860S.00/7–3149: Telegram

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


733. Today’s communiqué on interview granted by Tito to Italian Minister1 is item considerable political importance. Throughout last week Martino has been casting about for means for breaking impasse caused by Italian suspension economic negotiations. We had several talks along lines suggested by Rome’s 2198 July 18 and Deptel 365 July 13 (1491 to Rome)2 and upon Bebler’s3 return from Slovenia, Martino sought interview with him and suggested highest level statements might be necessary but lacking instructions could say nothing specific. Italian Counselor Tassoni was ordered to Rome for instructions and we gave him lift in Embassy plane yesterday noon.

Meanwhile events moving faster. On Tito’s return to Belgrade, Bebler prepared communiqué along straight economic lines and arranged setting for Tito to see Martino for few minutes before latter’s departure on leave last night. Martino succeeded in broadening language to include “various questions” and “good neighbor relations” hoping to nail down Zone B problem. When conversation then took place they talked of larger and long-term relations and when pressed on Zone B said that was “little matter if other things could be worked out”.

I saw Martino immediately afterward. He had not yet got through by phone to Rome to tell them what he had done and was a little scared. However, he fully realized abundant measure with which Tito had fulfilled Italian hopes for a gesture to break trade negotiation deadlock and in course of our talk began to wonder whether Tito may be thinking of a non-aggression pact with Italy or perhaps even Yugoslav participation in Mediterranean mutual defense pact.

I expect this elation to wear off. He handled this situation very skillfully and will surely realize that only new complications will arise if Italians known to gloat over their apparent success.

[Page 518]

Incident seems to show that Yugoslav economic straits require that they should hasten get Italian trade agreement into operations stage but at same time open up broader talks for event USSR may really turn its support to Italians. On Zone B, I think we are not justified in accepting interpretation that “little matter” means Yugoslavia willing to give up against nominal quid pro quo. Rather indication may be to count up modest Yugoslav holding as compared with Italian share FTT if bargaining begins.

Text communiqué follows.

Sent Department, repeated Rome 69, Paris 83, London 42, Moscow 88, Trieste 58.

  1. Enrico Martino, Italian Minister in Yugoslavia.
  2. Deptel 365 not printed; it informed Cannon that the Department of State planned, in consultation with the British Embassy in Washington, to hand the Yugoslav Charge” a note regarding the introduction of the new currency into Zone B, and it forwarded the proposed text of the note (860S.51/1–1349).
  3. Aleš Bebler, Yugoslav Assistant Minister for Foreign Affairs.