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

S/S–NSC Files: Lot 63 D 351: NSC 18 Series

Memorandum by the Secretary of State to the Executive Secretary of the National Security Council (Lay)¹

top secret

[Washington,] October 16, 1950.

Subject: Special Progress Report on the Implementation of NSC 18/2 and 18/4, “United States Policy Toward the Conflict Between the USSR and Yugoslavia.”²

NSC 18/2 and 18/4 were approved as governmental policies on February 18, 1949 and November 18, 1949 respectively. It is requested that this special progress report as of October 10 be circulated to the members of the Council for their information.

The situation described in this report is so critical that unless a satisfactory solution is reached the ability of the Yugoslav Government to resist Soviet aggression will be seriously impaired. The members of the Council should be aware that this emergency situation can be met only by means of immediate and full cooperation on the part of all government agencies concerned, and that failure to meet this situation in an adequate and timely manner will make it exceedingly difficult and probably impossible to implement the United States policies set forth in NSC 18/2 and 18/4. Because of the serious repercussions which would follow from failure of United States policy toward Yugoslavia and because of the responsibility of the Secretary of State for the coordination of the implementation of these policies, it is desirable to bring this situation urgently to the attention of the members of the National Security Council.

The following estimates of the Yugoslav food needs represent the views of experts from the Department of State, Central Intelligence Agency, Department of Agriculture and the Economic Cooperation Administration.

1. As a result of a severe drought, Yugoslavia will need, in order to meet minimum food requirements for human consumption alone, to import large amounts of foodstuffs before the spring harvest.

2. The initial United States Government estimate places Yugoslav needs for food imports at a minimum of $35 million. However, it is considered likely that the figure of $50 million presented to the Department of State by the Yugoslav Ambassador on October 3 may prove to be reasonable upon further investigation. On October 3 the Yugoslav Ambassador presented an oral request for grant assistance in the amount of $100 million of which $50 million was stated to be for food imports and $50 million for raw materials, as indicated in the attached memorandum from the Yugoslav Embassy.³

3. Grain requirements estimated by United States Government experts at 200–300,000 tons, valued at approximately $15–$20 million, comprise almost half of Yugoslavia’s total needs. Grain surpluses in these amounts are available in this country, and in France and Turkey. However, it may be necessary to raise this grain estimate upward if Yugoslav estimates of their needs for other foods can be substantiated, since grain would be the cheapest and most practical substitute for the other more expensive foods.

4. Because of limited Yugoslav capacity to unload and distribute foodstuffs, especially after winter sets in, it is considered essential that food shipments be started this month, if they are to be effective. In order to avoid transportation congestion, shipments should be evenly scheduled over the period of the next six to eight months.

Reports from Ambassador Allen in Belgrade and from British diplomatic sources confirm that if Yugoslavia’s minimum food import requirements are not met, the situation will become so serious that the Yugoslav Government’s ability to resist Soviet aggression will be gravely weakened.

The Yugoslav Government has already taken certain internal measures to alleviate the food situation, which in themselves however will not be adequate to solve the problem without large-scale food imports. The estimates of food requirements included in this report take into account these actions of the Yugoslav Government.

These additional food import requirements together with the loss of agricultural exports resulting from the drought have led to a further deterioration in Yugoslavia’s balance of payments, which will make it impossible for Yugoslavia to meet the food crisis with its own foreign exchange resources.

There are at present no dollar funds immediately available to the Yugoslav Government for this purpose. Therefore, the Department of State is informing the Yugoslav Government that it is prepared to support a Yugoslav request to the Export-Import Bank for consideration of immediate utilization of a portion of the recently authorized $15 million credit for urgent current account purchases, which would make possible starting the food pipeline immediately.

The Department of State is presently exploring the possibilities of emergency assistance to Yugoslavia from other countries, notably the United Kingdom, Canada and France. It is clear, however, that the financial cost of the food assistance would in any event have to be borne mainly by the United States.

It is in the interest of United States foreign policy, as set forth in NSC 18/2 and NSC 18/4, that all possible steps be taken to meet the Yugoslav food requirements. Even if the Export-Import Bank can take action to permit immediate shipments, the bulk of the funds to meet the Yugoslav need will still remain to be found. Several possibilities exist to provide grant or other assistance, particularly by means of arrangements through the Economic Cooperation Administration or the Department of Agriculture. The possibility of utilizing the Military Assistance Program for this purpose is considered as remote and inadvisable.

It is contemplated that there will be called within the next few days a meeting between the Secretary of State and the heads of other closely interested government agencies to discuss arrangements to meet the emergency food requirements of Yugoslavia.⁴

Dean Acheson

1. The source text was circulated to the members of the National Security Council as a “Progress Report.”
2. For information regarding NSC 18/2, February 17, 1949, “Economic Relations Between the United States and Yugoslavia”, see editorial note, Foreign Relations, 1949, vol. v, p. 868. For text of NSC 18/4, see p. 1341.
3. Regarding Ambassador Popović’s call at the Department of State on October 3 and the Yugoslav Embassy memorandum of the same date under reference here, see telegram 240, October 9, to Belgrade, p. 1460.
4. A meeting of the sort envisaged in this paragraph appears to have taken place on October 18. A formal record of the substance of the discussion at the meeting has not been found, but the course of the meeting is indicated in the memorandum of telephone conversation by Barbara Evans, October 26, p. 1483.