860H.00/9–1548: Telegram
The Chargé in Yugoslavia (Reams) to the Secretary of State
1250. Two and half months since Cominform resolution on CP Yugoslavia have provided evidence for conclusion Tito is firmly in control situation and for prediction he will retain control over next six months at least even though Soviets themselves take lead against him. This stability and reasonable probability its continuation now seems to require more active US policy toward Yugoslavia.
[Page 1107]Tito’s present control is illustrated by tranquillity and completeness of public order in country and by absence any domestic threat to Yugoslav internal power system. Facts that after more than two months of full Cominform blast only apparent defections are two ambassadors, three generals, and five officials in Republic Cabinets plus unknown but negligible number lesser personalities and that no official here with claim to political stature or following has failed to establish public allegiance to Tito form highly impressive record of solidarity.
Nor does horizon of next six months barring outbreak major war disclose probability any decisive threat to Tito. We discount Soviet military action against Tito this year on following grounds: (1) its effect on opinion throughout world, in eastern Europe, and in Yugoslavia itself would be tremendous blow to Soviet Union’s present political programs, (2) its material cost might easily be excessive, for although major Yugoslav cities could be taken quickly Red Army would be faced with severe occupation problem and we doubt its willingness to risk German experience here.
Similarly no economic measures seem likely to produce early political results although stability and future direction Tito regime will be effected by (1) economic sanctions by USSR and satellites and (2) Yugoslav internal economic difficulties. Because it is easy miscalculate their nature and effect both require analysis. CP letters (Embtel 1177, August 311) reveal USSR was first adopt sanctions in March with refusal discuss trade followed by withdrawal experts. After Cominform resolution Albania cut economic ties and oil supplies and Rumania and Hungary also ended oil shipments (Bucharest 795, July 20 and Budapest 1177, July 222). Oil chosen as most vulnerable point supply and overt sanctions temporarily halted there. Yugoslavia reacted by seeking oil elsewhere with partial success (Trieste 504, August 133).
Other USSR and satellite action more obscure. Hungary contemplating slow down Yugoslav orders (Budapest 1385, September 13) and Czechoslovakia withdrew tourists (our 1143, August 243) while forcing Yugoslavia uphold unwelcome trade deals before assuring coke and machinery (Prague 1202, July 233). Meanwhile Poland denies taking sanctions (Warsaw 1087, August 14) and USSR reportedly signed new limited agreements with Yugoslavia (Embtel 1029, August 23).
Yugoslav’s worst internal economic difficulties now are: 1) food shortage, 2) inflation, and 3) deterioration of plant and equipment. [Page 1108] Importance first two may be more deceptive than real and we doubt eastern bloc ability to influence them decisively. Food shortage despite generally good harvest and increased bread ration (Embtel 1134, August 224) has thoroughly alarmed populace. Yet correction deliberate state policies could quickly improve supply. These policies are heavy state purchases during harvest, maximum exports, elimination private trade and stockpiling all causing maldistribution. Government seizure hogs (Embtel 1221, September 84) is pertinent example: if hogs diverted internal supply instead export, present critical shortage meat and fats would ease. Inflation mainly result capital construction program financed by hidden credits, another deliberate state policy. Effects are cumulative and dangerous but we think breaking point still remote.
It is questionable if either situation really undermines political stability. Economic policies pursued by Tito would long since have overthrown almost any western democratic regime. Process can grow much worse without provoking more effective resistance than to date.
Plant deterioration is entirely different question. Tractor, truck and machinery parts urgently needed sustain civilian agriculture and transport, mining and timber output. This weakness exploitable by eastern bloc policy covert sanctions depending extent which US and western Europe keep supply sources close.
On balance, while open sanctions are somewhat more likely now that dispute has attained government level, we believe Soviets realize opportunities they would thereby create for west. It seems unlikely they wish to demonstrate to satellites that Yugoslav living standards and industrialization might improve with better western trade relations or that they fail to appreciate value Yugoslav exports to eastern bloc particularly since under Yugoslavia’s long term trade agreements heavy deliveries not scheduled from USSR, Poland, Czechoslovakia or Hungary until 1950–51. Where covert sanctions or delivery slow downs can be effected or where exports can be stopped without loss Yugoslav strategic materials we have no doubt Soviets will do so. Such actions cannot compel basic changes here, at least for six months horizon.
Politically, we feel situation is stable at least for same period. None of immediate possibilities seems promising for Cominform. Tito’s abdication for good of party is only barely conceivable; it would necessarily have to involve Rankovic, Kardelj and Djilas and a large segment of party. At moment there is absolutely no indication such a move is being considered by anyone. CPY action against Tito seems equally improbable in view firm control over party machinery exercised by [Page 1109] the four although it is very possible that as months pass pro-Stalinist deviations within CPY will increase. It is this long term weakening of party rank that may represent in the end major threat Tito’s leadership. General internal revolt seems even less likely. There are no leaders with country-wide appeal and both security police and army seem firmly held by Tito. Assassination of Tito has perhaps greatest political potentialities for Cominform, but in first place one of most rigorous security systems in world would have to be penetrated and, it seems entirely probable Rankovic or someone else could take his place and hold situation together, although disorder and possibly civil strife could be expected.
With publication Tseka editorial in Pravda Yugoslav situation entered new phase. Yugoslavs seem to have compelled direct participation of Russians as they proved themselves more than able to cope with satellites efforts to handle situation. At same time contagiousness of Yugoslav experiment in independence seems to be growing, witness Gomulka episode in Poland, protest of Bulgarians Macedonians against BWP policy, reported Czech protest to Kremlin on Zhdanov’s strategy, and signs of schisms in principal western CP’s. Questions thus arise how long Soviets can afford loss prestige its ineffectual participation will involve and can risk further spread Tito heresies. We think they have no present alternative and that any attempts they make to produce early change here will be rash and either unsuccessful or exorbitantly expensive.
If foregoing analysis be accepted it would appear US should now discard watchful waiting which has been policy basis toward Yugoslavia and take some affirmative action. It is still too early to expect or seek political terms. Political quid fro quo will be adequately served for present by continued existence split in international Communism. Possibilities do exist in informational and economic fields.
Our information policy through VOUSA should continue to seek maintain schism in every way possible, but in other fields we should attempt create impression of seriousness Tito’s ideological challenge to Stalin, of competitiveness rival interpretations of Marx and Lenin, and of potential claim to leadership of Communism’s international strategy that Tito has staked out. Publication and wide distribution Soviet-Yugoslav CP’s correspondence under official, subsidized, or private auspices might well be most desirable first step. If Soviets can be stimulated to precipitate action here, their cause can only be less successful than if they bide their time patiently.
More importantly in economic field although we should avoid governmental approach for present as politically embarrassing to Yugoslavia and quite probably to US there is action that can be taken now. We recommend early quiet progressive relaxation US controls re [Page 1110] Yugoslavia and favorable inter-Departmental consideration pending and future Yugoslav license applications non-military nature. Simultaneously we should encourage west Europe nations to redirect policies toward Yugoslavia within spirit broader trade objectives ERP, and consideration should be given to reviving abortive 1947 Bizonia–Yugoslav trade agreement.
We disagree conclusions Department Circair September 3, 10:50 a. m. re Yugoslav desire oil equipment (Embtel 1245, September 14) and urge dismissal any thought political concessions could be wrung out at this time. Recommended changes economic policy should be accomplished quietly and gradually. Their justification rests on their effective assistance to private US firms buy more Yugoslav critical and strategic materials, on their contribution both material and psychological to Yugoslav’s ability resist eastern pressure, and on their example to other satellites whose desire for greater independence may be equalled by concern for their own economic conditions.
Sent Department 1250; Department pass Moscow 229 and Defense; repeated London 168, Paris 165, Rome 170, pouched Trieste, Budapest, Bucharest, Sofia, Prague, Warsaw.