The Director, Office of European Affairs (Hickerson) to the Assistant Secretary of Commerce (Blaisdell)1


Dear Tom: I refer to our talk of yesterday concerning general US-Yugoslav trade relations, and in particular the informal Yugoslav request for an indication as to whether a license would be granted whenever the blooming mill which they wish to purchase here is ready for shipment.2 My comments were intended to present our views primarily from the standpoint of our political relations with Yugoslavia, and it has seemed to me that it might be helpful in clarifying the problem if I amplified them a bit.

As we see it, the relaxation of our export controls with respect to Yugoslavia was designed for the primary purpose of implementing our over-all policies toward the Soviets by permitting Tito to buy urgently needed goods, and in this way to foster his independence of the USSR and strengthen his resistance to the Cominform. The NSC paper3 thus had a major political objective. After returning to the Department I reread the NSC recommendations of February 17. In the light of this, I am convinced that in our conversation both you and I (and I quite as much as you) laid too much stress on imports from Yugoslavia.

The NSC recommendations lifting the prohibition on 1A items specified that goods in this category should be licensed after consultation with the Secretary of Defense when such licensing serves our national interest. It was further provided that the determination of our national interests in this matter should be based on foreign policy considerations. Action on a Yugoslav request for advance US Governmental approval for the placement of orders for goods requiring a long production period, likewise authorized by the NSC document, should, it would appear, also be determined on the basis of our national interests which in turn would be based on foreign policy considerations.

We had contemplated that in implementing this new relaxed trade policy toward Yugoslavia, each Yugoslav request would be examined individually on its merits and with relation to all the political as well as the economic factors involved. The NSC paper authorizes measures which are necessary for reasons of political expediency and provides, [Page 885] with respect to any possible conditions which we might later impose on Tito, that these should be in the nature of political concessions on his part.

I am aware of the various considerations which you in the Department of Commerce must take into account when examining the individual export license applications, and I share your view that it might be helpful if we knew just how far we intended to go and what we could obtain from the Yugoslavs. On reflection, however, I feel that it-would be inadvisable at this time to endeavor to discuss with the Yugoslav officials here the general subject of US-Yugoslav trade, within anything approximating a broad planned framework. Such talks might not only be construed by them as a specific approach by this Government, a step which is not in accordance with our present Yugoslav policy, but might be subject to misconstruction as comparable to the integrated programming we are undertaking with ERP countries, and might imply our assumption of a degree of responsibility for the implementation of the Yugoslav economic program. We think we should confine ourselves to the examination of specific purchase projects from the standpoint of Yugoslavia’s reasonable requirements in the industry in question, world supply, and strategic potential.

Mr. Nikezic,4 the new Yugoslav Commercial Attaché, was in the Department this morning, and again repeated that the Yugoslavs gave priority to the blooming mill over all the other things they wished to purchase. Additional attractive features are that it will take a minimum of twelve months to build this plant, that while it is under construction we will be receiving metals, and the Yugoslavs will be making progress payments to the American manufacturer. If when the plant is ready for export we find it is not in our national interest to issue the formal license, we can always refuse to do so through the contemplated “intervening unfavorable developments” escape clause.

From a political point of view we in the Department feel strongly that it is definitely in our national interest to give the Yugoslavs the advance assurance of a license within the terms mentioned. They regard this mill as a test case of our intentions to let them purchase items which they desperately require for their economy, and if the advance assurance is forthcoming it should strengthen them in their determination to fight the quarrel out with the Soviets, as it will be concrete evidence that they will probably have a source to which they can turn for at least certain kinds of industrial equipment.

Sincerely yours,

John D. Hickerson
  1. Thomas C. Blaisdell, Jr., Assistant Secretary for Foreign and Domestic Commerce.
  2. The reference here is to the conversation between Hickerson and Blaisdell on April 19. Bernard C. Connelly’s memorandum of this conversation is included in the Department of State files under 660H.119/4–1949.
  3. The reference is to NSC 18/2, February 17, not printed; see editorial note, p. 868.
  4. Petar Nikezić served as Commercial Counselor of the Yugoslav Embassy in: the United States from late March 1949.