860S.00/1–1248: Telegram

U.S. Political Adviser Mr. Robert P. Joyce, to the Commander, British-United States Zone, Free Territory of Trieste (Airey) to the Secretary of State

top secret

21. For Kennan and Bohlen. Remytels 17 of January 10,1 1 p. m. and 18 of January 12,2 1 p. m. 1. We believe here that for the reasons [Page 551] set forth Paragraph III mytel 180 of November 22, 11 a. m.3 Trieste situation has unfortunately been allowed to drift until we now face a really serious condition which threatens completely to undermine the Anglo-American position unless something is done immediately. In the absence of a governor for FTT AMG has increasingly tended to become a UK–US financial commitment and the CCS reliance upon Article 11 of Annex VII of Italian treaty has not been realistic in the sense that Italy has no intention to assume the financial burden of AMG here. Although realizing clearly that their presence represents only real protection for about 300,000 Italians this area, the Rome Government is broke and unwilling to assume the financial burden and does not consider Article 11 binds it too close.

2. If more money is expected from Rome we believe that either pressure must be applied outside terms of reference of present negotiations or Italy will expect Anglo-American political quid pro quo to the effect in treaty revision Italy will obtain return of Trieste area. Italy otherwise will sorrowfully bid farewell to her Triestine and Istrian children and commit them to the care and expense of the UN or US /UK Governments.

3. If not considered politic or expedient to exert pressure on Rome at this critical time for Italy some other way must be found immediately to produce the money to pay for AMG. Perhaps Department of Army could find a few millions to tide AMG over as a military commitment until permanent solution reached. Perhaps some fiscal agency or bank in Washington could loan AMG money with US Government going on the note. It might be possible in some way to earmark some of interim aid to Italy for use of AMG Trieste.

4. General Airey would deeply appreciate cabled reply.4

  1. In this telegram, not printed, Joyce depicted the attitude of the Italian Government as explained by Guidotti, Chief of the Italian Economic Mission in Trieste. A) Italy’s views had hardened. B) Italy maintained the position that its obligations under article 11 of the treaty were merely to supply currency for circulation on the same basis as for any comparable area of Italy. C) Italy did not consider that the article imposed any obligation to meet the budgetary deficiency of AMG, and in any case Italy’s finances were such that it could not assume such a commitment. D) Any negotiations looking toward sharing of the burden of AMG by Italy were bound to be protracted, and could not provide a solution for financing the UK–US Zone for the coining months. (860S.51/1–1048)
  2. In this telegram, not printed, Joyce warned that if funds to finance AMG were not forthcoming by January 15: it would be necessary, in order to pay salaries and wages of police and other local employees, to postpone again the settlement with local creditors; to suspend all public works, thereby increasing hard core unemployment; and that public confidence in the Anglo-American administration would be undermined at a very critical time (860S.51/1–1248).
  3. Foreign Relations, 1947, vol. iv, p. 127.
  4. In telegram 7 of January 7, not printed, Joyce had warned that General Airey would face a crisis within 8 days unless funds were provided for financing AMG, and he mentioned that for six weeks Airey had been cabling the CCS about his financial problem (860S.00/1–748).