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Report of the Administration
of the British - United States
Zone of the Free Territory of Trieste

1 April to 30 June 1949

by
Major General T. S. Airey CB. CBE.
Commander British - United States Zone
Free Territory of Trieste

Report Number 7

Section 1.
Introduction

This, the seventh report of my administration of the British - United States Zone of the Free Territory of Trieste, deals with the period from 1st April to 30th June 1949.

A substantial advance has been made toward industrial recovery. The Allied Military Government has maintained its principal objective of stimulating the shipping industry and the activities of the port, for it is on these that the economic prosperity of Trieste muse inevitably depend. The number of registered persons who are unemployed is slowly declining, but a more rapid decrease cannot be expected until the shipbuilding programme, begun early this year, is more fully developed. and until they replace, at least in part, of Trieste's merchant fleet will permit the full employment of her maritime population.

Commercial traffic through the port is steadily increasing and, in the second quarter of 1949, reached a figure exceeding that recorded for the corresponding periods of 1948 and even of 1938. This is attributed to general economic improvement and in particular to the growing volume of Austrian trade under E.R.P. [European Recovery Programme] On the other hand, efforts to recapture Trieste's lost transit and entrepot trade with those countries in the Danube basin which do not share in the Marshall Plan still fall short of success. Meanwhile, the port of Trieste has been fully repaired at a cost of nearly five thousand million lire to Italy and is ready with its unsurpassed resources of labour and modern equipment to handle the commerce of the countries of the hinterland whenever they show themselves willing and able to expand it.

In the field of finance satisfactory progress has been made toward the rationalisation of expenditure. The Zone's budget for the second half of 1949 is about to be presented and details of it will therefore be given in my next report. In addition to its general movement in the direction of a minimum financial deficit, Allied Military Government had proceeded progressively toward an investment pattern designed to increase Trieste's foreign exchange earning power and to diminish the import requirements from hard currency areas. Thus, at the end of the recovery programme, I hope that Trieste will be a foreign exchange asset rather than a liability. I do not, however, believe that this position is in any way obtainable outside the framework of the Italian economy or beyond the protection of the Italian State.

In the last analysis, Trieste's prosperity must be founded on that political stability which springs from rational and tolerant democratic values and it would be gravely menaced by any nostalgic backward trend toward the discredited doctrines of fascism and communism.

The political situation has been coloured by the growing concern of the Italian people of this Zone for the welfare of their compatriots and kinsmen living in the Yugoslav Zone of the Free Territory.

Administrative elections were held in Trieste on 12th June and in the outlying rural communes on 19th June. The new and freely elected communal administrations have their powers and responsibilities already established by law and follow the Italian system. These will consequently remain unchanged, A.M.G. acting in the capacity of caretaker central government in accordance with Annex 1 of Article VII of the Treaty of Peace with Italy. The elections were organised and conducted by the Zone President and the Communal authorities with the most scrupulous impartiality and their results are set out in Appendix "A" to this report. Of the 181,971 electors in the Commune of Trieste and 16,555 in the rural communes who received electoral certificates, no less than 94.2% cast their votes. The difference between these figures and the total electorate, which amounted to 197,266 in Trieste and 15,392 in the outlying communes, was due to the fact that 16,122 certificates could not be delivered because the persons to whom they referred could not be traced.

The most significant aspect of the result of these elections will be clearly seen in the large Italian majority of the electorate and in the small percentages of the pro-Yugoslav and the Independence groups, although the latter inevitably receives support from those elements of the population who are personally interested in the continuence of A.M.G. and who have been led to confuse existing conditions with those which would obtain in a free territory deprived of Italian economic support and protection. The elections also disclosed the extent to which the communist camp has completed its move from the Balkan to the Russian pressure area.

The results of the elections should serve to clear up the situation in Trieste and reveal its true proportions unclouded by the extravagant claims and false ideological propaganda which obscured the Giulian borderline at the end of the war. In conclusion I must again state my conviction that the future of the Free Territory of Trieste is not to be found in its perpetuation as a fragmentary and unnatural state thrown up by the disintegration of war, but rather in early agreement among the powers concerned on its return to Italy as the natural home of the majority of its people and the source of their prosperity when the Allied administration is withdrawn.