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Settling the Question of Trieste
by Pat Skelly

The extracts which follow are taken from the now declassified weekly Intelligence Review, published by the [United States] War Department General Staff, Military Intelligence Division. Very few of us, not even among those who served in Trieste with the 88th Infantry Division or TRUST (Trieste US Troops), were aware then of how fragile the diplomatic and military situation was in Trieste and along the Italian/Yugoslav border. I hope this work will be of value to the serious student in understanding the stress and undercurrents of that time. Rather than edit out redundancies in this material I have left them in place.

Intelligence Review, Issue 1, 14 Feb 46, pp. 61-63.
World in Review
Commission to Study Italo-Yugoslav Boundary Problem

The Foreign Ministers' Deputies Commission will arrive shortly in Trieste in an attempt to fix an Italo-Yugoslav boundary which will satisfy the mixed Italian-Slovene population of Venezia Giulia ethnically, economically, and politically. It has not yet become clear to what extent the Soviet Union will back Yugoslav claims to Venezia Giulia. Italo-Slav animosity over the issue has already created a tense atmosphere and caused some bloodshed.

Italy obtained control of the entire Istrian Peninsula and the Dalmatian coast by treaty after World War I. Thereafter, the age-old friction between Italians and Yugoslavs was aggravated by Italian atrocities in the conquest of Yugoslavia and by Yugoslav reprisals during the Tito campaign which preceded the German collapse. In May 1945, Yugoslav troops occupied Trieste (at the head of the Adriatic, on the west coast of Istria), and, as a result of subsequent Italo-Slav affrays and cross-charges, Venezia Giulia was divided into two zones, separated by the so-called Morgan Line. The Allied-administered western zone includes Pola and the important port city of Trieste, and has direct communication into Austria; the Yugoslav-controlled eastern zone contains Italy's major resources of mercury, bauxite, and coal.

Premier De Gasperi has announced Italy's willingness to accept a boundary suggested after World War I by Woodrow Wilson, which would leave Italy with about two-thirds of the Istrian Peninsula, including the principal coal and bauxite deposits, but which would give the Yugoslavs the large cities of Fiume and Zara and the entire Dalmatian coast. Tito claims not only the Dalmatian coast but all of the Venezia Giulia region as well. The Council of Foreign Ministers, unable to decide upon a boundary at its London conference some months ago, recommended that the port of Trieste be internationalized, with the city itself remaining Italian, and that a commission of their deputies be sent to investigate the boundary question. It is this commission which is now preparing to convene.

The normal population of Venezia Giulia is predominantly Italian in the large cities and Slovene in the hinterland. There are indications that, in preparation for the commission's visit, the Yugoslavs have been attempting to deport Italians. The Russian-trained Italian Communist leader, Palmiro Togliatti, first supported the Yugoslavs, but has now switched to a pro-Italian stand as a result of his party's loss of prestige last year; The Italian Communist Party of Venezia Giulia is also pro-Italian. This reversal by the Italian Communists, coupled with other reports, indicates that the U.S.S.R. may be withdrawing its original support of Tito's claims. It is possible that the U.S.S.R., which has been demanding a trusteeship of the Italian African colony of Tripolitania, has decided to encourage Italian claims at the expense of Yugoslavia in order to regain Russian prestige in Italy and strengthen the Italian Communist Party.

Intelligence Review, Issue 3, 28 Feb 46, pp. 30-36.
Venezia Giulia: Area of Dispute

The pattern of peace is established only in its broadest terms by international policies and principals; in actual practice, the pattern is woven of compromises and accords reached in resolving one little conflict after another. Important among the current disputes is the one involving the Venezia Giulia area of Italy. Like some which have been settled and many still to be considered, the Venezia Giulia controversy is the whole peace problem in miniature, involving as it does the interests of the victorious Great Powers, those of a vanquished enemy nation, and those of a country once overrun by the Axis - with all those interests inter-related to the basic rights of local ethnic groups, the viewpoints of political systems, the economic realities of world rehabilitation, and the military considerations of tomorrow's balance of power.

The Area in Question

Venezia Giulia, an area of 3,389 square miles which includes the Istrian Peninsula, has a population of about 1 million. While the cities are predominant Italian, the rural areas are largely Slovene, but the two groups are approximately equal in numbers. Historically the region was part of the Roman Empire, but from medieval times until 1918 it was under Austrian-Hungarian domination. The secret 1915 Treaty of London (which was repudiated by Woodrow Wilson) awarded Venezia Giulia to Italy. Italian control was recognized in 1918 by the Treaty of St. Germain with Austria and in 1920 by the Treaty of Rapallo with Yugoslavia.

During World War II, the traditional friction between Italians and Yugoslavs was aggravated by Italian atrocities committed during the conquest of Yugoslavia and by Yugoslav reprisals during Tito's campaign preceding the German collapse. In May 1945, Yugoslav troops occupied Trieste, and, as a result of Italo-Slav affrays and cross-claims, Venezia Giulia was divided into two zones, separated by the so-called Morgan Line. (See map.)

Inasmuch as Italy had lost the opportunity afforded her in 1918 of integrating the agricultural Slavs and the urban and maritime Italians, the questions of frontier rectification and population exchanges are now raised. It is doubtful that population exchanges alone would remove Italo-Yugoslav animosity. Should Italy lose all or the bulk of Venezia Giulia, either by peace treaty or a Yugoslav coup, a revival of pre-1914 irredentism is probable. Such an environment would hardly foster friendly economic and diplomatic intercourse between the two nations; thus a more equitable solution would favor the cause of general peace.

Italian Premier de Gasperi has announced Italy's willingness to accept a boundary suggested after World War I by Woodrow Wilson, which would leave Italy with about two-thirds of the Istrian Peninsula, including the principal mercury, bauxite, and coal deposits, but which would give Yugoslavia the large cities of Fiume and Zara and the entire Dalmatian coast.

Tito claims not only the Dalmatian coast but all of Venezia Giulia and a small area to the West of it as well.

The economic value of Venezia Giulia is based on the following:

(1) The deep water ports of Trieste, Fiume, and Pola, providing access to central Europe;
(2) Industries located mainly in Trieste and Fiume, including shipbuilding, oil refineries, chemicals, steel, textiles, cement and food processing;
(3) Mineral resources, including coal, bauxite, zinc, lead, and mercury;
(4) Agriculture; and
(5) Fishing.

The area provided Italy with half of its bauxite, one-third of its coal, and one-sixth of its mercury.

Yugoslav Military Strength

During the period 2-16 February 1946 the Yugoslavs increased their units along the Morgan Line by 150 percent. At the present time there are ten infantry divisions, one armored division, and two KNOJ (Elite Police) brigades there. All the identified new arrivals are Fourth Army units, which have been moved up from the part of Slovenia between Ljubljana and the Morgan Line. However, there have also been reports of units moving north along the Dalmatian Coast and west through Belgrade. With the exception of two infantry divisions, the entire Yugoslav Fourth Army, totalling 110,000 men, is now in Zone "B". Most of the units were at first concentrated in the vicinity of Fiume and Postumia, but are now believed to have fanned out north and south along the Morgan Line and through the Istrian Peninsula. An increase in the movement of new equipment and supplies to units in the Fourth Army has also been noted. These units are believed to be better equipped and manned than others in the Yugoslav Army. "Defensive positions" and semi-permanent fortifications are being erected.

Apparently in justification of these reinforcements of Zone "B", the Russians recently presented to the Security Council a Yugoslav memorandum charging that General Anders' Second Polish Corps had been moved into northeastern Italy and was recruiting elements unfriendly to Yugoslavia.

[The XIII (BR) Corps was the Allied force in Zone "A" and northeastern Italy at this time with the 88th (US) Inf Div on the northern segment of the Morgan Line, the 56th London (BR) Inf Div on the southern segment of the Morgan Line, and the 1st (BR) Armd Div to the west in Veneto.]

The Quadripartite Commission's Problem

A commission appointed by the deputies of the Foreign Ministers of Great Britain, the U.S.S.R, France, and the United States - the four powers that will eventually determine the Italian peace treaty - is presently authorized to determine pertinent facts upon which a new ethnic Yugoslav-Italian border can be based. This procedure was established when the Council of Foreign Ministers, at its London conference in September 1945, agreed upon internationalization of the port of Trieste, with the city remaining Italian, but was unable to agree upon any settlement of other issues involved. The arrival of the deputies' commission in the area has been delayed, but it will begin its work in the near future.

The commission will seek to resolve the ethnic, economic, and political problems of the mixed Italian-Slovene population of Venezia Giulia. There have been recent indications of a Yugoslav program for the Slovenization of the Yugoslav-occupied area (Zone "B") prior to the arrival of the Commission. This has taken the form of propaganda, census falsification, police brutality toward Italian sympathizers and deportation of Italians. In the area occupied by American and British forces (Zone "A") the Yugoslavs are directing a "war of nerves" against the population. Yugoslav flags and Italian flags bearing red stars are being smuggled in from Ljubljana to be flown in during the commission's visit. Despite Allied Military Government decrees, children in Slovene schools are being indoctrinated along Yugoslav lines. Infiltration of Yugoslav agents into Zone "A" and illegal raids and abductions by their secret police in that zone are also increasing. It has been reported that "in all villages", young people are erecting triumphal arches, decorating windows with pictures of Yugoslav Premier Tito, and writing slogans on walls to show pro-Tito attitudes.

Soviet Policy

Since agreeing to the establishment of the Commission in September 1945, the Soviets have adopted a "hands off" policy toward the Venezia Giulia problem in order to re-establish Russian prestige in Italy and strengthen the Italian Communist Party. This was evidenced by the switch to a pro-Italian stand made by the Russian-trained leader of the Italian Communist Party, Palmiro Togliatti. The Soviet Union may have adopted this aloofness toward Yugoslav demands in order to soften Italian reaction to the Soviet enunciation of its desire for a sole trusteeship of Italy's African colony, Tripolitania. However, the deputies' commission, which was due to arrive in Trieste about 15 February, is being delayed because the U.S.S.R. wants the commission's investigation restricted to Zone "A", which indicates a change in Soviet policy. Should the other three powers accede to the Soviet demand, the bulk of Tito's claims would be granted at the start. This reversal of Soviet policy in favor of Tito will cause an unfavorable reaction in Italy, weaken the Italian Communist Party, and undoubtedly will affect the Italian elections this spring.

The Soviet Union, with its influence over Tito, now probably can be expected to back present Yugoslav aspiration in one of two ways:

(1) By continued refusal to allow the Allied Boundary Commission to enter the Yugoslav-held Zone "B" - thereby nullifying the Commission's power and defeating its mission at the outset;, or
(2) By giving Tito a free hand in case of an adverse decision by the Peace Conference, permitting him to take independent action to achieve his own ends in Venezia Giulia. It is improbable that the Russians would furnish military support to any Yugoslav action, since their chief purpose probably would be to test the determination of the Allies to enforce the decision of the Peace Conference.

Yugoslav action could take either of two forms:

(1) Tito could use the various clandestine, semi-military organizations in Venezia Giulia to instigate "popular uprisings" throughout the area and then declare his Government incapable of checking the "spontaneous reaction" of Yugoslav troops in response to such a "popular appeal"; or
(2) He could direct the pro-Yugoslav groups to foment strikes and disorders which would incapacitate the Allied Military Government in Zone "A" to such an extent that Yugoslav troops would be "forced" to intervene, ostensibly to protect the Slovene and pro-Yugoslav population from alleged Italian imperialistic persecution.

In either case, The Yugoslav Fourth Army is capable of seizing and holding Zone "A" against the British, American, and Italian forces now in northeastern Italy. The Yugoslav Second Army, now based in Zagreb, could assume the defense of the Austrian border and serve as a second line of defense for the forces in Venezia Giulia. However, without Russian aid in the air, the Yugoslav forces would be almost defenseless against Allied air and naval attacks.

Intelligence Review, Issue 26, 8 Aug 46, pp. 32-34.
Yugoslav-Italian Border Settlement Complicated

Early in July the Council of Foreign Ministers reached a compromise settlement concerning the Yugoslav-Italian border. They agreed that: (1) All territory east of the ethnic boundary proposed by the French should be ceded by Italy to Yugoslavia; (2) Trieste and its environs should be internationalized,the Free Territory of Trieste to be constituted within the French line between Duino and Cittanova; (3) the Security Council of the United Nations should assure the integrity and independence of the Free Territory; (4) the provisional government and the permanent statute of the Free Territory should guarantee the principles of universal suffrage, democratic government, and the fundamental freedoms of religion, press, language, schools, and access to public services.; and (5) a special commission representing the Big Four should prepare a preliminary report concerning the provisional government and permanent statute for Trieste for the Council of Foreign Ministers which, in turn, would present recommendations to the Peace Conference.

Complications Arise

The implications of this broad basic agreement have given rise to numerous complications which indicate that a final settlement may not be reached for some time. The four members of the special commission have not reached agreement of what is meant by "internationalization". The Soviet conception of "internationalization" actually would make the Free Territory of Trieste part of the area of Eastern Europe under Soviet hegemony. Yugoslavia has gone even farther. The Yugoslav statement, submitted to the commission by Dr. Aleks Bebler, flatly rejected the proposed internationalization, but added that, if internationalization must be carried out, there should be a "real union" with Yugoslavia. "Real union", as proposed by the Yugoslavs, would take the form of the appointment of a governor by Yugoslavia, a customs and monetary union between the Free Territory and Yugoslavia, a common railway administration managed by the Yugoslav railways, a Yugoslav free zone in the port of Trieste under sole Yugoslav jurisdiction, and Yugoslav representation abroad for the Free Territory. Dr. Bebler also suggested that the provisional government be formed from the pro-Yugoslav liberation committees and political groups now operating in Zone "A" outside the Allied Military Government (See Int. Rev. No. 18, page 11.).

The Italians, probably with British support, have argued against these Yugoslav proposals. They maintain that the institutions created in Zone "A" under the AMG provide a satisfactory basis for the transitional regime, and urge that Italy represent the Free Territory abroad, and that Trieste should be in a customs and monetary union with Italy. Foreign Minister-designate Pietro Nenni of Italy has also been contacting various delegations at the Paris Peace Conference in an effort to get the Free Territory expanded to include Pola and the western Istrian coast.

Other Problems To Be Solved

Certain other problems remain to be solved, largely in connection with the transition from Allied occupation in Zone "A" to the establishment of the international administration. The question of the size and composition of the security force for the Free Territory, both during and after the transitional period, has not yet been resolved. The transfer of both Italians and Yugoslavs who do not wish to remain in Trieste or Venezia Giulia, under the proposed arrangement, to the country of their selection must be arranged. A revision of the Morgan-Jovanovic agreement among the Yugoslavs, British, and Americans must still be worked out with a view to eliminating the Yugoslav detachment in Zone "A" and permitting realignment of Yugoslav and Allied forces along the line proposed by the French instead of along the present Morgan Line.

Intelligence Review, Issue 53, 20 Feb 47, pp. 16-22.
Feature Section
The Security Council and Trieste

The United Nations' Security Council, on last 10 January, approved the three annexes to the Italian Peace Treaty establishing the Free Territory of Trieste and the Free Port of Trieste. (See map on page 18.) These documents are (1) Annex VI, Permanent Statute of the Free Territory of Trieste; (2) Annex VII, Instrument for The Provisional Régime of the Free Territory of Trieste; Annex VIII, Instrument for the Free Port of Trieste. The assignment to the Security Council of responsibility for the future of Trieste is set forth in Article 21 (Sec. III) of the Italian Treaty. The "Allied and Associated Powers" and Italy recognize the Free Territory of Trieste and agree "that its integrity and independence shall be assured by the Security Council ..." The Free Territory shall be governed by the provisional régime established by the Council of Foreign Ministers and approved by the Security Council. This government shall remain until the Security Council effects the establishment of a government under the Permanent Statute.

Objections in the Security Council

When the documents were presented for the approval of the Security Council, some U.N. representatives expressed doubt as to whether the Charter gives the Security Council power to accept responsibility for the Trieste area or not. Mr. N.J.O. Makin, Australian representative and President of the Council during January, stated that, in accepting the duty assigned to it by the Treaty, the Council would, in effect, become the supreme governing body of the territory and city, and the ultimate authority over its government and internal affairs. At Paris, the Australians had pointed out that, whether the Charter authorized such power for the Security Council or not, there was still another objection - the veto. In a crisis the veto could prevent the Security Council from executing the mandate of the Treaty; therefore, Charter revision of the veto right must precede the assumption of such an obligation. The Australian representative denied that Chapters VI and VII of the Charter (Pacific Settlement of Disputes, and Action with Respect to Threats to the Peace, Breaches of the Peace, and Acts of Aggression respectively.) authorized the Council to give any guarantees of independence or integrity to a specific territory. Makin urged either the amendment of the Charter authorizing the acceptance of the treaty provisions or, lacking an amendment, an effort by the signatories to the treaty to refrain from the threat or use of force against the Free Territory.

The Syrian representative on the Security Council also questioned the authority of the Council. The obligation of the U.N. member States to accept and carry out the decision of the Security Council in respect to the Italian Treaty also was regarded skeptically.

A statement submitted on behalf of the Secretary-General by A.A. Sobolev, Assistant Secretary-General in charge of Security Council affairs, found that the Council had the authority to assume the responsibilities, and that the member States were obligated to execute the decisions of the Council. Representatives of the Big Four also supported the treaty provisions. Andrei A. Gromyko, Soviet Union representative, pointed particularly to Article 24 of the Charter. ("In order to assure prompt and effective action by the United Nations, its members confer on the Security Council primary responsibility for the maintenance of peace and security, and agree that in carrying out its duties under this responsibility the Security Council acts on their behalf ... specific powers granted ... for the discharge of these duties are laid down in Chapters VI, VII, VIII and XII." The latter two refer to Regional Arrangements and Agencies, and International Trusteeship, respectively.) Sir Alexander Cadogan of the United Kingdom agreed that the Article was sufficiently broad to cover the problem. The United States representative, Herschel Johnson, asserted that any potential trouble area is rightly the concern of the Security Council. International territory requires international guarantees, not Big Power "trusteeship", he said. Alexandre Paroli of France agreed that the Charter gives the Council broad powers, and advised against restrictive interpretation of the Charter. When the vote was taken, Australia abstained, and the other 10 members approved the Trieste provisions of the Treaty.

The Security Council's Responsibilities

General. - Under the Permanent Statute, the Security Council assures the following: (1) the "integrity and independence" of the Free Territory; (2) the protection of the "basic human rights of the inhabitants"; and (3) the maintenance of internal order and security. No armed forces, except those under the direction of the Security Council, are to enter the Territory.

The Governor. - The Governor, an international official responsible only to the Security Council, shall be appointed by that body after it has consulted the Yugoslav and Italian Governments; he must not be a citizen of Yugoslavia, Italy, or the Free Territory; his salary and allowances are to be paid by the U.N. The Security Council may suspend or dismiss the Governor from office and appoint his successor.

(Inserted here, without their biographic details, from pp. 62-63 of the same issue:

It was the United States view that the Governor should not be a national of the Big Five. Some of those mentioned for the Governorship were:
- Henry Guisan, retired Commander-in-Chief of the Swiss Army;
- Lleras Camorgo, former President of Columbia;
- Alfred Emil Sandstrom, former justice of the Swedish Supreme Court and then head of the Foreign Capital Control Office;
- Bengt G Nordenskjold, Lieutenant General and Chief of the Royal Swedish Air Force;
- Leif Egeland, Minister of the Union of South Africa to Stockholm.)

Responsibilities of the Governor Under the Provisional Régime. - The Governor is to: (1) select members of the Provisional Council from among the Territory's inhabitants after consulting Yugoslav and Italian Governments; (2) submit reports to the Security Council regarding the Territory's administration; and (3) appoint a Director of Public Security who will administer the police force. Fifteen thousand troops, 5,000 each from the United Kingdom, the United States, and Yugoslavia, will be at the disposal of the Governor for 90 days after he takes office, unless the Governor requests the Security Council to continue their services for an additional 45 days. (Any of the Governments concerned can refuse the participation of its forces upon informing the Security Council.)

Responsibilities of the Governor Under the Permanent Statute. - The Governor is to: (1) prevent the entry into force of any legislative or administrative measures he deems in contradiction of the Statute, and refer the question to the Security Council, if the Popular Assembly or Council of Government rejects his views; (2) appoint members to the judiciary from candidates named by the Council (or from other persons after consultation with that group); (3) investigate and dismiss judges; (4) enforce: observance of the Statute, the protection of basic human rights, and the maintenance of public order and security; (5) in an emergency, he may assume all control and take any measures he sees fit to fulfill his duties; (6) submit an annual report to the Security Council; and (7) appoint the Director of the Free Port.


The internationalization of Trieste was one of the most difficult questions debated by the Council of Foreign Ministers and the Paris Peace Conference. No nation was satisfied with the compromise solution which will now go into effect. For several weeks during the sessions of the Peace Conference, the Soviet Union and the Western Powers disagreed on basic concepts of internationalization: (1) the U.S.S.R urged that the selection of the territory's Governor be made unilaterally by Yugoslavia; (2) the representatives of the Soviet Union and her satellites fought to prevent the inclusion of guarantees of protection of the basic human rights of freedom of religion, press, speech, assembly, and political opinion; (3) The Soviets supported the Yugoslav demand that the "international" territory be linked to Yugoslavia by trade, customs union, and currency; (4) in reply to a plea by the Italian Government that the area of the Free Territory be extended for ethnic reasons to include dominantly Italian towns along the coast of Venezia Giulia, Soviet Vice Foreign Minister Vishinsky stated that, although his government would support the previous commitments of the Council of Foreign Ministers, it was the opinion of the U.S.S.R. that Yugoslavia was entitled to the the whole of Istria, including Trieste; the Foreign Minister's compromise, he said, represented a "minimum of justice".

The compromise, arrived at with such difficulty, does not promise to be the solution of the problem. The United Nations Military Staff Committee has been involved in procedural debates for more than a year. and progress in these and substantive matters has been consistently blocked by the Soviet member. Present indications are that the Military Staff Committee and the Security Council may fail to make effective progress toward the organization of a U.N. armed force for some time to come. This condition seriously weakens the Italian Treaty, and creates bewilderment and doubt regarding the intent of the principal signatories concerned. In addition to this apparently impotent guarantee, the territory is dependent on the sufferance of the permanent members of the Security Council, who have obstructionist capabilities through the veto.

The following factors suggest that, unless the East and the West can effect firm agreement on this and other problems before the U.N., a de facto government subservient to the East may well arise: (1) the present ineffectiveness of the U.N. as an enforcement agent; (2) the attitude of the U.S.S.R. and Yugoslavia as demonstrated at the peace conference; (3) the present unrest in the territory; and (4) the withdrawal of Western troops, when the Governor recommends such action.

Intelligence Review, Issue 59, 3 Apr 47, pp. 17-24.
Feature Section
The Security Council and Trieste

The Free Territory of Trieste, located at the head of the Adriatic Sea, between Italy and Yugoslavia (See map on page 18.), has an area of 310 square miles; and its population is approximately 350,000, of whom 260,000 reside in the city of Trieste and 90,000 in the outlying areas. Approximately 75 percent are Italians, 20 percent are Slovenes, and the rest are of other nationalities.

The Territory's chief importance lies in its excellent port, which, with its rail connections, forms the best gateway between Central Europe and the Mediterranean. It is strategically important because Soviet power would be extended to the upper Adriatic and to the Italian frontier, if the Yugoslavs were able to establish control over the Territory. Thus, Soviet control over Austria and Czechoslovakia would be increased.


From medieval times until the end of World War I, with only a brief interruption in Napoleon's era, Trieste was under Austro-Hungarian domination. From about 1870 until 1914, it grew to its present position as a major port. The opening of the Suez Canal and the increased industrialization of Central Europe played a large part in its growth. Since Trieste was its best seaport, the Austro-Hungarian Empire fostered its development in every possible way. The Empire spent huge sums on railroads and port facilities, set very low freight rates to and from Trieste, and heavily subsidized its merchant marine.

After Trieste was given to Italy in 1918, it never entirely regained its former position in world trade. Since Italy had several other good ports, there was little reason to subsidize Trieste. Much of the Central European trade was shifted to North Sea ports, even though in many cases Trieste was much nearer.

In May 1945, Tito's forces first reached Trieste and overran most of the Venezia Giulia region, making contact with Anglo-American forces under General Harding. No detailed agreement had been reached regarding what territory should be occupied by each Army, and many clashes resulted. On 10 June the Duino agreement was signed, dividing the Venezia Giulia region into two zones, designated "A" and "B", and separated by the "Morgan Line". Since the city of Trieste lay within Zone "A", the Yugoslav forces withdrew. Zone "A" was placed under an Anglo-American Military Government; and Zone "B", under a Yugoslav Military Government. This arrangement is still in effect, and will remain in force until after the Peace Treaty with Italy has been ratified.

Economic Problems

The Free Territory will not constitute a well-balanced self-sufficient economic unit. Its chief industries are shipping, ship building, ship repair, metallurgy, light machinery manufacturing, oil refining, textiles, chemicals, and vegetable oil production. Agriculture, fishing, and canning are carried on in the outlying areas, but only a small proportion of the food necessary to feed the population can be produced locally.

The new government will face serious problems in reestablishing its manufacturing and foreign trade on a sound basis, since Trieste can exist only by trading her products and services for food and raw materials. Reconstruction of war damage to docks, factories, and railroads has lagged. There is considerable unemployment and living costs are high. At present, Trieste has insufficient goods and services available for export to pay for needed imports. The situation, if not remedied, will place the Free Territory in a very disadvantageous bargaining position.

An International Commission of Inquiry was appointed by the Council of Foreign Ministers in December 1946 to investigate the general financial position of the Free Territory. It has completed its study and has recommended: (1) a complete overhaul of the financial system; and (2) extensive reforms in the administrative organization, including dismissal of 30 to 40 percent of all public employees. The Commission drew up an estimated budget for the fiscal year 1947-48. The British, American, and French delegates agreed on a probable deficit of 4.6 billion lire ($20,400,000, at 225 lire to the dollar), while the Soviet delegate insisted that it need not exceed 48 million lire ($124,000).

The Western delegates estimated the foreign exchange deficit for the first quarter of the 1947-48 fiscal year at $5,000,000 and recommend that the Council of Foreign Ministers consider means of providing credit. The Soviet delegate, however, insisted that no deficit need occur. No agreement was reached on customs duties.

The Commission recommended that Trieste be granted favorable terms for purchase of food, coal, crude oil, oil seeds, steel, ships, and other necessary imports. It recommended that a Central Bank be organized, and that a new local currency be issued to replace existing currencies. It urged the early establishment of a strict system of export and import licensing, as well as other measures for the control of foreign exchange.

The Commission pointed out the necessity of a study of freight rates and cargo handling charges to insure: (1) that the port of Trieste was in a good competitive position with respect to alternative ports; and (2) that neighboring countries were not discriminating in favor of other ports. The disputed points will be discussed by the Council of Foreign Ministers.

It is too early to predict how rapidly the economic recovery of Trieste will progress, It will depend on: (1) general European recovery; (2) the efficiency of the local government; (3) the willingness of the United Nations and its individual members to back up the Trieste agreement; and (4) the willingness of all her neighbors to cooperate in the revival of Trieste's trade.

Operation and Control

The Council of Foreign Ministers, meeting at Paris in the summer of 1946, agreed to the establishment of a "Free Territory of Trieste" under the sponsorship of the Security Council of the United Nations. The Territory was to be administered by a Governor, appointed by the Security Council and responsible to it. The Foreign Ministers drew up a Provisional Statute and a Permanent Statute, which were incorporated into the Italian Peace Treaty. (See Int. Rev. No. 53, page 16.) The terms of these statutes will be binding on the government of the Territory, and on the governments signing and ratifying the treaty.

An International Commission - consisting of the United States, the United Kingdom, France, the Soviet Union, Italy, Yugoslavia, Czechoslovakia, Poland, Switzerland, Austria, Hungary, and the Free Territory - will deal with matters concerning the port, within limitations prescribed by the Permanent Statute.

A Constituent Assembly, popularly elected, will draw up a Constitution, which must be consistent with the Permanent Statute. A Popular Assembly will then be elected. This body will exercise the legislative power and will elect the Council of Government, which will advise and assist the Governor. Until the Permanent Statute is put into effect, the Council will be appointed by the Governor. The Judiciary will at first be appointed by the Governor, but the Constitution may make other provisions for the appointment of judges.

The Governor, who will be neither Italian, Yugoslav, nor a citizen of a Big Four nation, is given broad powers by the Statutes. He will appoint the administrative officials, such as the Chief of Police and the Director of the Port. He also will appoint a Provisional Council of Government. He may suspend laws which, in his opinion, conflict with his responsibilities. In emergencies, when, in his opinion, public order or the independence or integrity of the Territory is threatened, he may take direct command of the police force and "take appropriate measures". How wisely and how resolutely these powers are used will depend of the strength of character and political astuteness of the Governor. The Governor has not yet been chosen, although several candidates for the office have been proposed. (See Int. Rev. No. 53, pages 62 and 63.) It is hoped that he will be agreed upon soon so that, as nearly as possible, he will be ready to take over the government of the territory by the time the treaty is ratified. Ratification should be completed in April or May.

The Free Territory will have no army, navy, or air force of its own. The Governor, upon assuming office, will have at his disposal 15,000 troops, 5,000 each to be furnished by the United States, Great Britain, and Yugoslavia. Each of the three contingents will be under its own commander, who, in turn, will report directly to the Governor. Administrative and logistical matters for the American and British contingents will be handled on a combined command basis under a British commander, who will be responsible to the Combined Chiefs of Staff. During the period from the day of ratification until the Governor assumes office, any operations undertaken would be in support of the Allied Military Government; therefore, responsibilities assigned to the United States - United Kingdom combined commander have been enlarged to include operational command for the period mentioned.

The Governor will determine whether the Free Territory will continue to be divided into two zones. Ninety days after assuming office, he will notify the United Nations Security Council whether or not the troops, or a portion of them, are still needed. If needed, the Governor may keep them as long as he sees fit. The over-all duration of their stay is estimated at 4 to 12 months; but, in any case, the troops must withdraw within 45 days of the date he notifies the Security Council that they are no longer required.

After the national contingents have been withdrawn, the government will rely on a police force, recruited from the citizens of the Territory, for the maintenance of law and order. A Gendarmerie also will be selected to guard the borders and, when necessary, to assist the police force.


Trieste remains a major trouble spot. It is a point where the strategic interests of the Western Powers and the Soviet Union clash. It is an area of bitter Italo-Slav rivalry. It is the chief Mediterranean seaport of Central Europe and, therefore, greatly desired by Eastern and Western Powers. The United Nations will attempt to keep peace by means of a strong Governor, backed throughout the critical period by a joint force. Economically, Trieste may prosper if Europe prospers, or stagnate if its trade is choked off by political maneuvering. As a key to future peace or war, Trieste will bear close watching.

Intelligence Review, Issue 83, 18 Sep 47, pp. 6-7.
World In Review
United Nations

... Trieste Governorship. - The Security Council subcommittee composed of delegates from Australia, Columbia, and Poland, recommended, on 10 September, that the following three candidates were the "best suited for the post" of Governor of Trieste. They were: August Buisseret, Belgium; Theodor Brock, Norway; and Joaquin Fernandez, Chile. Since there is evidence that several members of the Security Council are not in accord with this recommendation, other names are expected to be added to this list. Continued delay threatens Security Council control of the Free Territory of Trieste, which came into being on 15 September with the deposit of ratifications of the Italian peace treaty.

Yugoslav Troops Advance to New Border Ahead of Schedule

Effectuation of the Italian peace treaty this week was marked by an outbreak of rioting at Trieste and by a premature occupation of the Yugoslav- Italian border by Yugoslav forces.

By a three-Power agreement, United States and British troops were to withdraw from the Morgan Line to the new boaundary at 1000 on 16 September, local time. However, at 1930 on 15 September, a Yugoslav officer arrived at General Moore's headquarters and stated categorically that the Yugoslavs were moving to the new boundary by midnight, when the treaty became effective. Withdrawal of British and American troops began about 2200 hours and was completed by 0030 on 16 September without incident. Italian troops, however, at last report had not moved up to the new line.

Meanwhile, riots, reportedliy involving 50,000 persons, broke out in Trieste. Local police were not able to cope with the situation. This violence is believed to have no particular significance other than being evidence of short tempers and deep-seated hatreds on the part of both the Italian and Yugoslav portions of the populations.

The Italian peace treaty became effective on 15 September w2hen the Four Powers' ratifications were deposited in Paris. By this treaty, Yugoslavia receives a large portion of Venezia Giulia. Trieste, however, and its immediate environs became a Free Territory under United Nations supervision. Until such time as a Governor is appointed, the Anglo-American and Yugoslav Military Governments will continue to have jurisdiction over their respective zones of the Free Territory.

Intelligence Review, Issue 84, 25 Sep 47, pp. 10-11.
World In Review
The Situation in Trieste

Pursuant to the Italian Peace Treaty, which became effective on 15 September, Yugoslavia received a large portion of Venezia Giulia; but the city of Trieste and its immediate environs became a Free Territory under United Nations supervision. The treaty further provides for appointment by the Security Council of a governor who is to be responsible for peace and order in the Free Territory. So far, however, no candidate has been found acceptable to both the U.S.S.R. and the Western Powers. Until a governor is appointed, the Anglo-American and Yugoslav Military Governments will continue to have jurisdiction over their respective zones of the Free Territory of Trieste.

In the territory which Yugoslavia was to receive as specified in the Peace Treaty, Allied troops prepared to evacuate. Because of the Yugoslav's decision to ignore the turnover time on the morning following deposit of the Treaty, it was decided to withdraw all Allied troops immediately to the provisional Italo-Yugoslav boundary to avoid risk of incidents. Disputes arose despite this precaution, but Allied detachments stood their ground and, on 16 September, handed over, without major incidents, only that territory outlined by the new provisional boundary.

Yugoslav newspapers devoted most of their space to flagrant and abusive attacks on United States Occupation Forces. In 10 specific charges, official statements and other press articles accused United States Occupation Forces of committing all sorts of attacks and crimes prior to withdrawing from that part of Venezia Giulia falling to Yugoslavia. The charges included maltreatment of the populace, destruction of property, and plundering. All of these charges have been refuted by the Commanding General of United States Troops in Trieste. The situation at present is under control, but not yet stabilized.

The Yugoslav's actions appear to have been probing maneuvers to determine just how far they could go to improve their position by means of bluff and intimidation. The cool-headed and resolute action by United States commanders and men thwarted these moves. The Yugoslavs have no intention of starting a conflict with the United States and United Kingdom Forces, it is believed, but similar tactics may be employed in the future to develop chaotic conditions. The Yugoslavs then would have a propaganda weapon which they could use to claim that only through complete annexation of the Free Territory of Trieste to Yugoslavia could a stabilized situation be achieved.

Intelligence Review, Issue 87, 16 Oct 47, pp. 19-20.
World In Review
Changes in Yugoslav Attitude in Trieste

The Yugoslavs apparently have adopted a more conciliatory attitude toward Italy, Great Britain, and the United States in discussing problems relating to Trieste. In a meeting with Italian representatives at Udine, Yugoslav representatives reportedly suggested a partition of the Free Territory of Trieste. Under this reported proposal, the Italians would receive the city of Trieste and the Free Territory north of Capodistria (Zone A) and the Yugoslavs would get the southern portion (Zone B) of the Free Territory. No agreement was reached.

A provisional agreement has been reached, however, between the British commander on the Austrian frontier and Marshal Tito, designed to prevent border incidents and to effect a quick settlement if any occur. Such incidents, in the past, have been a constant source of irritation, diplomatic correspondence, and recriminations in the Yugoslav press. A late reporet indicates that this proposal of cooperation has been extended to both United States and British forces in Trieste.

This reported offer to the Italians is the second attempt by the Yugoslavs to settle the Trieste controversy through bilateral agreement. Previously, Tito offered to agree to Italian acquisition of Trieste in exchange for Gorizia. If the present offer had been accepted by the Italians and approved by the United Nations Security Council, it would have meant the end of the Free Territory and the withdrawal of American and British troops. Yugoslav pressure, bluff, and intimidation completely failed during the confused situation of 15 September. (See Int. Rev. No. 83, page 6.) Any such tactics employed in the future would be ineffective as long as American and British troops remain. Such pressure, as well as infiltration and agitation, might have greater chances of success against Italian forces. Both Yugoslav proposals are examples of the Yugoslavs' ability to shift tactics and adopt a conciliatory attitude in one sector while continuing, or even increasing, their pressure in others.

Intelligence Review, Issue 92, 20 Nov 47, pp. 25-29.
Feature Section
The Problem of Trieste

Situation There Now Relatively Calm, but Most of the
Important Questions Concerning Future of Area Remain Unsettled.

The Trieste area (For a map of this area, see Int. Rev. No. 59, page 18.) has been a continuous source of controversy between the Western Powers and the Soviet Union, and between Italy and Yugoslavia, since the Italian Peace Treaty was drafted. Yugoslav efforts to gain control of the territory reached a climax on ratification day, last 15 September, when Yugoslav troops demanded entry into the Anglo-American Zone. After this attempted coup failed the Yugoslavs seemed to become more cooperative toward the local United States and British authorities. Nevertheless, during the two months since ratification, the provisions of the Italian Treaty concerning Trieste have remained essentially unfulfilled. The Trieste situation is now outwardly calm, but the basic conflicts have not been resolved, and further trouble can be expected.

Situation Before Ratification Day

The period between 10 February, when the Peace Treaty with Italy was signed, and 15 September, when final ratification occurred, was marked by continued Italo-Slav bitterness occasionally flaring into violence. The constant friction between Anglo-American and Yugoslav forces was reflected in several cases of detention of Allied personnel by the Yugoslavs. These individuals were eventually released unharmed, but the episodes did nothing to improve the atmosphere between the Western Powers and Yugoslavia.

Ratification Day (See Int. Rev. No. 84, page 11.)

The peace treaty with Italy became effective at midnight last 15-16 September. Yugoslav troops north of Trieste moved rapidly into the territory awarded to Yugoslavia by the treaty. They also attempted to enter the Anglo-American Zone of the Free Territory (See Int. Rev. No. 83, page 6.), but were turned back by a flat refusal of the United States commander. This Yugoslav action has been interpreted as an attempt to seize control of part or all of the Anglo-American Zone by a bloodless coup.

The next day (16 September), riots involving several thousands of persons broke out, and a number of Trieste residents were killed or injured. Local police were unable to bring the situation under control until that evening.

Yugoslav Actions After Ratification Day

Immediately following the incidents of 15-16 September, there were Communist-inspired strikes of very brief duration within the Territory, and abusive attacks on United States Occupation Forces were made in the Yugoslav press. This propaganda included charges that United States forces: (1) mistreated the populace; (2) destroyed property; and (3) looted before withdrawing from that part of Venezia Giulia which the treaty ceded to Yugoslavia. United States military authorities were also accused of seizing administrative and executive power in the Free Territory of Trieste, a "gross violation" of the treaty. In less than a week, however, the name-calling had subsided, and an era of apparent Yugoslav friendliness began.

Change in Yugoslav Attitude (See Int. Rev. No. 87, page 19.)

After the failure of the attempted coup and the dwindling of their propaganda, the Yugoslavs changed their tactics, adopting an attitude of apparent friendliness and conciliation. Border incidents decreased, and Anglo-American personnel detained by the Yugoslavs for alleged border violations were released speedily. Yugoslav authorities made overtures for: (1) cooperation on interzonal problems; (2) fraternization among troops; and (3) settlement of border incidents. Communist-dominated organizations for the first time offered to participate in the governmental bodies.

These proposals were not accepted by United States and British authorities because: (1) several of the proposals were apparently aimed at uniting the zones which, for economic reasons, is presently not feasible; (2) commitments made at this time would tend to limit the freedom of action of the future Governor; and (3) Communist offers to cooperate are under suspicion, since the Communists are not believed to have abandoned their ultimate goal of obtaining control of the whole Territory.

Recent Yugoslav Diplomatic Maneuvers

Yugoslavia resumed her aggressive tactics on the Trieste question before the United Nations Security Council on 8 November. A note was filed with the Council accusing the United States and Great Britain of "unjustified and hostile action" in Trieste and of at least six "gross violations" of the Italian Treaty. The note proposed the establishment of a United States - British - Yugoslav military government headquarters, to "consider all questions relating to the Free Territory of Trieste as a unity." This proposal ignores various provisions of the treaty relating to the administration of the Free Territory, pending assumption of office by the Governor.

Governor Not Yet Selected

The problems of choosing a Governor for the Free Territory of Trieste has not yet been solved by the U.N. Security Council. For nine months a subcommittee of the Council has been unable to agree on a man for the post, although various names have been proposed. The chief difficulty has been the Soviet Union's refusal to agree to the appointment of any "strong" candidate. The Western Powers, on the other hand, have refused to endorse any man of doubtful ability or one likely to succumb to Soviet pressure. The treaty endows the Governor with wide powers; and, until he is chosen, the Territory is to be administered "by the Allied military commands within their respective Zones." By the terms of the treaty, the continuation of the present bizonal system is mandatory until a Governor is installed. Furthermore, neither the Permanent Statute nor the autonomous currency system of the Free Territory can come into force until the Governor has taken office.


The situation within Trieste is relatively peaceful at present, but most of the important problems concerning the area remain unsettled. The basic tensions which still exist in Trieste are such that local incidents, similar to those which occurred on ratification day, could precipitate war. However, neither the Yugoslavs nor the Soviets, it is believed, are yet ready to provoke such an armed conflict.

Trieste is one of the places in Europe where the interests of East and west clash most violently. The Soviets would like nothing better than an Anglo-American indication of weariness with the Trieste problem. Any intimation that United States - British firmness in Trieste is only temporary would tend to encourage Soviet efforts in Greece, Austria, and other troubled regions, and would place the United States at a disadvantage at the Council of Foreign Ministers. Anglo-American retrenchment might lend impetus to Soviet strategic plans.

Intelligence Review, Issue 99, 15 Jan 48, p. 8.
World In Review
United Nations

... Failure of the Italian and Yugoslav governments to agree upon a candidate for the governorship of Trieste will have its repercussions at the U.N. The question will now be returned to the Security Council for attempted settlement by the United States, Great Britain, and the U.S.S.R.

Intelligence Review, Issue 102, 5 Feb 48, pp. 14-15.
World In Review
Economic Problems in the Free Territory of Trieste

Withdrawal of some capital and industrial interests by the Italians from the United States - United Kingdom zone of the Free Territory of Trieste has aggravated the economic problem created by the establishment of the Free Territory. The withdrawal is understandable caution on the part of the Italians as a result of the tense political situation.

Economic conditions in the Yugoslav zone of the Free Territory are more critical than in the United States - United Kingdom zone. Yugoslav action in damaging and removing industrial and agricultural equipment has greatly aggravated already deteriorating conditions. The United States Political Advisor in Trieste suggests that the Yugoslavs denuded their zone in the belief that they were creating problems for the future governor, not for themselves. They expected that their responsibility would end before their actions took full effect.

The Yugoslavs' actions, it is believed, was another part of their plan to gain domination of the entire Free Territory by any means. In this case, creation of economic chaos was the chosen weapon. Yugoslav policy has boomeranged because of (1) failure of the Security Council to appoint a Governor; and (2) refusal of the United States to allow integration of the zones prior to this appointment.

Intelligence Review, Issue 104, 19 Feb 48, pp. 54, 57-59.
The Situation in the Balkans, Trieste, Greece, and Turkey

Yugoslavia, Albania, Bulgaria, Rumania, and Hungary
Already Completely Subservient to the Soviet Union.

Although the policies of the U.S.S.R. are already exerting an ever increasing influence on the activities of other nations, nowhere is this influence stronger than in the Balkans and contiguous areas. ...

Soviet Policy in Trieste

The port of Trieste has become an important part of the post-war territorial demands made by Yugoslavia on Italy. Soviet Foreign Minister Molotov was insistent at the peace treaty conferences that this demand be implemented. The United States and the United Kingdom were, however, equally as emphatic in their objections to this particular transfer. The resultant compromise created the Free Territory of Trieste. Losing their initial battle for immediate possession, the Soviets, through the Yugoslavs opened a campaign, short of war, for ultimate seizure of control of the Free Territory.

Situation in Trieste

The Free Territory of Trieste, which came into existence on 15 September 1947, the effective date of the Italian Peace Treaty, includes an area of 300 square miles. The Treaty provides for a government consisting of: a Governor, appointed by the Security Council; a Council of Government, selected by the Governor; a popularly elected Assembly; and the Judiciary. A Constitution, created by the people of the Territory, is to become the foundation of the government. The Treaty, however, further provides that, until a Governor is appointed, the Free Territory will continue to be administered by the Allied military commands within their respective zones. Because of Italo-Slav bitterness and the strategic importance of the area, and because of the potentialities of the position of Governor, the Security Council has been unable to agree on a man acceptable to both the Western Powers and the U.S.S.R.

As a result, the United States, United Kingdom, and Yugoslavia each maintains a force of 5,000 in its zone of the Territory -- the United States - United Kingdom zones being merged. This force, provided for in the Treaty, will remain until 90 days after the appointment of the Governor. Only if the Governor so requests may the troops be retained longer.

The Yugoslavs have administered their zone in typical police-state fashion. Their removal of industrial equipment from their zone has made economic conditions increasingly intolerable. Conditions in the United States - United Kingdom zone are good in comparison with those in the Yugoslav area. Some progress has been made and relative order maintained in spite of obvious difficulties and a persistent campaign waged by the Yugoslavs to bring discredit on the military government of the United States and the United Kingdom.

That the Free Territory will long remain a political trouble spot is assumed. That it will face increasing economic problems also is probable. It is extremely unlikely that the U.N. Security Council can agree on a Governor in the foreseeable future. ...

Intelligence Review, Issue 106, 4 Mar 48, pp. 13-14.
World in Review
Possible Effect on Trieste of Italian Elections

The Italian elections in April will be of great importance to the administration of the United States - United Kingdom Zone of the Free Territory of Trieste. If the Italian elections result in a government along the lines of the present coalition, with the Communists excluded, then present conditions need not be materially altered in Zone "A" of the Free Territory, and Western adminstration can at least work freely toward improvement there. Such a result in the elections also would give increased encouragement to all non-Communist elements of the population. This encouragement would be reflected in more effective cooperation with the Anglo-American administration in Trieste.

If, however, the Communist - Left Wing Socialist combination gets 40 percent of the votes in Italy, as a United States official in Rome predicts, it will have gained a plurality. In that case, it will be extremely difficult to keep the Communists out of a coalition Italian Government. Furthermore, such Communist participation in the Government possibly could be followed by ultimate seizure of absolute control by the Communists along the line followed in Czechoslovakia. In either case, it can be expected that the Communists will use every available device to embarrass the United States - United Kingdom leadership in Zone "A" of the Free Territory.

If the Communist - Left Wing Socialist combination should gain sufficient votes in the election to force inclusion of Communists in a position of leadership in the new Government, they probably would follow one of three courses of action:

a. - Request the U.N. Security Council to accept a candidate for Governor of the Free Territory mutually agreeable to themselves and Tito of Yugoslavia.

b. - Request the Security Council to accept division of the Free Territory between Italy and Yugoslavia. If either one of these requests was accepted, the United States - United Kingdom military forces would, necessarily, be withdrawn from the area. Such an eventuality is a major goal of Moscow.

c. - In the event of failure of a Communist-dominated Government of Italy to succeed in either one of these courses, the Communists would then use every opportunity to defeat Western efforts in the Free Territory of Trieste. Economic ruin, greater political unrest, and possible Communist domination would result unless the United States were willing to increase tremendously its commitments in Zone "A" of the Free Territory. The circumstances that would allow the Yugoslavs and a Communist-dominated Italian Government to bring chaos in Zone "A" are due to:
(1) present dependence of the Trieste economy to Italian sources of food, power, communications, financial enterprises, currency, etc.; and
(2) the well-known bitterness between Yugoslavs and Italians in the Free Territory.

Intelligence Review, Issue 109, 25 Mar 45, pp. 15-16.
World In Review
Reaction to Proposed Return of Trieste to Italy

The United States, the United Kingdom, and France announced, on 20 March, that they favored placing the Free Territory of Trieste once more under Italian sovereignty. The joint announcement stated that the decision to recommend return of the Territory to Italy was forced by: (1) Inability of the U. N. Security Council to agree on a Governor; and (2) Yugoslavia's action in virtually incorporating her zone into the Yugoslav national structure, contrary to the desire expressed by the Powers to give an independent and democratic status to the Territory.

According to first reports from Italy, the announcement was received with "unbounded joy" throughout that country, and all comment indicated that the proposal will add considerable strength to the parties opposing the Leftist bloc. Communists in Italy were generally confused and concerned. Communist leader Palmiro Togliatti ridiculed the move as "a cheap election maneuver and an attempt to bring Italy into the war bloc". Pemier Alcide de Gasperi challenged Togliatti to try to persuade the Soviet Union to agree to the suggestion.

The announcement was greeted with wild rejoicing by the Italian element of the Trieste population. Although minor clashes were reported, the situation as a whole was surprisingly orderly.

By 23 March, neither the Soviet Union nor Yugoslavia had officially reacted to the proposal. Both Radio Moscow and Radio Belgrade, however, denounced the proposal as a "vulgar eloection maneuver", initiated behind the back of the Soviet Union. The Yugoslav Ambassador to the United States, in a formal statement, bitterly castigated the suggestion, alleging that the United States had refused to allow Italy to accept an offer made by Tito in November 1946 involving the return of the city of Trieste to Italy. The Communist press throughout Europe followed the Radio Moscow line in denouncing the proposal as an imperialistic attempt to influence the Italian election.

All comment from non-Communist centers agreed that the move by the United States, the United Kingdom, and France was a shrewd and effective maneuver in the battle for Italy, and that it definitely places Moscow in a difficult position. In view of the importance of the issue, the Kremlin, it is believed, will attempt to neutralize the move, possibly by some counter-proposal which the Soviets hope will be equally or more attractive to the Italians.

Intelligence Review, Issue 110, 1 Apr 48, p. 5.
Current Communist Propaganda

Eastern Europe. - The propaganda machinery of the Soviet Satellite States has reacted voluminously and violently to the United States-British-French proposal that Trieste be returned to Italy. The proposal is described as "a new imperialistic attack against the peace front" and "an aggressive act intended to sow trouble in international relations". The Western Powers are accused of (1) "General revisionism"; (2) violating the Italian Peace Treaty; (3) unwarranted provocation against Yugoslavia and her friends; and (4) attempting to influence the coming Italian elections.

Intelligence Review, Issue 113, 22 Apr 48, pp. 15-17.
World In Review
Capabilities of the Yugoslav Armed Forces

If the Soviets decide to take strong action in either Italy or Greece, their most potent Satellite, Yugoslavia, probably will occupy the center of the stage.

In the last six months, there has been little change in the over-all strength or disposition of major military units in Yugoslavia. (See Int. Rev. No. 105, page 30.) The 240,000 ground troops are still organized into 6 operational armies located as follows: First in Nis; Second in Zagreb; Third in Novi Sad; Fourth in Ljubljana; Fifth in Skoplje; and Sixth in Sarajevo. Of a total of 33 divisions, 4 are armored. Yugoslav Armed Forces are receiving increasing supplies of Soviet equipment. At present, approximately 50 percont of the artillery, 70 percent of the 550 tanks, and 50 percent of the automatic weapons and mortars are of the World War II Soviet type. For instance, 300 artillery pieces from Soviet supplies in Bulgaria arrived in Yugoslavia this year. Most of these went to the Fifth Army. Shortage of motor transport and weakness in service elements are two of the Army's greatest limitations.

The Yugoslavs have disposed what appears to be their most effective army, the Fourth, to face Trieste and Italy.. The disposition of this army, composed of seven infantry and one armored divisions, has remained relatively unchanged for the last six months, except for interior shifts. The Fourth Army has been restored to its normal strength of approximately 50,000 after having been depleted for 2 months by the release of several age groups. The most interesting activity within the Fourth Army's area has been the training methods of an unidentified division. One brigade at a time, this division has been conducting rail-movement exercises and assault maneuvers near strategic points of the Italian border. In their Zone of the Free Territory of Trieste, the Yugoslave have disposed 3 infantry battalions, 3 armored infantry battalions, 1 armored battalion, and 3 artillery battalions - with a total strength of approximately 5,000 men. There have been no significant movements in northwest Yugoslavia since the proposal to return Trieste to Italy.

Seemingly, the mission of the Fourth Army for the last six months has been defensive and pseudo-offensive - that is, poised to take advantage of any opportunity and to conduct a "war of nerves". Although there has been no indication that the Fourth Army's mission is to be changed, yet, with the situation in Italy about to reach a decisive state, such may happen.

If the Soviets decided to open a general offensive, this Army undoubtedly would be sent into Trieste and Italy. If the Communists were to stage a coup in Italy, they might possibly invite the Yugoslavs to assist in the destruction of "fascism" and the maintenance of their government, either as regular forces or as guerrilla units.

In either case, the Yugoslav Fourth Army, reinforced by the Second Army, could overwhelm United States forces in Trieste and overrun northern Italy within two weeks, it is believed. The Yugoslavs in Trieste occupy the strategic terrain, and the United States position could not be maintained under present circumstances. In northern Italy, the terrain would offer no impediments to a Yugoslav advance against resistance offered by a maximum of five widely disposed Italian infantry divisions.

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