665.68/3–2350: Telegram

The Secretary of State to the Embassy in Italy 1

priority

1106. Luciolli, Counselor Ital Emb, called Mar 23 to request US representations Yugo Govt re Zone B. In addition to points mentioned urtel 1193 March 232 he suggested we refer to Apr 16 elections Zone B.

We inclined agree ur view re effect our failure indicate support Ital representations, perhaps similar to action re currency conversion last July (Deptel 1491 Jul 13).3 We shall, of course, wish consult Brit and Fr re action in this instance. Meanwhile, fol are our prelim thoughts, on which addressees’ comments requested:

Dept shares Ital concern that Yugos may plan final incorporation Zone B in Yugo as Guidotti4 suggests. While this appears as possibility Dept also believes possible that Yugos trying establish firm bargaining position to maintain for themselves as much as possible of Zone B in any eventual Italo-Yugo negot for Trieste settlement. Tone of Yugo statements (Belgrade’s 362 Mar 17 and others)3 suggests basically conciliatory attitude which wld support second of two foregoing interpretations.

Much as US wld deplore Yugo fait accompli of annexation Zone B which we wld, of course, refuse to recognize as having legal validity, impossible at this time to say what if any punitive action wld be undertaken by US. While such highhanded Yugo actions cld not be condoned, any US action must be considered above all in light of possible effect on ability of Yugo to prevent Cominform recapture. Ital Govt statement that “it will not accept fait accompli of any kind etc.” has no clear meaning for us but it is hoped that Ital Govt will not commit itself in advance to action which at a later date might appear highly undesirable.

Stated Ital disposition to initiate negot for establishing econ customs unity Zones A and B appears represent change Sforza’s views [Page 1317] of last Jul (last para Rometel 2155 Jul 15)5 and must first be reconciled with statement in Ital note to AMG Mar 7 (Trieste 169 Mar 22 rptd Rome 40).6 Assume customs unity two zones wld entail introduction Ital lire Zone B and application in Zone B of regulations along same lines as those of Mar 9 and subsequent agreements between Italy and Zone A. Appears highly unlikely Yugos wld accept this offer to negotiate except, perhaps, as opportunity to lead into resumption of Trieste settlement talks. In this connection, Yugos have strong defense of present financial situation Zone B which they can attribute to earlier Ital unwillingness take reasonable steps to carry out Italy’s Peace Treaty financial obligations toward Zone B. In unlikely event Yugos accept idea econ union Zones A and B, many difficult questions raised re ECA7 and related matters. These wld have to receive careful study by US and UK Govts before any proposal cld be endorsed, in spite of obvious polit advantages of such union.

In gen Dept remains strongly persuaded desirability bilateral settlement Trieste issue now. While sharing Ital annoyance at Yugo statements and actions and recognizing limitations on concessions which Italy can make to Yugos we nevertheless hope very much that Itals will keep door open to discussions with Yugos, reserving final judgment on Yugo motivations, and will avoid overlooking any opportunity settle question bilaterally and thus permanently forestall incorporation Zone B in Yugo.

FYI only Dept meanwhile studying possibility of approaching Yugos to forestall incorporation Zone B in Yugo and action which US wld take in event incorporation occurs.

Acheson
  1. Repeated to Trieste as 163, London as 1404, Belgrade as 246, and Paris as 1355.
  2. Not printed; Dunn had reported that the Italian Foreign Office had instructed its Ambassador in Washington, Alberto Tarchiani, to urge the Department of State to make such representations as it might consider appropriate to the Government of Yugoslavia. The Italian Foreign Office thought that official representations by the three powers to the Belgrade Government might be successful in preventing further unilateral action by Yugoslavia in Zone B. Dunn urged the Department to give sympathetic consideration to Ambassador Tarchiani’s representations. (665.68/3–2350)
  3. Not printed.
  4. Gastone Guidotti, Director General of the Political Department of the Italian Foreign Office.
  5. Not printed.
  6. Not printed.
  7. Not printed; it reported that the Italian Government was informed that Yugoslavian authorities in Zone B allegedly intended to discontinue or restrict the movement of persons between the two zones. Should this happen, the only counteraction left to Italian disposal would be the stopping or restricting of the movement of goods between the zones. In this matter the Italian Delegation expressed the intention to ask for the cooperation of the Allied Military Government. (750G.00/3–2250)
  8. Economic Cooperation Administration.