PROBABLE DEVELOPMENTS IN ITALY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A002400020001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 22, 2016
• Document Release Date: September 12, 2012
• Sequence Number: 1
• Publication Date: March 31, 1953
• Content Type: NIE

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(-WNW
SECURITY INFORMATION
NATIONAL INTELLIGENCE ESTIMATE
PROBABLE DEVELOPMENTS IN ITALY
DOctioizPITivo.
NIE AUT
H. A
NXI.T/:-VIE7W DA T6;
'67LALIS:CCLA,LISASNIF:EIT TO: TS1 S \N- -
,A?10 CHANG,L, clAss.
Published 31 March 1953 DATE: CL2
FiStlEsivEit
The following member organizations of the Intelligence
Advisory Committee participated with the Central Intelli-
gence Agency in the preparation of this estimate: The
intelligence organizations of the Departments of State,
the Army, the Navy, the Air Force, and the Joint Staff.
All members of the Intelligence Advisory Committee
concurred in this estimate on 26 March 1953.
-CENTRAL INTELLIGENCE AGENCY
25X1
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11
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PROBABLE DEVELOPMENTS IN ITALY
THE PROBLEM
To estimate probable Italian political and economic trends, rearmament efforts,
and foreign policies, both short and longer range.
CONCLUSIONS
1. In the 195111952 provincial elections,
the Italian center parties, particularly
the Christian Democrats, suffered some
losses to the left and larger losses to the
right. Despite these_ losses the center
coalition will probably poll a majority in
the national elections tentatively set for
7 June 1953. If the coalition does obtain
a majority of the popular vote, the new
electoral law will give it two-thirds of the
seats in the Chamber of Deputies.
2. The short-run outlook is thus for con-
tinuation of a center government, but we
believe that the longer-range trend will
be increasingly to the right. We believe
that at some point the Christian Demo-
cratic Party, in response to this trend,
will form a moderate right-center coali-
tion.
3. Over the much longer run the contin-
uing Communist threat, the divisions
among Italian democratic forces, and the
continued difficulty of coping with Italy's
social and economic problems might lead
a moderate rightist government to be-
come more authoritarian and less parlia-
mentary in its methods. However, we
believe the emergence of another fascist
regime unlikely.
4. Under present circumstances there is
little likelihood of rapid and sustained
Italian economic growth, of substantial
emigration or of substantial reduction in
4-ie number of unemployed. Present
plans for economic development will prob-
ably be adequate to maintain economic
stability. However, these plans are not
likely to produce an improvement in so-
cial and economic conditions sufficient to
enable a center government, such as that
now in office, to retain power indefinitely.
5. Communism's highly developed politi-
cal and social organization in Italy has
been weakened by defection and apathy
over the past five years. Nevertheless,
Communist strength probably remains
greater in Italy than anywhere else in
Western Europe. We do not believe that
the Italian Communists will be able to
gain control of the Italian State in the
foreseeable future. However, in event of
a Soviet invasion the Italian Communists
would probably be able to disrupt lines of
communication in Northern Italy and
might be able to seize temporary control
of key areas.
6. The cohesion of the Italian Commu-
nist movement is not likely to be seri-
1
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8:MOREFEPT
ously impaired by the transfer of author-
ity in the USSR, unless there should be
a disruptive struggle for power within
the Soviet Communist party.
7. Italy's military establishment has
slowly improved with extensive US aid,
but the Italian Armed Forces by them-
selves are presently capable of no more
than a short-term delaying action in the
event of a major attack. Even if US aid
is continued at present levels, Italy will
almost certainly be unable to meet its
1954 Lisbon NATO goals. Italy has the
necessary industrial capacity and man-
power, but it is unlikely that the govern-
ment will be able to impose the sacrifices
on the Italian people necessary to achieve
these goals.
8. The Italian Government is a strong
supporter of European integration meas-
2
ures, which it views as offering Italy pres-
tige, security and material benefits.
9. While Italy is firmly committed to the
NATO alliance, its inability to cope with
its basic social and economic weaknesses
and to meet its rearmament commit-
ments will create continued problems for
the US and Italy's other allies. For the
foreseeable future Italy will remain one of
the weaker members of the Western coali-
tion and will rely heavily on continued US
support.
10. Moreover, conflicts of interest be-
tween Italy and Yugoslavia, especially
over the Trieste issue, will make political
and military cooperation between these
countries extremely difficult to achieve,
and are potentially dangerous to the re-
lations between Italy and the other West-
ern Powers.
DISCUSSION
Probable Political Trends
11. Underlying Italy's perennial political and
social problems is the fact that Italy is a poor
country, lacking sufficient arable land or raw
materials to provide for its population. Ex-
cept for Spain and Portugal, it has the lowest
standard of living in Western Europe; unem-
ployment is endemic. Italy's population of
47,000,000 is larger than that of France, but
its gross national product is only about half
as great. Among the Western European de-
mocracies, only in Italy is the demand for
land reform a serious national problem. A
major division also exists between the rela-
tively rich and republican-inclined North and
the impoverished and monarchist-inclined
South. Moreover, class lines in Italy are
more rigid than most in Europe.
12. Since 1945 the Communists and their
allies, the Nenni Socialists, have capitalized
on Italy's underlying social and economic
weaknesses and war-weariness to pose a ma-
jor threat to Italy's democratic regime. In
the 1948 national elections the Italian center
parties, led by Premier De Gasperi's Christian
Democratic (CD) Party and powerfully sup-
ported by Catholic Action, the lay arm of the
Church in Italy, won a substantial victory
over the Communist and Nenni Socialist bloc.
However, in the 1951-1952 local elections the
political extremes of right and left gained
strength, while the center coalition won only
51 percent of the popular vote, as compared
with 62 percent in the 1948 national elections.
The Communists and Nenni Socialists in-
creased their proportion from 31 to 35
percent, and the Monarchists and Neo-
Fascists from 5 to 12 percent.
13. This decline in the center position is at-
tributable mainly to these factors:
a. In 1948 many persons *of highly conserv-
ative and nationalistic leanings were fright-
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41,1115MT
ened into supporting the Christian Demo-
crats in a united front against Communism;
Czechoslovakia had recently fallen to the
Communists and there was fear that Italy
might be next. Many of these people are now
returning to their true political allegiance
and voting for the Monarchists and Neo-
Fascists; moreover, many are dissatisfied with
De Gasperi's failure to take stronger anti-
Communist measures or to press Italian na-
tional interests more successfully, especially
in Trieste;
b. The continuing high level of unemploy-
ment has increased the number of people,
especially young people, who have no incen-
tive to support the present government and
who are attracted by the promises of Com-
munism and Fascism;
c. The poverty, poor soil, peasant land-
hunger, and high unemployment of southern
Italy (for which the historic outlet through
emigration has been greatly narrowed) make
this area a fertile field for extremist agita-
tion. In the 1951-1952 elections both left
and right extremes made their greatest gains
in south and south central Italy;
d. There has been the normal loss of votes
suffered by any government long in office,
magnified by the characteristic antipathy of
Italians for the government in power.
14. Faced with these losses to the right and
left, the Christian Democrats and their center
allies (the Liberals, Republicans, and Social
Democrats) have formulated a new electoral
law designed to insure them an effective work-
ing majority in the Chamber. Under the new
law whatever linked group of parties gets a
bare majority of the national vote in the
approaching national election will automati-
cally be allotted two-thirds of the Chamber
seats., If no group succeeds in polling a ma-
jority, the seats will be distributed propor-
tionately as at present.
15. Probable Outcome of the Election. Should
the center coalition fail to win a majority in
1 These seats will be distributed proportionately
among the winning parties; the remaining third
of the seats will be left for distribution propor-
tionately among the other parties.
3
the coming election, it will be extremely diffi-
cult to form a government. With at least
one-third of the Chamber tightly organized
into a hostile left bloc and perhaps one-sixth
composed of Monarchists, Neo-Fascists, and
other rightist elements, De Gasperi would
either have to call new elections or broaden
his coalition to the right. He would be like-
ly first to attempt a coalition taking in the
Monarchists; if that failed because of Social-
Democrat objections, he might drop the So-
cial-Democrats in favor of the Monarchists.
16. We estimate, however, that the center
coalition will poll a majority of the popular
vote, even though the Communist and Nenni
Socialist bloc will probably retain part of its
1951-1952 gains and the rightists may even
exceed their 1951-1952 vote. Should the cen-
ter group win this majority, the Christian
Democrats would again form a government
which would seek to continue the programs
and policies presently pursued by De Gasperi.
17. The Longer-Term Outlook. Although the
short-run outlook is thus for continuation of
a center government, we believe that the
longer range trend in Italian politics will be
increasingly toward the right. Italy is a bit-
terly poor country, a country of divisions
rather than unity, of extremes rather than
moderation. These circumstances, together
with the basic social and economic problems
faced by any government, and the ever
present threat from the left, make the task
of the CD-led center government a difficult
one indeed. The Christian Democratic Party
itself is heterogeneous in its composition; its
various groups are held together on a center
line primarily by their common enmity to
Communism, by Catholicism, and by De Gas-
pen's firm control and leadership.
18. De Gasperi is now 72. Another leader
might be able .to maintain a centrist coali-
tion; the CD party might even come under a
leader oriented more to the left. It is possible
that some combination of favorable external
developments ? satiffactory international
trade conditions, large-scale emigration, con-
tinued US aid ? might enable a center coali-
tion to continue in power for some time.
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However, a center coalition is unlikely to re-
tain power indefinitely unless it is able to
effect a substantial improvement in social and
economic conditions. We do not believe that
the center coalition, pulled in opposite direc-
tions by its own conservative and reformist
factions, will be able to act with the vigor and
unity essential for the achievement of such
improvements.
19. Under these circumstances the appeal of
the rightist parties, with their slogans of
nationalism, economic revival, and stronger
action against Communism, is likely to in-
crease. This growth of rightist sentiment
would give impetus to the divisive forces
within the center bloc and encourage the
right-wing elements within the CD party to
even more vigorous opposition to social and
economic reform. The basic enemy of the
Church and of the CD party is on the left, not
the right; neither views the right as its chief
opponent. An alliance between the center
and the Communist-Nenni Socialist bloc ap-
pears impossible; an alliance between the cen-
ter and the right against the left presents no
insuperable difficulties.
20. Consequently, in time the CD party will
probably modify the present center coalition
in favor of a coalition further to the right.
This first step toward the right would prob-
ably be the creation of a moderate right-
center coalition including the Monarchists.
When this development might take place can-
not be estimated; much may depend on exter-
nal factors beyond Italian control.
21. Over the much longer run, the continuing
Communist threat, the divisions among Ital-
ian democratic forces, and the continued dif-
ficulty of coping with Italy's social and eco-
nomic problems might lead a moderate
rightist government to become more authori-
tarian and less parliamentary in its methods,
perhaps along lines similar to the Salazar
regime in Portugal. We cannot estimate that
such an evolution will eventually take place,
but the possibility cannot be ignored as a
long-range development. However, we be-
lieve that the memory of the disasters which
4
overwhelmed Italy under Mussolini will pre-
vent the emergence of another fascist regime.
Communist Strength and Capabilities
22. Communism's highly developed political
and social organization in Italy has been
weakened by defection and apathy over the
past five years. Party membership is now
estimated at 1.7 million, a drop of over 20
percent from its postwar peak in 1947-1948.
More significant, membership in the Commu-
nist-dominated trade union federation has de-
clined from an estimated 6 million in 1947-
1948 to about 3.5 million. About one and a
half million have withdrawn into two non-
Communist unions and about an equal num-
ber have dropped union membership. Al-
though the non-Communist unions have not
seriously challenged Communist leadership of
organized labor, Communist capabilities for
exploiting labor for political purposes have
been considerably reduced. Communist para-
military and sabotage capabilities have also
probably been reduced, especially because of
the growth in strength and efficiency of the
Security Police. Although there are still
many Communists among the conscripts in
the armed forces, vigorous and apparently
successful efforts have been made to remove
Communists from the officers corps. We do
not believe that the Italian Communists will
be able to gain control of the Italian State in
the foreseeable future, either legally or by
force of arms.
23. Nevertheless Communist strength proba-
bly remains greater in Italy than anywhere
else in Western Europe. The Communists
are still particularly strong in the heavy in-
dustries and in the transport and communi-
cations systems of Northern Italy. Moreover,
substantial caches of small arms probably still
remain in Communist hands despite extensive
confiscations by the police. In the event of a
Soviet invasion at least during the next few
years, the Italian Communists would probably
be capable of seriously disrupting lines of
communication in Northern Italy and might
also be able to seize temporary control of key
areas. Soviet operations would also be aided by
Italian Communist espionage and sabotage.
osimilaima
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24. Despite the decline in party membership,
Communist electoral support remains great.
The basic causes are the absence of any other
strong protest party, and the relatively mod-
erate tactics which the Communists have pur-
sued. The political appeal of the Commu-
nists lies in their ability to exploit the eco-
nomic grievances, land-hunger and anti-war
sentiment of large segments of the popula-
tion. Communist political strength is en-
hanced by the party's close alliance with the
Nenni Socialist party, which still contains
about two-thirds of Italian Socialists, and
contributes over one-third of the electoral
?
strength of the Socialist-Communist alliance.
A break between the Communists and the
Nenni Socialists, or an appreciable part
thereof, might check the drift of Italian poli-
tics to the right and make possible a left
center coalition government. However, such
a break now, seems unlikely. The Commu-
nists and Nenni Socialists may present sep-
arate electoral lists at the next election, but
this would represent only a tactical move de-
signed to attract non-Communist votes.
25. The cohesion of the Italian Communist
movement is not likely to be seriously im-
paired by the transfer of authority in the
USSR, unless there should be a disruptive
struggle for power within the Soviet Commu-
nist Party.
26. The Italian Government is likely to apply
stronger repressive measures which will fur-
ther reduce Communist effectiveness. Against
such measures the Communists would proba-
bly emphasize "unity of action" tactics and
might gain some support from the moderate
left. The Communists will also seek to
strengthen the underground apparatus, and
have considerable potential? for doing so.
Should the Communists be officially pro-
scribed, their influence would be significantly
reduced, though their underground apparatus
would quickly expand unless it, too, were vig-
orously rooted out. Proscription seems un-
likely, however, so long as large numbers of
Italians look upon the Communist party as a
democratic political party rather than as a
subversive organization.
5
Probable Economic Trends
27. Italy is deficient in almost all basic re-
sources save manpower and hydroelectric
potential. Over 90 percent of its coal, most
of its oil, half its iron ore, nearly all its textile
fibers, and even a considerable proportion of
its wheat must be imported. Thus, Italy is
highly dependent on foreign trade and tour-
ism and very sensitive to international eco-
nomic fluctuations. Indeed its future as a
nation with free institutions may ultimately
depend upon the achievement of a high and
stable level of foreign commerce, and the
reduction of restrictions on the international
movement of capital and labor. In part be-
cause European integration would assist
greatly in establishing these conditions, the
Italian Government strongly advocates Euro-
pean political and economic union.
28. Despite the retarding of its industrial
development by its inadequate natural re-
sources, Italy has had a substantial postwar
recovery, achieved with US assistance. How-
ever, Italy's basic economic problems ? the
low rate of capital formation, chronic unem-
ployment, and low productivity compared with
other Western European economies ? remain
unsolved.
29. These problems are intensified by various
institutional weaknesses in the Italian econ-
omy, notably: (1) the inefficient operations
of numerous state-owned productive enter-
prises; (2) large-scale state subsidization and
protection of inefficient private enterprises;
(3) the forced retention of excess labor on
farm and factory payrolls; (4) an inflexible
price structure resulting from monopolistic
business organization and restrictive prac-
tices; and (5) an inefficient tax system which,
together with large-scale tax evasion, limits
government ability to mobilize resources by
non-inflationary means. These factors have
discouraged technological efficiency and re-
sult in the misuse of the limited savings gen-
erated by the economy. Corrective measures
would require a strong and efficient govern-
ment and would involve painful readjust-
ments. Therefore, we believe it unlikely that
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1011IMPFLPT
any center or moderate right government will
be willing to undertake a general program of
extensive institutional reforms.
30. The highly conservative monetary and
credit policies pursued by the postwar Italian
Government also have tended to restrict eco-
nomic expansion. These policies have suc-
ceeded in restoring a measure of financial
stability, but at a low level of economic
activity. Believing avoidance of inflation to
be more important than expanded invest-
ment and full employment policies, the gov-
ernment has restricted private credit, kept
budget deficits relatively low, and sharply
limited public investment. The government
has instituted development programs and
land reform, particularly in the South, which
it considers costly and extensive. However,
these are unlikely to effect a decisive improve-
ment in the condition of the country as a
whole.
31. There is little likelihood that the Italian
Government over the next several years will
markedly change its conservative attitude
and undertake large-scale investment pro-
grams designed to increase productivity and
reduce unemployment. It fears that such
programs would generate inflationary pres-
sures which would be a greater threat to
political and social stability than the present
lack of economic growth. In any case, many
years would be required before even large-
scale development programs could be ex-
pected to overcome Italy's basic economic
problems. The pressure of unemployment
will probably force the government to under-
take some additional public investment, but
it will do so cautiously and on a piecemeal
basis. The government will continue to look
for an escape from its economic difficulties
primarily through continued US aid, increased
emigration, and European economic integra-
tion.
32. While Italy will probably be able to main-
tain economic stability, it is probable that
there will be a relatively low rate of economic
growth over the next decade. The average
annual rate of growth is unlikely to exceed 2
percent. Most of this new increment will
6
probably go into consumption, leaving only a
small portion for defense and investment.
Probable Trends In Italian Rearmament
33. Italy's military establishment has slowly
(but steadily) improved with extensive US
aid, and Italy came close to meeting its Lisbon
NATO commitments for 1952. However, the
Italian Armed Forces by themselves are
presently capable of no more than a short-
term delaying action in the event of an attack
by a major opponent. Morale and training of
the armed forces are considered fair to good.
Since 1950 the Army has improved in combat
readiness; however, it is incapable of sustain-
ing large-scale operations because of inade-
quate division and higher unit training, am-
munition deficiencies, and a logistic system of
doubtful effectiveness. The Army has about
255,000 men in 13 divisions, 3 Alpine brigades,
and numerous independent units. The Air
Force, with about 32,000 officers and men,
has 175 jet fighters. It is currently incapable
of fulfilling its air defense or ground support
responsibilities. It is being re-equipped with
US end-item aid, but its small number of
modern aircraft and relatively small appro-
priations are serious obstacles to its develop-
ment. The Navy of about 36,000 officers and
men is an unbalanced fighting force of rela-
tively low combat-readiness. It does, how-
ever, have appreciable capabilities for patrol,
escort, minesweeping, undersea warfare and
similar tasks, and is now being modernized
and reconstituted in order to improve these
capabilities for combined operations under
NATO.
34. Even if US aid is continued at present
levels, Italy will almost certainly be unable to
meet its 1954 Lisbon NATO goals of 16-1/3
divisions by M+30, 852 aircraft in operational
units, and a naval contribution of 16 major
and 48 minor M?day naval units and 15 naval
aircraft. Italy has the manpower and indus-
trial capacity to more than meet these objec-
tives. Given the raw materials and more
efficient production methods, Italy could pro-
duce many of its own arms requirements and
provide equipment for other NATO members.
The chief difficulty lies in Italy's apparent
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inability to provide the budgetary resources
to mobilize this capacity, while still meeting
other economic demands. Italy has many
competent scientists and an extensive organi-
zation for controlling and directing military
and industrial research. However, inade-
quate facilities and a lack of funds have thus
far prevented Italy from being a major con-
tributor to Western military research and
development.
35. In view of the probable lack of rapid eco-
nomic growth and probable government un-
willingness to undertake what it would con-
sider to be inflationary financing, we believe
that Italy is unlikely to increase its 1953-1955
defense outlays much above the level reached
in 1952. The outlook is for stabilization of
Italy's annual defense outlays at slightly less
than one billion dollars, or about 5? percent
of GNP, over the next several years. Such
outlays will almost certainly be insufficient to
meet the Lisbon NATO goals.
Italian Foreign Policies
36. Italy's basic foreign policies are to: (a)
maintain security; (b) solve Italy's pressing
social and economic problems through for-
eign assistance and European integration; (c)
improve Italy's status and prestige in world
affairs; and (d) increase its influence in the
Adriatic and regain some of its lost territory
in the Trieste area. The Italian Government
recognizes that the above policies can be real-
ized only if Italy is a part of a larger Western
coalition supported by the US.
37. Italy hopes through membership in NATO
and European institutions not only to obtain
greater security and avoid war, but also to:
(a) secure continued US military and eco-
nomic assistance; (b) obtain freer access to
raw materials and increased trade outlets;
(c) facilitate greater mobility of labor in
Europe and increase Italy's emigration out-
lets; and (d) secure support for Italy's own
national interests in the Adriatic and Med-
iterranean areas. The Italians are particu-
larly interested in promoting greater Euro-
pean integration, which they view as offering
Italy prestige, security and material benefits.
7
Italy's interest in the EDC is secondary to its
desire for greater European political and eco-
nomic unity, but it is almost certainly willing
to ratify the EDC.
38. Italy's adherence to NATO and to Euro-
pean institutions is supported by all centrist
political parties and by the Vatican, which
views the growth of Western strength and
unity as an essential bulwark against Com-
munism. Even a rightist and nationalist
government would probably feel compelled by
self interest to remain aligned with the West-
ern coalition.
39. However, we believe that future Italian
governments will be more insistent in their
pursuits of strictly Italian national interests,
and will raise difficult problems for Italy's
allies. Although most Italians are apparently
reconciled to the loss of their colonies, Italy
will probably seek to re-establish its economic
influence in Africa and the Eastern Mediter-
ranean. Above all, there is strong nationalist
feeling on Adriatic questions, particularly
Trieste.
40. At least so long as the Trieste issue re-
mains in its present state, it will hamper
NATO defense planning in the area. Italy
will strongly object to ties between Yugo-
slavia and NATO and to more extensive US
aid to Yugoslavia. De Gasperi has empha-
sized that Italo-Yugoslav political and mili-
tary cooperation will be impossible until the
Trieste issue is resolved. At the same time,
the Trieste issue represents a political barrier
to Italian participation in the friendship and
military collaboration pact recently signed by
Yugoslavia, Greece, and Turkey, even though
Italy almost certainly would like to gain
membership in this entente. From the
Italian viewpoint such an entente without
Italian participation would be a blow to
Italian prestige and might adversely affect
Italy's Adriatic and Eastern Mediterranean
interests.
41. Thus the Yugoslav-Greek-Turkish rap-
prochement, together with the political lia-
bility which the Trieste issue in its present
state represents internally, makes some
Trieste adjustment highly desirable to the
itkirgr
Declassified in Part - Sanitized Copy Approved for Release 2012/09/12 : CIA-RDP79R01012A002400020001-4
Declassified in Part - Sanitized Copy Approved for Release 2012/09/12 : CIA-RDP79R01012A002400020001-4
siessuirr 8
Italian Government. In the longer run,
Italy might also seek to regain additional
Adriatic territory lost under the peace treaty.
Other frictions between Italy and Yugoslavia,
as well as between Italy and its NATO allies,
would result from any developments in Al-
bania which adversely affected Italian in-
terests.
Implications for the US
42. While Italy is firmly committed to the
NATO alliance, its inability to cope with its
basic social and economic weaknesses and to
meet its rearmament commitments will create
continued problems for the US and Italy's
other allies. For the foreseeable future Italy
will remain one of the weaker members of
the Western coalition and will rely heavily on
continued US support. Moreover, conflicts
of interest between Italy and Yugoslavia,
especially over the Trieste issue, will make
political and military cooperation between
these countries extremely difficult to achieve
and are potentially dangerous to the rela-
tions between Italy and the other Western
Powers.
se;Wer--
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Declassified in Part- Sanitized .Copy Approved for Release 2012/09/12: CIA-RDP79R01012A002400020001-4
0
Declassified in Part - Sanitized Copy Approved for Release 2012/09/12 : CIA-RDP79R01012A002400020001-4