Foreign Relations of the United States, 1947, The British Commonwealth; Europe, Volume III

865.24 FLC/7–1547: Telegram

The Ambassador in Italy (Dunn) to the Secretary of State

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Rome, July 15, 1947—9 p.m.

1960. To OFLC. Conversations with Italian Ministers yesterday during Harriman visit¹ indicated a new urgent need for some immediate gesture on our part in support of present government in view of mounting Communist opposition both to treaty ratification and Marshall plan discussions in Paris. It is possible that in addition to another 100 million dollars credit from Exim Bank which I have already recommended,² pending surplus agreement on airfields, fixed installations, mine sweepers, fighter airplanes, combat equipment, lend-lease, scrap, etc., could be turned to advantage along these lines, provided it were divorced from former agreement of September 9, 1946 and presented to Italian public as a new and even more favorable gesture.

It is therefore proposed that the Corbino-Bonner agreement be left untouched and that OFLC endeavor to conclude with Italian Government a new agreement on all items of surplus uncovered by the former agreement on basis of 10% of original cost. In other words, that we agree to sell Italy on 30 year terms approximately 184 million dollars of property for 18 million dollars. Agreement would also include option to obtain up to 10 million dollars in real property and improvements. Aside from retention of the escalator clause in original agreement, this proposal would not alter the total sales price of approximately 150 million dollars as outlined in ourtel 1932³ (if present estimates on size of underrun prove accurate), but it would have an infinitely greater moral effect by the mere fact of being a new and more favorable agreement with the present government rather than merely an amendment to an agreement made with a former government in which the Communists participated (having in mind that Scoccimaro was present at the signing of the original agreement).

It is my intention, if you agree, to get the utmost news coverage on the signing of such an agreement, however leaving disclosure of the inclusion of combat materiel entirely to De Gasperi as he has indicated that he did not desire it to be known at this time that rearmament of Italian forces with United States equipment was contemplated. To this end wording of the agreement would refer to surplus army materiel, avoiding the use of the words “combat” or “armament” or “ammunition”.⁴

Dunn

1. In telegram 1966, July 15, from Rome, not printed, Dunn reported that Secretary of Commerce Harriman arrived in Rome Sunday afternoon, July 13, and was able that evening to discuss matters with Ambassador Dunn and General Lee. He was able next day to meet Italian President De Nicola, Prime Minister De Gasperi, Vice Prime Minister Einaudi, Minister of the Treasury Del Vecchio, Minister of Finance Giuseppe Pella, Minister of Foreign Commerce Giuseppe Merzagora, Minister of Industry and Commerce Giuseppe Togni, and several officials of the Ministry of Foreign Affairs. Harriman mentioned to Dunn “that he had been agreeably surprised and impressed with intelligence and evident high caliber of Ministers in present government whom he had met”. (033.1140/7–1547)
2. See telegrams 1322, May 28, and 1590, June 17, from Borne, pp. 911 and 922.
3. Supra.
4. In telegram 1152, July 16, not printed, the Department concurred in the proposal to negotiate a new, separate agreement, and it agreed to omission of the reference to combat material (865.24 FLC/7–1547).