Foreign Relations of the United States, 1950, Central and Eastern Europe; The Soviet Union, Volume IV

868.00/6–1950

Memorandum of Conversation, by the Secretary of State

secret

[Washington,] June 19, 1950.

Participants:	The Secretary
	Mr. Charles W. Yost, Director, Office of Eastern European Affairs
	Mr. Vladimir Popovic, Yugoslav Ambassador1
	Mr. Bruner, Interpreter2

The Yugoslav Ambassador expressed regret that he had not been able to call upon me sooner in view of the fact that I had been absent when he arrived. He said he hoped he might look forward to a frank and friendly collaboration with me as well as other representatives of the US Government on problems of common concern and that he might seek my assistance whenever necessary in dealing with these problems. I assured him that I would be happy to render to him such assistance as was in my power and that we were pleased to welcome him to Washington.

The Ambassador said that, since he had already been here some time, he should like to take advantage of the opportunity of his first call on me to take up one or two matters of business; he would be particularly interested to hear my views on the general economic situation of Yugoslavia. I replied that, while I was naturally not acquainted with the details, I had the impression that Yugoslavia is coping successfully with the very difficult economic problems which have confronted it during the last year and a half in its efforts to maintain its independence. I declared that we have been happy to assist in those efforts and should continue to do so. I pointed out that when I had discussed these matters with the Yugoslav Foreign Minister last autumn,³ I had suggested that the Yugoslav Government make every effort to conserve its dollar resources since the possibilities of US aid are obviously not unlimited.

The Ambassador declared that the Yugoslav economic situation is on the whole sound, that great progress has been made, but that serious difficulties still remain. He pointed out that a large proportion of its resources were necessarily being expended for defense at this time when Yugoslavia’s neighbors are increasing their armaments. This had had the unfortunate effect that it had been impossible for the Yugoslav Government to take the steps it had contemplated to raise the standard of living of its people, which remains extremely low.

The Ambassador expressed appreciation of my indication of US willingness to assist Yugoslavia but said that, speaking frankly, he had not met with the same understanding from all US officials with whom he had conferred. He was particularly concerned with the attitude of the International Bank, where he had had several conversations with Mr. Black and other officials. It had been the understanding of his government that the negotiations for an International Bank loan had been practically concluded last October. However, difficulties and delays have continuously arisen and it now appears that the International Bank is attaching further conditions in connection with settlements with foreign bondholders.⁴ He hoped that I would be able to assist in straightening out this matter.

I replied by pointing out, first, that the International Bank is not a US institution nor Mr. Black a US Government official and, second, that, since the bank can obtain funds only by selling securities and since the purchasers of the Bank’s securities attach importance to whether or not borrowers from the Bank are meeting their earlier obligations, the bank must necessarily be concerned in all cases in the attitude of prospective borrowers toward meeting their earlier obligations. This indicated no reluctance on the part of the Bank to make a loan to Yugoslavia but merely an established procedure which was necessary to enable the Bank itself to obtain funds. I suggested that it would be desirable for the Yugoslav Government to undertake negotiations for the settlement of its earlier indebtedness and at the same time to pursue its negotiations with the International Bank. I added that the Ambassador should discuss this question further with Mr. Thorp⁵ and Mr. Yost, who would speak for me in this connection.

The Ambassador also referred to Yugoslavia’s relations with Italy and said that his government felt it particularly important to settle outstanding economic problems with Italy. I replied that I was delighted to hear that this is his government’s desire and I hoped that they will proceed to negotiate promptly. When the Ambassador remarked that there had been Italo-Yugoslav economic negotiations which had been broken off after almost achieving a successful conclusion, I urged that negotiations on these and all matters outstanding between the two governments be resumed. I suggested that my advice to both parties would be to negotiate privately and not to make speeches.

The Ambassador then mentioned that his government is now entering upon negotiations with the West German Government for extensive commercial exchanges which could be, if successfully arranged, of great importance to the Yugoslav economy. He expressed the hope that the US Government would view these negotiations favorably and render assistance if necessary. I replied that we should be glad to be of any assistance possible in facilitating these negotiations.⁶

In conclusion, I pointed out that the US is assisting, and is disposed to continue to assist, Yugoslavia not for sentimental reasons but simply because it is in the interest of the US, as of Yugoslavia, that the latter continue to maintain its independence. I stated that the US is not intervening, and does not intend to intervene, in the internal affairs of Yugoslavia and that it does not wish to see others intervene in those affairs. I declared that we were impressed by the efforts Yugoslavia is making to maintain its independence. I expressed the hope that our aid would continue to serve this purpose and might also assist Yugoslavia in the future in raising the standard of living of its people.

[Dean Acheson]

1. In late March 1950, the Yugoslav Government designated Deputy Foreign Minister Vladimir Popović to succeed Sava Kosanović as Ambassador in the United States. Popović, a member of the Central Committee of the Yugoslav Communist Party, had earlier served as Yugoslav Ambassador in the Soviet Union from March 1945 to September 1948. In his telegram 365, March 20, from Belgrade, not printed, Ambassador Allen commented that Popović was very influential in Yugoslav Government and Communist Party circles and was very close to Marshal Tito. Popovic’s appointment indicated the great importance Tito attached to relations with the United States (601.6811/3–2050). Telegram 368, March 20, from Belgrade, not printed, reported hints from the Yugoslav Foreign Ministry that Kosanović had been replaced because as a non-Communist he carried inadequate weight with the Department of State (601.6811/3–2050). Ambassador Popović presented his credentials to President Truman on June 5.
2. Dr. Mirko Bruner, who subsequently became First Secretary of the Yugoslav Embassy.
3. Secretary of State Acheson’s memorandum of his conversation with Foreign Minister Kardelj on November 18, 1949, is printed in Foreign Relations, 1949, vol. v, p. 978.
4. Regarding the negotiations between the Yugoslav Government and the Foreign Bondholders Protective Council on the settlement of Yugoslavia’s prewar bonded indebtedness, see the editorial note, p. 1396.
5. Willard L. Thorp, Assistant Secretary of State for Economic Affairs.
6. Telegram 4711, June 30, to Frankfort, not printed, reported Secretary Acheson’s expression of willingness to render assistance in facilitating Yugoslav-Federal commercial negotiations and instructed the Office of the High Commissioner in Germany to keep in touch with the negotiations and provide any assistance that might he indicated (462A.6831/6–3050).