DEPARTMENT OF STATE Memorandum of Conversation
DATE: July 17, 1952
SUBJECT: Economic Aid to Yugoslavia
PARTICIPANTS: The Secretary Mr. Vladimir Popovic, Yugoslav Ambassador Mr. Mirko Bruner, First Secretary, Yugoslav Embassy Mr. John C. Campbell, EE
COPIES TO: S/S (2) American Embassy, Belgrade EUR - Messrs Perkins and Bonbright American Embassy, London E - Mr. Thorpe American Embassy , Paris EE - Mr. Barbour
During a call made at his request, the Yugoslav Ambassador referred to the aide-memoire on tripartite economic aid presented to his government on July 10. He said that his government was astonished to note the severe criticism of Yugoslavia's efforts in the past year in the economic field and the references to limitations on Yugoslav action in the future demanded by the three governments in connection with their proposed aid program. He stated that the first reaction of the Yugoslav Government was to reject the aide-memoire; however, they were still considering it and he did not know what the final position would be.
By the way of more detailed criticism of the document he made specific objection to references of Yugoslavia's investment policy, to the requirement that Yugoslavia should have the approval of the three governments before contracting any loans, and to the statement that future aid, if any, would be progressively reduced. He said that Yugoslavia had done everything possible to balance its payments and had undertaken many internal reforms to this end, and accordingly resented the allegation that it had been delinquent in this regard. He characterized the aide-memoire as self-contradictory and as also not consistent with the US-Yugoslav economic aid agreement of January 8, 1952 or with the relationship of confidence which had been created between the United States and Yugoslav Governments.
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The Ambassador asked whether I could do something about the aide-memoire, implying that it should be withdrawn. I said that Ambassador Allen had informed me of the Yugoslav Government's attitude along the lines of the Ambassador's remarks. I pointed out that since the aide-memoire had already been delivered, it was clearly not possible to do anything about withdrawing it. It was my understanding that it was still under consideration by the Yugoslav Government and we hoped they would reply to it, stating just what points they thought objectionable, so that these matters could be discussed in a frank and friendly manner. I said that I was not acquainted with the details of the aide-memoire but wished to point out that its main purpose was to stress the need for measures to bring about Yugoslavia's economic viability in the shortest possible time. I understood this to be the Yugoslav Government's own objective and added that, for our part, in providing grant aid we had an obligation to see that everything possible was done to ensure its effective use; obviously we did not envisage a great aid program as extending indefinitely year after year and considered that Yugoslavia, as well as the three Western powers, was interested in becoming independent of extraordinary foreign aid. The Ambassador said that he was aware of this and felt that the United States and Yugoslavia were working toward it on the basis of mutual confidence, which unfortunately was not reflected in the aide-memoire. He said he had felt it necessary to bring his government's view to my attention.
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