177. Operations Coordinating Board Report0


(Approved by the President April 16, 1958)

(Period Covered: December 24, 1959 through December 21, 1960)

National Independence. There has been no change during the past year in the independent status of Yugoslavia. The Yugoslav Government has continued to manifest both ability and determination to maintain its independence.
International Position. The Yugoslav Government has continued its policy of seeking to avoid alignment either with the Soviet bloc or the Western alliance. The Yugoslav leaders have increasingly sought to identify themselves with the aspirations and neutralist views of the uncommitted and newly-emerging nations of Asia and Africa and to play an influential role among these nations. Thus, at the UN General Assembly meeting in September, Tito took an active part in the preparation and presentation of the five-nation resolution calling for a renewal of contacts between the United States and Soviet heads of government for the solution of outstanding problems by negotiation.2 The Yugoslav Government is also actively endeavoring to develop bilateral economic, cultural and political relations with the uncommitted countries. This course, by its prospect of new friendships with these countries and greater maneuverability in Yugoslav foreign policy, appears to have strengthened Yugoslavia’s international standing, and particularly its position vis-à-vis the Soviet Union. These developing relations have the advantage of permitting the uncommitted states to contrast by firsthand observation Yugoslavia’s benefits derived from U.S. assistance— which has been extended without political conditions—with the danger of Soviet political domination. On the other hand, these developing relations facilitate Yugoslavia’s promotion of a philosophical and political outlook, based on its interpretation of Marxist ideology, which could affect both the internal political development and the foreign policy orientation of the uncommitted states.
Sino-Soviet Bloc Relations. Except for Communist China and Albania, which continue to be sharply critical of Yugoslav policies, the bloc, with a few noteworthy exceptions, has generally continued to refrain from polemical exchanges with Belgrade, and current state relations are relatively normal. Nevertheless, Moscow recognizes that Yugoslav revisionism (for example, Kardelj’s recent book “Socialism and War”) remains a significant threat to the unity of the Communist bloc and continues its effort to counteract and isolate Yugoslav political and ideological influence in Eastern Europe. Moreover, divergent views within the bloc toward Yugoslavia have exacerbated intra-bloc Party relations and the Sino-Soviet dispute.
Economic Progress. Yugoslavia has continued its rapid economic development during the past year. In order to stimulate further economic growth through removal of impediments to foreign trade arising from multiple exchange rates, the Yugoslav economic planners are [Page 475] about to undertake a reform of its foreign exchange system. This project, if successfully carried out, will draw Yugoslavia closer to the economy of the Free World. Consequently, the United States, in cooperation with Western European countries and international financial institutions, is currently seeking to work out a program of financial support for this reform. As a result of Yugoslavia’s success in the field of agriculture, U.S. assistance to Yugoslavia has shifted from the provision of agricultural commodities to supplying capital credits for industrial development. During the last fiscal year the Development Loan Fund has approved loans to Yugoslavia totaling $37.8 million for a plastics plant near Zagreb and for additional diesel locomotives.
Internal Liberalization. While the Yugoslav regime remains an authoritarian Communist dictatorship and deals severely with any internal political dissidents, there has been a gradual and continuing, if unspectacular, trend toward liberalization within Yugoslavia, particularly in the economic sphere. Yugoslav economic development has been accompanied by some decentralization of political authority, through which the regime is seeking to broaden its base of popular support. This decentralization will be reflected in a constitutional revision in the coming year. Since the death of Cardinal Stepinac,3 a cautious rapprochement has been taking place between the regime and the Catholic Church, which has led the Church to propose certain terms that may form the basis for eventual negotiation of a modus vivendi with the regime.

Expanded Contacts with the United States. Both private and official exchanges and contacts between the United States and Yugoslavia have continued to grow in various fields. These have included visits by high-level officials of both countries: during the past year the Yugoslav Secretaries of Education and Agriculture have come to the United States on leader grants, and Secretary of Agriculture Benson, Under Secretary of State Dillon, and USIA Director Allen have visited Yugoslavia.4 In the course of Tito’s attendance at the General Assembly Meeting at New York, he met with the President.5 The meeting was conducted in a cordial atmosphere and is believed to have made a favorable impression on Tito. In addition, the U.S. Sixth Fleet paid highly successful calls at two Yugoslav ports.6

While Yugoslavia remains the only Communist country in which the United States carries on a regular USIS program, Yugoslav officials [Page 476] have shown an increasing interest in reciprocity by seeking to expand their activities in the cultural field in this country.

Maintenance of Armed Strength. After U.S. grant military assistance to Yugoslavia was terminated in December 1957 at Yugoslavia’s request, a new military sales agreement was concluded, under which the Yugoslavs are permitted to purchase military equipment, materials and services from the United States. In the last year, the Yugoslavs have continued to buy quantities of spare parts in this country, as well as more than 100 jet aircraft. The Yugoslavs have also indicated interest in the purchase of 120 additional jet aircraft from the United States. While Yugoslavia’s armed forces do not meet fully modern standards, its armed strength appears sufficient to discourage a limited attack by any of its Soviet-dominated neighbors.
Problems in U.S.-Yugoslav Relations. During the past year, and particularly since the collapse of the Summit Meeting, Yugoslav foreign policy has been strongly influenced by fear of war and by the strength of the Soviet Union. Partly for this reason, but more importantly because of their basically Marxist approach to such questions, the Yugoslavs have continued to side with the Soviets on most major international issues. While a principal current problem in U.S.-Yugoslav relations is to seek greater balance in Yugoslavia’s positions on international issues, it should be recognized that by and large the solution to this problem lies outside the framework of U.S.-Yugoslav bilateral relations in the broader field of international developments.
Policy Review. The agencies represented on the Working Group on Yugoslavia have reappraised the validity and evaluated the implementation of U.S. Policy Toward Yugoslavia (NSC 5805/1) in the light of operating experience. They believe there is no need for the National Security Council to review the policy at this time and that there are no developments of such significance as to warrant sending a report to the National Security Council.7
  1. Source: Department of State, OCB Files: Lot 62 D 430, Yugoslavia. Secret. In an undated memorandum attached to the source text, Bromley Smith noted that the Board concurred in this report at its December 21 meeting.
  2. See Documents 120 and 122.
  3. On September 29 Presidents Tito, Sukarno, Nkrumah, and Nasser, and Prime Minister Nehru announced that they were offering a resolution to the 15th Session of the U.N. General Assembly calling for an early meeting of Khrushchev and Eisenhower. The resolution was subsequently withdrawn by its sponsors.
  4. February 10.
  5. Benson visited Yugoslavia on September 25, 1959; Dillon on July 17–20, 1960; and Allen on September 8–15, 1960.
  6. See Document 170.
  7. May 13–15; the U.S.S. Des Moines, Forrestal, and Gyatt visited Yugoslavia.
  8. The Semi-Annual Appraisal of U.S. Policy Toward Yugoslavia, approved by OCB on July 6, 1960, stated that although no policy review was necessary, “in the light of NSC Action 2215–c, the policy paper could be updated.” The NSC Planning Board completed editorial revision of NSC 5805/1 on November 21, 1960. [Footnote in the source text.]