Foreign Relations of the United States, 1946, Eastern Europe, The Soviet Union, Volume VI

860H.51/2–2246

Memorandum of Conversation, by Mr. Kingsley W. Hamilton, Assistant to the Assistant Secretary of State for Economic Affairs (Clayton)

[Washington,] February 22, 1946.

Participants:	Mr. Clayton
	Yugoslav Ambassador6
	Mr. Hamilton

Mr. Simic called this afternoon to say good-bye and to inquire regarding the procedures for and possibility of Yugoslavia’s obtaining a loan from the Export Import Bank.

Mr. Clayton said that it was doubtful whether the Export Import Bank would be in a position to make a general country loan to Yugoslavia. The Bank might be able to make a small loan for some specific purpose. However, although he was not familiar with the details of the problem, he understood that there were certain political questions at issue between Yugoslavia and the United States, particularly with respect to Venezia Giulia. It might be difficult to make any loan in such circumstances.

With some vigor Mr. Simic denied that there was any problem regarding Venezia Giulia. The area had been divided into two zones. Yugoslavia was responsible in its zone and the United States was not concerned. There was the question of the final frontier between Yugoslavia and Italy but this was a question between Yugoslavia and Italy. It did not concern the United States. It particularly had no relation to commercial relations between the United States and Yugoslavia. If the United States tried to link economic and political questions, it was using pressure. This would be difficult to tolerate. Yugoslavia could get along without a loan. It could wait. It would like to develop commercial relations with the United States, but it could wait, if necessary. If the United States was unable to grant a loan for political reasons, it would also probably have to withdraw UNRRA⁷ aid.

Mr. Clayton assured the Ambassador that our readiness to extend aid and relief where needed was one thing, to grant loans was quite another. There was no question of ceasing UNRRA aid to Yugoslavia. He was sorry the Ambassador was leaving Washington in the morning because it would be desirable to pursue the question further with the assistance of our political people.⁸

Mr. Simic said he could continue the discussion with Ambassador Patterson in Belgrade and the new Yugoslav Ambassador to Washington would also take the matter up further.

6. Stanoje Simić.
7. United Nations Relief and Rehabilitation Administration.
8. On February 27, the Yugoslav Chargé, Sergei Makiedo, called upon Walworth Barbour, Assistant Chief of the Division of Southern European Affairs, to inquire further for the reasons the United States was unwilling to grant credits to Yugoslavia. Barbour’s memorandum of this conversation concludes as follows: “I further stated that our unwillingness to grant credit to Yugoslavia at this time is predicated not only upon those developments in Venezia Giulia but also upon the larger consideration of the political situation in Yugoslavia of which recent events in Venezia Giulia form only a part. We have seen no improvement in the general tactics of the Tito regime of which we expressed our disapproval in the instructions to Ambassador Patterson made public at the time of our offer to recognize and establish relations with that regime at the end of December, 1945. We also are concerned at the measures taken by that regime which are resulting in the confiscation without compensation of American interests in Yugoslavia.” (860C.51/2–2846)