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

860H.5151/12–2349: Telegram

The Secretary of State to the Embassy in Belgium

secret

Washington, December 23, 1949—7 p. m.

1501. Belg Govt has never replied to Sec’s request Oct 21 for Belg cooperation in meeting Yugo hard currency gap by deferring substantial payments due Belg.¹ Belg Amb at that time, and again in conversation with Thorp Dec 20, attempted to link Belg assistance to Yugo with favorable action on Belg Eximbank application. Both Sec and Thorp made clear US considers there is no connection between two problems.

We have impression that assistance to Yugo may have been considered within Belg Govt primarily on economic plane and without due regard for important political considerations. It would be most helpful if you could take first favorable opportunity to speak to Van Zeeland² on this subject. You may wish to emphasize the common interest which Western Powers have in insuring that Tito regime is not obliged to capitulate to the Sovs because of inability to obtain essential hard-currency imports, the extreme difficulty with which Yugo will be confronted in financing such imports during the coming year, the fact that the US is making, substantial credits available to Yugoslavia, the further fact that the five million dollars estimated due Belg by Yugo from now until end 1950 represents approximately one-fifth of estimated Yugo hard currency deficit for that period, and the belief of the US Govt that all of the western Govts in a position to do so should, in pursuit of their common political interests, take such measures as are possible, even at some sacrifice to themselves, to assist in enabling Yugo to remain free from Sov domination.

We had hoped for these reasons that Belg might be able to cooperate by postponing Yugo payments as they come due henceforth until end 1950, after which date it is our hope Yugo will be able to close its hard currency gap and meet currently its foreign obligations. Since Belg trade delegation is now in Belgrade and substantial payments are due Belg in nearest future early action on this matter is most desirable. Repeat Belgrade as 816.³

Acheson

1. See Thompson’s memorandum of the Secretary of State’s conversation with Belgian Ambassador Silvercruys on October 21, p. 971.
2. Paul van Zeeland, Belgian Minister of Foreign Affairs.
3. In his telegram 1718, December 29, from Brussels, not printed, Ambassador Robert D. Murphy reported that he spoke with Baron Hervé de Gruben, Secretary General of the Belgian Foreign Ministry, in the sense of the Department’s instructions. De Gruben described the payment problems which had arisen in connection with Belgian-Yugoslav trade and payments agreement of December 1948, Ambassador Murphy concluded that Belgium would not actually expect actual cash payments from Yugoslavia during 1950 but would drive a hard bargain for the Yugoslav repayment in kind for the 200 million franc credit. Murphy reported that De Gruben several times characterized the credit to Yugoslavia as a bad debt and poor business risk and indicated that Belgium would make no further extension of credits. Murphy felt that Belgium looked on the question more in terms of economic advantage than in the light of the political importance of maintaining Yugoslavia free of Soviet domination (860H.5151/12–2949).