NIE 24-54, "PROBABLE DEVELOPMENTS IN ITALY"

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A004100030016-8
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 36
• Document Creation Date: December 23, 2016
• Document Release Date: January 18, 2013
• Sequence Number: 16
• Publication Date: November 12, 1954
• Content Type: MEMO

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CENTRAL INTELLIGENCE AGENCY
12 November 1954
MEMORANDUM FOR THE INTELLIGENCE ADVISORY COMMITTEE
SUBJECT: NIE 24-54, "Probable Developments in Italy"
1. The attached draft estimate has been approved by the
Board of National Estimates pursuant to consideration by the
IAC representatives.
2. This estimate has been placed on the agenda of the
IAC meeting scheduled for 10:45 on Tuesday, 16 November 1954.
Distribution "A"
A)
PAUL A. BOREL
Deputy Assistant Director
National Estimates
DOCUMENT NO. _
NO CH,V !-!?1 !
CLASS. cL TO: TS S
NEXT REV;E:',',1 DATE:
AUT-: HR 70-2
DATE:(5A6L____? REV!EVVE-.-R:
f ?
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CENTRAL INTELLIGENCE AGENCY
10 November 1954
SUBJECT: NIE 24-54: 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 member will continue to be
limited by its persistent and fundamental economic and social weak-
nesses, which Italy is unlikely by itself to mitigate substantially
during the period of this estimate. Although the Italian Communist
This estimate supersedes NIE-71, "Probable Outlook for Italy,"
dated 31 March 1953 and SE-54, "The Political Outlook in Italy,"
dated 30 December 1953.
Pow
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Party is the largest in Western Europe, and a further growth in
Communist-Nenni Sooialist strength is probable, we believe that the
Communists are unlikely to come to power.
2. 'Tie 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
dependable public security and military forces, almost certainly
would be able to frustrate the coup. Its willingness to do so
would be substantially increased if it were assured of prompt out-
side assistance.
3. Some form of coalition government dominated by the
Christian Democrats will almost certainly remain in power, at least
until the next national elections. Such elections are not now
scheduled before 1958, and the Christian Democrats probably 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.
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111 IP
L. Meanwhile, the Italian Government, now under moderate
left-oriented Christian Democratic leadership, is likely to be
more vigorous than any previous postwar government in attempting
to implement economic and social reforms. However, the obstacles
to the actual implementation of far-reaching reforms are great,
the dimenstions of popular discontent wide, and the skill and
resources of the extreme Left formidable. Unless the postwar
pace of economic growth and reform is accelerated, and a wisely co
conceived program is carried out on a broad scale against the
bases of Communist political power and prestige, the government
probably will not be able to reverse the trend to the extreme
Left, and the Left Bloc is parliamentary representation, now
amounting to 37% of the Chamber of Deputies, would almost
certainly increase at the next general election.
5. However, we believe that the anti-Communist parties
almost certainly will not permit the Left Bloc to form a govern-
ment or participate in one. Nevertheless, thepower of the
Communist and Nenni Socialist legislators to obstruct parliamen-
tary action might become so great as to threaten the functioning
of parliamentary democracy. Should this situation arise, anti-
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Communist forces would probably meet it by forming a government
able and willing to carry out drastic repressive measures a
against the extreme Left. Such a government would almost certain-
ly be lef 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.
6. With US assistance Italy has had a substantial poet-
war 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 probably
an equal number underemployed. The total of unemployed is slow-
ly growing and the rate of investment, though high, has been
inadequate to reduce the backlog of unemployment. This situation
continues to constitute Italy's most crucial economic problem.
7. The political obstacles not only to carrying out large
scale economic programs but even to implementing the reforms already
promised are sufficiently great to prevent rapid and substantial
progress by the Scelba or likely successor governments. Assuming
WOW
4
NINO
"AllRIR
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no serious international recession, Italy probably will be able
to maintain economic stability and to continue the present rate
of economic expansion. However, the chances are that even over
the long term the unemployment problem will not be greatly mitigated,
unless substantial outside economic aid is available to assist in
financing a long range expansion plan.
8. The Italian armed forces at present are capable of no
more than a short delaying action in the event of a Soviet attack.
However, the military establishment is slowly but steadily improv?
ing with US aid, and morale is considered to be good, though the
state of unit training varies widely. 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.
9. In the event of war between the Test and the Soviet Bloc
the Italian Communists, unless the military and security forces
were in a pcsition to promptly suppress them, would probably be
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111,
capable of widespread sabotage in industry, transportation, and
communications, particularly in northern Italy. They might
also be able to seize temporary control of key areas and installa-
tions.
10. Although the popular appeals of neutralism 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 Viestern European in-
tegration. It will continue to rely heavily on US support.
The Trieste settlement almost certainly will result in some
improvement in Italo-Yugoslav relations.
DISCUSSION
I. INTRODUCTION
11. Italy continues to be confronted with serious political,
economic, and social difft)ulties. These persist chiefly because
of a poverty in natural resources, including arable land; the
6 -
41INITEST
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111 1111
.40Nt!Itti"
long-continued failure of Italy's ruling groups to develop
effective institutions and to marshal 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 slowly increas-
ing, and a large number of Italians remain virtually desititute.
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,
end the nation is divided by the issue of clericalism. A major
division also exists between the impoverished South and the
considerably more prosperous North. Moreover, popular feelings
economic
of/insecurity, frustration, and cynicism continue to grow. More
people are demanding fundamental changes in social relationships
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mop
and a reinvigoration of Italian political institutions. In
these circumstances, the failure of Italian postwar governments
to raise popular hopes for improvements 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 alternative 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
Socialist 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 representing pro-Communist solutions now
constitute the only significant opposition to a Christian Democrat-
dominated government.
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low
II. POLITICAL SITUATION AND TRENDS
A. Current Political Situation
14. In the 1948 national elections the Italian center parties,
led by the late Premier De Gasperits Christian Democratic Party and
powerfully supported by Catholic Action, the lay arm of the Church
in Italy, won a substantial victory over the Communist and Nenni
Socialist bloc, receiving 62 percent of the popular vote to 31 per-
cent for the Left Bloc. Subsequently, 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 attri-
butable mainly to the following factors:
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mor
a. In 1948 many persons of highly conservative and
nationalistic leanings were frightened into sup-
porting the Christian Democrats in a united front
against Communism; Czechoslovakia had recently
fallen to the Communists and there was fear that
Italy might be next. Gradually, however, fear of
a Communist coup receded and confidence in the
West's ability to deter external aggression in-
creased. Thus, many who supported the center in
1948 have since shifted their allegiance to the
Monarchists and Ne0 -Fascists.
b. The failure of the Christian Democrats signi-
ficantly to improve social and economic con-
ditions has stimulated dissatisfactions. In
particular, the continuing high level of unem-
ployment increased the number of people,
especially young people, who had no incentive
to support center governments and who were
attracted by the promises of the extremists.
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11,
c. There has been the normal loss of support suf-
fered 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 im-
pressions of widespread corruption.
d. The "peaceful coexistence" theme of the Malenkov
regime, and the abandonment of militancy by the
local Commununists have persuaded 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 stressing the international and domestic dan-
gers of Communism.
16. In the most recent general elections, held in 1953, the
center coalition obtained only a bare parliamentary majority.
Owing to disagreements among the center parties, a series of
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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 outside. Because of
the coalition's extremely narrow majority in the Parliament,*
any relaxation of party discipline within the coalition 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
The party composition of the Italian Chamber of Deputies is
shown in Annex A.
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control of the party organization, though not of the party's
parliamentary delegation. Although Scelba continues as premier
for the present, the center 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. More-
over, the influence of the Pella right wine, which lost sub-
stantial ground within the party at the congress, has waned
further, and a split in the Monarchist Party has virtually eli-
minated for the time being the possibility of an effective
Christian Democratic-Monarchist alliance. The left wing, or
Iniziativa Democratica, appears to have won control of the
Christian Democratic Party principally because of a growing de-
mand by the party rank and file for more dynamic social and eco-
nomic policies, the organizational ability of the Fanfani group,
and the loss in the 1953 elections of some right wing strength
to the Monarchst-, ad Neo-Fascists.
18. Abona0ancy of the left wing of the Christian Democrats,
with which Sc11a, previously has not leen closely identified,
thus contributes to the internal weakness of the Scelba government.
Because of Fanfani's ability to control the party organization,
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AIM?
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Scelba almost certainly could not retain office in the event of
a serious clash over policies with the Fanfani 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 ra-
pidly lest the party be further weakened by defections from its
right wing.
B. Communist Strength and Capabilities
19. Although the membership of the Italian Communist Party
has dropped to an estimated 1.7 million, a decline of over 20 per-
cent from its postwar peak in 19),k7-1948, it remains the largest
Communist party in Western Europe. It is estimated to have a
hard core of nearly half a million. Membership in the Communist-
dominated trade union federation (CGIL) 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 non-Communist unions have not seriously threatened
Communist domination of organized labor, which is particularly
strong in the heavy industries, transport, and communications.
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,40001110
20.. Despite these losses in membership, tbetoeutdencec
iponsoacaustmotbefbcthe electoral appeal of the extreme left is
continuing to improve. The Communists and their Nenni Socialist
allies maintained their strength in the North in the most recent
elections, and showed a rising trend in the backward South.
Political intelligence is scanty concerning the Italian South
but the region appears to be becoming politically restive. The
Communists, and the CGIL also, have been undertaking intensive
organizational activities in the area, which traditionally has
been a Monarchist stronghold. With their strength in the North
fairly stabilized, the Communist apparently look to the South for
the additional votes they need to capture a popular majority,
though the Christian Democrats also are improving their organi-
zation in the area.
21. The growing popular support of the extreme 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 pur-
sued, and the new moderation which many Italians see in Soviet
foreign policy increase the Left Bloc's appeal. In addition, with
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their high-powered propaganda machine, their energetic and
efficient organization, and their highly skilled leadership,
the Communists exploitthe numerous shortcomings of the incumbent
administration, the difficulties of the Italian social and eco-
nomic situation, and the consequent mounting popular sentiment
for broad reforms in Italian political life and social relation-
ships.
22. Another important factor in the strength of the
Italian Communist Party is its large financial resources. In
addition to membership dues, voluntary contributions, and Soviet
subsidies, the party obtains financial support from various
Communist-controlled enterprises. It realizes considerable pro-
fit from both legal and illegal trade with Soviet Liao countries
because of the party's control or ownership of import-export
firms. The Communists also own a number of cooperatives and con-
cessions and, through their controlling influence over local
government administrations, profit from contracting arrange-
ments made on various types of goods and services.
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111
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 estimated that this
government intended to institute drastic police action to destroy
the party. Nevertheless, we believe that if a Communist coup
imminently threatened or was attempted, the government, with its
control of the dependable public security and military forces,
almost certainly would be able to frustrate the coup. Its
willingness to do so would be substantially increased if it were
assured of prompt outside assistance. Moreover, we believe that
the Communists share this view and almost certainly would be re-
luctant to attempt to seize power.
24. In the event of war between the West and the Soviet
Bloc the Italian Communists, unless the military and security
forces were in a position to promptly suppress them, would
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probably be capable of widespread sabotage in industry, trans-
portation, and communications, 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 disaffections in the armed
forces.
25. The power of the Communist Party would be greatly re-
duced if it lost the support of the Nenni Socialists, who
c4mprise about three-fourths of the Italian Socialists and con-
tribute over one-third of the electoral strength of the extreme
Left coalition. Although Nennits party has been seriously
infiltrated by the Communists, who might be able to retain con-
trol of the party organization even in the event of Nennils
defection, Nenni himself has a vast popularity among the
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Socialist electorate 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.
C. 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 Christian Democratic-dominated coalition, including
the Liberals, Social Democrats, and hepublicans, probably will
continue, and so will the cooperation between the Monarchists and
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441110rells.
Neo-Fascists. The Scelba government 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 Christian 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 leftward swing in Italian domestic policy. By mid-1955
Scelba himself is likely to be replaced by Fanfani, or by a
Fanfani candidate, and other ministerial changes are likely.
Although there is some uncertainty as to Fanfani'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 especially a successor
government led by Fanfani or his nominee, are likely to be more
vigorous than any previous postwar governments in attempting to
implement economic and social reforms already legislated or
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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 reforms, as well as unemployment
relief, are necessary.
29. However, the obstacles to the actual implementation of
far-reaching reforms are formidable. The costs of the necessary
programs will seem to the Italian Government to exceed its
economic capabilities. Divisions and rivalries within the coali-
tion, and within the Christian Democratic Party as well, probably
will hamper the application of any resolute program. The need
to placate right ming Parliamentary supporters, who oppose any
substantial modification of existing conditions, probably will
force the leaders into frequent compromises in order to preserve
the government's slim majority.
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arylow
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AWN'
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
Parliament, and they almost certainly will not call an election
before 1958 unless they rate highly their chances either of
winning a Parliamentary majority themselves, or in collaboration
with other anti-Communist parties, of dealing the extreme Left
an electoral setback.
31. Meanwhile, the government almost certainly will carry
out further harassing measures against the Communist party.
The government's anti-Communist program will probably be more
thorough and aggressive than that of any previous postwar govern-
ment. If wisely conceived and effectively executed, such a
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program would almost certainly hamper the Party /s activities
substantially and probably would result in some reduction in
Communist electoral strength. Many voters who now support
the Communist Bloc for personal rather than ideological
reasons, would probably shift their support to a government which
demonstrated strength and resolution, and which deprived the
Communists of their ability tO provide material benefits for
their supporters. 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 cannot be substantially reduced as long as
chronic massive unemployment exists and the hope of eventual
amelioration by a democratic 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 Monarchists
and Neo -Fascists likely, particularly in the south, the Christian
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qi,
Democrats may make limited net gains in electoral support in some
areas, especially if the Vatican supports Catholic unity within
the Christian Democratic Party and the reform program of that
party.
33. Unless the postwar pace of economic growth and reform
is accelerated, and a wisely conceived program is carried out Cla
a broad scale against the bases of Communist political power and
prestige, the government probably will not be able to reverse
the trend tc the extreme Left, and the Left Bloc's parliamentary
representation, now amounting to 37% of the Chamber of Deputies,
would almost 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 govern-
ment or permit it to participate in one. Nevertheless, the power
of the Communist and Nenni-Socialist legislators to obstruct par-
liamentary action and to capitalize on potential divisions among
the center parties might become so great as to threaten the
functioning of parliamentary democracy. Should this situation
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iligare"
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arise, anti-Communist forces mould probably meet it by forming
a government able and milling to carry out drastic repressive
measures against the extreme Left. Such a government would
almost certainly be led by Christian Damocrats, 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 resources save
manpower and hydroelectric potential. Over 90 percent of its
coal, most of ibs oi.i half of its iron ore, nearly all of its
textile ftbars, and even some of its wheat must be imported. Thus,
the Italian economy is dependent on a high and stable level of
foreign comm3ree and substantial receipts from tourism, and it is
sensitive to lnernational economic fluctuations, Indeed Italy's
ability to preserve free institutions may ultimately depend 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.
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Much plant and equipment have been replaced and modernized, new
production methods introduced, transport and marketing improved,
and new products and new industries developed. 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 industrial output, agricultural production, value of
imports and exports, gold and foreign exchange receipts, savings
deposits, and consumption. In many cases prewar levels were greatly
exceeded. Moreover, there have been petroleum and natural gas dis-
coveries which have benefited some industries and consumers, al-
though their ultimate potential for substantially reducing Italy's
high petroleum and coal imports has not yet been determined. In
spite of these achievements, the average number of unemployed re-
mains at over two million -- roughly 10 percent of the working
population -- with probably an equal number underemployed. The
total of unemployed is slowly growing as the economy fails to
absorb the entire annual increment of young workers to the labor
force. The rate of investment, though high, has been inadequate
to reduce the backlog of unemployment. This situation continues to
constitute the most crucial problem of the Italian economy.
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37, Italy's economic problems are intensified by various
institutional weaknesses, notably: (a) the inefficient operations
of numerous state-owned productive enterprises, which were in-
herited 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 government payrolls; (d) the adverse effects
tn the price structure and on innovation in new business initiatives
resulting from monopolistic 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 Tactors have
made it more 'U.fficult for Italy to take full advantage of the
economic oppoties ariSi g from its substantial postwar techno-
logical progress. Corrective measures would require a strong and
efficient government and would involve painful readjustments. The
ascendancy within the Christian Democratic Party of left-center
elements, as weal as the pivotal role played by the Social Demo-
crats since the last election, enhance the chances for needed re-
forms. The Seelba government has pledged itself to policies of
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economic development and reform, increased employment, and financial
stability. Analytical work is going forward on the prublems involved
in a 10 year economic expansion program designed to alleviate un-
employment by creating four million jobs over that period.
38. Nevertheless, we believe that political obstacles to
achieving broad reforms, and to carrying out comprehensive economic
plans which would require large-scale investment, probably are suf-
ficiently great to prevent rapid and substantial progress by the
Scelba or likely successor governments. Important right wing
elements within the coalition, whose support the government needs,
oppose many reforms. Moreover, these groups fear that radical
programs and large-scale investment would generate inflationary
pressures and dislocations which would be a greater threat to
political and social stability than the failure to increase the
rate of economic expansion. In addition, the government itself,
in the last analysis, probably will make large-scale expansion
policies contingent on the receipt of foreign aid and, if this
aid does not become available, it will not be likely to increase
its investment expenditures sufficiently to carry through these
policies.
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39. Assuming no serious international recession, Italy
will probably be able to maintain economic stability and continue
the present rate of economic expansion. However, the chances
are that, even over the long term the unemployment problem will
not be greatly mitigated, unless substantial outside economic
aid is available to assist in financiug 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. In-
dividual 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 enters a
general mar 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.
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aisomor
41. The Army consists of 10 infantry and three armored di-
visions and five Alpine brigades, as well as numerous independent
units. The strength of the Army will probably remain 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 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. Mthin the past two years the Air Force has achieved
substantial progress, particularly in equipment, training, and
combat readiness. Its strength is about 46,000 officers 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 deficiencies 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 minimum readiness standards and the over-all
=hers of men and aircraft probably will not be increased
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IIP
appreciably. The most significant advance will probably occur
in air defense, as existing interceptor squadrons are re-
equipped and an operational aircraft control 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 de-
fensive force. This program includes modernization of older
ships, acquisition of ships from the US, and construction of new
vessels in Italy. Its combat effectiveness is at present limited
by deficiencies in training and equipment and by lack of modern
submarines and effective antisubmarine warfare aviation. In the
event of general war, however, it could contribute combat elements
which oould perform antisubmarine, minesweeping, and escort and
patrol duties at acceptable standards.
44. Italy probably will not fully meet its NATO commitments
for 1954 and 1955. Quantitatively the Army is meeting its NATO
force goals, but deficiencies in equipment, training, qualified
active and reserve personnel, and logistical support must be
overcome before even SHAPE minimum readiness standards are reached.
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41Fgailifflr'
At present the Italian Air Force is not fulfilling its NATO com-
mitments, and the chances for achieving 1955 NATO provisional goals
are slight. Currently, the Italian Navy could not fully carry out
its assigned NATO missions, because one-third of the NATO-committed
ships are either undergoing major modernization or are under con-
struction. 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 addition, to produce
equipment for it .1lios. However, in view of the government's
emphasis on economic and social programs and its probable
unwillingness to undertake what it would consider to be inflationary
financing, we believe that Italy will reduce even its present de-
fense outlay.
46. Italy has many competent scientists and its theoretical
researchfisboth good and well organized; however, its applied
research and development is poorly financed and severely limited.
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111,
iggefer
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 application of atomic
energy, although it has displayed interest in its peaceful uses.
V. FOREIGN POLICY TRENDS
47. Italy's current foreign policy objectives are to
(a) obtain foreign economic assistance, secure outlets for ex-
cess population through emigration, and promote European inte-
gration, 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 its influence in
the Adriatic.
48. However, Italy's ability successfully to take the
initiative on any important international questions is
limited, and the Italian Government recognizes that its objectives
can be realized only if Italy is a part of a Western coalition
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IIP
supported by the US. Through membership in NATO and Western
European Union Italy hopes not only to obtain greater military
security and avoid war, but Also to achieve its other foreign
policy objectives. In general, the Italians consistently have
supported all moves toward greater European integration.
49. Italy's adherence to NATO and to European institutions
is supported by all center political parties and by the Vatican.
Even a rightist and nationalist government would probably remain
aligned with the Western coalition. Although the popular appeals
of neutralism may grow, we believe that they are unlikely to have
a substantial effect on the policies of the Italian Government,
which almost certainly will remain firmly oriented toward the
7:lest for the foreseeable future. Italy almost certainly will
remain attached to NATO and Western European Union, and its
policies toward the Soviet Bloc and West Germany will closely
parallel those of the US. While Italy will seek greater trade
with the Soviet Bloc, it will not oppose US leadership on
questions of trade control to the same degree that may be expected
from France and the UK.
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? ?
SinaiNeW
50. Although most Italians almost certainly are reconciled
to the loss of their colonies, Italy will probably continue its
efforts to re-establish economic influence in Africa. There is
strong nationalist feeling on Adriatic questions.
51. The Trieste settlement will almost certainly result
in some improvement in Italo-Yugoslav relations, thus greatly
facilitating NATO defense planning in the area. Moreover,
Italy eventually may become a member of the Balkan Alliance.
However, in the longer run, new frictions between Italy and
Yugoslavia may arise out of conflicting interests in the
Adriatic, which may also cause some strain on relations between
Italy and its NATO allies.
52. 7hile Italy probably will remain firmly committed to
the NATO Alliance, its basic social and economic weaknesses will
create continued problems for the US and Italyls other allies,
and it will rely heavily on continued US support.
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