868.10/3–450: Telegram
The Secretary of State to the Embassy in the United Kingdom 1
996. (1) IBRD actively considering $25 million loan to Yugo of which $12 million wld be in dols for purchases in US and remainder in local currencies of UK, Neth, Belg, France, and Italy for purchases in those countries. These currencies wld come from the 18% of total contributions of member govts to IBRD paid in local currencies but which cannot be used for loans without consent of particular nation whose currency is to be used. IBRD has requested such consent from 5 govts concerned in connection above loan to Yugo. We have asked IBRD and have been informed that the British share wld be the sterling equivalent of 2.7 million dols.
(2) You are requested informally approach appropriate top officials British Govt with respect this loan and express hope that favorable reply will be given Bank’s request for use local currency. [Page 1382] You shld indicate that Dept strongly supports loan and feels five countries whose local currencies are desired shld give necessary consent. If necessary you may express Dept’s concern that problem of maintaining and exploiting rift between Yugo and USSR be considered as common concern of western nations and shld be supported economically as well as politically by them. You shld point out US has recently extended assistance to Yugo through Eximbank loans of $20 million in Aug/Sept 1949 plus further $20 million earlier this week, and indicate possibility undesirable political repercusions here if it appears other western countries unwilling undertake appropriate responsibility in situation involving their own interests fully as much as US interests. Substantial portion latest Eximbank loan designed meet emergency balance of payments situation Yugo which can only be solved in long run by additional production resulting from further capital goods acquired through such assistance as that under consideration by IBRD.
(3) Similar instructions being sent Rome, Paris, The Hague, Brussels and early replies requested. There is some indication that the UK is reluctant give necessary consent use sterling involved proposed loan and that other countries may be holding back until British act. Hence prompt approach Brit may be particularly important although other 4 countries shld be urged act independently of British if point arises.
- This telegram was repeated, mutatis mutandis, as 944 to Paris, 292 to Brussels, 206 to The Hague, and 774 to Rome (868.10/3–450 and 398.14/3–450). Special supplementary instructions were added to the telegrams to The Hague and Rome. Telegram 167, March 8, to Belgrade, not printed, informed the Embassy of the substance of these instructions and explained that the action to speed the proposed multicurrency loan to Yugoslavia was taken in pursuance of a suggestion by Eugene Black, President of the International Bank for Reconstruction and Development, during a recent call on Secretary of State Acheson (868.00/3–850). Telegram; 1569, April 7, to London, repeated as 279 to Belgrade, not printed, informed that the Belgian, Italian, and Netherlands Governments appeared willing to participate in the loan. However, in view of recent developments, including the failure of negotiations with the Yugoslav Government regarding claims settlement for prewar Yugoslav dollar bonds, the Department wished that no further action be taken on the matter for the time being (868.10/4–350).↩