Twentieth-century diplomatic and trade relations
Rory Steele was born in Perth; from 1954 to 1956 he lived in Liguria and Tuscany. He graduated from Oxford University with a BA in Modern Languages (Italian and French) and from 1964 to 1965 taught in Naples at the Liceo Scientifico Mercalli. Steele entered the Australian Diplomatic Service in 1969, and concluded his career as Australian Ambassador to Italy (1997–2001). He established Italinx Pty Ltd as a trade and culture consultancy, and visits Italy once or twice a year. In 2002 he promoted the major exhibition of Renaissance art The Italians in Canberra and Melbourne. Steele’s novel about Italian wartime resistance in the Dolomites, Ghosts in the Helmet Trees, was published in 2006.
Since the early days of the European presence in Australia, people, goods and ideas have persistently moved between Italy and Australia, as Ros Pesman’s contribution to this book makes clear. But it was not until after the Second World War that diplomatic and trade relations between the two countries became significant; migration was the main driving force in the establishment and development of closer political and diplomatic ties.1
Diplomatic, political and trade relations up to the Second World War
At government level Australia at first took little notice of Italy. The six federating colonies explicitly declared that the British imperial government should safeguard Australia’s external interests. The Commonwealth of Australia had no foreign office, and dealings with the outside world through London were the responsibility of the Prime Minister’s Department. It was not until 1935 that the Australian Government, responding to an ominous international situation, established a tiny Department of External Affairs consisting of only of half a dozen officers.
Trade between the two countries, however, had picked up after the First World War when, in 1919, the Italian shipping line Lloyd Sabaudo instituted bimonthly services with Australia, and soon afterwards increased the service to 15 a year. During the 1920s Italy enthusiastically bought raw materials from Australia and exported manufactures – at a ratio of five to one in Australia’s favour. For decades after Federation the 1883 Anglo-Italian Treaty of Commerce and Navigation that had previously applied to the six colonies had continued to govern Australia’s commerce with Italy. Neither Australia nor Italy felt the urge to negotiate a new treaty. Australia’s stance was spelled out by prime minister Stanley Bruce at the Imperial Conference in 1923 when he stated that ‘the whole basis of our trading policy is to try and ensure, as far as we can, the Australian market for the British manufacturer’. Bruce knew that this situation could not last indefinitely and observed that not to amend it in due course could be disastrous for Australia. Nevertheless in August 1932 Australia was a willing signatory to the Ottawa Agreement providing for preferential trade among British Empire countries. When, during that same year, Italy asked that its products be given fair condition of entry into Australia, Canberra replied that under the Ottawa Agreement it would only be possible to reduce duties ‘in the case of articles in which the United Kingdom is not interested’. Accordingly Italy cut its purchase of wool, and the following year Australian exports fell from £4.6 million to £1 million. In 1940, with the outbreak of war with Italy, the 1883 Anglo-Italian Treaty was suspended, never to be revived.2
The Second World War and its aftermath
Following the declaration of war against Italy by the Australian government, Italians living in Australia were interned, 3631 of them by 1942. Although internment ended in 1943, the legacy of that period endured for some years. Italy remained subject to Trading with Enemy restrictions and, in the absence of banking machinery to enable payments for commercial transactions, no import licences were issued. The Paris Peace Treaties were signed in 1947, under which Italy – among others – reassumed activities as a sovereign state and qualified for membership in the United Nations; these treaties were ratified by Australia the following year.
Diplomatic relations, broken in 1940, therefore resumed. In July 1949 Australia opened a Legation in Rome under C. V. Kellway as minister. A notable advance in the relationship came in July 1950 when prime minister Robert Menzies stopped briefly in Rome and met both prime minister Alcide De Gasperi and foreign minister Carlo Sforza. Menzies discussed Korea, where war had just broken out, as well as communism in Italy with De Gasperi, who in turn raised the issue of emigration, noting Italy’s 1.5 million unemployed. Later that year, the Legation in Rome reported to Canberra on issues raised between the two prime ministers and on the future of Trieste and Italy’s application for membership of the United Nations. Minister Cedric Kellway noted that ‘questions are constantly being directed at the Legation in regard to the possibility of increasing the intake of Italian migrants into Australia’, and towards reaching a formal agreement on that subject.
The migration wave
Migration, then, became the core issue in the postwar period; building and managing the migration program, with its ups and downs, remained the key element in the relationship between Italy and Australia for the next quarter of a century. Negotiations began with a meeting in Rome between the two foreign ministers in 1949. In August 1950, Sir John Storey, chairman of the Migration Planning Council, called on prime minister De Gasperi. The Italian press reported that half a million Italians were expected to migrate to Australia over the next decade. Tasman Heyes, secretary of Immigration, told an Italian delegation that it was ‘useless to hide the fact that certain sections of the Australian public were not altogether in favour of bringing large numbers of Italian migrants into the country’. However, he was certain that this opposition ‘would vanish as people became accustomed to the idea’. This prejudice within Australia’s narrowly Anglo-Irish culture was noteworthy. To deal with the political issue, Harold Holt, then minister for immigration, stressed publicly that the actual numbers of incoming Italians would be limited and would be ‘governed solely by our own needs and the type and character of the migrants available’. He went on: ‘We will be able to tap a new source of supply… a wide range of highly skilled and other workers of the kind we sorely need’. But other factors were working in favour of the idea of bringing Italians to Australia in unprecedented numbers. Italian companies such as Aziende Mangiarotti and Societa’ Anonima Elettrificazione began winning major contracts for infrastructure projects. This introduced into Australia highly skilled labour from a country that was quickly becoming an important industrial nation, and it also meant that other shortfalls in Australia’s capacities could be met – at a time when the Australian economy itself was also beginning to boom.
The Australia–Italy Migration Agreement was signed by Harold Holt and minister Don Luigi del Balzo on 29 March 1951. The Italian parliament ratified the agreement on 14 June. The Italian media reported that while Australia had set an initial quota of only 15,000 migrants, this would be increased over time. These reports drew satisfaction from the fact that there would be complete equality between Italian and Australian workers. For the next 20 years, beginning with the maiden voyage of Lloyd Triestino’s Australia in April 1951, Italian migrants in a steady stream made the journey to set up a new life on the other side of the world. Not everything went smoothly. By 1961, Australia was having its own unemployment difficulties. In June and July rioting broke out at the Bonegilla Reception Centre where many migrants were frustrated because of a lack of work available after their arrival. Minister for immigration Alexander Downer announced a cut in the unskilled migrant intake. A visiting Italian delegation noted that Italy also needed skilled workers and that unemployment there had been halved from two million to one. By 1964, 98 per cent of Italian migrants arrived in Australia by means of nominations by relatives rather than under the Migration Agreement. In the next year, immigration minister Hubert Opperman acknowledged in a speech in Rome that the Italian demand for places in Australia had lessened. During the early 1970s migration from Italy effectively ceased as that country’s economy boomed.
The relationship develops
Disastrous floods in Italy in November 1951 constituted a test for the nascent bilateral relationship. Sir John Storey, referring to a ‘tragedy beyond words’, recommended that the Australian government launch a national appeal. Minister Holt responded in a note that ‘some people think I am already too enthusiastic about Italians and their migration here. I would not want my motives to be misunderstood and the Italian programme to be jeopardised in any way’. He consulted cabinet colleagues and the leader of the opposition, and the outcome was public support given by the prime minister to a Red Cross appeal which resulted in substantial donations.
D. P. McGuire, Kellway’s successor as minister in the Australian Legation, reported to Canberra that while Italians may ‘lack zest for wars serving no real interest of theirs, they still make houses, ships, television services, churches and railways to pace the world’. In advocating the upgrading of Australian diplomatic presence in Rome, he noted that Italy was our fourth largest wool customer, and that already 10,000 migrants had gone to Australia under the new agreement. McGuire also argued that Rome, a world crossroads and conference centre, was an extraordinary source of information. Large missions were there, headed by very senior diplomats. McGuire was appointed Australia’s first ambassador to Italy in 1957 when relations were upgraded and a commercial office situated in the Embassy. This was the beginning of a significant chapter in relations between the two countries. Immigration reached its peak during the 1960s and demanded a big staff in Rome, with a building quite separate from the Embassy, as well as offices in Trieste and Messina. In the Embassy an office was established to deal with some 18,000 dual nationals receiving Australian pensions in Italy. Trade also expanded, and in March 1968 the Australian Trade Commission (Austrade) set up an office in Milan, with the trade commissioner serving concurrently as consul-general. A major milestone in relations between the two countries was the visit to Australia in 1967 by Italy’s president Giuseppe Saragat.
In the 1970s and 1980s the bonds between the two countries developed to match the impact of Italian migration to Australia. In 1973 the Australian prime minister Gough Whitlam in turn visited Italy, reporting to Parliament afterwards that in Rome, in the absence of prime minister Giulio Andreotti, he had outlined to another senior minister his Government’s thinking on foreign policy matters: ‘I found a close identity of views between our two Governments on all matters which we discussed, for example, the recognition of China and North Vietnam. I also explained to Signor Colombo our attitude to continued French nuclear testing in the Pacific’. Such high level visits in each direction have always given sharper focus to the bilateral relationship. In addition to president Saragat, two other Italian presidents have visited Australia, Francesco Cossiga in October 1988, and Oscar Luigi Scalfaro in 1998. Besides Menzies and Whitlam, prime ministers Malcolm Fraser, Bob Hawke and John Howard have also visited Italy, in 1977, 1986 and 2002 respectively. On 11 October 1988, in a speech welcoming president Francesco Cossiga, Hawke had acknowledged ‘the great historical debt’ Australia owed to ‘the hard work and ingenuity of thousands upon thousands of Italians… who had enriched our society beyond measure. Italians had made their mark in every profession and factory, city and town in Australia’.
Over the past quarter of a century, diplomatic effort has also resulted in bilateral agreements covering a wide range of areas of common interest, from double taxation to air services; from academic exchanges to cinema and tourism. In 1975 Australia and Italy signed a Cultural Agreement which remains a framework, if not a spur to action, for activities in this field. Memorandums of Understanding have been signed on science and technology cooperation; motor vehicle safety certification; game meat exports and trade cooperation, and on defence industry matters and matériel. Most recently, negotiations have been successfully concluded on working holidays for young people, and sport. Defence in recent times has become a key area of complementarity, with both countries requiring state-of-the-art military capabilities. While Italy’s industrial base is the more significant, Australia has been able to provide offsets and to develop projects at home. Prominent among many areas of successful cooperation have been the Royal Australian Air Force’s acquisition of Macchi trainers from Italy between 1967 and 1972, and the Royal Australian Navy’s purchase of the Italian Gaeta minehunter, which was modified as the Huon Class to suit Australian conditions. In 1996 a Defence Office was set up in the Australian Embassy. Australian and Italian forces have served in United Nations (UN) peacekeeping operations, notably with Interfet in East Timor in 1999: Italy’s generous contribution of a 640-strong contingent followed representations to that country by Australia.
At the level of individual communities, bilateral relations have often been strengthened by twinning arrangements between towns or regions. Some of these gemellaggi have been substantial, such as the links developed between Victoria and the Veneto region, and between Western Australia and Tuscany. Significant, too, were the naming of a Piazza Australia in Conzano in Piedmont, and a Viale Australia at Capoliveri on the island of Elba, together with celebrations recalling ties between communities sending or receiving Italian sugarcane cutters. Such links as these generally provide embassies with a good basis for involvement at grassroots level.
Postwar Italy had an urgent need to import millions of tonnes of cereals, and in 1948 its Embassy in Washington raised with Australian counterparts Italy’s hope that some of Australia’s exportable surplus could be made available. Moved partly by defence considerations and no less importantly by the need for migrants, Australia responded favourably to the Italian proposal that normal trade relations be resumed. As a consequence, Italy began buying cereals under the International Emergency Food Committee of the UN Food and Agriculture Organization, and its purchases of wool also commenced in earnest. In 1948–49 Australian exports to Italy rose to record levels (5.35 per cent of total exports), and the following year imports also grew to a new record (1.68 per cent of total imports). As in the prewar period, Australia’s exports soon began to dwarf its imports from Italy. In 1952 the Italian Legation in Canberra complained about recent import regulations that created an ‘artificial unilateral reduction of the figures of trade’ which had ‘no justification in the balance of trade, this having been, in past years, always in favour of Australia’. The Legation was told that it was normal for Australia to have a favourable balance of trade with countries that bought substantial amounts of raw materials which, anyway, tended to benefit those countries’ exports to third countries.
In the 1950s Australia received a stream of invitations to participate in international trade fairs in Italy. The first of these was to attend the Fiera del Levante in Bari in September 1954, and was followed by invitations to fairs in Padua and Parma. Minister McGuire attended the 1955 Fiera del Levante in Bari and was at that fair again in 1956, reporting after his visit: ‘I still yearn to show a Holden car, if only to counter the view of Australia as populated entirely by sheep, kangaroos and Bondi-beachers’. The establishment of the Austrade office in Milan led to a significant promotion of Australian exports during the 1970s – in traditional goods like wool, hides, coal and cereals, and increasingly in manufactures and services – and to the encouragement of inward investment from Italy. At the same time, Italy’s economic boom had an impact on the bilateral trade relationship. The Australian Embassy’s annual report in 1979 noted that, although Italy was now Australia’s sixth largest trading partner, Australia was only 29th in importance to Italy, and added that Italy ‘is more significant to Australia than we are to it’. By 1984–85, the trade balance had moved heavily in Italy’s favour – to the extent of A$300 million.
In recent years non-traditional Australian exports to Italy such as fast ferries, motor vehicle parts, processed food, wine, medicaments and defence matériel have been growing at a modest pace. Macquarie Bank has invested in Rome Airport and opened a mortgage-lending business in Italy, while the Australian Sports Commission is to establish a European training centre north of Milan. Major Australian imports from Italy have been pharmaceutical products, household equipment, specialised machinery and heating and cooling equipment. Australia now buys more than twice as much from Italy as it sells to it. From time to time, both governments have taken particular initiatives to encourage further trade and investment. In 1984 the two deputy prime ministers, Lionel Bowen and Arnaldo Forlani, signed an Economic and Commercial Cooperation Agreement that provided for a working group to meet to produce new ideas and resolve any evident problems. A very similar idea emerged in 1997 when the two trade ministers, Tim Fischer and Augusto Fantozzi, established a Business Leaders’ Forum. The forum has met a number of times since, at ministerial level and on an informal basis, with membership changing to reflect the current interests of particular firms wishing to do business. The unfortunate lesson derived from these efforts seems to be that there are limits to what even energetic government activity can achieve. In commerce as in other spheres, the horse can be taken to water but not made to drink.3
The challenges today
The 1997 trade initiative accompanied an effort at the political level to reinvigorate the relationship between Australia and Italy. Foreign ministers Alexander Downer and Lamberto Dini established an Australia–Italy Economic and Cultural Council, which met first in Rome and then again in Adelaide in 2001. Their joint declarations traversed the general progress of ties between the two countries but did not herald any major initiatives or add new substance to the relationship.
Today some 30,000 Australians live in Italy, while over 50,000 Italians visit Australia each year. Australian tourists to Italy number in excess of 80,000 annually. Of Australia’s European trading partners, Italy is our second largest export market and third largest source of imports. This said, the bilateral relationship has been remarkable more for what has not been achieved than for what has. Neither trade nor political exchanges have developed to the extent that they might have. There is no questioning the impressive contribution to Australia’s development by Italian migrants, and the later prominence in Australian society of many of their families. Also remarkable are the values both governments have shared during the Cold War and in today’s complex international environment. At all levels there is enduring goodwill, and the two countries have a most positive image of each other. Wool and cereals provided an initial solid platform for two-way trade but, although Australian exports have diversified, their total has remained stubbornly around A$2 billion per annum. Investment in each direction has been modest. Italy’s postwar economic development as well as its leading place in the North Atlantic Treaty Organization, the European Union and in international activities, represent something of a continuing missed opportunity for Australia.
One important example of the challenge is the practical issue of the diminishing number of Australian diplomats ‘on the ground’ in Italy. Australian embassies around the world tend to be smaller now than in the past for several reasons, which include enhanced technologies (visas for Australia, for instance, can now be handled electronically by Italian travel agencies) and increased pressures on budgets. The Australian Embassy in Rome is now half the size that it was 30 years ago, while the separate Immigration office – which in the 1960s boasted 15 staff based in Australia, and 100 locally engaged staff – is now an integrated section of just two locally engaged personnel. A side effect of these changes is that these fewer Australian officials based in Italy can do less than their predecessors to nurture the relationship between the two countries. It is notable that Alitalia ceased direct services to Australia in 2000, and Qantas cancelled its flights to Italy in 2003.4
There are many other reasons why the relationship has failed to realise its undoubted potential, and most of them have nothing to do with government, although it is true that over the past couple of decades both Canberra and Rome have increasingly concentrated on priorities within their own region. One factor impeding a strong relationship has been the dominance of shared stereotypes. Italians call Australia (even in headlines in economic magazines) ‘the land of kangaroos’, and retain anachronistic ideas about the country, fuelled by a lingering affection for one of the few Italian films about Australia, namely Bello, onesto, emigrato Australia sposerebbe compaesana illibata, which was released in 1971, starring Claudia Cardinale and Alberto Sordi. Italy’s small and medium enterprises are discouraged by the distance between the two countries, while for their part Australian entrepreneurs tend to consider Italy and the possibility of investing there too difficult; that is, as not worth the risk because of differences of language, business culture, bureaucratic tangles and security issues. Australia’s perceived remoteness has also discouraged Italian government ministers from visiting, given the frequent changes of government experienced there, and an intensifying European agenda on Italy’s part. Australian ministers and parliamentarians do like visiting Italy, yet have still been reluctant to commit funds of any significance to strengthen the relationship. Not enough domestic reasons have urged them to do so, and Australians of Italian origin have neither pushed them nor set an example. The result has been a comfortable partnership but one lacking substance. Acknowledging the impressively solid basis on which it is built, diplomats and trade officials never tire of endeavouring to invigorate the relationship. It has always been clear that every effort in this direction is worthwhile.
1 Research for this article was carried out in the National Archives of Australia (NAA) and in the Department of Foreign Affairs and Trade (DFAT), where the Historical Section assisted with its resources, and made available both classified and unclassified files.
2 For the section of the paper on early links between Australia and Italy, NAA files consulted include Series numbers A2910/1, A981/4, AA1539/1 and AA1963/77.
3 For the section on diplomatic and political relations after the Second World War, the main NAA files consulted are Series numbers A 1067, A 1200, A1539/1, A 1838, A 4556 and A 4558, together with despatches from the Australian Legation Series numbers A 4231 and A4231/2. NAA sources consulted for the section on migration are in Series numbers A 12111, A 1838 and A 12111. Economic material is derived from NAA files Series numbers A 1838, A 1838 and A 3300.
4 The final sections in the paper draw in part from material readily available in the public domain; specifically, for example, material available on the DFAT website – country brief for Italy. Available from: http://www.dfat.gov.au/geo/italy/.
This chapter is from Australians in Italy: Contemporary Lives and Impressions, edited by Bill Kent, Ros Pesman and Cynthia Troup (Monash University Publishing: Clayton, Melbourne. 2010). For more information about this book, or to purchase print copies, please go to http://www.publishing.monash.edu/books/ai.html.