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

Italian Desk files, lot 57 D 56, “435—Aid to Italy”

No. 791
The Ambassador in Italy (Luce) to the Assistant Secretary of State for European Affairs (Merchant)

confidential
official–informal

Rome, November 22, 1954.

Dear Livie: Ever since Minister Vanoni’s return from his trip to the United States, I have wanted to write to thank you and the Department for the highly cooperative and successful efforts that were made to handle his visit.

Vanoni himself was obviously well pleased with the treatment he received everywhere, and he was most favorably impressed by what he saw and heard. We hope that this will make our future dealings with him that much easier. Moreover, Vanoni’s positive reaction was reflected in his statements to the press and Parliament on his return. These statements received very good news coverage.

Indeed, in one respect the treatment given Vanoni’s party was apparently so good as to have an unintended effect. To some extent, perhaps not completely unintentionally, the Italians appear to have confused U.S. cordiality and expressions of sympathetic understanding with informal commitments on various forms of assistance. After their return, when they wanted to start right away to arrange the PL 480 Title I assistance they were going to receive, it became necessary to cool them off a bit by calling attention to certain prerequisite actions on the Italian side. In particular, we referred to the satisfactory establishment of their productivity program which they are still stalling on one and a half years after the allotment of $22 million for this purpose under Sec. 115(b); their continued failure to do their best to help themselves with their investment and development problems, especially in the field of oil monopoly; the need for concrete action on a stepped up Italian development program which would justify and support a supplementary U.S. contribution; and above all, the need for a comprehensive and concrete political action program to assure that the political benefits of economic and social improvements in Italy accrue to the democratic forces, and not to the Communists.

If it should become reasonably certain that the Italian Government is going to perform well on the main problems of concern to the U.S., we may, under the conditions indicated in Embtel 1822,¹ wish to have a sizeable economic aid package available to provide the marginal push that the Italian program might need. This might be something like $200 million per year for two or three years, for which PL 480 might be the major source. But I would like to emphasize that this aid should only be given after we are convinced that it will be used effectively to support an effective Italian program to deal with their Communist problem. Most importantly, we should not let them know that we are earmarking any specific sums for this purpose. With this in mind, we agree with the usefulness of the proposal in Deptel 1514² to keep the door open for economic aid to Italy in the current presentation to the Budget Bureau, although it is too early to know if we will actually recommend extending any new economic aid to Italy, or how much.

Before closing, I would like to mention two areas of Washington action that have caused Henry Tasca special concern recently. One is the Italian oil problem, and specifically Mattei’s activities.

The second concern arises from the difficulties implicit in the legislative and administrative arrangements for moving U.S. surplus commodities abroad, and the need to centralize responsibility for negotiation with Italian Government representatives.

Henry is not expected back from Paris until the end of this week. He will then prepare memoranda on the Mattei and the surplus commodities question, which I will send to you with further comments.³

With all best wishes,

Cordially,

Clare

1. See footnote 2, supra.
2. This telegram, dated Nov. 3, discussed the estimates for the FY 1955/56 economic aid program for Italy. (765.5 MSP/11–354)
3. Copies of these memoranda have not been found in Department of State files, but in a draft reply to Luce prepared for Merchant’s signature, dated Dec. 9, Tesoro commented briefly on Luce’s recommendations and on Tasca’s two memoranda which were described in passing. (Italian Desk files, lot 57 D 56, “435—Aid to Italy”)