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The economic bloom on Italy's face was not put there by Italians alone. Uncle Sam has paid most of the doctor's bills since war's end--nearly $5 billion worth.

And what happens after U.S. aid falls off? Beneath Italian soil lies the promise of rich oil deposits, perhaps enough to fulfill Italy's own needs and to save her expensive imports. Oil is not the answer to all of Italy's economic problems, but it is a good place to make a start. The question before Premier Antonio Segni's Cabinet last week was whether to entrust the big job of finding and exploiting the oil to the U.S. companies who have the capital and the experience to do the job, or to leave it in the hands of a state monopoly.

For three years U.S. oil companies (among them Gulf, Jersey Standard, Socony-Vacuum, Caltex) have been urging the Italians to modify their restrictive 1927 mining law, passed under the Fascists. The companies hoped for the prevailing 50-50 split of profits after taxes --the successful formula in Saudi Arabia and booming Venezuela. They also wanted the opportunity to compete on an equal basis with E.N.I., the government's oil monopoly, a swiftly growing octopus directed by a smart and aggressive apostle of state socialism named Enrico Mattei.

Decision: Monopoly. Premier Segni's government last week decided to amend the outmoded laws, but in such a way as clearly to favor state monopoly. It was a major defeat for the oil companies, and a severe setback to the U.S. efforts to help stabilize Italy politically by helping it to stabilize itself economically.

The government's proposal, likely to become law in a few months, specifies a 60% cut of oil profits for Italy, affirms E.N.I.'s monopoly in the potentially rich Po Valley, and grants E.N.I, such fat advantages over private competitors that in a matter of a few years E.N.I., without even half trying, ought to have the lion's share of the oilfields in continental Italy.* Example: oil exploration concessions to private companies are to be limited to 123,000 acres each. Should a company strike oil, its "exploitation concession" will then be limited to 25,000 acres; the government takes over the other 98,000 acres for E.N.I.

"Look, It's Simple." On the basis of past performance, E.N.I, is ill equipped to exploit its great privileges. Under Enrico Mattei and with the inherent advantages of a monopoly, the corporation has become in the past two years a huge enterprise (15,000 employees), with holdings in 35 other companies, and has so much money to spend that it wields a potent influence on Italy's press and among its politicians. In the development field, it has expanded Italy's production of methane to almost 100 times the prewar total, a noteworthy achievement. But as sn oil producer, E.N.I, has been a bungling flop. Where it has bored only dry holes and left, private explorers later found oil; so far, E.N.I, has raised only one gusher--in the promising Abruzzi area--and that by edging up close and spudding into a pool found months before by a private U.S.-Italian company.

But if E.N.I, has produced only a trickle, it is an Italian trickle. That simple appeal has been sufficient to gather public opinion behind the government's position. "If these amendments become law," said a U.S. oilman in Rome, "no major U.S. oil company will do any further exploration or production in Italy. We couldn't afford to." Said an Italian official with unintended ambiguity: "Look, it's simple. We don't want to become a Saudi Arabia or a Venezuela."

*Not affected: semi-autonomous Sicily, which, by letting in private oil companies, is already far ahead of the mainland in developing its oil wealth.

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