Foreign Relations of the United States, 1952–1954, Eastern Europe; Soviet Union; Eastern Mediterranean, Volume VIII

750G.00/3–1754: Telegram

No. 176
The Secretary of State to the Embassy in France¹

top secret
priority
niact

Washington, March 24, 1954—3:09 p.m.

3285. Eyes only for Ambassador Luce.² I have read with interest and appreciation your letter of March 18³ analyzing Italian situation with special reference to Trieste. From your reference to Tito’s best offer as calling for Italian sacrifice in Zone A without compensation in Zone B, I infer you had not received report of basis for settlement which Velebit agreed to present to Tito (London’s 3990⁴), which involves only minor rectification interzonal boundary with approximate equality in territorial concessions made by each side. Basis for settlement now under consideration seems to accord closely with your views as I understand them and is in its territorial aspects very close to Oct. 8. Velebit seems to have accepted only lip service to autonomy. Free port of Trieste is already in existence and there is no question of a Yugo proposal for anything different as implied para. 2 Rome’s 2835.⁵ We agree with your point that financing Yugo port and railroad should be divorced from settlement and hidden in economic aid as proposed by Thompson in London’s 3990. Slovene claims issue seems narrowing down to opening credit institution and one or more cooperatives which admittedly carries some potential for future use against Italian interests, thought apparent fact that few Slovenes in Trieste are pro-Tito (Trieste’s 1083⁶) suggests danger limited. Reparations issue clearly is difficult but should be manageable in context of settlement of outstanding issues, especially if we can persuade Yugos to accept Italian agreement to negotiate, and not make whole settlement contingent on agreement on reparations.

Proposed consultation with Italian representative in London after US-UK Embassies Rome have taken initiative to this end (leaving representatives in London to give Italians all details), should afford Scelba all necessary protection. I believe we should say to Ital. For Office that we think there would be advantages in handling this, at least initially, with Brosio alone in London, though if they wish to send one or two experts there would certainly be no objection. We hope we could reach substantial agreement with Italians without repeating with them the tripartite exercise we have been engaged in with Yugos.

My thought, like yours, is that best hope avoiding spiral unfortunate developments with which Italy is threatened is earliest possible solution Trieste problem, on basis meeting reasonable Italian requirements and at same time without alienating Yugos.

It seems to us that Dept’s long telegram to London, 4848 repeated to Rome as 3044⁷ which you no doubt saw on Saturday⁸ before you left Rome meets your main concerns and outlines basis for a settlement which Italians could discuss without subjecting Scelba government to undue risks and with good hope of thereby speeding a tolerable settlement.

It seems to me the proposal on which we are now working is so close to Oct. 8 with only minor deviations which each could claim for facesaving purposes that it would be a great misfortune not to proceed. It ought to be a political achievement for the Italian Govt to get the Italian flag flying again over Trieste, which after all is the heart of the matter.

I am anxious to send instructions to Ambassador Thompson along these lines but want first your observations which please send niact.

Best regards.

Dulles

1. Drafted by Hooker and cleared with Bonbright, Barbour, Jones, and Dulles. In a memorandum of Mar. 23 from Merchant to the Secretary, which accompanied a draft of this message, Merchant said that if Luce expressed serious disagreement to the proposed basis for a settlement, “we may face a very difficult decision. But on balance we have preferred to put it up to her, rather than issue instructions to Thompson which she might later question.” (750G.00/3–2354)
2. Luce was in Paris on leave.
3. Supra.
4. Described in Document 174.
5. In paragraph 2 of telegram 2835, Luce commented on the Yugoslav position as presented by Velebit on Mar. 17. (750G.00/3–1954)
6. Not printed. (750G.00/3–1654)
7. See Document 174.
8. Mar. 20.