175. Telegram From the Embassy in France to the Department of State0

2434. Subject: Yugoslav exchange reform. Following is summary discussions Basel December 10–11:


Italy: Carli indicated Italians prepared extend $35 million credit. Order implement quickly and to avoid Parliamentary action propose extend credit to existing account Yugoslav National Bank under previous agreement. $13 million of total would be in form which would cover payments made by Yugoslavs in 1960. This amount would be available in cash immediately and could be used by Yugoslavs for purchases from any source. Remaining $22 million would be available for purchases only of Italian goods. According Carli Yugoslavs have orders outstanding in Italy approximating $100 million (covered by one to two year credits). The $22 million portion would thus represent extension terms these latter short term credits.

Carli indicated Italians flexible on terms and would look see what terms offered by other participants. He mentioned 10 years as possibility if others did same. Carli had with him text agreement with only terms left blank which he discussed with Smole in Basel. Carli unable attend December 16 meeting Paris but Italy will be represented.

UK: Stevens and Rootham confirmed they prepared contribute but were not prepared specify amount and terms since decision this regard will depend on what others intend do. They indicated they could not agree to repayment term as long as 15 years but did not preclude 10 years. Interest rate would be going rate in British market. Indicated they wished see credits untied to maximum extent feasible and prepared provide completely untied credit if other Europeans do so. They regard US special case and would not consider fact US credits tied as consideration their own action. They prepared use BIS as agent on strictly procedural basis but opposed any arrangement imposing long term financial liability on BIS. They appear prefer arrangements be worked out on bilateral basis with some variations possibly in terms from one contributor to another. UK plans be represented at Paris meeting.
Germany: Blessing and Emminger stated decision has been taken to provide $35 million of which $25 million would be untied and $10 million used to [for?] procurement in Germany under [garble] system. [Page 470] $25 million portion will be provided by private banking syndicate with guaranty through credit Anstaltfurweideraufbau. Blessing has had talks with private banks and is confident syndicate would be organized and funds provided. Terms contemplated are six years for $25 million portion and not exceed 5 years for export credit guarantee as is normal under existing system. Blessing gave assurance Germans would attend Paris meeting but unsure type representation (i.e. government or bank).
Sweden: As Brink indicated Sweden had not yet really focussed on problem. Intimated Swedes would probably participate if others do so. Expressed preference for untied credits. He expected Swedes would attend Paris meeting.
Netherlands: Holtrop stated government decision not yet taken but thinking running in direction of $5 million revolving credit available for purchase raw materials as well as equipment subject only requirement purchase through Dutch merchant. Said effect would be same as untied credit. Terms would be normal for item purchases, i.e., six months to one year but he stated money could be turned over so that could be effective five year credit. (Note: Smole and Ferras have question utility this arrangement as part support package). Holtrop stated Netherlands would be represented December 16 meeting and hopes firm decision will be ready by that date.
Austria: Kamitz reported his government favorably inclined toward participation support package. However due past generosity Austrians to Yugoslavs ($10 million equipment credit 1951 recently extended by $6 million) and possible consequent Parliamentary difficulty would prefer channeling any new credits through multilateral instrument, e.g., BIS or IMF. Also feel that contribution should be less than whatever UK proposes although talked in terms $10 million. Although Kamitz does not expect be able attend Paris meeting Austria will have representatives there.
France: Brunet and Calvet not directly involved in Yugoslav program but were quite firm in stating that France could not go beyond $10 million export credit guarantee. Were flatly opposed to any untied credit and stated would be concerned about decision IMF extend part of drawing in French francs. They point previous generous assistance given Yugoslavia by France in form export credits and technical assistance for which France has not been rewarded politically. Finally they indicated Sadrin of Treasury was appropriate official French Government for this matter and they would discuss matter with him.
Switzerland: Schwenger not well informed intentions Swiss Government although appeared favorably disfused [disposed?] personally to Swiss participation. Asked for copy IMF report which we will attempt have sent by Paris IMF office.
Belgium: Although Belgians not previously consulted Upton took opportunity discuss with Ansiaux following Smole indication approach made by Yugoslav Ambassador Brussels. Ansiaux indicated $5 million export credit guarantee might be possible. Have asked Embassy Brussels take soundings with Belgian Government order determine whether invitation should be sent for Paris meeting.
BIS: Guindey and Holtrop reiterated willingness BIS offer all appropriate assistance such as (A) provision physical facilities (they in fact provided office space US representative over weekend); (B) acting as syndicate manager for assistance channeled through BIS subject examination details any proposed arrangement. Still prepared consider extension BIS credits on basis time deposits provided however no risk to BIS. For own part BIS has authorized doubling present 100 million franc limit on uncovered credits but these limited three months. Latter can be extended for additional periods but they stated credit could not be permitted degenerate into five year credit. Given limited role BIS could play (i.e., tiding Yugoslavs over brief periods when cash short) they feel their participation could not be included in package. (Note: Yugoslavs informed extension limit BIS uncovered credits but unaware precise amount new limitation.)
IMF: Stated Jacobsson authorized him indicate Jacobsson prepared recommend additional $4 million to proposed IMF drawing. Ferras has not divulged this to Yugoslavs and cautioned us not do so.
Believe Basel discussions productive and that matters proceeding satisfactorily. See no need for further action by Department at this time.

  1. Source: Department of State, Central Files, 868.131/12–1260. Confidential. Transmitted in two sections and repeated to Belgrade, London, Vienna, Stockholm, Bonn, Rome, Brussels, The Hague, and Bern.