Foreign Relations of the United States, 1948, Western Europe, Volume III

860S.5151/1–1348: Telegram

The Secretary of State to the Embassy in Italy

secret
urgent

Washington, January 16, 1948—6 p. m.

121. For your info, following is text instructions which Dept has suggested be transmitted from CCAC to Gen Airey, re urtel 147 Jan 13,¹ repeated 13 Trieste, 9 Belgrade.

Reference: Taf 67.²

1. You are authorized to agree to proposal, if advanced by Italians., that there be two separate agreements to cover arrangements for supply of currency to UK–US Zone, FTT (Para 7 Taf 67).³ First agreement should merely reiterate language Art 11 Annex 7 and neither agreement should in any way imply or reflect AMG acceptance Ital interpretation Peace Treaty obligation under this Article. (Para 9B)

2. Re Ital suggestion that second agreement “be in the nature of a private one between the Ital Govt and AMG” (Para 7B Taf 67) and US–UK Embs recommendation that no commitment be made to keep second agreement secret, in view of difficulty if not impossibility fulfillment such commitment (Para 9D), suggest that Ital authorities be informed in connection with discussion second agreement that while considerations leading them to desire “private” arrangement with. AMG fully appreciated, problem keeping details such arrangement from becoming known complicated by US–UK undertaking to UN Security Council to keep Council informed of details of administration of UK–US Zone. While you should, therefore, make no commitment that agreement arrived at will be kept secret, we are prepared further to consider any specific suggestions Ital authorities may care to make in this connection.

3. Completely agree with US–UK Embs’ recommendations contained Para 9 A, B and E Taf 67.⁴

Repeated to Trieste as 223 and to Belgrade as 233.

Marshall

1. In this telegram, not printed, Dunn reported having been informed that the Italian Government had suggested to the British that there be two agreements (860S.5151/1–1348).
2. Of January 14, 1948, not printed.

3. Paragraph 7 reads: “… Italian Government was considering possibility of meeting AMG’s currency requirements by means of two separate agreements on following lines:

   (A) An undertaking by Italian Government to give effect to Article 11 without defining the extent of its obligations under that Article. This undertaking would in practice only cover the supply of currency for banking operations and could be made applicable to both zones should the Italian ultimately be unable to resist Jugoslav pressure on them to do so.

   (B) A second agreement covering the supply of currency to meet the AMG deficit, on the lines of the draft already presented but so framed as to omit reference to Article 11. This agreement would be in the nature of a private one between the Italian Government and AMG, and as such would be less liable than the first agreement to have to be repeated in case of Jugoslavs.”

4. These paragraphs read as follows:

   (A) “Both currency agreements should be signed by me, as head of AMG, or by my authorized representative and not by representatives of US and British Governments.”

   (B) “Acceptance by AMG of Italian interpretation of their obligations under Article 11 (see para 4 above) is in no way stated or implied in either agreement.”

   (E) “That, in order to avoid confusing issue, unless Italians themselves raise the question, I should not press for conclusion of foreign exchange agreement until main problem of currency is settled.”