Foreign Relations of the United States, 1950, Western Europe, Volume III

740.5/5–1250

Memorandum by Mr. Walter S. Surrey of the Mutual Defense Assistance Program¹ to the Under Secretary of State (Webb)

confidential

[Washington,] May 11, 1950.

I understand that you have an appointment with the Italian Ambassador on Friday, May 12th, at 4:00 p. m.

Mr. Ortona, Counselor of the Italian Embassy, has shown me in confidence a draft of the Aide-mémoire which the Italian Ambassador will leave with you.² The subject is the possibilities of increasing Italy’s contribution to the defense of the North Atlantic area. The note outlines two suggestions:

1. It is proposed that a working fund, apparently to be contributed to by all participants in the NATO, be established for financing production of military equipment in Western Europe. While the note does not specifically name the United States as a contributor, apparently this is intended. The purpose of such fund is to make possible increased production by a country such as Italy, which, although it has the productive capacity, is alleged not to have the means to finance such production. The view is expressed that increased production of material required for the defense of the North Atlantic area could be produced without violation of the terms of the Treaty of Peace with Italy.

2. The note proposes that the United States procure in Italy material for provision of military assistance to certain countries outside the North Atlantic area but whose security is important to Western Europe. The intention here is that we should pay in hard currency for material produced in Italy for transfer to other countries to which United States military production is authorized, i.e., Greece, Turkey, Iran, the Philippines, Korea, etc. The note points out that in this manner additional hard currencies could be provided Italy which would be available for increased production for the defense of the North Atlantic area. The note optimistically expresses the view that much of such equipment could be produced in Italy at less cost to the United States.

1. Surrey was Consultant to the MDAP and, concurrently, Assistant Legal Adviser to the Department of State.
2. Under Secretary of State Webb, in his May 12 memorandum of his conversation with Ortona on that date, stated that on receiving the aide-mémoire he told Ortona that subject to the limitations of the peace treaty, the United States “was already studying actively and sympathetically the problem of how available Italian productive capacity and manpower could best be used in the mutual defense effort and that we would be glad to take his government’s proposals into consideration in our continuing study of the problem” (740.5/5–1250). Webb transmitted the substance of the note to Acheson in London in telegram Tosec 196, May 13, not printed (396.1 LO/5–4350).