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balance of payments cannot be properly interpreted in isolation from the general balance of payments. At this stage I would merely draw the attention of my colleagues to the probability that our policy of keeping Tito "afloat" will involve the prospect of further substantial subventions for the purchase of essential goods in the coming months. Any beneficial effect from the activities of our Economic Mission cannot be expected for a little time.
4.
I accordingly recommend that we should offer the Yugoslav Government immediately the remaining £2 millions of the £5 millions, which we are now holding in reserve, and that this, together with any part of the £3 millions not immediately needed for its original purpose, may be devoted to the purchase of urgent raw materials. In making this offer we should leave the Yugoslavs in no doubt that we have not yet satisfied ourselves about their raw material position, that the £2 millions represented a stopgap, and that further intensive study would still be required in Belgrade. I would propose to ask the Yugoslav Ambassador to call and hand him a note conveying the offer.
5.
I am sending a similar minute to Hugh Gaitskell.
(Sgd.) ERNEST DAVIES.
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