172. Memorandum of Conversation0


  • Yugoslav Exchange Reform


  • Mr. Marko Nikezic, the Yugoslav Ambassador
  • The Under Secretary (Mr. Dillon)
  • Mr. Leddy, U
  • Mr. Weiss, OT
  • Mr. Katz, EE

The Ambassador stated that his Government had now made approaches to a number of countries (UK, France, Italy, Austria, Switzerland, Netherlands, Sweden and Canada) seeking support for its proposed exchange reform. While the initial responses were favorable, there had as yet been no definite commitments. Belgrade was thus becoming increasingly concerned, since there was very little time remaining before January 1, when the reform is to be instituted. The Ambassador wished to know, therefore, how the Under Secretary saw the situation. He asked also whether the Under Secretary felt it would be possible for the US to proceed with its share of the support together with the IMF in advance of other countries.

The Under Secretary acknowledged that European participation in the support package was taking longer to arrange than we liked or had originally contemplated. Perhaps this should have been expected since delays had also been experienced in attempting to arrange support for the Spanish and Turkish reforms.1 He realized that the Yugoslav situation was made more difficult by the presence of a deadline which was not a factor in the previous situations.

The Under Secretary informed the Ambassador that we had made approaches to all of the countries mentioned by the Ambassador plus Germany and had talked with representatives of some of the countries on several occasions. The reactions we had received were similar to that reported by the Ambassador, i.e., most were favorable but for various reasons definite answers had not been forthcoming. The one difficult problem, however, was Germany. While they haven’t refused to participate, [Page 466] the Germans were having considerable difficulty from a political point of view. Apart from the problem created by the Yugoslav recognition of the GDR, the Germans were unhappy about recent Yugoslav public statements directed against the FedRep.2 The Under Secretary said we continued to hope that it will be possible for the Germans to participate indirectly through the BIS on the basis of commercial motivations. He pointed out, however, that there would be no opportunity for top level discussion with the Germans until he and Secretary Anderson go to Bonn on November 21.3 He realized that this delayed the matter later than had been hoped but he saw no other solution at the moment.

As regards the Ambassador’s question whether the US could move first, the Under Secretary said that we hadn’t planned on this for two reasons. First, the amount contributed by the US and the IMF would not be sufficient to meet the needs of the program. Secondly, we had a problem with our own monetary people who felt strongly that the US should proceed jointly with Europe on such matters in order that the burden be shared by countries able to contribute. He pointed out that we were not insisting that we necessarily know what all other countries would do. It was necessary, however, to be sure of at least the bulk of the European contribution, including the Italians and the Germans. He felt that the European participation might well be clear by December 1.

The Under Secretary asked the Ambassador whether December 1 would be too late, and if so, what were the alternatives? Would it be possible to proceed at a somewhat later date? The Ambassador was unable to answer this question without reference to Belgrade.

The Under Secretary stated that he could not realistically encourage the Ambassador to expect anything definite much before December 1. He said that we would, of course, continue our efforts in the meantime and hoped that some countries, particularly Italy, might be able to make a commitment, even though conditional on other contributions, very soon. The Under Secretary suggested that the Ambassador in the meantime talk to Mr. Jacobsson, and he stated we would talk to him also,4 to see whether he had any further thoughts on the matter. It was also suggested to the Ambassador that he recommend to Belgrade that Yugoslav representatives in the various capitals make further efforts which we could support.

  1. Source: Department of State, Secretary’s Memoranda of Conversation: Lot 64 D 199. Confidential. Drafted by Katz and cleared in U on November 9. [text not declassified]
  2. The Turkish Government had requested an IMF loan to allow it to continue a currency stabilization program begun in 1958. The Spanish Government initiated a currency stabilization program in August 1959 and requested an IMF loan in August 1960.
  3. From September until mid-November the Yugoslav press carried out a campaign attacking the Federal Republic of Germany for systematic opposition to improvement in international relations.
  4. Under Secretary of State Dillon and Secretary of the Treasury Robert Anderson visited Bonn September 19–22 during a three-nation trip to Europe. Documentation is in Department of State, Conference Files: Lot 64 D 559, CF 1781–1788.
  5. In a November 7 memorandum attached to the source text, Walter Stoessel noted that Leddy had spoken to Jacobsson.