Office of the Historian
No. 885

651.68/4–551: Telegram

The Chargé in France (Bohlen) to the Secretary of State 1

secret
Paris, April 5, 1951—9 p.m.

5968. Charpentier has informed us he believes all outstanding points in French-Yugo negotiations (Embtel 5620 Mar 21 rptd London 1373 Belgrade 962) have now been settled. He states definitive agreements being drafted with signature hoped for in 5 or 6 days.3 Overall agreement will comprise following:

1.
A trade agreement.
2.
Arrangements for payment of Yugo Govt direct and indirect debt. French have agreed to elimination of Banque Ottomane debt as indirect obligation Yugo Govt and indirect category therefore includes only “Caisse Commune” and Danube–Save–Adriatic railroad.
3.
Compensation for nationalized industries involving payment of $15 million in period 10 to 12 years.
(Funds for debt payment and for payments on account of nationalized industries will be obtained through establishment of sliding scale percentage surcharge on Yugo exports to France. This percentage, to be paid by French importer of Yugo products into franc fund here, will begin at 7 percent first year and be increased to 12 percent. It is expected that in first year deposits will amount to [Page 1773] equivalent of about 1½ million dollars. This will be divided ⅔ to debt repayment and ⅓ to compensation for nationalized industries).
4.
Agreement on war materials. This involves a cash payment of about one billion francs (already made) and 5 year credit at an interest rate of about 1 percent amounting to 5 billion.

French Govt has already indicated its support of Internatl Bank loan to Yugo of which equivalent of $23 million wld be in Fr francs and wld be devoted by Yugos to purchase of investment goods in France.

In course of conversation Charpentier reiterated French interest in Brit/US discussions of subject general econ assistance to Yugo. In reply Emb officer stated observations on this subject (Embtel 5830 Mar 31 rptd London 1432 Belgrade 1014) had been conveyed to Dept.

Bohlen
  1. Repeated to London and Belgrade.↩
  2. Telegram 5620 reported that the French-Yugoslav negotiations on these “agreements were still pending. (651.68/3–2251)↩

  3. In telegram 6245 from Paris, April 16, the Embassy reported that the agreements described here were signed on April 14. (651.68/4–1651) The texts of the French-Yugoslav trade agreement and the agreement on compensation for nationalized French property were subsequently made public.

    On April 19, 5 days after the French-Yugoslav agreements were signed, representatives from the Federal Republic of Germany and Yugoslavia concluded an economic agreement whereby Yugoslavia received a $10 million credit to pay for exports from Germany. A description of this agreement was sent to the Department of State in telegram 8507 from Frankfurt, April 19. (462A.6831/4–1951)

    ↩
  4. Not printed.↩