860H.51/10–2149
Memorandum of Conversation, by the Deputy Assistant Secretary of State for European Affairs (Thompson)
| Participants: | The Belgian Ambassador, M. Silvercruys |
| Mr. Paul Hubert, Attaché | |
| The Secretary of State | |
| Mr. Thompson, EUR |
The Secretary said he had asked the Ambassador to come in in order to discuss the current Yugoslav situation. He emphasized the importance of the Yugoslav break with the Kremlin and said that at the present time Yugoslavia was faced with a difficult situation in its balance of payments. The situation was particularly difficult with respect to the rest of this year and for 1950. It appeared that the long term outlook beginning with 1951 looked good. We had arranged an Export-Import Bank loan of 20 million dollars and when these and other steps that were being taken had time to take effect, Yugoslavia would be able to increase its exports and would probably not be in an unfavorable situation. The British were negotiating a commercial agreement which we understand involves 13 million pounds credit, and the French are looking into the situation to see what they can do. The World Bank is considering a substantial loan. The immediate difficulty is that Yugoslavia owes Belgium some 4½ million dollars, representing short term credits advanced to pay for earlier purchases and it is expected that there will be a trade deficit on current account of about another 1.5 million dollars. On September 10, 1950, the Yugoslavs will owe Belgium another 4.5 million dollars under the present payments agreement. The Secretary said that in view of the importance to us all of keeping Tito afloat, he hoped the Belgian Government would see what it could do to assist in this matter and particularly the possibility of deferring payment for a year of the 6 million dollars due Belgium this year. The Secretary referred to the risk involved in any assistance to Yugoslavia but said he felt that the importance of the Yugoslav defection could scarcely be exaggerated and said he thought the Russians themselves gave it first priority.
The Ambassador said he would faithfully inform his Government of the Secretary’s remarks, and said he need not assure the Secretary they would receive full and sympathetic consideration. He pointed to the fact that Belgium had already done a great deal, not entirely with altruistic motives, in assisting not only Yugoslavia but also other European countries. This had given employment in Belgium but the situation had now been reached where Belgium had, in connection with [Page 972] its trade arrangements, allowed credit balances to be built up which amounted to some 300 million dollars. This was a large amount for Belgium which was now faced with a possible unemployment situation which might necessitate large scale expenditures on public works. It was for this reason that he was having discussions with Mr. Black of the World Bank and with Ex-Im Bank officials. He said these matters moved slowly and he might wish to come to the Secretary for assistance in connection therewith.
The Ambassador again said that he would promptly inform his Government of our interest in this matter.