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

301. Report Prepared by the Operations Coordinating Board¹

Washington, April 24, 1957.

PROGRESS REPORT ON “UNITED STATES POLICY TOWARD YUGOSLAVIA” (NSC 5601)²

(Policy Approved by the President January 24, 1956)

(Period Covered: September 6, 1956 through April 24, 1957)

A. Summary of Operating Progress in Relation to Major NSC Objectives³

1. OCB Recommendation Regarding Policy Review. The OCB notes the NSC directive for a review of NSC 5601, contained in paragraph 24 of NSC 5616/2,⁴ but considers that in the light of operating experience to date, and of anticipated future developments, there is no urgency for a review from the OCB standpoint.

2. Summary Evaluations. On October 15, 1956 the President issued the finding with regard to continued aid to Yugoslavia required by Section 143 of the Mutual Security Act of 1954 as amended. This action was based on a determination that Yugoslavia remained independent of Soviet control and that U.S. objectives would, on balance, continue to be served by U.S. support of Yugoslavia. The finding permitted economic aid to Yugoslavia to go forward, but deferred a decision with regard to military aid with the exception of spare parts and maintenance items. (See paragraphs 3.a. and 6.)

a. Yugoslav Independence. U.S. officials now feel more confident of the Yugoslav will and ability to maintain independence than they did in the period when the Yugoslavs were eagerly reciprocating the Soviet-initiated rapprochement. In the last six months the Soviet threat to Yugoslav independence has changed its character. It now is exerted through economic pressures and “ideological” polemics instead of taking the form of economic inducements and other blandishments, as it had after late 1954. The Soviets have blamed the events in Poland and Hungary in part on Yugoslav influence. The result has been a mounting Soviet bloc pressure on the Yugoslavs for ideological (and, hence, political) subservience to Moscow. This pressure was first manifested on an ideological level and exercised through speeches and editorials, but it now gives clear signs of being extended to the state level, where it is evidenced by the refusal of the USSR and East Germany to implement fully previously-granted credits and development loans. The Yugoslavs have indicated clearly that they do not intend to submit to this pressure.

b. Yugoslav Encouragement of Separatist Tendencies in the Soviet Bloc. Recent events in Eastern Europe and the strong anti-Yugoslav Soviet reaction thereto have provided evidence of the extent of Yugoslav influence. Polish nationally-minded Communists have been influenced by the Yugoslav example and advice in their so-far successful bid for greater independence and, moreover, from all reports, have been greatly heartened by the fact of U.S. support for Yugoslavia and the nature of U.S.-Yugoslav relations. The Yugoslav example had an important role in encouraging those in intellectual elements which first instigated the Hungarian revolt with their demands for greater national and intellectual freedom.

c. Yugoslav Foreign Policies. Considered in relation to the NSC objectives that Yugoslavia not actively further Soviet-Communist cold war objectives and that Yugoslav potentialities be developed on behalf of U.S. and other free world aims, Yugoslav foreign policies seem to call neither for great concern nor for enthusiastic approval. Yugoslavia has not recognized the (East) “German Democratic Republic,” but remains willing to accept economic relations with it not leading to recognition. In general, the neutralist bent of Yugoslav foreign policy continues as before and seems to be dictated by the Yugoslavs’ view of their country’s needs as a small country balanced between East and West. Yugoslavia has supported United Nations actions in the Middle East, but its attitude in regard to UN action on Hungary has been somewhat ambiguous. While disapproving of Soviet intervention there in principle, Yugoslav officials have explained their abstention on most General Assembly votes condemning the Soviet Union by claiming that UN action could only exacerbate the situation, would not influence the USSR, and could not help Hungary in any case. Besides this rationalization of their position, the Yugoslavs indicated to the United States last November their apprehension about possible Soviet military actions against them or other nearby countries.

d. Liberalization of the Regime. No concrete measures toward liberalization of the regime took place during the reporting period. On the contrary, the arrest and conviction of Djilas for his criticism of the basic tenets of Communism, whether of the Yugoslav or Soviet variety, points up the lack of political freedom which prevails. There are signs, however, that Djilas’ message and the impact of events in Hungary and Poland were not lost on Yugoslav leaders. Although Yugoslav Communists have been realistic enough, apparently, to recognize the desires of the people for improvement in living standards and for some measure of freedom, such recognition has not yet resulted in any material improvement in the conditions of life in Yugoslavia.

3. Status of and Progress on U.S. Commitments for Funds, Goods or Services and Other Programs.

a. Military Aid. Military assistance to Yugoslavia is still limited to spare parts and maintenance items in accordance with the policy set by the Presidential determination on aid of October 15, 1956. Pending a decision by the executive branch, deliveries of ammunition, major items, and aircraft remain suspended. (See Section B, Paragraph 6)

b. Defense Support. Defense support for Yugoslavia for FY 1957 amounts to $15 million, of which $1.5 million has been approved for technical assistance and $13.5 million approved for wheat and cotton, bringing total non-military MSP assistance to approximately $445 million since 1950.

c. PL 480. A PL 480 agreement for FY 1957 in the amount of $98.3 million was signed on November 3, 1956, and is being carried out on schedule. This will bring total PL 480, Title I, assistance to Yugoslavia to a cumulative total since 1954 of approximately $221.5 million. In response to a Yugoslav request, the Department of Agriculture agreed in January to shift $5 million from wheat to ocean freight, and the Yugoslavs were promised that the U.S. would consider the problem of additional wheat when supplementary PL 480 funds are voted by Congress.

d. Estimated Cumulative Total. Commitments for military, economic and technical aid have totalled about $1.5 billion from 1949 to the present.

4. New U.S. Commitments for Funds, Goods or Services Entered Into During the Reporting Period.

No new commitments except as in 3.b. and 3.c.

B. Major Operating Problems or Difficulties Facing the United States

5. Hungarian Refugees. As of March 1, 1957, there were over 17,000 Hungarian refugees in Yugoslavia. UN observers have reported that conditions of housing and feeding provided by the Yugoslavs are roughly comparable to Austrian standards. New refugee flow has been reduced to a trickle and it is unlikely that the number in Yugoslavia will exceed 20,000. To date, about 400 have settled permanently in Yugoslavia, over 250 have gone from Yugoslavia to Western countries other than the United States, and almost 1,800 have voluntarily returned to Hungary. The Yugoslavs complain that the refugees represent a heavy economic burden to them, and continue to press the West for financial and material assistance in caring for the refugees, as well as for action to remove some of the refugees to the countries of second asylum. No refugees will be taken directly into the U.S. from Yugoslavia on parole, at least until the proposed amendments to the Immigration and Nationality Act have been acted upon. However, the Department of State is seeking to work out a plan (for which $2 million has been allocated) for helping the Intergovernmental Committee for European Migration to move 10,000 Hungarians from Yugoslavia to countries of permanent resettlement or secondary asylum. Some U.S. assistance for interim care and maintenance of the refugees is also being considered.

6. Military Aid. The resumption in March 1956 of previously programmed deliveries, following a 10-months’ suspension, continued for less than four months before another partial suspension was instituted on the basis of Congressional hesitancy about aid for Yugoslavia. In October 1956 this partial suspension was extended to all items except spare parts and maintenance equipment. The Departments of State and Defense have reviewed this situation a number of times in recent months, and an early decision on a resumption of relatively normal shipments appears probable. Such a decision is required to avoid expensive prolonged storage of jet aircraft incorporated in prior programs. On the political level the Yugoslavs have requested a decision and on the working level Yugoslav military officers have made it apparent to American Military Assistance Staff officers in Belgrade that the present stoppage is materially affecting the tactical efficiency of the Yugoslav Air Force. A similar problem exists concerning three OSP minesweepers which have been completed for the Yugoslavs in French yards and which are now using up urgently needed harbor space.

7. Tito Visit. After premature reports of a possible visit to the United States by Tito began circulating publicly, Congressional and press opposition mounted rapidly. In the face of the unfavorable atmosphere building up here, the Yugoslav press announced Tito’s unwillingness to visit the U.S. under such conditions, at least for the time being. Yugoslav officials have since expressed their disappointment at the foregoing incident and have pointed out that recent attempts by the Soviets to pressure the Yugoslavs into ideological conformity have been encouraged, in part, by the Soviet belief that Yugoslavia has become relatively isolated in relations with the United States. Nevertheless, a visit is now unlikely this year in the absence of a renewed high-level U.S. initiative.

8. Yugoslav Request for Long-Term Aid. The Yugoslavs, on November 30, 1956, formally requested a five-year agricultural commodity aid program of about $100 million per year, consisting mainly of wheat. As yet, no inter-agency consideration has been given to this proposal. The prospect now for a multi-year agreement of this kind for Yugoslavia is not very good. Consideration of this request will be affected by the magnitude of new PL 480 authority which may be voted by Congress, general policy regarding future multi-year agreements of this kind and the specific political problem of Yugoslavia.

9. Majdanpek Copper Project. A request for a U.S. loan of about $10 million to assist the development of a copper mining facility and related plants in Yugoslavia as part of an over-all project in which the Yugoslav Government is greatly interested is still outstanding. The Yugoslavs continue to press for support on this matter.

C. Listing of Additional Major Developments During the Period

10. Summary of Yugoslav-Soviet Relations. The instability of the supposedly equal and bilateral relationship between the Yugoslav and Soviet Communist parties created by the declaration of June 20, 1956 during Tito’s visit to Moscow, began to manifest itself soon thereafter. A secret letter was dispatched from the Soviet Communist Party to the satellites and some West European parties warning them against Yugoslav influence tending to splinter the Soviet orbit and “proletarian international solidarity.” In September 1956 Khrushchev flew to Yugoslavia to visit Tito, with the apparent intention of securing his acquiescence in the continuation of Soviet control in the satellites. These talks were extended by a flight of Tito and Khrushchev to Yalta, but were only a limited success from the Soviet point of view. The Yugoslavs seem to have agreed to accept such Stalinist figures as Gero in Hungary, but did not agree to cease intimate party relations with the satellites, nor, apparently, to cease trying to influence the satellites in the direction of “national Communism.”

a. The outcome of the Polish crisis and the Hungarian revolt seems to have convinced the Soviet Union that “national Communism” was fraught with danger for their control of Eastern Europe. Soviet and Soviet-inspired polemics against the Yugoslavs have sought to prove the Tito regime’s ideological weaknesses and anti-Leninist tendencies. The Yugoslavs, however, have tended to enunciate theories which, if adopted, would seriously weaken the cohesion of the Communist world. The most complete formulation of this ideological line can be found in Kardelj’s speech of December 7, 1956 which maintains that communism, in Yugoslavia as elsewhere, cannot have a future unless it proves itself able to better the lot of its people, and to avoid becoming a harsh bureaucratic apparatus distant from the people.

b. It is too early to estimate the meaning of this development from the point of view of U.S. policy. The new estrangement between Moscow and Yugoslavia must mean, for the present, that Yugoslav influence in Eastern Europe, with the exception of Poland, is now at a low ebb. But, in the long run, the ability of the Yugoslavs to criticize Soviet-style Communism where it is vulnerable, in its own terminology, remains a divisive and demoralizing factor. As such, it may have continued effects on the ability of the Soviet Union to maintain stable control over the largely disaffected population of the nations in the Soviet orbit in Eastern Europe.

11. Trade With the Sino-Soviet Bloc. Yugoslav trade with the Sino-Soviet bloc expanded somewhat during the period under review. It represented 22 per cent of total Yugoslav trade during 1956. Exports amounted to $74 million, while imports totalled $105 million. The excess of imports was financed primarily by drawings of more than $26 million on Soviet and satellite credits and loans during this same period. Exports to the bloc were comprised mainly of meats, fruits, tobacco, chemicals, lead, hemp, and wool. Imports were mainly cotton, petroleum, coal, iron and steel, some machinery and paper. During recent weeks difficulties encountered both in concluding trade agreements with the USSR and Eastern Germany and in obtaining Soviet agreement on the utilization of various promised credits, indicate a reversal of the present trend of increased Yugoslav-Soviet bloc economic relationships.

1. Source: Department of State, OCB Files: Lot 62 D 430, Yugoslavia 1956–1957. Secret. A financial annex regarding U.S. assistance to Yugoslavia for fiscal years 1956 and 1957 and Mutual Security Program aid for fiscal years 1950–1956 is not printed. According to a letter attached to the source text by Charles E. Johnson, the OCB concurred in the progress report and approved it for transmittal to the NSC on April 24. The NSC noted the report on June 15 in NSC Action No. 1732.
2. Document 270.
3. NIE 31–56, July 24, 1956—Yugoslavia’s International Position. [Footnote in the source text. NIE 31–56 is printed as Document 282.]
4. For text of NSC 5616/2, “Interim U.S. Policy on Developments in Poland and Hungary,” see vol. XXV, pp. 463–469.