860S 00/8–448: Telegram
The Chargé in Italy (Byington) to the Secretary of State
urgent
3289. Following are our comments on Yugoslav note to Security Council re administration US–UK zone Trieste (redeptels 2012, July 29, sent Trieste 379, London 3009; 2023, July 30, sent Trieste 385;1 and 2024, July 30, sent London 3028, repeated Trieste 3862).
From Rome point of view, most important that during debate in SC we and British thoroughly back up agreements which we have made through AMG with Italian Govt and that as suggested London’s 3488, August 23 to Dept repeated Trieste 4 we should not be put in defensive position of apologizing for our administration. In this connection note that Yugoslav protest accuses only AMG of violating peace treaty, although of course the agreements which they cite in support their case involve Italians equally and were certainly not dictated to latter; we should in no way leave opening for attempt to shift onus to Italian Govt.
We might point out that Italian fulfillment of obligations under Article 11 Annex 7 is technically impossible without the agreements which have been entered into and which Article itself calls for, as acknowledged in paragraph four of Yugoslav note. Indeed, Article 11 Annex 7 clearly implies that monetary union with Italy will exist until such time as permanent governor might be appointed and new currency regime established. It might also be worth pointing out that agreements of which Yugoslavs complain have been so worded as to permit Yugoslavs conclude parallel agreements for their zone if Yugoslavs willing undertake all requisite obligations. Supply lire on part Italian Govt constitutes burden on that govt, particularly in view of fact that such lire may be used to import from Italy.
Peace treaty also obliges Italy to supply foreign exchange requirements of FTT on as favorable a basis as that supplied in Italy. This clearly means supplying foreign exchange to meet requirements of FTT. Supplying of such foreign exchange to meet requirements of [Page 538] FTT could not have meant other than that any such proceeds which might accrue would be used to reimburse Italian Govt. Supplying of foreign exchange requirements on conditions no less favorable than in Italy must mean that FTT external payments with other countries would have to be integrated into Italian system of payments.
Foreign exchange and currency regime have always been considered as provisional as provided under Annex 7 of treaty, such measures do not in any way prejudice future of FTT but simply maintain at expense of Italian Government the status quo, pending such time as permanent government of FTT is set up and able finance its own requirements under Annex 6 (permanent statute of FTT).
Yugoslav complaint does not, of course, refer to recently initialled supplementary agreements between AMG and Italy (reEmbtel 3246, July 314 and previous), and if these agreements are to be approved, believe it would reassure Italians if we inform SC of them before Yugoslavs have chance to do so.
Also important at some stage in debate to reassure Italians our continued interest in fate present Yugoslav zone FTT; in this connection original March 20 proposal in its entirety might well be reiterated, and we might also refer to absence of Yugoslav military government report to SC on administration and to numerous communications to UN from representative groups in Istria, including Istrian committee liberation, re violation human rights in zone B.