Foreign Relations of the United States, 1947, The British Commonwealth; Europe, Volume III

865.51/6–447: Telegram

The Ambassador in Italy (Dunn) to the Secretary of State

secret

Rome, June 4, 1947—7 p.m.

1402. Export-Import Bank representatives conversations in Rome ended May 29 and Messrs. Arey and Itana¹ left for visits to industrialists in southern and northern Italy May 30. Subjects of [subject to] development of new thinking as a result of this trip, representatives have reached agreement with Italians on memorandum (text by air) to be submitted to board of bank for implementing tentative 100 million dollar credit.²

In summary memo states:

1. Italian Govt will guarantee credits and undertakes to ensure that all qualifying firms will get share of financed raw materials.

2. Credits will be remitted to industries which can most quickly increase Italian exports i.e. improve balance of payments. Italian Govt proposes to limit equipment financing to 15 percent (although needs of individual industries may deviate from this percentage).

3. Credits will be geared to import needs over next one year period.

4. Italian Govt will select the firms (and indicate respective amounts) authorized to contract direct with Export-Import Bank.

5. For smaller manufacturers Italian Govt will draw up an overall program based on one year production and export prospects.

Credit applications for small firm groups will be made by “industrial sectors”.

6. Italian Govt proposes to allocate one-half total credit to large firms (about 35) under direct loans and one-half to small manufacturers through IMI.

7. Export-Import Bank proposes to open credits simultaneously for each sector as a whole. Italian Govt suggests following priority of sectors without prejudice to Export-Import Bank’s right to examine any application it may receive:

(a) Iron, steel and mechanical;

(b) Electro mechanical;

(c) Chemical; and

(d) Rubber.

8. There shall be no discrimination between term of credit for small firms financed through IMI and “direct loan” firms. Confindustria assumes responsibility to inform firms of terms. Firms belonging to an approved sector may, subject to Export-Import Bank IMI agreement, buy goods from IMI in lire. IMI is responsible for records of distribution of raw materials.

9. Excepting coal and POL materials distributed under credits will not jeopardize right of firms so credited to their normal internal allocations.

10. IMI will cover credits in special dollar accounts guaranteed by dollar value of financed raw material inventories and equipment plus exchange proceeds of exports in sufficient amount to cover deficit.

11. So long as existing exchange regulations prevail dollar exchange to service credits and to enter into IMI cover account is to come from exporters 50 percent share of exchange.

12. Italian Treasury may charge a commission of one and one-half to two percent per annum to borrowing firms.

13. Export-Import Bank will be kept informed of use of credits.

14. Italian Govt should devise methods to reduce number of direct lines of credit (i.e. permit group contracts for each sector or large firms).

15. While the Export-Import Bank emphasizes it is not authorized to discuss terms or interest rates, Italian Govt points to convenience of:

(a) Terms of ten years or more;

(b) Begin amortization only after second year; and

(c) Low interest rates.

16. Export-Import Bank representatives express view that terms and conditions of credit bear direct relation to economic position and export prospects of each sector.

17. Italian Govt has taken note of and has not objected to usual terms included in Export-Import Bank loan contracts.

Throughout conversation Export-Import Bank representatives stressed that discussions in no way modify general conditions set forth in bank’s letter of last January to De Gasperi.

Dunn

1. Hawthorne Arey, vice president and general counsel, Export-Import Bank. “Itana” is a garble for Tirana. Rifat Tirana was a senior economist with the Export-Import Bank.
2. The Department’s instruction 168, July 28, 1947, not printed, forwarded to Rome copies of the Report to the Board of Directors of the Export-Import Bank, 34 typewritten pages, dated June 23, 1947 (811.516 Export-Import Bank/7–2847).