The Ambassador in Italy
(Luce) to the Department of State1
1140. Limit distribution. As stated in Embtel 11332 Casardi and Del Balzo met Murphy at airport early this morning to discuss government’s decision on two alternatives for frontier rectification. They did not give any definitive answer but stated that the following procedure would be followed:
- Instructions would be sent to Brosio to conclude immediately all aspects of proposed agreement with exception of territorial question.
- Entire agreement containing two alternatives on frontier rectification would then be presented by Scelba for Cabinet decision.
- Cabinet would decide whether alternative one or alternative two would be accepted (as described in Embtel 1113 September 203) and final agreement could then be completed in very short time.
Foreign Office officials said that this procedure was necessary in view of political problem faced by Scelba since territorial settlement was least attractive aspect of agreement from Italian point of view. Territorial provisions however are counter balanced by other favorable aspects which Italy would derive from Trieste settlement. They believe that Scelba could then present entire package with choice of territorial alternatives in much better light than if he presented solely problem of frontier rectification without being able to stress the advantages of agreement to Italy. They reiterated [Page 556] importance of timing as outlined in Embtel 1133 and stated that instructions would be sent to Brosio to proceed on foregoing basis immediately.
Casardi and Del Balzo pointed out two problems which still disturbed them:
- On question of cultural houses they repeated that raising their figure of 150 million lire by 25 or 30 was all that could be done at present time. Del Balzo suggested that land and an “equitable” sum of money be given to Yugoslavs for purpose of constructing a cultural house and that details providing for further payments over a longer period of time be worked out at a later date. They pointed out discrepancy between requirement for providing 500 million lire for cultural houses in Trieste and the fact that “no hovel is available in Capodistria for Italian Consulate.” Del Balzo stressed that problems of this type might raise difficulties in the ultimate political decision. (We learned from Fracassi today that instructions were sent to Brosio limiting additional Italian financial support to 25–30 million lire.)
- Italians also disturbed by phrase “regardless of their legal status” in first sentence draft letter on financial settlement. According to Casardi, Yugoslavs responsible for paying for property of optants. However, Yugoslavs have refused recognize right of certain people residing or formerly resident in territory ceded to Yugoslavia by Italy under peace treaty. Yugoslavs refusal based on grounds that persons involved are ethnically not Italians. Italian Treasury estimates that property claims of persons this category amount to ten million dollars. Question apparently involves Article 10 of Annex 14 peace treaty and Italo-Yugoslav agreement of 1949. Casardi promised us memo today substance of which we will telegraph as soon as received.4
Yugoslavs request for frontier rectification in Gorizia area not raised with Italians. Bebler gave Murphy a memo on this question which he has given to Embassy in Rome for action.4 Murphy was under distinct impression that Bebler did not make frontier rectification in Gorizia a condition for Trieste settlement. We concur with Thompson’s recommendation that this problem should be in no way connected with Trieste settlement or made a part of it. We therefore propose subject to instructions to bring gist of Yugoslav memo to attention Italian Foreign Office and follow Thompson’s suggestion that Italians be asked to agree to discuss this question promptly. We will make it clear however that it is not connected with Trieste settlement.