CFM files, lot M–88, box 159, Conversations with the Italian Prime Minister
United States Minutes of Italian Prime Minister De Gasperi’s Third Formal Meeting With the Secretary of State, Department of State, September 25, 1951, 4 p.m.1
Present
Mr. Acheson (U.S.)
Mr. De Gasperi (Italy)
Also Present
| United States | Italy |
| Mr. Harriman | Amb. Tarchiani |
| Mr. Bissell | Amb. Zoppi |
| Mr. Perkins | Minister Janelli |
| Amb. Dunn | Minister Magistrati |
| Mr. Byington | Minister Malagodi |
| Mr. Cleveland | Minister Pella |
| Mr. Linder | Mr. Ortona |
| Mr. Martin | Mr. Luciolli |
| Mr. West | Mr. Sensi |
| Mr. White | Mr. Venturini |
| Mr. Greene | Mr. Canali |
| Mr. Christensen | Mr. Panza |
| Miss Kirkpatrick | Mr. Ferrari-Aggradi |
Italian Economic Problems
The Prime Minister called upon Signor Pella, Italian Minister of the Budget, for a discussion of the economic questions on the agenda. Minister Pella spoke in Italian, Minister Malagodi interpreting. He said that he would like to speak from a political viewpoint on economic questions. He indicated that there exists today in Italy a serious problem of investment but that his government would not allow this problem to detract from the defense effort. Italy is now making a defense expenditure equivalent to one billion American dollars, a figure which represents 7% of Italy’s GNP. This figure, he continued, appears to be quite adequate on the basis [Page 707] of an average annual per capita income of only $250. The Italian Government, however, intends to carry on its rearmament effort and even though the Italian Government speaks of the need for economic aid this indicates no diminution of their political determination to make the effort. It is not a question of “no aid, no rearmament, but he would like to mention what will happen if there is a cut in US economic aid for Italy. In order to be entitled to the trust and confidence of the Americans as well as that of the Italians, he said it might be wise to set forth some of the results of three and a half years of Marshall Plan aid. He pointed out that the Italian GNP had increased 36% and industrial production 40% above the prewar period. During the period of Marshall aid the Italians have also reestablished monetary stability and although the lira is not one of the strongest currencies in Europe, it has been given a strong enough basis to encourage savings by the Italian people. On the low per capita income of only $250 investments have reached 20%. There are now 800,000 more workers than previously and in the same period the government deficit has changed from one of threatening proportions to one which is much closer to a manageable size. In addition to internal improvements Italy has also taken major steps on international measures.
Minister Pella emphasized that these facts demonstrated that the Italians had done their duty and requested that the US recall this when heavier duties loom. He said that it was particularly important to remember the psychology of the Italian people and their inclination toward pragmatism. In the past as in the future to effectively combat the external and internal threats of communism the military effort must be balanced against civilian needs. He said that he was sure that the Committee of 12 would recognize these facts. He said there were also two important points that should be noted in considering Italian potentialities: first, the large unused industrial capacity and second, the excess of Italian manpower. The Minister pointed to the financial problems related to these two questions and said that his primary desire was to avoid the political consequences that they might create. With reference to the rearmament effort he noted that the Italian Parliament has now approved a supplementary appropriation of 250 billion lira. He conceded, however, that further measures were necessary in order to bring the Italian effort to its highest possible point.
Minister Pella added that it is essential that Italy receive end items, raw materials, machine tools, special equipment, blueprints, etc., through American assistance in 1951 and 1952.
The Minister said that the second major requirement is United States economic aid. This aid is necessary in order to meet the dollar gap and to create an anti-inflation effect through counterpart [Page 708] funds. He conceded that in view of the Congressional cut in aid, it would be necessary to re-examine Italian requirements. He said, however, that the present estimate of $330 million as the deficit in the Italian balance of payments for 1951–52 is not a bid for more aid but merely a working figure.
The Minister said that the Italian Government has welcomed the United States decision to launch an off-shore procurement program in Europe and said that this would be of considerable assistance to his country. He said that his country is working to increase its industrial capacity to the limit and estimated that they should be able to handle some $500 million worth of orders by June 30, 1953. This would include such items as vehicles, aircraft, electronics, etc. He proposed that a joint American-Italian group be established immediately for the implementation of this program through the proper channels of the two governments. With reference to raw materials, he said measures had been taken in Italy to control the use of those which are in scarce supply. Italy requires for the present fiscal year 400,000 tons of steel and 80,000 tons of copper. He also suggested that DO ratings should be granted for those items needed in the steel and thermo-electric plants and that GAA ships should be made available to carry goods to Italy. He said it was also essential to avoid inflation in Italy through the establishment of reasonable international prices on scarce materials. This was particularly true since he did not believe it possible to go beyond the present stretching of the Italian budget.
Minister Pella then called attention to the manpower and emigration problems which now confront Italy. In addition to the large number of unemployed, there are many refugees in Italy. The problem of over-population has been aggravated by the war. Once solved it would not arise again; however, unless Italians are allowed to emigrate, the problem is not capable of solution. Italy has both unemployment and communism and while full employment will not completely eliminate communism, it will go a long way toward solving the problem. He noted that the United States had done a great deal in this field through its program for displaced persons and expressed the hope that it would also be possible to help Italy solve its problems.
In conclusion, the Minister handed the Secretary a detailed memorandum covering the subjects he had discussed,2 and seven catalogues in single copy showing the types of equipment Italian factories are able to produce.*
[Page 709]The Secretary said that it was necessary for Mr. Harriman to leave for another meeting, but he assured the Prime Minister and Minister Pella that Mr. Harriman would be working with them on these problems as a member of the Committee of 12. He thanked Mr. Pella for his clear analysis of Italy’s economic situation and said that it would be of great assistance to the United States in future planning. He indicated that he would ask Mr. Bissell to comment in more detail on some of the points raised, although it would not be possible for Mr. Bissell to give a definite estimate at this time on the amount of aid that would be available for Italy because of the situation in Congress. He said that the United States Government is aware of the problems that Italy faces, not only the immediate ones but those of the future. The immediate efforts of the United States to help Italy will be directed by Mr. Harriman and Mr. Bissell. Through offshore procurement, and end-item and economic aid, we will try to help bring about the maximum effort possible in western Europe.
Mr. Bissell said that he was familiar with some of the problems raised in connection with the questions of economic aid and offshore procurement through the preliminary discussions he had had with Minister Pella and other representatives of the Italian Government. He said that he was aware that Italy has both external and internal financial problems. In a few weeks, after Congressional action on the foreign aid program has been taken, the United States will seek to discuss with the Italian Government what action can be taken on the external financial problems. He surmised that it should prove possible to cope with the external (dollar) problem if not in magnitude, at least in degree. He said that the United States program of off shore procurement will complement the other forms of aid and he expressed the hope that when negotiations on the aid program begin it will be possible to give the Italian Government definite information on the way in which off-shore procurement will be handled. Mr. Bissell said that work had also been going forward on helping Italy get scarce materials and their requests have been presented to the Defense Production Board. He said that he had good news for them since it was now his understanding that nearly all of their requests for power equipment and steel equipment would be given priority ratings within a few days. It is also hoped that the United States will be able to meet approximately the delivery schedules originally contemplated on these requests.
On the shipping problem Mr. Bissell said that the lack of port capacity in the United States and not the lack of shipping was the limiting factor. The United States is, however, continuing to withdraw ships from the reserve fleet and he assured the Ministers [Page 710] that by mid-winter the lack of shipping would definitely not be the limiting factor. Mr. Bissell concluded by saying that he was not completely familiar with the availability of steel but expressed strong doubt that it would be possible to ship anything close to the 400,000 ton figure mentioned by the Ministers. Mr. Linder expressed appreciation of Italy’s cooperation in the International Materials Conference. With reference to their requests for copper he noted that Italy had received 24,000 tons in the last quarter and at this rate he did not feel that the problem of copper for Italy would be a serious one.
Mr. Bissell said that he would welcome further discussions on the technical level with the Italian delegation. Minister Pella said that his group would also like to have further discussions. He noted that he and the rest of the delegation would be in Washington through the following day and that it would be possible for some of them to remain even longer if so desired. It was agreed that Minister Pella, Mr. Bissell and members of their staffs would meet the following day, and the question of additional meetings would be discussed at that time.
The Secretary said that the US Government recognizes the great problem that emigration poses for Italy and assured the Prime Minister that we were anxious to help as much as we could. He recalled that he and the Prime Minister had talked about this question with the President and the latter had discussed the Congressional problems involved with regard to immigration laws. The United States has supported the activities of the IRO as well as those of other international groups. Now that the operations of the IRO are coming to an end the United States will seek to provide assistance through other means. He pointed to migration in Europe as a pressing problem and expressed the hope that progress could be made through the Committee of 12 by the exchange of technicians and other steps.
Mr. West said the United States was seeking to join with other nations in forming an international organization that would be helpful on this matter. It will be necessary, however, to obtain the support of all countries concerned and particularly to achieve cooperation between those countries who have emigrants and those countries who can receive them. There is substantial opinion in the United States which supports such programs, as demonstrated by the support of the Displaced Persons Commission. He warned, however, that it was very difficult to obtain changes in the immigration laws of the United States. We view with great interest, however, the opening of opportunities for migration in western Europe. With increasing production and a resultant greater demand for [Page 711] manpower there should be a favorable effect on the manpower situation in Italy.
Minister Pella said that he would like to raise the question of “ILO versus IRO” and wanted to know in particular what the US attitude was toward the forthcoming conference in Naples. Mr. West said that this matter was under discussion. The United States will at the Naples conference3 express its support for opportunities to stimulate greater emigration. However, at this time we are not in a position to support the various suggested proposals.
The Prime Minister said that these economic problems were only apparently technical; they are basically political. He referred to the President’s statement to him earlier in the day on the importance of emigration and stressed that if the United States does not support the creation of an international mechanism for handling emigrants a solution will not be found. He said that it might well be said the manpower situation is more important to Italy than is the problem of the balance of payments, for if high unemployment continues it will be increasingly difficult to combat communism. While Canada, for example, wants immigrants, the United States does not. He said that Italy cannot impose its desires on the United States but unless the U.S. can take more immigrants, the effort will be jeopardized. He proposed that these steps be taken: first, to create an international mechanism for the financing and transfer of emigrants overseas; second, to establish a joint American-Italian group in order to promote efficient employment of technical personnel and Italian manpower for the construction of military installations, particularly in the Mediterranean area; third, to support the plans adopted by NATO and OEEC for Italian emigration in Europe in order to support the defense programs and to develop European economic strength. The Prime Minister said that an important question was that of actually financing the emigrants. In South America corporations for agrarian emigration have been established. However, it now costs approximately $1,000 for each person who emigrates. The Australians have solved this problem by permitting loans through the National Bank for the assistance of emigrants and 50,000 people have been settled in Australia in this way. He suggested that an international mechanism might utilize this type of arrangement but stressed the need for US aid. He said that what was needed was not splendid resolutions by international groups but real action. In conclusion he requested that the Secretary follow this matter closely in view of its extreme political importance.
[Page 712]The Secretary assured the Prime Minister that the United States Government would study this problem and will support international machinery but he stressed that the United States wanted to make sure that the machinery established was the correct kind. The Secretary then said he had another matter he would ask the Prime Minister to consider namely, the waiver of U.S. obligations to Czechoslovakia under the GATT. He noted that both Italy and France have found difficulty in voting for a waiver and that he had spoken to Mr. Schuman about it. To obtain the waiver it will be necessary to receive sixteen affirmative votes and unless both Italy and France vote for it the waiver will not be granted. If the waiver is voted, there will be no violation of GATT, but if not we will have to suspend trade. In that event a vote will have to come up again under GATT procedure and in that case it will be under far less favorable circumstances than those on the initial vote.
The Secretary said he realized that problems have been created for Italy by the imposition of U.S. restrictions on imports of Italian cheese and other products, but he said that the situation should improve since Congressional action is now being taken.
Ambassador Zoppi said that the Italian Government had under study the question of the waiver requested by the United States and said that this problem had been under consideration before the Italian delegation had left for Ottawa. The Secretary pointed out that the vote on the waiver is imminent and may be taken before the end of this week.
Minister Pella said he would like to make a final statement on the economic problems. As a technician he had set forth a number of the problems and trusted that action would be taken on them. However, one paramount question remains. Italy’s reconstruction program was made possible because the people had trust in the present and in the future and as a result have invested their savings. It is extremely necessary that this confidence be raised and strengthened. The people must be convinced that Italy is not alone and that the U.S. stands with Italy in confronting Italy’s problems. If this psychological and political confidence can be maintained the technical problems will not present an obstacle. If the United States can help supply the foundation, Italy will build the “house”.
The Secretary replied that the US Government shared the view expressed by the Minister and he assured the Italian Delegation that we would do everything possible to help them in their efforts.
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The Prime Minister then referred briefly again to the question of emigration and asked whether it was possible for the United States to make arrangements for temporary emigration of Italians into the United States. The Secretary said that this was not possible [Page 713] under present law and Ambassador Tarchiani agreed that it would be most difficult to secure special legislation permitting such temporary emigration.
The Prime Minister suggested that Italy and the United States continue to study the problem of common action against communism, and he said his government may come forward with specific proposals. He concluded that the West must take the initiative in such things, as had the Communists in organizing the Berlin Festival. The Secretary said that what was really needed was a better idea than the Berlin Festival which would effectively combat Communism.
The Prime Minister said that he had received information that it is being said in Trieste that elections there will be held the first week in December and he warned of the consequences that this rumor might create. The Secretary assured him that the elections had been postponed but that the situation would be investigated.
Following a brief discussion of what information should be released to the press, the meeting was adjourned.