Foreign Relations of the United States, 1949, Eastern Europe; The Soviet Union, Volume V

680H.6331/6–2949: Telegram

The Secretary of State to the Legation in Austria ¹

secret
priority

Washington, July 11, 1949—1 p. m.

702. Reur 777 June 29.² You shld discourage Aust participation in any trade which wld facilitate satellite procurement of 1 A goods, including not only direct procurement but any devious means by which such trade cld be carried on through third parties from whatever source.

In general if materials desired by Yugo are to fill existing orders and goods are essential to Yugo economy there is no objection to their procurement from satellites. US would like to be kept informed re individual transactions in order to state objections it might have as the exchange develops. As to goods being shipped in return however we definitely oppose shipment of any 1 A goods to satellites. If goods shipped to satellites fall in category 1 B we wld not discourage the exchange, unless there is evidence of excessive shipments sufficient to indicate probability of stockpiling or other non-civilian use.

In general Dept favors other means of helping Yugo which wld discourage trade with satellites and at same time lessen Yugo dependence on imports from satellites. The direct exchange of goods between Aust and Yugo shld definitely be encouraged. Steps which have been taken and are being taken to develop trade between Yugo and the west and the means by which such trade may in some instances be financed are described in recent communications from Dept and in instrs from ECA in Wash and OSR in Paris.

Acheson

1. This telegram was also sent to Belgrade as 355.
2. Not printed; it reported that Yugoslav officials in Austria had approached an Austrian bank with a proposal to circumvent the East European satellite boycott of Yugoslavia by indirect procurement from the satellites through Austrian intermediaries. The Legation in Vienna asked for guidance on whether satellite procurement of strategic or essential Yugoslav products should be facilitated (660H.6331/6–2949). In telegram 650, July 9, from Belgrade, not printed, Ambassador Gannon commented that the effects of the USSR-satellite economic blockade of Yugoslavia were difficult to assess but were probably severe. Cannon did not believe that substantial circumvention of the blockade was possible, but he recommended that the United States for the time being do nothing either to facilitate or to obstruct such deals as Yugoslavia might arrange through intermediaries (660H.6331/7–949).