ECONOMIC AND POLITICAL SITUATION IN YUGOSLAVIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00810A007300150001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 4
• Document Creation Date: December 20, 2016
• Document Release Date: December 5, 2007
• Sequence Number: 1
• Publication Date: June 29, 1955
• Content Type: REPORT

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INFO MA10ON REPOQ
MFORMAINON REPO
CENTRAL INTELLIGENCE AGENCY
This material contains information affecting the National Defense of the United States within the meaning of the Espionage Laws, Title
18, U.S.C. Seca. 793 and 794, the transmission or revelation of which in any manner to an unauthorized person is prohibited by law.
S-E-C R-E-T
COUNTRY Yugoslavia
DATE OF INFO.
PLACE ACQUIRE
DATE ACQUIRED
of private foreign capital investments in Yugoslavia.
Economic and Political Situation DATE DISTR. 29 June 1955
in Yugoslavia
NO. OF PAGES
REQUIREMENT NO. RD
This is UNEVALUATED
Information
NCES
Wood and copper are plentiful in Yugoslavia; labor is the cheapest in
any European country equipped to build shipping; superior marine engineers
and well-qualified designers are available. But, radar equipment, engines 25X1
and engine parts are urgently needed from abroad; only foreign investment
can save Yugoslavia from losing these important orders.
need for Yugoslavia to enter serious negotiations
with Eastern countries which could supply strategic items to keep Yugo-
slavia's "peace-time economy afloat".
2. An even greater number of Bulgarian, Czech and Polish commercial missions
were observed in Yugoslavia during April and May 1955 than in February
and March 1955. In April, the chief of a Bulgarian delegation was offer-
0 percent of the Yugoslav allocation for a
foreign pharmaceutical purchases is now earmarked for East Germany,
Poland and Czechoslovakia. Havlicek (fnu), the chief of Astra in Zagreb,
affiliated with Interexport in Belgrade, ie negotiating an
agreement for extensive export to Yugoslavia of items ultimately destined 25X1
for the Satellites and Communist China. One of the main purposes behind
the designation of Vladimir Popovic, a protege of Tito, as Yugoslav
Ambassador to Red China is the desire to promote trade between the two 25X1
countries.
3. The Yugoslavs are greatly concerned over their balance of payments prob-
lem, realizing at last,, or at least openly, that short-range solutions
STATE W
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ARMY X NAVY X AIR X FBI AEC
(Note: Washington distribution indicated by "X"; Field distribution by "#".)
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are no longer the answer. They are counting on further Western economic
aid
hope that additional trade with the East would
open up extensive re-export opportunities, permitting Yugoslavia to
"switch" or barter or come up with hard currencies through manipulation
of trade. There is a growing tendency to overlook violations in stra-
tegic trade, and the feeling is general that strict enforcement of con-
trols on the part of the Yugoslavs would not mean greater concessions
from those who urge compliance.
4. Yugoslav agricultural leaders are counting on a good harvest year to solve
their most pressing problems. There is no intention to forego 'the eventual
socialization of the agricultural sector, but leaders recognize'that'only
compulsion can bring it about and compulsion of the peasants they cannot 25X1
afford at this critical time. In the meantime, they are charging peasants
and other sectors of the ,economy with waste and inefficiency and, are,
following up the charges with `fines, ;publicity,, and stronger .economic
controls. Maladministration of va#,ous sectors of the economic program
is one of the most serious'handicaps today and an intensive educational 25X1
program is under way to correct the most flagrant',abuses.'
5. A general complaint in 'Yugoslav cogmercial. circles is that "decentralize
tion is only a fake". Numerous commercial enterprises find themselves
under more stringent federal restrictions than at any time in the past
seven years. This is particularly true where foreign credits are involved
and in enterprises enga.ged'in.imports and exports with the. West..
6. Yugoslav are most 25X1
keenly interested in the tnternational,piture.and Yugosl.avia's.r.ole in
international affairs.' The"feeling is that'an indefinite period of peace
is'.at.:hand and that Yugoslavia will'take an increasing number of steps to
solidify its role as one of the great neutrals.,. Influential Yugoslavs,:,
have expressed the view that the West should accept,Soviet.overture8.for
peace at face'value. They'believe that the Soviet?move.to conclude the
treaty with Austria was a significant.change in Soviet polio, r and t11a~ ,. . 25X1
the decision to pay a state visit to Tito could not fail to,impress other
would-be independent" and neutralist powers with the good inte.ntiona.,of
the present Soviet-leadership.., Even the peasants are responding to..1ito,
as ',an individual, as his personal prestige, has reached its ?hi,ghea . have .
since he came to power.. Some Yugoslavs have" ,exesaed the, opinion,hat
Tito is closer now than ever before to achieving his, dream of a -Balkan'.
fully expected Tito to be given the green light duri,g,,the Soviet
Yugoslav talks (possibly in exchange for Yugoslav support of a Soviet
sponsored move for a united but neutral Germany). Federation in the
Balkans would vastly strengthen ,Tito
vie-a-via Greece and gy in the a n liance?. On the other; hand,.
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7.
8.
9.
10. The current demobilization program involving-some 75,000 officers axed non-
commissioned officers in the.Yugoslav Army is not so much a demobilization
as a purge of unreliable elements.. Vacancies are promptly filled by
vigorous, well-trained?,youth dedicated to Titoist Communism. At the same
time the Yugoslavs have an extensive civilian mobilization program with
regular classes for youths 'and adults in plane recognition, air-raid
warden training, use of rifles and emergency medical care,. While there
is greater confidence about peace in the future than in 1953, at the same
time the Yugoslavs maintain interis ve home-defense pro ams which counter-
act their professions of pease. -In this conne.cti
Government
the Yugoslav Government is asical cally oppose
obligation
to West German rearmamen ;because it imposes
to take a public stand on an issue where "the government is divided"..? The
Yugoslav Army's recent refusal to permit the Slovene Government to develop
a large natural gas field in what it considered to be a strategic- area is
cited as further'-proof-of the insincerity of the proponents of peace:.
Furthermore, Yugoslav Army,.Commissars a.re.increasingly active. There,haa
been a noticeable increase - in'the number and ?;rre.guemey of so-.ca.lled,.orien-
tation lectures.
12. With reference to the-various members of the `Miiecutive Committee, it is
reported that Aleksand8i Rankovic is being built-up by Tito where
ever' possible.'.. Howejrer3, Rankovic has no real popularity amoig='the people
and even with Tito's ardent endeavor, he is making little head'wgy,-aS-a
leader. Edvard Kardelj lost much prestige in the Djilas affair; he still
feels the punishment was not severe enough. With the possible exception
of Kardelj's efforts to go farther than normalization with the USSR which
may have contributed to the Russian overture to Tito, Kardelj has very little
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to say regarding top policy decisions. These rest-exclusively with..Tito,
who some consider has made concessions. to the?Kardelj wing in accepting
Russian overtures. Koca-Popovic and Kardelj are in basic. opposition on
many issues...Kardelj turned thumbs down to Koca Popovic's suggestion
that Austria and Italy, and Yugoslavia sit down together to discuss mutual
economic interests in Trieste.
13. With regard to nationality antagonisms, it is reported that the antagonisms
between Serb and Croat, Slovene and . Montenegrin are more alive at the;.middle
Party level than ever before. The.top:leve.l leaders deny the existence of
antagonisms but realize the problem.is?by.:no means solved. No figure is
permitted to be a "strong man" in the individual republics;.even.the:.Croatian
Prime Minister Bakaric has lost someof-:his,authority.. A strong Tito man,
Bakaric has yielded certain of his powers in the economic sector to so-
called economic "experts".
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