865.24/7–1247: Telegram
The Ambassador in Italy (Dunn) to the Secretary of State
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1932. It is our view that principal obstacles to transfer agreement regarding US surplus property include (a) Government’s reluctance to burden further Italy’s dwindling foreign exchange assets with additional principal and interest payments implied in additional purchases of US surplus property and (b) concern regarding burden of Italy’s balance of payment when principal payments begin to become due in [Page 937] 1951 (c) Anglo-Italian agreement regarding lend-lease supplies transferred by UK to Italy involve substantially higher figure than Italians had understood at time of agreement. In final analysis all three of above problems could probably be solved by offering Italians sufficiently attractive price with respect to disposal of remaining US surplus property in Italy.
Since it appears to be in US national interest only to complete this agreement as speedily as possible, I recommend that we establish on US side rock bottom price on basis of which we can conclude overall transfer agreement with Italians. Once this is established, I will see De Gasperi and, having in mind recommendations put forward your 1090, July 9, insist this Government conclude transfer settlement promptly.
After conversation with Taff who is sending parallel explanatory cable we believe that settlement with Italian Government might be reached on basis of turning over all remaining surplus property, including lend-lease, in Italy for total sum of 150 million dollars (Corbino-Bonner Agreement contained ceiling 160 million dollars). It is estimated this would mean about 23 percent recovery of original cost which would be above recovery percentages in other countries, such as France and U.K.
Will Department authorize me proceed on this basis or any other lower figure which Department can agree as our rock bottom price?
Please reply urgently.1
- In instruction 1138, July 15, not printed, the Department concurred in Dunn’s proposal if an over-all transfer agreement could be arranged for a total of $150 million (865.24/7–1247).↩