No. 268


Memorandum of Conversation, by the Under Secretary of State ( Webb )1


Subject: Italian Rearmament Program

Participants: The Italian Ambassador
The Under Secretary of State
Mr. Byington, WE

Ambassador Tarchiani said that he had come on instructions from his Government to discuss the current negotiations in Rome with regard to the amount of U.S. assistance Italy will receive in the fiscal year 1952 to support its military production program and the Italian economy. He reviewed the progress made by the Italian Government over the past few years, its stability and its success in achieving recovery and maintaining order. He said that Italy was wholeheartedly behind its commitments under the NATO and wanted to do its full share and more if it could be given the opportunity. In order that there could be a substantial Italian military program as contemplated under the NATO it was absolutely necessary that the Italian Government should receive the raw materials for the implementation of its program and for the basic essentials of civilian requirements which must be met if the defense program is to be carried out efficiently. He pointed out that at present Italy had insufficient raw materials to meet its military production within the military limitations of the Italian Peace Treaty. The U.S. Senate, however, had only just recently expressed its will that the Italian military contribution to the NATO should not be limited by the Peace Treaty. If that were to be accomplished, it would be absolutely essential for Italy to receive additional quantities of necessary raw materials. If given adequate assistance, the 45 million Italians would be anxious to go ahead with the kind of program that is needed. He said that the negotiations in Rome had been stalled for three months over the question of the amount of aid that would be provided by the United States. The Italian Government had been informed that the United States aid presentation to the United States Congress would include the sum of $275 million for Italy. On the other hand, the Italian Government believed that aid of at least $400 million to $450 million is absolutely necessary to insure Italy against serious economic difficulties and [Page 598] to permit the efficient development of an Italian rearmament program. He pointed out that the Italian Government had already substantially increased its defense effort with a supplementary program of military production of 250 billion lire, over and above the normal budget of the Italian military establishment. It was going ahead letting contracts under this program, and had no intention in any way of making the Italian effort conditional upon U.S. aid. If, however, adequate assistance to the extent of the amount he had indicated is not forthcoming from the United States, Italy would be faced with a severe lack of resources to maintain the minimum standard of living necessary to insure the carrying out of its military program.

The Ambassador also referred to the fact that this year, in May and June, there would be municipal elections throughout Italy. The popular support of Italy’s role in the North Atlantic Treaty Organization would be fundamentally affected by the degree to which the Italian Government was in a position because of U.S. assistance to insure the Italian people that the NATO was in fact going ahead and that Italy was making substantial progress. In some wealthier countries in Europe there was a degree of fat which could be cut off the economy without affecting the basic necessities of life. In Italy conditions were such that the overwhelming majority of the Italian people had only a bare subsistence to live on and any cut on that would mean starvation. The necessary degree of U.S. aid, therefore, would mean the political success or failure of de Gasperi and all that he was trying to do. It would have a direct bearing on the ability of communist opposition to impede Italy’s role under the North Atlantic Pact Organization.

The Ambassador pointed out that their estimate of the amount of aid needed and the U.S. estimate only differed to the extent of $125 million. He hoped that in considering the memorandum from his Government, which he was leaving with me,2 the United States Government would keep in mind the important political aspect of this question, rather than limiting its consideration to purely economic factors. It would certainly seem tragic to fail fully to utilize Italy’s potentialities for the want of the comparatively small amount of additional assistance required to meet the essential needs of the Italian military program.

In accepting the Italian Government’s note I thanked the Ambassador for his eloquent presentation of his Government’s views and [Page 599] said that I would see to it that the information he had given me received the most careful consideration of the appropriate officers of the Department in consultation with the other agencies concerned. I said that the U.S. Government is gratified that the Italian Government is proceeding with the letting of contracts for defense production without waiting for the conclusion of the aid negotiations now in progress in Rome.

I also pointed out that we expected that foreign aid appropriations will be made as in the past not on a rigid country-by-country basis, but with sufficient flexibility to permit us to relieve in part, at least, strains which may later develop in individual countries. In this connection, I stressed that the necessity for rearmament for mutual protection necessarily involves sacrifice on the part of all the North Atlantic Treaty partners. This Government appreciates the efforts of the Italian Government and the impact which the proposed program and its continuation to 1952 will have on the Italian economy. The United States, as he knew, is assuming a tremendous burden in its defense effort. It was pointed out to the Ambassador that the total U.S. assistance to Italy programmed for fiscal year 1951 (military end items and economic aid) was possibly greater than the total Italian defense budget. In considering the sacrifice that each country would make we would have to keep very much in mind the question of balance of payments as an important criteria in studying each country’s needs and the problem of correlating the needs of the European area as a whole.

  1. Drafted by Byington.
  2. The memorandum of April 4 requested adequate assistance from the United States in the amount of $400–450 million for the fiscal year beginning July 1, 1951, or else Italy “would be faced with a severe lack of resources to carry on the rearmament program and might see its social and political stability seriously impaired.” (765.5–MSP/4–451)