Foreign Relations of the United States, 1969–1976, Volume E-15, Part 2, Documents on Western Europe, 1973–1976, Second, Revised Edition

378. Backchannel Message WH 61280 / Tohak 26 From the President’s Assistant for National Security Affairs (Scowcroft) to Secretary of State Kissinger¹

Washington, September 17, 1976, 0324Z.

To Covey/Passage/Rodman for the Secretary.

Below is a memorandum from Bill Simon to you on his discussions with Barre, Healey, and Apel in Paris. The essential message is that we must move quickly if we are to insure that the Italians come up with an economic program adequate to correct the problems in the Italian economy and to justify support from the IMF. If the Andreotti government fails to do this, the Communists are likely to capitulate on this failure to argue that a proper economic program in Italy can only be put into effect by a government which includes the Communists.

Simon suggests sending Yeo out to bolster the Italian efforts to come up with a strong program which the IMF can support. He feels that a higher level individual—you or Simon—would attract too much attention and imply that the U.S. was overly influencing Italian policy.

Following Simon’s memorandum is a draft letter which you could send to Andreotti regarding Yeo’s visit.

It is important that we get whatever message we plan to send to Andreotti as soon as possible.

Warm regards,

To: Henry A. Kissinger, Secretary of State.

From: Bill Simon.

I had a highly constructive meeting with Raymond Barre, Denis Healey, and Hans Apel in Paris last night (9/15). A part of the discussion was devoted to Italy where the following points emerged.

1. There was a general sense that Italian political circumstances have changed—that the Italian public has become vocal in support of an economic approach that deals with the real issues. There apparently is some evidence that the PCI is helping to promote the demand for a “realistic” program—on the assumption that the DC will produce a shallow and weak program.

2. Our analysis is that Italy will probably require $1.0–$1.5 billion in financing next year—funds that will have to come from official sources, e.g. the IMF, since the Italian Government is not an acceptable borrower on the world money markets.

3. We are particularly upset by the possibility that if the Andreotti government appears to be failing to deal with the country’s problems the PCI will use that as the basis for discontinuing its policy of abstention on votes. If the Andreotti government fell it appears probable that the PSI might join the PCI in forming a government, or all parties would join in forming a “government of convergence.” This would cripple the French effort to peel Mitterand away from the Communists.

Unfortunately, there is evidence of substantial support within parts of the non-Communist parties for a government of convergence on the basis that after the American elections such a government could be formed and at that point the real economic issues could be dealt with in a way that all would share in the responsibility. This attitude, to the degree it prevails, is deadly in terms of the effectiveness and thus the tenure of the Andreotti government. I feel that if this new government falls it might be the last non-Communist government for some time.

If, on the other hand the Andreotti government succeeds in demonstrating its capacity to deal with the economic situation the chances of the PSI joining with the DC and forming a majority government are high.

4. There was general agreement that we should try to encourage the Andreotti government to take the necessary economic measures now. It would be a mistake to approach Italy’s problems as if Andreotti’s was a caretaker government waiting for a “government of convergence.”

In addition, we think it might be possible to bring the IMF and the Andreotti government into agreement on a program which would merit financial aid, thus making it possible to provide Italy with up to $1 billion, perhaps even more.

Ed Yeo returned from Rome impressed with Finance Minister Stammati’s general thinking in terms of an economic program but shocked by Rinaldo Ossola’s, a friend of both of ours, advocacy of a government of convergence. Ossola is Minister of Foreign Trade in the new government.

Direct communication from us to Andreotti in letter form and delivered as quickly as possible is probably the way to proceed. Neither of us can get into Rome and out without being recognized and a personal visit may have an unfavorable impact on the formulation of the upcoming economic program. My recommendation is that, in order to put our support in the proper political context, you immediately send a message to Andreotti (suggested text follows) emphasizing our support of his efforts to achieve a strong and viable Italian economy.

The others at last night’s meeting agreed that they would, in their individual ways, indicate their support for Andreotti’s economic program.

Draft

September 16, 1976

Dear Mr. Prime Minister:

As you know, we want to be as supportive as possible of your government and the efforts you are making to restore stability and vitality to the Italian economy. The United States, and I believe your other allies as well, fully recognize the importance to the future of Italy and to that of Western democracies of the success of the major efforts which must be made by your government in the near future to strengthen the Italian economy. As you proceed in developing your economic program to be presented at the end of this month, we would like to be as helpful as possible. To this end, I believe it might be useful for Under Secretary of the Treasury Yeo to meet privately with you as soon as possible to discuss your economic plans and the type of financial support which might be provided.

Warm regards,

1. Summary: Scowcroft forwarded a memorandum from Simon on the Italian economic situation.

   Source: National Archives, RG 59, Records of the Office of the Counselor, Helmut C. Sonnenfeldt, 1955–1977, Entry 5339, Box 3, HS Chron, July–Sept. 1976. Secret; Immediate; Eyes Only. From September 15 to 17, Kissinger was in Lusaka, Zambia, for discussions with President Kenneth Kaunda on Rhodesia and Namibia. In telegram Secto 27156 from the Secretary’s Delegation in Lusaka to the Embassy in Rome, September 17, Kissinger instructed Volpe to deliver the proposed message to Andreotti. (Ibid., Box 9, POL 2 Italy)