of State to the Embassy in
62. Urtel 38.2 Department has always been aware that decision to push Yugos to maximum concession before going to Italians might make a narrow gap between positions of two hard to bridge. But Yugos could have had no illusions about necessity of taking account Italian arguments. We believe Yugos sufficiently realistic to know that we must in interest solution avoid to maximum degree possible loss of face to Italians well as to Yugos. Decision on how far and when to press both parties involves exercise of judgment in bringing their positions together without undue loss of face on [Page 481] either side. Department fully supports Thompson’s judgment as to extent to which it was desirable in this phase negotiations to push Italians to May 31 proposals. Department confident that if development of which we were forewarned London’s 2293 should arise you will make most of line of argument suggested.
Fact that Yugoslavs made maximum concession (which we appreciate and are not overlooking) did not necessarily dictate that it would have been sound tactics to attempt at that stage to force Italians to accept fait accompli. Yugoslavs cannot be surprised that we come back to them with less than full Italian agreement on all points of package. Overall position we are presenting to Yugoslavs not out of line, in total effect, with May 31 and essential long range interests both parties would be served by acceptance. Department does not plan for present make representations to Mates at least pending Velebit’s report of official Yugoslav initial reaction which we hope may be revealing of ultimate attitude and of assistance in deciding further tactics.