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

257. Memorandum From Robert Hunter of the National Security Council Staff to the President’s Assistant for National Security Affairs (Brzezinski)¹

Washington, August 22, 1978

SUBJECT

• FMS Credits for Arms Sales to Yugoslavia

In authorizing moderate expansion of our arms transfer relationship with Yugoslavia last September, the President specifically excluded FMS credits.²

There are now indications that the Yugoslavs will ask for limited FMS financing (State estimates no more than $10 million in FY 1980).

The State Department memorandum at Tab II³ asks for a decision in principle to permit such financing—while understanding the limited funds available and the need for Congressional consultations. (Normal budget procedures would still have to be followed.) State argues that the prospects for selling two $10 million-plus systems (unspecified) would be enhanced if the authority were available; and that our ability to respond positively on the financing question would enhance the fall visit here of the Yugoslav Defense Minister. It would improve our ties to the military, and underline our commitment to post-Tito Yugoslavia.

State argues that the limitation on credits was placed in the Presidential Decision because we did not expect to be asked. I recall that we also wanted to keep the program low-key, in view of the still-tentative nature of our improving relations.

Now, however, I agree it would be valuable to take this extra step. This does not seem to be sufficiently important to require the President’s personal approval.⁴

Defense and ACDA agree with the State memo.

Recommendation:

That you concur with the extension of FMS financing to Yugoslavia in principle, and sign the memorandum at Tab I.⁵

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Country Chron File, Box 57, Yugoslavia: 4–12/78. Confidential. Sent for action. Jessica Tuchman Mathews concurred.
2. See Document 242 and footnote 4 thereto.
3. Not attached.
4. Inderfurth wrote “DR information only?” in the margin. Aaron replied “Yes” underneath.
5. Aaron wrote “I agree” and signed for Brzezinski an August 22 memorandum to Vance, informing the Department of State of the recommendation to permit the extension of FMS financing for Yugoslav arms transfers. (Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Country Chron File, Box 57, Yugoslavia: 4–12/78)