Foreign Relations of the United States, 1981–1988, Volume X, Eastern Europe

215. Memorandum of Conversation¹

Washington, February 1, 1984, 11:30 a.m.–1:40 p.m.

SUBJECT

• Memorandum of the President’s Meeting with Yugoslav President Mika Spiljak

PARTICIPANTS

• United States

  • (Participants for all meetings)
  • President Ronald Reagan
  • Vice President George Bush
  • Robert C. McFarlane, Assistant to the President for National Security Affairs
  • Acting Secretary of State Kenneth Dam
  • Under Secretary of State Lawrence S. Eagleburger
  • United States Ambassador to Yugoslavia David Anderson
  • Paula Dobriansky, NSC Staff Member (Notetaker)
  • (Additional Participants/Cabinet Room/Residence) Deputy Secretary of the Treasury Timothy McNamar
  • R. Mark Palmer, Deputy Assistant Secretary of State
  • Roger Robinson, NSC Staff Member

• Yugoslavia

  • (Participants for all meetings)
  • President Mika Spiljak
  • Federal Secretary for Foreign Affairs Lazar Mojar
  • Yugoslav Ambassador to the United States Mico Rakic
  • Federal Executive Council Vice President Zvone Dragan
  • (Additional Participants/Cabinet Room/Residence)
  • Ambassador Zivojin Jazic, Foreign Policy Advisor to the President
  • Ambassador Dusan Marinkovic, Director for North American Affairs, Federal Secretariat
  • Pavle Jevremovic, Counselor, Yugoslav Embassy
  • Colonel Nikola Novkovic, Military Assistant to the President
  • Tea Tos, Staff Member, State Presidency

Photo Session—Oval Office 11:30–11:40 a.m.

President Reagan opened the meeting by welcoming President Spiljak to the United States and extending his best wishes for the success of this winter’s Olympic Games.² (U)

President Spiljak thanked the President and stated that the Olympic Games constitute a manifestation of friendship and rapprochement among all nations. (U)

President Reagan mentioned that the consultations between U.S. and Yugoslav officials on Olympic security have been useful. He noted that we deplore all terrorist attacks and would strive to do all that we could to prevent them from occurring in the future. (C)

President Spiljak added that his government wanted to avoid any crises during the Olympics and thus, it was essential to have these consultations. (C)

At this time, President Reagan commented on the origins of the Olympics. Specifically, he mentioned that the Olympic Games were always held even in times of war. (C)

President Spiljak asserted that all wars should stop so that the Olympics could take place. He then remarked that he is the first official visitor to meet with President Reagan since he made his reelection announcement.³ Thus, Spiljak congratulated the President and said that he was pleased to have accepted the President’s invitation to visit the United States. The President also mentioned that despite changes in leadership in both countries, Yugoslavia wants lasting cooperation and good relations with the United States. (C)

President Reagan agreed with Spiljak’s assertion and reaffirmed U.S. support of Yugoslavia’s independence, unity and territorial integrity and respect for its policy of non-alignment. (C)

Cabinet Room Meeting—11:40 a.m.–12:15 p.m.

President Reagan congratulated President Spiljak on Yugoslavia’s improvement in its balance of payments in 1983, and its efforts to implement economic reforms. He added that the U.S. will continue to give Yugoslavia its full support to stabilize and reform the economy. In particular, he mentioned that we intend to continue to play a leading role in the multilateral assistance package. (C)

President Reagan also commented that we value military consultations and cooperation with Yugoslavia. He stated that he was pleased to inform President Spiljak that we will be able to give a favorable response to the Yugoslav request for technical data on a U.S. jet engine for their planned supersonic fighter aircraft. The President added that Secretary Weinberger would discuss this issue in greater detail during his scheduled meeting with President Spiljak.⁴ (S)

At this time, President Spiljak noted that the world economic situation has become more grave. He mentioned that with the departure of President Tito, a new government structure arose in Yugoslavia—a collective leadership. There is currently no disagreement over the present Yugoslav state system; yet, there is a considerable debate on broad economic issues and methods of leadership. These discussions are intended to foster new ideas and to help solve economic problems. The President stated that the government has worked out a new economic stabilization program. Although it has been hard to get a consensus in Yugoslavia on this issue, the implementation of the program has already begun. (C)

President Spiljak remarked that Yugoslavia has paid its interest costs and has been able to improve its balance of payments in 1983. He cited that in 1981, Yugoslavia’s deficit totalled $3.0 billion, and in 1982, it dropped to $1.5 billion dollars. In 1983, there was a surplus of $100 million. He stated that Yugoslavia’s improvement in its balance of payments resulted from the austerity measures imposed last year. However, as a result of these measures, personal consumption and the standard of living were reduced. President Spiljak asserted that this was the price of economic stabilization necessary for long-term economic betterment. (C)

He also indicated that Yugoslavia needs to invest more in energy, raw materials and food. It is necessary for them to learn how to deal with the debts and losses of their various enterprises. He further mentioned that they want to impose still more severe measures to restructure the economy. Specifically, they would like to alleviate the problem of their large inflation rate. Toward this end, they have imposed a price freeze. (C)

President Spiljak then raised the issue of Yugoslavia’s negotiations with the IMF on a new stand-by agreement. The negotiations are presently stalled due to disagreements over Yugoslavia’s foreign exchange law. Specifically, the Fund wants to impose conditions on Yugoslavia which cannot be met. The President contended that the IMF’s conditions are too rigid and thus, would trigger internal political and social problems. Moreover, it would lead to stagnation and a decline in production. The President remarked that if they capitulated to the IMF’s terms, the Yugoslav leadership would not be able to maintain the support of its people. At this time, the President remarked that the State Presidency will still be kept to a one-year term of service. Thus, the rotational system will continue. (C)

President Spiljak went on further to discuss U.S.-Yugoslav bilateral relations. He mentioned that even though we have different social and economic systems, this has not hindered our bilateral relations. He asserted that our economic relations are very important. Yugoslavia wants a lasting balance of trade; it does not want increased U.S. imports unless Yugoslavia’s exports to the United States increase as well. He also expressed the hope that preferential tariffs would still be continued.

President Spiljak then raised other bilateral issues. He mentioned that Yugoslavia is interested in expanding scientific cooperation with the United States. He hailed our cooperation on the tourism agreement and also reported that presently Yugoslavia’s foreign investment laws are being reexamined and some key legislation governing foreign investment should be passed soon. He expressed the hope that there will be continued expansion of economic cooperation with the United States. Finally, the President mentioned that Yugoslavia is appreciative of all U.S. efforts to deal with terrorism. (C)

President Reagan thanked President Spiljak for his remarks and asked Deputy Secretary of Treasury McNamar to comment on the economic issues raised. (C)

Deputy Secretary McNamar lauded the economic progress Yugoslavia has made thus far. In particular, he noted the potential changes in Yugoslav foreign investment laws. With regard to the trade imbalance, he asserted that approximately half of all Yugoslav imports to the United States come under a generalized system of preferences (GSP), and a large percentage of U.S. exports are tied to agricultural CCCs. He mentioned that we hope this subsidization of two-way trade will only be a temporary situation. (C)

On the issue of the IMF, Deputy Secretary McNamar stated that the Administration was pleased to hear that Federal Executive Council Vice President Zvone Dragan’s conversations with Mr. De Larosiere (IMF Managing Director) on the IMF proposals have progressed well. The Deputy Secretary expressed the hope that the negotiations with the IMF will move more quickly and that Yugoslavia will be able to explain its position to the IMF with respect to interest rates, the dinar exchange rate and other matters of contention. In addition, he mentioned that although Yugoslavia has been very successful in its exports, its enterprises have held their money outside the country and have not reinvested it in Yugoslavia. He added that the United States cannot tell the IMF what to do. However, we will strive to be of as much assistance to Yugoslavia as possible. (C)

At this point, Acting Secretary of State Dam made several points. First, he indicated that he shared Deputy Secretary McNamar’s views. He also stated that the commercial banks would act positively on the financial assistance package to Yugoslavia and reaffirmed the importance of concluding the standby agreement. (C)

On trade, Secretary Dam mentioned that President Reagan is for free and open trade. There are measures especially in the area of trade promotion that should be implemented to increase the volume of bilateral trade. Secretary Dam indicated that we are pleased with the overall tenor of our bilateral relations and the lack of major contentious issues. He reaffirmed the desirability of further strengthening cooperation in a variety of areas and specifically mentioned terrorism as an example. (C)

President Spiljak replied that this is true.

Old Family Dining Room—12:20–1:20 p.m.

President Reagan opened the discussion by asking President Spiljak to share his views on U.S.-Soviet relations. He also commented that the U.S. is seriously committed to seeking a constructive relationship with Moscow and cited Secretary Shultz’s recent exchange with Foreign Minister Gromyko⁵ as a positive development. However, he expressed regret over the unjustified Soviet decision to suspend INF talks which he contended should remain separate from both the START and MBFR talks.⁶ The President remarked that we are encouraged that the Soviets have agreed to set a date for the resumption of the MBFR talks.⁷ (C)

Finally, President Reagan stated that we have no reservations about making even the most far reaching disarmament proposals. The President cited President Eisenhower’s admonition that the use of nuclear weapons would not lead to a victory by one side or the other, but would bring about the ultimate destruction of mankind. (C)

In response, President Spiljak asserted that the Soviet leadership is interested in cooperating with the United States. However, they mistrust U.S. intentions and view U.S. actions with suspicion. He commented that he has looked carefully at all of President Reagan’s speeches and statements, and he believes that there are overlapping U.S.-Soviet interests which could serve as a basis for improved relations. In order to overcome mutual mistrust, there is a need for dialogue and lasting agreements. The President said whatever the U.S. may think of the Soviet system, it should realize that there is a desire in Moscow to attain peace with the United States. (S)

President Reagan responded that the United States is ready to resume negotiations at any time. He went on to say that the United States has always been drawn into wars and yet, we have never started any wars. He contended that the real source of U.S. mistrust of the Soviet Union and the subsequent difficulties in U.S.-Soviet relations is the series of Soviet international aggressions. The record of Soviet expansionism and empire-building is the major stumbling block to improved relations and a menace to international peace. (S)

President Spiljak stated that he thinks the Soviet leadership realizes that the current situation cannot continue and acknowledges the need for contact and lasting agreements. He repeated, however, that due to a lack of trust, it will not be easy to improve bilateral relations. It is essential for both sides to persevere in negotiating efforts. He stated that if a summit evolves, it would foster better U.S.-Soviet relations. President Spiljak cited the example of how John F. Kennedy’s exchange with Khruschev affected U.S.-Soviet relations positively during that period. (S)

President Reagan replied that we are ready. He pointed out the existence of a Washington-Moscow back channel and noted that through this channel we have candidly informed the Soviets that we are looking for concrete deeds and not rhetoric on their part. He also mentioned that one result of the back channel operations was the lifting of the grain embargo.⁸ Yet, he referenced our disappointment that despite U.S. overtures to ease tensions, the Soviets have continued their military build-up and, in particular, their strategic nuclear build-up at an alarming rate. (S)

At this time, Secretary Dam posed a question to President Spiljak. He queried that given examples of Soviet aggressive behavior in Czechoslovakia, Cambodia and Afghanistan, how can such expansionist behavior be prevented in the future. He also asked whether the Soviets might want to reach an agreement not only on arms, but on moderating regional conflicts? (S)

President Spiljak replied by saying that today there is more willingness for dialogue on both arms control and regional issues. (S)

Foreign Minister Mojsov interjected at this time that the last Soviet aggressive action occurred in 1979 in Afghanistan. Before Afghanistan, the Soviets intervened into other countries on almost a yearly basis. However, from 1979 to 1983, they did not invade any new countries. For this reason, he asserted that Soviet behavior since 1979 has been restrained. He partially attributed this restraint to burdens associated with Afghanistan. He said that Soviet expansionism also appears to have stopped as a result of a feeling of greater confidence due to enhanced military strength. However, Moscow knows that unabated military buildup cannot go on forever. In fact, both Washington and Moscow agree that use of nuclear weapons would be suicide. Thus, the Foreign Minister asserted that there are very valid, logical grounds for dialogue and for some compromise in various areas. Nothing can be achieved by force. He pointed out that Stockholm⁹ represented a first step and confirmed the need to expand bilateral dialogue. (S)

At this point, Vice President Bush inquired about Andropov’s health. He wanted to know to what extent his condition affected Soviet ability to deal with other countries. (S)

In response, Foreign Minister Mojsov remarked that the present state of Andropov’s health is a grave state secret. His health, however, appears to be improving and he is in control of the system. From all the information they have, he is consulted on a daily basis, even though he has failed to be present in a number of ceremonial obligations. (S)

President Spiljak added that Andropov’s domestic policies are very interesting. He began some things that if continued can constitute substantial changes within the Soviet Union. In fact, if these changes were continued, they would have a dramatic effect on the general state of international affairs. (S)

President Reagan went on to say that one reason as to why Soviet behavior may be somewhat restrained is because they are not doing well in Afghanistan. However, he noted that through surrogates, Moscow has been threatening the Western Hemisphere and has sought to spread revolution. In fact, he cited a recent case whereby the Soviets sent a ship laden with military supplies to Central America. Despite their promise to permit the press to be present during the unloading of the cargo, the Soviets allowed only the Cuban reporters to be observers. (S)

President Reagan went on to ask President Spiljak how much of Soviet aggressive policy should be attributed to the fact that the Russians have always maintained a suspicious attitude of the rest of the world. He stated that pre-revolutionary Russia had internal passports and permission was required to travel abroad. Yet, the unrelenting pattern of Soviet expansionism is hard to explain by alleged Soviet security. To Americans, it appears that the Soviet Union is seeking to dominate the world. (S)

President Spiljak answered by stating that we often ask ourselves that same question. He added that there is indeed continuity between Czarist Russian and Soviet foreign policies. (C)

President Reagan also remarked that during World War II, despite the U.S.-Soviet alliance, the Soviets did not allow U.S. aircraft to use Soviet territory on their return from bombing raids against Germany. (S)

President Spiljak then stated that Moscow clearly fears Western presence. For years, the Russians have lived in isolation. He mentioned that during World War II and the Cold War, the Soviet Union remained isolated. Presently, there are those within the USSR that feel the constraints of a closed system. Andropov has tried to address some of their concerns in his domestic programs. President Spiljak said there is a need for more positive steps. Small steps can have an impact on the way Moscow develops its overall policies. (S)

President Reagan commented that he never thought that popular sentiment in the Soviet system would engender changes in policies. Rather, only modifications in the leadership’s perspectives would produce changes within the system. (S)

President Spiljak replied that he had visited the Soviet Union several times. During those visits, he noted that there were many changes within the government bureaucracy and within the country itself. He also sensed that at different levels, there were various dispositions and perspectives of U.S.-Soviet relations. He asserted that there were many people in the Soviet Union who want peace, democracy and cooperation with the entire world. If those elements within the USSR who want peace, democracy and cooperation are supported, this will have an impact on the leadership composition and Soviet policies. (S)

At this time, President Reagan commented that in 1981, when he was in the hospital, he wrote a letter to Brezhnev.¹⁰ It was a hand-written letter, in which he mentioned that the people of our two countries want the same things. He also said that when he was Governor of California he had met Brezhnev. He expected an answer that would be sympathetic to the appeals that he had made on behalf of the American people. Rather, Brezhnev’s answer was not hand-written, and was the usual propaganda.¹¹ The President added that maybe he should write another letter to Andropov. (S)

President Spiljak pointed out that the discussion thus far, had addressed small steps and gestures that could be taken to improve U.S.-Soviet relations. He stated that Yugoslavia wholeheartedly agrees that such small steps need to be taken in order to alleviate mistrust. Mistrust is a grey area which must be conquered. He said that maybe we are deceiving ourselves, but we still believe that something can be achieved between the United States and the Soviet Union. (S)

President Reagan commented that he didn’t think there were any people who want war except in the Middle East. (C)

President Spiljak laughed, and said that the situation is very bad in the Middle East. He mentioned that Yugoslavia is very concerned about all Middle Eastern developments as that area is close to Yugoslavia. He asserted that if the situation becomes worse there would be more pressure applied on Yugoslavia. If only because of that, Yugoslavia will continue to strive to seek a solution to the Middle East crisis. (C)

President Reagan stated that this Administration will persist in finding a diplomatic solution. The present obstacle to that solution is Syria’s policies. There is a need to overcome Syrian obstinance and let the Lebanese settle their internal problems. (C)

At this time, Assistant to the President for National Security Affairs Robert McFarlane stated that small steps need to be taken in order to eventually arrive at broader solutions. He said that in Lebanon, Israel had already taken a small step which, in fact, should lead to further progress. He remarked that now the Soviets should try to influence the Syrians to make a reciprocal gesture in Lebanon. (C)

President Spiljak asked for the Administration’s opinion of Arafat and its appraisal as to why he has turned lately to Jordan and Egypt. (C)

Mr. McFarlane replied that it is useful for the Palestinians to have others involved in their movement who are not of a radical persuasion. In particular, it is important to have the Palestinians cooperating with King Hussein. Frankly, Mr. McFarlane stated that Arafat’s actions to date are not sufficiently forthcoming. Both King Hussein and Mubarak have been positive about prospects of greater Palestinian moderation, but thus far, it has not been reflected in Arafat’s statements or actions. He commented that the experience of a generation of Palestinians growing up during three disastrous wars in 12 years apparently has not affected Arafat’s approach. He has not strived to lead the Palestinian people out of this violence. Mr. McFarlane remarked that he hopes that Arafat will at some point have the courage to do so. (S)

Foreign Minister Mojsov mentioned that President Spiljak will soon visit the countries of this region and is very interested in U.S. views on these issues. He also said that he, too, hopes that Arafat will be bolder and will not use violence, but rather diplomatic channels to achieve his goals. The Foreign Minister added that it is necessary to solve the Palestinian problem first in order to resolve the overall Middle East crisis. He pointed out that the Palestinians are in a desperate situation, hence, they seek desperate solutions. Mojsov contended that we need to give the Palestinians a chance. (C)

Robert McFarlane commented that the U.S. did what it could to extract concessions from the Israelis on the territorial issue. He indicated that when the Administration announced its Middle East peace initiative in September 1982, Arafat had an opportunity to compromise. Presently, given the support from Hussein and Mubarak, Arafat has the same opportunity. If Arafat is able to reach a compromise with the support of Mubarak and Hussein, the United States will do what it can to induce reciprocal actions by the Israelis. He cited the case of when Arafat and Hussein appeared to be on the verge of agreeing to let Jordan represent the PLO in negotiations with the Israelis, but Arafat in the end succumbed to the pressures of radical Palestinians and broke off the talks. In fact, these radical Palestinians were the same ones who, supported by Syria, drove Arafat out of Lebanon. Arafat made the mistake of trying to win back this radical faction that had betrayed him when he was trying to help the Palestinian people. (C)

President Spiljak asserted that Arafat has turned recently to Egypt and Jordan in order to gain support for a moderate policy. He will strive to enhance his position with other moderate Arab countries. President Spiljak asked if there are any prospects for solving the Palestinian question. The President further mentioned that Hussein set forth a proposal which none of the other countries have so far supported. The proposal calls for the Palestinians to establish a federation with Jordan. This is a proposal which Yugoslavia supports. President Spiljak added that every perspective must be examined. If all doors are closed, the situation will become even more unfortunate. (C)

President Reagan mentioned again that in our September Middle East initiative, this Administration indicated that there must be a fair settlement of the Palestinian question. (C)

At this point, President Spiljak thanked President Reagan for the meeting and added that he looks forward to continuing his discussions with the President’s Cabinet members. (U)

President Reagan thanked President Spiljak and closed by stating that the discussions had been mutually beneficial. (U)

Diplomatic Entrance—1:30–1:40 p.m.

Upon conclusion of the departure ceremony, President Spiljak turned to President Reagan and invited him to visit Yugoslavia.

President Reagan replied that he would be delighted to do so.

1. Source: Reagan Library, Paula J. Dobriansky Files, Yugoslavia—Spiljak Visit 2/1/84–2/2/84 (4). Secret. The meeting took place in the Oval Office, Cabinet Room, Old Family Dining Room, and Diplomatic Entrance. Kimmett sent a copy of the memorandum of conversation to Hill and Hicks under a February 16 covering memorandum. (Ibid.) Spiljak’s official visit was from January 31 to February 2.
2. The winter Olympics were held in Sarajevo, February 8–19.
3. Reagan made his reelection announcement on January 29. See Public Papers: Reagan, 1984, Book I, pp. 109–110.
4. A memorandum of conversation of this meeting was not found.
5. Shultz and Gromyko met in Stockholm on January 18. See Foreign Relations, 1981–1988, vol. IV, Soviet Union, January 1983–March 1985, Documents 159 and 160.
6. See Foreign Relations, 1981–1988, vol. IV, Soviet Union, January 1983–March 1985, Document 141.
7. Documentation on U.S. policy toward MBFR is in Foreign Relations, 1984–1992, vol. X, European Security Framework, 1984–1992.
8. See Foreign Relations, 1981–1988, vol. IV, Soviet Union, January 1983–March 1985, Document 76.
9. Documentation on U.S. policy toward CDE and the Stockholm conference is in Foreign Relations, 1984–1992, vol. X, European Security Framework, 1984–1992.
10. See Foreign Relations, 1981–1988, vol. III, Soviet Union, January 1981–January 1983, Document 39.
11. See Foreign Relations, 1981–1988, vol. III, Soviet Union, January 1981–January 1983, Document 40.