Foreign Relations of the United States, 1961–1963, Volume XVI, Eastern Europe; Cyprus; Greece; Turkey

113. Letter From the Assistant Secretary of State for European Affairs (Kohler) to the Ambassador to Yugoslavia (Kennan)⁰

Washington, December 4, 1961.

Dear George: We have been giving much thought to our exchange of correspondence—my letter of October 12 and yours of October 27¹—which go into the basis and rationale of our policy toward Yugoslavia and the assistance programs associated with that policy. There is a great deal in common in our views particularly where both of us come out as regards recommendations for various types of economic assist-ance. In this regard there is more agreement between you and EUR than between either of us and the Director of AID. Yet certain differences exist in each of our approaches. Some of these differences are due perhaps to semantic difficulties in finding the same meaning in a given description or in our failure to develop sufficiently certain concepts in my last letter. In this letter I shall try to reach more common ground by developed explanation and, hopefully, reduce those differences that appear at first sight to exist.

We took the position that our basic policy toward Yugoslavia is a good one, a successful policy over the years, and that it should not be abandoned or changed in a fundamental way. This did not mean that it must always remain identical in scope or details, in implementation, and in courses of action from year to year. Our EUR concept would permit adjustments as circumstances require—adjustments to take account of developments in Yugoslavia or to express our reaction, when necessary in our own interest, to moves of the Yugoslav Government. But this, as we see it, is not a change in our basic policy as presented in my October 12 letter and in our EUR policy review (copy of which I enclosed in my last letter). In fact since 1949 we have had our ups and downs in relations with the Yugoslavs and we have made those tactical adjustments as required. It is also true that our assistance activities have varied considerably from time to time to take account of new developments and we do not believe that the Yugoslavs have a basis for taking for granted the continuation of certain types and amounts of assistance. The continuation of our basic policy does not by any means require the continuation of economic programs without change. We believe, therefore, and I think there is agreement in the Department at least outside AID that the basic aspects of our policy (in premises and purposes) should continue.

As to Yugoslavia’s independent position we have never questioned that it is determined today to remain separate from the bloc and we see no prospect unless a great change occurs in the international situation of its going back to Moscow on the old terms of subordination. It is difficult to believe however that Yugoslavia will not need some assistance to take care of contingencies such as the present food stringency created by the severe crop conditions or to adjust its institutions to the requirements of a market economy as in the extensive credits by the West in support of Yugoslavia’s reform of its foreign trade and exchange rate systems. The consolidation of its independence and economic development in our view necessitates at this juncture still some support from the West.

The Department has never thought that Yugoslavia should become economically dependent on the US with the expectation of receiving the same forms and amounts of assistance indefinitely. We find it hard to believe that the Yugoslavs have this expectation or desire this although we gather from our experience here that they are not unhappy to receive aid from the US in the form of credits and PL 480 sales. In fact they seem anxious to get it when they need it and give evidence of appreciating such forms of assistance. They have undoubtedly not wanted certain kinds of assistance at various times—for example military grant aid in 1957 and technical assistance in the beginning. We feel sure too that they would like to be in the fortunate position, just as would any nonaligned state, where they would need no assistance at all from other countries. In our judgment their attitude toward receiving assistance from the Soviet bloc in 1956 was about the same. They show, whatever they may say in public speeches, that they know very well we extend assistance to their country for political purposes of our own national interest rather than for some reasons of internal necessity.

In any event our purpose is not to continue various assistance programs for an indefinite period but to move gradually as soon as circumstances permit toward a basically commercial relationship. We would do so in a manner to perpetuate worthwhile activities on a self-sustaining basis and to keep doors open to essential modes of access to the Yugoslavs.

You have yourself recommended against abrupt termination of assistance and with this we agree. The sudden withdrawal or drastic reduction of aid by the US would not be limited to the effects of our government action. Other Western countries would probably be guided to a great extent by our example and the actions of governments would influence private bankers and traders. The total result might well do considerable damage to the Yugoslav economic position. If the West generally was to take a negative attitude toward Yugoslavia, the repercussions might drive Yugoslavia back toward some kind of close connection with the bloc particularly if the policies of the bloc should become less conservative with Soviet acceptance of increasing national autonomy in the bloc and if the bloc held out the promise of economic aid. The bloc did the latter in 1956 and so this does not appear to be a farfetched possibility. In these circumstances Yugoslavia might conceivably become a member of a kind of a Communist Commonwealth. It is any chance of such an eventuality involving Yugoslavia’s virtual return to the bloc which we seek to avoid.

In regard to the present direction of Yugoslavia’s institutional developments, we believe the evolution of the internal system and Yugoslavia’s network of relations with the West, which are becoming institutionalized, are moving Yugoslavia constantly toward a closer and broader association with the West. These developments serve to consolidate Yugoslavia’s independent status and make it irreversible. We think we should assist these tendencies and certainly not take actions that might check, impede or decelerate them for an indefinite period.

As we have considered this problem over and over, we end by finding no alternative basic policy that will bring such advantages to the US from the standpoint of our long range interests. We still think this to be the case taking into account the present international situation, the stage of Yugoslavia’s development and the policies of the Tito government. Concerning the last, we find no fundamental change in the recent attitude of the Yugoslav Government on international issues. Tito’s speech at the Belgrade Conference struck us as setting forth essentially his traditional line except for two important points: (1) his condoning of Soviet resumption of nuclear testing and (2) the assertion that some powers were making a fetish of controls as a pretext for avoiding disarmament. On these points the speech was particularly objectionable to the US and chiefly for this reason the Department suggested that you make vigorous representations at Belgrade. In our view the US in addition should have shown displeasure by some delay and some reduction in extending assistance. This was one of the principal reasons for our pressing for a reduction in developmental lending from $25–30 million as contained in the Congressional presentation to $15–20 million as submitted in the EUR recommendation to the Secretary. We would also have deferred the PL 480 discussions long enough, although probably not so long as has actually been the case, to support and reenforce the representations you made.

We fully appreciate your view as set forth in your despatch of July 20² that there should have been adjustments in economic assistance to Yugoslavia in any event. We go along with the view that assistance should be adjusted from year to year as the circumstances indicate. Our difference with you on this is on the amount and types of assistance when reductions are made.

We come now to a point where EUR sees things differently from your view. You say “There can be no question but that Yugoslav policy, like that of Moscow, is aimed generally at the frustration of US efforts in the cold war and the elimination of our country as a major factor in world affairs.” and again: “… and we may demand from them the evidence that they feel some concern for the preservation of our power and influence as a factor in world affairs.”³ If Yugoslav policy were like that of Moscow in seeking the elimination of the power and influence of the US as a factor in world affairs we would find no reason to extend any assistance whatsoever to Yugoslavia any more than to the Soviet Union itself or to a complete satellite like Bulgaria. It seems to us that an appraisal of Yugoslav policy in this way leads to the inescapable conclusion that the US should treat Yugoslavia only as a full satellite member of the bloc and follow the same general policy toward Yugoslavia as toward the Soviet Union.

In our dealings with Yugoslavs here we have not found this to be their attitude nor can we read Tito’s speeches to imply the desire to eliminate the US as a power factor. This would not be in the interest of the Yugoslavs since it would leave the Soviet Union the supreme power in the world and in a position then to proceed with its apparent long standing objective in dealing with the heretic regime at Belgrade. It is our impression that the Yugoslavs realize clearly that their position of independence in the world depends in the last analysis on the essential balance of power between the US and the Soviet Union. Tito and other high Yugoslav leaders doubtless desire to see socialism triumph as a system but we gain the impression that many of the lower echelons and younger Yugoslavs do not have the same interest in this development.

To be sure, on international issues the Yugoslav Government takes, and will doubtless continue to take, a position different from ours in most instances. In fact this attitude including Tito’s recent expressions of anti-Westernism is not in any sense new. This is partly because they are communist and partly because they are neutralist. The score can be counted in the UN and there they usually line up with India, Indonesia and the UAR. Sometimes in fact India causes us more trouble. We fully appreciate of course the unalterable Marxism of Tito and his desire to see socialism spread everywhere together with his conviction that it will.

Regarding the question of our influence on Yugoslavia’s development a powerful force is certainly at work in Yugoslavia’s evolving situation making for pragmatic departures from the Soviet model. At the same time we are convinced that our exchanges and contacts with the Yugoslavs, many of which have depended on our economic assistance, have had an important formative effect on the evolution of the Yugoslav system since 1949. The Yugoslavs, we agree, do not shape their institutions or plans in order to get our economic assistance. In receiving our assistance however they have made numerous visits to institutions, organizations and plants in the US and bought many of our products. They have developed continuing contacts with individuals, firms and institutions. They have had a chance to be exposed to this vast country and its great economic system. They have been influenced, whatever their interests or wishes. We have seen this time and again in talking with them here. This is especially true as regards the middle and lower echelons who will step into influential positions in the future—ones who desire to make changes and move ahead. Technical assistance, which is mostly an exchange program, has perhaps most of all provided a channel for this kind of influence to make itself felt.

Then too with the assistance from us and other Western countries the Yugoslavs can take steps to change their system in a Western sense which they could not otherwise do so soon or at all. In agriculture it seems clear to us that our assistance has actually relieved the lot of the peasantry (as well as of the population as a whole); otherwise in the effort to achieve large unit efficiency of operation the regime might well have applied pressure for collectivization by administrative means. We are frankly at a loss to understand to what you refer in saying that our PL 480 transactions allow Yugoslavia to indulge in ideological experiments in agriculture or to cease efforts to increase agricultural productivity. We had thought that the Yugoslavs had made considerable progress for a communist country in increasing agricultural production through the introduction of new seeds, the use of machines and fertilizers, and the utilization of peasant incentive. The Yugoslavs still have a way to go in achieving a rational price system and, of course, they still have not licked the problem of weather.

We are puzzled by the comment that one of the results of our extensive aid has been to relieve the Yugoslavs of the necessity for coming to grips with the problem of their economic relations with Western Europe. We had rather understood that they had built up extensive and healthy economic relations with Western Europe, a development which the US has welcomed and encouraged over the years as a means of associating them more closely with the West. We had believed that our assistance had contributed to this favorable growth. The trade between Yugoslavia on the one side and Western Germany and Italy on the other, for example, has expanded greatly and we hope it will continue to flourish. We realize that the Yugoslavs have constant balance of payment problems, yet these seem due to their extensive investment, procurement of capital equipment abroad and rapid economic growth rather than to essential weakness of the national economy. They naturally push for the sake of these interests their balance of payments margins to the limit and they could reduce the scope of their problem if they were to limit the rate of their capital expansion.

The Yugoslav activities in the underdeveloped countries are also a matter of interest and concern to us. While granting there is a political purpose in these activities, we do not overlook the economic motive as well. The rapidly growing Yugoslav industrial output demands markets and they are not in a position to compete so well in Western markets as Western industries since they have broken away only in part from the noncompetitive features of the typical communist system. Their capital and technical products however are desired in the markets of the underdeveloped countries but can be purchased in any quantity only on the basis of long term credit. Hence we would see in the extension of such credits for the sale of capital goods to underdeveloped countries partly a desire of the Yugoslavs to find markets for their products. Although we would certainly not wish to promote Yugoslavia’s role in this area, if any communist country has to trade with these underdeveloped countries it seems better for Yugoslavia to do it than for one of the bloc countries. We have seen in a number of instances Yugoslav competition with bloc countries in Africa and the Middle East. Moreover, there is good evidence that one of the things the Yugoslavs do in the underdeveloped countries is to point out the danger of becoming economically dependent upon the Soviets and the Chinese Communists.

As I come to the end of an already long letter I feel that if one or two of the principal points made in your letter are valid, no justification exists for extending any further assistance to Yugoslavia and for the continuance of our basic policy toward Yugoslavia. We cannot feel that this should be our conclusion. We think we have gained important benefits from that basic policy and continue to do so. We do not get all we would like out of Yugoslavia’s situation. It is a communist state but not like the bloc states; it has evolved a long way from being the model satellite it was in 1948. The doctrinal cleavage between even Tito and Moscow over separate roads to socialism and a system involving more humanistic, individualistic and pragmatic concepts is deep. And Tito is not Yugoslavia. There are different Yugoslavias; they are changing and I am sure will continue to change. We should do what seems basic to our long range interests to assist this evolution in a Western direction and to win the younger generation in support of this evolution. That perhaps is the essence of our views on our policy toward Yugoslavia.

Sincerely,

Foy D. Kohler⁴

0. Source: Kennedy Library, National Security Files, Yugoslavia. Secret; Official–Informal. A copy was sent to Bundy.
1. Document 102 and the attachment to 106.
2. Reference is to despatch 41; see footnote 2, Document 97.
3. Ellipsis in the source text.
4. Printed from a copy that bears this typed signature.