611.60H31/1–3149: Telegram

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


102. Embtel 28 January 101 set out economic case for liberalizing commercial policy toward Yugoslavia and Embtel 1012 presented Yugoslav political background for these recommendations. Following is discussion evolution of more vigorous policy from standpoint of obtaining maximum advantages both in Yugoslavia and Europe.

Two principal differences of opinion held by those willing to make attempt to use Yugoslav situation for ends of Western policy are whether aid should be given now or later and whether political conditions should be attached to our economic assistance. Essentially these are but single questions since those who favor withholding aid now do so largely on grounds that when Yugoslav economy has deteriorated further aid can more readily be made contingent on political concessions.

This is popular theory among foreign missions here. We think it errs fundamentally and urge prompt and adequate trade facilities for Yugoslavia with no attempt obtain political concessions in present stage of still-developing Yugoslav-Soviet dispute. Further delays run real risks that resultant Yugoslav economic deterioration or party [Page 860] disintegration would increase amount of assistance needed and render returns less probable. Aid now will maintain situation, force Soviets to divert more energy and resources to Yugoslav liquidation, and set stage for major developments at later date.

Whole concept of political concessions from Yugoslav Government does not seem to have received very close analysis. Domestically, concessions from Tito, if meaningful, would have to affect his security apparatus and would establish facilities for greater freedom of action for Stalinist agents. Between the quarreling diverse unorganized emigre groups in the West and the ruthless cohesive forces of the Cominform, there would be no real contest. Stalinists gleefully exploiting an activized pro-Western opposition to undermine Tito from the right could be expected to end expeditiously both Tito and his domestic political concessions.

Externally, political concessions are thought of in terms of Trieste, Austria and Greece.3 We do not think this is time to try to liquidate Trieste situation in any deal with Tito. Until Austrian treaty is concluded, conditions for Austrian stability established and threat of Cominform invasion of Yugoslavia reduced, presence of US-UK troops in Trieste has practical and symbolic importance as demonstration of constancy of American purpose.

Re Yugoslavia’s Austrian claims, we do not think that concessions by Yugoslavia would necessarily bring treaty agreement. This is problem of US-USSR relations and Yugoslavia’s pretensions have been convenient but not indispensable tool for Soviet imperialism.

Re aid to Greek bandits, we see only slight probability of obtaining assurances while Yugoslavs still fail to acknowledge grave risks in their long-range situation. Any arrangement now entered into would be both unstable and deceptive. Actual extent present Yugoslav aid seems largely undetermined and we wonder whether we could rely on promises of interruption of supply routes to have decisive effect on Markos4 fortunes. We should not overlook fact that such arrangement would definitely weaken Yugoslav Government position in whole Macedonian area now under increasing Soviet pressure from their pincer of Albania and Bulgaria.

Moreover, there is another aspect to entire theory of political concessions. We wonder whether it might not serve longer objectives our political strategy to permit Tito to maintain himself as orthodox but [Page 861] prosperous Communist. Cominform propaganda can cite as evil consequences Yugoslavia’s desertion of Moscow only “facts” that Yugoslavia will thereby be transformed into bourgeois colony and suffer internal economic ruin. If these assertions prove false, case against further deviations by other satellites is appreciably weakened on Communist’s own terms. If what we seek over long run is liberation east Europe from USSR tyranny, demonstration that in Tito’s path lies both preservation national independence and increased well-being will surely help.

Today Yugoslav leaders still seem to believe Yugoslavia can go it alone politically and appear blindly confident that through hew trade agreements regime can finance enough of five year plan governments and can provide for its indispensable military establishment while in isolation. It is only when degree of Soviet pressure mounts, when questions first of economic credits and finally of military equipment come to fore that commensurate concessions can be contemplated.

We therefore recommend again quiet, prompt and radical relaxation US and ECA export control re one-maker [apparent garble] restrictions in exploitation Yugoslavia’s unique situation. We further recommend in all policy directives re Soviet Union and satellites inclusion of special reservation for Yugoslavia. We do not suggest identical treatment with west Europe. Ideally, balance should be sought between sufficient facilities to maintain Yugoslav situation and sufficient restraints to stimulate Yugoslavia’s realization parlous nature its long-range situation. At same time, we think it not too early for Department to begin immediately study credit possibilities direct from US if politically feasible, or indirect along line ECE timber machinery deal or transactions providing manufactures for Yugoslavia against future commitments raw materials. We can argue that such transactions might prove as useful to trizonia and west Europe as beneficial to Tito but in main we should frankly regard them as factors of a later phase of US-Yugoslav relation.

On basis of all evidence available to us we emphasize again our belief that Yugoslavia’s situation provides the outstanding possibility in east Europe for loosening Soviet grip on these once independent nations. We therefore think we should be ready to move forward [with?] such initiative and enterprise as new phases of Yugoslav situation may develop and we hope way can now be paved for the immediate policy measures recommended above.

Sent Department 102; pouched Moscow, Paris, London, Rome, Warsaw, Torep Paris, Trieste, Athens, Praha, Budapest, Bucharest, Sofia, Geneva.

  1. Ante, p. 854.
  2. Supra.
  3. For documentation on the interest of the United States in the administration and future disposition of the Free City of Trieste, see vol. iv, pp. 497 ff. For documentation on the continuing negotiations on an Austrian State Treaty and the related question of Yugoslav territorial claims in Carinthia, see vol. iii, pp. 1066 ff. Documentation on conclusion of the Greek civil war in 1949 is scheduled for publication in volume vi.
  4. Markos Vafiades, Premier and Minister of War in the so-called Provisional Greek Democratic Government from December 1947 to January 1949.