Office of the Historian

245. Telegram From the Embassy in the Federal Republic of Germany to the Department of State1

35589/Depto 6002.
Bonn, November 9, 1987, 2046Z

SUBJECT

  • My Visit to Yugoslavia.
1.
(Secret—Entire text.)
2.
My trip has started off with three very productive days in Yugoslavia. We spent Saturday2 in Zagreb, highlighted by a long luncheon with Ante Markovic, Chairman of the Presidency of Croatia, an important figure in a country where regional governments have veto power over Federal legislation. We spent Sunday in Dubrovnik, a beautiful seashore resort whose old city dates back to the ninth century. Monday was a working day in Belgrade including meetings with Premier Mikulic, Member of the Presidency Vrhovec (who hopes to come to Washington in December3 if the Vice President will see him), Foreign Secretary Dizdarevic (whom you met at the UN in New York), and Deputy Foreign Secretary Loncar. Thanks to good work by Mike Newlin, we completed and initialed a new consular convention, solving the knotty problem of how they treat our dual nationals. Al Adams had twelve solid hours of negotiations on counter-terrorism, pretty [Page 726] much resolving our concerns about their previous lack of cooperation. They acknowledged they have a problem, and acknowledged they need to tighten up.
3.
Much time was spent on their very serious economic situation. Inflation is running at a rate of 150 percent. There is a financing gap of over USD one billion and an all-too-large international debt. The government is in the throes of putting the final touches on a drastic plan which contains all the right measures, if they stick to it. The plan goes before their Parliament Thursday4 and should provide a good dose of shock treatment for their economy. It is a moment of real crisis for them, and there is even talk of replacing Mikulic. I stressed the need for strong, free market corrective measures, for an IMF agreement and for a more honest and open relationship with us in order to permit us to continue to be constructive on their behalf with the IMF, the World Bank, the Paris Club and the commercial banks. They seemed to accept all three points. Their agreement on the need for an IMF agreement is an important change.
4.
Yugoslavia is an important country to us, had the courage to get out and then stay out of the Soviet bloc. As a model for what we hope can happen with other Eastern European countries, it is important that we help them and that we be seen as helping them. Their views on world issues are a lot closer to ours than to the Soviets. We discussed the upcoming summit,5 arms control agreements, human rights, Afghanistan, Middle East peace, international debt, NAM issues, the Iran-Iraq war and the Gulf. One group of their officials was just back from Moscow where they attended the November 5 ceremonies. Another was just back from visits to Argentina, Peru, Mexico and Cuba, where they said they found Castro more reasonable than ever before.
5.
All in all, the atmosphere was much better than a year ago. The effort we have put in is paying off. They perceive that we’ve been working well together and appreciate our interest and concern at a time of real trauma for them.
6.
We’re on to Bonn tonight and to East Berlin tomorrow.
Burt
  1. Source: Department of State, Official Correspondence of Deputy Secretary of State John C. Whitehead, July 1982–January 1989, Lot 89 D 139, EE Trip: Belgrade, Yugoslavia, November 13–14. Secret; Immediate; Nodis.↩
  2. November 7.↩
  3. Vrhovec’s visit was delayed until May 5–6, 1988. See Document 250.↩
  4. November 12.↩
  5. Reference is to the Washington Summit, December 7–10.↩