Foreign Relations of the United States, 1951, Europe: Political and Economic Developments, Volume IV, Part 2

No. 910

ECA mesage files, FRC 53A278, Belgrade: Telegram

The Deputy Administrator for Economic Cooperation (Bissell) to the ECA Mission in Yugoslavia ¹

secret

Washington, June 21, 1951—9 p. m.

Ecato 42.² Subject—Yugo EPU Accession. Dep/ECA greatly concerned problem financing US share econ aid to Yugo after close FY 1951 and pending enactment new fon aid legislation which not expected until fall. Some concern too that Congress may specify econ aid to non-ERP countries be confined to loans. Three alternative methods appear available:

1. Further allotment MDAP funds. Assuming interim Cong authorization beginning 1 July, allotment cld be made from such authorization. However, use MDAP funds for Yugo requires Cong Comite approval which may have polit repercussions and military character of fund FY 51 and strictly military end-item character planned FY 52 may make use for urgent econ needs most difficult.

2. Use ERP funds. ECA has available funds gen EPU use to cover most urgent Yugo needs. If Yugo joined EPU we contemplate initial credit positions or special assistance financed by US, UK, Fr, and others, and possibly direct aid from US. Disbursements via EPU wld be released quarterly instead of in lump and wld permit control by us or through EPU special Sub-comite managing board. Such use of ECA funds under existing leg whether for EPU deficit or U.S. purchases wld require that Yugo become Participating Country. ECA advises that Yugo membership EPU wld establish Yugo status as Participating Country. Before allocating funds on this basis, however, Dept and ECA wld wish advise with appropriate members of Congress re this procedure.

Uncertain here whether (a) Yugo willing become EPU member, (b) other EPU members wld act favorably on Yugo application, (c) membership eld be effectuated in time actually to provide alternative aid channel and (d) relationship to tripartite London agrmt.³

3. Specific authorization gen econ aid to Yugo on interim basis. In view polit delicacy, both on merits and in relation to entire aid program, this shld, if at all, be last resort.

Without as yet bringing problem to attention either FPRY or EPU members, request your comments following immediately.

Belgrade pls indicate whether in your judgment FPRY now ready join EPU, if US willing to use good offices to facilitate membership.⁴

OSR pls give your judgment whether OEEC members might accept Yugo membership in EPU readily if needed to continue aid to Yugo pending new fon aid bill passage. If not, how long do you estimate process wld take? Wld Yugo accession seriously jeopardize longer range objectives which EPU designed to serve?⁵

Emb London pls indicate effect, if any, of a US proposal to implement London agrmt through Yugo accession EPU, particularly attitudes of other tripartite conferences to such procedure.⁶

Bissell

1. Drafted by G. L. Green and cleared with Porter, Hopkinson, Van Dyke, Ebb, Cox, and McCullough. Sent also to Paris and London.
2. In order to expedite distribution and action on communications relating to ECA activities in Yugoslavia, a separate Ecato–Toeca cable series was established between Washington and Belgrade on May 15; communications between Belgrade and Paris on ECA matters were to be sent on the Repto–Torep telegram series. Both series of telegrams are in ECA message files, FRC Acc. No. 53A278, Belgrade.
3. This is a reference to the Final Report of the Tripartite Official Conversations Concerning Economic Aid to Yugoslavia, Document 906.
4. In telegram 1977 from Belgrade, June 26, Ambassador Allen reported that Yugoslavia would apply for membership in the EPU if the United States assured them of willingness to help facilitate their request. (840.10/6–2551)
5. In the opinion of the OSR in Paris, whose views were transmitted to the Department of State in telegram Toeca 23 from Belgrade, July 2, by Richard Allen, Yugoslav membership in the EPU would require a very complicated procedure and therefore should not be rushed through. The estimated time required to work out the problems involved was at least 6 months. (ECA message files, FRC 53A278, Belgrade)
6. The Embassy in London reported in telegram 6901, June 28, that the British and French voiced “considerable opposition” to special membership for Yugoslavia in the EPU. (868.00/6–2851)