125. Memorandum From the Ambassador to Italy (Reinhardt) to the Under Secretary of State for Political Affairs (Johnson)1

SUBJECT

  • 303 Committee Consideration of the Italian Covert Action Program

I want to elaborate further on our discussion on Tuesday about the Italian covert program.2 The coming months may represent a critical period for political stability in Italy. Decisive steps to reunify the Socialist and Social Democratic parties are anticipated this fall. This prospect, in conjunction with the strong rivalries within the Christian Democratic party, could put new strains on Moro’s center-left coalition. An additional unsettling factor is the approaching general elections. They must take place not later than April 1968.

Since my assignment to Rome I have consistently recommended the gradual reduction of covert activities in Italy. The record in fact shows sharp year-to-year cuts in expenditures. The level of funds has dropped from [less than 1 line of source text not declassified] in FY 1964 to a recommended [less than 1 line of source text not declassified] in FY 1967. The latter figure represents a cut of 35% from FY 1966. It is also significant that in recent years we have progressively discontinued direct subsidies to political parties—the last was the small program in FY 1966 for [less than 1 line of source text not declassified]. All other support to political parties has been contingent on approved action programs in support of U.S. policy objectives, in the absence of which no funds have been made available. The [less than 1 line of source text not declassified] is now on notice that any support for FY 1967 would be on such a basis. Accordingly the proposed program contains no unstructured contributions to any political party’s finances.

In the circumstances, I recommend that the program proposed for FY 1967 be approved. An abrupt discontinuance of the program at this time would be interpreted by some of our friends, on whom we must depend for achievement of our policy objectives in Italy, as a change in our long-standing support for them and for what they are attempting to achieve. I am particularly concerned that we avoid any action which might disturb the Moro-Nenni-Saragat leadership, which is relatively strong by post-war Italian standards and which seems to offer the best chance of strengthening political stability and democracy in [Page 260]Italy. At the same time, I feel that we should continue the gradual reduction of the covert program in Italy with the general objective of a final phase-out in connection with the 1968 elections.

  1. Source: Department of State, INR Historical Files, 303 Committee Files. Secret; Eyes Only. Drafted by Reinhardt and Dozier.
  2. No record of this discussion has been found.