Foreign Relations of the United States, 1961–1963, Volume XVI, Eastern Europe; Cyprus; Greece; Turkey

117. Memorandum From Secretary of State Rusk to President Kennedy⁰

Washington, undated.

SUBJECT

• U. S. Policy and Assistance Programs Toward Yugoslavia

Attached for your use at the meeting on Yugoslavia to be held Monday, January 15, is a paper with three annexes embodying the Department’s recommendations on U.S. policy and assistance programs toward Yugoslavia. Annex A is a review of U.S. policy. Annex B is a paper on U.S. military sales to Yugoslavia. Annex C deals with export control policy toward Yugoslavia.¹

Our principal recommendations are given on pages three and four of the attachment and can be summarized as follows:

1. Technical Assistance: A technical assistance program in the magnitude of $500,000 to $750,000 should be continued in the current fiscal year under the Development Grant category of AID funds. The desirability of continuing technical assistance, if any, beyond FY 1962 will be the subject of review after an evaluation by Ambassador Kennan of the effectiveness of the program.

2. Development Loans: We will encourage Yugoslavia to rely henceforth on lending sources other than AID, while indicating the willingness of the U.S. Government, as a transitional measure, to accept further loan applications for consideration. Within the U.S. Government it would be understood that loan assistance would be in the range of $10 million to $20 million of which the DLF portion would not exceed $10 million. The Export-Import Bank will be requested to give priority attention to Yugoslav applications. The terms of DLF loans should approach those of the Export-Import Bank.

3. P.L. 480: P.L. 480 agreements with Yugoslavia should be considered from time to time to meet minimum Yugoslav consumption requirements. With an increasing shift in the future from Title I to Title IV, Title III activities should be phased out over the next several years.

4. Military Sales: We should continue to sell Yugoslavia military equipment and spare parts and to train Yugoslav military personnel in the U.S.

5. Export Licensing: Yugoslavia should be considered on the same basis as non-Soviet Bloc nations for export licenses.

We understand that the unresolved inter-agency issues relate primarily to export financing. Defense and Commerce appear to believe that more severe export license review standards should be applied to Yugoslavia. In addition, due to limitations of time, the recommendation with regard to the Export-Import Bank has not been discussed with the Bank. Dean Rusk²

0. Source: Kennedy Library, National Security Files, Countries Series, Yugoslavia. Secret.
1. The report and annexes are not printed.
2. Printed from a copy that bears this typed signature.