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

641.60H31/12–2149: Telegram

The Chargé in Yugoslavia (Reams) to the Secretary of State

secret   priority

Belgrade, December 21, 1949—8 a. m.

1303. Informed by British Ambassador¹ that UK trade and payments agreement proposal worked out recently in London was presented to Yugoslav delegation late last week as best offer possible to make and that only minor adjustments could be considered. Promptly thereafter Kardelj asked Peake to call on him and latter took advantage of Foreign Minister’s opening general words of disappointment with British offer to tell him bluntly and at some length why better offer could not be made, mentioning in addition to factors affecting British economic situation, continuing public attacks on the West and UK by responsible Yugoslav Government officials and in controlled Yugoslav press, which had not escaped attention of British public or His Majesty’s Government. Kardelj said to have made notes of these points, but to have insisted that apparent inequality of guaranteed Yugoslav deliveries and vague assurance of UK deliveries placed Yugoslav Government in exceedingly difficult position. Mentioned among other things possibility of crop failures in support contention British position unreasonable. Peake then asked precisely what adjustments Yugoslav Government proposed in list to take account such hazards, which Kardelj promised would be submitted promptly along with number minor modifications of draft agreement. Peake undertook to see if something farther could be done concerning assurances of British deliveries.

Although Peake appeared rather optimistic about possibility early conclusion agreement, Embassy inclined believe inequality issue forced by British insistence on guaranteed Yugoslav deliveries (Embtel 1124, November 3, repeated London 90²) may continue hold up if not wreck agreement. British apparently reason that since they got similar guarantees out of Poles in absence of credits, insistence on Yugoslav Government guarantees is more than justified view of credits. Guarantees also defended on ground necessary to ensure repayment. This reasoning may seem quite logical in abstract but clashes with hard logic of Yugoslav Government’s insistence, for major political reasons, on appearance of equality. Hope Department and Embassy London will make another urgent effort persuade British find face-saving formula.³

Sent Department 1303, repeated London 119.

Reams

1. Sir Charles Peake.
2. Not printed.
3. Telegram 5085, December 22, from London, not printed, reported that Officials in the British Foreign Office were very optimistic regarding successful conclusion of the trade and payments negotiations with Yugoslavia. The Embassy therefore urged that no further representations be made to the British on the matter until they had had a further opportunity to conclude the negotiations (641.60H31/12–2249). In telegram 813, December 23, to Belgrade, not printed, the Department agreed to postpone further representations (641.60H31/12–2249). The British-Yugoslav agreement on trade and credits was signed in Belgrade on December 26, 1949.