868.10/3–750: Telegram

The Chargé in France (Bohlen 1) to the Secretary of State

secret

1068. The question of French consent to proposed IBRD loan to Yugoslavia was taken up with Parodi2 this afternoon. All the considerations set forth in Department’s 944 of March 43 were brought to his attention and emphasized.

Parodi stated that French Government was in sympathy with political importance and desirability of this loan but that he was not familiar with it and wished the views of Felix,4 the Foreign Office financial expert, who had been dealing with it. Felix stated that the [Page 1384] Ministry of Finance had taken the position, and had so requested Hoppenot in the IBRD, to inform the bank that the French Government could not consent to use of francs contributed to the bank for a loan to Yugoslavia as long as the negotiations for the settlement of French financial claims with Yugoslavs remained unsettled. He mentioned in this connection that Yugoslavia had shown no interest whatsoever, in attempting to reach settlement of these claims, although they expect this week some new proposals from them following return to Paris of Yugoslav official who had been conducting these negotiations. (In this connection Department should see Embassy’s despatch No. 384 of March 1, 19505 transmitted via air pouch concerning status of these negotiations.)

Parodi appeared to be fully in sympathy with political importance of this loan to Yugoslavia for reasons indicated in Department’s telegram which I repeated but said that in circumstances, felt that position of French Government was that until these negotiations had been satisfactorily settled it would not be possible to give consent of French Government for use of funds by the bank for this purpose. Neither Parodi nor Felix knew whether or not French consent was required before the bank could extend any loan or whether it applied merely to franc contribution thereto. Felix pointed out that French impression had been that the Yugoslavs were uninterested in reaching any settlement in negotiations with French Government concerning these claims, because they confidently expected to obtain an international loan irrespective of their outcome. He mentioned in this connection possibly settlement might be reached fairly quickly with Yugoslavs if they felt that IBRD loan was dependent thereon.

Felix was quite definite in stating the firm position of Ministry of Finance not to give its consent until these claims were settled on a reasonable basis, mentioning in this connection that US and British had obtained a relatively reasonable settlement whereas, Yugoslavia’s best offer to date is 6.6 percent of French claim.

Bohlen
  1. Charles E. Bohlen, Minister of the Embassy in France.
  2. Alexandre Parodi, Secretary General of the French Foreign Ministry.
  3. Same as telegram 996, March 4, to London, p. 1381.
  4. Lucien Felix, of the Division of Economic and Financial Affairs of the French Foreign Ministry.
  5. Not printed.