Foreign Relations of the United States, 1958–1960, Western Europe, Volume VII, Part 2

278. National Security Council Report⁰

NSC 6014

August 16, 1960.

DRAFT STATEMENT OF U. S. POLICY TOWARD ITALY

General Considerations

1. Since Italy is a key member of the Atlantic Alliance, its political and economic progress and full collaboration within that Alliance are essential, not only to the NATO strategic concept for the defense of Europe, but to the historic unity and continued growth of the Atlantic Community. Conversely, the loss of Italy to Communist control would result in profound political, psychological, and military damage to the Free World.

2. Until the election of 1948, grave danger existed that Italy would fall under Communist domination. Beginning with that election, the Communist drive was halted, partly as a result of large-scale economic aid, firm moral support from the United States, and the military security furnished by NATO membership. From April, 1948, to June, 1953, under De Gasperi’s Christian Democratic leadership of the center party coalition, Italy made progress on many fronts. Despite its outspoken anti-Communism it failed, however, to discredit Communist pretensions to legitimacy as a democratic political institution, and did not take adequate steps to undermine the vast Communist organization. Meanwhile, the Communist Party became deeply entrenched in many local governments and socio-economic institutions.

3. Since 1953, as Italian politics emerged from the period of National Unity inspired by the Communist threat and the urgent needs of post-war recovery, there has been increased governmental instability. The four center parties have retained only a small majority in Parliament. Furthermore, a diminished sense of urgency about the Communist threat allowed differences among the center parties over program, ideology, and electoral tactics, to make it increasingly difficult for them to unite in support of any government. While the Christian Democratic Party has continued to be the nucleus of all governments, it is itself badly split and, because of its heterogeneous nature, can arrive at no lasting internal consensus around which a majority government can be formed. The resulting inability of the Christian Democratic Party to form stable, long-lived governments which can carry out effective, reformist programs has contributed to a growing cynicism about Italy’s young democratic system. If such conditions continue, there is a real danger that a continued succession of unstable governments will increasingly discredit the institutions of parliamentary democracy and further reduce parliamentary representation for the moderate center parties, thereby strengthening the left and right extremes. The Fanfani Government, which took office in late July 1960 with broad center political support, benefits from a renewed spirit of cooperation among the center parties and marks at least a temporary pause in this trend. However, it was created as an emergency solution in the aftermath of serious public disorders, and it can only postpone, not resolve, the basic problem of political choice which has faced the Christian Democratic Party for many years. While successive governments have been able to point to considerable economic and social progress which has occurred in a generally favorable international economic climate, it is doubtful that governments which depend on ultra-conservative support will distribute the benefits of this economic progress on a scale sufficiently broad to blunt persistent popular demands for more fundamental “structural reforms”.

4. Moreover, leftist sentiment in Italy remains strong. The Communists have built up over many years an effective machine of subversion reaching down to the block and village level. In the 1958 national elections they polled 23 percent of the vote. The Nenni Socialists (PSI) obtained about 14 percent. Together these two parties thus obtained about 37 percent of the vote, as compared with 31 percent in 1948. During 1948- 58, however, the Communist national vote has remained almost stationary, and the significant gains have been made by the PSI.

5. Two major factors which have contributed to the leftist gains are: first, a shift of a small portion of the urban middle class vote away from the center; and second, the increasing disenchantment on the part of the poorer classes of the South with the disintegrating ex-Monarchist parties. The ex-Monarchists and to a lesser extent the Neo-Fascists have suffered the greatest losses in recent elections. The Christian Democrats, while losing some strength of the moderate left, have managed to pick up a majority of right-wing losses so that on balance they have actually increased their total percentage of the electorate.

6. The net effect of these voting trends has been to strengthen the Christian Democrats and the composite left at the expense of the right, thus shifting the center of the political spectrum somewhat toward the left. This shift has resulted from a number of factors: The increasingly pronounced public posture of political autonomy assumed by Nenni Socialists; revelations of corruption and misgovernment which to some degree result from the long period in which the Christian Democratic Party has controlled the national administration; deep-seated anti-clerical resentment at church interference in political life; disappointment at the slow implementation of basic economic and social reforms; and the recent aura of détente in over-all East-West relations. This electoral trend acquired increased significance because the moderate center parties found it increasingly difficult to agree among themselves on a government program, thereby permitting the Communist Party to maneuver skillfully to attempt to escape from the “political quarantine” in which it was placed in the early post-war period.

7. A key disruptive factor in the Italian political scene is the difference of opinion among the various democratic forces as to the possibility of accepting the Socialists (PSI) as a reliable and responsible democratic party. The Socialists have shown distinct signs of desiring political autonomy, and have increasingly distinguished themselves from the Communists on some important issues, most significantly by abstaining rather than voting against the Fanfani Government in the recent vote of confidence. This trend will probably continue, but it has not yet gone far enough to lend confidence that the PSI would not follow the Communist line on at least certain critical questions, and especially on foreign policy. Nonetheless, many democratic center-left elements feel that limited confidence can be placed in PSI support for a DC government, and that such action would result in a more rapid move by the PSI toward complete autonomy. Other democratic elements prefer to depend on the right as the lesser of the two evils. Most all agree, however, that a major danger is that of aligning conservative political, economic, and clerical forces with the Neo-Fascists in a “National Front” against a Communist-led “Popular Front” including the laboring classes and democratic elements of the moderate left. Such a clear split of the Italian body politic would reproduce the division which spawned Fascist authoritarianism in the 1920’s. [5 lines of source text not declassified] An extreme rightist government would also almost certainly be ultra-nationalist and probably opposed to European unity, and possibly neutralist.

8. In this situation, it is clearly in U.S. interests to give maximum feasible support to democratic political forces as broadly based as possible, in order to achieve implementation of the reforms necessary to improve basic social and economic conditions in Italy, and increase public support for the Italian democratic system. This support should take fully into account the importance of the lay center parties, which act as barriers against the electorate’s drifting to either extreme. The cooperation of these parties with each other, and the maintenance of the possibility of some moderate center formula for coalition governments for a further period of years, is highly desirable in order to avoid the extreme polarization of the electorate described in paragraph 7 above.

9. In recent years, Italy’s rate of economic growth has been one of the highest in Europe. Since 1953, Gross National Product has increased 5–1/2 percent per year and industrial production 8 percent per year. Noticeable progress has been made in reducing unemployment. Although the Italian budget is still in deficit, the budget position has generally improved and the condition of the economy is such that a larger budget deficit could be maintained without creating significant inflationary pressures. However, there is likely to be significant political resistance to either a sharp expansion in the budget deficit or to an increase in tax rates.¹

10. Gold and foreign exchange holdings have increased since 1953 by more than $2 billion, giving Italy total reserves exceeded now only by the United States and Germany and making the Italian lira, which is now externally convertible, one of the strongest and most stable currencies in the world. The International Monetary Fund and the GATT have determined that Italy can no longer justify quantitative import restrictions for balance of payments reasons. Although many restrictions have been removed, our efforts to persuade the Italian Government to take early action to eliminate remaining quota restrictions—particularly those which discriminate against imports from the dollar area—have not yet been successful.

11. The rapid progress of recent years has eased but not eliminated Italy’s chronic economic problems. Italy is very densely populated but poor in many raw materials and fuel resources. Per capita Gross National Product is substantially lower than in most other Western European countries. Within Italy there are wide regional and class divergencies in incomes and living standards which augment political tensions; for example, average income in the north is more than double the average in the south. The long-range program for development of the south has begun to help to expand job opportunities and improve economic conditions in that region. In the first four years of the program, more than one million new jobs were created, but the decline in unemployment has been much slower than was originally envisaged, and the gap in income between the north and south has not changed significantly.

12. Italy has indicated its interest in and support of proposals for expanding Free World efforts to assist the less-developed areas, but expects her contribution to be largely in the form of technical assistance and short- or medium-term commercial credits. The Italian Government has not yet established any government mechanism for furnishing long-term development financing abroad. Her contribution in this field to date has been almost exclusively limited to economic assistance for her former Trust Territory, Somalia. However, her economic position would permit an increase in the general field of economic assistance to less-developed areas.

13. Throughout the post-war period under a succession of Christian Democratic-led governments, Italy has collaborated closely with the Western powers, particularly the United States, and has given vigorous support to NATO. It also early assumed a leadership position in the movement for European integration, motivated not only by long-range security considerations but by the hope that through European unity its political and economic problems might be alleviated. This collaboration with the United States and NATO has not suffered substantially from the governmental instability which has characterized Italy’s parliamentary system since the 1953 election.

14. During the past five years, successive Italian Governments have increasingly urged the United States and the other leading Western nations to recognize Italy as one of the major powers by admitting her right to participate in all major international conferences and in all important Western decisions, particularly those affecting Italian interests. This drive for acceptance as a major power does not appear to be based on any strong pressures of public opinion, but there is no doubt that an important element of Italian national character is that any important government official or leader must appear to play an important role in world affairs. Italian Governments have insisted, with some measure of justification, that their success or failure in obtaining this recognition has a substantial effect on their continued ability to provide wholehearted support for U.S. policies.

15. Italy also considers that it retains special, traditional interest and influence in the Mediterranean area and in Africa. With the independence of Somalia, Italy may be expected increasingly to look for ways to improve her position in Ethiopia. The wide-ranging activities of the National Petroleum Authority (ENI), headed by Enrico Mattei, throughout the Middle East and Africa, will undoubtedly be given full support by the Italian Government in the context of the above attitude.

16. The Trieste settlement of 1954 eliminated the major sources of friction between Italy and Yugoslavia. Consequently, our policy of encouraging Yugoslavia to maintain its independence in the face of Soviet pressures and blandishments no longer troubles our relations with Italy. Italy’s relations with France have continued to be close and friendly. However, Austria’s demands that Italy grant complete autonomy to the German-speaking Province of Bolzano (Alto Adige) have created a serious rift between Italy and her northern neighbor. Our policy of seeking to induce Austria and Italy to reach a solution for this problem, which would be satisfactory to the German-speaking minority without derogation from Italian sovereignty, has thus far not been successful, and this dispute will continue to complicate Italian-Austrian relations for the foreseeable future. However, it is unlikely to lead to serious violence.

17. Because of Italy’s limited military capability and geographic location, its military role in NATO has essentially been confined to the defense of its own national territory and contiguous air and sea areas. Over the past few years, Italy has steadily expanded and improved its defense establishment and can be expected to continue its efforts to meet its current NATO force goals. Italy now furnishes almost all of the substantial number of land, sea, and air units required of it by NATO defense plans. However, its capability, principally that of the Army, to fulfill its NATO role remains limited, and external aid and support would be required for other than a short period of military operations (25–30 days). With support by the other NATO powers, Italy is capable of making a substantial contribution toward protecting the southern flank of Allied Land Forces Central Europe and of defending the western flank of Allied Land Forces Southeastern Europe, particularly if Yugoslavia takes concurrent military action to defend her territory against attack by the Soviet Bloc. Additionally, the Italian peninsula and Sicily constitute a zone of great strategic importance as a base area for the air and naval forces of other NATO nations. The heavy industry and oil refining facilities of Italy have been expanded toward meeting the needs of the Italian armed forces, and through the cross-servicing system can help to fulfill the material requirements of the armed forces of NATO countries. Italian forces can be expected to fight effectively if at the outbreak of hostilities the United States is able, through NATO or directly, to provide effective leadership and support.

18. Italian defense expenditures in 1959 were slightly over one billion dollars, or 3.8 percent of the Gross National Product. The Italian defense budget has increased each year, although the increase has not been quite as rapid as the increase in the country’s total production so that the relative burden of defense has tended to diminish slightly. The Italian Government has given assurance that its defense budget will continue to rise about 4 percent per year. This figure can probably be increased, if appropriate inducements and political pressures are applied. However, increases substantially beyond this magnitude will encounter strong political opposition because of, among other factors, pressures for costly programs of economic development to remove one of the basic causes for Communist political strength.

19. In response to various inducements and pressures, the Italians have been taking over a progressively increasing share of the financial responsibility for the maintenance of the conventional equipment required for their forces and for their spare parts requirements. They are producing a variety of items of conventional equipment, have embarked on an extensive naval construction program, are producing a light-weight strike fighter aircraft and are planning to participate with other Western European countries in the coordinated production of the F–104 aircraft. A number of other cost-sharing projects have been undertaken toward the fulfillment of NATO force goals. In addition, the Italian Government has assigned priority within its defense program to the reorganization, modernization, and strengthening of the operational units required by MC-70 in an effort to improve the quality of her armed forces. The measures contemplated to accomplish this include reducing national forces to the minimum level consonant with the risks which are considered acceptable. To this end, Italy has recently announced plans to reduce five of her national divisions to five brigades so as to permit a qualitative improvement in forces available to meet MC-70 requirements.²

20. Notwithstanding these efforts to improve the effectiveness of Italy’s forces, equipment deficiencies will remain the major obstacle to achievement of Italian force goals called for by MC-70 plans.³ Maintenance and operations of these forces takes almost 90 percent of the Italian defense budget leaving only a little more than 10 percent for the procurement of new equipment. The projected increases in the defense budget will not improve the situation materially because the integration of advanced weapons systems, such as the IRBM, into the Italian armed forces will involve sizeable increases in maintenance and operating costs. To equip Italian forces to levels which would meet MC-70 objectives by the 1963 target date would require equipment expenditures well above Italian defense expenditures (after they have been increased by the assumed four percent) plus whatever U.S. military assistance is likely to be approved for this period. Since any further likely increase in Italian defense expenditures would cover only a minor portion of this shortfall, and since U.S. assistance of a magnitude to fill all of the remaining gap is not in prospect, it is expected that there will be a considerable shortfall⁴ or delay in meeting these planned force goals.

Objective

21. A strong, stable Italy:

a. Free from Communist domination or effective Communist influence and subversion;

b. Having a constitutional, democratic government and a healthy, self-sustaining economy; and

c. Able and willing to make important political, economic, and military contributions in support of the Free World coalition.

Policy Guidance

The Internal Situation in Italy

22. Encourage a broadening of the democratic base of the Italian political system, thus permitting the more effective conduct of parliamentary government. In so far as possible, pursue this end by strengthening the parties of the moderate center. Encourage all political forces within the democratic spectrum either (a) to support Christian Democratic attempts to construct stable, progressive, efficient, and firmly anti-Communist governments which will continue to cooperate with the United States and NATO; or (b) to form a loyal, constructive, Parliamentary opposition.

23. Encourage by all practicable means:

a. A maximum feasible reduction in the strength and effectiveness (influence, subversive potential, organizational and economic strength, and electoral appeal, etc.) of the Communist Party and of Communist-controlled front groups, so as to prevent Italy from falling under the domination of the Communist Party, either directly or through other political parties or factions dominated by the Communists.

b. The evolution of the Italian Socialist Party as a completely autonomous and democratic party; the further development by that Party of policy lines distinct from and antagonistic to those of the Communist Party, and ultimately anti-Communist, Western-oriented, and fully supporting European and Atlantic solidarity. Until such evolution has been substantially demonstrated, however, attempt to prevent the Italian Socialist Party from exerting significant influence over the conduct of Italian foreign affairs and defense policies.

c. The prevention of domination of Italy by extreme rightist authoritarian groups, and the prevention of decisive extreme right influence on Italian Government policies.

24. Encourage the Italian Government to adopt and carry out a broad constructive program capable of attracting maximum popular approval and decreasing the appeal of extremists of both wings, whether Communist or Neo-Fascist.

25. Encourage by all practicable means the growth of the free labor federations as instruments with which to weaken Communist influence in the labor field.

26. Increase pressure on the Italian Government to eliminate all quantitative import restrictions not justified by GATT waivers, especially those which discriminate against imports from the dollar area.

27. Wherever appropriate and feasible, continue to support U.S. legislation and actions by other Free World nations designed to facilitate the emigration and resettlement of Italian nationals.

28. Consistent with NSC 5706/2,⁵ support measures for the resettlement of international refugees temporarily residing in Italy.

29. Conduct vigorous information and educational exchange programs in Italy directed at winning Italian acceptance of and support for U.S. world-wide policies and objectives.

30. Encourage U.S. non-government organizations and individuals to undertake appropriate programs in support of U.S. policies in Italy.

Italian Collaboration in the Free World

31. Recognize Italy’s increased sense of self-confidence and national pride by supporting Italy’s participation in Western councils whenever reasonable in the light of other U.S. interests.

32. Acting whenever appropriate with the support of or in concert with other friendly governments:

a. Support active Italian participation in and contribution to the movement for European economic and political integration, and encourage Italy to continue to play a leading role in this movement.

b. Promote strengthened Italian political, economic, and military collaboration with the United States, other NATO countries, and the other free nations of Western Europe through appropriate international organizations.

c. Continue efforts to encourage an early solution of the Alto Adige problem, and to avoid allowing this dispute to disrupt Western unity.

d. Persuade Italy to assume a share of the responsibility for extending appropriate economic aid and technical assistance to less-developed countries outside the Iron Curtain commensurate with its economic position.

e. Encourage Italy, together with the U.K., to continue to bear the major responsibility for assisting in the economic and political development of Somalia.

33. Maintain steady political pressure, exerted bilaterally and in conjunction with other governments and appropriate multilateral organizations, to induce Italy to increase the proportion of Italian resources devoted to defense. Continue to consult with the Italian Government concerning the size and character of the Italian defense effort, the scope and nature of U.S. military assistance, and the extent to which an increased Italian contribution can be achieved without prejudicing Italy’s political and economic stability.

Majority	As part of these consultations, inform the Italian Government at an early date that it cannot in the future look forward to the level of grant military assistance that Italy has received in the past and begin to plan with the Italian Government for the orderly reduction and early elimination of new commitments for the provision of military equipment to Italy on a grant basis.
Treasury-Budget	Consistent with the foregoing, continue to provide grant military assistance to Italy in support of Italy’s military requirements, emphasizing cost-sharing and other techniques designed to bring about a maximum Italian NATO contribution.

Future Contingencies

34. In the event of an external attack against Italy, the United States should make such use of its military power as it may agree to be necessary under Article V of the North Atlantic Treaty.

35. If Communist or Communist-front groups appear to be significantly increasing their influence on the Italian Government, and especially if anti-Communist determination appears to be waning, the United States should consider taking any feasible non-military actions, [less than 1 line of source text not declassified] either alone or in cooperation with other allied nations, to support any available Italian resistance to these trends.

36. In the event the Communists appear to be acquiring or actually achieve control of the Italian national Government or portions thereof by either legal or illegal means, the United States should be prepared, in the light of conditions existing at that time, to take appropriate action, either alone or in cooperation with other allied nations, [less than 1 line of source text not declassified] to assist whatever Italian elements are seeking to prevent or overthrow Communist domination.

0. Source: Department of State, S/S-NSC Files: Lot 63 D 351, NSC 6014 Series. Secret. In a memorandum attached to the source text, August 16, Marion W. Boggs, Acting Executive Secretary of the NSC, noted that this draft statement of policy had been prepared by the NSC Planning Board. A Financial Appendix which estimated the costs of a U.S. aid program for Italy was circulated on September 16.
1. Italy’s level of taxation, measured as a percent of GNP, falls below the level existing in the major European nations of the U.K., Germany and France, and above the level existing in a number of other European nations such as Belgium, Portugal and Spain. The Italian level of taxation is higher than that of the U.S. if social insurance payments are included for both countries, lower than that of the U.S. if these payments are excluded. [Footnote in the source text.]
2. See footnote 3, Document 230.
3. Under NSC Action No. 2149–b, the Departments of State and Defense are preparing recommendations for U.S. policy regarding the future roles and contributions of the United States and other NATO nations with respect to the collective defense posture, as a basis for consultation with other NATO governments, such recommendations to be plausible to NATO Allies as well as sound from the U.S. viewpoint. [Footnote in the source text.]
4. In terms of JCS strategic objectives (JCS planned force goals), the shortfall would substantially exceed that projected for MC-70. [Footnote in the source text.]
5. “U.S. Policy on Defectors, Escapees and Refugees from Communist Areas”, approved March 8, 1957. [Footnote in the source text. For text of NSC 5706/2, see Foreign Relations, 1955–1957, vol. XXV, pp. 584–588.]