Foreign Relations of the United States, 1952–1954, Western Europe and Canada, Volume VI, Part 2

Rome Embassy files, lot 59 F 222, “320.1—Offshore Procurement 1950–1952”

No. 733
The Ambassador in Italy (Bunker) to the Director for Mutual Security (Harriman)¹

secret

Rome, November 12, 1952.

Dear Averell: I would like to call your personal attention to a matter which I regard as vital for American foreign policy in Italy over the next few months.

Last summer there were a number of general discussions of the offshore procurement program for fiscal year 1953. At the time Bill Draper and John Kenney came to Rome,² they were in general agreement with us on the urgency of starting the program at an early date. In particular, we all realized that offshore procurement, if begun early, could influence the critical Italian elections in the spring.

Our MSA Mission estimated that an offshore procurement program of $300 million would create almost 60,000 jobs during the first year after contract placement and would increase Gross National Product by almost two percent. Properly handled this boost to Italy’s economy could have a strong positive influence on the elections. But in order to maximize the political effectiveness of offshore procurement, contracts would have to be placed at least four to six months before the election. Employment effects lag behind contract placement by this much because of the necessary delay before actual production begins and because of further delay before other parts of the economy are stimulated by the indirect impact.

This means that, to be effective, offshore procurement contracts must be let within the next few weeks. However, with four months of this fiscal year gone by we are still lacking most of the authorizations needed to dig into the necessarily complicated and time-consuming job of bid requests, bid submissions, contracting and so forth. I cannot help but express my concern over this delay.

We have recently studied SRE’s recommendation for offshore procurement in Europe during this fiscal year and were encouraged to note the very substantial recommendations for Italy. In many cases these recommendations also pertain to those sectors of the Italian economy currently most depressed and most politically sensitive to economic change. Much of this advantage may be lost, however, as regards these critical elections if the program does not proceed promptly.

Specifically, I understand that the only offshore procurement that has thus far been authorized out of fiscal year 1953 funds is for naval vessels. The bulk of the program has still not reached the procurement authorization stage. There are inevitable delays at this end between authorization and actual contracting which make it all the more urgent that the necessary authorizations be issued as soon as possible.

I, of course, realize that there are many other factors which must enter into a decision on this question. I do, however, wish to emphasize the importance which we here attach to an effective use of offshore procurement to achieve our political objectives. I am writing to ask your personal interest in this matter. In the light of the overwhelming importance of the forthcoming elections, not only to Italy, but to all of Europe, anything you can do to speed up the normal processes will be tremendously helpful, and I am confident will show us handsome returns.³

With kindest personal regards.

Sincerely yours,

Ellsworth

1. Transmitted to the Department of State in telegram 2202 from Rome, Nov. 14, which contained the following introductory note: “Personal for Acheson, Lovett, Harriman from Bunker. I am today sending identical letters each of you, copies Draper and Kenney, on subject of importance accelerating placement off-shore procurement contracts”. (765.5 MSP/11–1452)
2. Kenney and Draper visited Rome in late July and early August.
3. In a letter of Dec. 12, Berger informed Bunker, at Harriman’s request, that Harriman had raised the question of speeding up OSP procurement in Italy with Foster 2 weeks before and it appeared that action would be taken on the matter in the near future. Berger referred to recent meetings in Washington and telecon talks with SRE during the previous few days to see if any part of the OSP program could be proceeded with immediately. (Rome Embassy files, lot 59 F 222, “320.1—Off Shore Procurement 1950–1952”) Harriman’s letter to Foster, Dec. 1, is printed infra.