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

860S.51/8–1248: Telegram

The Secretary of State to the United States Political Adviser (Joyce), at Trieste

confidential

Washington, August 18, 1948—1 p. m.

418. Substance of proposed agreement transmitted Rome’s tel 3246 of Jul 31 acceptable to Dept. Stop order on ratification (Deptel 2073 to Rome of Aug 6¹ and Paris 4178 to Dept of Aug 12 rpt Trieste as 45²) was required until outlines Trieste case SC more clearly defined. Dept considers proposed agreement in conformity peace treaty terms but in light of charges by Yugoslavs and Russians at SC some changes in language and emphasis are required to avoid possible embarrassment when agreement published.

You should explain this to Ital Govt and if possible secure their concurrence to put substance of agreement into effect at once, while negotiation proceeds on language changes suggested below. If necessary Airey could ratify, at same time making written reserve concerning language and with understanding that agreement as presently worded would not be published, reurtel 511 Aug 16.³

Following changes in language should be taken up with Ital Govt:

[Here follow the changes in language desired by the Department.] Foregoing changes discussed with Brit Embassy. They will suggest that Foreign Office approach AmEmbassy for details. Our approval proceed with ratification with foregoing changes subject to Foreign Office comments.

Approval agreement also necessarily subject to interpretation, now under consideration of ECA Appropriations Act provision that 5 percent of local currency account be allocated for US Govt currency requirements in Zone. Unclear whether this requires account be used, as far as possible, to cover troop pay or whether US will continue buying troop pay lire with dollars. Assume latter is “present procedure” mentioned Art 8, Part Two of agreement. Implications this question for agreement under consideration as well as Mar 9 agreements obvious and early adoption interpretation will be urged.⁴

Sent Trieste 418, rptd Rome 2156, Paris 3178, London 3277.

Marshall

1. This telegram, not printed, directed the Embassy to take farther action with the agreement until further word from the Department (860S.51/7–348).
2. In this telegram, not printed, Ambassador Caffery reported having received a telephone call from Trieste urging need of a solution, urging the need for lire and for dollars, and mentioning the growing skepticism in Trieste because of the lack of any visible sign of an ERP program (860S.5151/8–1248).
3. This telegram, not printed, reported that the Italian Cabinet had informally approved the Agreement of July 31; that formal ratification was expected any time (860S.51/8–1648).
4. The Department’s telegram 2213 to Rome, August 26, not printed, directed the Embassy to approach the Italian Government with the view to securing revision of the currency and foreign exchange agreement in accordance with the instruction to Trieste (860S.51/8–1248).