368. Memorandum of Conversation1
- President Ford
- Vice President Rockefeller
- Brent Scowcroft, Assistant to the President for National Security Affairs
[Following a briefing and discussion on Italian earthquake aid]
Vice President: The Foreign Minister said they were right down to the wire on the elections. They thought they could do it, but they urgently needed funds. Also they had used up most of their foreign exchange.
Arthur Burns rode back with me. He said Schmidt proposed a $2 billion loan from the Economic Community and the US on the condition—which would be secret—that they take no communists into the government, and then get OECD to help with an economic and financial plug. Schmidt thinks they need help and guidance.
President: You are talking about Rambouillet II?
Vice President: Yes. Burns said that it would take a lot of doing and there is no way to do it before the elections. He has $250 million he can use, but Congress may then add restrictions on the Federal Reserve. It could, though, be done through the Exchange Stabilization Fund, but Simon doesn’t want to. Or we could loan against gold at the current market value. Treasury lawyers say we could only loan at formal value. All this would take is for Treasury to change its position.
President: Can this be coordinated with the Europeans? What would it be for?[Typeset Page 1124]
Vice President: It can’t be done before the elections. It would just be an exchange loan.
Also the 40 Committee has some money.
Scowcroft: [Described the situation with the $6 million.]
President: Let’s look into that.
Scowcroft: We would have to restructure any program. What we proposed was for a year or more and for specific projects rather than the parties themselves.
President: What about what Connally is doing?
Scowcroft: He’s organized a private group of Italian-Americans.
President: If we do something, we have to make sure that the funds don’t get into the wrong pockets.
Vice President: The $1 billion against gold or a stop-gap measure looks good to me.
President: How do we look into it?
Scowcroft: I will have someone look into it.
[Omitted here is discussion unrelated to Italy.]
Summary: Ford, Rockefeller, and Scowcroft discussed the Italian political and economic situation.
Source: Ford Library, National Security Adviser, Memoranda of Conversation, Box 19. Secret; Nodis. All brackets, except those noting omitted text, are in the original. The meeting took place in the Oval Office. Rockefeller and AID Administrator Daniel Parker visited Italy to assess the damage done by a May 6 earthquake in the northeastern part of the country. In a May 17 memorandum to Ford, Parker discussed the political considerations involved in the U.S. response to the earthquake. (Ibid., National Security Adviser, Presidential Country Files for Europe and Canada, Box 8, Italy (5)) Reports on Connally’s activities in Italy are ibid., Outside the System Chronological Files, Box 4, 4/16/76–430/76; National Archives, RG 59, Records of the Office of the Counselor, Helmut C. Sonnenfeldt, 1955–1977, Entry 5339, Box 7, Southern Europe 1975; and ibid., Southern Europe 1976. In telegram 63163 to Rome, March 16, the Department told Volpe that it was “neither involved in nor encouraging” Connally’s fund-raising efforts and could not “confirm that such activities are in fact taking place. We share your misgivings about such a project and agree that you should not follow up with him or with others said to have been involved.” (Ibid.)↩