THE TRIESTE QUESTION/POLITICS/RESISTANCE/STATUS OF MACEDONIA/POSSIBLE SOLUTION TO THE BALKAN QUESTION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00047R000300690002-0
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: December 14, 2016
• Document Release Date: April 14, 2003
• Sequence Number: 2
• Publication Date: February 3, 1954
• Content Type: REPORT

COUNTRY
SUBJECT
PLACE
ACQUIRED
DATE
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CENTRAL INTELLIGENCE AGENCY
INFORMATION REPORT
iUgoslavia.
The Trieste Questio Politicstkesistance/
Status of Macedonia/Possible Solutions to the
Balkan Question
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THIS DOCUMENT CONTAINS INF:II:SAMS AFFECT:Ns THE NATImoss DEFENSE
OF THE UNITED STATES: NITNIN THE'NEADINCIOr TITLE Ea: SECTIONS 793
AND 794, OF THE U.S. CODS: AS AMENDED. ITS T NAM ITM ION OH RE SE
LOTION or ITS CONTENTS To ON sr AN oNAUTUOSIEED PESSON Is
PNONISITEO IT LAW. THE EEPOODDETION 4, 101$TON.9 I% TSDNIO/TEO:
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SUPPLEMENT TO
REPORT NO.
THIS IS UNEVALUATED INFORMATION
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In Yugoslavia, particularly in RA10-rae +hp stores are always filled with merchandise,
but the quality is limited0 la stranger to Belgrade would presume that
the government had released controls on retail outlets, for when one witnesses the
stores and retail outlets crammed with merchandise one would presume that a new policy
has ensued. In Belgrade the retail outlets had large quantities of merchandise as
early as 1947, but in those days, as even today, the average citizen was unable to
wace purchases because the goods were priced beyond reason and because the citizen
long ago ZAugust 1953/ in which la ton of low grade lignite coal
not 25gw1
did not haye the money to make purchases. I a letter
costs four thousand dinars (US$ 13.33). This price did not include transportation
og tile coal or storage to coal bins. I informed me that one kilogram25)( 1)(
.i./.24,/ of coffee also sold for four thousand dinars. Tsa gye you an illustration of
the status of the dinar, after WWII 494W dinars were supposedly
stabilized at the rate of 5Rdiners to one US dollar Zpre-war rat:V.. Within a
span of five years, the Yugoslavian Government has had to devaluate the diner six
times, thus the current rate stands at 300 dinars to one US dollar. However, in the
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black market one can get 600 dinars for a dollar. In spite of inflation, people by
. ,
and large have very little money and, consequently, cannot make purchases in 72_2:E
market. Domestic merchandise is of very poor quality Within the last year LI
sent a pair of used shoes to a friend in Serbia wile was able to resell them for our
thousand dinars. Ithe purchaser of these shoes was
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particularly pleased with the quality and workmanship.
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2. the National Bank of Yugoslavia Ziarodna Banka/ has any power
or influence on financial policy of the country, but serves merely as a technical
organization for currency exchange. The Ministry of Finance actually controls
the National Bank. With reference to the dinar, it is nothing more than a means
of expressing the local value of commodities in a monetary sense. This is so
because it has no worth or solid backing, such as the US dollar, the UK pound, or.
the Swiss franc. Consequently, Yugoslavia mnst sell its commodities on the dollar
market in order that it can deal financially with other nations. The major
portion of current trade between Yugoslavia and European nations is done on paper
with the dinar rarely being sent outside the country.
3. The first five-year plan devised by the Yugoslavian Government after WWII called
for an outlandish budget. the budget set up under this plan was
10 times the ne,enenal income. The new government intended to invest 60 billion
dinars per year for five yeare. This was ironic because the normal budget of
Yugoslavia was nee-se over 11-13 billion dinars per year and the total national
income never exceeded 90 billion dinars per year. Once the Yugoslays had realized
that their five-year plan was not feasible under the new arrangement, they resigned
themselves to the theagLt that if 20 per cent of their projects were realized, 25X1
they would be happy.
25X1 4. trade with the USSR until 1948 was not unduly large.
with imports from the USSR were confined to receiving smell electrical motors
up to 20 horse power, receiving standard size movie projectors and some laboratory
equipment. In general, the commodities which we received from the USSR were of
exceptionally poor quality and Were exorbitantly priced. The difficulty with the
electric motors lay in the fact that they yer poorly insulated and consumed far
more power than was feasible economically I lalso received 300 Zis trucks. ThZV1
trucks were used to transport lead and zinc from the Yugoslavian mines to the H3k1
Danube for reshipment tc the USSR., With reference to the Zis trucks, I
from various sources that they were durable and servi Atl'hl A Al-inal? +1-iez 1ir
assistance which the USSR gave us during those years
ligie to help us repair the Pancevo Bridge. The USSR a-eo naulea antimony irom
Zajaeca. An interesting facter which again points up the stupidity in Yugoslavian
, planning, is the. feet that it cost the Yugoslavian Government 96 thousand dinars
per ton to mine antimony at a date when the world price was approximately 33
thousand dinars. In order to compete, the Yugoslavian Government sold the antimony
for 33 thousand dinars which was, of course, a large loss. Ironically before WWII
one of the few industries which showed a hiSle profit in Yugoslavia was the antimony
mine at Zajaeca o Another ironic situation is the fact that the chief engineer at
Zajaeca today Z1952, a fellow by the name of Zikalloaa.00xia? was the owner of
this mine prior to its being taken over by the government.
5. Prior to WWII trade between Czechoslovakia and Yizgeslavia was intricately inter-_
woven; in fact, this eituation endured until 1948 ZYugoslavia left the Gominform/.
To be more specific, Yugcslavia sent copper, iron, pyrite and canvas, flax, corn
and coal to Czeohcelevakia. These minerals were critical to Czechoslovakian
heavy industry and since he did not possess them herself, Yugoslavia was her
chief source of supply. In return, Czechoslovakia shipped maChinery and other
material goods to YUgoslavia.
6. Since Italy has very little coal, her chief source of supply has been Yugoslavia.
In fact?nany of the furnaces used in the mills of Northern Italy are so constructed
that Istrian coal from the Siverich Mills is the only type which will burn ade-
quately. Prier to WWII, Italy used to purchase a similar coal from Trboje?
Slovenia, so you can see that a great portion of Northern Italy industrially
is dependent on coal imported from Yugoslavia. As a consequence, the Trieste
question lies far deeper than mere possession of the Port of Trieste itself...
For Istria not only yields coal for the Italian heavy industry, but also possesses
the Idria mine which yields mercury for Italian industry. In? my estimation, the
real significance of the Trieste question lies in the minerals entombed in the
surrounding territory, for the Part of Trieste' has no practical value toatalya
Immediately after WWII, one of the chief sources of commodities for Yugoslavia was
Italian industry. Purchaess were made on a barter basis through which Yugo-
slavia exchanged her coal to Italy for finished products.
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25X1 7. Although 0Yegoelavians did not eare for Tito, his debut on the 25X1
YUgoslavian pclitioal scene in 1941-42 served a greater purpose than one would
deem possible. As an example, Yugoslavia in her religious, political and ethnic
cleavages would, in 07 prebability, have posed no threat to any of the Axis
?
forceeeleit would have continued her internecine struggle. Although Tito is a
Cemmenist, he was able to draw large numbers from each of the above groups into
the Peeplets 4-my of liberation, thus temporarily causing them to forget their25xi
25X1 own differenoee. should Tito lose his paeol ion in
aigoslavia, that nation would again revert to warfare which would make the
streggles of the past infantile be companisene
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religious differences whieh has been prevalent 'throughout Yugoslavia for centuries.
However, it wae generally accepted among more intellectual people of Eastern
YUgoslavia eact to .,a great extent Croatian unwillingness to fight either the
Germans or, the Italians was fostered by a Croatian natioealiem which was based
on a philosophy eponsored by the Catholic Church.
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8. With reference to a possible attack against Yelgoslavia by any. of
Satellites or i5eviee Satellite seoupse the same situatiorewhich prevailed ie
1941e45 would in ell prebability reoccur for the following reasons:
a. The Croatia es today feel that the Communist system had beeneimposed upon
Yugoslavia by the Serbs and,that,this sate system is being directed by the
Serbs. This thinking is conditioned on the premiseethat Titots capital and
his,admieletratien are located in Belgrade, the old capital and emblem of
Serbia and Pan Serb Chauvinism,
,The Serhse hewever? knowing that Tito is a Croatian, claim that the Communist
eyetem existent in Yugoslavia was imposed by the Croatians.
One must alwaye beer in mid that the aew generation which is being schooled
and indoctrinated by the Commueiets (although now a mieerity) is on the .
inerease.
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1111V9 are, hundreds f theesende, of Serbs who IlVd Croatia to Serbia
duthig ,t118 German oceupatiee. Ifthese ,people Were permitted, to ratItIrn to
, GpoatiAjI toy ,,rould massacre large iambera of Croatiana
whom they held responsible fer their plight. e
Should the Tito Government and the Communist admintetration ofiYugoplavia fall,
eeTtaio political stepeweuld be necessary to secure a permenent peace .in the
Balkans. In fermaticn of e new government, certein precautionary measures
should prevail. Neither dynastic nor pre-WWII officials would be acceptable
to. the majority *f Yugoclavianso Tor that matter, very few of.the cerreet
effeciale would he welcome either,
a. a solution to the ever troublesome Southeastern Eeropean
question should include the creation of a large democratic federation of
southern Slave. This federation, weicheof necessity, would include Yugoslavia and Bulgari, must also include a non-Slavic neighbor, Albania. The
inclusion of Albania in such a federation would afford a solution to the
majoe problete which have beset Albania for. many centuries.
There are now ,?Nov _195.3/ nearly 400 thousand Albanians in present day
Yugoslavia. jihey reside in Metoleija? Kossovo, Tetovo and othereparte
of Southern Serbia. Although they ltve among preponderantly-Serbian
popelatione? they have been to a large degree assimilated. The
friction which ensues between Yugoslavia and Albania over the eoe
oalled Nacedenian territory which Albania claims plas the Albaniane
populateen,resident in Yugoslavia is a constant bone of contentien,
always aegued by 'Albania. Border incidents between the two countries
are coemon,oceurrences beeause the Albanians drive Yugoslavian livestock
back over the border, and numbers of Albanians try to move into !age-
slavia elandestinel:, a matter which causes concern to the administration.
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l3. The i&droelectke plant:562A :fat Maribsr during WWII was practically doubled
in size by the Germans, however, it Vas it completed as of December 1944 when
the Germans were driven from the area'. When the new administration took over,
it completed the work begun by'Ale"Gehlans (which? was about 90 per cent completed)
and then took full credit for the entire construction, claiming that it was
built under the efficiency of the new administration, typical Communist propa-
25X1 ganda.I Fala 'is the most 'important hydroelectric project in,
all of Northwestern xugosiavia? for net ally cy)es it supply that lector with
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electricity, but also supplies acaz, Austria. I 25X1X
December 1946, it was in '.:full operation and functioning smoothly.
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