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

2533. Meeting of countries participating support package for Yugoslav exchange reform held December 12 [16] at OEEC Headquarters. [Page 472] All contemplated participants represented plus observers IMF, BIS and OEEC. Yugoslav not invited morning session. German Government not represented but official of German Deutsch Bank (Pirkham) was present as observer only.

Ferras gave brief description proposed reform and indicated IMF directors scheduled meet December 21 to act on Yugoslav drawing. It was indicated that package should be announced in connection IMF action and Ferras agreed it possible withhold IMF announcement few days order wait for those countries who have yet to take firm decision.

Following description proposed US contribution, Italian, British and French representatives described their proposed contributions along lines explained to US representatives at Basel (Paris Embassy telegram 2434 to Department).1 Since German representative had indicated he not in position to speak US representative (Martin) summarized our understanding proposed German contribution as explained by Blessing at Basel2 and confirmed by Harcourt yesterday. (Harcourt indicated yesterday delay arising out of technical problem which has arisen illiquidity private German banks.) Bundesbank understood to be seeking solution. We have asked Bonn attempt expedite decision so as in any case be prepared inform Fund prior December 21 meeting. (UK criticized failure Germans untie total amount, saying made almost impossible to untie theirs.)

Netherlands representative indicated intention offer $5 million revolving credit as described by Holtrop at Basel.3

Swiss representative stated no decision could be expected prior January 1 and while he thought Switzerland wished to join in package Swiss contribution would be less than $10 million.

Austrian representative indicated decision before December 21 unlikely and that his government wished to see what others prepared to do, but would participate.

Swedish representative stated he without instructions and he would report today’s discussion to Stockholm.

In general discussion suggestion was made for a coordinating instrument to receive and disseminate information on implementation Yugoslav reform and status disbursement and repayment credits. Text such proposal (actually prepared by BIS representative but not attributed to him) was circulated informally. However, representatives were not in position decide such matter and it was felt that matter would have to be considered subsequently in Washington when package finally [Page 473] developed. If BIS is to be used in such manner, it was agreed effort would be made notify BIS authorities before next BIS meeting in January.

In afternoon session Yugoslavs were present. They briefly summarized what Yugoslav program seeking to accomplish and answered questions which had arisen in course discussion.

Meeting approved memorandum summarizing contributions envisaged by countries. Copies being carried there by Department officers. Copy given Yugoslavs with invitation to use time between now and 21st to improve amounts and terms by bilateral discussions.

US pressed for Austrian and Swiss decision in principle next week, even if necessary it be subject parliamentary approval so that announced package could be adequate, full US participation assured (recalling US unwilling put up more than Europeans) and to take advantage of participation in multilateral package from start, point to which they had attached importance.

  1. Source: Department of State, Central Files, 868.131/12–1660. Confidential. Repeated to Belgrade, London, Bonn, Vienna, Bern, Stockholm, The Hague, and Rome.
  2. Document 175.
  3. Blessing’s comments were reported in Document 175.
  4. Holtrop’s comments were reported in Document 175.