611.60H31/182: Telegram

The Minister in Yugoslavia (Lane) to the Secretary of State

276. Department’s instruction No. 133 of August 29.

Since the despatch of the above instruction the control list has been extended to cover all articles.
Because of the present international situation it is doubtful whether we shall be successful in persuading the Government to devote time to the careful study of the question of individual quotas (despite several representations we have not yet received from the Foreign Office the figures regarding imports of automobiles and trucks for the first 6 months of 1939).
With the exception of raw materials, such as cotton, it is doubtful whether there will be further demand for American products here unless the foreign exchange situation should improve.
We consider that it is going to be increasingly difficult to obtain foreign exchange, especially if as now seems probable, Yugoslavia’s economic dependence on Germany is increased.
My opinion is that any advantage to be obtained by an agreement such as the arrangement regarding automobiles and trucks would be academic. The ability of the Yugoslav Government to fulfill commitments at this time is highly questionable. Furthermore, any protracted negotiations with Pilja7 would seriously handicap us in our reporting and protection activities.
Under the circumstances may I defer initiating negotiations? Please telegraph.
  1. Milivoje Pilja, Yugoslav Assistant Minister for Foreign Affairs.