868.10/2–2250: Telegram
The Secretary of State to the Embassy in France
760. Eyes only for the Ambassador, It is expected Exim Bank will consider Feb 23 and we hope approve credit 20 mil dols to Yugo for purchase urgently needed raw material and capital equipment.1 Decision will not be announced at this time nor will Yugos be informed. At such time as announcement made and Yugo informed plan is to state that line of credit opened in this amount and Bank will retain control releases. Decision delay announcement based on desire avoid close coincidence announcement recognition Ho and permit preparation public opinion here and in France.
Credit will be extended pursuant US policy, to which Dept attaches greatest importance, of assisting Tito to resist Sov econ pressures and thus successfully maintain his heresy against Cominform. We wld not willingly have chosen moment recognition of Ho by Tito to approve this credit but approval represents conclusion more than two months effort by Dept to find means within this Govt supplying funds of character most urgently needed by Yugos and delay at last moment did not seem wise.
While we strongly disapprove Yugo recognition of Ho and so informed them in advance, we consider policy toward Tito must be realistic based on advantage we can derive from his heresy and not on approval or disapproval. He is Communist and must be expected to act like Communist and periodically to demonstrate in some objectionable fashion his independence of West. We do not consider such demonstrations, unless carried to outrageous lengths, shld deter us from pursuing our primary objectives re Yugo.
Our action in granting Yugo credit in no way indicates any change in our attitude toward Bao Dai or our Indochina policy. We shall await with interest indications as to what prompted Ho’s request for Tito’s [Page 1374] recognition and whether Yugo representative will actually be received at Ho’s hdqtrs.
You may use such of foregoing as you consider advisable in discussion with French FonOff. Ur comments and those Belgrade urgently desired.2
- The Export-Import Bank finally approved the $20 million credit to Yugoslavia on March 1; see telegram 142, March 1, to Belgrade, p. 1378.↩
- In his telegram 893, February 25, from Paris, not printed, Ambassador Bruce reported that he had seen French Foreign Minister Schuman that afternoon and had taken the occasion to tell him of the American intention to carry on aid to Yugoslavia despite Yugoslav recognition of the Ho Chi Minh regime. Bruce emphasized that the action in no way reflected any change in the American attitude toward the Indochina problem. Schuman said he understood the American attitude and found it perfectly reasonable (868.10/2–2550).↩