660H.119/6–949
Memorandum by the Assistant Secretary of State for Economic Affairs ( Thorp ) to the Under Secretary of State ( Webb )1
Subject: Issuance of Export License for Blooming Mill for Yugoslavia
Discussion:
The Department of Commerce has had under consideration an application, filed on March 18, 1949, for license to export to Yugoslavia a complete blooming-slabbing mill costing $3,223,000. This mill is rated in the highest security classification, i.e., 1A, for export control purposes. Although this mill would not increase the basic steel-making capacity of Yugoslavia, it is considered extremely important by the Yugoslavs because it would greatly expand intermediate processing capacity and, hence, would markedly strengthen Yugoslavia’s steel industry as a whole.
The Department has advocated approval of this license application as being definitely in our national interest as defined in NSC 18/22 [Page 899] (on relaxation of export controls to Yugoslavia). To the Yugoslavs, approval of the application would constitute concrete evidence, in the face of present Cominform sanctions, that there is a source to which they may turn for at least some kinds of desperately needed supplies and equipment. Failure to approve would weaken the support given by nationalistic elements to Tito. Approval will also show the other satellites, whose five-year industrialization plans are failing, due to the unavailability of industrial equipment from either the U.S.S.R. or the West, how they can hope to make them succeed. The NME has stated that from a strategic point of view they oppose approval of the export license on the ground that the contribution of this mill to the economic potential of Yugoslavia would be so important as to constitute a real military hazard.
After a full discussion of this case at a meeting of Secretary Sawyer’s interdepartmental Advisory Committee on Requirements on Friday, June 3, in which NME alone opposed the Department, Assistant Secretary Blaisdell indicated that he would recommend approval of the license. He stated, however, that Mr. Sawyer might wish to consult with interested Cabinet officers before taking final action. Commerce and NME representatives have been informed that failure to secure favorable action due to NME objections might require State to refer the case to the NSC staff as a difference in the interpretation of NSC 18/2. They have expressed no objection to such a course of action.
Recommendation:
- a. If the Secretary of Commerce consults with the Acting Secretary regarding this matter, that the Acting Secretary urge approval of the license on political grounds.
- b. If the Secretary of Commerce appears unwilling to approve, due to NME objections, that the Acting Secretary indicate his intention of presenting the case to the NSC staff as a basic difference in the interpretation of NSC 18/2, for resolution through the procedures established for this purpose.
Concurrences:
The proposed action is concurred in by ITP, SE, EUR, and E.
Attachments: