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

868.10/7–1250: Telegram

The Secretary of State to the Embassy in the United Kingdom ¹

secret   priority

Washington, July 14, 1950—8 p. m.

249. Frankfort, 281 July 12, rptd London July 14 as 2332.² Re proposed Ger credit to Yugo joint US–UK–Fr policy of supporting Yugo agreed on at Washington mtg FonMins, Sept 14–15, 1949;³ reaffirmed November ’49 FonMins’ mtg (Paris, 4716, Nov 11⁴) and May ’50 FonMins’ mtg (London, Secto 230, May 11⁵).

In line with this policy, Secy informed Yugo Amb, June 19, that US Govt wld render any assistance possible in facilitating current negots with West Ger Govt for trade credit.⁶

Background of credit as fols: Yugo Trade Min approached Ger Min Economy, Erhardt, Apr for credit. Erhardt committed Gers by letter to unspecified credit. Yugos have been asking $80–100 million for purchase capital goods during next two yrs, repayable in commodeties, 1952–57. Gers thinking of $20–25 million repayable 3–5 yrs starting 1952.

Dept officer informed by HICOG officials that British and Fr reps HICOG are opposing credit, former on specific instrs FonOff. Further, strong indications that British attempting preserve Yugo market themselves and trying direct Ger exports toward Sov bloc in order avoid Ger competition Western markets. Brit Amb Belgrade also expressed disapproval Ger credit.⁷

While Dept realizes there are certain features Ger credit which must be carefully worker out, nevertheless British must be aware contradictions between present position and their responsibilities in common Yugo, East-West trade, and occupation policies. While this credit, as means indirect US support to Yugo, is of greatest importance in minimizing further US financial assistance, it will cost Brit (and Fr) nothing. If latter countries are interested Yugo market we are quite willing they extend Yugo whatever credits necessary to maintain this market.

Request you make high level approach along above lines soonest. Similar instrs will be sent Paris later.⁸

Acheson

1. This telegram was repeated to Belgrade as 36, to Paris as 253, and to Frankfort as 331.
2. Not printed; it reported that the British and French were adamant in their disapproval of the extension of German Federal credit to Yugoslavia (868.10/7–1250).
3. For the texts of Secretary of State Acheson’s memoranda of his conversations with Bevin and Schuman in Washington on September 14 and 15, 1949, on Yugoslavia, see Foreign Relations, 1949, vol. v, pp. 955 and 957, respectively.
4. For the relevant portion of the message under reference here, see ibid., p. 977.
5. Regarding the message and meetings under reference here, see the editorial note, p. 1415.
6. See the Secretary of State’s memorandum of conversation of June 19, p. 1421.
7. In his telegram 57, July 18, from Belgrade, not printed, Ambassador Allen expressed the view that both the British and the French appeared to be concerned about the possible long-term effects of the development of Federal-Yugoslav trade on their competitive position in Yugoslavia. The French also appeared concerned that the proposed Federal credit might weaken the French bargaining position in financial negotiations with Yugoslavia. Allen hoped that the Department could persuade the British and French to waive their objections to the credit which appeared to be of crucial importance to Yugoslavia (868.10/7–1850).
8. Telegram 303, July 18, to Paris, not printed, requested the Embassy to approach the French Foreign Ministry at a high level as soon as possible regarding the tripartite Yugoslav policy outlined in the telegram printed here. Strong American support for the proposed Federal credit, as a means of providing Western assistance to Yugoslavia, was to be expressed (868.10/7–1250).