Foreign Relations of the United States, 1955–1957, Central and Southeastern Europe, Volume XXVI

291. Telegram From the Embassy in Yugoslavia to the Department of State¹

Belgrade, October 19, 1956—7 p.m.

508. Pass Army, Navy, Air. Embassy telegram 500.²

1. Have just concluded 2-hour session with Prica where as not unexpected Foreign Office press release October 17 was subjected to considerable interpretation. He said he would like my comment on press release first, particularly as it represented Yugoslav Government viewpoint on President’s report which while welcome in some respects had given certain shock in others. I then spoke along following lines.

2. Press release in my opinion could be criticized primarily on grounds inconsistency and inaccuracy on certain points. If Yugoslav Government found certain sections letter unpalatable or even unacceptable, it should recall first that President had made affirmative response to three points. In view highly generalized information hitherto given us re Yugoslav-Soviet relations and recent developments it was not unnatural United States should have some reserves on ultimate Soviet aims. Seriousness of developments at Brioni and apparent Soviet intention to reverse line laid down in Moscow declaration had been emphasized to us only by Yugoslav Government and in particular by Prica in our conversation October 1 (Embassy telegram 437, paragraphs 3 and 4).³ Subsequently little information had been offered how this “wide gap” had been bridged at Yalta and we were still unaware what compromise had been arrived at. I said threats to independence could take various forms and Tempo, in course of wheat discussions, had underlined danger for Yugoslavia in becoming too dependent on USSR in trade relations. Therefore I found lack of logic in contention of no threat to Yugoslav independence by Soviet Union. Yugoslav Government desire for long-term economic arrangements was of course well-known to us but this raised several problems which we had discussed lengthily with Tempo. I reminded Prica we had extended under authorization stipulated by law and further I had told Tempo only recently question of long-term credits would naturally raise same type political issues with which we now concerned. Furthermore generalized Yugoslav proposals to date envisaged sale of surplus agricultural products under long-term credits eventually payable “in dollars or some other currency”. Emphasis seemed to be on latter which raised host of problems. Perhaps next year administration would have new proposals to present to Congress but at present we must operate under existing laws.

3. Re statement on military aid, I could only remark release was inaccurate and quoted figures mentioned Embassy telegram 500, paragraph 4 amplifying these with numerous illustrations on variety of deliveries in addition to spare parts.

4. Prica said would try explain Yugoslav Government position in existing circumstances. Difficult accept President’s report without comment; although Yugoslav Government knows aid given under United States laws, it thinks situation now greatly changed. President had in effect repeated what was formerly true but it no longer corresponds to facts, i.e., danger from Soviet Union has lessened or is disappearing. Yugoslav Government is attempting to find balance between East and West which is different from Presidential formulation which implies Yugoslavia in same danger as five years ago. Yugoslav Government does not want to be bound to one side and would be difficult for it to admit it accepting aid on basis danger from Soviet Union. These formulations therefore offensive to Yugoslav Government which is striving for good economic relations with both sides. Also mention of possibility of cutting off aid worries Yugoslav Government as it places it in position insecurity for future while its duty must be provide food for its people. Yugoslav Government hopes US will therefore understand its motives in accepting aid, and its standpoint is set forth in press release.

5. Prica then said Yugoslav Government in difficult position on wheat. It wants to plan for more than one year’s supply and with United States it cannot be certain in view of President’s letter whether it can count on more than one year. (I interrupted to say our record of covering deficits spoke for itself and Prica admitted this was true.) He said he would be entirely frank about present status of negotiations with USSR. Soviet system was rigid as was based on state planning and Soviets were demanding to know Yugoslav requirements for 4 to 5 years ahead before concluding agreements. Yugoslav Government had postponed and was still postponing decision on this because it wanted to investigate again possibility of longer term arrangements with United States for agricultural surpluses. He referred to our recent agreement with India as example of what Yugoslav Government had in mind and it hoped very much we would examine some such possibilities for them. He entered strong plea on basis necessity Yugoslav Government plan future economic development, assure food supply over next 4 to 5 years, remove friction from our economic relations and put them on some loan or credit basis as not to cause such criticism in Congress. Although he understood limitations under which we worked he hoped we could give some indication of our attitude when we commenced discussions of wheat needs which were urgent. I replied I would submit his observations and would be in position to discuss immediate wheat needs within few days.

6. Discussion re military aid and comment will follow in separate telegram.⁴

Riddleberger

1. Source: Department of State, Central Files, 768.5–MSP/10–1956. Secret. Repeated to London, Paris, and Moscow.
2. In telegram 500 from Belgrade, October 18, Riddleberger reported on a press release issued by the Yugoslav Government on October 17 in reaction to the resumption of U.S. aid. (Ibid., 768.5–MSP/10–1856)
3. Telegram 437, October 2, reported on an October 1 conversation between Riddleberger and Prica. (Ibid., 768.5–MSP/10–156)
4. Telegram 508 from Belgrade, October 19. (Ibid., 768.5–MSP/10–1956)