134. Memorandum of Conversation1
- Fiat Deal
- His Excellency Giuseppe Saragat, President of Italy
- His Excellency Amintore Fanfani, Minister for Foreign Affairs
- His Excellency Egidio Ortona, Italian Ambassador to the U.S.
- Mr. Sergio Romano, Interpreter
- The President
- The Secretary
- The Honorable G. Frederick Reinhardt, American Ambassador to Italy
- Mr. Neil Seidenman, Interpreter
President Saragat said that another matter of concern was the Export-Import Bank loan to Fiat.2 Although it was not of major importance, it had a definite psychological value. Fiat was a private corporation whose operations were less subject to public scrutiny than were those of Alitalia. Fiat has an annual turnover of approximately $2 billion. It employs some 12,000 workers and was obviously no small company. The transaction in question concerned a loan of $50 million. Fiat does not need the money. Its President could take this amount from his own pocket. $50 million represents only about one-fortieth of Fiat’s annual turnover. The Fiat proposal to construct an automobile industry in the Soviet Union was motivated by the desire to encourage a commercially-orientated economy in the Soviet Union. It was also motivated by the desire to promote a higher living standard and possibly a subsequent reduction of military expenditures. Fiat is not going to the USSR to produce missiles. Rather it will produce automobiles and hopefully will contribute to the improvement of the lot of Soviet workers and consumers. This would contribute to the cause of peace and by promoting a consumer-oriented economy would play a part in promoting the evolution of democracy in the Soviet Union. The $50 million [Page 281] loan had not been requested by Fiat from the standpoint of need. Rather the purpose was to show that the Fiat project had no anti-American overtones, and to insure that it could not be exploited for political or ideological reasons. For this reason, the problems which arise from the blocking of the loan are not financial, but are psychological.
The President said that he was not altogether familiar with this aspect of the subject, but would have the matter carefully reviewed. He said that the Administration agreed that the Fiat project is a constructive and useful step and that we are in accord with the goals which it seeks to achieve. For this reason, we had asked the Ex-Im Bank to approve the loan. In our opinion, the Fiat transaction would have effects in the Soviet Union that would be in the interests of all the parties involved. Unfortunately, some members of Congress had felt that to approve the loan would be giving aid to the Communists. It sometimes takes a considerable amount of time to educate some of the members of Congress.
The President said that for the last four years, the Administration had been successful with Congress both on the domestic front and in international affairs. However, we were now approaching an election year and anything that can be used to embarrass the Administration is fully exploited by the opposition and even by some members of the party in power. The latter may have presidential aspirations or other individual interests which they wish to promote. Thus, many things that the Administration feels are worthwhile run into obstacles and we then must wait until after the elections or “until the Republicans take over.” The President assured President Saragat that he would do everything possible to have the matter reconsidered.
President Saragat said that in his contacts with the late Professor Valletta, former President of Fiat, he had been told that it was essential to know exactly where the US stood before entering into a contract with the USSR. President Saragat said that had the US expressed opposition, Fiat would not have signed the agreement. He said that the Italian Communists find themselves in a very uncomfortable situation each time visitors from the USSR arrive in Italy and then make a point of expressing their admiration for Fiat.
President Johnson said that he himself owned a Fiat convertible about which he is very enthusiastic.
- Source: Johnson Library, National Security File, Country File, Italy, Saragat Visit. Secret. Drafted by Seidenman and approved in S on September 29. The memorandum is Part V of VII; memoranda of conversation of the other portions of the discussion are ibid. The meeting was held at the White House.↩
- During an October 7, 1966, speech in New York, President Johnson announced that the Export-Import Bank was ready to guarantee Italy credit for the purchase of U.S.-made equipment for the Togliattigrad Fiat plant. For text of his statement, see Public Papers of the Presidents of the United States: Lyndon B. Johnson, 1966, Book II, pp. 1125-1130. In 1967 both the House and Senate adopted amendments to the Export-Import Bank authorization legislation that banned the loan guarantees.↩