Foreign Relations of the United States, 1948, Eastern Europe; The Soviet Union, Volume IV

860H.00/6–848: Telegram

The Ambassador in Yugoslavia (Cannon) to the Secretary of State

secret

Belgrade, June 8, 1948—8 p. m.

709. For first time confidence local regime in its ability to move forward boldly in new Stalinist world seems faltering. Vigor and firmness recent US policy, renewing vitality Western Europe, economic difficulties at home, and domestic political defections at upper levels government have undermined surging optimism that was regime’s most characteristic feature last fall. Today Yugoslav Government seems groping for those new directions that will give it once again sense of having the lead in Balkans, of being in fact spearhead of evangelical and expansionist communism.

In making its reappraisals, Yugoslav Government finds little comfort at home or abroad. Following must loom uncomfortably large: (1) Yugoslav Government’s investment in Markos has not been profitable and additions required seem beyond its capabilities; (2) its Austrian pretensions have been flatly rebuffed; (3) its progress into Trieste and Western Europe has been halted and presence renascent Italy on its border poses new complication; (4) reverberations recent Ljubljana espionage trial¹ are still echoing and deviationism Žujović and Hebrang² indicates even top party structure far from impervious; (5) strenuous agitation and propaganda re May Day, Tito’s birthday, and other recent celebrations failed to arouse more than apathetic response.

Moreover, many indications show sense domestic economic ill-being. Nationalization 3, 100 enterprises considered too small to bother about last year, closing of private shops throughout country, drastic limitations on right to resign or refuse transfers in government employment, failure publish budget in last year’s detail, new internal loan with its clear intimations of obligatory subscription, all point to scraping bottom of barrel. Kardelj³ and Kidrić,⁴ in their major economic presentations to Fifth Peoples Assembly,⁵ reinforced impression growing consciousness of stringencies. Kidrić’s definition of 1948’s main task “find and exploit all hidden and presently unknown and unexploited reserves in economy” was session’s keynote. But Assembly failed to produce either clear directives or coherent program and appears instead to have sharpened latent cleavage among regime’s planners over directions and tempos for 1948.

Convocation General CP Congress for July 21 indicates local Politburo feels it can and must find its solutions within next six weeks. We can only report its interim measures seem both temporizing and ineffectual. Regime seems find it impossible adopt any thorough withal temporary change of direction. For example, armed services, which now require sufficient resources maintain forces more than half large as total eastern bloc outside USSR, received 35 percent increase in this year’s budget, and military program will be further served by new premilitary trainees (Embtel 683, June 3).⁶ In foreign policy, chief aim now seems discovery formula to salvage something in retreat from Greek adventure. Austrian decision was accepted with much less bluster than might have been expected. And Trieste cauldron is merely simmering after continued failure of Yugoslav Government to follow through on its attempt at bilateral bargaining.

At home entire effort seems on consolidation party ranks. On one hand officeholders who gave regime its multiparty facade are disappearing. On other internal security and police controls have been greatly intensified. Ranković⁷ and his UDBA have never been so influential and omnipresent. Trials against saboteurs and speculators are more numerous and sentences harsher than ever before. And there are increasing signs campaign against both. RC and orthodox churches is being revived.

We have been giving much thought to what our policies should be in this new situation. I find our have no fundamental changes to suggest. We are now in an essentially interim period and no composition our underlying differences is presently possible. Economically, local pressures will have to be even more obvious before they can be used as political adjuncts. I urge all firmness in our claims position and any major trade which should be permitted only on terms unmistakably advantageous to our national interest.

Politically our firm Trieste policy has had excellent effect. Decision to permit at least temporary independent FTT representation in ERP is thoroughly sound notwithstanding difficulties regarding Zone B and lines our interim policy pending reincorporation. We think it would be fatal mistake to relax any of those excellent controls which have been paramount element in our holding the line in this part of Europe and that our major overall interest requires maintenance FTT regime with undiminished vigor.

Greece is still foremost Yugoslav problem. Neither shift in propaganda line to appeals for international intervention to end terror nor reappearance Zachariades⁸ with offer of peace at Politburo prices should obscure essential nature problem (Embtel 708, June 8).⁹ Yugoslav Government and eastern bloc are so deeply committed there that events in Greece will profoundly influence all their campaigns and policies. UN consideration UNSCOB report¹⁰ will be most important to us here and it is vital that no retreat or compromise be made. I can only stress once again belief that success of military operations alone will bring end to present phase and is therefore today the key to Balkans.

Sent Department 709; Department pass Moscow 138; repeated Athens 89; pouched to Paris, London, Rome, Trieste, Warsaw, Praha, Sofia, Budapest, and Bucharest.

Pass to Defense.

Cannon

1. During April 1948, two large trials were held in Ljubljana, Slovenia, involving 27 persons, many of them in governmental or Communist Party positions, for alleged treasonous activities against the Yugoslav regime.
2. In early May 1948, Sreten Žujović and Andrije Hebrang, Ministers of Finance and Light Industry respectively, were dismissed from the Yugoslav Cabinet and subsequently placed under arrest. In telegram 629, May 20, from Belgrade, not printed, Ambassador Cannon speculated that the elimination of Žujović and Hebrang, the reasons for which had not been announced, indicated that the increasing domestic difficulties, particularly in the economic field, may have resulted in a top-level Yugoslav interparty conflict (860H.00/5–2048).
3. Edvard Kardelj, Yugoslav Deputy Prime Minister and Secretary of the Yugoslav Communist Party.
4. Boris Kidrić, Chairman of the Economic Council and the Planning Commission; Member of the Politburo of the Yugoslav Communist Party.
5. In April 1948.
6. Not printed.
7. Aleksandar Ranković, Yugoslav Minister of Interior and Secretary of the Politburo of the Yugoslav Communist Party.
8. Nikos Zachariades, Secretary General of the Greek Communist Party.
9. Not printed.
10. The United Nations Special Commission on the Balkans, established to investigate the Greek frontier incidents, held discussions throughout 1948. Its first major report to the General Assembly was submitted in June 1948. For documentation regarding the Commission and its report, see pp. 222 ff.