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

262. Memorandum From Secretary of State Vance to President Carter¹

Washington, January 2, 1979

SUBJECT

• Request for an Arms Transfer Policy Exception for a Jet Engine for Yugoslavia

I. ISSUE

The Government of Yugoslavia (GOY) has requested United States Government approval to explore with Pratt & Whitney Aircraft (P&W) the co-production and assembly of the TF30–P–414 jet engine in Yugoslavia. Such an arrangement would require that you authorize an exception to the arms transfer policy of May 19, 1977 on the grounds that approval of the program will promote our national security interests.

II. DISCUSSION

The US has been seeking to build more durable relations with Yugoslavia in anticipation of the post-Tito era. Our success depends upon our ability to establish strong links with the leading individuals and institutions, key among which is the Yugoslav military.

The Yugoslavs produce about 75 percent of their military needs. For the remainder, which includes nearly all sophisticated equipment, they depend primarily on the Soviets. The Yugoslavs have been diversifying their sources of supply and have sought to purchase from us a number of new items. Most important among these would be a new engine for the Eagle II (Orao II) all-purpose, supersonic fighter aircraft which Yugoslavia plans to build during the mid-1980s. After several exchanges with us about which engines might be available for this plane, the Yugoslavs settled on the P&W TF30. The GOY is also considering several West European and Soviet Engines.

We authorized P&W to discuss direct sales of the engine with the GOY, consistent with your approval last year of a moderate expansion in our arms transfer relationship with Yugoslavia with emphasis on political impact. The Yugoslavs are very interested in the TF30 but their decision will depend largely upon our willingness to permit joint production of the engine; they probably are not interested in a straight sale. The GOY requests detailed commercial and technical information regarding both direct purchase and co-production by January 15, 1979.

The GOY plans to produce up to 200 Eagle II’s. P&W estimates that it would gross, either through direct sale or co-production, an average of approximately $1.5 million per engine. If the co-production scheme is approved, the first of the engines would be completed in 1985 and the last around 1988.

Factors for Approval

—Given Yugoslavia’s strategic location, its influence in the Third World, the eventual post-Tito transition, and Yugoslavia’s determination to reduce its dependence on the USSR, we should continue to support its desire to increase cooperation with the West.

—The Yugoslav military is one of the most important all-Yugoslav institutions in the country and will be a decisive factor in the post-Tito era. One of our important goals has long been to increase our access to the military at all levels. Technical assistance to the GOY for TF30 co-production would provide us with a key instrument to pursue this goal and would tie the Yugoslavs to a Western supply source for years.

—If successful, the TF30/Eagle II program would reduce military reliance on the USSR—a Yugoslav Air Force objective—and eliminate Yugoslavia’s total dependence on the Soviets for high performance aircraft.

—The TF30 is a sophisticated engine but none of its technology is classified.

—The engine co-production arrangement would be consistent with our policy not to transfer offensive systems to Yugoslavia.

Factors for Denial

—Current US arms transfer policy, PD/NSC–13, prohibits the licensed manufacture of significant combat equipment such as the proposed jet engine in non-exempt countries.

—Yugoslavia’s role as a leader and spokesman for the Non-Aligned Movement has often led the GOY to take positions opposed to ours in international forums.

—However improved its human rights record may be in recent years, Yugoslavia has an autocratic, one-party political system with a strong internal security element and several hundred political prisoners.

—Approval of this co-production arrangement could lead to similar co-production requests from other non-exempt countries more closely oriented to the West.

Recommendation:

I recommend that you grant an exception to our arms transfer policy guidelines to authorize the co-production arrangement on the grounds that it would be in the national security interest of the United States.

To restrict possible retransfer of the engine and to protect its technology, I further recommend that approval be made subject to the following written conditions:

1. That third-party transfers of the engine, any of its components, or technology thereof on the part of Yugoslavia would be prohibited.

2. That development of any advanced versions of the engine involving technology beyond the level authorized must be approved by the United States Government prior to initiation.

The Department of Defense and ACDA concur in my recommendation.²

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Country Chron File, Box 57, Yugoslavia: 1–8/79. Secret. The memorandum is not initialed by Vance.
2. Although there is no indication on this copy of the memorandum when Carter saw and approved it, the Department of State reported the Presidential decision in telegram 12672 to Belgrade, January 17. (National Archives, RG 59, Central Foreign Policy File, D790024–0137) The approval of the exception for Yugoslavia leaked to the press immediately and Aviation Weekly called the White House to seek confirmation of the story. (Telegram 15555 to Belgrade and Madrid, January 20; National Archives, RG 59, Central Foreign Policy File, D790028–0244) The magazine featured the news in its January 29, 1979, issue. (Telegram 30079 to Belgrade, February 3; National Archives, RG 59, Central Foreign Policy File, D790054–0244)