Foreign Relations of the United States, 1952–1954, Eastern Europe; Soviet Union; Eastern Mediterranean, Volume VIII

Eisenhower Library, Eisenhower papers, Whitman file

No. 198
Memorandum by the Secretary of State to the President¹

top secret

Washington, June 3, 1954.

Subject:

• Successful completion of first phase of Trieste negotiations.

For your information, the “Agreed Record of Positions Reached” between the US, UK, and Yugoslavia was initialed in London on Monday, May 31 (copy attached²).

The Yugoslavs agreed to a territorial settlement which amounts practically to acceptance of October 8, i.e., Zone A which includes the city of Trieste to Italy and Zone B to Yugoslavia. The only difference is that they ask for a small strip of Zone A at the western end of the interzonal boundary and are willing to give up a smaller segment of Zone B at the eastern end. (See map attached.³) The changes proposed could accurately be described as a “minor rectification” of the boundary. This contrasts with the initial Yugoslav demand for the entire hinterland of Zone A, leaving only the city of Trieste and a coastal strip to the Italians; and with their later demand for a port area on the outskirts of the city with a connecting corridor.

The Yugoslavs have also given up their insistence that the territorial settlement be contingent upon a settlement of their financial, mostly World War II reparations, claims against Italy.

Other features of the contemplated settlement are a reciprocal statute for the protection of minorities, arrangements for maintenance of a free port in Trieste and for some measure of at least lip-service to the idea of local autonomy, and a reciprocal declaration of non-prosecution for political activities in connection with the settlement.

The US, UK, and possibly France would issue a statement of non-support for further territorial claims by either side and would in fact make it clear that they consider the settlement final, although it will not be so described in explicit terms.

The US is granting Yugoslavia $20 million additional aid in FY 1954 and the British $5,600,000, which is required on the basis of Yugoslavia’s current balance of payment deficit. The Yugoslavs may use a major portion of the local currency counterpart funds generated by this aid for the construction of a port and transportation facilities in the Capodistria–San Nicolo area. It will also be proposed to the Italians that we grant them a similar amount of aid to assist them in reaching a financial settlement with the Yugoslavs.

The US and UK negotiators in London, after informing the French, opened the second phase of these negotiations with the Italians on June 1.⁴

John Foster Dulles

1. A draft of this memorandum by Hooker was an attachment to Hooker’s memorandum of June 2 to Secretary Dulles through Merchant. Hooker wrote that in view of the President’s interest in the Trieste problem, Dulles might wish to call his attention to the successful completion of the first phase of the negotiations. (750G.00/6–254)
2. The copy was identical to the Agreed Record of Positions, supra.
3. Not found attached to the source text.
4. In a brief memorandum to Dulles, June 7, Eisenhower thanked the Secretary for the report on Trieste and said that if it became apparent that an agreement was to be reached, plans for the release of the information should be carefully made. He concluded, “If properly handled, it should strengthen our position immeasurably, particularly abroad.” (750G.00/6–754)