Foreign Relations of the United States, 1949, Eastern Europe; The Soviet Union, Volume V

Under Secretary’s Meetings Lot 53 D 250

Paper Prepared for the Under Secretary of State’s Meeting¹

secret

[Washington,] February 14, 1949.

UM D–3

Economic Relations Between the United States and Yugoslavia

problem

To gain maximum advantage for the United States out of Tito’s deviation from Kremlin hegemony.

discussion

It is apparent by now that the gulf between the Tito regime and the Kremlin is practically unbridgeable. By ascertaining that he, Tito, represents the true Marxist-Lenin orthodoxy, by calling the Kremlin’s brand of communism “erroneous” and “outmoded” and by thus flouting the thesis that world communism is under the strict leadership of the Kremlin, Tito has committed an unforgivable heresy. As confirmation of this, reliable information indicates that the Cominform attempt to infiltrate and subvert Tito’s regime has been intensified, as has the Cominform’s propaganda against him.

If the self-made Tito regime succeeds, its existence will be an “erosive and disintegrating force … within the Kremlin’s power sphere … a vital weakness in Russia’s expansionist plans.” All nationalist-inclined “deviationists” in Communist parties everywhere will be provided with a potent example of a successful Communist opposition to Moscow. This fact, particularly as it applies to China’s equally self-made Communist conquerors—is of great political and strategic significance to the United States.

If the Tito regime succumbs, the only government which will take its place is one truly subservient to Moscow, which will impose on the Yugoslav people an even worse dictatorship than that they suffer under at present. Cominform propaganda would then waste not an instant in pointing to the ruin of Tito as the certain fate of those who desert the Kremlin.

The stability of Tito’s regime is very gravely threatened by the economic boycott relentlessly being imposed upon him by the Cominform countries. If Yugoslavia is not given economic aid from some source, there is grave danger that Tito will be overthrown.

While isolated from the East, Tito has not “come over to the West.” His regime has continued to attack the United States with the traditional Communist epithets. He exercises a totalitarian control which, while repugnant to our form of government, he refuses to broaden at the present juncture, to include non-Communist element, since such a liberalization, as Tito the realist knows, would indicate weakness and would provide an opportunity for Cominform agents to undermine his power and overthrow him more quickly.

A relaxation of US export-licensing controls in favor of Yugoslavia:

(a) would provide desperately needed aid to Tito and help keep his regime in existence as a cancer in the Cominform apparatus;

(b) would hasten the “forces of economic, political and ideological attraction which are inexorably drawing Tito toward the West”—probably to so great an extent that Tito could be persuaded to cease his aid to the Greek guerrillas;

(c) would not materially contribute to the military potential of the Soviet sphere since (i) Yugoslavia would presumably not reexport to Cominform countries, and (ii) US export controls would be retained on goods to Cominform nations;

(d) would enable the US to increase its export of usable mineral ores and concentrates.

recommendations

Subject to the advice and discretion of the United States Ambassador in Belgrade and to a continuous review of current developments, it is recommended:

1. 1–A List² goods to Yugoslavia should be licensed for export as serves the national interest. The Secretary of State is to set forth the foreign policy considerations which should guide the making of these decisions.

2. 1–B List² goods or lower should be promptly licensed for export to Yugoslavia without interdepartmental clearance.

3. Short-supply goods not representing a threat to our national security should be licensed for export to Yugoslavia so as to cover the genuine immediate needs of the Yugoslav economy to the extent that available supplies and ERP requirements permit.

4. Goods on the AEC’s list should of course not be licensed for shipment to Yugoslavia.

5. OEEC countries should be notified of our adoption of this policy and informed that the US has no objection to their following a similar course of action. Special consultative arrangements should be made for the reexport of 1–A goods.

6. If advance US governmental approval is requested for placement of orders for goods requiring a long production period, general assurance of eventual licensing should be given at once for all items in 1–B. Such assurance for 1–A items should be given if the interdepartmental committee approves.

7. In view of Yugoslavia’s critical balance of payments situation, short or medium-term commercial credits, including government commodity credits and International Bank loans should be permitted.

8. The implementation of the above recommendations should be done in a quiet routine manner in order to avoid the impression that US policy toward Tito is undergoing “radical change.” In case of public inquiry, it should be stated that (a) in exchange for products exported, the U.S. is receiving strategic imports from Yugoslavia and (b) this Government does not like Tito’s Communist regime and that our relaxation of export controls signifies neither appeasement nor approval of Tito.

1. This paper was presumably prepared by the Secretariat of the Under Secretary of State’s Meetings. It appears to be based upon Policy Planning Staff paper PPS 49, February 10, 1949, which was subsequently submitted to the National Security Council. Regarding the National Security Council action that followed, see editorial note, p. 808.

   This paper was considered by the Under Secretary’s Meeting of February 14; see supra.

2. Regarding the lists under reference here, see footnote 2 to telegram 96, January 19, from Bern, p. 65.
2. Regarding the lists under reference here, see footnote 2 to telegram 96, January 19, from Bern, p. 65.