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

Current Economic Developments, Lot 70 D 467

Current Economic Developments

[Extract] secret
No. 219

[Washington,] September 12, 1949.

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Financial Aid To Be Given Yugoslavia by the US and UK

The first important measure of financial assistance from the west in Yugoslavia’s present economic crisis was effected on September 8 with the extension by the Eximbank of a $20 million credit to Yugoslavia. Of this total, the Bank authorized the immediate establishment of a $12 million credit, repayable over 10 years, for US materials and equipment for the rehabilitation of Yugoslavia’s non-ferrous mining industry; the remaining $8 million of credits will be established from time to time as items of materials, equipment and services to be financed under such credits are agreed upon by the Bank of Yugoslavia.¹

Meanwhile, discussions have been proceeding on a UK credit to Yugoslavia in connection with the negotiations for a UK-Yugoslav trade agreement and nationalization claims settlement. The final UK credit offer appears to meet most of the Yugoslav requests, and it is anticipated that final agreement will be reached shortly. The UK will offer a credit of £8 million repayable in six years and additional short-term (90 days) credits up to a maximum of £5 million. The credits are to be conditional upon payments under the trade agreement being maintained generally in balance at the level contemplated in the trade negotiations.

Action by the US and UK followed the receipt of information concerning Yugoslavia’s urgent need for financial assistance to provide sufficient economic and political stability to enable the Tito regime to continue its fight against the Cominform. The Yugoslavs stressed that, if assisted during this extremely critical period of re-orienting their economy from east to west, they would be able to repay this assistance by the export of non-ferrous metals, timber and other products to the west.

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1. The National Advisory Council on August 25 approved consideration of the proposed $20 million credit to Yugoslavia by the Export-Import Bank. The Board of Directors of the Export-Import Bank at its meeting on August 31 approved the credit to Yugoslavia as described here. The Bank’s press release announcing the extension of the credit was delayed and revised at the request of Yugoslav Ambassador Kosanovic and was not issued until September 8. A considerable body of documentation regarding the negotiation of the Export-Import Bank credit to Yugoslavia is included in file 811.516 Export-Import Bank.