840.51 FC 60H/5–1448: Telegram

The Secretary of State to the Embassy in Yugoslavia


236. Whenever suitable occasion arises during talks with Yugo officials suggest in your discretion you refer to Prica’s comment on blocked assets (urtel 579 May 7)1 and point out that (1) in current US-Yugo financial negotiations now going on Wash US has consistently maintained there should be simultaneous settlement of both US claims vs. Yugo and Yugo claims vs. US, including unblocking Yugo assets; (2) these were the two problems Yugos themselves agreed to discuss before conversations started last year; (3) throughout conversations US has earnestly endeavored to reach a reasonable and acceptable compromise figure as evidenced by reductions we have made from original amount we named of 25 million but Yugos have not shown a comparable interest in arriving at a satisfactory solution; (4) another Stumbling block to progress negotiations is recent introduction new and hitherto non-existent factor—namely, effects which extension Yugo nationalization law to small businesses and foreign owned real estate may have on such Amer owned property in Yugo and consequently on present conversations with Yugo Eeps here; and (5) nonetheless US continues earnestly to desire early and mutually acceptable simultaneous settlement respective claims.

FYI three weeks ago US further reduced acceptable figure in US currency from 20 to 16 million. On May 12 attorneys for Yugos raised Yugo offer to 7½ million except for new claims arising under recent extension nationalization law for which suggested a sum be set aside (i.e. continued blocked) by agreement to be basis for future settlement to be negotiated when facts regarding effect of hew nationalization law amendment become known. Impression attorneys had was that such facts would not be available for some time. Dept now studying latest Yugo offer.

  1. Not printed; it reported that Srdja Prica, Director of the Western Office of the Yugoslav Ministry of Foreign Affairs, had reviewed Yugoslav attitudes on such problems as Palestine, religion, American-Yugoslav trade, and blocked assets (711.60h/5–748).