868.10/3–150: Telegram

The Secretary of State to the Embassy in Yugoslavia

restricted priority

142. Eximbank informed Yugoslav Amb noon today re credit. It was agreed provide press 4 p. m. today with release which fols for Thursday morning papers:

Eximbank today authorized an additional credit of $20 mil to Yugo.

Early Sept 1949 Bank approved credits of $20 mil. Of these, $15 mil were to enable Yugo purchase capital equipment and materials rehabilitate non-ferrous mines and related industries so as permit country, one of leading producers of bauxite, mercury, copper, lead, zinc other non-ferrous materials, to increase its exports to US and other hard currency markets. Remaining $5 mil was to acquire Amer industrial materials needed by other Yugo export industries and enterprises.

Last Dec and Jan Yugo Govt applied for further assistance from Eximbank. Present credit of $20 mil is result of Bank’s consideration and approval of Yugo applications. Purpose of credit is to enable Yugo to purchase large variety Amer goods, including capital equipment, spare parts, machinery and materials needed to maintain present level of Yugo economy.

The credit, which will be available until March 30, 1951, bears interest at 3½% per annum and will be amortized in 14 equal semiannual installments beginning Jan 1, 1954. A relatively extensive period of grace for repayment of principal has been provided to enable Yugo to meet heavy payments falling due in next three years.”1

Rptd Paris for OSR as 860.

Acheson
  1. In his telegram 269, March 2, from Belgrade, not printed, Ambassador Allen reported that he had informed Yugoslav Foreign Minister Kardelj of the credit Kardelj reacted with undisguised pleasure, relief, and appreciation. Allen, who felt that the genuineness of Kardelj’s reaction was beyond question, took the occasion to point out that no political conditions were attached to the credit.

    The purposes of the credit and the manner of its administration were set forth in some detail in a letter of April 20 from Export-Import Bank Chairman Gaston to Yugoslav Ambassador Kosanović (p. 1407), handed to the Ambassador on the occasion of the formal signing of a credit agreement with Yugoslavia. By August 1950, the Bank had approved a series of prospective purchases providing for full usage of the credit. By the end of 1950, however, just over $7 million of the credit had not yet been disbursed.