Italy

Italy is a parliamentary republic in southern Europe, a founding member of NATO and the European Economic Community, and the location of the Holy See - the headquarters of the Catholic Church. Italy's post-World War II politics were dominated by the Christian Democratic Party, which governed from 1948 to 1994 with CIA support as part of the American strategy to prevent the Italian Communist Party - one of the largest in Western Europe - from achieving electoral power.¹

CIA Operations and Stay-Behind

The CIA funded the Christian Democrats and Italian anti-communist organizations extensively from the late 1940s onward. Operation DEMAGNETIZE and related programs provided covert funding channeled through Italian intermediaries to sustain political opposition to communist electoral success. These funding streams were institutionalized through the Marshall Plan and later through non-governmental conduits.¹

The most operationally significant CIA program in Italy was Operation Gladio, the Italian branch of the NATO-wide Stay-Behind network. Gladio was established in the late 1940s to provide an organized resistance infrastructure in the event of a Soviet invasion or communist takeover. Italian authorities revealed the network's existence in 1990, prompting parliamentary investigations. Gladio's weapons caches, personnel, and organizational structure had allegedly been used not only for their defensive purpose but for offensive "tension" operations - strategy of tension attacks that could be blamed on leftists. The 1980 Bologna massacre (August 2, 1980, 85 dead) has been linked by Italian courts to far-right networks connected to Gladio structures.²

P2 Masonic Lodge

The Propaganda Due (P2) Masonic lodge, led by Licio Gelli, was a clandestine organization of approximately 1,000 members that included senior figures in Italian intelligence services, the military, politics, media, and organized crime. P2 was discovered when Italian tax police raided Gelli's villa in March 1981 and found a membership list. The list included the head of all three Italian intelligence services, 43 members of parliament, senior military officers, future Prime Minister Silvio Berlusconi, and Roberto Calvi, chairman of Banco Ambrosiano.²

Roberto Calvi, known as "God's Banker" for his IOR (Institute for the Works of Religion) connections, was found hanging from Blackfriars Bridge in London on June 18, 1982, in what was ruled suicide then later reclassified as murder. Banco Ambrosiano collapsed with a $1.3 billion shortfall, much of it tied to fictitious loans to Vatican-connected shell companies in Panama and Latin America. The Vatican Bank's exposure forced a partial settlement. The IOR's role as a conduit for CIA-connected funds - channeled through to Solidarity in Poland and other Cold War projects - is documented in several investigations.¹

BCCI and Vatican

The Bank of Credit and Commerce International maintained significant Italian connections, including accounts used by Italian political figures and connections to Vatican financial networks. Italy's banking system, including Banca Nazionale del Lavoro (BNL), was a significant conduit for the Iraqi arms procurement financing that became the BNL scandal; the BNL's Atlanta branch affair grew out of its role in financing Saddam Hussein's weapons purchases, but BNL's Rome headquarters and Italian government connections gave the scandal a significant Italian dimension.²