241. Report Prepared by the Operations Coordinating Board1


(Policy approved by the President, February 6, 1954)

(Period covered: May 7, 1954 through April 13, 1955)

A. Summary of Major Actions and Decisions

1. Since, in major respects, the implementation of U.S. policy towards Yugoslavia was either held in abeyance or seriously curtailed by the existing impasse over Trieste, the focus of our efforts within the period under review was upon a solution of this problem. Diplomatic negotiations of eight months duration, in which the U.S. and the U.K. laboriously promoted an Italian-Yugoslav accord on Trieste, [Page 633] culminated October 5, 1954 in a four-power understanding which resolved the issue in a manner not only acceptable to Italy and Yugoslavia but also favorable to U.S. interests. It is hoped that the disposal of the Trieste problem, in terms accepted by both Yugoslavia and Italy, established the basis for Italian-Yugoslav rapprochement and cleared the way for planning and action with respect to other phases of U.S. policy towards Yugoslavia. [2 lines of source text not declassified]

2. On August 9, 1954, Yugoslavia, Greece and Turkey concluded a treaty for a military elaboration of the Balkan (Ankara) Pact. From the outset, the U.S. assumed a sympathetic: attitude toward the development of the Balkan Entente into a formal military alliance. Our influence was exerted in concert with the U.K. and France to the end that the conclusion of the Alliance should not impede the achievement of other important objectives of U.S. policy. Although the establishment of the Balkan Alliance provides no organic connection with NATO, it aligns Yugoslavia indirectly with the general scheme of Western defense.

3. In continuation of U.S. military aid to Yugoslavia, the cumulative amount programmed from the beginning in FY 1951 through February 28, 1955 reached $787.7 million. During the period of April 30–January 31, 1955 materials delivered increased from 47 to 65 percent of the total value of end-items programmed since FY 1951; dollar value of end-items delivered by January 31, 1955 was $513.1 million. Deliveries within the period amounted to $144.3 million.

4. At the end of the period under review, the cumulative total of U.S. economic assistance which had been programmed and allotted for Yugoslavia since the beginning of the U.S. aid programs in 1950 amounted to $475.485 million. At the end of February 1955, $435.6 million had been shipped. (These figures include surplus agricultural commodities provided under PL 4803 as outlined in paragraph 5.) The cumulative total of contributions by the U.K. and France to the tripartite economic aid program for Yugoslavia reached the equivalent of $77 million ($48.2 million from the U.K. and $28.8 million from France). During this period a final allotment of $10 million was made under the Mutual Security Program for FY 1954, which totalled $65 million. The MSP planning figure for Yugoslavia in FY 1955 is $45 million plus $500,000 for technical exchange activities. Allotments for MSP FY 1955 funds for economic aid as of April 15, 1955, totalled $36 million. The $40.5 million for economic aid requested for FY 1956 will allow a somewhat greater proportion of aid for direct strengthening of the economic and defense structure of Yugoslavia [Page 634] than in past years when aid has been almost exclusively concentrated on food and raw materials for subsistence purposes.

5. In November 1954, discussions were held in Washington on economic matters between high-level representatives of the U.S. and Yugoslav Governments.4 The head of the Yugoslav delegation made an extended presentation of Yugoslavia’s economic difficulties. The question of Yugoslavia’s medium and short-term indebtedness, which was discussed at the Washington talks, is under further study. Following the talks, an agreement was signed under which 425,000 tons of wheat and $10 million worth of cotton from surplus stocks were provided to Yugoslavia under Title I of PL 480. Funds were authorized in the amount of $44.185 million to cover this wheat and cotton, and the ocean transportation thereof. The furnishing of these commodities was in addition to 275,000 tons of wheat (at a cost of $32 million) provided under Title II of PL 480, and 150,000 tons (at a cost of $9 million) provided in the Mutual Security Program, bringing the total of FY 1955 wheat to 850,000 tons as of the end of CY 1954. In February 1955 the Yugoslav Government requested an additional 286,000 tons to meet its needs until the new crop was harvested. As of April 13, 1955, this question had not been finally decided, but it appeared likely that this request would be given favorable consideration.

6. The USIS program emphasized (a) growing military and economic strength of the West with U.S. support, (b) the values of cooperation among the free world powers, (c) U.S. measures of economic, technical and flood relief assistance to Yugoslavia, and (d) the dangers of too close a rapprochement with the Soviet bloc. As part of an extensive program of cultural relations, the stage play “Porgy and Bess” was performed with significant success in Yugoslavia. The U.S. is sounding out the Yugoslav Government with a view to sending an “Atoms for Peace” exhibit to Yugoslavia beginning with the Zagreb Trade Fair in September, 1955.

B. Evaluation of Progress in Implementing NSC Policies and Objectives

7. It is believed that the policies set forth in NSC 5406/1 should be reconsidered. The following modifications in NSC 5406/1 are considered advisable in any case to reflect the progress of events:

In view of the resolution of the Trieste issue and the marked improvement in Yugoslav-Italian relations, (1) the note with respect to the then active Trieste controversy which heads the statement of policy on page 1 should be deleted, (2) para. 8, pp. 3–4, should be [Page 635] revised, (3) para. 17, p. 7, should be deleted, and (4) para. 52, pp. 33–34, should be revised.
In view of the current trend in Soviet behavior toward Yugoslavia and certain effects of the “normalization” of Yugoslav relations with the Soviet bloc, some revision is indicated in para. 7, p. 3; paras. 5–9, pp. 14–15 (especially para. 5); and paras. 49–50, pp. 32–33.

[Numbered paragraph 8 (28 lines of source text) not declassified]

C. Emerging Problems and Future Actions

9. The “normalization” of relations between Yugoslavia and the Soviet bloc countries which had been evolving since mid-1953 was accelerated at Soviet initiative during the review period. While officially welcoming these developments, Yugoslav leaders claim that post-1948 ties with the West will not be impaired. Present signs are that Tito is using his increased freedom of action resulting from the virtual cessation of Soviet orbit pressures against his regime to enhance Yugoslavia’s international prestige and position by becoming an active proponent, along with India, Burma, Egypt, etc., of a neutralist policy of non-alignment with either the Soviet or U.S. “bloc”. Although there is no reason for believing that Tito has weakened in his determination to maintain his independence from the Soviet bloc, emerging developments in this regard call for continuing alert scrutiny with a view to influencing their direction in line with U.S. interests or, if necessary, to giving timely, basic reconsideration to our Yugoslav policy.

[Numbered paragraphs 10–12 (1 page of source text) not declassified]

13. Proposals to establish a formal education exchange program between the U.S. and Yugoslavia, which would be recognized by the International Exchange Service of the Department of State, have encountered and will continue to run up against the thus far insurmountable obstacles of a lack of Congressional support, partially hostile U.S. popular attitudes (to welcoming Communists), and the unavailability of funds.

  1. Source: Department of State, OCB Files: Lot 62 D 430, Yugoslavia, 1956–1957. Top Secret. This progress report was discussed at the OCB meeting of April 13 and approved for transmission to the National Security Council with the recommendation that the policies set forth in NSC 5406/1 be reviewed by the NSC Planning Board. Minutes of the meeting are ibid., Preliminary Notes. Attached to a covering memorandum from Executive Officer Elmer B. Staats to the OCB, dated May 10, which stated that the report was noted by the NSC on May 5, in NSC Action No. 1393. See Document 246.
  2. For text of NSC 5406/1, February 6, 1954, see Foreign Relations, 1952–1954, vol. VIII, pp. 13731377.
  3. Agricultural Trade Development and Assistance Act of 1954 (P.L. 480), approved July 10, 1954; 68 Stat. 454.
  4. The discussions took place November 12–23, 1954; see Foreign Relations, 1952–1954, vol. VIII, pp. 1421 ff.