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

CFM Files, Lot M–88, Box 144, Memos Conv Formins and See Sep 1949

Memorandum of Conversation, by the Secretary of State

top secret

[Washington,] September 15, 1949.

Participants:	Mr. Bevin
	Sir Oliver Franks
	Sir Roger Makins
	Mr. Schuman
	Ambassador Bonnet1
	Mr. Acheson
	Ambassador Jessup
	Ambassador Murphy2
	Mr. Reber3
	Col. Byroade4
	Mr. Thorp
	Mr. Satterthwaite5

Subject: Conversation with Bevin and Schuman on Yugoslavia

Bevin said that he and Schuman had had a talk about the dangers arising in Yugoslavia and what steps could be taken to assist Tito to maintain his economic position over the next few months. According to the press, the underground against Tito is coming out into the open. What will be the effect of the difficulties in Yugoslavia with regard to Greece and Albania and what attitude should be adopted toward these problems in the UN? It is obviously in our interest to support Tito if we can do so unostentatiously. The British have given the Yugoslavs a credit of eight million pounds and the Export Bank has made a loan, but this is not enough. Can the European governments and Great Britain play a more positive role, assisted by the financial authorities in America?

I said the Export-Import Bank had agreed to a twenty million dollar loan. The International Bank does not believe it can lend any more dollars, as the Yugoslavs can’t service the loans. There are, however, sufficient exports going to lira and sterling areas to service loans made in those currencies. The World Bank is looking into the question of sterling and lira loans, but can’t grant them, of course, without the consent of the British and Italian Governments. I said I didn’t know what the possibilities of a French franc loan might be.

Bevin replied that he thought perhaps we could arrange for the Italians, French, British and Belgians to make a collective loan. I remarked that if the Yugoslavs get through the next six to nine months they may be out of danger economically, but that meanwhile the short-term picture looked very bad. Schuman interposed that the situation was bad politically as well as economically, and I agreed. Schuman then said that the French are negotiating a commercial treaty with, Yugoslavia. He thought credit from France would help, and that European aid within the framework of commercial treaties should be studied. Bevin agreed that it should be studied and said that collective action might supplement direct action. Makins said that he did not know whether anything more could be done beyond help from France, the United States, and the sterling loan, but that the British would look into it.

Bevin said that it occurred to him the agitation in Yugoslavia may be caused by the Soviets to divert Tito from Albania. He then asked Schuman what he thought of the general Yugoslav situation. Schuman said he thought there was a real risk of an attempt against Tito’s life or of sabotage organized by a fifth column. He did not think there was a danger of a direct attack from the outside. He was not sure, of course, but there was no indication of an immediate danger of external attack. I asked Schuman whether he thought the internal situation of Tito was weak. Schuman said he did, that trouble from rightist parties could develop as well. Tito had been very rough on people who opposed him and there was much resentment in Yugoslavia against him. Schuman repeated, however, that trouble from the Eight was a danger rather than a probability.

We then discussed what form of help Tito should take and what he needs. Mr. Thorp said the United States had given a loan of twenty million dollars to Yugoslavia, of which twelve is committed and eight is left for future projects. What the Yugoslavs need most are cotton, coke, and oil and petroleum products. Coke is the most difficult to supply. The British can supply the oil products for sterling. The Yugoslavs can get along without imports of food.

1. Henri Bonnet, French Ambassador in the United States.
2. Robert D. Murphy, until March 1949, United States Political Adviser for Germany with the rank of Ambassador; from March to September 1949, Director, Office of German and Austrian Affairs; appointed Ambassador to Belgium in September 1949.
3. Samuel Reber.
4. Henry C. Byroade, Colonel, U.S. Army, retired; Acting Deputy Director, Office of German and Austrian Affairs, March–October 1949; Director, Bureau of German Affairs, from November 1949.
5. Livingston L. Satterthwaite.