1946	1947	1948	1949	1950
Wheat	2,136	1,905	2,400	2,586	2,500
Rye	241	203	203	229	229
Corn	2,693	5,080	4,696	4,824	5,000
Barley	429	381	404	412	400
Oats	312	305	327	335	330
Total	5,811	7,874	8,030	8,366	8,459

Pig Iron	82.8	163.0	172.0	185.0	200.0
Raw Steel	202.0	150.0	200-235.0	235-250.0	250-275.0
Rolled Product	148.0	145.0	175.0	178.0	180.0
Lead	10.7	40.0	57.0	70.0	65.0
Zinc	4.6	5.0	8.0	10.0	20.0
Aluminum	2.4	3.0	2.4	2.8	2.0
Crude Oil	21.3	38.6	36.3	63.0	100.0
Electric Power (billion KWH)	1.4	1.6	2.0	2.2	2.7

	Imports(per cent)		Exports(per cent)
	1947	1948	1947	1948
U.S.S.R.	22.2	10.8	16.8	15.0
Czechoslovakia	17.6	17.1	18.8	15.9
Hungary	5.0	4.4	8.3	9.0
Poland	3.2	7.4	3.4	7.8
Bulgaria	3.2	1.7	1.8	1.0
Romania	0.6	1.7	0.9	0.6
Albania	0.2	-	-	-
E. Germany	4.1	2.6	2.7	1.4
Total	56.1	45.7	52.7	50.7

 

*Source: A.Z. (1956) The Soviet-Yugoslav Economic Relations 1945-1955. The

World Today. Royal Institute of International Affairs. 12(1): 36-38; Central Intelligence Agency. (1977) Economic Situation in Yugoslavia. CIA Historical Review Program Release in Full. 22.

 

After the Soviet Blockade: United States Relaxing Export and Import Control

 

  The UNRRA aid ended in June 1947 because of mutual distrust—Americans feared Yugoslav would use this aid to support the popular Greek Communist Revolution, while Yugoslavs feared economic aid would become a tool for American to demand Yugoslav political concession in other issues. Without the generous support of UNRRA, Yugoslav government requested American to release Yugoslavs prewar gold reserves held in New York. Yugoslavs prewar loyal family transferred gold valued more than $100 million to the Federal Reserve in April 1941 (Jovanov 2009, 54-56). American rejected the Yugoslavs request and “demanded compensation for the American assets located in Yugoslavia and nationalized by Yugoslav government. In later 1948 Yugoslavs repeated their demand for the release of the gold held in the Federal Reserve(Ibid.). Finally in the end of 1948 American decided to unblock the gold reserve after the settlement with American firms(Ibid.).

The economic blockade by Comecon, combined with Yugoslav doubled military budget and rising foreign debt, pushed Yugoslav leaders turn to Americans for help. “If the U.S. and the West wanted to use Yugoslavia as a wedge to disrupt the communist movement, they would have to keep Tito’s economy afloat”(Heuser 1989, 81). “…The West simply had no choice. Yugoslavia was going to be ruled either by Tito or by a Stalinist puppet. The Kremlin would have its way in Yugoslavia if the United States failed to come to Tito’s aid.”(Swissler 1993, 86-98).

Yugoslav Export and Import to United States increased dramatically in 1948. At the beginning of 1949, Yugoslavia export licenses were approved for a total of $6,833,000. The United States also approved 10 oil well drilling rigs to be exported to Yugoslavia. In September 1949, Yugoslavia renewed its export license to purchase an American mill for steel production. Not only the license was approval at the end of August 1949, but also Yugoslavs received $3.2 million for this project (Jovanov 2009, 64-68). In 1947, the value of Yugoslav import to U.S. was $11.0 million. This figure dramatically rised to $31.0 million in 1948. In 1948, Yugoslav export to U.S. totaled $8.0 million, which increased to $17.0 million in 1948. (Lampe J. and Russell R. 1990, 30)

The amounts of American license approval and denial increased significantly after 1948, which signalized the growing relationship between Yugoslavia and United States. From National Security Council Progress Reportsin May 27 and November 9 (NSC 18/2 Progress Reports) in 1949 we can clearly see Yugoslavs growing frequent economic contact with United States. During February and April 1949, licenses approved amounted to $14,569,206. This amount in two months is about 20 percent, or some 2.5 million dollars, higher than the total applications approved during all of 1948 (National Security Council May 27 1949). The licenses denied during February and April 1949 is valued $8,122,615, of which about 85 percent, or $6,746,447, was accounted for by the denial of applications for 10 of the total of 20 oil well drilling rigs (Ibid.). In Autumn of 1949, the values of export licenses grew from $876,692 in August to $8722,410 in September (Ibid.).

It is worth mentioning that total valued $80,595 of the 1-A items were approved to be exported in August and $480,549 of the 1-A items approved in September (Ibid.). The approval of 1-A items to Yugoslavia shows the Americans effort to secure Tito’s regime against the potential Soviet invasion. 1-A items were restricted to be exported because “Class 1-A consisted of munitions, equipments and materials primarily used in the production of munitions that would contribute to the military potential of the Soviet bloc”(U.S. Department of State 1948). American officials thought American willingness to consider to export 1-A items to Yugoslavia “would clearly signal Tito that the United States wished to contribute to his survival”. In August, the 1-A item’s licenses approved covered one tinplate order valued at $137,233, another hot dipped coke tinplate item worth $110,000, and jeep replacement spare parts of $110,000 value. In the next month, the license for tracklaying tractors worth $295,236 was approved along with the drilling equipment (National Security Council Nov.9 1949). Although Americans approval of 1-A exports to Yugoslavs were in exchange for the Yugoslavs closing border for Greek communist guerrillas, the growing economic contact presented a “striking opportunity” for United States to develop sound trade with Yugoslavia” (Swissler 1993, 75-76).

 

Sustaining “Tito Effect” in the Soviet Bloc: United States Extension of Credits and Loans to Yugoslavia

 

Yugoslavs economy suffered great losses from the comeinform economic blockade whih started in the beginning of 1949. Learning from the catastrophic effect of over economic dependence to the Soviet bloc, Yugoslavs leader became increasingly aware of the need to have more frequent economic interaction with the West, especially the United States. The Yugoslav trade deficit had increased to $20 million in the year 1948 and to $50 million in May 31, 1949. Although American achieved agreement with Yugoslavs about the royal family’s prewar gold reserve in the Federal Reserve, $20 million of the total $30 million reserve had already been used for Yugoslav current imports.

In May 1949, Yugoslavs demand for export credits of $25 million to purchase material resources from the American Export-Import Bank was approved. In August, another Yugoslavs request for a $20 million loans was approved (Lampe and Russell eds. 1990, 32). In December, new American ambassador to Yugoslavia V. Allen met with Tito and Yugoslav foreign minister Kardelj. Both of them expressed their willingness to further develop Yugoslav economic relation with United States. Now both sides had consensus, but the problem for American is, how much Yugoslavs needed? As a staff in Yugoslav embassy Abramovic described, Yugoslavia needed emergent aid from United States because of the trade deficit as previous mentioned and the balance of payment crisis which “if not addressed without delay, would halt all Yugoslav imports” (Ceh 1998, 98-107). For Abramovic, a credit of $25-30 million was in grave need for Yugoslavs to purchases essential current imports and equipments. Failure to achieve the goal would result in serious unemployment and harsh economic situation which would greatly affect the stability of Tito’s regime (Ibid.). The Yugoslavs ambassador to United States Kosanovic also expressed that “Yugoslavia pending application before the World Bank for a general loan of $500 million, of which $200 million would be used for specific projects in the field of agriculture, mining, and industry” (Ibid.).

Even if American agree to aid more, how Western economic aid could help Yugoslav economy? Yugoslavs “Self-Management” socialist economy has its very distinctive characters that are different from both the Soviet style economy and the Western style economy. First, different from the Soviet Command Economy, Yugoslavs self-management economy has no absolute authority that could determine the economic development. Second, in joint ventures aspect, “Yugoslav enterprises and foreign enterprises would be defined by special agreements based on sharing profit and not on property ownership (Sarkovic 1986, 65-68). Thus the foreign investors could not gain their own property in Yugoslavia. Also, Yugoslav decentralized bureaucratic economy undermines Americans willingness to invest because of the political uncertainty and risk. And the lack of real information about the Yugoslavs economy obstruct those international financial organization’s evaluation, hence major financial organizations would not easily approve credits or loans to Yugoslavia. Yugoslav foreign minister Kardelj claimed that if the West fails to provide economic aid and Yugoslav economic situation continues to decline, it will create a fertile soil for pro-Cominform agents in Yugoslavia to overthrow the Tito’s regime (Swissler 1993, 99-100). He also claimed that Yugoslavs need to obtain a $6 million loan from the International Monetary Fund, $20 to $25 million from the International Bank and $5 million from the Export-Import Bank immediately (U.S. Department of State 1950).

United States and the West actively offered generous economic aid to Yugoslavia to “keep Tito afloat”. Immediately after the expulsion from Cominform, Yugoslavs received $17 million from United States. In August, Yugoslavia request for additional aid was approved and it received a $20 million additional loan (Lampe and Russell eds. 1990, 30). By October 1949, the International Monetary Fund offered a loan of $3 million to Yugoslavia. In December 1949, West Germany signed a trade agreement worth of $60 million with Yugoslavia under U.S. auspices. Britain also signed a five-year $616 million trade agreement with Yugoslavia. United States used its role in various international and domestic financial institutions to provide economic aid to Yugoslavia. In 1949, Yugoslavia received tremendous financial support from International Monetary Fund(IMF), American Export-Import Bank, and other western countries’ banks. Under the principle of “keeping Tito afloat”, American Export-Import Bank offered $20 million credits and loans to Yugoslavia in the single year of 1949.(see Table 2.1). On March 1 1950, the American Export-Import Bank granted another $20 million credits for Yugoslavs to purchase goaods and capital equipments.

 

      

Table 2.1: Credits and Loans Yugoslavia received from West in 1949*

 

 

*Source: F. Singleton. 1976. Twentieth-Century Yugoslavia. Columbia University Press.

 

Mutual Trade between United States and Yugoslavia grew significantly during 1947 and 1952 to compensate Yugoslav losses from the Cominform blockade. The value of Yugoslav exports grew from $3.5 million to $36.0 million in 1952, while value of imports grew from $7.0 million to $146.6 million in the peak year of 1951.

 

 

*Source: Savezni Zavod za Statistiku. 1982. Razvoj Jugoslavije. 1947-1981. Beograd 124;Lampe J. and Russell R. (1990). Yugoslav-American Economic Relations since the World War II. Durham and London. Duke University Press. 41.

 

From Table 2.2 We can clearly see that U.S. shares of Yugoslavs export continue to grow steadily and reach the peak level—14.7% in 1952. In the meantime U.S. shares of Yugoslavs import increased dramatically during 1947 and 1949, and it reached the peak level—19.3% in 1951.

In 1951 Yugoslavia received a loan of $200 million from the International Bank for Reconstruction and Development (IBRD). Later the approval of “the U.S. Mutual Security Act of 1951 made the congressional funding possible, and soon President Truman used his executive authority to support these grants (Ibid., 40-41). “The International Monetary Fund exchange stabilization loan and the Export-Import Bank loan aided the process of realignment of Yugoslav trade with the West, but Yugoslavia also needed massive amounts of assistance from a number of countries to offset the losses from the Soviet Union and Eastern European satellites” (Swissler 1993, 183). United States actively mobilized other financial partners in the West to aid Yugoslavia. From Table 2.3 we can clearly see many Western countries such as previously mentioned Britain and France, and those who just recovered from the catastrophic effect of the Second World War, participated in the Americans program of “keeping Tito afloat”. For Yugoslav leaders, growing frequent contacts and warming economic relation with the West, especially with the United States, not only compensate their previous economic losses from the Cominform blockade, but also decrease the potential risk of a Soviet military invasion or political subversion. By providing economic aid to foster the stability of the Tito’s regime, Americans were actually implementing the wedge tactic toward the Soviet bloc. “the Central Intelligence Agency(CIA) suggested that his[Tito] survival under Stalin’s pressure could make it harder for the Kremlin to discipline other similar factions within the bloc (Lees 1997. 52-53). “American policy toward Yugoslavia rested on a cold-blooded calculation of self-interest on both sides (Campell 1967, 28). U.S. economic aid was “small price to pay for what was the one strikingly successful policy the U.S. was able to conduct in Eastern Europe during the whole period since the war” (Ibid.). By fostering Tito’s heretical process of drifting away from Soviet control, Americans could pursue a policy of fostering division within the Soviet bloc (Jovanov 2009, 101).

 

Table 2.3: Foreign Credits and Loans Yugoslavia received during 1949 and 1952* ( million of US dollars)

 

 

Food Aid to “Deflector” from Soviet Bloc: The Yugoslav Drought of 1950 and American Emergency Relief Assistance

 

The catastrophic effects of the severe drought in Yugoslavia posed real threat to the very existence of Tito’s regime. The total loss caused to Yugoslav agriculture by the drought amounts about 21 billion dinnars. Productions of major food for citizens’ consumption dramatically decreased: the reduced rates of productions of wheat, corn, potatos, and fodder are 26%, 35%, 30%, and 20-35% (National Security Council 1950).

The Drought of 1951 led to the severe decline in Yugoslavs living standard. In both rural and urban scale, extreme saving of food needed to be implemented in order to survive the Drought. In the National Security Progress Report on October 16, 1950, American provided some advices for Yugoslavs to satisfy the country’s minimum requirements such as slaughtering and exporting certain amount of livestocks (National Security Council 1950). In order to maintain the minimum demand, American suggested Yugoslavs slaughter 2.25 million heads of cattles, 4.20 million heads of sheep, and 3 million heads of pigs. American also suggest Yugoslav could export 50,000 heads of cattles, 100,000 heads of sheep, and 10,000 heads of horses (National Security Council 1950).

The Drought greatly affected Yugoslavs import in 1951. Yugoslavs had to increase their budget to import much more agricultural goods in order to survive the Drought.

 

Table 3.1: Effect of Drought on Yugoslav Import*

 

 

*This list shows victuals which Yugoslavia has to import and which ordinarily are not imported articles.

 

**Real needs for the imported quantities of victuals are greater on account of the total losses causes by the drought, however, this list shows the most necessary minimum.; Source: National Security Council. 1950. National Security Council Progress Report on the Implementation of United States Policy toward the Conflict between the USSR and Yugoslavia (NSC 18/4) and Economic Relations between the United States and Yugoslavia (NSC 18/2). October 16.

 

The formal request to United States for assistance from Yugoslavia occurred on October 20, 1950 estimated the total need for food assistance at approximately $55 million. Later, this figure increased to $75 million. By October 3, Yugoslav losses had amounted to $105 million “that could only be overcome by extraordinary assistance from abroad” (U.S. Department of State 1950). United States launched the Stop-Gap Aid Framework, which totaled approximately $33,500,000 for food purchases and delivery involved the Economic Cooperation Administration, the Export-Import Bank and Mutual Defense Aid Funds. All three institutions and programs provided emergent funds for Yugoslavia to purchase food. “The Economic Cooperation Administration arrangements for the delivery of wheat flour in the amount of $11,500,000 to Yugoslavia. The Export-Import Bank made available to Yugoslavia credits of about $6 million for the purchase and transport of food (lard, beans, dried eggs, and canned meat). The Mutual Defense Assistance Program under the Mutual Defense Assistance Act provided Yugoslavia with certain foodstuffs including wheat flour, corn, barley, lard and sugar (Whilte House Central Files, 1950).

American plan to provide food aid to Yugoslavia could be divided into two stages. The first stage, U.S. officials could provide the first emergent food aid to Yugoslavia without Congressional approval. The first aid valued $30.8 million, provided Export-Import Bank, Mutual Defense Assistance fund, and Economic Cooperation Administration fund. The second aid needed Congressional approval. It included 125,000 tons of corn, 125,000 tons of feed grain, 50,000 tons of vegetables and 15,000 tons of seed (U.S. Department of State 1950, 1489-1499).

In December 1950, the Emergency Relief Act was passed by Congress and Yugoslavia received $50 million in relief, with another $38 million under the Marshall Plan (Lampe J. and Russell R. 1990, 37). The Congress appoved the second stage of food aid to Yugoslavia containing 125,000 tons of corn, 125,000 tonso feed grain, 50,000 tons of vegetable and/or rice, and 15,000 tons of seed (U.S. Department of State 1950, 1489-1499). In the whole year of 1950, Yugoslavia received $6.1 million from American Export-Import Bank to purchase procured beans, eggs and canned eggs, $12.5 million from Mutual Defense Program to purchase 9,000 tons of lard, 32,000 tons of flour, 25,000 tons of sugar, and $12.2 million to purchase 110,000 tons of flours.

 

Conclusion

 

The goal of United States generous economic and food aids to Yugoslavia is to “keep Tito afloat,” which is equal to maintain existence of Tito’s regime, against the Soviet bloc. After the end of the Second World War, the fundamental strategic orientations of Soviet Union and Yugoslavia began to diverge. The Soviets expulsion of Yugoslavs out of Cominform signalized the total split between Tito and Stalin.

For American, although Yugoslavia is a communist country, its expulsion by Soviets demonstrate that Soviet bloc countries are not united together against the West. Using economic aid to further widen the gaps among bloc countries became a feasible choice for Americans.

Firstly, immediately after the Second World War, U.S. led Western world provided tremendous material support to Yugoslavia through the form of UNRRA. The aid from UNRRA helped Yugoslavs to rebuild and rehabilitate agriculture, industry, and economy. In June 1947, UNRRA aid to Yugoslavia came to an end due to mutual suspicions toward each others’ intentions.

After the Soviet-Yugoslav split, Soviet Union launched a total economic blockade together with other Cominform countries. Due to Yugoslav highly dependent economic relationship with Soviet bloc, the severe losses result from the Cominform blockade posed a real threat to the Tito’s regime. By keeping Tito afloat under the pressure from Soviet bloc, American actually was encouraging other bloc countries to rise up against Soviet hegemony. Americans continued to expand their economic relation with Yugoslavia in order to offset Yugoslavs losses from the Cominform blockade. United States actively mobilized domestic and international financial institutions such as Export-Import Bank, Federal Reserve, Economic Cooperation Administration, World Bank, and International Monetary Fund to extend credits and loans to Yugoslavia. U.S. share of export and import in Yugoslav economy quickly increased as a result of more and more frequent economic interactions.

In 1950, severe Drought hit Yugoslavia which causes dramatic declines in Yugoslav agricultural production and foreign trade. American quickly responded by providing Stop-Gap aid. The Congress passed the Emergency Relief Act of 1951 which allowed United States to provide emergent food assistance to Yugoslavia using funds from previous mutual framework such as Mutual Defense Act, Mutual Security Act, and previously mentioned financial institutions.

“Yugoslavia’s continued fight against Soviet threat was now acknowledged to be in the national interests of the United States.” By providing economic aids to Yugoslavia, their struggle to overcome the effects of the Cominform economic blockade had been successfully concluded by an orientation of Yugoslavia’s international economic relations westward. Finally U.S. Congress in 1951 announced Yugoslavia no longer stood alone in its resistance to Cominform aggressive pressure (U.S. Congress 1951, 12).

 

 

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