Foreign Relations of the United States, 1949, Eastern Europe; The Soviet Union, Volume V

811.516 Export-Import Bank/11–249: Telegram

The Secretary of State to the Embassy in Yugoslavia

secret

Washington, November 2, 1949—5 p. m.

670. From State and ECA.

1. All possible sources financing being explored to assist Yugo meet hard currency gap until assistance no longer required. Deptels 618 Oct 10, 632 Oct 17.¹ This connection possible Yugo may obtain additional dol earnings through increased dol purchases by ERP countries authorized by ECA. This could result from Yugo (a) getting dols for exports not now earning dols and (b) switching, when price differentials warrant, portions non-ferrous metals exports from US to ERP countries.

2. ECA is fully prepared authorize dol purchases from Yugo except where alternative means payment exist, e.g. exchange goods, extension credits, or payment Eur currency. Where payment dols required, ECA will issue procurement authorization provided commodity sold world market price or less.

3. Yugo exports commodities for which ECA currently authorizing dols for offshore procurement. E.g. during past year ECA authorized fol offshore purchases from Canada and Latin America (in mil dols): copper 99; lead 39; zinc 26; metallic ores and concentrates 24; lumber and lumber manufactures 34. ECA believes ERP countries could obtain more of these commodities from Yugo, it being clearly understood that authorizations for West Hemisphere purchases would be correspondingly decreased. Believe this might be accomplished by greater Yugo initiative in course of negotiating trade agreements with ERP countries.

4. Believe Yugo has in past realized reluctance ECA authorize dol purchases from EE countries. This realization shared by ERP countries with which Yugo negotiated trade agreements. Informal talks between State and Yugo reps indicate Yugo has been reluctant seek ECA dols. However after we explained that as matter public knowledge thru Aug 31 fol countries had reed ECA dols (in mil) Pol 12.6, East Ger 1.1, Czecho 0.569 and Yugo 0.546, Yugo reps indicated Yugo Gov now prepared seek maximum ECA dols.

5. Suggest you inform Yugo Gov that ECA prepared in appropriate cases issue procurement authorizations upon request any participating Gov for commodities at world market prices which cannot be obtained through non-dol means or which would otherwise be procured elsewhere for dols.

Repeated Paris for Harriman, as 4184. [State and ECA.]

Acheson

1. Neither printed. Telegram 618 reported that officers of the Department of State had held extensive and frank discussions with Yugoslav representatives regarding the Yugoslav hard currency deficit The deficit for the last four months of 1949 amounted to $20 million of which $12 million was in dollars. Emergency measures to finance the deficit were being contemplated (811.516 Export-Import Bank/9–2049). Telegram 632 reported that the Export-Import Bank on October 12 authorized the establishment of an $8 million credit to Yugoslavia, from the total $20 million credit approved on September 9, for industrial raw materials, coal mine equipment, and transportation equipment for non-ferrous and coal mines. The telegram also reported that the National Advisory Council on October 14 advised the U.S. Executive Director on the International Monetary Fund that he should raise no objection to an additional $6 million Fund drawing by Yugoslavia (811 516 Export-Import Bank/10–1749).