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

243. Telegram From the Department of State to the Embassy in Yugoslavia¹

316629.

Washington, October 9, 1987, 2314Z

SUBJECT

• Secretary’s Meeting With Yugoslav Foreign Minister Dizdarevic.

1. Secret—Entire text.

2. Begin summary. The Secretary met for thirty-five minutes on October 1 with Yugoslav Foreign Minister Raif Dizdarevic. Principal areas of discussion were efforts to combat international terrorism and the Yugoslav economic situation. On terrorism, the Secretary told the Foreign Minister that the USG is not satisfied with the nature of our dialogue on this issue. He proposed that Ambassador Adams visit Belgrade in early November to hold consultations on terrorism in advance of Deputy Secretary Whitehead’s planned visit.² Dizdarevic told the Secretary that Yugoslavia is prepared to make every effort to combat terrorism and to cooperate in this effort with the USG. He welcomed the idea of bilateral consultations. Dizdarevic outlined for the Secretary the severity of Yugoslavia’s foreign debt situation and indicated that his government is looking for the understanding of the United States in seeking a long-term resolution of the problem. The Secretary indicated that he fully understood the difficulty of the Yugoslav economic situation and that the United States would try to be helpful. He urged that the Yugoslavs pursue a bold program of market-oriented reforms to address their economic problems. Dizdarevic also noted that he had met on September 30 with the Israeli Foreign Minister and that he would be meeting with the eleven Mediterranean non-aligned Foreign Ministers October 2. End summary.

3. The Secretary opened the meeting with the Yugoslav Foreign Minister by recalling his visit to Belgrade³ and noting Deputy Secretary Whitehead’ s forthcoming trip there. He described the U.S.-Yugoslav bilateral relationship as fundamentally sound, and he stressed U.S. support for Yugoslavia’ s independence and territorial integrity.

4. Observing that there was no one particular issue he wished to raise, the Secretary told Dizdarevic that the USG is not at all satisfied with the nature of our communications with the GOY on the subject of combatting international terrorism. He noted that we have provided detailed information on known international terrorists, and we do not consider that we have received satisfactory responses. For example, during a September 2 meeting,⁴ Deputy Foreign Minister Loncar told Ambassador Scanlan that the GOY had no information about the presence in Yugoslavia of Col. Hawari, an important PLO operative; however, we have reliable information that he and a key operative are residing there. The Secretary observed that the GOY had earlier received from us information about two dangerous terrorists, but we had not received responses to this information. He said that the GOY should do more than just check border and hotel records in response to information we provide. Extensive investigations are in order and should be carried out. The Secretary said that we have worked hard to isolate Abu Nidal and his organization, and have developed good information about their activities, including some in Yugoslavia. In an effort to strengthen and improve our dialogue with the GOY on this issue, the Secretary proposed that Ambassador Al Adams visit Belgrade in early November, in advance of the arrival of Deputy Secretary Whitehead, for a round of consultations with Yugoslav officials on international terrorism.

5. Dizdarevic commenced his remarks by expressing his appreciation for the opportunity to meet with the Secretary. He described the meeting as part of an ongoing dialogue which helps to clarify issues and maintain relations at a good level. The Foreign Minister said that the GOY is looking forward to the Deputy Secretary’s forthcoming visit to Belgrade as well as to the visit by Presidency member Josip Vrhovec to the United States later this year.⁵ Dizdarevic expressed particular appreciation for the program which had been arranged in July for Deputy Prime Minister Milosavljevic’s visit to Washington⁶ and for the special attention the Secretary had devoted to it.

6. Regarding terrorism, Dizdarevic stressed that Yugoslavia as a matter of principle is resolutely opposed to terrorism. The GOY, he stated, is prepared to make every effort to combat international terrorism. He noted that Yugoslavia had been an early victim of terrorist activities, and he described terrorism as an “international evil.” The Foreign Minister expressed GOY willingness to make every effort to cooperate in combatting terrorism with the USG. Dizdarevic noted that the GOY had previously expressed a readiness to have close cooperation on this issue with the USG, and he mentioned that Ambassadors Oakley and Adams had visited Belgrade for bilateral discussions with appropriate officials, including members of the security services.

7. Dizdarevic said that the GOY had recently received a substantial amount of information on terrorism from Ambassador Scanlan and had given it full attention. He said that all of the information had been checked out within the framework of what was possible. In other words, according to Dizdarevic, a maximum effort had been made to investigate the information which had been given and to provide a response. The Foreign Minister said that the USG could be satisfied or dissatisfied with the response, but he stressed that there was no reason to doubt the correctness of the information in the GOY response or the fact that the GOY had done the best it could do to investigate the material which had been provided to it.

8. Dizdarevic said that recently, in an effort to make more efficient the bilateral dialogue on terrorism, the GOY had opened direct contact between the American Embassy and the Ministry of Interior. In this connection, Ambassador Scanlan had a detailed conversation with the Minister of Interior. Dizdarevic said Ambassador Adams would be welcome in Belgrade, and indicated that he would notify GOY authorities of the proposal for early November consultations.

9. Ambassador Bremer interjected that we were not satisfied with the information that we had been provided earlier in the week by the Ministry of Interior. Furthermore, with regard to detailed information provided earlier this year—as far back as last February—we had received no response. He noted, in particular, that we had not been given a response to information provided by Under Secretary Armacost regarding Abu Nidal activities in Yugoslavia which we had developed from an accused Abu Nidal terrorist currently in detention in New York.

10. Dizdarevic responded by repeating that the USG could be satisfied or dissatisfied with what the GOY has said. The point is, however, that the GOY responded to all requests for information. The Minister stressed that the GOY does not want Yugoslav territory to be used to launch terrorist attacks against anyone, and he reiterated that the GOY welcomes the proposal put forward by the Secretary for Ambassador Adams to visit Belgrade for consultations.

11. In response to a question from the Secretary, Dizdarevic said that the Yugoslav economic situation is difficult. The GOY is resolved, however, to persevere in efforts to correct the situation utilizing “economic and market laws.” The Minister noted that the government had taken a number of reform measures and that more would follow. Dizdarevic said that these reforms are being carried out at a time when the country is facing a heavy debt servicing burden. According to the Minister, even if the Yugoslav economy were healthier than it is, it could not afford the present level of debt servicing. Accordingly, debt rescheduling must be an integral part of any effort to address Yugoslavia’s economic problems.

12. To illustrate the financial problems facing the GOY, Dizdarevic told the Secretary that from 1981 through 1985, the GOY had spent 23 billion dollars to service the country’s debt. If the government had been able to save 25 percent of this amount, economic recovery could have taken place at a faster pace. In 1986, he said, 9.85 percent of GNP had gone to debt servicing which was three times higher than the growth of GNP. This, he stressed, inhibits growth. Continuing, Dizdarevic said that if rescheduling is not arranged, the GOY will be obligated to repay 67 percent of its debt in 1991. This would require that Yugoslavia utilize 35 percent of its foreign exchange earnings annually for this purpose alone. Thus, from the GOY standpoint, rescheduling is absolutely essential.

13. Dizdarevic said that the GOY has already commenced discussions with its creditors regarding the rescheduling of principal. In general he described the responses of the creditors as sympathetic. The Minister noted that the GOY is also in touch with the Paris Club and the IMF. Regarding the IMF, he noted that Yugoslavia had previously had a stand-by agreement and then a program of enhanced surveillance. At the present, he observed, the GOY is looking for a formula for its future relationship with the IMF. Concluding his presentation, Dizdarevic said that the GOY is looking for the understanding of the USG as it seeks to resolve its economic difficulties.

14. The Secretary said that he fully understood the extent of the GOY’s economic difficulties. For its part, he noted, the USG wants to be helpful. The Secretary stressed that a program of market reforms—“the bolder the better’’—is essential if the Yugoslav economic situation is to be improved. He noted that the GOY should work cooperatively with the Paris Club. With respect to the IMF, the Secretary suggested that the GOY would need some form of IMF “facility.”

15. Turning to East-West relations, Dizdarevic expressed appreciation for the information received from Ambassador Scanlan on the Secretary’s recent meetings in Washington with Foreign Minister Shevardnadze.⁷ He remarked that on this occasion the information received from both sides was very similar, and he expressed the hope that the Secretary’s October meetings in Moscow⁸ would be fruitful.

16. The Foreign Minister thanked the Secretary for Deputy Secretary Whitehead’s reply to his letter on behalf of the eleven Mediterranean non-aligned countries.⁹ He appreciated the USG readiness to enter into dialogue on the issues raised in his letter, and said he would report the USG response to the Foreign Ministers of the eleven countries when he meets with them in New York on October 2.

17. Regarding the Middle East, Dizdarevic reported to the Secretary that he had met with Israeli Foreign Minister Peres September 30. He said this is the first bilateral meeting at this level in twenty years. The Minister described the atmosphere of the meeting as constructive, and he expressed his feeling that the time has come when something can really be done in the Middle East.

18. Accompanying Dizdarevic were Ambassador to the United Nations Dragoslav Pejic, Ambassador to the United States Zivorad Kovacevic, a notetaker and an interpreter. U.S. participants were Assistant Secretary Ridgway, EUR/EEY Director Wenick (notetaker), and an interpreter.

Armacost

1. Source: Reagan Library, Rudolf Perina Files, Subject File, Yugoslavia—Bilateral 1987. Secret; Immediate; Exdis. Sent for information to Tel Aviv.
2. Whitehead visited Yugoslavia from November 8 to 9.
3. See Documents 235 and 236.
4. No memorandum of conversation of this meeting was found.
5. Vorhovec visited the United States from May 5 to 6, 1988. See Document 250.
6. Milosavljevic visited the United States from July 4 to 10.
7. Scanlan briefed Strbac on September 23 on Shultz’s September 15–17 meetings with Shevardnadze. A summary of the discussion was transmitted in telegram 9481 from Belgrade, September 23. (Department of State, Central Foreign Policy File, D870794–0169)
8. Shultz visited Moscow from October 22 to 23.
9. Not found.