SPECIAL REPORT: THE ITALIAN POLITCAL SITUATION

Created: 10/22/1965

OCR scan of the original document, errors are possible

SPECIAL REPORT

THE ITALIAN POLITICAL SITUATION

DATE:2

CENTRAL INTELLIGENCE AGENCY

OFFICE OF CURRENT INTELLIGENCE

THE ITALIAN POLITICAL SITUATION

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four-party governing coalition is showing signs of greater cohealon although Its future continues to depend on Its ability to achieve some of the aajor provisions of itsprogram. This fall's heightened activity will offer ao opportunity to make some progress toward longer tera viability. At present, tbe leadera of the principal partners--the Christian Deaocrats (CD) aod tbe Socialistswilling to seek the compromisesto preserve the delicate balance althin the coalition. However, there are still significant aloorities ln both parties which oppose CD-PS Iat least ln Its current form,and this Issue alonguaber of other potentially divisive lntraparty questions will be debated at several aajor party congresses and assemblies in coaiing months.

Factors of Cohesion

Although emotion-packedsuch as corruption charges and foreign policy differences, can trigger critical situations at any time, several factors have improved the Moro government's chances of surviving the political test posed by the party meetings this fall. Chief among these is Socialist Vice Premier Nennl's continued commitment to keep the PSI in the government and his stronger positioo with respect to dissident elements within his party.

Henni 's prime objectivethe achievement of progress one has repeatedlyto the PSI rank and file that the party has not lost sight of its Long-standing reform goals, and he is convincedeturn to opposition would not serve to achieve them any more quickly. He is equally aware, moreover, that his position as party Leader would be in jeopardy if thewere to withdraw from the government coalition.

Premier Horo reportedlyin

I in reccnr months.

though several Christian Democrats have designs on the premiership, no rival, Including Foreign (and ex-premier) Fanfani,t present actively trying toMoro. lection to the UN General Assembly presidency will reduce his maneuverability on the domestic political scene but should lncreaae his long-run chances of becoming prime minister when the opportunity arises.

Sometime afterSocU Hat congress there will probablyalted cabinetaimed at alleviating in-terparty pressures and rivalries.

Basic Problems Remain

The viability of PSI-CDstill depends on the continued health of the Italian

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economy and the willingness and ability of the government leaders to implement the basic elements in their program.

A gradual recovery Trow4 recession now appears under way, and there seems Little doubt that GNP growth5 will reach atercent. Marked in the steel,and petroleum industries have brought industrial production to the highest levels in Italian Inlatest month for which full data arethe production index (calculatedasetood, comparedn Recovery hasteady rise ofand official reservesillion in August) have continued to increase. unemployment is still only slightlyercent of the labor force.

Weak spots still exist,particularly in investment and domestic demand. BudgetPieraccinl doubts thatercent average annual growth rate envisaged in the government's five-year economicill be attained He has also indicated that increases in the government's currentexpenditures are likely tothe achievement of economic planning targets.

At present, the main economic problem is maintaining monetary stability during the period ofby restraining excessive increases in wages and prices. In this, the coalition appears to be having some success. Retail prices, for example, have risenate

iercent this year,ercent4 The coalitionifficult test this fall, ; however, as major wage contracts

involving some three millionrs in the construction,nd metal-mechanicalre due for renegotiation.

Along with economic recovery, action on the Moro government'sprogram remains theto long-run government viability. Tne government'sthus far has been spottyit has made some progress. Despite having to devote most of its energies to coping with an economic and financial crisis the Moro government hasariety of measures relating to agriculture, education, labor, social welfare, state and depressed areas. Other crucial bills are before Parliament.

There has been littlehowever, on such key as urban reform and public administrative reorganization-two of the most controversialin the government's program. Further compromise will be needed and reform enactment Is likely to proceed slowly at best.

The Socialist Congress

The Socialistocial Democratic iberalonarchist nd Communist (PCI) parties all plan congresses by early January. Ail except that of the PDIUU are Important for future political developments, but the PSI congress fromoovember is likely to have the most impact on the coalition's prospects.

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The PSI will be debating the party's continued collaboration with the Christian Democrats and tho reunification of the PSI and PSDI, which split The tactical positions of theand minority elements within the PSI leadership have been sharply drawn. Majority leader Hennl has called on the party's grass roots to support thegovernment formula and to work for eventual Socialist Followers ofleader Riccardo Lombard! and the PSI left wing oppose Nenni on both counts.

Lombardi wants to abandon collaboration with the CD andto "traditional Socialist autonomy." He maintains that the "center-left" has becomefrom previous center governments and that the PSI's continuation ln it serves only to solidify the present system and perpetuate Christianrule. He opposes PSI-PSDI reunification because he believes lt would smother the PSI'sof its own "specifically socialist reforms." Consequently, he believes tho only remaining hope for an alternative to CD rule lies in the eventual unity of all the workers* and left-wing movements in the country. argues that this hope would be frustrated by PSI continuation ln the government, by PSI-PSDI reunification, and by persistent attempts to isolaterocess of transformationemocratic development has already begun."

Hennl not only differs with Lombardi on the means ofreforms but also in bisof the direction in which Italian socialism should evolve.ecent political-ideological letter addressed to the party's rank and file, Henniubstantial revision ofSocialist doctrine on the concept of state, class, and He asserted that the only realistic choice for the PSI in tbe context of current Italian politics is to assume Its share in tbe direction of the state while seeking to modernize it within the existing system and institutions.

At present, the indications are that Nenni's position will triumph and that the Lombardi forces will not poll moreercent of the vote at the congress. uarter of the" PSI's membership has already elected delegates to congresses of the local PSIwho io turn will elect theto the national congress. In these local elections, the Nenni majority faction has won aboutercent of the vote.

While tbe left-wing PSI faction is apparently effectivelytruggle within tbe majority faction at the congress may develop between the Nenni forces and party secretary De Martlno's small but notfollowing. In the past, De Martino has been more willing than Nenni to compromise with some of Lombardi's views in the Interest

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of PSI unity. Bo ha& also favored the party's adopting positions somewhat more to the left of the existing center-left program and he does not want to push theof Socialist reunification rapidly. Henni has recentlyanxiety over possible moves by De Martino at theand the outcome of their struggle is likely to be one determining factor in theand timing of Socialist reunification. At present, the indications are that Nennl's group will probably get more than an absolute majority in the new PSI central committee to be elected at the congress.

The Prospects for SociaTTst ReunificaTlon

Progress on Socialistwill depend largely on results of the PSI and PSDI congresses. No quick merger is likely, but the issue is crucial for future political developments. The formationeunifiedparty could, in the first Instance, provide the Socialist forces in the government with considerable leverage to push further Implementation of its program. Over the longereunified party might--at least inChristian Democratic dominance byemocraticfor voters who now feel that the larger and stronger Communist party can betteror help them. Recognizing the prospect of furtherthe forthcoming Communist

congress will debate the approach it must take to implement its own callunified Workers Party of the Left."

PSDI secretary Tanassi has already declared that ho and other PSDI leaders would be pleased to accept Nennl as the leadernifiod party, and he wants Nenni to move as swiftly as possible to work toward Tbe eloctlon to the Italian presidency of former PSDI leader Giuseppe Saragat (who bas campaigned for PSI-PSDIhasotential rival of Nennl for leadershipeunified socialist party. The PSDI is demanding, however, that the PSI must first end all collaboration with the Communists on the local administrative level and modify its statute requiring all PSI members to belong to the Communist-Socialist "Italianof Labor" (COIL).

The PSI is unable to meet the first of these demands at this stage,pecial party committee recently issued an amendment modifying the party statute requiring all members to Join "labor or professional organizations" and other "mass associations" designated by tbe party. This amendment, however, must still be approved at the party congress level. Tbealso called for tbeby the PSI of its own small farmers' organization, thusthat the Socialistsin time to divorce themselves from the Communist-controlledLeague of Cooperatives."

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Partly because meeting the PSDI's demands will be aand lengthy process for the Socialists, the PSI congress is likely to approve Socialistin principle withouteadline. Hennl will probably propose that theauthorize certainmeasures.

He argues, however, that Socialist reunification cannot be achievedimplebetween the leaderships but that lt must be reached through "an agreed common program and common struggles." He would also open the reunified party to other left-wing forces, but not to the Communists,Unifiedarty of tbe Left" he flatly rejects.

If Nenni receives his hoped-for increased majority at the congress, some progress toward reunification will probably be made by8 national There evenhance for some tentativeln7 regional elections.

The CD Assembly

Premier Moro's Christian Democrats have scheduled a

"National Assembly onforwhich could have an importantbearing on theirln the coalition. The meeting appears designed toserious organizational weaknesses and to consider the effects of recent scandals in high government circles. Party chiefs are already evidencing some concern over their prospects in8 elections, and they apparently will seek someamong CD factions on the pace of the government's program. Vice Secretary Plccoll recently indicated that solid legislative progress might bo forthcoming next spring, provided thecongress supports Nenni by a large majority.

There have beer some signs of dissatisfaction with the CD party's leadership on both tbe left and right wings, which is probably coming to the surface partly because of the proximity of the assembly. PartyMariano Rumor and Premier Moro, however, intend to keep their party behind the coalition in its present form, and lt is likely that he will be able to do so without difficulty.

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