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NEWS OF THE WEEK yUGOSLAV spokesmen have insisted with such emphasis that the trade and compensation agreements signed with the United Kingdom on Monday would have no influence on the home or foreign policy of Yugo- sla%ia that they must almost have convinced themselves it is true. But how could it be true ? The internal economic arrange- ments of Yugoslavia, as well as that country's foreign relations, are so intimately bound up with Marshal Tito's quarrel with the Comin- form, and with the steadily improving relations with the West which have followed it, that denials of a connection are hollow. Both the Yugoslav Foreign Minister, Mr. Kardelj, and the Minister of Mining, Mr. Vukmanovic, have repeated this week that economic agreement with the Soviet Union became impossible because of the Russian insistence that Yugoslavia must become a pastoral subordinate. That was why Yugoslavia turned West. The Western Powers, for their part, faced with a country determined to stand on its own feet and detached from the sudden switches and the subordination of economics to politics characteristic of Russian Communist policy, decided that trade agreements with Yugoslavia had become a risk worth taking. The British Government has produced a loan of £8,000,000 from nowhere, hinted at the possibility of guaranteed credits for firms who decide to trade with Yugoslavia, and thus helped to promote the policy which the Russians tried to prevent—a policy of building up Yugoslav industry and creating a balance between agriculture and manufacture. It is impossible to disentangle the political from the economic threads in a situation such as this. All this is not to say that the British Government wishes to interfere in the internal :itfairs of Yugoslavia, or that the Yugoslav Government intends to abandon its policy of national Communism. It is simply to say that Yugoslavia—the one country in .which the Iron Curtain has been dented—occupies such a crucial position between East and \Vest that her economic policies cannot be isolated from the balance of power, and it is useless to pretend that they can.
