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SECRET to the Government they will increase labor agitation and strikes, attempting to discredit the present government as lacking working-class representation and as sub- servient to US imperialism. The USSR and the Italian Communist Party will probably fail to attain their objectives within the near future. The failure of Italian economy based on non-Soviet-controlled markets, however, would compel Italy to turn to the Soviet economic sphere. In this connection, the Italian economy, starting in 1949, will be partially linked to the USSR in the satisfaction of reparations. More im- mediately the USSR, because of an estimated 2 million tons of exportable surplus wheat for the winter 1947-1948, is in a position to bolster Italian Communist prestige at an opportune time before the spring 1948 national elections. Lastly there is also the possibility that the USSR may further its interests in Italy by impressive support of Italian claims during the current Big Four discussions of the final disposition of the prewar Italian African colonies.* 5. WESTERN POWERS. a. United Kingdom. After the Italian surrender of 8 September 1943, the question of Italy's future government became of particular concern to the UK; and through Prime Minister Churchill the UK favored the political forces working for the retention of the House of Savoy. This policy caused considerable resentment among anti-Fascist and re- publican political groups in Italy - this opposition to the apparent UK policy of po- litical intervention was accentuated by Churchill's veto of Count Sforza's nomination as Foreign Minister in the Bonomi Cabinet of 9 June 1944. The Italian position was made clear when the electorate voted for a republic in preference to a monarchy by a majority of approximately two million votes on 2-3 June 1946. Italians are still bitter toward the UK because of (a) the latter's postwar occupation of Italy and its former African colonies, (b) the midsummer 1947 British action of blocking the dollar convertibility of vitally needed sterling credits, and (c) the slow British forgiveness of the Fascist war. Hence, the current UK campaign to restore traditional friendship with the Italian people faces considerable difficulties. The UK, particularly since the proclamation of the Truman Doctrine (12 March 1947), has followed the lead of the US policy toward Italy. Not only friendly diplomatic relations but also trade relations have been renewed. More important from the Italian point of view, however, is the official UK policy of favoring considera- tion of revision of the Italian peace terms. But in this connection Italy is pessimistic about UK's support of Italian claims to the prewar African colonies. b. France. Despite close cultural and racial ties, France and Italy have often strained or broken relations because of various conflicts of their territorial and economic interests. Since World War II Italian public opinion has been unfavorably impressed by France's collaboration in the draft of punitive peace terms, particularly the clauses * On 16 February, the USSR recommended the return to Italy, under temporary trusteeship, of the prewar Italian colonies in Africa. SECRET III-6

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    "ocrText": "SECRET\nto the Government they will increase labor agitation and strikes, attempting to\ndiscredit the present government as lacking working-class representation and as sub-\nservient to US imperialism. The USSR and the Italian Communist Party will probably\nfail to attain their objectives within the near future. The failure of Italian economy\nbased on non-Soviet-controlled markets, however, would compel Italy to turn to the\nSoviet economic sphere. In this connection, the Italian economy, starting in 1949,\nwill be partially linked to the USSR in the satisfaction of reparations. More im-\nmediately the USSR, because of an estimated 2 million tons of exportable surplus\nwheat for the winter 1947-1948, is in a position to bolster Italian Communist prestige\nat an opportune time before the spring 1948 national elections. Lastly there is also\nthe possibility that the USSR may further its interests in Italy by impressive support\nof Italian claims during the current Big Four discussions of the final disposition of\nthe prewar Italian African colonies.*\n5. WESTERN POWERS.\na. United Kingdom.\nAfter the Italian surrender of 8 September 1943, the question of Italy's future\ngovernment became of particular concern to the UK; and through Prime Minister\nChurchill the UK favored the political forces working for the retention of the House\nof Savoy. This policy caused considerable resentment among anti-Fascist and re-\npublican political groups in Italy - this opposition to the apparent UK policy of po-\nlitical intervention was accentuated by Churchill's veto of Count Sforza's nomination\nas Foreign Minister in the Bonomi Cabinet of 9 June 1944. The Italian position was\nmade clear when the electorate voted for a republic in preference to a monarchy by\na majority of approximately two million votes on 2-3 June 1946.\nItalians are still bitter toward the UK because of (a) the latter's postwar\noccupation of Italy and its former African colonies, (b) the midsummer 1947 British\naction of blocking the dollar convertibility of vitally needed sterling credits, and (c)\nthe slow British forgiveness of the Fascist war. Hence, the current UK campaign\nto restore traditional friendship with the Italian people faces considerable difficulties.\nThe UK, particularly since the proclamation of the Truman Doctrine (12\nMarch 1947), has followed the lead of the US policy toward Italy. Not only friendly\ndiplomatic relations but also trade relations have been renewed. More important\nfrom the Italian point of view, however, is the official UK policy of favoring considera-\ntion of revision of the Italian peace terms. But in this connection Italy is pessimistic\nabout UK's support of Italian claims to the prewar African colonies.\nb. France.\nDespite close cultural and racial ties, France and Italy have often strained or\nbroken relations because of various conflicts of their territorial and economic interests.\nSince World War II Italian public opinion has been unfavorably impressed by\nFrance's collaboration in the draft of punitive peace terms, particularly the clauses\n* On 16 February, the USSR recommended the return to Italy, under temporary trusteeship,\nof the prewar Italian colonies in Africa.\nSECRET\nIII-6"
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