October 1, 1951
CONVERSATIONS WITH ITALIAN PRIME MINISTER
Minutes of the Third Meeting held in Room 5106, New State 4:00 p.m., September 25, 1951
PRESENT
Mr. Acheson (U.S.) Mr. DeGasperi (Italy)
ALSO PRESENT
UNITED STATES Mr. Harriman Mr. Bissell Mr. Perkins Amb. Dunn Mr. Byington Mr. Cleveland Mr. Linder Mr. Martin Mr. West Mr. White Mr. Greene Mr. Christensen Miss Kirkpatrick
ITALY Amb. Tarchiani Amb. Zuppi Minister Janelli Minister Magistrati Minister Malagodi Minister Pella Mr. Ortona Mr. Luciolli Mr. Sensi Mr. Venturini Mr. Canadi Mr. Panza Mr. Ferrari-Aggradi
CONTENTS
Italian Economic Problems
ITALIAN ECONOMIC PROBLEMS
The Prime Minister called upon Signor Pella, Italian Minister of the Budget, for a discussion of the economic questions on the agenda. MINISTER PELLA spoke in Italian, Minister Malagodi interpreting. He said that he would like to speak from a political viewpoint on economic questions. He indicated that there exists today in Italy a serious problem of investment but that his government would not allow this problem to detract from the defense effort. Italy is now making a defense expenditure equivalent to one billion American dollars, a figure which represents 7% of Italy's GNP. This figure, he continued, appears to be quite adequate on the basis of an average annual per capita income of $250. The Italian government, however, intends to carry on its rearmament effort and even though the Italian government speaks of the need for economic aid this indicates no diminution of their political determination to make the effort. It is not a question of "no aid, no rearmament", but he would like to mention what will happen if there is a cut in US economic aid for Italy. In order to be entitled to the trust and confidence of the Americans as well as that of the Italians, he said it might be wise to set forth some of the results of three and a half years of Marshall Plan aid. He pointed out that the Italian GNP had increased 36% and industrial production 40% above the prewar period. During the period of Marshall aid the Italians have also reestablished monetary stability and although the lira is not one of the strongest currencies in Europe, it has been given a strong enough basis to encourage savings by the Italian people. On the low per capita income of only $250 investments have reached 20%. There are now 800,000 more workers than previously and in the same period the government deficit has changed from one of threatening proportions to one which is much closer to a manageable size. In addition to internal improvements Italy has also taken major steps in international measures.
Minister Pella emphasized that these facts demonstrated that the Italians had done their duty and requested that the US recall this when heavier duties loom. He said that it was particularly important to remember the psychology of the Italian people and their inclination toward pragmatism. In the past as in the future to effectively combat the external and internal threats of communism the military effort must be balanced against civilian needs. He said that he was sure that the committee of 12 would recognize these facts. He said there were also two important points that should be noted in considering Italian potentialities: first, the large unused industrial capacity and second, the excess of Italian
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manpower. The Minister pointed to the financial problems related to these two questions and said that his primary desire was to avoid political consequences that they might create. With reference to the rearmament effort he noted that the Italian Parliament has now approved a supplementary appropriation of 250 billion lira. He conceded, however, that further measures were necessary in order to bring the Italian effort to its highest possible point.
Minister Pella added that it is essential that Italy receive end items, raw materials, machine tools, special equipment, blueprints, etc., though American assistance in 1951 and 1952.
The Minister said that the second major requirement is the United States economic aid. This aid is necessary in order to meet the dollar gap and to create an anti-inflation effect through counterpart funds. He conceded that in view of the Congressional cut in aid, it would be necessary to re- examine Italian requirements. He said, however, that the present estimate of $330 million as the deficit in the Italian balance of payments for 1951- 52 is not a bid for more aid but merely a working figure.
The Minister said that the Italian government has welcomed the United States decision to launch an off-shore procurement program in Europe and said that this would be of considerable assistance to his country. He said that his country is working to increase its industrial capacity to the limit and estimated that they should be able to handle some $500 million worth of orders by June 30, 1953. This would include such items as vehicles, aircraft, electronics, etc. He proposed that a joint American- Italian group be established immediately for the implementation of this program though the proper channels of the two governments. With reference to raw materials, he said measures had been taken in Italy to control the use of those which are in scarce supply. Italy requires for the present fiscal year 400,000 tons of steel and 80,000 tons of copper. He also suggested that the DO ratings should be granted for those items needed in the steel and thermo-electric plants and that GAA ships should be made available to carry goods to Italy. He said it was also essential to avoid inflation in Italy through the establishment of reasonable international prices on scarce materials. This was particularly true since he did not believe it possible to go beyond the present stretching of the Italian budget.
Minister Pella then called attention to the manpower and emigration problems which now confront Italy. In addition to the large number of unemployed, there are many refugees in Italy. The problem of over- population has been aggravated by the war. Once solved it would not arise again; however, unless Italians are allowed to emigrate, the problem is not capable
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of solution. Italy has both unemployment and communism and while full employment will not completely eliminate communism, it will go a long way toward solving the problem. He noted that the United States had done a great deal in this field through its program for displaced persons and expressed the hope that it would also be possible to help Italy solve its problems.
In conclusion, the Minister handed the Secretary a detailed memorandum covering the subjects he had discussed, and seven catalogues in single copy showing the types of equipment Italian factories are able to produce.
THE SECRETARY said that it was necessary for Mr. Harriman to leave for another meeting, but he assured the Prime Minister and Minister Pella that Mr. Harriman would be working with them on these problems as a member of the Committee of 12. He thanks Mr. Pella for his clear analysis of Italy's economic situation and said that it would be of great assistance to the United States in future planning. He indicated that he would ask Mr. Bissell to comment in more detail on some of the points raised, although it would not be possible for Mr. Bissell to give a definite estimate at this time on the amount of aid that would be available for Italy because of the situation in Congress. He said that the United States Government is aware of the problems that Italy faces, not only the immediate ones but those of the future. The immediate efforts of the United States to help Italy will be directed by Mr. Harriman and Mr. Bissell. Through off-shore procurement, and end-item and economic aid, we will try to help bring about the maximum effort possible in western Europe.
Mr. Bissell said that he was familiar with some of the problems raised in connection with the questions of economic aid and off-shore procurement through the preliminary discussions he had had with Minister Pella and other representatives of the Italian government. He said that he was aware that Italy has both external and internal financial problems. In a few weeks, after Congressional action on the foreign aid program has been taken, the United States will seek to discuss with the Italian Government what action can be taken on the external financial problems. He surmised that it should prove possible to cope with the external (dollar) problem if not in magnitude, at least in degree. He said that the United States
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program of off-shore procurement will complement the other forms of aid and he expressed the hope that when negotiations on the aid program begin it will be possible to give the Italian government definite information on the way in which off-shore procurement will be handled. Mr. Bissell said that work had also been going forward on helping Italy get scarce materials and their requests have been presented to the Defense Production Board. He said that he had good news for them since it was now his understanding that nearly all of their requests for power equipment and steel equipment would be given priority ratings within a few days. It is also hoped that the United States will be able to meet approximately the delivery schedules originally contemplated on these requests.
On the shipping problem Mr. Bissell said that the lack of port capacity in the United States and not the lack of shipping was the limiting factor. The United States is, however, continuing to withdraw ships from the reserve fleet and he assured the Ministers that by mid-winter the lack of shipping would definitely not be the limiting factor. Mr. Bissell concluded by saying that he was not completely familiar with the availability of steel but expressed strong doubt that it would be possible to ship anything close to the 400,000 ton figure mentioned by the Ministers. Mr. LINDER expressed appreciation of Italy's cooperation in the International Materials Conference. With reference to their requests for copper he noted that Italy had received 24,000 tons in the last quarter and at this rate he did not feel that the problem of copper for Italy would be a serious one.
Mr. BISSELL said that he would welcome further discussions on the technical level with the Italian delegation. MINISTER PELLA said that his group would also like to have further discussions. He noted that he and the rest of the delegation would be in Washington through the following day and that it would be possible for some of them to remain even longer if so desired. It was agreed that Minister Pella, Mr. Bissell and members of their staffs would meet the following day, and the question of additional meetings would be discussed at that time.
THE SECRETARY said that the US government recognizes the great problem that emigration poses for Italy and assured the Prime Minister that we were anxious to help as much as we could. He recalled that he and the Prime Minister had talked about this question with the President and the latter had discussed the Congressional problems involved with regard to immigration laws. The United States has supported the activities of the IRO as well as those of other international groups. Now that the operations of the IRO are coming to an end the United States will seek to provide assistance through other means. He pointed to migration in Europe as a pressing problem and expressed the hope that progress could be made through the Committee of 12 by the exchange of technicians and other steps.
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MR. WEST said the United States was seeking to join with other nations in forming an international organization that would be helpful on this matter. It will be necessary, however, to obtain the support of all countries concerned and particularly to achieve cooperation between those countries who have emigrants and those countries who can receive them. There is a substantial opinion in the United States which supports such programs, as demonstrated by the support of the Displaced Persons Commission. He warned, however, that it was very difficult to obtain changes in the immigration laws of the United States. We view with great interest, however, the opening of opportunities for migration in western Europe. With increasing production and resultant greater demand for manpower there should be a favorable effect on the manpower situation in Italy.
MINISTER PELLA said that he would like to raise the question of "ILO versus IRO" and wanted to know in particular what the US attitude was toward the forthcoming conference in Naples. MR. WEST said that this matter was under discussion. The United States will at the Naples conference express its support for the opportunities to stimulate greater emigration. However, at this time we are not in a position to support the various suggested proposals.
THE PRIME MINISTER said that these economic problems were only apparently technical; they are basically political. He referred to the President's statement to him earlier in the day on the importance of emigration and stressed that if the United States does not support the creation of an international mechanism for handling emigrants a solution will not be found. He said that it might well be said the manpower situation is more important to Italy than is the problem of the balance of payments, for if high unemployment continues it will be increasingly difficult to combat communism. While Canada, for example, wants immigrants, the United States does not. He said that Italy cannot impose its desires on the United States but unless the US can take more immigrants, the effort will be jeopardized. He proposed that these steps be taken: first, to create an international mechanism for the financing and transfer of emigrants overseas; second, to establish a join American-Italian group in order to promote efficient employment of technical personnel and Italian manpower for the construction of military installations, particularly in the Mediterranean area; third, to support the plans adopted by NATO and OEEC for Italian emigration in Europe in order to support the defense programs and to develop European economic strength. The Prime Minister said that an important question was that of actually financing the emigrants. In South America corporations for agrarian emigration have been established. However, it now costs approximately $1,000 for each person who emigrates. The Australians have solved this problem by permitting loans through the National Bank for the assistance of emigrants and 50,000 people have been settled in Australia in this way. He suggested that an international mechanism might utilize this
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type of arrangement but stressed the need for US aid. He said that what was needed was not splendid resolutions by international groups but real action. In conclusion he requested that he Secretary follow this matter closely in view of its extreme political importance.
THE SECRETARY assured the Prime Minister that the United States government would study this problem and will support international machinery but he stressed that the United States wanted to make sure that the machinery established was the correct kind. The Secretary then said he had another matter he would ask the Prime Minister to consider namely, the waiver of US obligations to Czechoslovakia under GATT. He noted that both Italy and France have found difficulty in voting for a waiver and that he had spoken to Mr. Schuman about it. To obtain the waiver it will be necessary to receive sixteen affirmative votes and unless both Italy and France vote for it the waiver will not be granted. If the waiver is voted there will be no violation of GATT, but if not we will have to suspend trade. In that event a vote will have to come up again under GATT procedure and in that case it will be under far less favorable circumstances than those on the initial vote.
THE SECRETARY said he realized that problems have been created for Italy by the imposition of US restrictions on imports of Italian cheese and other products, but he said that the situation should improve since Congressional action is now being taken.
AMBASSADOR ZOPPI said that the Italian government had under study the question of the waiver requested by the United States and said that this problem had been under consideration before the Italian delegation had left for Ottawa. THE SECRETARY pointed out that the vote on the waiver is imminent and may be taken before the end of this week.
MINISTER PELLA said he would like to make a final statement on the economic problems. As a technician he had set forth a number of the problems and trusted that action would be taken on them. However, one paramount question remains. Italy's reconstruction program was made possible because the people had trust in the present and in the future and as a result have invested their savings. It is extremely necessary that this confidence be raised and strengthened. The people must be convinced that Italy is not alone and that the US stands with Italy in confronting Italy's problems. If this psychological and political confidence can be maintained the technical problems will not present an obstacle. If the United States can help supply the foundation, Italy will build the "house".
THE SECRETARY replied that the US government shared the view expressed by the Minister and he assured the Italian Delegation that we should do everything possible to help them in their efforts.
ATTACHMENT (Memorandum from the Italian Government)
DEFENSE AND ECONOMIC PROBLEMS
The Italian government is determined to contribute to the fullest extent to the defense of the Atlantic community and is of the opinion that the mobilization of available resources should serve both the purposes of building an adequate defensive set-up and of strengthening the internal economic and social structure.
In this spirit the Italian government welcomes the decision adopted in Ottawa to appoint the committee of 12 to coordinate the military requirements with political and economic necessities and will actively participate in its work.
Italy feels that, in addition to devoting to direct defense purposes a notable part of its income (more than 7% of an annual pro-capita net income of only $250) the following Italian potentialities in the framework of a joint cooperative effort, should be taken in due consideration.
a) Unused productive capacity in important sectors;
b) Surplus of manpower.
This would promote the solution of serious Italian structural problems and would further the strengthening of the country both on the internal action against communism and on the international fronts.
The main specific measures which have been preliminarily examined in conversations of the last fortnight and on which it is hoped that definite solutions will be soon reached, are the following:
MILITARY AID
The setting up of the Italian defense forces for which, as it is known, the Italian Parliament has recently enacted a first supplementary appropriation of 250 billion lira, in addition to the ordinary budget of 361 billion lira for defense, would imply that the US Department of Defense allot to Italy, out of the military aid funds, an adequate amount to assure a speedy delivery of materials necessary to make the Italian program effective.
Such assistance should amount to not less than 550-600 million in 1951-52 and should include:
1) military end-items and equipment; 2) raw materials necessary to insure the fulfillment of the Italian military production program; 3) machine tools and other special equipment; 4) blue prints, patterns and drawings.
With regard to further action, the Italian government intends to take active part in the work of the committee of 12 and will in due time present to the approval of the Parliament measures apt to ensure duration of the Italian defense effort.
ECONOMIC AID
With reference to economic aid for 1951-52 in the framework of the Mutual Security Act, the Italian government feels that it is imperative to call the attention of the United States government to the necessity that essential Italian requirements be given the maximum consideration notwithstanding the global reductions adopted by the US Congress. In this connection it should be pointed out that according to the latest official estimates based on minimum requirement for food and basic raw materials, the deficit of the Italian balance of payment for 1951-52, for the dollar area, is estimated at 330 million dollars.
As far as the currency problems and even more the financial position are concerned, it should be noted that the payments in dollars for military orders can only partially offset inadequate economic aid.
OFF-SHORE PROCUREMENT BY U.S. GOVERNMENT
The Italian government welcomes the decision taken by American government with regard to placing US military orders in Western Europe and earnestly hopes that such decision will find prompt and adequate implementation with respect to Italy so that the Existing Italian industrial capacity be used immediately for the mutual defense effort.
The Italian potentialities in some important sectors have already been brought to the attention of the US government particularly with regard to transportation vehicles, ship building, aircraft construction, ammunition, fire arms, engines and machinery, electronics, etc. As a whole the Italian economic and industrial potential could process orders up to June 30, 1953, to the extent of 500 million dollars.
It is quite evident that the success of such a program will largely depend upon the establishment of efficient and adequate machinery for its implementation. It would therefore seem extremely desirable to proceed immediately to the creation of a joint American-Italian group for the implementation of the program through suitable channels of the two governments.
SCARCE MATERIALS
The Italian government is deeply interested in the activity of the International Materials Conference and in general in the measures directed to obtain an adequate international discipline of production, distribution and prices of scarce materials.
Italy has practically no raw materials: Italy needs, therefore that its requirements be satisfied at reasonable prices in order to be in a position to implement the defense programs and military orders while maintaining and strengthening the internal economic and social stability.
In this framework the following specific requests are being brought to the attention of the U.S. governments.
a) That essential Italian requirements of scarce materials be satisfied. Specifically, are worth mentioning the requirements of steel and copper (respectively 400,000 and 80,000 tons for the present fiscal year)
b) That the DO rating necessary for the completion of the Italian industrial projects financed by ECA and now under way, be promptly granted (equipment for steel, thermo-electric plants, etc.
c) That a sufficient number of ships of the reserve fleet (GAA ships) be made available for the transportation to Italy of coal and other bulk cargoes. Requirements for the sea transportation of such materials can be estimated at about 200 ships for the period between July 1st and December 31st, 1951.
INTERNAL FINANCIAL REQUIREMENTS AND OTHER PROBLEMS FOR 1952/53
By January 1952 the Italian government will have to submit to Parliament the budget for 1952/53, in the frame of the defense requirements and the general economic policy.
Therefore the problems related to the defense program, to off-shore procurements to military and economic aid and scarce materials, are bound to come up very soon with reference to the fiscal year 1952/53. In this connection the internal financial problem appears serious and urgent: the implementation of the present extraordinary defense programs of 250 billion lira causes a severe strain on the Government budget; fiscal pressure has already reached a maximum level (over 21% on a net per-capita annual income of 250 dollars) while expenditures in the civilian sector disregard many essential requirements. In spite of this situation, the deficit for 1951/52 is estimated at 369 billion lire, account having been taken of a counterpart fund corresponding to a portion of American aid. The Italian government is of the opinion that such deficit already implies a serious danger and that any larger deficit would without doubt promote an inflationary impact. It therefore requests that due consideration be given to the vital importance of the contribution of American aid toward the solution of this problem both in the present and next budget through the availability of an adequate counterpart fund.
ITALIAN MAN POWER IN THE FRAME OF THE ATLANTIC COMMUNITY
The Italian government declares that full recovery of the Italian economy and the elimination of the communist threat are strictly tied to the liberalization throughout the world of the movement of persons.
The Italian government will continue to make the maximum effort in order to create within Italy employment to the 200,000 workers accruing every year to the active population.
Notwithstanding such effort and normal emigration, Italy suffers from an extraordinary accumulation of unemployed as a consequence of the aftermath of the war (lack of emigration, destruction and economic underdevelopment, refugees, etc.). Such accumulation represents an abnormal factor which could be solved with extraordinary measures, "una tantum", also taking in due account the gradual decreases of the ratio of growth of the Italian population.
Among the provisions conceivable for this purpose, nothing could be as productive of good results (also and above all from ideological and political standpoints) as an extraordinary program and similar to the D.P. program now being carried out. Such programs should provide for the emigration to certain number of countries, the United States included, of an additional number of persons for some years.
Other specific steps should be taken:
1) The creation of an international mechanism, with the participation of the United States, for the financing and the transfer of emigrants overseas.
2) The establishment of a joint American Italian group in order to promote a large and efficient employment of technical personnel and Italian man power for the construction of military installations (airfields, roads, etc.) particularly in the Mediterranean area. Such program should include the creation of joint Technical Organization for initiatives of military interest. This would make it possible for Italy to contribute its full share of technicians and man power.
3) An increased support by the US government to the action adopted by NATO and OEEC for the development of Italian emigration also to Europe (France and United Kingdom) in connection with programs for defense and for development of Western European economic strength.
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In principle, in view of the structural problems of Italy the Italian government is deeply interested in all technical and financial measures mean to facilitate economic developments both in the Country and anywhere an increased development of man power can be promoted.
Unused man power in Italy must be viewed as a weakness and a danger for the whole Atlantic community, while when used wherever favorable conditions exist, it becomes an important asset and accrued additional strength. Annex A to Memorandum
IMPORTS PROGRAM FOR 1951/52
The following major elements concerning the import program have been taken into consideration:
WHEAT - The program prepared by the High Commissariat for Food and examined by CIR accounts for the following imports:
(Millions of Quintals)
Production 68 Unchanged Stocks at end of period, 10 Consumption 87 Total imports 18.5 Stockpiling 15.5
Estimated sources of imports are the following:
(Millions of Quintals)
United States 5 Canada 4 Australia 3 Others (including USSR and Argentina) 6.5 18.5
Imports from the dollar area would therefore be equal to 9 million quintals, 5 of which from the United States and 2.5 from Canada on the basis of the Wheat Agreement for 1951/52 and 1.5 quintals from Canada as a leftover on the preceding year. The IWA quota for 1951/52 also includes 2 million quintals from Australia which brings the total imports under IWA to 9.5 million quintals.
The distribution of quotas for imports outside the IWA is still uncertain; tentatively, an import of 2.5 million quintals will be effected from Argentina as a leftover on the IWA quota of last year and at least 1 million quintals will be added to that, following the new agreement. The way conversations with USSR are going on makes us foresee considerable difficulties for the import of the 2.5 million quintals scheduled from the said country.
Cost has been evaluated on the basis of $72 per ton fob. for wheat imported under the I.W.A., and on the basis of $115 for wheat from other sources.
OILS and FATS - Considering the Italian stocks (which include 80,000 tons of the Government stockpile) and the favourable forecast on the forthcoming crop, the importation is estimated at a low level.
The price evaluation takes into account the trend of the past few months.
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The estimated imports from the dollar area concern the usual imports of "copra" and greases for industrial use.
SUGAR - No considerable amount of imports has been foreseen in view of the favourable forecast with regard to the 1951 crop.
COFFEE - Imports of 50,000 tons are confirmed by the trend of exchanges during this last period. With regard to payments in dollar currency, the 1950-51 system will most probably be maintained since it has avoided direct payments (clearing, free imports, agreements).
SECONDARY CEREALS - In view of the forecast of the forthcoming crop no import has been foreseen for corn from the dollar area. More limited imports from other areas still remain on the program, both for corn and other minor cereals.
OTHER FOODSTUFFS - Imports originate almost entirely from the non-dollar areas and it has been deemed right to maintain a proportionately increasing volume with respect to the 1950-51 year also because of the latest regulations issued by CIR for the increase of imports of specific goods.
CHEMICALS - From the dollar area an import of certain quantities of phosphate rock (a maximum of 150,000 tons), nitrate from Chile, carbon black, pharmaceutical basic products, etc. is forecast; unless the situation improves, the realization of some of the above mentioned imports will meet some difficulties because of the restrictions introduced, especially in the United States.
OIL PRODUCTS - A refining on the basis of 6 million tons is estimated, of which some more than 60% will be paid in dollars and the balance in pounds sterling. From the dollar quota about 400,000 tons will have to be deducted for the Trieste refineries, since they are not financed together with the Italian program.
The largest portion of imports from the dollar area are made from the Mediterranean pipelines, and the fob. price therefore is notably higher than that of the imports from the sterling area, i.e. almost entirely from the Persian Gulf ($17 per ton against $13.5); for the dollar quota, of course, there is a lower freight to be accounted for.
The dollar expenditure is estimated at around 58 millions.
Other estimated imports are: fuel oil for abt. 1,200,000, half from the dollar area and half from the pound sterling area; 90-100,000 tons of lubricants all from the dollar area; 30,000 tons aviation gasoline, 2/3 of which are to be imported from the pound sterling area; small quantities of paraffin and petroleum coke.
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The above mentioned program does not include the crude oil requirements of Socony Vacuum needed for the production of finished goods for Greece: the relative dollar expenditure is of abt. 12 millions a year including freight.
COAL - In 1951 the total import was of 9,670,000 tons and the consumption was a little over 9 million tons.
Taking into consideration the estimated increase, above all in connection with the increase of distilling and a stockpiling covering abt. two and a half months requirements, an import of 11 million tons is estimated for 1951/52.
Taking in account the scarce availabilities of U.K., the agreements with Germany and Poland and the possibilities offered by France and Belgium, the foreseen sources are as follows:
Germany 3,000,000 tons England 500,000 " Poland 1,000,000 " Other European Countries 1,000,000 " United States 5,000,000 " total 11,000,000 tons
RAW MATERIALS FOR STEELWORKS AND STEELWORKS PRODUCTS - The import of raw materials (scrap iron, iron ore, ingredients, etc.) and of a few semi- finished products is related to the production program which anticipates, for the year taken into consideration, 2,600,000 tons of steel and 810,000 tons of pig-iron.
There is to be added the import of finished products, above all special steels, tinplate, deep drawing sheets, some ferro-alloys, etc.
In particular from the dollar area, the import of total requirements of tinplate is anticipated (30,000 tons), as well as of a large portion of deep drawing sheets, special steel, galvanized sheets, some ingredients, etc.; a part of these requirements concern directly the defense program.
COPPER - The estimated expenditure for the import of copper has been made not in connection with our requirements, but with a realistic evaluation of the possibilities of supplies from various markets at the present prices.
Therefore a program has been set forth for an expenditure of 30 million dollars covering the purchase of 50,000 tons at the official United States price from the dollar area, considering above all the favorable conclusion of talks in progress with IMC and within the United States for market controlling. The estimated quantity is lower than the Italian requirements, reckoned to be not less than 75,000 tons from the dollar area, namely in consideration of the difficulties of the market. The total requirement is calculated around 100,000 tons.
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The estimated expenditure for copper from other sources (50,000 tons) takes into consideration the effective price at which copper is available in those areas, between 900 and 1,000 dollars per ton.
OTHER NON FERROUS METALS - The program includes the requirements of tin, nickel, tungsten, molybdenum, etc. The estimated expenditure in the dollar area is first of all in connection with the requirements for the re- armament program.
COTTON - An import of abt. 210,000 tons is estimated from the following sources:
United States 140,000 tons Egypt 35,000 " Pakistan 20,000 " South-America 10,000 " Other Countries 5,000 " total 210,000 tons
Even taking into consideration the favorable possibilities deriving from the United States availabilities, the opportunity has been considered, following the objectives of CIR, to take account of the efforts, now in progress, for increasing imports from the dollar area.
OTHER TEXTILES - The major item in this sector is wool, of which import of 50,000 tons is estimated for a value of 150 million dollars, originating almost entirely from the sterling area.
Other minor vegetable fibers have similar origin (Sisal, jute, Manila hemp, etc.). From the dollar area small parcels of Uruguay wool will arrive, besides rags and hemp linters from the United States and other minor imports.
WOOD, WOOD PULP AND PAPER - Also in this sector import programs mostly refer to non-dollar areas, and to a great extent to North-European countries.
From the dollar area imports of cellulose for paper and for artificial textile fibres from the U.S.A. are foreseen (not less than 40,000 tons for an amount of $8,000,000), as well as timber from Canada and U.S.A. The latter import is related mostly to the requirements for the re-armament program.
OTHER RAW MATERIALS- Major items are natural and synthetic rubber, the latter from the U.S.A., and leather which is to come from non-dollar areas almost entirely.
The estimated expenditure for imports of these materials from the dollar area concerns synthetic rubber (3 million dollars), leather (2 million dollars) and other basic raw materials (4 million dollars).
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EQUIPMENT AND COMPONENTS - The whole of the existing requests and the projects under way, moreover, the consideration which is being given to the programs for further development of certain sectors, lead us to believe that, notwithstanding some difficulties on the part of both United States and European industries to fulfil the scheduled deliveries and to accept new orders, the estimated volume of imports may be effected in 1951-52.
Due account has been taken of the above mentioned difficulties while evaluating the rather modest amount of imports from the dollar area, whereas it is believed that the extent of imports from other areas and the progressive enactment of liberalizations may favourably influence the other areas.
The requirements for the re-armament program were accounted for among the imports from the dollar area, particularly for so-called "components."
FINISHED PRODUCTS - The forecast is based above all upon elements connected with the trend of imports during the last few months; account has been already taken of a progressive increase of such imports in connection with the implementation of the "liberalization" program among OEEC countries, and with the trend towards a higher amount of imports from non-dollar areas.
Rome, September 1st, 1951.
1951 - 1952 PROGRAM OF IMPORTS (in million of dollars)
Dollar area All currencies
Wheat 64.8 160.9
Oils and Fats 10.- 60.-
Sugar - -
Tobacco 2.- 5.-
Coffee - 50.-
Other Foodstuffs 1.- 115.-
Secondary Cereals - 25.-
Chemicals 25.- 75.-
Petroleum Products 75.- 120.-
Coal 50.- 141.-
Steelworks Material 25.- 110.-
Copper 30.- 75.-
Other Metals 10.- 35.-
Cotton 105.- 190.-
Other Textiles 25.- 215.-
Wood, Pulp, and Paper 13.- 83.-
Other Raw Materials 9.- 100.-
Equipment and Components 40.- 135.-
Finished Products 15.- 110.- __________ __________ TOTAL 499.8 1,804.9 __________ __________ Rome, September 1st, 1951
ENCLOSURE
BALANCE OF PAYMENTS IN THE DOLLAR AREA 1951-52
Breakdown of capital income:
- Interests due on loans:
Eximbank 3.2
Shipping 1.6
Bonner-Cokino 3.-
Taff del Vecchio 0.4
Lombardo 3.3
International Power Security 0.4
___________
- 11.9
- Interests and dividends on private - 2.5 transactions
- Interests on credit lines (balance) - -.9 __________
Total - 15.3
_________
BALANCE OF PAYMENTS IN THE DOLLAR AREA 1951/1952
REMARKS IN THE ITEM "TRANSPORTATION"
Breakdown of the balance (Provisional data) :
- payable freights for commodities -102
- payable freights for passengers - 11
- expenses abroad of Italian vessels - 29 _______
-142
-receivable freights for commodities 18
- receivable freights for passengers 27
- expenses in Italy of foreign vessels 12
________ 57 ________
-85 _________
The balance for 1950 has been of - 15.1 million dollars. The great worsening of this item is due mainly to:
- increase of rates which are almost the double;
- imports of coal from the United States for 5 million tons: about 60% of the transportation cost is paid in dollars (about 30 million);
- increase in the imports of wheat from the dollar area;
- increase of the traffic volume and of some routes with the exception of POL the route of which has been decreased with the opening of the Mediterranean pipelines.
ESTIMATE BALANCE OF PAYMENTS 1951-52
(million of dollars)
I T E M S Dollar Area All currencies
fob imports - 499.8 - 1,804.9
Exports + 210.- + 1,610.- _________ _________
Trade deficit - 289.8 - 194.9
Transportation - 85.- - 120.-
Tourism + 25.- + 70.-
Remittances + 20.- + 70.-
Capital income - 15.3 - 20.3
Sundry + 13.- - 20.- _________ __________ Balance - 332.1 - 215.2 ___________ ___________
Rome, September 1, 1951
Annex B to Memorandum
BALANCE OF PAYMENTS IN THE DOLLAR AREA (million of dollars)
I T E M S 1950/51 1951/52 Provisional balance revised sheet estimate
fob Imports - 455.- - 499.8
Exports + 190.- +210.- _______ _______
Trade deficit - 265.- - 289.8
Transportation - 70.- - 85.-
Tourism + 25.- + 25.-
Remittances + 20.- + 20.-
Capital income - 14.- - 15.3
Sundry + 20.- + 13.- _______ _______
Balance - 284.- - 332.1
_______ _______
Rome, September 1, 1951