164 The Postwar Period
worsened by America’s decision to interfere in the trials of Stepinac and
Mihailović (who had been captured via a plot on 13 March, tried in Belgrade in
June, and then shot on 17 July). Diplomatic relations between the two countries
were at their lowest ebb, but relations with the Soviets were also deteriorating,
with the Yugoslavs accusing them of not advocating strongly enough for their
interests at the Peace Conference. When the decision on the Free Territory of
Trieste was announced, the Yugoslav delegates threatened to abandon Paris,
saying they would refuse to sign the peace treaty with Italy. They backed down
from this threat only under substantial pressure from both East and West.^81
Their conviction that the Soviets did not fight vigorously enough for their
cause triggered deep bitterness in Yugoslavia. “They considered it their right,”
Tito said later,
not to tell us about foreign policy issues that directly affected us, which were funda-
mental to the interests of our country. During meetings of the foreign ministers in
the spring of 1946 in Paris, when the Trieste question was discussed, Molotov spent
the entire night before the final session debating with Kardelj, our representative,
about the border, without telling him what was being proposed: in fact, the follow-
ing day he agreed with the collective decision, despite it being so unjust to us. In a
meeting of ministers in London, Molotov also accepted the proposition that Italy
should pay reparation of $300 million: $200 million to the Soviet Union and $100
million to all the other States. He didn’t mention this to us, even though we suffered
more from the Italian occupation than any other member of the United Nations.^82On 3 July 1946, in protest against such treatment, Tito sent a dispatch to Stalin,
denouncing the passivity of the Soviet delegation. He received a reassuring
answer, even though the subsequent policy of the Soviet Union remained effec-
tively unchanged.^83
Before the Second World War, Yugoslavia was one of the most underdevel-
oped states in Europe. Its economy depended largely on foreign capital, which
controlled nearly 50 percent of its industrial sector. About three hundred thou-
sand people worked in the industrial sector, 2 percent of the population, whereas
nearly 80 percent lived off the land. The peasantry had almost no equipment—in
1939 there were only 2,500 tractors in the entire country—which meant that pro-
ductivity was as low as the standard of living. After the war the situation was even
worse, due to widespread devastation.^84 Average per capita income did not ex-
ceed $60 annually, one of the lowest in Europe. In August 1945, the government
introduced agrarian reform, cancelling the debts of peasants and recognizing