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

768.5/11–2450

Memorandum Prepared by the Department of State¹

secret

[Washington,] October 25, 1950.

Yugoslavia

problem

To work out, under existing statutory authority, the means for financing emergency food exports to reach Yugoslavia prior to January 1, and therefore to be shipped from the United States prior to mid-November.

discussion

The potential apparent sources of funds are principally the ECA, the Commodity Credit Corporation, the Export-Import Bank, the Mutual Defense Assistance Program, and the Department of Defense.

The whole of the emergency food program for Yugoslavia could theoretically be undertaken either through MDAP or ECA. However, in the case of MDAP this would require especially that Yugoslavia agree to sign a bilateral agreement with the U.S. on MDAP. Ambassador Allen has stated that we have about a fifty-fifty chance of getting the Yugoslav Government to sign an MDAP bilateral² and the matter is now being explored on a tentative basis with Yugoslav officials. In the case of ECA, Yugoslavia would have to agree to sign a bilateral agreement under the Economic Cooperation Act and to apply for membership in OEEC and be accepted by the other members.

Tito has stated quite definitely within recent weeks that it would be impossible for him, for internal political reasons, to participate directly in ERP. Yugoslav participation would be equally undesirable from a U.S. policy point of view, not to speak of the improbability that the membership of OEEC could be induced to accept communist Yugoslavia into the group. The U.S. is endeavoring to make short-term emergency food relief immediately available to Yugoslavia in the present crisis for both strategic defensive and political reasons. It is not our policy to provide communist Yugoslavia with the longer-term general economic and military assistance of the type being made available to democracies of Western Europe. Our policy is simply to provide Yugoslavia with such assistance as is required to protect our political and strategic interests in the area. In any event, even on the unrealistic hypothesis that Yugoslavia would accept it and the OEEC countries were willing, the required procedures for adherence to the ERP are too time-consuming to meet the urgent need for immediate food shipments to Yugoslavia.

As Yugoslav intentions on MDAP remain uncertain, it has seemed advisable to explore means in case Yugoslavia is not willing at this time to negotiate the MDAP bilateral, and various possible combinations have therefore been discussed whereby several agencies would contribute to the solving of the entire problem.

The technical discussions among the various Agencies have not yet brought about the measure of agreement on feasible means necessary to take care of the entire emergency food program. The positive conclusions thus far reached and the points of difference that remain to be resolved are discussed below.

Total Yugoslav requirements for 10 items of foodstuffs necessary to reach Yugoslavia prior to January 1, 1951 aggregate approximately 400,000 metric tons with an approximate dollar value, inclusive of freight, of $31 million, as shown in attached Table l.³ The discussions to date disclose that it is technically feasible for ECA to finance Yugoslavia’s total requirements in wheat, and it is possible for Eximbank to finance Yugoslav emergency needs in barley, corn, beans, dried milk, dried eggs, and meat as well as dollar freight. It has not been possible to reach agreement regarding the financing of the remaining part of the program calling for actual disbursement of dollars in an amount of some $10 million, and comprising principally the purchase of 100,000 tons of potatoes, or the equivalent in food value of other products, and the purchase of 20,000 tons of sugar valued at $2.7 million and 15,000 tons of lard valued at $5 million.

It is necessary to explain at this point in some detail the character of the transactions involved in providing relief to Yugoslavia and the limitations on the nature of the proposed aid of each Agency participating in the program.

[Here follows a detailed review of the possible forms of food relief for Yugoslavia that might be provided through the Economic Cooperation Administration, the Export-Import Bank of Washington, and the Department of Agriculture (and the Commodity Credit Corporation). There appeared to be no feasible method of using Mutual Defense Assistance Program funds other than on the basis of a bilateral agreement with Yugoslavia, but there appeared to be some possibility of undertaking some financing of Yugoslav requirements through the occupation authorities in Germany and perhaps Austria.]

1. Secretary of State Acheson discussed this paper with President Truman on October 26 and left a copy with him at that time; see the memorandum of telephone conversation by Barbara Evans, October 26, p. 1483. The paper was discussed further by the Secretary of State with President Truman and other officials following the Cabinet meeting of October 27; see the memorandum by the Secretary of State, October 27, p. 1484.
2. Telegram 282, October 19, to Belgrade, not printed, explained that in connection with the efforts within the United States Government to obtain the necessary funds for emergency food aid for Yugoslavia prior to Congressional action, it might prove essential to use funds appropriated for the Mutual Defense Assistance Program. The use of such funds would require a bilateral agreement with Yugoslavia. The draft text of such an agreement was transmitted, and Ambassador Allen was asked urgently to report whether such an agreement would be acceptable to the Yugoslav Government (868.03/10–1950). In his telegram 394, October 23, from Belgrade, not printed, Allen replied that the approach proposed by the Department of State had no better than a 50 percent chance of success, but he felt the plan was worth attempting (868.03/10–2350). Telegram 301, October 25, to Belgrade, not printed, authorized Allen to make a discreet approach to the Yugoslav Government regarding the MDAP formula for emergency food assistance. Allen was to make clear the proposal was tentative and pending consultation with member governments of the North Atlantic Treaty Organization (868.03/10–2550).
3. Not printed.