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

229. Telegram From the Embassy in Yugoslavia to the Department of State¹

9314.

Belgrade, November 13, 1984, 0954Z

SUBJECT

• GOY Reaction to Financial, Human Rights Issues: Protecting U.S. Interests.

REF

• (A) Belgrade 9305 (Nodis),²
• (B) Belgrade 9117.³

1. S—Entire text.

2. Summary. According to a number of senior GOY advisors, including Deputy Foreign Secretary Budimir Loncar (Ref A), the Yugoslav leadership has reacted strongly to the presence of an Embassy officer and other foreign observers at the recently convened trial of six dissident intellectuals in Belgrade. At least some top leaders perceive linkage between our attention to human rights and “pressure” in financial aspects of our relations, specifically lack of USG support for multi-year refinancing. They are apprehensive that the USG is seeking to compromise Yugoslavia’s independence and destabilize the country. This apprehension, though based on mistaken premises, is potentially dangerous and could trigger internal and foreign policy reactions harmful to U.S. interests. We must also consider ways to protect our taking actions consistent with our long-term policy before the current GOY mind-set hardens. Action requested paragraph six. End summary.

3. In the past week, a series of senior GOY advisory-level figures have separately presented to us views similar to those Deputy Foreign Secretary Loncar expressed to me on November 9 (Ref A). According to these officials, some members of the collective SFRY (State) Presidency are apprehensive that the USG is engaged in an effort to compromise Yugoslav sovereignty and independence through financial pressure, both directly and through the IMF. When the Embassy sent an official observer to the trial of six dissident intellecturals beginning November 5, some in the Yugoslav leadership apparently even concluded (mistakenly) that Washington (and other Western countries, including the FRG) was linking Yugoslav human rights performance with continuing support on financial issues. (We have told our contacts in no uncertain terms that this is nonsense.) These same leadership elements apparently saw this alleged USG “pressure” as part of an inimical long-range strategy. Our sources, two of whom are members of the Presidency staff, described the mood in the Presidency as highly emotional and nervous, perhaps not least because the Presidency recognizes it has made a mistake with the trial. Unfortunately, it is now stuck with the trial and typical Yugoslav reactions to mistake-making are usually not logical. The leadership may crack down more severely in the sentencing simply to show its unity and toughness.

4. This seemingly paranoid interpretation of our actions stems from real pressures and tensions in the leadership. Under the burden of a third year of austerity/stabilization driven by tough IMF conditionality, living standards continue to slide and the leadership is publicly divided over domestic economic policy. The major GOY response to its economic crisis over the past two years has been to rely on Western and IMF financial assistance, with the U.S. in the lead. In the view of GOY conservatives, the IMF has required the GOY to surrender considerable economic policy freedom of action. The pragmatic, moderate group within the GOY which initiated and advocated GOY engagement with the IMF in the face of considerable internal opposition has come under even harsher criticism by the conservatives. The latter charge the pragmatists with having led the country to the point of dangerous dependence on the “capitalist” West. If the Yugoslav leadership comes to the conclusion that the USG intends to use economic leverage to exert political pressure, pro-Western moderate groups here could be quickly neutralized and very likely pushed from power. Our reading of the various comments made to all of us in the past week or so leads us to believe that the conservative/moderate balance is more on knife’s edge than at any time since Tito’s death over four years ago.

5. I think we have to accept that the collective post-Tito leadership is undergoing its stiffest test to date. With that in mind, we need to look beyond the Yugoslavs’ current preoccupation with their own perceived problems. When all is said and done, the character of the post-Tito leadership which will ultimately emerge will be determined in large part by its view of U.S. reliability and sincerity. In the event of a major set-back in U.S.-Yugoslav relations, we can very likely expect the emergence of an ideologically harsher and tough-fisted ruling coalition. I do not entirely exclude that such a group might well believe that Yugoslavia’s interests lie in a closer, though still independent, economic and even political association with the Soviet Union and its allies. This is not a worst-case scenario; in the current circumstances suspicion of U.S. motives runs rife through even the most rational of our friends. It is simply a contingency we have to acknowledge as existing in a more real way than we have witnessed in many more years than any of us here at the Embassy can remember. (And our institutional memory is long.)

6. Where does all of this hand-wringing bring us? My response is simple, at least for the immediate future. The Yugoslavs will not act wisely and reasonably of their own volition. USG actions in the near future will affect GOY attitudes. Our objective should be to reassure the GOY pragmatists and demonstrate to GOY conservatives that our commitment to progress on both multilateral financial and bilateral political questions has not changed, notwithstanding our continuing attention to Yugoslav human rights questions. We have listed below a number of possible short-term steps the USG might take to protect its interests. These are not designed to solve long-range problems which may lurk somewhere down the road. These steps could include:

— High-level visits. (A) Prime Minister Planinc. Vice President Bush extended an invitation to visit the U.S. to Prime Minister Planinc, a—if not the—ranking leader of the pragmatist group, during his trip to Yugoslavia in September, 1983. Now that we are in a post-elections period, we could reaffirm the invitation, perhaps proposing possible dates in early 1985.
(B) The Secretary. The Yugoslavs have made clear their interest in an early visit by Secretary Shultz. The Secretary would have access to all of the top leadership. The very fact of his visit would reassure the Yugoslavs of our support for their independence and their economic stabilization efforts.

— Extradition cases. These problems have great weight among te Yugoslavs and early results would have a considerable impact. The Arktukovic case⁴ is of great emotional importance to the GOY. He is a war criminal and many here—especially more conservative elements—suspect the U.S. has consciously given shelter to “anti-communist” figures of the Nazi-related past. We recognize that this case has its own dynamics. The Yugoslavs would view any movement, such as taking him into custody, as a positive political sign. We realize that the Medenica case⁵ has its own special aspects, but here too early movement toward extradition would be viewed as a positive step. The Milic case⁶ may be easier to resolve in the post-election period. It should be given priority attention.

— The aircraft engine. Here too, continued signs of readiness to work out an acceptably co-production package would result in a significant change in mood in the GOY.

7. We believe that, in considering the above and possibly other steps, we should take account of Loncar’s real sense of urgency. The Yugoslav leadership seems to be reaching some wrong conclusions very rapidly, and we need consequently to take steps quickly to protect our interests here.⁷

Anderson

1. Source: Department of State, Ambassador Robie Mark Palmer’s Files, 1972–1985, Lot 87 D 177, Yugoslavia 1984. Secret; Immediate; Nodis.
2. See Document 227.
3. Telegram 9117 from Belgrade, November 5, reported the Yugoslav Government’s consternation that an Embassy official attended the dissident trial of the “Belgrade Six.” (Department of State, Central Foreign Policy File, D840707–0255)
4. See footnote 6, Document 224.
5. See footnote 5, Document 224.
6. Reference is to Karlo Milic, who, after seeking political asylum in the United States, was charged by Yugoslavia with embezzlement. (Department of State, Central Foreign Policy File, D820334–0836)
7. An unknown hand drew two parallel lines in the right-hand margin next to this sentence.