Office of the Historian

225. Memorandum From the Presidentʼs Assistant for National Security Affairs (Kissinger) to President Nixon1

Washington, May 3, 1971.

SUBJECT

  • Financial Assistance for Yugoslavia

Secretary Rogers (Tab A)2 recommends your approval of a $61 million debt rescheduling for Yugoslavia ($59 million of PL–480 and $2 million of Development Loan Fund principle and interest). The figure represents 44% of the $140 million Yugoslavian debt to U.S. government agencies coming due in 1971 and 1972. Equal payments on the postponed amounts would be stretched out over a 10-year period beginning in 1973. A 5% interest rate would be charged during the repayment period.

Yugoslavia is currently soliciting about $600 million in Western aid, of which 80% would come from Europe and 20% or $120 million from the U.S. over the next two years. Politically, our assistance would signal to the Yugoslavs, Eastern Europeans and the Soviets the importance we place on the success of Yugoslaviaʼs political and economic decentralization efforts and her moves toward an essentially open market economy. Economically, it would help Yugoslavia over a severe balance of payments crisis by increasing reserves from the present dangerously low level. This would, in turn, assist her economic stabilization program and thereby allow her to continue the economic reforms on which she has embarked. The rescheduling would be done in conjunction with an IMF standby agreement and in cooperation with other creditors.

We have also offered Yugoslavia a Commodity Credit Corporation (CCC) credit line increase of $20 million, a new CCC barter program of $25 million, an increase in U.S. military procurement, and an increase in Ex-Im Bank lending. With these programs, the total 1971 U.S. government financial contribution to Yugoslavia would increase by $110 million, although only the $30 million debt rescheduling for the year represents the direct assistance for its reserve problem which the Yugoslavs consider their most important requirement. We cannot do [Page 558] more simply because present legislation flatly bars any AID money for Yugoslavia, and there are no other available options.

Recommendation

That you approve Secretary Rogersʼ recommendation of a $61 million debt rescheduling for Yugoslavia. Pete Peterson and Treasury concur. Agriculture has no objection.3

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 733, Country Files—Europe, Yugoslavia, Vol. II Aug 70–Aug 71. Confidential. Sent for action. Haig initialed the memorandum for Kissinger.↩
  2. Attached but not printed.↩
  3. The President initialed the approval option on May 4.↩