The Atlantic Alliance’s Rearmament Programs and the Start of Postwar Multilateral Industrial Cooperation: Trade Integration, Financial Burden-sharing, Balance of Payments Stabilization, and the case of Italy

This contribution first briefly reviews American and NATO policies and legislation that after the end of WWII tuned the trajectory leading to combine coordinated rearmament to Western Europe with the enhancement of intra-European economic integration. The chapter focuses on the case study of the Italian economy, which was exemplary on multiple dimensions in so far as it offered unutilized industrial capacity, abundant workforce and a quickly developing domestic consumer markets which forced American economic diplomats and national economic policymakers to balance defense effort procurements and adequate supply of civilian consumer goods. As sections highlight, though it was the recipient of a fair share in total contracts placed with European industry, apparently Italy’s foreign trade did not take solace from it. Thereafter, this chapter cast light on the specific linkage between the off-shore procurement programs and the implications of coordinated financial burden-sharing at NATO level to make the argument that the off-shore procurement contracts placed by Washington or the Atlantic alliance with single member countries for supplying other allied nations with end items or spare parts was not only consistent with early U.S. concerns, since the Truman administration, for a rearmament not at variance with economic reconstruction and prosperity. Rather, in so far as they were financed through a NATO common fund and based on a financial burden-sharing principle, coordinated multilateral production programs were consistent with the priority target of balance of payments stability, foreign exchange equilibrium and foreign currency reserves, considered the very cockpit for transatlantic trade integration and the establishment of a stable European trade area and consumer market.