Foreign Relations of the United States, 1977–1980, Volume XX, Eastern Europe

254. Memorandum of Conversation¹

Washington, March 8, 1978, 11 a.m.

SUBJECT

• The Secretary’s Meeting with Yugoslav Foreign Secretary Minic

PARTICIPANTS

• U.S.

  • The Secretary
  • The Counselor
  • Lawrence Eagleburger, U.S. Ambassador to Yugoslavia
  • George S. Vest, Assistant Secretary for European Affairs
  • Richard Holbrooke, Assistant Secretary for Asian and Pacific Affairs
  • Raymond Albright, Vice President of the Export-Import Bank
  • William H. Luers, Deputy Assistant Secretary for European Affairs
  • Louis V. Nosenzo, Deputy Assistant Secretary for Oceans, International Environmental and Scientific Affairs
  • Nicholas G. Andrews, Director of the Office of Eastern European Affairs
  • Darryl N. Johnson, Country Officer for Yugoslavia
  • Michael Petrovich, Interpreter

• YUGOSLAVIA

  • Milos Minic, Vice President of the Federal Executive Council and Federal Secretary for Foreign Affairs
  • Dragan Bernardic, Assistant Federal Secretary for Foreign Affairs
  • Dimce Belovski, Yugoslav Ambassador to the United States
  • Svetozar Starcevic, Director of the Office of North American Affairs
  • Vladimir Sindjelic, Minister-Counselor of the Yugoslav Embassy, Washington
  • Vladimir Matic, Political Counselor of the Yugoslav Embassy, Washington
  • Zvonimir Petnicki, Interpreter

Korea. After opening remarks, Secretary Vance asked Secretary Minic for clarification of President Tito’s comment to the President the previous day suggesting contacts with North Korea.² He wanted to clarify that these contacts would involve the North and South Koreans as well as the United States. Minic replied that this understanding was correct. He continued that President Tito, before his departure for Washington, had received a detailed message from President Kim Il-song, but it contained no new ideas and largely repeated those which President Tito had relayed to Carter last fall.³ The major obstacle to conversations was still South Korean President Park. During Tito’s visit to Pyongyang, Kim had emphasized his willingness to hold talks with both the United States and South Korea, but not with President Park. President Carter’s reply had said that the U.S. was not in a position to change Park. Therefore it is necessary to give thought to some new approach. In his recent message, Kim had again insisted on the removal of Park. The suggestion for lower-level talks was President Tito’s own initiative and President Carter was the first person to whom he had suggested it. If this is acceptable to the U.S., Tito would begin a dialogue to see what the North Koreans would accept. At present the situation is blocked, and the question is how to unblock it. This is Tito’s suggestion. Kim’s stand is known and his first reaction will no doubt be negative. But there may be some flexibility which the Yugoslavs will seek to explore.

Secretary Vance emphasized that we would not take part in any talks without the South Koreans being present. Minic reiterated that the Yugoslavs understood this and noted that the North Koreans wanted direct talks with the U.S. to replace the armistice agreement. This subject was also discussed in detail in Peking, and the Chinese indicated that they would not interfere in the Korean situation. A solution depends entirely on the Koreans, they said. Tito discussed the matter at length with Chairman Hua Kuo-feng and Minic himself with Foreign Minister Huang Hua. He asked whether the U.S. agreed that the situation was blocked.

Secretary Vance replied that we would consider the Yugoslav proposal and that we had no difficulties with it, as stated. He expressed his opinion that the South Koreans likewise would go along. The result therefore, depends upon Kim Il-song. Minic said that the Yugoslavs would be very satisfied if Kim recognizes the realities of the situation and the need to break the deadlock. Assistant Secretary Holbrooke said that perhaps the Yugoslavs could pursue the idea with the North Koreans while we consult with the South Koreans. He agreed that the idea was worth pursuing.

Science and Technology. Turning to bilateral matters, Secretary Vance thanked Minic for his letter on the question of cooperation in science and technology. He said he had followed up on the funding requirements to continue the program and told Minic that the President had now agreed that we would seek a $7 million appropriation (to cover a five-year period) on a matching basis.⁴ This appropriation would be a part of the regular State Department budget, and the program would be administered by the State Department. Minic said this was a satisfactory solution and he emphasized the importance of the program for mutual understanding, particularly for Yugoslavia as a developing country. Secretary Vance said we agree on its importance, and will be pleased if we can continue it by this means.

Economic Matters, Exim Bank. On the question of loans and “super-guarantees”, Minic said that he was glad to see the representative of the U.S. EximBank in the meeting and suggested that perhaps this was the moment when the two sides could reach agreement.⁵ Before coming to Washington, Minic said he had held detailed talks with the Prime Minister, the Finance Minister and the Vice Premier about this problem. The situation now is that the U.S. has made a proposal which is not acceptable in its present form to the Yugoslav side. He outlined the Yugoslav position as follows:

Cooperation with ExIm has been very significant. Until a year ago 50% of U.S. loans were through ExIm. Now the percentage has dropped to thirty but the government of Yugoslavia is very interested in continuing its cooperation with ExIm. However, the new Constitution and the law of associated labor had introduced reforms. Under these provisions the Government of Yugoslavia and the National Bank do not have the right to issue “super-guarantees”. In order to reinstitute this procedure, a change of the law and perhaps an amendment to the Constitution would be necessary. Individual banks, a group of banks or a consortium of banks could give guarantees. Or a new bank for Export and Import which Yugoslavia is establishing to deal with questions of foreign trade and financing could give guarantees. The government can say that any bank or group of banks can get the required amounts of foreign exchange to meet its obligations on the basis of its dinar holdings. In the Yugoslav view, this should be sufficient to meet the requirement for guarantees. All European banks have agreed to this system and no longer require a “super-guarantee”. He urged that we do everything possible to resolve this problem. After this visit, the Secretary of Finance will send a written proposal to ExIm giving a detailed response.

Minic added that the Yugoslav side had a very positive reaction to the formation of working groups on economic cooperation to be headed by Assistant Ministers and Ambassadors. He said that economic ties with the United States had not developed sufficiently. Trade with the Soviet Union last year was approximately $2.5 billion. With the FRG, trade was approximately $2 billion, but was not balanced, with Yugoslavia having a huge deficit of $1.2 billion. In the past the deficit had been largely made up by revenues from tourism and remittances from Yugoslavs working in Germany. But this past year there was a short-fall of $200 million. With Italy trade was over $1.5 billion, and was well developed but also unbalanced. With the U.S. the long-term aim is to expand trade and the U.S. should be among those in the first rank of Yugoslav trading partners. The present deficit situation with the EEC cannot continue in its present form. The difficulties with the EEC already transcend tolerable limits. Its trade with third countries is highly protectionist, especially on agricultural products. It is a very difficult situation in which Yugoslavia can cover only thirty percent of its trade through exports. The U.S. market is fair but difficult for Yugoslav exporters. Exchanges in recent years have been more or less balanced. There have been talks with the EEC, but the first round did not give grounds for optimism. Yugoslavia’s aim is to expand economic ties with the U.S., and ExIm should seek to help in this process.

Secretary Vance said that we welcome Yugoslavia’s objective of expanding economic relations with the U.S. and we agree with it. He thanked Minic for his proposal on ExIm and said that he would discuss the matter further with Mr. Albright and President Moore and would be back in touch. The important thing, he said, is to find a solution to this question. Minic reemphasized his wish that the U.S. government promote the long-term expansion of trade and finance and added that U.S. businessmen know well the Yugoslav laws which encourage foreign investment. Expansion remains the important thing, including industrial cooperation.

Krsko Fuel License. Minic called on Assistant Secretary Bernardic to discuss the Krsko question. He noted that Bernardic and Assistant Secretary Vest had met the previous evening and that Bernardic had presented the Yugoslav suggestion for an interim agreement pending adoption of an international convention on nuclear export controls.⁶ Bernardic said his talks with Vest had been very useful but he emphasized that these were not negotiations, which must be left to Ambassador Kljun and U.S. officials who deal with this question. Their conversation was intended to move the effort forward. He said that the situation is now very fluid with some important matters not clearly defined, including the agreements with the IAEA, and the implementation of the new U.S. law on nuclear exports. Also, he said, the INFCE will continue its work over the next two years or more and a UN Conference on Nuclear Energy will be convened. It is important that any arrangement made now be consistent with agreements already concluded or to be concluded. The Yugoslavs thought it premature to go for a long-term agreement at this time and therefore suggested a temporary agreement for four or five years to provide the fuel and to await the conclusion of an international convention. Under this arrangement Yugoslavia would clearly reaffirm its commitments under the NPT as well as bilateral and international commitments. When these are summed up, they would cover all matters of concern to the U.S. side. Such a solution would meet the requirements of the Yugoslav situation. Yugoslavia was among the first signers of the NPT and was in the front line of those countries fighting for it. Between the industrialized and nonaligned countries there is need to understand the needs of each and to meet the special requirements in this case. We should be able to work out an interim solution; we should examine the concrete situation and should seek to help the negotiations.

Mr. Vest replied that this Yugoslav approach differs significantly from that discussed earlier, and that he had not had a chance to consult with the experts on the subject. He said it would also have to be acceptable to the Nuclear Regulatory Commission and in harmony with our new legislation. We will pursue this matter. Secretary Vance said that the plan for continuing discussions was a good one, but that the subject is very difficult because of the strict limits of our law. We will do all we can within those limits and without discrimination against others with whom we deal on this question. Minic said he also agreed that the two sides should meet soon to continue their discussions. (The Yugoslavs will give us their proposal in writing.)

Emigre Matters and Terrorism. Minic said that the Yugoslavs are pleased to note that the present Administration is acting more energetically on this question. During President Ford’s visit to Belgrade in 1975, Minic had given a pro memoria paper to Secretary Kissinger on all of these matters. Now there was a new paper which brought the information up to date. The problem basically is that there are too many acts by the same small groups of people which remain unsolved and unpunished.

Secretary Vance said that this is a matter of great importance to us and that since the Carter Administration came into office we have seen the resolution of the TWA hijacking and of the break-in at the Yugoslav UN Mission. (He noted that in these matters we were following actions initiated during the prior Administration.) He continued that we also feel very strongly about the broader question of international terrorism and that we supported efforts in the UN and elsewhere to find effective measures to combat it. We hope that we can work together with Yugoslavia to put teeth into these measures. Minic said he agreed on the problem, and in the UN there had been some efforts. But there were differing views. The main issue concerned the “national liberation” movements. It is difficult among the nonaligned to get agreement if the effect is to inhibit the struggle by those involved in “national liberation” movements. If the political causes which give rise to these kinds of disturbances were resolved the broader issue could also be resolved. In that case, we would be left with the other problem, which is a common threat to mankind. He suggested that the U.S. talk with other nonaligned countries, and offered to be of assistance in arranging these contacts. Secretary Vance said we agreed that such consultations would be useful and we will seek them with other nonaligned countries as well as with Yugoslavia.

Minic said that he thought all bilateral matters had been covered and that the two secretaries should tell the two Presidents that they need not deal with them, but could go on to other international questions. Secretary Vance agreed.

Horn of Africa. Noting that there were some additional time remaining, Secretary Minic said that he would like to follow up on some of the topics discussed the previous day by the two Presidents. On the Horn of Africa, he said that he would be received by both Mengistu (of Ethiopia) and Siad Barre (of Somalia) on his forthcoming visit. He said he hoped both would not be angry because of President Tito’s comments in his interview with James Reston. Regardless of this, Yugoslavia has very good relations with both, and both want Yugoslavia’s full support in their dispute. The Yugoslavs have told them that they cannot agree that war can solve their problems, and that these and similar questions must be resolved by peaceful means. The Yugoslavs had thought much about this question, and others including President Carter had also expressed their concern. Yugoslavia has a diplomatic dialogue with both countries, but feels that no solution is possible until the military situation changes. It now appears that the military situation is changing so a solution may be closer. It should be on the basis on the principles outlined by the two Presidents in their previous meeting. It is best that neither side be victor nor vanquished but resolve the matter fairly through negotiations. Yugoslavia has informed five or six countries about its plan and has asked for parallel approaches. All would be informed of the results. Concerning the U.S., it would be very good to implement the understanding between Mr. Aaron and President Mengistu and send a new Ambassador to Ethiopia as soon as possible. This should go together with further efforts to bring about the withdrawal of Soviet and Cuban forces. Minic asked that we consider candidly why Ethiopia was pushed to seek aid from the other side. The withdrawal of US aid had been a big blow. Ethiopia was a very poor country, with a per capita income of about $50 per year. Thus it needed aid wherever it could get it. The US should also encourage Ethiopian nonalignment. Mengistu was strongly committed to nonalignment, but there are many younger people near the top who may not be. The important thing now is to maintain a dialogue.

Secretary Vance thanked Minic for Yugoslavia’s assistance on Mr. Aaron’s recent trip to Ethiopia. He agreed that the solution to the conflict would have to come through negotiations and noted that Soviet and Cuban troops would have to be withdrawn. He expressed concern about the apparent ineffectiveness of the OAU mediation effort, which had largely fallen through. He was not sure that the OAU could handle the problem, and asked what the role of outside powers should be if the instrument the Africans prefer to use cannot be effective.

Minic replied that the OAU is in a period of crisis, and that its problems parallel those of the current conflict. He agreed that the OAU should assume responsibility for solving the problem. Outside interference is “most obnoxious”. Friendly advice and influence are not out of line, but the OAU should play the main role. Yugoslavia is in contact with Foreign Minister Garba of Nigeria, who understands the problem very well. (Secretary Vance said that we are also in close contact with Garba.) Garba has asked for patience, but the Yugoslavs believe that the OAU cannot do much and others should try to help. Minic will carry messages from Tito to Siad Barre and Mengistu and to President Numayri of the Sudan, who is also very concerned. Minic promised to inform us of the results of his visit.⁷

Secretary Vance said that it will be worthwhile to talk with the Sudan, which has offered to mediate. Garba has indicated that he will call on the ad hoc committee to meet with the entire OAU board. We should press for a solution along the lines discussed by President Carter and Tito, and he would look forward to Minic’s report.

Minic said he hoped India could play a role, and Foreign Minister Vajpayee will become more active, if Prime Minister Desai agrees. Vance said he had also discussed this matter with Vajpayee during the President’s visit to India.

Middles East. Regarding yesterday’s talks Minic wanted to make it clear that although President Tito indicated that he would not have supported President Sadat’s recent initiative if Sadat had sought his view, there was no dispute about Egypt’s right to choose the means it felt would be most effective. Yugoslavia did not comment at the time but felt that the initiative would not work. They foresaw that one result would be that a group of Arab countries would form a “rejection front” and would look for support from the Soviet Union. This has indeed happened. Tito told those who met in Tripoli to adopt a moderate approach, but they did not and the extremist statement which resulted from that meeting was “ridiculous”. After waiting for the situation to settle down, those countries have been in touch with Tito and have exchanged messages. Tito advised that the solution could not come through extreme opposition to Egypt or in an extreme reaction by Egypt. But Sadat “very emotionally” broke relations with all those countries. Yugoslav efforts now are directed at overcoming the problems between the other Arabs and Egypt. Yugoslavia advised that the “rejectionists” meet again to adopt a more realistic position. He asked what can be done if the direct Egypt-Israeli talks do not produce a result. The situation is very dangerous. Yugoslavia does not share the opinion that this would bring about the downfall of Sadat, since he has great support in Egypt. But it is possible that he will then draw on this support to turn to a harder line. He will say that he has done all he possibly can and taken great risks but that Israel has not been responsive. He may also say that the U.S. did not give enough support to his efforts. Then the whole issue will be back to the starting line. Minic asked if in our view there was any other approach and inquired about the possibility of a preparatory conference for a Geneva Conference which would include all likely participants. He said that this idea has not yet been discussed with [us?] but Yugoslavia believes that UN Secretary General Waldheim’s recent initiative was a good one, though premature. Is there any third road to a solution, he asked, and what is the current status of the joint statement between Secretary Vance and Soviet Foreign Minister Gromyko last October?⁸ Was it still valid, were the Soviets still interested in playing a role?

Secretary Vance said that the joint statement with Gromyko stands and the Soviets agree that it remains valid. Minic noted that the Yugoslavs had expressed support for the statement on the day it was issued. Vance said that the statement is being used as a basis for negotiating a Declaration of Principles among the relevant states. There is nothing inconsistent between the statement and our mediating role. Unfortunately, the parties are still far apart on the questions of the Palestinians and the Gaza Strip. It is still too early to say that direct negotiations have failed and we feel that we should continue to support this approach. In this connection we invited Prime Minister Begin, and President Sadat agrees with this. (The Secretary said that we would inform Yugoslavia about the results of the Begin visit.)⁹

We must pursue the present course until its succeeds or fails, and we should know soon about the outcome. If it fails we believe that the Waldheim proposal for a wider meeting within the context of the United Nations but separate from the Geneva Conference, is a worthwhile possibility. It should, however, be seen as a preparation for the Geneva Conference. The Secretary said that he had discussed this question last week with Secretary General Waldheim. Minic said he agreed with this assessment and Vance said that he did not see a third alternative as being necessary yet.

Secretary Minic then said that he had been very satisfied with this discussion and felt that this personal contact was very useful and helpful. He suggested that in addition to the messages between the two Presidents, he and Vance write to each other if there are matters which they feel can be dealt with at that level. Secretary Vance said that is an excellent idea which he wholeheartedly supports. Minic then invited Secretary Vance to come to Yugoslavia as he had previously promised and Secretary Vance said that is a promise he intended to carry out with great pleasure.

1. Source: National Archives, RG 59, Office of the Secretariat Staff, Ambassador at Large and Representative of the President for Nonproliferation Matters (S/AS), Gerard C. Smith, 1977–1980, Lot 81D287, Box 2, Yugoslavia 1978. Secret. Drafted by Johnson; approved in S/S on March 23. The meeting took place in the Secretary’s Conference Room.
2. See Document 253.
3. Letter from Tito to Carter, September 22, 1977. See footnote 5, Document 243.
4. In a January 30 letter delivered by the Yugoslav Embassy to the Department of State, Minic suggested that the U.S. Government pay annuitants in Yugoslavia in dollars to free up dinars for the program. (Telegram 48421 to Belgrade, February 24; National Archives, RG 59, Central Foreign Policy File, D780088–0797) See also footnote 10, Document 251.
5. The Yugoslav Government advised the ExIm Bank that it would no longer be able to provide “super-guarantees” by the Yugoslav National Bank on ExIm loans to Yugoslav businesses. Tarnoff informed Brzezinski of the emerging dispute between the ExIm Bank and the Yugoslav Government in a February 11 memorandum. (Carter Library, National Security Affairs, Brzezinski Material, VIP Visit File, Box 15, Yugoslavia, President Tito, 3/6–9/78: Cables and Memos)
6. No separate record of the meeting was found. In telegram 67708 to Belgrade, March 16, Andrews informed the Embassy that the discussion took place, but that “Bernardic did not go into any more detail than he did at the Vance-Minic meeting.” (National Archives, RG 59, Central Foreign Policy File, D780117–0865)
7. On April 14, Belovski met with Newsom to deliver a letter from Minic to Vance on his trip to Ethiopia, Somalia, the Sudan, and the Soviet Union. The meeting and letter were reported in telegram 98712 to Belgrade, April 18. (National Archives, RG 59, Central Foreign Policy File, D780165–1072) Vance responded to Minic’s letter on May 12, thanking Minic for the information on his mission to the Horn of Africa and describing his talks in Moscow with Foreign Minister Gromyko. The Department forwarded the text of the letter in telegram 122712 to Belgrade, May 13. (National Archives, RG 59, Central Foreign Policy File, D780204–0269)
8. The United States and the Soviet Union issued a joint statement on the Middle East on October 1, 1977. The statement proposed guidelines and procedures for Arab-Israeli negotiations of a comprehensive peace settlement in the Middle East and called for an international conference in Geneva. (Department of State Bulletin, November 7, 1977, pp. 639–640)
9. In telegram 114888 to multiple posts, May 5, the Department provided talking points for briefing of host governments on Begin and Dayan’s visit to the United States. (National Archives, RG 59, Central Foreign Policy File, D780192–0898) In telegram 3633 from Belgrade, May 12, the Embassy reported Eagleburger’s conversation on May 10 with Yugoslav Foreign Ministry Assistant Secretary Komatina, in which the Ambassador briefed the Yugoslav official on the visit. (National Archives, RG 59, Central Foreign Policy File, D780203–0446)