105. Memorandum of a Conversation, Italian Embassy, Washington, March 1, 19561
SUBJECT
- Interview between President Gronchi and Secretary George Humphrey at the Italian Embassy before Ambassador Brosio’s dinner for Vice President Nixon
PARTICIPANTS
- President Gronchi
- Secretary Humphrey
- Mr. Randolph Burgess
- Foreign Minister Martino
- Ambassador Brosio
- Minister Ortona
- Mr. Luciolli
- Ambassador Clare Boothe Luce
Secretary Humphrey opened the discussion by expressing his congratulations for the “excellent” speech given by President Gronchi before the Congress. All comments which he had received had been most appreciative and made him feel that the speech had made a deep impression on the members of the American Congress. President Gronchi thanked Secretary Humphrey and, following the line of thought expressed in his speech before the Congress, said that he had had an interview shortly before with Eugene Black of the World Bank; that he had urged Mr. Black to reexamine carefully the possibility of further, and more extensive, loans to finance the Enti di Riforma (Land Reform Agencies). He stated that he was urging this upon Mr. Black, not only because of the economic considerations, but also because of political convictions. The President seemed to feel that his conversation with Mr. Black had been encouraging. The President was of the opinion that if these loans could be consummated quickly, reforms could continue to be made quickly. He said that the essence of the matter was the swiftness of the aid from the Bank, since political [Page 349] effects would become attenuated if the aid came in too small amounts over too extended a time, even though in the end it should be the same amount.
The President then said he wanted to discuss a few thoughts on the development of Italy’s oil resources, in connection with present legislation pending before the Parliament. He said, “We feel the full responsibility of our role in this respect not only as it affects Italian internal economy, but also from the point of view of its implications abroad, namely the situation developing now in the Near East.” The President said that he was convinced in principle that if Italy and the United States could collaborate on a large scale in Italy on the oil question, it would be an excellent thing. The President said he thought the draft of the pending legislation was “formulated in a certain direction.” He said, “We can change this direction if we can manage to eliminate political overtones and talk of current problems, and make the whole thing a strictly business matter.” For example, if one could succeed in obtaining a flow of investment (by which he said he meant public investment as well as private loans) the President could then use his influence, which he indicated was substantial, to change the law in a favorable direction. He said he was well aware that a large and rapid development of Italy’s oil resources would put Italy in a favorable credit position, and a far more favorable position for the increase of private investment.
Secretary Humphrey replied that he agreed entirely that if Italy could develop its own oil resources with some rapidity it would be a wonderful thing for Italy and for all of Europe. He said if favorable legislation could be drawn up, this would increase the climate in Italy for economic investment, and it would be a splendid thing for all of Europe, since it would reduce Europe’s almost complete dependence on oil from Middle East sources.
The President then replied that in his view there was another reason to accelerate oil development in Italy, and that this was the opening up of atomic energy as a fuel for industrial uses. At this point, the President said, “Oil will become a second grade fuel.” Mr. Humphrey said that this was entirely a relative question. He said that the President was no doubt aware that atomic power is not cheap, and there is nothing at present to indicate it ever will be cheap. Certainly it will not, in the foreseeable future, be as cheap as cheap oil. He said that cheap oil development in Italy would provide excellent competition for a long time to atomic energy. He said he was well aware that cheap oil would help Italy’s balance of payments rapidly, adding however, that he did not know, but assumed, that the oil was there.
[Page 350]The President replied that on the other hand this should not prevent going forward with agreement on atomic energy in Italy, since, when he spoke of rapid development of oil, he was well aware there would be a long lapse of time, say 12 to 15 years, before oil could become a cheap and favorable fuel in Italy.
Mr. Humphrey replied that while he did not know the time factor, it was his impression cheap industrial fuel oil could come far quicker than atomic fuel. He said he certainly believed it would be a long time before atomic energy could compete with oil in Europe.
The President said that while he realized that much of this was an academic discussion he simply wished to present to Mr. Humphrey the fact that he hoped to change the law in a proper direction if efforts could be made which would not make it impossible for him to do so.
Mr. Humphrey then said that he would like to make a few inquiries about the land reform program, in distinction to the program of the Cassa del Mezzogiorno; that he did not understand the land reform program very well. At this point, Mr. Burgess intervened to say he was sorry he had not briefed the Secretary fully on this matter, and as he had done a lot of work on this last summer he would brief the Secretary without delay.
The President said there were four land reform areas: (1) Rome to Pisa; (2) Calabria–Lucania; (3) Puglia; and (4) the Po Valley area. He said programs in these four areas were administered by independent State agencies, like the Cassa—though they were geared to one reform program, under the supervision of the Department of Agriculture, the conditions differed in the four regions.
For example, region 1, the Rome to Pisa area, was a pasture and cereals production problem, and so here the question was one of changing from an extensive to intensive type of agriculture reform. That the second region, Calabria–Lucania, presented difficulties of a more serious nature because of the poor soil and the tremendous disinterest of the owners in developing and improving the soil. Through a better economic base, which is now being provided by the Cassa—with aquaducts, roads, etc.—it can be hoped that it will become easier to put land reform into effect.
He said that the same problem existed in Puglia, as in the Calabria area. The problem in the Po was again a different one—there it was how to achieve the reclamation of submerged soil in this flood area, but all those areas had one common problem: in none of the four areas is there private initiative: the present land owners make no forward movement toward soil and land reform because of the risk to capital and their lack of any hope for profit. Therefore, reform in these areas requires State intervention. As things stand today, the State can pay the owner for the lands he has to give up, but the States does not have the means to provide the machinery, the animals, and equipment that [Page 351] is necessary so that the new owners can make the soil profitable. The President wished to make the point that land reform in the South is particularly important because it is highly susceptible to communist penetration. In the South, there are many overgrown villages with 50/60,000 inhabitants, all of whom are dependent on the soil, who travel miles to get to the fields, and then return at night to their homes, where they express their discontent and dissatisfaction. This concentration of workers in the villages provides a focal point for the spreading of discontent and communism.
Mr. Humphrey then went on to ask what the procedure of land reform was—do you buy the land and reclaim it and give it to the farmers? The President said; “You buy it, reclaim it, provide it with machinery, etc.” Mr. Humphrey asked, “Is this the problem you are working out with Mr. Black?” The President answered in the affirmative mentioning, as the recipient of possible loans, the Enti di Riforma. A favorable atmosphere has already been created by the Bank’s satisfactory experience in its dealings with the Cassa. The President said that he wanted to mention other possibilities of American investments in Italy, such as bond issues, State loans, etc.
At this point it was announced that the Vice President was waiting in the other room, and Mr. Humphrey interrupted to say that we were all tremendously interested in the efforts Italy has made to redeem its own economy in the past ten years. He expounded momentarily on economic development in Italy in the past decade. He then said to the President, “You are a fine salesman; you seem to have the interest of your people at heart. We hope we have encouraged you on this visit and we will examine all the ways in which we can properly aid you.” He said the President had made a very constructive statement.
The President then said he knew very well the important part that American private capital can play in the fortunes and destinies of countries, as well as peoples.
- Source: Department of State, Italian Desk Files: Lot 58 D 357, 131 Gronchi Visit. Official Use Only. Drafted by Luce on March 6.↩