The Ambassador in Yugoslavia ( Cannon ) to the Secretary of State
100. In appraising political background and tactical conduct US claims negotiations, Department should know how vitally important to their own negotiations US stand is considered by all western missions here and how enthusiastically its firm position in recent exchange notes has been received. Since Department press released its reply, Embassy Secretary has been approached by local British, French, Dutch, Belgian, Swiss, Turkish, Italian, and Czech officers. All have emphasized gratification over US insistence that claims must be settled and something like envy over bargaining lever afforded by blocked assets. They all seem to have come to conclusion that no normal negotiations are possible and that their only hope is linked trade agreements with threat of some form economic sanction.
Swiss will send claims committee here in March seeking approximately dollars 35–40 million settlement to be paid by unbalanced offset [Page 1064] trade agreement. They fear principal issue will be Yugoslav charge of confiscation for collaboration not nationalization. Others report little progress, with Turks and Czechs privately almost abandoning matter. French still have claims negotiator here but this is admittedly more psychological than operational.
British trade and claims negotiations have, of course, been resumed. Their Embassy here feels chance for agreement slight, unless Yugoslavs will make decent claims settlement, and no indication here of greater willingness to settle. Department will note conscientious alteration of Yugoslav campaign against US and UK with most recent blasts at US coming after interruption British negotiations. We can probably expect no further action re our claims until results current Yugoslav-UK discussions known.1
Sent Department 100; repeated London 25.
- United Kingdom-Yugoslav agreements on trade and claims were concluded on December 23, 1948.↩