PRINCIPAL YUGOSLAV PROBLEMS
 
                        Summary
 
     The Partisan organization appears in fact to be 
in effective control of the liberated parts of Yugo-
slavia. Its present armed strength, the presence of 
Soviet armies under a formal agreement with Marshal 
Tito, and the political support-of the British and So-
viet Governments, over a period of many months, have 
created a situation in which the Partisan leaders have 
taken advantage of their achievements in guerrilla war-
fare for the creation of a powerful political organiza-
tion. Its active opponents, such as the Nationalist 
movement under such leaders as General Mihailovic,
and the less coherent opposition groups such as the Croatian 
Peasant Party and the Slovenian clericals, for the time 
being are reduced to sullen impotence. All indications 
point to the intention of the Partisans to establish a 
thoroughly totalitarian regime, in order to maintain 
themselves in power.
 
          The Tito-Subasic agreement, now awaiting the King's 
approval in London, would transfer the effective powers 
of government to the Tito organization, with just enough 
participation of the Government in exile to facilitate 
recognition by other governments. The Soviet and British
Governments have firmly advocated an acceptance of this 
agreement. This Government has refused to exert influ-
ence on the King, and has pointed out that while the 
language of the agreement is in line with our ideas, the 
real test will be the good will of the new administration 
in its execution.
 
         We have also placed on record our uncertainty as 
to what extent the proposed agreement, in the formula-
tion of which both Mr. Churchill and Marshal Stalin 
seem to have had a part, may be related to the arrange-
ments between the British and Soviet Governments defin-
ing their respective interests in Southeastern Europe.
 
         If an effort is made to associate this Government 
with this Yugoslav arrangement, it is recommended: (1) 
that we should emphasize our complete independence of 
action in dealing with the Yugoslav situation, despite 
any commitments which may be or may have been made by 
the British and Soviet Governments; and (2) that we 
should make any endorsement of a new administration in 
 
                                         Yugoslavia