with Department’s 641 of May 5,2 is leaving by air for Washington May 8 or 9 carrying the text of the report prepared in response to Department’s 583 of April 25. The preliminary summary is therefore not being telegraphed in advance.
There follows however a synthesis of our comments on Section D of Department’s outline. For the statistical data called for in Section C reference is made to Embassy’s 1013 of May 2.3 Tasca before departing may be able to assemble some current statistics supplementing those that have already been reported. As Tasca will explain, however, some statistical data, such as inventories, cannot be developed by either the [Page 896] Italian Government or ourselves with the means available; many others are suspect and still others, such as trade, will vary according to the government agency which assembles them.
2. The chain of circumstances which have plagued post-Fascist government and have led to the present situation, although familiar, might be summarized for backdrop:
- (1)
- The government[s] since liberation have been composed of parties of widely varying competitive philosophies.
- (2)
- The earliest governments had only token authority during military operations. Since the transfer of full responsibility to the Italians, local and assembly elections, the institutional problem, the constitution and the coming elections for the regular parliament have monopolized the attention of government and politicians. Parliamentary and electoral jockeying has therefore replaced constructive activity.
- (3)
- Party strife and ambitions have resulted in unworkable ministerial organization (witness the separation in the preceding government of the Ministry of Treasury or spending ministry, headed by a Liberal, from the Ministry of Finance or collecting ministry, headed by a Communist. [) ]
- (4)
- Incompetence and inexperience, both technical and political, have occurred from the inevitable epuration [of?] so many persons trained in government who were Fascists and from paying-off with political positions of obligations to resistants.
3. The deepening crisis is fundamentally psychological. Other is lack of confidence in the government. This psychological state of mind is reflected in the sudden rise of the lira in the free market yesterday caused by rumors of a government crisis, i.e., “any government is better than this one”. Only Draconian measures, and the longer they are delayed the more severe they must be, appear adequate to arrest the drift, which may become a plunge, and to start Italy on the upward path. Such measures will hurt some classes but as things are now done in the fatuous hope of being all things to all men, all of Italy may be reduced to misery.
4. The requirements to meet and vanquish the forces in this whirlpool of disintegration are:
- (1)
- Political leadership both competent and courageous.
- (2)
- Political and economic policy reforms against the opposition of many special interests, including Communist, preference, (a) to prolong the turmoil and (b) to gain time for organizational preparation for the elections;
- (3)
- Effective implementation of policies through fundamental reforms of practices and procedures.
Only the Italians themselves can meet these requirements; outside aid per se will provide neither leadership, confidence, nor courage. What the United States can and should however do is, first, provide wheat, no matter how bad the situation, so as to maintain life and [Page 897] hope; and, second, when the appropriate time comes, to give moral and material support to an eventual competent government who promises some measure of success.
5. Assuming a competent strong government will eventually emerge, we appraise as follows the requirements for Italy to start on the road forward. While we have been mainly guided by technical considerations, we have at the same time tried to remain politically practical by keeping our suggestions within range of attainment.
- (1)
- Restoration of confidence in the government and its ability to direct the economic and financial reconstruction of the country.
- (2)
- Abrogation of political legislation in financial clothing used to intimidate and paralyze strategic economic groups in the country.
- (3)
- Adoption of policies to include: direct block on wages, abandonment of prohibition and work to dismissals [apparent garble], controls over political strikes in key industries.
- (4)
- Adoption of other technical measures with assurance of successful implementation, such as exchange control, credit control, reduction of government expenditures, et cetera.
- (5)
- Extraordinary amounts of foreign aid (government and private if possible) for some time to come.
- (6)
- Strict protection of freedom of speech and assembly against extremist interferences, and restoration of respect in all levels of the population for government and law.
Italian Communist policies have been at direct variance with the above. Therefore, it might be difficult for the Communists to accept participation in a government which would effectively carry out these policies. On the other hand the magnitude of the problems confronting a competent government including increased problems of maintenance of public order of [if?] the PCI were in open opposition and the immense difficulty of its taking the necessary measures we have urged will assuredly require moral and material support and sympathy from the west, meaning more especially of course the US.