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this trade, a goal was included within its 5-year plan (1971-75) for a merchant fleet totaling 12 million g.r.t. by 1975. By way of encouraging private shipowners to meet the fleet-expansion objective, the government no longer prohibits shipowners from placing orders for ship construction in foreign shipyards; they may now do so when domestic yards cannot meet domestic fleet requirements.

On 31 July 1972, shipowners had placed on order for delivery between 1972 and 1978 a total of 53 merchant ships amounting to about 3.4 million d.w.t.; however, only three dry cargo ships totaling 33,000 d.w.t. and one 138,800-d.w.t. tanker were to be built in foreign yards. Ship types reflecting the largest amount of tonnage on order were as follows:

In addition to ships of 1,000 g.r.t. and over, the fleet includes several hundred smaller merchant ships with are employed in Italy's coastal trade and trade with countries bordering the Mediterranean Sea. In mid-1971 the fishing fleet had 134 vessels between 100 and 499 g.r.t. and 69 between 500 and 1,999 g.r.t.; the 203 units totaled 85,000 g.r.t.

The Ministry of Merchant Marine administers the maritime laws and regulations on both domestic- and foreign-ship operations. Italy is a member of the Inter-Governmental Maritime Consultative Organization (IMCO) and a party to the following IMCO conventions: Safety of Life at Sea, 1948 and 1960; Prevention of Collisions at Sea, 1960; Oil Pollution, 1954 and 1962; and Load Lines, 1966.

Despite the government's concern for a fleet that would more adequately satisfy the country's economic needs, it subsidizes only the operations of the Finmare companies and local passenger and mail services of several smaller companies. Indirect government subsidization is provided shipowners through loan extensions for the construction, modernization, or repair of merchant ships; through ship depreciation allowances; and through partial financing of new ships purchased as replacements for scrapped tonnage. Shipowners receive tax benefits in the form of tax-free reserves which have accrued from profits of ship sales and are to be spent for ship-replacement purchases.

Italy neither prohibits Italian shipowners from registering ships under foreign flag nor foreign shipowners registering ships under Italian flag. It has been estimated that between 1.5 million and 2 million g.r.t. of Italian-owned shipping is registered under foreign flags, including a considerable amount of tonnage under Liberian and Panamanian flags of convenience. Cargo preference laws provide that, without government authorization, no trade can be carried on ships of foreign countries that have discriminated against Italian-flag ships. In addition, the carriage of Italy's coastal trade is restricted to domestic-flag ships.

Of the estimated 37,000 seafaring personnel employed on Italian-flag merchant ships of 100 g.r.t., and over, more than 35,000 are nationals. In addition, an estimated 15,000 Italian seafaring personnel are employed on ships registered under flags of convenience. Because of strong maritime union participation, Italian seafaring personnel are among the world's highest paid, in both wages and other benefits.

The government operates about 25 Nautical Technical Institutes for training deck and engineering officer candidates. They provide 5-year courses in navigation, marine engineering, and ship construction. The government also sponsors about 30 merchant marine schools for training seamen and specialists.

I. Civil air (C)

Alitalia-Linee Aeree Italiane (Alitalia), the national airline, is almost entirely government owned. The state holding company, Istituto per la Ricostruzione Industriale (IRI), has the majority of the stock. Alitalia, which ranks high among the world's international airlines in number of passenger-miles flown, serves 78 foreign cities in 60 countries and 11 domestic points (not including those cities served by subsidiary companies under contract). Its fleet consists of 18 Aerospatiale Caravelle VI's, 5 Boeing 747's, 11 Douglas DC 8-40's, 8 Douglas DC 8-62's, 2 all-cargo Douglas DC-8-62F's, 35 Douglas DC 9-30's, 2 all-cargo Douglas DC 9-30F's, and 3 Douglas DC-30's.

Alitalia has three domestic subsidiary airlines: Aero Transporti Italiani, S.P.A. (ATI), Societa Italiana Esercizio Elicotteri (Elivie), and Societa Aerea Mediterranea, S.P.A. (SAM). ATI and SAM are wholly owned subsidiaries, and Alitalia owns 90% of Elivie's stock. ATI, which has headquarters in Naples, serves 24 domestic points, including cities in Sicily and Sardinia. One of the fastest growing airlines in the world, ATI passengers increased from 632,000 in 1969 to about 1,790,000 in 1971. Elivie, which has been managed by ATI since 1968, operates charter helicopter service to several Italian resort towns; it ceased providing regularly scheduled services in 1971.

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200080003-4