PROBABLE DEVELOPMENTS IN ITALY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A004100030001-4
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 23, 2016
• Document Release Date: January 18, 2013
• Sequence Number: 1
• Publication Date: November 16, 1954
• Content Type: NIE

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NIE 24-54
16 November 1954
weiverfewits
12EE5
NATIONAL INTELLIGENCE ESTIMATE
NUMBER 24-54
(Supersedes NIE-71 and SE-54)
PROBABLE DEVELOPMENTS IN ITALY
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following organizations participated in the preparation
of this estimate: The Central Intelligence Agency and the
intelligence organizations of the Departments of State, the
Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
INTELLIGENCE ADVISORY COMMITTEE
on 16 November 1954. Concurring were the Special Assistant,
Intelligence, Department of State; the Assistant Chief of
Staff, 0-2, Department of the Army; the Director of Naval
Intelligence; the Director of Intelligence, USAF; and the
Deputy Director for Intelligence, The Joint Staff. The Atomic
Energy Commission Representative to the IAC and the
Assistant to the Director, Federal Bureau of Investigation,
abstained, the subject being outside of their jurisdiction.
DOCUMENT NO.
NO CHANGE 1N CLASS.
DECLASSIFIED
CLASS. CHANGED TO: TS S C
NEXT REVIEW DATE:
AUTH: HR 70-2
DATE: tq mAY'S(REVIEWER. U( JJ 5 5
COPY NO, 208
ASSISTANT DIRECTOR ONE
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CENTRAL INTELLIGENCE AGENCY
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June 1953.
WARNING
This material contains information affecting
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Title 18, USC, Secs. 793 and 794, the trans-
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1000001Pg*
PROBABLE DEVELOPMENTS IN ITALY
THE PROBLEM
To estimate the current situation and probable developments in Italy through
1958.
CONCLUSIONS
1. Italy's effectiveness as a NATO mem-
ber will continue to be limited by its per-
sistent and fundamental economic and
social weaknesses, which Italy is unlikely
by itself to mitigate substantially during
the period of this estimate. The Italian
Communist Party is the largest in West-
ern Europe, and a further growth in Com-
munist-Nenni Socialist strength is prob-
able. However, while the battle against
Communism is far from over, we believe
that the Communists are unlikely to come
to power for the reasons stated below.
2. We believe that the Communists are
unlikely to undertake to seize power
by force. If, however, the Communists
should attempt a coup, we believe that the
government, controlling the public secu-
rity and military forces, almost certainly
would be capable of frustrating the coup.
Its present willingness to do so would be
substantially increased if it were assured
of prompt outside assistance.
3. A government dominated by the Chris-
tian Democrats in coalition with or sup-
ported by other anti-Communist parties
1 This estimate supersedes NIE-71, "Probable
Developments in Italy," dated 31 March 1953 and
SE-54, "The Political Outlook in Italy," dated
30 December 1953.
will almost certainly remain in power
until the next national elections. Such
elections are not now scheduled before
1958, and the Christian Democrats prob-
ably will not call them before then unless
they rate highly their chances of winning
a parliamentary majority or of dealing
the extreme Left an electoral setback.
4. Meanwhile, the Italian Government,
now under moderate left-oriented Chris-
tian Democratic leadership, is likely to
be more vigorous than any previous post-
war government in attempting to imple-
ment economic and social reforms. How-
ever, the obstacles to the actual imple-
mentation of far-reaching reforms are
great, the dimensions of popular discon-
tent wide, and the skill and resources of
the extreme Left formidable. Unless a
wisely conceived program is carried out
on a broad scale against the political,
economic, and social bases of Communist
power and prestige, the government prob-
ably will not be able to reverse the trend
to the extreme Left, and the Left
Bloc's parliamentary representation, now
amounting to 37 percent of the Chamber
of Deputies, would almost certainly in-
crease at the next general election.
-*Apirttlegr 1
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5. We believe that the anti-Communist
parties almost certainly will not permit
the Left Bloc to form a government or
participate in one. Nevertheless, the
power of the Communist and Nenni So-
cialist legislators to obstruct parliamen-
tary action might become so great as to
threaten the functioning of parliamen-
tary democracy. Should this situation
arise, anti-Communist forces would prob-
ably meet it by forming a government
able and willing to carry out drastic re-
pressive measures against the extreme
Left. Such a government would almost
certainly be led by Christian Democrats,
but its program would probably be fur-
ther to the right, since it would depend
for its decisive support upon the rightist
parties.
6. With US assistance Italy has had a
substantial postwar economic recovery.
However, in spite of this achievement, the
average number of unemployed remains
at over two million ? roughly 10 percent
of the working population ? with prob-
ably an equal number underemployed.
The rate of investment, though high, has
been inadequate to reduce the backlog
of unemployment. This situation con-
tinues to constitute Italy's most crucial
economic problem.
7. The political obstacles not only to
carrying out large scale economic pro-
grams but even to implementing the re-
forms already promised are sufficiently
great to make it unlikely that rapid and
substantial progress will be achieved by
the Scelba or probable successor govern-
ments. Assuming no serious internation-
al recession, Italy probably will be able
to maintain economic stability and to
continue the present rate of economic ex-
pansion. However, even over the long
term the unemployment problem prob-
ably will not be greatly mitigated, unless
substantial outside economic aid is avail-
able to assist in financing a long-range
expansion plan.
8. The Italian armed forces at present are
capable of no more than delaying action
in the event of a Soviet attack. However,
the military establishment is slowly but
steadily improving with US aid, and mo-
rale is considered to be good, though the
state of unit training varies widely. Al-
though efforts have been made to remove
Communists from sensitive positions in
the armed forces, there are still a small
number of Communists and Communist
sympathizers in the officer corps, and a
greater proportion among conscripts and
other enlisted men.
9. In the event of war between the West
and the Soviet Bloc, the Italian Commu-
nists, unless the military and security
forces were in a position to promptly sup-
press them, would probably be capable of
widespread sabotage in industry, trans-
portation, and communications, particu-
larly in northern Italy. They might also
be able to seize temporary control of key
areas and installations.
10. Although the popular appeals of neu-
tralism may grow, we believe that they
are unlikely to have a substantial effect
on the pro-Western policies of the Italian
Government. Italy almost certainly will
remain firmly oriented toward the West,
and particularly interested in promoting
Western European integration. It will
continue to rely heavily on US support.
The Trieste settlement almost certainly
will result in some improvement in Italo-
Yugoslav relations, although in the longer
run new frictions may arise out of con-
flicting interests in the Adriatic.
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DISCUSSION
I. INTRODUCTION
11. Italy continues to be confronted with seri-
ous political, economic, and social difficulties.
These persist chiefly because of a poverty in
natural resources, including arable land; the
long-continued failure of Italy's ruling groups
to develop effective institutions and to mar-
shal the national will in order to cope with
the country's problems; and the inability of
Italian postwar governments to act effectively.
Italy's still growing population, now nearly
48,000,000, is larger than that of France, but
its gross national product is only about half
as great. Except for Spain and Portugal,
Italy has the lowest level of living in Western
Europe. Despite notable postwar economic
development, unemployment is large and
many Italians remain virtually destitute.
Among the Western European democracies,
only in Italy does agrarian reform remain a
major national issue.
12. The government's problem is rendered
more difficult by the fact that many social
and political cleavages divide the population.
Class lines remain among the most rigid in
Europe, and the nation is divided by the issue
of clericalism. A major division also exists
between the impoverished South and the con-
siderably more prosperous North. Moreover,
popular feelings of economic insecurity, frus-
tration, and cynicism continue to grow. More
people are demanding fundamental changes
in social relationships and a reinvigoration of
Italian political institutions. In these cir-
cumstances, the failure of Italian postwar
governments to raise popular hopes for im-
provement has resulted in the development of
the largest Communist Bloc vote in Western
Europe, and this vote is slowly but steadily
increasing.
13. A noteworthy weakness of democracy in
Italy lies in the absence of a democratic alter-
native to a government dominated by the
Christian Democrats. The minor center
parties are unable to attract many dissident
voters. With about three-fourths of the So-
cialist voters supporting the pro-Communist
Nenni Party, there is no party on the non-
Communist left (such as the Labor Party in
Britain) to stand as an alternative democratic
government. As a result, leftist parties rep-
resenting pro-Communist solutions now con-
stitute the only significant opposition to a
Christian Democrat-dominated government.
II. POLITICAL SITUATION AND TRENDS
Current Political Situation
14. In the 1948 national elections the Italian
center parties, led by the late Premier De Gas-
pen's Christian Democratic Party and pow-
erfully supported by Catholic Action, the lay
arm of the Church in Italy, won a substantial
victory over the Communist and Nenni Social-
ist Bloc, receiving 62 percent of the popular
vote to 31 percent of the Left Bloc. Subse-
quently, however, the 1951-1952 local elections
reflected a clear shift to the Left and, in the
1953 national elections, the center coalition
received only about half of the popular vote,
and the Communist-Nenni Socialist Bloc 35
percent. Local elections since that time have
indicated further gains for the Communist
Bloc parties. The Monarchists and the Neo-
Fascists obtained about 12 percent of the vote
in 1953, but local elections since then have
shown a weakening of these parties, and some
Christian Democratic recovery.
15. The decline in the center position since
1948 is attributable mainly to the following
factors:
a. In 1948 many persons of highly conserv-
ative and nationalistic leanings were fright-
ened into supporting the Christian Democrats
in a united front against Communism; Czech-
oslovakia had recently fallen to the Commu-
nists and there was fear that Italy might be
next. Gradually, however, fear of a Commu-
nist coup receded, and confidence in the
West's ability to deter external aggression in-
creased. Thus, many who supported the cen-
ter in 1948 have since shifted their allegiance
to the Monarchists and Neo-Fascists.
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b. The failure of the Christian Democrats
significantly to improve social and economic
conditions has stimulated dissatisfactions.
In particular, the continuing high level of
unemployment increased the number of peo-
ple, especially young people, who had no in-
centive to support center governments and
who were attracted by the promises of the
extremists.
c. There has been the normal loss of sup-
port suffered by any party long in power,
magnified by the characteristic antipathy of
Italians for any incumbent government.
Moreover, the Christian Democrats have also
been the target of widespread criticism based
on anticlericalism, resentment of bureaucratic
inefficiency and arrogance, and impressions of
widespread corruption.
d. The "peaceful coexistence" theme of the
Malenkov regime and the abandonment of
militancy by the local Communists have per-
suaded many Italians that there has been a
relaxation of world tensions. Hence, it has
been continually more difficult for the center
coalition to retain popular support by stress-
ing the international and domestic dangers of
Communism.
16. In the most recent general elections, held
in 1953, the center coalition obtained only a
bare parliamentary majority. Owing to dis-
agreements among the center parties, a series
of cabinet crises followed, until in early 1954
Prime Minister Scelba, a Christian Democrat,
finally formed a center party coalition with
Social Democrats and Liberals in the cabinet
and Republicans supporting it from the out-
side. Because of the coalition's extremely
narrow majority in the Parliament,2 any re-
laxation of party discipline within the coali-
tion on a major issue could result in the
government's fall.
17. Establishment of a strong government
has been hindered by factionalism within the
Christian Democratic Party. At the party
congress in Naples in June, 1954, the left wing
of the Christian Democrats, led by Amintore
Fanfani, won overwhelming control of the
The party composition of the Italian Chamber
of Deputies is shown in the appended chart.
party organization, though not of the party's
parliamentary delegation. Although Scelba
continues as premier for the present, the cen-
ter group of the late Premier De Gasperi, long
the dominant faction by virtue of its ability
to moderate between the left and right, has
lost much of its power. Moreover, the influ-
ence of the Pella right wing, which lost sub-
stantial ground within the party at the con-
gress, has waned further, and a split in the
Monarchist Party has virtually eliminated for
the time being the possibility of an effective
Christian Democratic-Monarchist alliance.
The left wing, or Iniziativa Democratica, ap-
pears to have won control of the Christian
Democratic Party principally because of a
growing demand by the party rank and file
for more dynamic social and economic poli-
cies, the organizational ability of the Fanfani
group, and the loss in the 1953 elections of
some right wing strength to the Monarchists
and Neo-Fascists.
18. Ascendancy of the left wing of the Chris-
tian Democrats, with which Scelba previously
has not been closely identified, thus con-
tributes to the internal weakness of the Scelba
government. Because of Fanfani's ability to
control the party organization, Scelba almost
certainly could not retain office in the event
of a serious clash over policies with the Fan-
fani faction, or of a decision by Fanfani to
displace him. At the same time neither
Scelba nor the Fanfani elements can move
too far left too rapidly lest the party be fur-
ther weakened by defections from its right
wing.
Communist Strength and Capabilities
19. Although the membership of the Italian
Communist Party has dropped to an esti-
mated 1.7 million, a decline of over 20 percent
from its postwar peak in 1947-1948, it remains
the largest Communist party in Western Eu-
rope. It is estimated to have a hard core of
nearly half a million. Membership in the
Communist-dominated trade union federation
(CGIL) has also declined from an estimated
6 million in 1947-1948 to about 3.5 million,
but no significant membership losses appear
to have occurred since about 1950, and the
des0110P6f,,
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non-Communist unions have not seriously
threatened Communist domination of organ-
ized labor, which is particularly strong in the
heavy industries, transport, and communica-
tions.
20. Despite these losses in membership, the
electoral appeal of the extreme Left is contin-
uing to improve. The Communists and
their Nenni Socialist allies maintained their
strength in the North in the most recent elec-
tions, and showed a rising trend in the back-
ward South. Political intelligence is scanty
concerning southern Italy, but the region ap-
pears to be becoming politically restive. The
Communists, and the CGIL also, have been
undertaking intensive organizational activi-
ties in the area, which traditionally has been
a Monarchist stronghold. With their strength
in the North fairly stabilized, the Communists
apparently look to the South for the addi-
tional votes they need to capture a popular
majority, though the Christian Democrats
also are improving their organization in the
area.
21. The growing popular support of the ex-
treme Left derives from a number of causes.
The absence of any other effective political
party which attracts protest votes on the left,
the relatively moderate tactics which the local
Communists have pursued, and the new mod-
eration which many Italians see in Soviet
foreign policy increase the Left Bloc's appeal.
In addition, with their high-powered propa-
ganda machine, their energetic and efficient
organization, and their highly skilled leader-
ship, the Communists exploit the numerous
shortcomings of the incumbent administra-
tion, the difficulties of the Italian social and
economic situation, and the consequent
mounting popular sentiment for broad re-
forms in Italian political life and social rela-
tionships.
22. Another important factor in the strength
of the Italian Communist Party is its large
financial resources. In addition to member-
ship dues, voluntary contributions, and Soviet
subsidies, the party obtains financial support
from various Communist-controlled enter-
prises. It realizes considerable profit from
both legal and illegal trade with Soviet Bloc
countries because of the party's control or
ownership of import-export firms. The Com-
munists also own a number of cooperatives
and concessions and, through their con-
trolling influence over local government
administrations, profit from contracting ar-
rangements made on various types of goods
and services.
23. We do not believe that the Communists
are likely to undertake to seize power by force.
It is possible, of course, that a revolutionary
situation might develop, in which the Left
would seek to overthrow the government.
The Communists might also attempt a coup
in the event of a sharp government shift to
the extreme right; particularly if they esti-
mated that this government intended to in-
stitute drastic police action to destroy the
party. Nevertheless, we believe that if a
Communist coup imminently threatened or
was attempted, the government, with its con-
trol of the public security and military forces,
almost certainly would be capable of frustrat-
ing the coup. Its present willingness to do so
would be substantially increased if it were
assured of prompt outside assistance. We be-
lieve that the Communists share this view
and almost certainly would be reluctant to
attempt to seize power.
24. In the event of war between the West and
the Soviet Bloc, the Italian Communists, un-
less the military and security forces were in
a position to promptly suppress them, would
probably be capable of widespread sabotage
in industry, transportation, and communica-
tions, particularly in northern Italy, and
might also be able to seize temporary control
of key areas and installations. Although we
believe that most of the wartime arms caches
of the Communists have been seized, some
consisting primarily of small arms probably
still remain in Communist hands. Moreover,
gun-running to the Italian coast probably
would not be difficult. Soviet operations
would also be aided by Communist espionage
and by some actively disloyal members of the
armed forces.
25. The power of the Communist Party would
be greatly reduced if it lost the support of
the Nenni Socialists, who comprise about
tialiteaT
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three-fourths of the Italian Socialists and con-
tribute over one-third of the electoral strength
of the extreme Left coalition. Although
Nenni's party has been seriously infiltrated by
the Communists, who might be able to retain
control of the party organization even in the
event of Nenni's defection, Nenni himself has
a vast popularity among the Socialist elec-
torate and many of his supporters probably
would follow him. However, we believe that
Nenni is so deeply committed to his present
course that he is unlikely to repudiate his
Communist allies. Accordingly, he would
not be accepted as a member of a Christian
Democratic-dominated government.
Probable Political Trends
26. Over the short term at least, little change
in the present parliamentary alignment of the
non-Communist parties is likely. The Chris-
tian Democratic-dominated coalition, includ-
ing the Liberals, Social Democrats, and Re-
publicans, probably will continue, and so will
the cooperation between the Monarchists and
and the Neo-Fascists. The ,Scelba govern-
ment probably will remain in office through
1954 and possibly until the parliament elects
a new President of the Republic in mid-1955.
27. With Italy's extreme rightists temporarily
disunited as a result of electoral setbacks and
factionalism, and the right wing of the Chris-
tian Democratic Party at least temporarily in
eclipse as a result of the sweeping victory of
the Fanfani left at the last party convention,
the stage appears to be set for a moderate left-
ward swing in Italian domestic policy. By
mid-1955 Scelba himself is likely to be re-
placed by Fanfani, or by a Fanfani candidate,
and other ministerial changes are likely. Al-
though there is some uncertainty as to Fan-
fani's intentions, and he might be willing to
make deals with the Italian right, we believe
it more likely that he will continue his left-
center orientation.
28. The Scelba government, and more espe-
cially a successor government led by Fanfani
or his nominee, is likely to be more vigorous
than any previous postwar governments in
attempting to implement economic and social
6
reforms already legislated or planned. The
coalition parties recognize more clearly than
ever that modest anti-Communist measures
and improved party organization cannot by
themselves undermine the electoral power of
the extreme Left, and that tangible results in
such fields as tax, land, and bureaucratic re-
forms, as well as unemployment relief, are
necessary.
29. However, the obstacles to the actual im-
plementation of far-reaching reforms are for-
midable. The costs of the necessary programs
will seem to the Italian Government to exceed
its economic capabilities. Divisions and rival-
ries within the coalition, and within the Chris-
tian Democratic Party as well, probably will
hamper the application of any resolute pro-
gram. The need to placate right wing Parli-
amentary supporters, who oppose any sub-
stantial modification of existing conditions,
probably will force the leaders into frequent
compromises in order to preserve the govern-
ment's slim majority.
30. National elections are not now scheduled
before 1958, the constitutional limit on the
life of the present Parliament, and they almost
certainly will not be held before the fall of
1955. Between those dates the Cabinet may
pass through periods of instability, which will
evoke demands from the extreme Left and
possibly the right for immediate elections.
However, the initiative for calling elections
will remain with the Christian Democrats by
virtue of their near-majority position in Par-
liament, and they almost certainly will not
call an election before 1958 unless they rate
highly their chances either of winning a Par-
liamentary majority themselves or, in collabo-
ration with other anti-Communist parties, of
dealing the extreme Left an electoral setback.
31. Meanwhile, the government almost cer-
tainly will carry out further harassing meas-
ures against the Communist Party. The gov-
ernment's anti-Communist program will prob-
ably be more thorough and aggressive than
that of any previous postwar government. If
wisely conceived and effectively executed, such
a program would almost certainly hamper the
party's activities substantially and probably
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would result in some reduction in Communist
electoral strength. Many voters who now
support the Communist Bloc for personal
rather than ideological reasons would prob-
ably shift their support to a government which
demonstrated strength and resolution, and
which deprived the Communists of their abili-
ty to provide material benefits for their sup-
porters. On the other hand, indiscriminate
anti-Communist measures which hurt non-
Communists as well probably would provoke
an adverse reaction among some supporters of
the government. In any event, the basic
political appeal of the Left Bloc probably can-
not be substantially reduced as long as the
hope of amelioration of unsatisfactory politi-
cal, economic, and social conditions by a dem-
ocratic regime remains frustrated.
32. At the same time, the Christian Democrats
will make strenuous efforts to improve their
party organization throughout the country.
With a recession in the popularity of Monarch-
ists and Neo-Fascists likely, particularly in
the South, the Christian Democrats may make
limited net gains in electoral support in some
areas, especially if the Vatican supports Cath-
olic unity within the Christian Democratic
Party and the reform program of that party.
33. Unless a wisely conceived program is car-
ried out on a broad scale against the political,
economic, and social bases of Communist
power and prestige, the government probably
will not be able to reverse the trend to the
extreme Left, and the Left Bloc's parliamen-
tary representation, now amounting to 37
percent of the Chamber of Deputies, would al-
most certainly increase at the next general
election.
34. In any event, we believe that the anti-
Communist parties almost certainly will not
permit the Left Bloc to form a government or
permit it to participate in one. Nevertheless,
the power of the Communist and Nenni
Socialist legislators to obstruct parliamentary
action and to capitalize on potential divisions
among the center parties might become so
great as to threaten the functioning of parlia-
mentary democracy. Should this situation
arise, anti-Communist forces would probably
meet it by forming a government able and
7
willing to carry out drastic repressive meas-
ures against the extreme Left. Such a gov-
ernment would almost certainly be led by
Christian Democrats, but its program would
probably be further to the right since it would
depend for its decisive support upon the
rightist parties.
III. PROBABLE ECONOMIC TRENDS
35. Italy is deficient in almost all basic re-
sources save manpower and hydroelectric po-
tential. Over 90 percent of its coal, most of
its oil, half of its iron ore, nearly all of its
textile fibers, and even some of its wheat must
be imported. Thus the Italian economy is
dependent on a high and stable level of foreign
commerce and substantial receipts from tour-
ism, and it is sensitive to international eco-
nomic fluctuations. Indeed Italy's ability to
preserve free institutions may ultimately de-
pend upon the maintenance of a high level of
international trade, and upon the reduction of
restrictions on the international movement of
capital and labor.
36. Despite its inadequate natural resources,
Italy has had a substantial postwar recovery,
achieved with large US assistance. Much
plant and equipment have been replaced and
modernized, new production methods intro-
duced, transport and marketing improved,
and new products and new industries devel-
oped. Gross national product in 1953 was
approximately seven percent above that of
1952. Within a framework of stable price
levels, there were substantial increases in in-
dustrial output, agricultural production, value
of imports and exports, gold and foreign ex-
change receipts, savings deposits, and con-
sumption. In many cases prewar levels were
greatly exceeded. Moreover, there have been
petroleum and natural gas discoveries which
have benefited some industries and consumers,
although their ultimate potential for sub-
stantially reducing Italy's high petroleum and
coal imports has not yet been determined. In
spite of these achievements, the average num-
ber of unemployed remains at over two mil-
lion ? roughly 10 percent of the working
population ? with probably an equal number
ONOMISM
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underemployed. The rate of investment,
though high, has been inadequate to reduce
the backlog of unemployment. This situation
continues to constitute the most crucial prob-
lem of the Italian economy.
37. Italy's economic problems are intensified
by various institutional weaknesses, notably:
(a) the inefficient operations of numerous
state-owned productive enterprises, which
were inherited from the fascist era but never
adequately reorganized; (b) large-scale state
subsidization and protection of inefficient
private enterprises; (c) the forced retention
of excess workers on farm, factory, and gov-
ernment payrolls; (d) the adverse effects on
the price structure and on innovation in new
business initiatives resulting from monopo-
listic business organization and restrictive
practices; and (e) an inefficient tax system
which, together with large-scale tax evasion,
limits the government's ability to mobilize
resources by noninflationary means. These
?factors have made it more difficult for Italy
to take full advantage of the economic oppor-
tunities arising from its substantial postwar
technological progress. Corrective measures
would require a strong and efficient govern-
ment and would involve painful readjust-
ments. The ascendancy within the Christian
Democratic Party of left-center elements, as
well as the pivotal role played by the Social
Democrats since the last election, enhance the
chances for needed reforms. The Scelba gov-
ernment has pledged itself to policies of eco-
nomic development and reform, increased em-
ployment, and financial stability. Analytical
work is going forward on the problems in-
volved in a 10 year economic expansion pro-
gram designed to alleviate unemployment by
creating four million jobs over that period.
38. Nevertheless, we believe that political ob-
stacles to achieving broad reforms, and to
carrying out comprehensive economic plans
which would require large-scale investment,
probably are sufficiently great to make it un-
likely that rapid and substantial progress will
be achieved by the Scelba or probable suc-
cessor governments. Important right wing
elements within the coalition, whose support
the government needs, oppose many reforms.
Moreover, these groups fear that radical pro-
grams and large-scale investment would gen-
erate inflationary pressures and dislocations
which would be a greater threat to political
and social stability than the failure to in-
crease the rate of economic expansion. In
addition, the government itself, in the last
analysis, probably will make large-scale ex-
pansion policies contingent on the receipt of
foreign aid and, if this aid does not become
available, will not be likely to increase its
investment expenditures sufficiently to carry
through these policies.
39. Assuming no serious international reces-
sion, Italy will probably be able to maintain
economic stability and continue the present
rate of economic expansion. However, even
over the long term the unemployment prob-
lem probably will not be' greatly 'mitigated
unless substantial outside economic aid is
available to assist in financing a long-range
expansion plan.
IV. PROBABLE MILITARY TRENDS
40. Italy's military establishment is slowly
but steadily improving with US aid, and
morale is considered to be good. Individual
training is generally good, while the status of
unit training varies from fair to excellent.
Although the services are predominantly loyal
to the government, Communist infiltration of
the Air Force, the Army, and to a lesser extent
the Navy, makes probable some sabotage and
harassment in the event that Italy were to
enter a general war against the Soviet Bloc.
Although efforts have been made to remove
Communists from sensitive positions in the
armed forces, there are still a small number
of Communists and Communist sympathizers
in the officer corps, and a greater proportion
among conscripts and other enlisted men.
41. The Army consists of 10 infantry and
three armored divisions and five Alpine bri-
gades, as well as numerous independent units.
The strength of the Army will probably re-
main about the same, varying roughly from
225,000 to 275,000 depending on the number
of conscripts in service. Modernization of
weapons has been extensive, and deficiencies
in equipment eventually may be overcome
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through US aid. Although it is now capable
of only a limited defensive role, if the Army
continues to improve at its present rate it
will probably be able to engage in sustained
combat by 1958.
42. Within the past two years the Air Force
has achieved substantial progress, particu-
larly in equipment, training, and combat
readiness. Its strength is about 46,000 offi-
cers and men (including about 3,500 pilots) ,
with some 400 jet fighters. Of these, some
225 F-84G fighters are assigned to nine
fighter-bomber squadrons, which are currently
combat-ready. Nevertheless, serious deficien-
cies still exist in the Air Force, especially in
air defense and maintenance capabilities. By
1957-1958 the Italian Air Force probably will
have made additional progress in solving
these deficiencies; nevertheless, some units
will continue to remain below SHAPE mini-
mum readiness standards and the over-all
numbers of men and aircraft probably will
not be increased appreciably. The most sig-
nificant advance will probably occur in air
defense, as existing interceptor squadrons are
re-equipped and an operational aircraft con-
trol and warning system is developed.
43. The Italian Navy of about 39,000 officers
and men is being reconstituted with US aid
primarily as a small-ship defensive force.
This program includes modernization of older
ships, acquisition of ships from the US, and
construction of new vessels in Italy. Its com-
bat effectiveness is at present limited by de-
ficiencies in training and equipment and by
lack of modern submarines and effective anti-
submarine warfare aviation. In the event of
general war, however, it could contribute
combat elements which could perform anti-
submarine, minesweeping, and escort and
patrol duties at acceptable standards.
44. With respect to fulfillment of NATO com-
mitments for 1954 and 1955, the Army is
meeting its numerical force goals, but defi-
ciencies in equipment, training, qualified
active and reserve personnel, and logistical
support must be overcome before even SHAPE
minimum readiness standards are reached.
At present the Italian Air Force is not fulfill-
ing its NATO commitments, and the chances
9
for achieving 1955 NATO provisional goals are
slight. Currently, the Italian Navy could
not fully carry out its assigned NATO mis-
sions, because one-third of the NATO-com-
mitted ships are either undergoing major
modernization or are under construction.
Because of anticipated delays in the delivery
of new vessels, the Navy will probably fall
short of units scheduled under the 1955 NATO
provisional D+180 goals.
45. Lack of funds is the chief barrier to
attainment of NATO goals. Italy has more
than sufficient manpower and industrial
capacity to meet these objectives and, in addi-
tion, to produce equipment for its allies.
However, in view of the government's em-
phasis on financing economic and social pro-
grams and its probable unwillingness to
undertake what it would consider to be infla-
tionary financing, we believe that Italy will
reduce even its present defense outlay.
46. Italy has many competent scientists and
its theoretical research is both good and well
organized, but its applied research and devel-
opment is poorly financed and severely lim-
ited. Owing primarily to inadequate funds,
Italy's research facilities and scientific and
technological manpower probably will not con-
tribute significantly to Western military or
economic strength in the near future. At
present Italy is not engaged in research or
development in the field of military applica-
tion of atomic energy, although it has dis-
played interest in peaceful uses.
V. FOREIGN POLICY TRENDS
47. Italy's current foreign policy objectives
are to: (a) obtain foreign economic assistance,
secure outlets for excess population through
emigration, and promote European integra-
tion, all primarily as contributing toward a
solution of Italy's pressing economic and
social problems; (b) improve Italy's status
and prestige in world affairs; and (c) increase
Italian influence in the Adriatic.
48. However, Italy's ability successfully to
take the initiative on any important inter-
national questions is limited, and the Italian
Government recognizes that its objectives can
be realized only if Italy is a part of a Western
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PARTY SUPPORT OF THE ITALIAN GOVERNMENT
p?-?? o''''?c)a4s
50 060?
-
(
13569 11-54
ee
?Ts:
5)-1*
10 MARCH 1954 .94.
L
CENTER caIBERALSl 04,
0.8% 2.5%
Voted for Scelba Government
Voted against Scelba Government
CHAMBER OF DEPUTIES ? 590 SEATS
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-
SEe'
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