Washington, March 5, 1965, 10 a.m.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL IT-US. Confidential. Drafted by McKillop and approved in S on April 27. The meeting was held in the Secretary's office.

SUBJECT
Secretary's Discussion of the Situation in Viet-Nam with the Italian Ambassador

PARTICIPANTS
The Secretary
Ambassador Sergio Fenoaltea, Italian Embassy
Mr. Rinaldo Petrignani, Counselor, Italian Embassy
Mr. David H. McKillop, Director, WE

Italian Request for a Review of the Situation--Calling under instructions, he said, of Prime Minister Moro, the Ambassador referred to Moro's statements (before the publication of our White Paper) supporting the American position on Viet-Nam./2/ The Secretary expressed warm appreciation for the helpful statements that the Prime Minister had made despite his political problems.

/2/Moro supported U.S. policies in Vietnam in February 12 and 18 statements before the Italian Senate. The white paper was "Aggression From the North," released February 27. Its contents are summarized in Foreign Relations, 1964-1968, vol. II, Document 171.

Noting this appreciation, the Ambassador stated that Moro had courageously pointed to Hanoi as the root of the trouble in Viet-Nam. By its military action against South Viet-Nam through infiltration, the U.S. had been forced to reply acting with and on behalf of Saigon. The Ambassador added that Moro is mindful of the potential danger of the situation and has welcomed U.S. assurances that we do not wish to see the conflict spread. Italy has not taken any initiative in trying to bring about a settlement of the conflict but is not indifferent to the problem and stands ready to cooperate if the occasion to be helpful should arise.

In light of the foregoing, the Prime Minister had requested the Ambassador to obtain our latest views on the situation in Viet-Nam, including an evaluation of the various political initiatives that have recently been taken, notably by the British and French, whose views, however, seemed to differ somewhat. The Ambassador hoped a common approach to the problem consistent with Allied solidarity can be worked out. He thought a NATO review of the situation might be helpful, in connection with which he noted with satisfaction Ambassador Unger's recent briefing in NATO.

The Secretary then reviewed our position on Viet-Nam along the lines of his news conference of February 25./3/ He said that his opening statements in particular expressed clearly what the crux of our policy on Viet-Nam is and hoped that the Italian Government had been furnished with a text. The Ambassador replied he had sent copies of the entire text. As he had stressed at his news conference, the Secretary said that the missing piece in a solution of the Viet-Nam problem is Hanoi's willingness to terminate its aggression in South Viet-Nam and leave its neighbor in peace.

/3/For text of Rusk's remarks, see American Foreign Policy: Current Documents, 1965, pp. 836-838.

Channels to Communists Open--The Secretary also wished to stress that channels to the Communists to discuss Viet-Nam are open--the French through Hanoi, the British as Co-Chairman with Soviets on Laos, ourselves with Peiping via Warsaw, etc. Thus, there is no lack of communications, but so far none of these contacts has revealed any evidence of Hanoi's willingness to abandon its aggression by infiltration and terrorism against South Viet-Nam. Therefore, the question of negotiations takes on a special meaning. Negotiations leading to surrender in South Viet-Nam are, of course, out of the question. If formal negotiations were started and then failed, this failure could lead to a more serious situation and wider conflict, since a way out through negotiations would have already been exhausted. In this connection, the Secretary pointed out that previous successful negotiations with the Communists (end of Berlin blockade, Laos Agreement, Test Ban Treaty, etc.) have been preceded by private talks indicating a genuine willingness to reach a mutually satisfactory agreement. There has been no such indication resulting from contacts with Hanoi. The French, for instance, have asked the North Vietnamese point blank if they were willing to stop their aggression in South Viet-Nam but have received no answer. Both French and British approaches have not reflected the possibility of success in terms acceptable to the Free World.

The United States has more reason than any other Western country for a successful resolution of the problem, but a peaceful solution is impossible if only one side wants it. As the President and Secretary have reiterated on innumerable occasions, we will withdraw our forces tomorrow if Hanoi will honestly guarantee to let South Viet-Nam alone. Meanwhile, as the President has affirmed, the United States is prepared to take all appropriate and adequate measures to stay on until Hanoi shows its readiness for peace.

Difference Between the Situations in Laos and Viet-Nam--The Secretary said there was an important difference between the situations in Laos and Viet-Nam from a United States viewpoint. The Laos Accords of 1962/4/ had been preceded by a Kennedy-Khrushchev agreement that a solution of the Laotian problem should be reached on the basis of all countries undertaking to leave Laos alone to tend to its own affairs. This bilateral agreement with the Soviets is lacking with reference to Viet-Nam. While the United States participated in the negotiations leading to the Geneva Agreement on Laos, it did not do so in the case of the Geneva Agreement of 1954 on Viet-Nam,/5/ which the United States did not sign but accepted in a declaratory statement made by Ambassador Bedell Smith.

/4/For text of the declaration and protocol on neutrality in Laos, signed in Geneva July 23, 1962, see 14 UST 1104. For documentation, see Foreign Relations, 1961-1963, volume XXIV.

/5/For texts of the Indochina accords, signed in Geneva July 20, 1954, see American Foreign Policy, 1950-1955: Basic Documents, pp. 750-788. For documentation, see Foreign Relations, 1952-1954, volume XIII.

Points of Emphasis for Moro--The Secretary suggested that in his discussions of the Viet-Nam problem, the Prime Minister might helpfully underline what North Viet-Nam is doing to South Viet-Nam in the way of massive infiltration and terrorism and to express confidence that the United States will withdraw just as soon as North Viet-Nam stops its aggressive interference. The Ambassador stated Moro has been doing this and that our White Paper is helpful in this regard. The Secretary commented that our French friends, for instance, express concern about our air strikes but make no mention of North Vietnamese provocation in South Viet-Nam, which makes a troublesome imbalance. Even the Buddhists in South Viet-Nam, who are keen for a peaceful settlement, base it on demands that both the North Vietnamese and Americans go home, and have told us privately that they support our air strikes even if religious considerations prevent them from saying so in public.

Clarification of Point in U.S. White Paper--The Ambassador referred to a statement in our White Paper on Viet-Nam to the effect that the United States and South Viet-Nam would continue their military efforts until either North Viet-Nam ceased its aggression or other measures were taken to assure the peace and security of the area. The Ambassador wondered about the significance of the "or" clause. The Secretary explained that the "either" clause carried 99 percent of the weight of the sentence. The "or" clause had been added so as to leave a door technically open to the possibility of some sort of international action, possibly through the UN, SEATO, etc., but that possibility seemed small.

Significance of the Soviet Role--The Ambassador asked if the Secretary regarded the latest reaction from Moscow to our air strikes as more violent than the others, perhaps portending stiffer Soviet action? The Secretary replied that the Soviet record in South East Asia in the past has demonstrated a Soviet desire to avoid a confrontation in the area with the United States. The Sino-Soviet conflict, however, has become a complicating factor in solving problems with the Soviets in SEA since the Soviets are under pressure to take steps strong enough to match the Chinese Communist. Therefore, the possibility of substantial Soviet military aid to Hanoi cannot be excluded. The Secretary thought, however, that the tenor of Moscow's reaction to our air strikes has been about what could be expected under the circumstances. He added that we were sorry that the February 9 strikes occurred while Kosygin was in Hanoi, and it was not the United States which planned it that way. In short, the Secretary said we cannot say for sure what the Soviets may do.

The Ambassador wondered if we were forced as a deterrent measure to strike further north in North Viet-Nam, whether that might not bring the Chinese Communists directly into the hostilities. The Secretary replied that there is no sure answer to such a question. The North Vietnamese probably fear a horde of Chinese coming into their country but, on the other hand, desire to take over South Viet-Nam. Who can tell which emotion would dominate? The Secretary did think, however, that if Hanoi fails to pull back, the situation can become more serious.

Stability of Political Situation in South Viet-Nam--The Ambassador asked about the prospects for greater political stability in South Viet-Nam and mused whether the Viet-Cong might not eventually win by a political takeover rather than by military means.

The Secretary regretted the effects of fourteen months of political instability in Hanoi [Saigon], which has made a bad impression abroad, including the United States, and sent the wrong kind of signal to Hanoi about the ability of South Viet-Nam to continue to resist. We hope very much that the current Saigon regime will endure, but in light of past events, cannot say for sure. In this connection, the Secretary pointed out that political commotion in Saigon affects only a comparatively few people and that traditionally the rural areas in South Viet-Nam are not too greatly affected by what happens in the capital. In areas in the countryside where the security of the population (about 75 percent) is assured, the villages and towns have cooperated satisfactorily with Saigon. In conclusion, the Secretary said that while the situation is not good, still it is not necessarily on the brink of collapse.

Possibility of Italian Assistance--The Ambassador again referred to the fact that Prime Minister Moro has not proposed an Italian initiative but does not remain indifferent to the seriousness of the situation. The Ambassador wondered, therefore, if there were not something useful that the Italians might be doing now to express their willingness to cooperate. The Secretary said he appreciated this willingness, but could not think of anything they could do at this particular juncture.

As he had already explained, we do have the channels for sounding out the Communists on Viet-Nam but so far none of the soundings has produced any satisfactory results.

The Ambassador commented that if the French through their contacts with Peiping and Hanoi succeeded in persuading the North Vietnamese to withdraw, would that not prove the value of maintaining such contacts. The Secretary replied that if the French so succeeded that would be fine, but so far there is no evidence of such success. He thought it important that our friends, including the French, first think about the desired results in Viet-Nam and then decide on how to achieve them. If Paris, for instance, equates the neutralization of South Viet-Nam with Communist domination of South East Asia, that, of course, would not be an acceptable result for the Free World. We can accept South Vietnamese and other South East Asian peoples being non-aligned quite happily, but we cannot sanction their being taken over by the Communist camp against their will.

Effect of the Viet-Nam Problem on Presidential Travel--Replying to the Ambassador's inquiry, the Secretary stated no definite arrangements have been made for the President's travel in Europe, which, as has been announced publicly, remains an intention in principle. How things shape up in South East Asia would, of course, be a factor affecting the timing of the President's eventual trip to Europe.

The Ambassador warmly thanked the Secretary for his kind and useful reception and took his leave.

107. Letter From the Counselor of Embassy in Italy (Fraleigh) to the Officer in Charge of Italian Affairs (Givan)/1/

Rome, March 10, 1965.

/1/Source: National Archives and Records Administration, RG 59, Italian Desk Files: Lot 68 D 436, Official Informal. Confidential; Official-Informal.

Dear Walker:

We were concerned to learn, from your letter of February 18, that you had seen an uncleared policy paper that argues that Western European Communist parties including the PCI are changing and at some point will probably be acceptable partners within the governing coalitions./2/ We presume that you will oppose clearing any such paper, and we hope that the arguments we have furnished--for example, in our A-1828 of June 30, 1964/3/--provide sufficient ammunition for you to justify formally withholding EUR clearance. Just in case it might prove useful, however, I am summarizing below the arguments against the wishful thinking which promotes the theory here that the PCI wolf is becoming a harmless and useful sheep.

/2/Neither the letter nor the paper has been found.

/3/Not printed. (National Archives and Records Administration, RG 59, Central Files 1964-66, POL 12 IT)

The rationale, here in Italy, concerning the evolution of the PCI toward respectability and acceptability, generally leans heavily on one or more of the following weak "logical" reeds:

The PCI is becoming independent of Moscow, and as a fully autonomous party it will be acceptable within the democratic area. This is of course a non sequitur. The PCI link with Moscow is an excellent reason to exclude the Communists from power here. But it is not the only reason. The continued diminution eventually perhaps even to something approaching zero, of any such link with Moscow would not make the PCI acceptable or worthy of trust. They would remain a totalitarian party; as totalitarian as the Fascist MSI, and considerably more dangerous. We believe that it suffices to point out that the Yugoslav League of Communists (LCY) is quite independent of Moscow and since 1948 has made tremendous strides toward reconciling itself with the Yugoslav people, but it remains Marxist-Leninist, and after almost 17 years of independence from Moscow the Yugoslav people are still offered no political alternative whatsoever to the LCY. There is no evidence to support any conclusion that a fully autonomous PCI would perform any more democratically than the LCY.

The PCI is evolving toward democracy, and once fully democratic there would be no reason to exclude the Communists from the exercise of power. This fallacy is based on a false premise. The PCI is not evolving toward democracy. Steps have been taken from time to time to improve the workings of the system and (hopefully, from the PCI point of view) to give the cadres more of a feeling of participation in the Party decision-making apparatus. These are agitprop exercises, and the rest of the scanty appearances of PCI democratization are no more than a well propagandized illusion. Party leaders have said again and again that no matter how much the democratic left-wing calls for Communist abandonment of democratic centralism, the PCI will continue to consider democratic centralism the keystone of the Party principles of organization. In this sense the Leninist orthodoxy of the Party is impeccable. And it goes without saying that on this subject the views of Rosa Luxemburg stated 60 years ago (see Luxemburg's Centralism or Democracy) still demand our careful consideration. She correctly predicted that democratic centralism and Party democracy would prove to be completely antithetical, and history has shown her to have been correct. The leaders of the democratic left-wing parties here know, and it more than ever behooves us to keep in mind, that no partial measures short of complete abandonment of Leninist organization can ever democratize the PCI. The argument can of course be made, convincing or not, that the lack of democracy within the Party need not preclude its acting in a democratic manner with respect to other parties. However, the statements of the Party (for Party consumption and therefore asserted seriously) leave no room for doubt on this score. The statements of Pietro Ingrao which were quoted in our A-1828 make it clear that the leopard has no intention of changing its spots, despite the propaganda to the contrary.

Inherent PCI tendencies toward autonomy and democracy can be stimulated and brought to fruition by gradually bringing the Party into the democratic area and offering responsibility to the Communists as they prove themselves ready for it. Of course this view would not be reflected in any paper prepared in Washington, but it is properly a part of this letter because it represents a logical construction on the fundamental misconceptions listed above. And notwithstanding the political absurdity of this sort of thought, we are sometimes hit with arguments of this type which, for example, regret our "shortsightedness" for not speeding up the "PCI evolution" by recognizing the respectability of Giorgio Amendola, etc. At the risk of belaboring the obvious, let me say that we find it quite easy to bear in mind that if the PCI leaders were demonstrably autonomous and 24 karat democrats, their domestic and foreign policy programs would automatically exclude them from any sort of practical consideration as partners in an Italian coalition. The problems inherent in the present center-left coalition provide sufficient examples. It is difficult to imagine the PCI moving to the right of the PSI positions as they are today, but without such a movement by the PCI, the Communists could contribute nothing to a program which would also have to find acceptance outside the Marxist area. Putting it another way, the Catholics recognize that a "dialogue" with Leninist Communists is impossible unless the Catholics care to move toward Communist positions; see, for example, L'Impossible Dialogo tra Cattolici e Communisti, Father Giuseppe De Rosa, S.J., in Civilta Cattolica of October 17, 1964, or the recent broadside by the Vatican Osservatore Romano. As Father De Rosa said, there is no common ground--political, philosophical, religious, or social. And the PCI has repeatedly asserted it will not abandon its tenets in all these areas.

It is not surprising that the Catholics, the PSDI, and all parties to the right of them have rejected cooperation with a party that remains a wolf in sheep's clothing; a party that is not evolving toward democracy; a party that is only slightly less objectionable as a result of its growing autonomy; a party with which it would be impossible to fashion a useful democratic program, even if sincerity and trustworthiness could be assumed. We believe the democratic parties have been wise in rejecting the PCI to date.

We don't see any convincing evidence that the PCI is changing, and much convincing evidence that it is not. We don't know, therefore, to what democratic parties the PCI might ultimately become acceptable as a coalition partner, but we are certain that in terms of US policy interests and in the interests of liberty and democracy for our allies, the Communists will remain unacceptable unless and until they become fully autonomous, scrap Lenin's democratic centralist structure, and adopt and support programs which reflect national needs rather than narrow doctrinal or power interests. But would the PCI then be a Communist Party?

The way to deal with the Communists, it seems to us, is to isolate them from the government and keep them so until the government has taken measures to improve social and economic conditions in Italy. Then it is to be hoped that their voting strength will fall off, for two reasons, as Nenni noted the other day: (1) voters will have less to protest about and (2) they will see that the Communists, absent from the "control room" can do nothing directly to influence the government's program. To let the Communists into the government would remove this avenue of (hopefully) diminishing their voting strength.

We feel strongly enough about this to wish to call the paper to which you refer to John Di Sciullo's attention, and I am therefore sending a copy of this letter to him. We hope both of you can take a thoroughly skeptical view of any paper that claims to see any meaningful steps toward democracy by the PCI. We would be the first to be delighted by such a trend, in view of the threat the PCI constitutes in Italy, but what we have observed to date is basically not PCI evolution, but wishful thinking encouraged by the PCI.

Sincerely,

Bill

108. Telegram From the Embassy in Italy to the Department of State/1/

Rome, April 9, 1965, 8 p.m.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 7 IT. Confidential.

2659. Moro Visit. Italian Communist Problem. Embtel 2551/2/ advised that Moro will expect be asked for his views on problem of Italian Communist Party (PCI). Embassy believes that occasion should be used by US to strengthen Christian Democratic (DC) determination to face this problem squarely. Experience in Italy supports belief that only by standing firm can anti-Communist content of center-left program be given fair test of ability to reduce Communist threat.

/2/Telegram 2551 from Rome, March 30, provided an analysis of Moro's character. (Ibid.)

Majority of DC (including Moro) have no illusions concerning nature of PCI and threat it constitutes for Italian democracy. Nevertheless, important elements of DC, including factions led by Foreign Minister Fanfani, have at times shown willingness to deal with or attempt to use Communist Party to accomplish non-Communist aims. Interest by some members DC in current Communist maneuver to establish "dialogue" between Catholics and PCI, i.e. a debate which would lead to DC-PCI political understanding, is a case in point.

Indications of Pope's displeasure in March 31 audience, and subsequent strong warnings by Vatican's Osservatore Romano and Jesuit Civilta Cattolica against DC-PCI collaboration should put to rest trend toward dangerous assumption that it possible for Church to treat profitably with Italian Communists.

Strong Vatican position will have salutary effect at least for immediate future. However, US approach to Moro regarding PCI can benefit from climate of Vatican reaction and at same time contribute to broader scope and hopefully lasting nature of DC resolve to isolate Communists. Embassy therefore believes this is appropriate time for US encourage Moro to hold line against Italian Communists and press ahead with Italian effort to demonstrate that cooperation with PCI neither necessary nor compatible with good government.

Although we believe Moro will need little convincing on this subject, he may point out characteristics of PCI which are different from those of other Communist parties and which are changing to adapt to contemporary world. These phenomena are major subject of debate among democratic parties in Italy, where the issues are obscured by desire of some democratic elements to reject out of hand all reports of change, autonomy, or national motivation in PCI. Facts are that PCI leaders are efficient, pragmatic, and energetic; they have given PCI character of its own, and that character is subject to certain changes to adapt to developments in Italy and within international Communist movement. Embassy believes it important that we recognize the real elements of difference and change in PCI, bearing carefully in mind that in terms of basic nature and goals, the PCI is and will remain an unacceptable totalitarian party.

Moro may discuss following principal current problem areas of PCI question:

Autonomy. PCI policy is linked to Moscow but substantial autonomy does exist, and trend in international movement is toward increasing degree autonomy. Pertinent question in Italy is: will PCI be acceptable for cooperation with democratic parties if and when PCI can be considered autonomous? Answer is that if PCI were autonomous, it would still have to be judged on its domestic Italian attributes. And by PCI's own statements, these attributes are and will continue to be Marxist-Leninist in organization and philosophy. They will include materialism, economic determinism, democratic centralism, Marxist concepts of history and truth, and the range of Communist theory and practice which is irreconcilable with democratic institutions.

Democracy. PCI strategy to seek power by parliamentary means has been exploited also by the Communists to project false image of respectable democratic party. Additionally, imperatives of membership appeal and popular image push PCI toward increasing semblance of democracy in internal and external practice. However, PCI Leninist control formula (democratic centralism) is authoritarian, and party consistently asserts that democratic centralism is basic to PCI procedure. As long as party holds to Leninist totalitarian concepts, PCI cannot be democratic internally or in its relations with other Italian parties. Moreover, lack of PCI democratic intent has been made abundantly clear by party leaders, despite effective propaganda to the contrary (see A-1828 June 30, 1964)./3/

/3/See footnote 3, Document 107.

Reinhardt

109. Memorandum From the President's Special Assistant (Valenti) to President Johnson/1/

Washington, April 16, 1965.

/1/Source: Johnson Library, National Security File, Country File, Italy, Moro Visit. No classification marking.

These are some observations that I hope that you would consider in regard to the visit of Prime Minister Moro.

The Prime Minister is very anxious for this visit to be a success from both his standpoint and yours. As you know, I spoke rather sharply to the Italian Ambassador after the publication of the New York Times story about his alleged remarks on Viet Nam./2/ The Italian Ambassador was very upset about it and insisted that this was a speculative story. He later conveyed to me that he passed along to the Prime Minister my conversation with him. The Prime Minister declared the story to be entirely speculative and not at all the sort of thing he would be saying.

/2/An apparent reference to The New York Times article by Reston of April 11. No record of Valenti's conversation with Fenoaltea has been found.

The Prime Minister is in a difficult political situation. The Nenni Socialist Party (PSI) cannot be too accommodating or else Nenni will lose his effectiveness as well as his following. It is vital to Moro that the Nenni Socialists remain allied to him because of the substantial strength of the Communist Party.

As of now the Christian Democrats have a little less than half of the majority in the Italian Parliament with the PSI about 15% and the Communists about 25%. There is a splinter group (PSIUP) a little to the left of the PSI and a little to the right of the Communists. This group broke off from Nenni's Socialists when the Nenni Socialists endorsed NATO. Therefore, the Moro posture is on a knife-edge and the outcome of his meeting with you is very important to him.

Viet Nam is the one issue that threatens the Moro-Nenni relationship. Your Baltimore speech had a tremendously favorable impact in Italy. It cut the propaganda ground out from under the Communists and strengthened Moro's hand immeasurably.

The Prime Minister wants to tell you about the Italian political situation and of the moves that Italy is making to restore its economic strength. He will be very circumspect about what is said in public about Viet Nam.

I think you will find out that you will be able to call the turn on this and he would be willing to go along with your views--keeping in mind, of course, that too strong a support of the U.S.-Viet Nam policy would allow the Communists to make some hay.

If it is possible for you to consider the following, it would allow Moro to go back to Italy in a stronger position than when he left:

(1) The President hopefully show great warmth and affection for Moro and Italy in some visible way-perhaps a little longer than usual discussion with Moro, particularly private talks. Hopefully, I will try to come up with some ideas for pictures and other suggestions that will give evidence that the warmth of your welcome was more than merely normal and procedural.

(2) Any background we can give the Press to emphasize the extreme cordiality of the meeting and the President's genuine and intense interest in Italy's problems and in Italy's future.

You are scheduled to actually talk with him about 45 minutes. If this could be stretched to say about an hour and a half even though Moro will be a little late to his luncheon given by Secretary Fowler on April 20 it would be taken as a gesture of warm interest on your part.

(3) The Italians are quite sensitive about their position in the European power structure. It would be most helpful if your talk could underscore the fact that the U.S. considers Italy to be part of a rectangle of London, Paris, Bonn, and Rome. Like any human or nation that once tasted great glory and then settled into a decline, the Italians thirst for recognition as a nation to be reckoned with in the affairs of the world.

110. Editorial Note

Prime Minister Aldo Moro visited Washington April 20-21, 1965, for meetings with U.S. officials. In a one-on-one meeting with President Johnson, Moro laid out his view of the prospects for Italy's Center Left government. In a subsequent expanded meeting, Moro, Foreign Minister Fanfani, the President, and Secretary Rusk discussed the war in Vietnam, immigration, and European unification. Moro had a discussion with Vice President Humphrey on Latin America at an April 21 breakfast meeting. Memoranda of the Moro-Johnson talks are in the National Archives and Records Administration, RG 59, Presidential Memoranda of Conversation: Lot 70 D 217. A memorandum of the Moro-Humphrey discussion is ibid., Italian Desk Files: Lot 68 D 436, Pol 15-2 Humphrey. A memorandum of conversation between Moro and Secretary Rusk on NATO issues is printed in Foreign Relations, 1964-1968, volume XIII, Document 80. For texts of the welcoming statements, toasts, and communiqué, see Public Papers of the Presidents of the United States: Lyndon B. Johnson, 1965, Book I, pages 434-438 and 440-441.

Telegram 2471 to Rome, April 22, summarized the talks: "Substantive discussions covering major world problems disclosed no novel GOI positions. In discussions Moro was most forthcoming in support US objectives SEA and elsewhere." It also noted that "Visitors highly pleased with arrangements and exceptional gestures of esteem." (National Archives and Records Administration, RG 59, Central Files 1964-66, POL 7 IT)

111. Memorandum of Conversation/1/

Washington, April 28, 1965.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 5 IT. Limited Official Use. Drafted by Thomson on April 29. The conversation was held at the Motion Picture Association of America headquarters.

SUBJECT
Italian Film Law

PARTICIPANTS
Mr. William H. Fineshriber, Jr., MPEAA
Mr. Leo Hochstetter, MPEAA
Mr. G. Griffith Johnson
The Honorable G. Frederick Reinhardt, American Ambassador to Italy
Mr. David R. Thomson, E/OT/GCP, Department of State

Mr. Fineshriber and Mr. Hochstetter emphasized that Italy today is the most important non-English-speaking market for U.S. films. They briefly reviewed the post-World War II history of access to this market. Tight restrictions have gradually been liberalized, and the Italian market is now substantially open to U.S. competition, as shown by the fact that American films earn over 50% of total gross receipts in Italy. Liberalization has been a function of greatly increased collaboration between the United States and Italian film industries, particularly with respect to production and financing.

Mr. Fineshriber and Mr. Hochstetter noted the strong political factors which had influenced the motion picture bill as recently reported out of the Parliamentary Commission. According to their information, the bill will probably come up for action in the Chamber of Deputies by late May.

The MPEAA's over-all assessment of the bill was that it provided for entirely too much government regulation, and that it contained too many elements of discrimination against foreign films. They noted, however, that some of its undesirable features would have little significance unless enforced by the Italian authorities in a restrictive way. The manner of future implementation might depend in part upon U.S. attitudes toward the new law. I.e. if the United States should make a big issue of the law, the Italian film authorities could be expected to react by enforcing it strictly, instead of by relaxing its controls where this is left open to their discretion.

Specific Unfavorable Features of the Bill

Rebates on admission tax for showing national films (Article 6 and other articles of bill). Ambassador Reinhardt assured the group that he was familiar with the manner in which this rebate has been in violation of Italy's international trade commitments since 1949 (see CA-5560, 11/24/64)./2/ It was noted that the new rebate formula was much more complex than the provision which had been in effect since 1949, and that one could not say offhand whether the general incidence of discrimination would be higher or lower. However, one change would clearly sharpen the extent of discrimination; namely, the fact that films from other EEC countries would henceforth be eligible for the rebates.

/2/Not printed. (Ibid., INCO MOTION PICTURES-IT)

Copies of films for National Film Library (Article 23). The MPEAA representatives expressed some concern about the new requirement to provide free of charge a copy of each new feature film for possible "educational and cultural" showings after 5 years. They recognized that the requirement apparently did not discriminate between foreign and domestic films, and that it presumably did not violate international commitments by Italy. Nevertheless, it did represent a new form of government intervention.

Government intervention in terms of film rental contracts (Article 41). The law permits the Ministry of Tourism and Entertainment to fix the terms of private contracts, e.g., between distributors and exhibitors, if the interested private parties do not reach agreement. This was not a new feature of Italian legislation on films, the MPEAA representatives noted, but it left open a wide field for possible abuse by the Italian authorities.

Cinema screen quota (Article 5). In the latest version of the bill, Mr. Hochstetter reported, the screen quota reserving time for films which qualify as national has been raised from the traditional 25 days per quarter (about 28%) to 30 days per quarter (about 33%). Under current market conditions, he said, the increased quota would probably not hurt American exports any more than the previous quota, since films currently qualifying as domestic were able to command about 45% of the Italian market. Mr. Hochstetter had some impression that this increase would be inconsistent with Italy's commitments under the GATT. Mr. Thomson explained that this was not so, since this quota had never been bound in trade negotiations.

Television screen quota (new Article 56). Another restrictive new feature affecting television had been added to the bill, Mr. Fineshriber reported. The bill would require that, of screen time devoted to the broadcast of feature films (and this is normally a very small fraction of total screen time), at least 50% must be reserved for national films. Mr. Thomson commented that this provision, assuming its enactment, would be a curious new departure, in that countries with state television monopolies usually preferred to conceal trade-restrictive practices in this field and to hide behind the fact of operation by the state.

A brief overview ensued of the compatibility of these provisions with Italy's international trade commitments. As the MPEAA representatives were aware, the American Embassy in Rome has already taken the position in discussions with Italian officials, by instruction (CA-5560), that any rebate of this type was incompatible with the GATT (Article III), the U.S.-Italian FCN Treaty (Article XVI), and with the OECD Code on Current Invisibles.

As for the proposed increase in the cinema screen quota, it was noted that this action would be compatible with what the EEC Commission had recently prescribed in its Second Directive on films (Article 5--see Brussels ECBUS A-722, 4/15/65)./3/ Assuming that the new law would go into effect at an early date, the Italians would thus be complying with this directive in advance of the required date (December 31, 1966), by providing national treatment for the films of other EEC countries under the screen quota (Article 18 of the draft Italian law) and by using their "option" to make a corresponding increase in the height of the quota. It was noted that the GATT did not provide a basis for protesting such an action, although the United States had already presented to the EEC Commission arguments against the desirability of such increases, particularly on a "proportional" basis.

/3/Not printed. (Ibid., ECIN 3 EEC)

With regard to the reported new TV screen quota, and possibly also to the increase in the cinema screen quota, Mr. Thomson noted that Italy had undertaken a standstill commitment with respect to restrictions affecting printed films, in the OECD Code of Liberalization of Current Invisible Operations. The United States, he noted, could argue that both measures were inconsistent with this commitment. However, Mr. Thomson added, there was still no agreement in the OECD as to whether the standstill covered screen quotas.

MPEAA Position

In summarizing their views about the bill, the MPEAA representatives made it clear that they were concerned about many of its features, but that they were also highly concerned about safeguarding their companies' high volume of business in Italy and anxious to avoid aggravating the situation unnecessarily.

In view of the political history of the bill, and regardless of Italy's international commitments, the MPEAA regarded it as unrealistic to expect to achieve any change in the bill as reported out by the Parliamentary Commission which would be in a more liberal direction.

They felt, nevertheless, that it would be desirable at this point for the Ambassador to make a high-level approach on the matter, preferably to Corona, the Minister of Tourism and Entertainment. The main idea they would like to see put across would be on the following lines: the Italians would be jeopardizing future cooperative relations in the film field if they should try to go any further along the path of official discrimination against foreign films. The U.S. film industry could reluctantly learn to live with the provisions of the bill as presently drafted, but the Italians could expect "real trouble" from the American side if they should allow this discrimination to go even a single step further, or if--in areas where the authorities have any discretion--they should implement the law in a restrictive manner. The MPEAA representatives also made it clear that they wanted the U.S. position on the legal issues involved to be put "on the record."

Ambassador Reinhardt said he intended to make such a démarche, and that he would consult further with Mr. Hochstetter after they had both returned to Rome. The Ambassador said he had in mind a three-stage presentation:

(a) With regard to the legal issues raised by international agreements, he would make sure that the Italians understood that the U.S. Government does not condone Italy's departures from its commitments.

(b) He would ask Corona to give him a frank statement of Italian intentions with respect to U.S. film interests. E.g., under what circumstances would the Italians invoke the discretionary measures? Do they still place any value on future cooperative relationships between Italy and the United States in the field of motion pictures? Have they decided to revert to general policy of protectionism in this area? Etc.

(c) He would bespeak the cooperation of high Italian officials in preventing matters from getting any worse.

In connection with the last part of this proposed démarche, the Ambassador indicated that he would take into consideration the entire scope of our trade and other interests. He said that, if specific trade injury was being felt, he might make use of any figures which the MPEAA could supply him. However, he had found in dealing with certain other trade issues involving Italy that in some cases you simply could not estimate accurately the extent of such injury. Mr. Fineshriber said that the MPEAA might respond to a previous suggestion from Mr. Thomson that it make a rough estimate of the actual effect upon remittances from Italy to the U.S., attributable to (a) the previous 20% rebate, and (b) the proposed more complex rebate. However, he indicated it would not be possible to say anything definite in this regard, particularly under present favorable market conditions in Italy.

Future possibilities were noted for dealing with this matter in international forums, such as the OECD, in addition to bilateral representations to the Italian authorities. Ambassador Reinhardt felt that, for the time being, it would be advisable to confine U.S. representations to the bilateral channel and to reserve any U.S. actions in international organizations until such time as circumstances appear to call for them.

112. Memorandum of Conversation/1/

Washington, May 24, 1965.

/1/Source: Johnson Library, National Security File, Country File, Italy, Vol. 4. Confidential. Drafted by Seidenman and approved in S on June 2. The memorandum is Part VI of VI. Copies of the other memoranda of conversation are ibid. The discussion was held during a luncheon at the Department of State.

SUBJECT
Italian-US Civil Aviation Differences

PARTICIPANTS

United States
The Secretary
Mr. Neil Seidenman, Interpreter

Italy
Foreign Minister Amintore Fanfani

Foreign Minister Fanfani asked the Secretary if any progress had been made in the area of civil aviation. The Secretary said that we are continuing to study the subject, and, that he thought it would be best to continue to handle the matter through the normal channels on the technical level. Minister Fanfani instantaneously concluded, with the last words of the Secretary, "Yes, with the companies." The Secretary corrected this and said he referred to government technical channels, then added that if some answer can be found to the problem of capacity there would be hope of solving some of the other aspects of the question.

113. Memorandum for the Record/1/

Washington, June 28, 1965.

/1/Source: Department of State, INR Historical Files, 303 Committee Files. Secret; Eyes Only.

SUBJECT
Minutes of the Meeting of the 303 Committee, 25 June 1965

PRESENT
Mr. Bundy, Ambassador Thompson, Mr. Helms, Mr. Vance
Mr. Glenn Fields was present for Item 1.
Mr. Desmond FitzGerald was present for Items 3, 4, 5, 6.
Mr. Frank Friberg was present for Item 7.
Mr. Cord Meyer was present for Item 8.

[Here follows discussion of items 1-6 covering other national programs.]

7. Italy--Covert Action Program in Italy for FY 1966/2/

/2/According to the proposed agenda for the meeting "[less than 1 line of source text not declassified] proposed spending [less than 1 line of source text not declassified] for its covert action program in Italy in FY 1966. Its purpose is to strengthen the center left government. While the program has some new emphasis on 'flanking organizations' it is in general a continuation of policies that have been successful in Italy." (Ibid.)

According to the [text not declassified] proposal to the 303 Committee, June 11:

"The basic political problem to which the FY 1966 program is addressed is that Italy's four-party, center-left coalition Government, which was formed in December 1963, is faced with a profusion of problems which makes it a fragile working partnership. The Italian Communist Party has skillfully exploited the Government's vulnerabilities and has steadily increased its electoral appeal during this period when the vote of the two major coalition partners, the Christian Democrats (CD) and the Socialists (PSI), has declined. A basic premise of the FY 1966 program is that if the strength and unity of the Government coalition can be increased, thus permitting implementation of its program of basic social, economic and administrative reforms, the democratic parties' appeal in the next national election should increase and that of the Communist Party should decline." (National Security Council, Special Group/303 Committee Files, Subject Files: Italy)

The Italian proposal was generally viewed as a "necessary evil" and approved with the following proviso: Mr. Bundy, deploring the chronic failure of the Italian democratic political parties to utilize their own bootstraps, used the term "annual shame" and stated that he felt obliged to advise higher authority of this continuing subsidy. Until such time as the attitude of higher authority is known, final approval remains pending.

[Here follows discussion of item 8.]

114. Memorandum of Conversation/1/

Washington, July 22, 1965, 10:30 a.m.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 7 IT. Limited Official Use. Drafted by Spielman and approved in S on July 27.

SUBJECT
Review of Professor Valletta's Discussions with Kosygin in Moscow

PARTICIPANTS

United States
The Secretary
Mr. Franklin D. Roosevelt, Jr., Director, Office of Economic Opportunity
Mr. Herbert Spielman, WE
Mr. Jose De Seabra, Interpreter

Italy
Professor Vittorio Valletta, President of Fiat
Mr. Carlo Cavalli, Assistant to Professor Valletta
Mr. Vincent A. Garibaldi, Fiat Representative, New York
Mr. Oscar Cox, American attorney for Fiat

In welcoming Professor Valletta, Secretary Rusk said he understood the Professor had been traveling recently, and he would enjoy receiving his impressions. Professor Valletta noted two impressions which had emerged from his discussions with Chairman of Council of Ministers Kosygin in Moscow: First, that Kosygin desired to reduce his defense costs and, with the resulting savings, to shift from the production of armaments and nuclear weapons to more intensive development of consumer goods. Secondly, that with respect to Vietnam, Kosygin had indicated he generally desired a solution but he could not act because he was faced with "independent nations" against which it was difficult to bring pressure; Professor Valletta, who said he had initially raised the Vietnam issue with Kosygin, observed that he understood this to be a reference to Communist China.

The Secretary remarked that the USSR exercises no effective control over the Hanoi regime's actions. Hanoi, in turn, was under pressure from Peiping to achieve military results. This created difficulties for Moscow and also for us in that we had no one with whom to discuss a peaceful solution. The Secretary continued that the Vietnamese issue had become a formidable barrier in US-Soviet relations. Until that problem was solved there would continue to be considerable strain in US-Soviet relations. These remarks, he added, reflected also the recent Harriman-Kosygin discussions,/2/ which conveyed similar impressions on Vietnam to those expressed by Professor Valletta.

/2/See Foreign Relations, 1964-1968, vol. III, Document 59.

Professor Valletta said that in his modest opinion if some form of US-Soviet contact could be continued as a result of the Harriman talks, this would be all to the good. He guessed that Kosygin would like to intervene usefully in the Vietnamese situation. Indeed, Kosygin had accepted the reconvening this month of the Eighteen Nation Disarmament Conference at Geneva. The Secretary interjected that it would be interesting to see what emerged from the current meeting of Communist party leaders in Bucharest, where the Soviet and Chinese leaders would be in contact./3/ The Professor noted that, in any event, it would be well for the United States to continue to retain a position of strength. Agreeing, the Secretary said that if Moscow and Peiping were to come together on the basis of the Soviet thesis of "co-existence" that would be all right, but if, on the other hand, they agreed on Peiping's terms, that would involve very grave dangers not only for the United States but for Europe as well.

/3/July 19-24.

Mr. Cox said he assumed the informal contacts between Valletta and Kosygin would continue in view of the agreement in principle for Fiat to provide technical guidance in automobile production to the Soviet Union. Professor Valletta observed that it was during the discussion of this that Kosygin had expressed the desire to better satisfy the Soviet people's needs for a better life. The Secretary noted we always emphasized to the Russians our mutual "unfinished business" in building our own societies. For example, in the United States we required about a million new classrooms, and that we could accordingly think of better ways to spend $50 billion each year than for defense.

Referring to the Soviet-Fiat agreement in principle to cooperate in automobile production,/4/ Mr. Roosevelt said that Professor Valletta had discussed this with Admiral Raborn at the CIA, with Secretary Connor at Commerce, and Deputy Defense Secretary Vance./5/ The Professor had made clear to them that if Fiat's undertaking with the Soviet Union to construct an automobile factory was not in accord with United States policy, he would disengage Fiat. Mr. Roosevelt felt that Professor Valletta would wish to make the same point to Secretary Rusk. Professor Valletta said this was correct, but he wished to point out that enhancing Soviet automobile production involved important long-range considerations.

/4/On May 4 Fiat and the Soviet Government announced agreement for joint planning and construction of an automobile factory in Togliattigrad. The agreement was signed on August 15.

/5/No record of these conversations has been found.

The Secretary asked Professor Valletta for his impression of the time-table for cooperation between Fiat and the Soviets. The Professor replied that the Moscow talks had only touched on general aspects of the problem, and that he anticipated the USSR would send a mission to Italy to work out more precise details. In essence, Fiat would assist in the construction of a new Soviet automobile plant which would produce from 1000 to 2000 cars per day of the American compact type. In addition, Fiat would help the USSR to modernize existing plants which now turn out about 200,000 cars per year. The Secretary asked whether Fiat would be able to carry out this program itself, or would expect some kind of American participation. Professor Valletta replied that he had told the Soviet officials that if they desired an up-to-date automobile plant, some machinery would be required from the United States. The Secretary then noted that in the broadest sense we were sympathetic toward making more consumer goods available to the Soviet people. Indeed, we were exploring legislation to permit American business to participate more actively in trade with Eastern Europe. However, he wished to add a note of caution concerning possible US participation in Fiat's undertaking with the USSR. He would wish to convey something more precise on this particular point and would be in touch with Professor Valletta after consulting with his colleagues, especially Secretary Connor.

Mr. Cox observed that Secretary Connor had made the same point. Indeed, an officer from Commerce's office of export controls had been present and had indicated that he foresaw no problems. The Soviets would apparently require three to five-year credits, however. The Secretary asked how the Soviets would pay, by increased oil exports to Italy? Professor Valletta noted that the present balance of trade between Italy and the USSR favored the latter. If the automobile project went forward, credit terms would have to be arranged. In setting up a modern automobile industry, the Soviet Union would not only have to utilize their technical resources but would also have to import machinery, perhaps from France, Britain, and Germany, among others.

In concluding the discussion, the Secretary reiterated that we would wish to give this project some thought and would convey our reaction shortly. He added jokingly that perhaps it would help if we could obtain Soviet machinery to destroy old and discarded American automobiles. Laughingly agreeing, Professor Valletta expressed appreciation for his having had the opportunity to discuss his visit to Russia with the Secretary.

115. Letter From Prime Minister Moro to President Johnson/1/

Rome, August 2, 1965.

/1/Source: Johnson Library, National Security File, Special Head of State Correspondence, Italy. No classification marking. The letter is marked "Unofficial Translation."

Dear Mr. President:

Ambassador Harriman has delivered to me your message of July 26th./2/

/2/Not printed. (Ibid.) Harriman visited Rome July 24-25, during a July 8-August 3 trip to Europe. The Embassy reported on his talk with Moro in telegram 229 from Rome, July 26. (Library of Congress, Manuscript Division, Harriman Papers, Special Public Service Files, Kennedy-Johnson, Trip and Mission Files, Europe and Soviet Union 1965)

I wish to thank you warmly for your thoughtfulness in briefing me on the South Vietnam situation through Mr. Harriman: I have much appreciated the fact that you have chosen to add your personal remarks to those of the Ambassador.

The conversation I had here has been very useful to me to improve my knowledge of the issue in the light of new elements. They confirm the reasons for the understanding we have repeatedly expressed for the motivations of the United States's action in Viet Nam. Such action is all the more valuable in as much as it is coupled with offers for a peaceful and honorable solution, constantly and even recently reiterated, and with generous plans aimed at fostering, in the framework of a re-established peace, the welfare of the peoples of South East Asia through economic and social development.

I also share your viewpoint on the advisability of a solidarity, demonstrated also with facts, to an action which encourages the free world to believe in the keeping of one's word and in the failure of violence exerted for the purpose of upsetting freely accepted juridical situations.

I have therefore confirmed to Ambassador Harriman the decision to renew the medical assistance, and I wish to inform you that I have given instructions to examine the possibility of increasing our humanitarian assistance.

Mr. Harriman was accompanied by Ambassador Reinhardt, whom I shall contact for any further consultation, as you kindly suggested.

Please believe me cordially yours

Aldo Moro/3/

/3/Printed from a copy that indicates Moro signed the original.