Foreign Relations of the United States, 1950, Central and Eastern Europe; The Soviet Union, Volume IV

868.00/2–850: Telegram

The Secretary of State to the Embassy in Yugoslavia

secret   priority

Washington, February 11, 1950—noon.

95. Embtel 152 Feb 8.¹ Current status economic aid to Yugo urinfo only fols:

1. Re most urgent matter, that of obtaining immed some $10 mil for purchases cotton, gasoline, chemicals, other raw materials bolster civ economy and mil defense: Due US policy IMF drawings, NAC unwilling recommend at this time release $6 mil this source. Proposal that Eximbank will make immed available $10 mil bal payments credit (i.e., funds spendable on items cited above) being urgently considered highest levels. Bank may also be asked for assurances it will extend additional financing of same kind during 1950 if necessary.

2. Action on Eximbank $5 mil equipment credit held up temporarily only, pending clarification raw material financing problem.

3. Dept understands no real progress recent weeks or until after British elections Feb 23 toward IBRD being able decide in principle on $20–$25 mil Yugo application. This because IBRD desires extend multi-currency loan, about half US dols, other half sterling, lira, and Belgian, Swiss and French francs, with UK participating substantially in Western Eur half. Bank not pressing Brit until after election. Other Western Eur govts believed waiting see what Brit do. Dept may urge Bank consider proceeding rapidly dol part of loan, making it as large as possible, other part when feasible. Dept views this necessary if IBRD financing is to be provided relatively near future. However, settlement prewar dollar bond debt may be prerequisite even to this step. Representative bondholders expected proceed Belgrade shortly.

4. As indicated Deptel 84 Feb 7,² however, recognition Ho cld jeopardize all proposed arrangements.

5. Dept also feels publicity, such as Handler³ story in yesterday’s NY Times in which essential features your conversation with Kardelj set forth, likely render negotiations more difficult by conveying to officials other US Govt agencies impression pressure being applied to them. You may wish so to indicate to Yugos if story orginated with them.

6. You may wish inform Kardelj gravity Yugo dol exchange and raw material situation fully realized US Govt; and that serious efforts being made find funds most appropriate and available from point of view Yugo and US Govts.

Acheson

1. Not printed. It reported that Yugoslav Foreign Minister Kardelj had summoned Ambassador Allen that morning and made an extended presentation of Yugoslavia’s urgent need for economic assistance. In concluding his report on the conversation, Allen expressed the view that it was highly important both economically and politically to expedite measures to ease Yugoslavia’s balance-of-payments difficulties. He felt that continued uncertainty would be psychologically depressing and possibly dangerous to American interests (868.00/2–850).
2. Ante, p. 1365.
3. M. S. Handler, foreign correspondent for the New York Times.