865.00/6–1747: Telegram
The Ambassador in Italy (Dunn) to the Secretary of State
us urgent
1590. Re statistical presentation in my 1579, June 16, midnight,1 I wish to emphasize following very important qualifications to any interpretation of the data presented:
- 1.
- It is likely that the estimates presented, in absence of any substantial US aid in addition to post-UNRRA program will involve a drastic reduction re Italian Govt’s exchange reserves. In view of uncertainties attached to problem of financing Italy’s requirements in 1948, as well as unfavorable economic developments which may take place during last six months of 1947 it is highly important that Italian Govt maintain sufficient foreign exchange reserves to meet such emergencies as may arise.
- 2.
- Dept’s attention is also called again to very pessimistic forecast being made at present time with respect to current wheat crop. Until more definitive estimates are available with respect to need for grain imports during next twelve months’ period it is impossible to state accurately total foreign exchange deficit which will have to be met during that period.
- 3.
- The entire Govt’s estimates as revised by Embassy are based upon minimum emergency rations. A primary factor in the instability of any democratic govt in Italy is inadequate food supplies resulting in hunger which provides a fertile field for Communist propaganda and agitation.
- 4.
- If the present tide in favor of extreme left is to turn and if a democratic govt of present type is to succeed, its fundamental task [Page 923] must be to shift from present phase of an emergency hand-to-mouth economy to one providing maximum employment and production and their corollary of improved standards of living necessary for eliminating social unrest. For democratic leadership in Italy to survive it must accomplish this position towards a more permanent basic economic reconstruction which offers Italian people concrete hope for a betterment in standards of living in foreseeable future.
The political situation in Italy has reached a point of delicate balance where the outcome between totalitarianism of extreme left and democracy may be decided by the extent to which outside aid will support the democratic elements in Italy who are attempting to meet the heretofore unchecked drive of the Communists. Should the present effort to govern Italy without the Communists fail, the future of democracy in Italy may be most seriously endangered. A victorious Communist Party back in the Govt would face the coming elections in a very strong position with discouraged forces of Center either joining it for self preservation, along with Nenni, or turning in desperation to extreme right.
I urge therefore that Dept give immediate consideration to adoption of measures along lines suggested in mytel 1322, May 28, 8 p.m.
- Not printed.↩