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

380. Briefing Memorandum From the Director of the Bureau of Intelligence and Research (Saunders) to Secretary of State Kissinger¹

Washington, December 2, 1976.

Implications of The Communist/Christian Democratic Accommodation in Italy

Prime Minister Andreotti’s visit to Washington on December 6–7 will provide the opportunity for the first exchange of views between the highest-level Italian and American policymakers since the Andreotti government came into power last summer. The analysis which follows is an effort (1) to put in perspective his experience with the first few months’ cooperation with the Communist Party under the arrangements he worked out last summer and (2) to describe the mechanics of how the PCI is expanding its influence.

In a nutshell, Andreotti’s government was formed and remains in office as a result of the Italian Communist Party’s (PCI) willingness to abstain in key votes in Parliament where it has the power to overturn the government. The Christian Democratic Party (DC) agreed to this formula, or accommodation, in order to try to hold on to power and gain time to form a coalition with other non-Communist parties. The PCI accepted the arrangement in order to try to establish its credentials as a constructive and democratic party and to promote an eventual DC/PCI coalition—the so-called “historic compromise.”

While the accommodation would seem to be inherently unstable, it is reinforced by the fact that Italy’s democratic political leaders see no immediate alternative. This paper examines the implications for the United States of a continuation of the DC/PCI understanding. The analysis leads to the following thoughts:

—The DC minority government will endure at least until next spring.

—The PCI will gradually reinforce its role in future Italian governments.

—Italy will gradually modify its role in the Atlantic Alliance in such ways as to lead to a decrease in the value of the Italian contribution to the Western camp.

—Existing US leverage on the Italian situation will be difficult to apply because the PCI will avoid provocations that would elicit retaliation, and the major Western allies will be reluctant to take actions that could result in loosening Italy’s ties to the EC and NATO.

—Given the present political and economic circumstances in Italy, plus the constraints on the use of US power and influence there, an increasingly strong Communist input into government policies and a gradual strengthening of the DC/PCI alliance appear inevitable. As a result, the Communists will be well on their way toward their goal of formal participation in the government.

Background

In the general election of June 1976, the Christian Democrats won 38.7 percent of the vote (the same percentage as in 1972), gaining at the expense of their traditional allies on the left and in the center. Collectively, the Socialists, Social Democrats, and Liberals declined from 18.9 percent to 14.3 percent. The Communists increased their share of the popular vote from 27.2 percent in 1972 to 34.4 percent. The DC was unable to constitute another one of the center-left or center-right coalitions that had enabled it to dominate Italian governments for the past 30 years. Consequently, the Christian Democrats and the Communists agreed to the formation of a minority DC government that depends on PCI abstentions in votes of confidence.

In return for what the Communists called a “non-rejection” of the Andreotti government, they obtained:

—important parliamentary leadership posts for the first time;

—extensive programmatic concessions regarding the government’s economic austerity and reform plans;

—the exclusion of certain DC politicians who had aspired to return to the cabinet; and

—public recognition of their indispensable role in allowing the government to be confirmed.

Prospects for the Minority Government

When the minority government was formed, the objectives announced by the DC and the PCI differed:

—The DC needed confirmation of the cabinet in order to retain control of the government and to gain time to convince the Socialist Party (PSI) to rejoin a center-left coalition that would exclude the Communists.

—The PCI saw its tolerance of the government as a first step in the direction of the “historic compromise,” a DC/PCI governmental coalition.

Given their contradictory expectations for the Andreotti government, tensions between the DC and the PCI will not disappear. The parties are likely to clash on policy matters, especially in the area of economic and social reform. The accommodation could come unstuck during the crucial negotiations just begun by the unions and industry on adjustments to be made in the wage indexation schedule. Moreover, a significant proportion of the rank and file in both parties opposes the DC/PCI accommodation out of concern that it will compromise the identity and integrity of their party.

During the meeting of the PCI Central Committee, October 18–20, it was evident that Secretary Berlinguer’s conditioned support of the DC minority government was not unanimously endorsed by the party’s leadership:

—PCI President Longo, noting the widespread criticism of the austerity measures among trade union rank and file, warned of the danger of close identification with the government.

—Central Committee member Amendola on the other hand, criticized the government for not going far enough in proposing necessary deflationary measures.

The DC’s internal doubts over the accommodation with the PCI have been more muted. Still, leading personalities, such as Milan’s right-wing Massimo De Carolis, have criticized the growing relationship between the DC and PCI.

The next challenge to the government (assuming that agreement can be reached on wage-indexation) will come during the first half of 1977, when the brunt of the deflationary measures begin to be felt by the man in the street. If the Andreotti austerity program is fully implemented, economists project a further short-term rise in the inflation rate (which may reach 20 percent), a fall in consumption, and a rise in unemployment. Moreover, the impact will be even harsher if the stringent conditions of the pending IMF loan are accepted by the Italian Government in their entirety. At a time of wage restraint, labor pressures will increase, and the PCI may not be able to continue its support for the austerity package indefinitely.

Despite these stresses, however, the DC and PCI both seem to believe that their own interests are best served by pursuing their experiment with the Andreotti government. Several factors are working to allow it to remain in office for at least some months:

PCI Interest in Government’s Success. Berlinguer’s policy of “non-rejection” is designed to prove the viability of a government that needs PCI support. He believes that the experience will lead eventually to popular acceptance of an “historic compromise” government. Hence, the PCI will be using its considerable strength to ensure that the Andreotti government does not soon fail.

Economic Difficulties. The Italian public has become increasingly aware of Italy’s economic plight. Most of Andreotti’s austerity program, consisting primarily of stabilization measures but also including structural reforms, is now in place, the product of close consultation with the PCI. Both parties are in agreement that government budgetary deficits—one of the root causes of inflation—must be cut, a step that will cause a reduction in the overall standard of living. Moreover, both parties agree that consumer buying must be restricted in order to free resources for greater investment.

While disagreements between the parties still exist on the relative importance of short-term stabilization measures (favored by the DC) and longer-term structural reforms (advocated by the PCI), both appear to have agreed to a tacit division of labor that is designed to ensure some success for Andreotti’s economic proposals:

—The PCI intends to respect the DC’s role as an interlocutor with Italy’s key EC and NATO allies because foreign financing will be needed to moderate the severity of deflationary measures.

—The DC is counting on the PCI to convince its labor supporters to accept the austerity package. The PCI and the Communist-controlled CGIL currently are the only moderating influences in the Italian labor movement. The Socialist-controlled UIL and the Christian Democratic CISL have both been considerably more intransigent on the Andreotti austerity proposals. In addition, the DC is relying on the PCI to enlist labor support for modifications of the wage indexation system, which is necessary to reduce unit labor costs and satisfy the conditions for the prospective IMF loan now under consideration.

Lack of Alternatives. The small democratic parties have sufficient members in parliament to form a majority government with the DC and send the PCI into opposition. However, these smaller parties are currently involved in a quest for identity, which, in the case of the Socialists and the Social Democrats, has provoked the resignation of their party secretaries. Faced with their own divisions and with strong PCI opposition to any revival of the center-left coalition, these parties will probably not be sure enough of their own strength and direction to negotiate an alliance with the DC in the near future. In any event, their opposition to a larger Communist role in government has decreased.

If the Andreotti Government Remains in Office

Given the above factors, Andreotti seems assured of being able to remain in office through next spring. (He has stated that he will work as if the government will endure forever, but that he is prepared to depart tomorrow should Parliament so decide.) If, as we believe, the DC/PCI accommodation continues to provide support for the government, several significant political tendencies are likely to become more evident:

—Increase in PCI Credibility. Much of the credit for any success that the government achieves, especially in the economic field, probably will go to the Communists, who are better equipped to exploit it than are the Christian Democrats. By lending support to measures that call for sacrifices by the working class and by attempting to control trade union unrest, the PCI will have succeeded in proving to much of Italy’s middle class that it can be counted on to implement measures designed to reduce production costs so that Italy’s international industrial competitiveness is restored. Furthermore, by its readiness to compromise and willingness to play down socially divisive issues, such as abortion and Church-State relations, the PCI probably will begin to overcome the visceral anti-Communism of Italy’s rural and Catholic populations, which in the past have served as bulwarks against PCI growth.

—Deepening of Cooperation Between DC and PCI. Andreotti and his cabinet may begin to find the disciplined PCI easier to work with than were the querulous Socialists. Many key and influential businessmen are already openly acknowledging the indispensability of the PCI in any efficient management of Italian society. Andreotti could well conclude that, promises of external assistance and pressure from the Europeans, the US, and multilateral institutions notwithstanding, he must accept the prospect of a growing PCI role in government because only by this accommodation with the Communists can he assure that the DC will retain a large governmental role. For its part, the PCI, by acting “responsibly,” will add verisimilitude to its claim of indispensability to the effective operation of the Italian political system.

—Greater Legislative Oversight of Foreign Policy. Any Italian government that is dependent on the PCI will make timidity a virtue when it comes to foreign policy. In the recent past, Italian foreign policy followed the leads of the US and the EC, with day-to-day operations left in the hands of Foreign Ministry officials, who, by inclination, training, and political ties, were generally receptive to counseling by the United States. However, if the Parliament, with the PCI playing an assertive role, becomes more involved in policy formulation, legislative oversight of the activities of the Foreign Ministry will be increased. The concentrated Communist presence in the several parliamentary committees dealing with foreign affairs will guarantee the PCI an increasingly active role in influencing foreign policy.

—Lessening of Pressure for DC Renewal. The modicum of popularity which the Andreotti government is enjoying militates against internal DC efforts to retire the traditional leadership which is currently well entrenched in the sottogoverno (appointive governmental positions). Although Andreotti’s cabinet contains some second-generation leaders and technocrats, DC leaders continually acknowledge the need for revitalization but seem unable both to keep the government in non-Communist hands and make sweeping personnel changes.

—Withering Effect on Socialist and Lay Parties. As the government continues in power, the position of the Socialists and the smaller parties will become more tenuous. Removed from power and patronage, their ability to maintain membership and electoral support will be severely curtailed. As these parties witness the broadening of DC/PCI cooperation, they will feel driven to attempt demagogic initiatives, and factions within the parties will feel bold enough to challenge the tactics of their leaderships. The result will be increased turmoil in these parties and further damage to their abilities to expand their support.

It is difficult to predict the relative political advantage that each of the two major parties will gain if the Andreotti government is able to weather its immediate economic problems. However, for the reasons listed above, it does not seem likely that even a strengthened DC will improve its position to a degree sufficient to enable it to dispense with PCI support within the next year.

Consequences Of An Increased Communist Role

As the Communists appear increasingly indispensable to the Christian-Democrats as guarantors of a DC government, the PCI will begin to wield a degree of influence in Italy that potentially challenges the interests of the Western alliance:

—NATO Support. It is the PCI’s public position that Italy should continue its membership in NATO until the Warsaw Pact and NATO are dismantled, and the Communists will be careful not to question directly Italy’s position in NATO. However, they advocate a “restructuring” of NATO to remove what they call the “US predominance” and probably will press for a more active NATO role in promoting East-West détente. Also, because of their emphasis on social progress, the Communists will give a lower priority to defense. They will probably support additional military force reductions beyond those already taking place should Italy’s weak financial situation continue to demand further cutbacks. Unless a stark Soviet intervention in Yugoslavia alters PCI perspectives, Italy under the current DC/PCI accommodation will maintain formal NATO membership, but its military role and strategic dependability will be subject to serious doubt.

—US Bases. The Communists will not immediately criticize the maintenance of US bases in Italy. However, they can be expected to work toward creating a climate unfavorable to the maintenance of the US military presence. In addition, the US is vulnerable to PCI criticism on the issue of local employment at the bases. If the US reduces the number of Italian personnel at the bases for economic or operational reasons, the PCI will charge that the US is turning its back on Italy because of the increased Communist role there.

—Military and Security Appointments. The PCI probably now commands enough influence to block the appointment of men whom it opposes to key positions in Italian military and security agencies. While known PCI members or sympathizers will not accede to positions of power, strong anti-Communist careerists in these services are likely to be passed over or retired. The choice of replacements for the chiefs of staff of the Army, Air Force, Navy, and Ministry of Defense (where all the incumbents are eligible for retirement within the next nine months) will be a crucial test of PCI power. In addition, the Andreotti government’s commitment to reorganize the Italian Intelligence Service (SID) will provide the PCI with an opportunity to influence the form of the reorganization and the choice of persons who will be placed in positions of authority. In addition, the PCI will have other opportunities to modify the SID reorganization plan when it is submitted to Parliament for approval.

—A Foothold in National Television. The two national channels of RAI, the government-controlled television network, currently are under the management of the DC and the Socialists. The PCI is likely to move quickly to stake a claim to part of Italy’s principal information and cultural medium. Such a takeover would give the Communists more influence over media resources that already distort the news substantially, often with an anti-American slant.

—Modifications in the Market Economy. Although the PCI is against further nationalization of the economy, its preference for greater planning in allocating resources and its support for increased union participation in government and business decision-making, particularly with respect to investment, will tend to reduce further the role of the free market and private enterprise in Italy. Moreover, the PCI, when confronted with the exigencies of a hard-pressed economy, is apt to advocate greater government controls over trade, capital flows, and foreign investment (particularly by multinationals). More centrally planned and protectionist economic policies would strain Italy’s traditional economic relationships with the European Community and the US. Italy would become a more difficult participant in the trade and financial institutions of the West.

Limitations on US Influence

Given its economic strength and its influence among the Western allies, the US would appear to have considerable potential leverage on the evolution of the political situation in Italy. However, several constraints will limit US options:

—The PCI is an elusive target in a situation that is slowly changing in degree but not dramatically in kind. Berlinguer’s strategy is to avoid a Chilean-type situation in Italy. The Communists will attempt to blur issues and avoid provoking the non-Communist forces either in Italy or in the West. The formula of a “non-rejected” government provides the PCI with an ideal vehicle for extending its influence and support under the cover of an all-DC cabinet.

—Public opinion in Western Europe, as well as in the US, will react negatively to anything perceived as an American attempt to have US political preferences play a role in the democratic process in Italy. Incessant Communist propaganda decrying the US role in Chile, plus the recent revelations of past US subsidies to Italian politicians, have sharpened Italian suspicion of foreign actions regarded as “interference.”

—The US has maintained its principal contacts with the DC, developed only an intermittent relationship with the Socialists, and established only limited low-level contact with the PCI.

During his visit to Washington, Andreotti will request American support for IMF assistance and sound out US willingness to provide additional bilateral aid. However, the US decision on financial assistance for Italy—whatever form it takes—will not alleviate Andreotti’s political dependency on the PCI.

—Continuing to finance Rome’s trade and budgetary deficits might bolster Andreotti and permit him to implement a degree of economic reform without sharply reducing the Italian standard of living, but it will not reduce the need for Communist support of government measures for economic and social reform.

—Withholding financial assistance might force Italy immediately to effect a more drastic deflationary program. However, Andreotti’s own position would be severely weakened—partly as a result of the public outcry against the US refusal—and his government might even be replaced by one in which the Communist role would increase.

Another sensitive link, where American leverage will be difficult to apply, will derive from doubts, particularly in the US, over whether the confidentiality of NATO plans and documents can be preserved in view of the growing PCI presence in government deliberations and parliamentary oversight of security matters. Fearing American actions that could result in holding back selected strategic information from the Italians:

—Andreotti will express concern that attempts to “discriminate” against Italy within NATO could hurt Rome’s international standing and increase the domestic appeal of the PCI; and

—the Western European allies, while concerned at Communist penetration of Italy’s security establishment, will be divided on the wisest course to follow; some will argue that NATO should do nothing that would cause Italy to loosen its ties to the alliance.

With their shared fears of a Western reaction, the Christian Democrats and Communists already appear to be tacitly working together to avoid giving the US an opportunity to mobilize American and West European public opinion against actions by the PCI or by the Italian Government.

Concluding Reflections

Present conditions in Italy appear to make it inevitable that there will be growing cooperation between the leaderships of the DC and PCI because:

—The two major parties are becoming increasingly dominant, and the smaller lay parties are in no position to enter a coalition with the DC.

—To carry out pressing economic reforms, the DC must have the cooperation of the PCI with its influence over working-class and trade-union attitudes.

—The leaderships of both parties believe, although for different reasons, that it is in their own interest to pursue the present accommodation.

—Severe constraints exist on the use of American leverage in Italy, and the Western European allies will be especially reluctant to take actions that would result in loosening Italy’s ties to the EC and NATO.

As a result of these factors, it appears that the Communists will consolidate their influence over the formulation and execution of governmental policies and will be well on their way toward their goal of attaining formal participation in a future Italian government.

1. Summary: Saunders discussed the implications of the Communist/Christian Democratic accommodation in Italy.

   Source: Ford Library, National Security Adviser, Presidential Country Files for Europe and Canada, Box 8, Italy (9). Secret; Noforn. Drafted by Harry Coburn in INR/RWE. In a November 17 memorandum to Scowcroft, Clift reported on a November 13 private and informal meeting between Andreotti and Berlinguer on domestic politics and foreign relations. Clift commented: “To me it is significant in its revelation of the apparent depth and intimacy of the Prime Minister’s consultations with the Head of the PCI—the fact that an ‘historic compromise’ is already taking place.” (Ibid.)