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

765.00/8–1054

No. 783
The Counselor of Embassy in Italy (Durbrow) to the Director of the Office of Western European Affairs (Jones)¹

secret
eyes only

Rome, August 10, 1954.

Dear Johnny: Based on several recent instructions and telegrams both from the Department and from Headquarters,² I am sorry to say that I have the distinct impression that again we are not seeing eye to eye on both sides of the Atlantic. This, therefore, will be an attempt to tell you at some length what our thinking is here in the hope that we can all get on the same wave length.

First of all I was quite surprised and definitely perturbed to learn of the point of view taken by the Department in regard to the IRI/Confindustria question. I refer particularly to Instruction A–66, July 26, 1954.³ This instruction was not received here until July 30th, and consequently we could not carry out instructions to “keep aloof from this issue”. Had we received such instructions as contained in A–66 prior to the time this question was discussed with Italian leaders, I would have asked the Department to reconsider them for the reasons set out in this letter. In any event we did not get caught in the middle but did try to make it clear that, rightly or wrongly, we did not favor any action which would not only play into the Communists’ hands by having Christian Democrats propose something already proposed by the Socialcommunists but would also be a major step toward bringing about more nationalization of industry, etc. For our money the Pastore resolution would do just that, and there are so many other concepts built into the resolution that it can in the future be used by anyone, particularly the Socialcommunists, to try to force the Government to take steps not only in the industrial field but in the labor field, which in my estimation are straight Communist aims.

As to future use of IRI to bring about objectives stated in paragraph 2 of A–66, there is no question that from a short-range point of view Pastore might be able to wring some concessions from the IRI firms favorable to labor, but it is almost certain that these concessions as much as they might be desired, would be wrung from the Government on purely political grounds without much consideration to the economic factors involved. We realize, of course, that Pastore being among other things a political figure, must as such act in the political area, but it seems to me that he should not be encouraged to free-wheel too much in the politico-trade union field to the detriment of party unity. He should show a bit more political responsibility. For instance, statements have recently been made that since IRI’s companies do not have to maximize profits, they could more easily make concessions to labor than private industry. The resolution thus would invite the politicians or, perhaps better, force the politicians to make concessions to labor which in the long run would not be paid for by the profits of the IRI firms but by the taxpayer. That is, by the Government picking up the chit for all IRI firms running in the red. Our understanding is that many of these firms are now in the red. You will recall the resolution also provides for “the participation of labor in various aspects of productive life”. This, for my money, sounds too much like a Togliatti rather than a Christian Democratic proposal.

While it is obvious that the Government had to find some way to have the Lizzadri motion⁴ knocked out, it did not have to do it with an even more comprehensive motion including a demand for the same action by the Government as had been demanded by the Socialcommunists. Furthermore, the submission of such a motion with Pastore as the principal exponent was badly timed at this point, since, as you know, just a few weeks before, for the first time since the War, Confindustria had, first of all, consented to deal with the free trade unions alone and, secondly, had granted to the free trade unions alone what amounts to a substantial increase in pay in connection with the “Conglobamento” agreement.⁵

We have for a long time been doing what we could to encourage both the Government and private industry to refuse to deal with the CGIL and to deal with and encourage the free trade unions.…

It is quite clear from the many soundings we have taken that large sections of the Government were taken by surprise by the scope of Pastore’s motion. However, once it was introduced, the Government had to accept it or find itself in the minority on an “everyone is against sin” motion which would have been passed by the votes of the PSDI, the Republicans, the CISL deputies, a few Iniziativa deputies and, of course, the solid bloc of the Socialcommunists. In other words this move by Pastore brought dissension in the Government ranks as well as in the CD Party itself. From my point of view it is neither good nor healthy to have purely trade union matters introduced in a big and broad way into the political arena. This is just what Pastore did, for his action is going to plague the Government for a long time, and he gives every indication that he is going to press for action on the motion.

… Confindustria is the one organization of private industry in this country and must be dealt with. In all probability, we should do everything we can to induce it as best we can to be more enlightened and we have been working in that direction. But the problem regarding the motion was whether we should remain silent or try to discourage a motion which in all probability will lead to more nationalization of industry and bring trade union policies into the purely political field. We do have something to say about what Pastore does; therefore, with the short time which it appeared we would have between the publication of the motion and the scheduled (July 12–July 15) debate, we acted to let him know that this was not something that would be particularly favored by the U.S. Government. I based my conclusions on this point on the declared intent of Congress in various bills of the last year or so, making it clear that we should encourage private initiative and private enterprise and, furthermore, it has been our policy here for some time, rightly or wrongly, to try to induce the Italian Government to get out of business by either closing up unprofitable IRI plants or selling the profitable ones to private industry. (Perhaps we have been all wrong in trying to curb the Government monopoly empire building of Mattei?)

It is true that we are also enjoined to foster the growth of free trade unions. That means supporting CISL primarily, which is making a determined drive for greater state intervention in industry in what is undoubtedly a sincere effort to spur greater productivity, greater benefits for workers and better labor relations in general—and which is markedly increasing its concrete political strength inside the CD party. It is important that our different policy objectives be clarified and reconciled in order that what influence we exercise here can be exerted in a consistent fashion.

Both the Government and Confindustria have always in the past used the excuse that in a democratic country you have to deal with all groups and since CGIL is the most important group, the Government and the others must deal with it on an equal footing with the free trade unions. We have been pleading with the Government, with individual industrialists and with the representatives of Confindustria to change their policy by at least taking steps to ostracize CGIL and, if possible, to encourage the free trade unions. As I pointed out above, the first time this was done was by Confindustria in connection with the “Conglobamento”.

On the other hand, if democracy is to flourish in Italy, among other things we have to be on our guard against allowing more nationalization of industry which will either set things up nicely for the Socialcommunists in the long run or set things up nicely for the re-establishment of a corporate state.…

We have had recently other indications that our points of view are not the same on both sides of the ocean. It appears that “many” and I don’t know who the “many” are because there are none of them here, believe that the Scelba Government is a do-nothing government that does not desire, intend or hope to carry out any economic-social reforms and is incapable of taking any drastic steps against the Communists. The Scelba Government is far from perfect, but on these two scores it has certainly been taking action. This action has not, perhaps, been dramatic enough for the “many” who think that a government is no good unless it makes big splashes every day. However, it is a fact that the Scelba Government is the only government since the war which has started taking some drastic action against the Communists. I refer particularly to the seizure of Fascist properties. While this process is not moving ahead at lightning speed, they are taking more and more houses away from the Socialcommunists. They have evicted the Communist party from its very fine headquarters in Milan, have evicted the CGIL from its fine headquarters in Genoa, and in other small towns they have and are continuing to take back these properties, and in many cases it has been necessary to use the “celere”, tear gas, etc., in order to accomplish this. The Commies are now beginning to react. Since the Government does not feel that it is on completely sure legal grounds in ousting the Social-communists from all of these buildings, it has gone about accomplishing this in a firm but quiet way. We were told confidentially the other day by the Under Secretary of Interior that the Council of State had just rendered four decisions favorable to the Government and against the Communists’ appeals made on the basis of eviction notices. Many of these buildings are held under different legal bases so it is not a simple matter to chase them out of all the buildings at once. The Scelba Government has categorically refused any “cultural exchanges” with Iron Curtain countries. We have been kept informed of the plans now going forward to take all East-West trade away from Commie firms and place it in a central government-controlled organization. (I was officially informed by Zoppi last week that a Government organization is taking over full control of all trade with China.) We are convinced that the Scelba Government has every intention of debating EDC in the Chamber as soon as it reconvenes. This in itself should be and may be the touchstone which will bring the Commies out into the open. This, in our estimation, is what is needed most at this time. Our feeling also is that if, as and when EDC is passed and there has been a showdown debate with the Commies, the Government will move forward even faster in its anti-Communist campaign. These things are not dramatic, but they are positive steps in the right direction.

I don’t know whether I need to go into great detail in this letter since the Economic Section and USOM have been reporting these things regularly, but the Government is, in everybody’s estimation here, making concrete definite plans to adopt social and economic reforms of a far reaching and fundamental nature. Tasca and the others on the economic side tell us that they are convinced that the Government is most sincere in this matter. These too cannot be done in a hurry and they have to find the money for them. Some can be found here, but if they are going to be carried out on a large and perhaps not even a too dramatic scale, they will have to get some money from outside sources—loans or grants. Those who worry about the slowness of the economic reform business might begin to think whether they can induce the U.S. Congress to grant Italy bigger or better aid or loans to accomplish this, in what seems to be their desire to have these things done in a “dramatic” fashion. Incidentally, while I am all for economic reforms and they are certainly needed in Italy, I for one do not feel that economic reforms alone or that economic reforms are the principal weapons needed to defeat Communism. The Communists must be fought politically at the grass roots level and Fanfani is apparently starting a campaign on this score. CGIL must be broken and motions like Pastore’s do not help in that process. Ways must be found to cut off the easy money sources of the Communists and, finally, ways must be found to convince the people that Communism is not the way of the future.

The big question right now is whether or not Fanfani intends to use his newly-acquired domination of the party machine⁶ to upset Scelba or the present government combination or both. Until that is answered we should shy away from any rigid commitments but should keep ourselves in a flexible position to throw our weight where we want it at the proper time. At present Fanfani is publicly supporting Scelba and the quadripartite formula. It was a general feeling that he would concentrate in forging the party into an effective electoral weapon and move in as head of government after this task had been clearly accomplished in a year or two. We now get reports that he may try to take over from Scelba after Trieste and EDC are settled and the period of the constitutional ban on elections sets in. Whether this is true, whether Fanfani will continue with the present quadripartite formula, where De Gasperi stands in the whole matter, and even the question of the role Pastore plays in this situation all must be answered before we make any firm comprehensive decision on support.

At the pace Fanfani is moving to stimulate party activity, this picture should become much clearer in the next month and certainly not long after Parliament reconvenes the middle of September.

Therefore, we must take some very basic soundings, study the situation most carefully and come up with concrete U.S. policies and objectives as soon as we possibly can. My preliminary thinking is that, at least for the time being, we should back up the quadripartite formula under Scelba to permit him to show what he can do in the next few months in making progress along lines desired by us.

This has been a too-long letter, but I felt I should give you in detail some of our fundamental thinking here so that we can have your reactions … in order that we will be more in tune one with another.

What I really believe would be most helpful is for you to come here for at least a couple of weeks not only to talk to us but to absorb some of the current atmosphere and, I should add, confusion in the current political picture.

. . . . . . .

Sincerely yours,

Durby

1. A handwritten notation on the source text reads, “Treat as Top Secret”.
2. A handwritten notation in the margin of the source text reads, “instruction Jerry received dated 27 July”.
3. Supra.
4. Reference is to the motion introduced in the Chamber on June 22 by PSI Deputy Oreste Lizzadri, which, like the subsequent Pastore motion, called for the separation of Confindustria from IRI. The text of the Lizzadri motion was quoted in telegram 218 from Rome, July 16. (865.00/7–1654)
5. On June 12, following lengthy negotiations, Confindustria signed a wage agreement, the “Conglobamento” agreement, with CISL and UIL and separately with CISNAL. The agreement was described in the Joint Weeka of June 18 as perhaps the “most important single development in the labor field since the schisms in the labor movement, 1948–49”. (765.00(W)/6–1854)
6. Following the Fifth National Congress of the Christian Democratic Party in Naples, June 26–29, Fanfani, who was one of the leaders of the “current” within the party known as Iniziativa Democratica, was elected Political Secretary of the Party. An analysis of Fanfani’s ideas and some comments on his probable intentions concerning the orientation of the party were contained in despatch 433 from Rome, Sept. 1. (765.00/9–154)