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

840.50 Recovery/2–2549: Telegram

The Secretary of State to the Embassy in Yugoslavia ¹

secret

Washington, February 25, 1949—7 p. m.

92. Tel to Paris for Harriman of Feb 22 rptd Belgrade as 84² reported recommendations approved under Feb 18 revision policy on US-Yugo economic relations. There follows resume of policy conclusions lying behind recommendations, reflecting your observations over recent months.³

In obvious interest US that “Titoism” continue exist as erosive and disintegrating force in Sov sphere. Tito’s position precarious, may soon become desperate as result economic boycott. Only solution to his economic dilemma lies in developing trade with West. Tito and lieutenants are Yugo nationalists, also realists, not prepared to face extinction for Marxist tenet. But pressure now to modify Tito’s dictatorship wld weaken Tito internally and threaten his overthrow by Cominform. Cominform also wld seize upon dissolution Tito regime in chaos, econ ruin to demonstrate fate of deserters of Moscow. Therefore, in sum, we are endeavoring to keep Tito strong enough to continue resistance to Cominform.

We will, however, constantly endeavor to exert as early as possible sufficient pressure on Tito to abandon assistance to Gr guerrillas. Yugo leaders still identify themselves with Kremlin’s policy toward West. Appear confident they can maintain themselves by obtaining industrial equipment from West. However, as situation develops and Cominform political pressures increase Yugo leaders expected be in more receptive state to discuss political matters in general and to reexamine policy in terms closer political and economic relations with West in face of Russ imperialist pressure.

You shld keep continuously in mind that in our vital interests that Yugo cease support Gr guerrillas. Tito (at opportune time) shld be made clearly understand US not prepared continue make available goods or assist him increase level Yugo economy so long as his regime supports insurrection against freely elected Govt, UN member, which being militarily supported by US. Believed that when Tito faced with choice his own vital interests will compel him to cease assistance. This not impossible for him ideologically nor, at proper time, shld it weaken his internal situation in Yugo. But given Tito’s present position not in our interest try to extract specific political commitments from him now. Balance between economic assistance to Tito and his support of guerrillas is delicate and shld not be disturbed by forcing Tito at outset to choose. Although impossible now to know what eventually can be accomplished with Tito, certainly nothing possible unless certain economic bargaining counters are placed in your hands, to be used carefully and cautiously.

Relaxation export controls, fully reported reftel is one immed means implement foregoing policy maintain Tito’s resistance to Cominform, as are conclusion Bizone-Yugo trade agreement (Deptel 90 of Feb 25⁴) and ECA readiness buy copper, lead for OEEC countries (Deptel 83 Feb 22⁵).

It is recognized that at present it wld not be practicable nor advisable to try to get firm commitment from Tito that Yugo aid to Gr guerrillas wld be stopped. However, after Yugos receive concrete indications US readiness expand trade and relax export controls, with examples such as those preceding para and blooming mill (still undecided), you should take appropriate occasion point out to Yugo Govt contradiction of US supplying Tito while US aiding Gr Govt in suppressing rebels which Tito supports. Dept will keep you informed progress on trade and export control matters to assist timing ur conversations. (Obviously implementation long-run objective bring about free selection by Yugo people of govt their choice must await considerable further developments.)

At same time Dept will hear proposals if any which Filipovic brings from Belgrade and point out same considerations in discussions with him. Believe that unique ready availability in US goods required by Yugo will assure our bargaining position in unlikely eventuality Yugos appear intend remain adamant indefinitely on Gr situation.

Consider informal discussion (Paris unnumbered to you Feb 21⁶) between Harriman as ECE Rep and Filipovic⁷ useful, if requested by latter, and see no objection general discussion expansion Yugo trade with West.

Acheson

1. This telegram was repeated to Paris for Harriman as 592, London as 641, Moscow as 113, Athens as 256, and Rome as 344.
2. A summary of the recommendations contained in document NSC 18/2 was transmitted in telegram 545, February 22 to Paris for Ambassador Harriman from the ECA and the State Department, and was repeated to London as 606, to Belgrade as 84, to Rome as 314, to Geneva as 177, to Frankfurt as 107, to Moscow as 102, and to Athens as 234. (660H.119/2–2249) Regarding NSC 18/2, which was approved by President Truman on February 18, see editorial note, p. 868.
3. A copy of NSC 18/2 was subsequently transmitted to the Embassy in Belgrade as an enclosure to instruction 18, February 28, not printed (660H.119/2–2249).
4. Not printed. A trade and payments agreement was concluded between the Joint Export-Import Agency (the trade authority for the U.S.-U.K.-French zones of occupation of Germany) and Yugoslavia on March 23, 1949. The terms were less restrictive than those applied to JEIA agreements with other Eastern European countries.
5. Not printed; it suggested that the ECA missions in France, Austria, Italy, Netherlands, and Trieste indicate to appropriate government officials that the ECA was prepared to finance lead and copper purchases in Yugoslavia as a replacement for ECA procurement of these metals from the Western Hemisphere (840.50 Recovery/2–2249).
6. Not printed.

7. The reference here is to Milenko Filipović, Yugoslav Deputy Minister for Foreign Trade and Chief of the Yugoslav Delegation to the Economic Commission for Europe. In January 1949, during meetings of the Economic Commission for Europe, in Geneva, Filipović approached Paul Porter, Deputy United States Representative to the Economic Commission for Europe, with a suggestion that the United States increase its imports of metals from Yugoslavia.

   In March 1949, Filipović became Minister-Economic Counselor of the Yugoslav Embassy in Washington.