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October 5, 1974 - Ford, Kissinger, Simon, Greenspan, Ash, Eberle, Seidman, Burns
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1552816
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October 5, 1974 - Ford, Kissinger, Simon, Greenspan, Ash, Eberle, Seidman, Burns
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Memoranda of Conversations (Nixon and Ford Administrations)
Ford Administration Memoranda of Conversations
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Grain sales
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1974
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1974-10-05
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File scanned from the National Security Adviser's Memoranda of Conversation Collection at the Gerald R. Ford Presidential Library
MEMORANDUM
THE WHITE HOUSE
DECLASSIFIED
CONFIDENTIAL
WASHINGTON
E.O. 12958, SEC. 3.5
NSC MEMO, 11/24/98, STATE DEPT. GUIDELINES
BY
MEMORANDUM OF CONVERSATION
NABA DATE 11/2/06
PARTICIPANTS:
President Gerald R. Ford
Dr. Henry A. Kissinger, Secretary of State and
Assistant to the President for National
Security Affairs
William E. Simon, Secretary of the Treasury
Alan Greenspan, Chairman, Council of
Economic Advisers
Roy Ash, Director, Office of Management and
Budget
William D. Eberle, Special Representative for
Trade Negotiations, Council of International
Economic Policy
L. William Seidman, Assistant to the President
Dr. Arthur Burns, Chairman, Federal Reserve
Board
Lt. General Brent Scowcroft, Deputy Assistant
to the President for National Security Affairs
DATE AND TIME:
Saturday, October 5, 1974
10:00 a.m.
PLACE:
The Oval Office
The White House
SUBJECT:
Soviet Grain Purchase
Kissinger: There are three interpretations of the Soviet actions: (1) They
are trying to disrupt the market; (2) they misunderstood the signals we gave,
or (3) they see the prices going up and want to beat the increase.
Dobrynin proposes to know nothing about this.
President: What is the Soviet situation?
Simon: Pretty good. They are down a bit in feed but they are okay in feed.
So this is something of a surprise.
TOP SECRET- XGDS (3)
CONFIDENTIAL
CLASSIFIED BY: HENRY A. KISSINGER
Downgrated 5/11/04 Webs
CONFIDENTIAL
2.
Kissinger: Dobrynin said they were told they could have 1 million tons.
I told him they could have 500, 000 tons of corn and 1 million tons of
wheat but after November and spread over a long period. We would
announce it but say we would hold it in abeyance.
President: How about licensing?
Simon: It still would cut off PL 480 for those crops, and it just shifts the
demand. So you would have to impose export controls and ask Congress
for an exemption for PL 480.
Kissinger: Ohira said that Butz told him there would be absolutely no
export controls.
Simon: We could put in licensing, tell Japan it is an anti-Soviet move and
they would get what they need and ask Congress for the PL 480 authority.
President: What would this do for PL 480?
Kissinger: It would create disquiet. We have been using PL 480 in lieu
of aid to Egypt.
Simon: We would even have a helluva job selling it to the Congress -- even
500, 000 tons of corn and 1 million tons of wheat.
Kissinger: Why would that push the price up if it was held in abeyance?
Burns: Because it means the Soviet Union is in the market. That is a new
factor in a skittish market.
[There was a brief discussion of the 25 September Food Committee
Meeting and its sequel]
President: We have two options: One is to impose licensing with prior
notification. The second is to get the Soviet Union to back off -- either
back off or slow delivery.
Simon: I think we have to announce the cancellation by Monday if the
market is not to go wild.
Kissinger: We may be able to work out a lower sum with the Soviet Union,
but it puts us in a dangerous situation. No MFN, no EXIM credits, and
now licensing against them. This is economic warfare and they haven't
done a thing.
CONFIDENTIAL
GONF IDENTIAL
3.
President: Did we notify the companies that we wanted to approve these
purchases?
Eberle: Butz said SO.
Greenspan: Licensing will create a two-tiered pricing system in the world,
with drastic price increases in Europe and Japan.
President: But I suspect we would face dramatic action in the Congress
for licensing to stop deals like this.
Simon: I recognize the two-tier problem. It's a mess. But if we move
to licensing ourselves, we have a chance to save PL 480.
Ash: But Congress may impose a whole new series of restrictions in the
PL 480 option.
Kissinger: It could push Sadat over the edge.
Simon: That is why I would tell the Soviet Union to cancel.
Kissinger: It's easier for the Soviet Union to have the contract cancelled
through our licensing than for them to voluntarily cancel.
President: I think we must find out whether Butz or the companies did the
wrong thing here.
Eberle: We have no legal lever over the companies.
Seidman: Can we avoid an announcement today?
Simon: We will be accused of being devious.
Kissinger: But for a good purpose.
Eberle: From the market point of view we have until Saturday afternoon,
but we have a credibility problem.
President: We have to make the announcement, as Henry has indicated.
Get Butz back here.
Kissinger: I think the Soviet Union will consent to things imposed on them
better than to take initiatives themselves.
CONF DENTIAL
CONFIDENTIAL
4.
President: We should be tough on the companies. Get them and Butz in
a room and sort this out.
Kissinger: But the contracts have to be cancelled -- by the companies, the
Soviet Union, or by us through licensing.
Eberle: Getting the companies in should be part of the press release.
Kissinger: If we publicize getting companies in and we cancel the
contracts, that should help.
President: We should also say that the companies must get prior approval
in the future for contracts of an unusual size.
Kissinger: We had better get some cables drafted to the affected countries.
P/K/Simm
50ct 74
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DECLARBIFIED
GERALO A. +086
E.O. 12958, SEC. 3.5
NSC MEMO, 11/24/98, STATE DEPT. GUIDELINES
BY We
NARA, DATE 5/5/04
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