THE YUGOSLAV INTERNAL ECONOMIC SITUATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00457R012700330009-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 27, 2016
• Document Release Date: July 8, 2013
• Sequence Number: 9
• Publication Date: July 1, 1952
• Content Type: REPORT

Declassified in Part - Sanitized Copy Approved for Release 2013/07/08: CIA-RDP82-00457R012700330009-3
I.
?
' FEB 1902."?rr.
S?;' ?
CENTRAL INTELLIGENCE AGENCY
CLASSIFICATION SECRET/CONTROL - U. S. OFFICIALS ONLY
SECURITY INFORMATION
INFORMATION REPORT REPORT
COUNTRY Yugoslavia
SUBJECT
DATE OF
INFO.
PLACE
ACQUIRED
The Yugoslav Internal Economic Situation
CIRCULATE
CD NO.
50X1 -HUM
50X1 -HUM
DATE DISTR. 1 July 1952
NO. OF PAGES 5
NO. OF ENCLS.
(LISTED BELOW)
SUPPLEMENT TO
REPORT NO.
50X1 -HUM
THIS DOCUMENT CONTAINS INFORMATION AFFECTING THE NATIONAL DEFENSE
OF THE UNITED STATES, WITHIN THE MEANINGOFTITLE 18, SECTIONS 783
AND 794, OF THE U.S. CODE, AS AMENDED. ITS TRANSMISSION OR REVE-
LATION Ot ITS CONTENTS TO OR RECEIPT BY AN UNAUTHORIZED PERSON IS
PROHIBITED' 87 LAW. THE REPRODUCTION OF THIS FORM IS PROHIBITED.
THIS IS UNEVALUATED INFORMATION 50X1 -HUM
General
1. The internal economic situation in Yugoslavia at the beginning of 1952 was no
worse than it had been in the past; Yugoslavia had successfully overcome such
situations before. In facto there were now indications of an economic revival
and signs of an improvement in the functioning of the Yugoslav bureaucratic
machine. There was a recrudescence of initiation on the part of the senior
staff, such as factory managers, technicians and skilled workers, attributed
to the gradual disappearance of fear which had had a paralyzing effect during
the last two or three years. .
2. The reasons for a lower level of output during the period 1947-1950, inclusive,
were diverse, but were basically-due to the following causes:
a. The economic blockade imposed by Yugoslavia s Satellite neighbors;
b. The decrease and almost total disappearance of accumulated funds which had
been built up by 1947, by strenuous efforts on the part of the Yugoslav
working population and by Yugoslaviags access to the following resources,
now cut off:
(1) Expropriation and nationalization measures;
(2) UNRRA aid and Czechoslovak assistance;
(3) Yugoslav trading credits in Poland and Czechoslovakia;
CLASSIFICATION
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STATE
NAVY
NSRB
DISTRIBUTION
ARMY
AIR
FBI
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The exploitation and re-export of Albanian petroleum products; 50X1-HUM
(5) SubStantial funds for the civil war which were
administered by Yugoslav agencies at home and abroad;
Trade with Trieste, which had gradually become more and more difficult;
The greater productivity of the workers in the immediate post-war vglarst!
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Remittances from enigrgs
the country by immigrants
after the war; and
(6)
(7)
(8)
(9)
and funds brought into
immediately
The post-war agrarian policy prior to the introduction of agricultural
cooperatives, which scared off the peasants.
3. At the congress of the Communist Party of Serbia held in March 1952, Peter
Stambolic, President of the Republic of Serbia, following-the lead given by
Boris Kidric, Chairman of the *Federal Economic Council, defended the thesis of
a revision of the economic plans, and the granting of greater freedom to private
enterprise. He stated that economic planning should be brought on to a more
realistic basis, and that plans should take into account the actual potential of
the country. Private enterprise in small trading and in craftsmen's industries
should be encouraged and not discouraged by Government orders; where the State
has failed to realize the aims laid down, work should be banded over to private
enterprise.
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this was not being considered only as a tanporary meas-
ure by certain Yugoslav economic circles, but rather as the initial steps towards
the founding of a new form of Yugoslav socialism, a form of compromise between the
social democracy as expounded by social-democratic government and that of the
People's Republics of the Soviet bloc.
Labor
5. The position of the younger members of the Yugoslav working classes (the Yugoslav
youth proletariat) has, however, worsened for the following reasons:
a. Less opportunities for work;
b. Decrease in public works and social benefits;
c. Less opportunities to join the white-collar class of worker; and
d. Diminished political influence of the masses on Yugoslav political firms.
6. The result has been an increase in Caminform influence on this section of the popu-
lation since the end of 1951.
7. The Government has faced the labor situation by granting greater powers of dis-
cretion to factory managers than has ever been the case before, and similarly
to directors of import-export firms, who are now empowered ..to cOnClude contracts
with foreign firms. They are eqaally empowered to nominate foreigners to repre-
sent Yugoslav products firms abroad. The Government has also given final
approval to measures entitling workers to consult with their superiors and to
make suggestions to their superiors on matters affecting the factories.
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Output
8. The output of the last ten months has not been considered adequate by the Yugo-
slav authorities, The weakest point in the Yugosilv production plan has been
the following industries:
a. Light industries;
b. Agricultural and foodstuffs industries; and
c. The petroleum industry.
The first two categories above mentioned have not produced more than 70 to 72
per cent of their targets during the period in question.
Agriculture
9.. Wheat production during 1951 was 40 per cent higher than during recent years
but stocks are loner than in 1949. Potatoes are in the same situation; proddc-
tion is higher but stocks are lower, and the alcohol-producing industries have
suffered serious losses. During the second half of 1951, they were forced to
buy on the open market at prices two or three times above normal, which had the
effect of increasing production costs considerably.. Sugar-beet productiorymms
8 per cent above that of 1950 and the Yugoslav sugar factories were adequately
and regularly supplied.
10. As regards produce for the pharmaceutical industries, Government farms and agri-
cultural cooperatives produced 27,000 tons of opium poppies more than before
with an equivalent increase in the production of pure opium. The North Serbian
farms also showed an increase in pharmaceutical plant produce.
11. In general, individual production of agricultural produce increased, but produc-
tion was diverted mainly, to that of necessities for the family and neighboring
cities. Production on industrial account, with the exception of sugar beet, de-
creased with consequent effect on foreign trade. The northern part of the
country, in particular Serbia, gave the best returns, although Croatia and Slov-
enia showed a marked decrease in produce for industrial use. During 1952, the
situation in the South improved, particularly in Macedonia, where the position
has shown a steady betterment in the last 18 months. This can be ascribed to
the fact that the Macedonians have accepted the fact that the political situation
will not change, as they expected earlier.
Petroleum Industry
12. The petroleum industry did not succeed in realizing during 1950-1951 even 30 per
cent of the target envisaged under the Five-Year Plan. The drillings in the
Moslavina area of North Croatia and the Modjuxmure region of Slovenia did not
give the expected results. The Modjurmure region was expected to produce 280,000
tons per annum by the end of 1951; the actual 1951 output was 33,000 tons. The
exploratory soundings in the Kostolac area of northeast Serbia were only experi-
mental, and no regular production took place. Shortage of necessary plant was
the cause.
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13. During 1951 and the first two months of 1952, Yugoslavials equirements
were met exclusively by imports; 62,000 tons were imported during 1951.
14. Very rich deposits have been found in .SlavonsicaPozega in Slavonia; they-ames-
timated to'be tha largest ion Yngoslav territory.
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Electro-technical Industries
15$ The Zagreb manufacturers of electric motors, batteries and electric-light, bulbs
realized their quantitative targets at the expense of quality, which suffered
from the negligence of the workers and lack of technical skill of the management.
The worst example was that of the "Akumulator" (sic) works of Zagreb whose poor
quality output caused considerable damage and losses to Croatian factories and
other works in Yugoslavia.
. The "Rade Koncar" works realized their program; the targets were, however, set
lower than in 1949-1950. Despite all the difficulties which this concern had to
face, such as a regular flow of raw material, particularly pig iron, it neverthe-
less more or less reached its target. Production over the last two years has
been, more and more concentrated on 1-Klito120,-KWmotors at the expense of conden-
sers and power-station equipment.
Rubber Leather and Plastics Industries
17. Over-all production has increased, but an analysis of the figures shows that semi-
finished and finished leathers have increased by about 30 per cent. Production
of synthetic materials (plastics) is cadpletely new and an increase in percentage
here has no significance. Polivinyl production is largely exported in raw or
semi-finished state Although the industry is going,,it is not of great
importance in the world market. 50X1-HUM
Agricultural Machinery
18. The. "Zmaj" works at Zemun_is the only works to have realized the appointed' tar-
gets for agricultural machinery during 1951 and the first quarter of 1952.
Metallurgical Industries
19. The general level of production in 1951 was lower than in 1949 because of diffi-
culties in raw-material supplies, and also because of h tendency to attempt'to
maintain a steady average output rather than to force production and wear out
equipment which is later irreplaceable.
20. A new blast furnace was installed at Caprag in November 1951, which was produced
by n3 May" Enterprise in Rijeka. Nevertheless the tendency was that of a de-
crease in pig-iron output because of a dimunition in ore supplies. The reasons
for this were antiquated equipment and a changing labor force, no longer closely
controlled by the Government.
21. The production of rolled steel has slightly increased. The Zenica works, which
consists of a new and an old rolling mill, have increased output by 40 per cent
compared to 1949. New plate-cutting machinery , which ha5ox1 -HUM
been installed at the "Ivo Lola Mbar" works at Zeleznik)improved the position
there. These works supply the Slavonski Brod engineering industries, which are
expected to produce locomotives for the first time in 1952. The target is set
at 200.
Power Supplies
22. The 1954-1955 target of a production of 7,000 (sic) kilowatts of electric power
per annum appear since the arrival of imports during the 50X1-HUM
period October 1951 to March 1952 to be a more practical proposition. The new
hydroelectric stations, upon which so much depends, had to be partially closed
down during 1950. Jablonica is now, however, fully operative, and great strides
were made at the end of 1951. Thethermo-electric stations in Central Serbia are
also gradually making their output felt.
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Railway Communications
23. The electrific;dcion scheme is vital for the improiement of the North-South line,
and communication with the Central Adriatic littoral. The Ljubljana-Zagreb-Bel-
grade-Nis, Belgrade-Skoplje-Greek frontier, and the Samac-Sarajevo-Dubrovnik are
all to be electrified. Work on the Samac-Dubrovnik is finally to start on 1 June
1952 and is to be completed by samer 1952.
24. Lack of locomotives, and the inadequacy of track, are the main causes for the in-
efficiency of Yugoslav rail communications, Priority is being given to the doubl-
ing of tracks, in particular to the vital Samac-Dubrovnik line, which should be
completed by 1953. When this occurs, Ploce port (Dubrovnik) will relieve Split?
of 70 per cent of the traffic now handled by that port.
River Communications
25. River communications daowed a marked improvement during 1951. Despite the gon-
tinued tension with neighboring countries, the volume of Danube ?traffic increased
by 25 per cent. It is hoped to overcome political tension with Rumania suffi-
ciently to reach a modus vivendi regarding communications with the Black Sea. The
Danube-Theiss Canal complex should be completed by 1953., Lack of labor has so
far held this project up. There are adequate supplies of cranes and excavators
to carry it out. The Sava Canal from Zagreb to Sisak has been completed. Its
prolongation to Zidani Most by 1954 will greatly assist the transportation of Slov-
ene, coal and timber to the Adriatic. The Samac-Dubrovnik line will then be the
shortest route from river to the coast.
Mining Industries
26. Copper - The exploitation of the deposits near Pec in northern Montenegro on the
Albanian frontier started in the second half of 1951. By 1953 these mines are ex-
pected to produce 20,000 tons per annum. This output will be entirely directed
to exports, so that the production at Bor can be processed at the new copper works
to be erected during 1952 near Krusevac. By the end'of 1953, the Krusevac works
should be in a position to supply the needs of the domestic market in copper (par-
ticularly electrolytic) wire bars which now have to be imported.
27. Coal - Coal production during 1951 was Uneven. The central Croatian lignite mines
passed their target by 10 per cent. Those at Bosanski Krupa did not reach the
target set. The new lignite deposits on the Sar area of northern Montenegro started
production during the second half of 1951. Eventually their output will be larger
than the, combined output of the two Bosnian fields.
28. The need for coke is, however, still very pressing. Home production barely covers
10 per cent of requirement. The lack of Polish coal and coke is very greatly felt
and, in fact, constitutes one of the main reasons that Yugoslavia is being forced
to try to seek some form of economic agreement with the Soviet bloc.
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