768.5 MSP/10–752: Telegram

No. 657
The Ambassador in Yugoslavia (Allen) to the Department of State1

secret

484. Deputy Foreign Minister Bebler asked British and French Ambassadors and myself to call on him yesterday to inform us of critical situation faced by Yugo economy and to urge speedier action on tripartite aid program.

He pointed out that whereas Yugo received $29 million in econ aid from United States in June, 1951, and $50 million from tripartite aid during second semester of 1951, Yugo had received no aid during second semester of 1952 although drought this year was more severe even than in 1950. He said reserves of raw materials were becoming desperately low. As example, he said Yugo had coke for only 22 more days and cotton for 30 days. He said one factory after another would close down if raw materials were not received very soon.

Bebler made three specific requests: First, prompt signing of tripartite aid agreement; second, acceptance of Yugo point of view that wheat and basic raw materials should take precedence on shopping list over “non-essentials” and technical assistance; and third, immediate help, “on account”, in obtaining cotton, wool and hides, to enable textile and leather factories to continue operation. He emphasized that even if orders for cotton, wool and hides were placed immediately, they would not arrive in time to keep all factories open because these materials come from distant source. He said Yugos had counted on tripartite aid in time to place orders six weeks ago. He now hopes United States, United Kingdom and France might be able to do what United States did last year when [Page 1315]it most helpfully found surplus cotton in Greece which could be sent to Yugo immediately.

British Ambassador pointed out that delay in signing aid agreement had resulted from Yugo refusal to accept original tripartite aide-mémoire of July 10.2 He admitted that present delay was due to necessity for final approval of latest draft by British Cabinet but expected this in few days. As for shopping list he said British felt that despite crisis caused by drought, Yugos should not neglect long-term improvements in agriculture which required irrigation work, technical assistance, etc. He pointed out that Yugo had agreed to both agricultural development and technical assistance during tripartite negotiations at Bled this summer.

I suggested that Yugo reps in Washington, London and Paris be instructed to discuss urgent need for raw materials with appropriate authorities there. French Ambassador said he did not think France was involved since none of materials needed come from France.

Our comments will follow.3

Allen
  1. Repeated for information to London.
  2. Not printed. See Document 648.
  3. See telegram 489, infra.