Foreign Relations of the United States, 1948, Eastern Europe; The Soviet Union, Volume IV

661.6531/11–3048: Telegram

The Secretary of State to the Embassy in Italy ¹

top secret
urgent

Washington, November 30, 1948—5 p. m.

2910. 1. Dept and ECA have examined further issue of Ital-USSR reparations agreement as it relates to Ital-USSR trade agreement and restrictions on delivery to East of goods on 1–A list. Particularly for reasons set forth in Embtels 4336, Nov 16² 4064, Oct 21,³ Rome’s Torep 167, Oct 11,⁴ we agree to following:

a. Assuming reasonable terms of trade conclusion Ital-USSR trade agreement appears desirable. Should such agreement depend on conclusion of agreement on reparations current production, Dept would not object such rep agreement provided clearly established and consistently maintained by Itals that in principle and detail such agreement continuously subject provisions and limitations of Article 74 as set forth in Deptel 2476, Oct. 1.⁵

b. Itals should exercise every effort exclude 1–A items from agreed rep deliveries. There appear be sufficient 1–B and lower order items on Soviet list of rep requests to more than exhaust amount due Soviets even should Balkan assets be valued less generously than Itals anticipate.

c. Nevertheless, should Itals demonstrate that efforts to delete all 1–A items from rep agreement have proven unsuccessful and that failure to agree delivery such items will prevent reps agreement, State and ECA will consider limited deliveries of 1–A items and approve this in principle; final decision on 1–A items must of course be made on case by case basis.

2. Dept memo on which foregoing based being pouched courier.

3. If Harriman concurs, and if occasion requires it, foregoing views on trade and reparations may be made known to Ital Gov.

4. In light this cable we are reviewing urgently specific question raised in Rome Embtel 4443 of Nov. 26,⁶ which was also subject of Ital Emb representation to Dept. on Nov. 26.

Marshall

1. This telegram was repeated to Paris for Harriman as 4577 and to Moscow as 1349.
2. Ante, p. 582.
3. Not printed; it reported that the Italian-Soviet trade and reparations negotiations in Moscow had reached the stage when it would soon be necessary to discuss Italian construction and delivery of specific types of items, including some which were prohibited under current East-West trade restrictions (740.00119 EW/10–2148).
4. Not printed; it reported on demands by the Soviet Union for the delivery as Italian reparations of ships built in Italian shipyards. It was recommended that such construction and deliveries be approved in view of the delicate situation in the Italian shipyards where there was excessive unemployment and a strong, Communist-led trade union (865.642/10–1448).
5. Not printed.
6. Not printed. It reported that high officials of the Directory General of Economic Affairs of the Italian Foreign Ministry had informed the Embassy in Rome that the Italian Embassy in Washington would shortly take up with the Department of State and the Economic Cooperation Administration the question of whether Italy might be allowed to construct and deliver for the Soviet Union a number of small tankers under the terms of an Italian-Soviet trade agreement (661.6531/11–2648). Telegram 2923, December 1, to Rome, not printed, instructed the Embassy to inform Italian authorities that if they were satisfied that the inclusion of some small tankers was essential to the conclusion of the Italian-Soviet trade agreement, the United States would offer no objection. Such approval was not to be construed by the Italians as a general waiver on the sale of tankers to the Soviet bloc (661.6531/11–2848). The Embassy in Rome did not find it necessary to inform the Italian Government along the lines authorized by the Department inasmuch as the Italian-Soviet trade agreement was shortly concluded without inclusion of the tankers in the list of items.