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Pipeline – USSR (5)
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Pipeline – USSR (5)
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Records of the National Security Council, Directorate of European and Soviet Affairs (Reagan Administration)
Jack F. Matlock, Jr.'s Union of Soviet Socialist Republics (U.S.S.R.) Subject Files
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Ronald Reagan Presidential Library Digital Library Collections This is a PDF of a folder from our textual collections. Collection: Matlock, Jack F.: Files Folder Title: Pipeline - USSR (5) Box: 31 To see more digitized collections visit: https://reaganlibrary.gov/archives/digital-library To see all Ronald Reagan Presidential Library inventories visit: https://reaganlibrary.gov/document-collection Contact a reference archivist at: [email protected] Citation Guidelines: https://reaganlibrary.gov/citing National Archives Catalogue: https://catalog.archives.gov/ WITHDRAWAL SHEET Ronald Reagan Library Collection Name MATLOCK, JACK: FILES Withdrawer JET 5/18/2005 File Folder USSR-PIPELINE 5/6 FOIA F06-114/9 Box Number 31 YARHI-MILO 3101 ID Doc Type Document Description No of Doc Date Restrictions Pages 10758 CABLE 181112Z MAR 82 12 3/18/1982 B1 R 3/24/2011 F2006-114/9 10759 CABLE INTER-AGENCY MISSION ON EAST-WEST 3 3/22/1982 B1 ECONOMIC RELATIONS: DISCUSSION OF SIBERIAN GAS PIPELINE R 3/24/2011 F2006-114/9 10765 CABLE 151255Z JUN 82 1 6/15/1982 B1 B3 D 9/25/2012 F2006-114/9 10752 MEMO MARTIN TO BUCKLEY RE SAKHALIN AND 1 1/16/1982 B1 WEST EUROPEAN SOVIET PIPELINE 6 R 9/25/2012 F2006-114/9 10753 PAPER TECHNICAL REVIEW OF SAKHALIN 4 7/16/1982 B1 PROJECT AND SIBERIAN GAS PIPELINE PROJECT R 9/25/2012 F2006-114/9 10760 CABLE 240214Z JUN 82 2 6/24/1982 B1 R 3/24/2011 F2006-114/9 10761 PAPER SIBERIA-TO-WESTERN EUROPE GAS 1 6/26/1982 B1 PIPELINE: THE PRESSURE INTENSIFIES 10754 MEMO BAILEY/PIPES/ROBINSON TO CLARK RE 1 8/4/1982 B1 B3 PYM RECENT VISIT TO WASHINGTON D 1/24/2008 NLRRF06-114/9 Freedom of Information Act - [5 U.S.C. 552(b)] B-1 National security classified information [(b)(1) of the FOIA] B-2 Release would disclose internal personnel rules and practices of an agency [(b)(2) of the FOIA] B-3 Release would violate a Federal statute [(b)(3) of the FOIA] B-4 Release would disclose trade secrets or confidential or financial information [(b)(4) of the FOIA] B-6 Release would constitute a clearly unwarranted invasion of personal privacy [(b)(6) of the FOIA] B-7 Release would disclose information compiled for law enforcement purposes [(b)(7) of the FOIA] B-8 Release would disclose information concerning the regulation of financial institutions [(b)(8) of the FOIA] B-9 Release would disclose geological or geophysical information concerning wells [(b)(9) of the FOIA] C. Closed in accordance with restrictions contained in donor's deed of gift. WITHDRAWAL SHEET Ronald Reagan Library Collection Name MATLOCK, JACK: FILES Withdrawer JET 5/18/2005 File Folder USSR-PIPELINE 5/6 FOIA F06-114/9 Box Number 31 YARHI-MILO 3101 ID Doc Type Document Description No of Doc Date Restrictions Pages 10755 CABLE 041255Z AUG 82 2 8/4/1982 B1 B3 D 1/24/2008 NLRRF06-114/9 10756 CABLE 171429Z SEP 82 1 9/17/1982 B1 B3 D 1/24/2008 NLRRF06-114/9 10757 MEMO PIPES TO CLARK RE CDU STATEMENT ON 1 9/21/1982 B1 SOVIET SANCTIONS R 3/24/2011 F2006-114/9 10762 CABLE 251312Z SEP 82 4 9/25/1982 B1 R 3/24/2011 F2006-114/9 10763 CABLE 011524Z OCT 82 2 10/1/1982 B1 R 3/24/2011 F2006-114/9 10764 CABLE 071530Z OCT 82 4 10/7/1982 B1 R 3/24/2011 F2006-114/9 Freedom of Information Act - [5 U.S.C. 552(b)] B-1 National security classified information [(b)(1) of the FOIA] B-2 Release would disclose internal personnel rules and practices of an agency [(b)(2) of the FOIA] B-3 Release would violate a Federal statute [(b)(3) of the FOIA] B-4 Release would disclose trade secrets or confidential or financial information [(b)(4) of the FOIA] B-6 Release would constitute a clearly unwarranted invasion of personal privacy [(b)(6) of the FOIA] B-7 Release would disclose information compiled for law enforcement purposes [(b)(7) of the FOIA] B-8 Release would disclose information concerning the regulation of financial institutions [(b)(8) of the FOIA] B-9 Release would disclose geological or geophysical information concerning wells [(b)(9) of the FOIA] C. Closed in accordance with restrictions contained in donor's deed of gift. SECRET PiPECiNE DECLASSIFIED NATIONAL SECURITY COUNCIL 10758 NLRR 10758 MESSAGE CENTER BY KML NARA DATE4/7/2011 PAGE 01 OF 02 ROME 6645 DTG: 181112Z MAR 82 PSN: 001989 EOB665 AN009463 TOR: 077/1508Z CSN: HCE560 DISTRIBUTION: ISEC-01 MYER-00 PIPE-00 RENT-00 RUSS-00 STER-00 ECON-00 /001 A2 WHTS ASSIGNED DISTRIBUTION: SIT: CKLS EOB: S OP IMMED UTS7624 DE RUEHRO #6645/01 0771129 o 181112Z MAR 82 FM AMEMBASSY ROME TO SECSTATE WASHDC IMMEDIATE 4820 INFO AMEMBASSY BONN 3882 D AMEMBASSY BRUSSELS 4776 AMEMBASSY LONDON 6391 AMEMBASSY PARIS 2193 S USMISSION USNATO 7433 SECTION 01 OF 06 ROME 06645 EXDIS ALSO FOR USEC E.O. 12065: RDS-1, 3/18/92 (BUCKLEY, JAMES L.) TAGS: EFIN, EEWT, UR SUBJECT: INTER-AGENCY MISSION ON EAST-WEST ECONOMIC - RELATIONS: REPORT ON TALKS IN PARIS 1. SECRET ENTIRE TEXT.) 2. SUMMARY: S FOCUS OF MISSION' S TALKS IN PARIS WAS THREE-HOUR-SESSION WITH FRENCH INTER-AGENCY TEAM HEADED BY QUAI ECONOMIC DIRECTOR PAYE INCLUDING MOUTON, ALSO FROM THE QUAI, SCHNEITER OF DREE AND TRICHET OF THE TREASURY. PRIOR TO THAT MEETING, SENIOR MEMBERS OF MISSION AND AMBASSADOR GALBRAITH MET WITH FOREIGN MINISTER CHEYSSON WHO WAS GENERALLY POSITIVE BUT NON-COMMITTAL TOWARD THE MISSION' S OBJECTIVES. FOLLOWING LUNCH AT QUAI, MEMBERS OF MISSION MET SEPARATELY WITH FINANCE, DEFENSE AND ELYSEE OFFICIALS AS WELL AS WITH OE CD SEC-GEN VAN LENNEP. OVERALL D IMPRESSION OF TALKS WITH FRENCH IS THAT WHILE GOF SHARES MANY OF OUR BASIC CONCERNS AND WOULD LIKE TO WORK WITH US IN CREDITS AREA, THIS WILL HAVE TO BE DONE WITHOUT S PREJUDICE TO FRENCH ECONOMIC INTERESTS. POLITICAL INCENTIVE FOR MAINTAINING CLOSE ECONOMIC RELATIONSHIP WITH USSR SEEMS LESS PRONOUNCED IN PARIS THAN MISSION FOUND TO BE THE CASE IN BONN. THIS BEING SAID, HOWEVER, MOVING FROM GOOD FRENCH INTENTIONS TO CONCRETE UNDERTAKING WILL BE VERY DIFFICULT. END SUMMARY. 3. UNDER SECRETARY BUCKLEY OPENED MEETING WITH OUTLINE OF U.S. OBJECTIVES, NOTING: THE PRESIDENT' S UNDERSTANDING OF EUROPEAN CONCERNS OVER DECEMBER 29 MEASURES AND HIS DECISION TO HOLD FURTHER MOVES PENDING MISSION' S VISIT; FAILURE OF "DETENTE POLICY" TO PRODUCE HOPED-FOR IMPACT ON SOVIET UNION; DISAPPOINTED HOPES FROM CSCE, MOST DRAMATICALLY REVEALED LAST FRIDAY IN MADRID; NEED TO FOCUS ON STRATEGIC ROLE OF CREDITS IN FACE OF SOVIET BUILD-UP; THREAT TO WESTERN FINANCIAL STABILITY OF SOVIET/EASTERN EUROPEAN DEBT; AND NEED FOR COMMON ALLIED APPROACH. BUCKLEY SAID WE WERE AWARE OF COMPETITIVE SECRET 2 SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 02 OF 02 ROME 6645 DTG: 181112Z MAR 82 PSN: 001989 PRESSURES BUT BELIEVED THAT IF WE COULD AGREE ON BASIC OBJECTIVE WE COULD FIND WAYS TO DEAL WITH THIS PROBLEM. HE NOTED THAT WE HAD ALREADY APPROACHED JAPANESE, WHO, TOGETHER WITH FOUR COUNTRIES ON MISSION' S EUROPEAN X ITINERARY WERE RESPONSIBLE FOR 90 PERCENT OF CREDITS EXTENDED TO USSR. HE ASKED WHETHER FRENCH COULD: D - A. AGREE ON NECESSITY OF DEVELOPING COMMON APPROACH ON OFFICIAL CREDITS AND GUARANTEES TO SOVIET UNION; - B. AGREE TO GIVE MUCH MORE INFORMATION TO OTHER S PARTICIPATING COUNTRIES ON THEIR CREDIT OPERATIONS WITH SOVIET UNION; - C. JOIN IN A "PAUSE" ON FURTHER EXTENSIONS OF CREDITS/ GUARANTEES TILL KEY ALLIES AGREE ON ESTABLISHMENT OF A MECHANISM FOR FURTHER POLICY COORDINATION. 4. UNDER SECRETARY IKLE STRESSED STRATEGIC IMPLICATIONS E OF CREDITS ISSUE, POINTING TO THREAT WHICH GROWTH OF SOVIET MILITARY POTENTIAL POSED TO ALLIES. FRENCH AND X U.S., HE SAID, ARE ENGAGING IN MAJOR BUILD-UP OF THEIR FORCES. HOWEVER, THIS EFFORT TO CLOSE GAP WOULD BE IN D VAIN IF WE CONTINUE TO ASSIST, THROUGH CREDITS AND GUARANTEES, CONTINUING SOVIET BUILD-UP. HE ACKNOWLEDGED THAT OUR IMPACT ON SOVIET ECONOMY WOULD ALWAYS BE MARGINAL S BUT ARGUED THAT ANY GAIN WOULD BE WORTH THE EFFORT. HE ALSO STRESSED NEED TO AVOID "REVERSE LEVERAGE" SITUATION IN WHICH SOVIETS USE WESTERN CREDIT EXPOSURE TO THEIR ADVANTAGE. UNDER SECRETARY OLMER CALLED ATTENTION TO SELF-IMPOSED RESTRAINTS ON ACTIVITIES OF U.S. BUSINESS IN SOVIET UNION GOING BACK TO 1974. RECENT U.S. LOSSES IN SALES, HE SAID, AMOUNTED TO ABOUT $500 MILLION. E 5. ASSISTANT SECRETARY LELAND ALSO NOTED DANGER OF X "REVERSE LEVERAGE" SITUATION. HE SUGGESTED THAT GENERAL D ISSUE OF EXPORT CREDIT SUBSIDIES, WHICH WAS BEING DISCUSSED ELSEWHERE, CONTINUE TO BE HANDLED SEPARATELY. HE CHARACTERIZED CREDITS ISSUE AS OF STRATEGIC NATURE AND S THEREFORE NOT SUITABLE FOR OECD DISCUSSION AND NOT, STRICTLY SPEAKING, ISSUE FOR EC COMPETENCE. LELAND SAID BT E X D S SECRET SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 01 OF 02 ROME 6645 DTG: 181112Z MAR 82 PSN: 001990 EOB667 AN009465 TOR: 077/1510Z CSN: HCE561 DISTRIBUTION: ISEC-01 /001 A2 E X WHTS ASSIGNED DISTRIBUTION: SIT: MCF D EOB: S OP IMMED UTS7629 DE RUEHRO #6645/02 0771130 O 181112Z MAR 82 FM AMEMBASSY ROME E TO SECSTATE WASHDC IMMEDIATE 4821 X INFO AMEMBASSY BONN 3883 AMEMBASSY BRUSSELS 4777 D AMEMBASSY LONDON 6392 AMEMBASSY PARIS 2194 USMISSION USNATO 7434 S SECRET SECTION 02 OF 06 ROME Ø6645 EXDIS ALSO FOR USEC U.S. UNDERSTOOD NEED FOR EQUITY IN ANY RESULTING SYSTEM AND ADDED THAT NO COUNTRY COULD BE EXPECTED TO SUFFER DISPROPORTIONATELY. COMPETITIVE PRESSURES COULD BE HANDLED, HE SAID, ALTHOUGH HE ADMITTED THIS WOULD BE X DIFFICULT. UNDER SECRETARY BUCKLEY MENTIONED THERE RE THREE OTHER SUBJECTS WHICH MISSION WISHED TO DISCUSS D BRIEFLY, NAMELY: - 1. DEFAULT SAFETY NET; 2. HOW POSSIBLE DEPENDENCY OF WESTERN EUROPE ON SOVIET S ENERGY COULD BE AVOIDED; AND 3. RESTRICTIONS ON IMPORTS FROM SOVIET UNION. DR. BAILEY OUTLINED POSSIBLE SCHEDULE FOR FOLLOW UP CONSULTATIONS ON CREDITS ISSUE LEADING THROUGH FURTHER BILATERAL MEETINGS TO A MULTILATERALIZATION AND AGREEMENT ON ESTABLISHMENT OF A COCOM-TYPE ME CHANISM. E 6. OPENING FOR THE FRENCH SIDE, PAYE SAID FRANCE SHARED U.S. PREOCCUPATIONS REGARDING ECONOMIC RELATIONS WITH USSR, WHICH HE LISTED AS: A) TECHNOLOGY TRANSFER, WHERE D HE EXPRESSED SATISFACTION WITH STEPS TAKEN TO STRENGTHEN COCOM; AND B) FINANCIAL PROBLEMS, WHERE FRENCH WERE AWARE OF HAZARDS OF GIVING MORE CREDITS TO SOVIETS AND EASTERN EUROPEAN COUNTRIES WHEN THEY were RUNNING INTO DEEP S TROUBLE. FRENCH HAVE BEEN TRYING FOR 2/3 YEARS TO REDUCE EXPOSURE IN EAST; FOR LAST 18 MONTHS, FRENCH HAVE HAD "TENSE" DISCUSSIONS WITH SOVIETS over CREDIT ISSUE AND INTEND TO CONTINUE TO TIGHTEN TERMS. FRENCH ARE READY, HE SAID, TO EXCHANGE INFORMATION ON THE DEBT PROBLEM AND CONTINUE WORK IN OECD. ON POLITICAL FRONT, FRENCH SHARE OUR DISAPPOINTMENT WITH RECENT TRENDS, BUT BELIEVE CONTINUATION OF DIALOGUE NONETHELESS ESSENTIAL. FRENCH WANT TO MAKE TRADE MUTUALLY BENEFICIAL, BUT MODIFICATIONS TO THAT END SHOULD BE MADE GRADUALLY. TOUGHER CONDITIONS FOR CREDITS ARE DESIRABLE, HE SAID, BUT WE SHOULD BE AWARE THAT THIS WILL NOT CHANGE SOVIETS, AND FRENCH FEEL "DESTRUCTION OF TRADE PATTERNS" WITH EAST WOULD ONLY HELP SOVIETS INCREASE CONTROL OVER EASTERN EUROPE. 7. PAYE SAID FRENCH WERE PLEASED THAT U.S. WAS NO LONGER FOLLOWING SANCTIONS APPROACH BUT WAS SEEKING TO DEVELOP LONG-TERM POLICY TOWARD USSR, AS FRENCH HAD LONG SECRET SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 02 OF 02 ROME 6645 DTG: 181112Z MAR 82 PSN: 001990 SOUGHT. HE WARNED AGAINST SEEKING TOO RAPID CHANGE AND GIVING SOME COUNTRIES IMPRESSION THAT BURDEN WAS NOT EQUALLY SHARED. PAYE SAID FRENCH COULD AGREE TO COMMON E CONSIDERATION OF JOINT APPROACH AND TO MODIFICATION OF X PATTERN OF TRADE AND CREDITS, AS LONG AS THIS DIDN' T MOVE TOO FAST OR CREATE CONTENTION AMONG ALLIES. D 8. SCHNEITER (DREE) NOTED IMPORTANCE OF CAPITAL GOODS/ COMPLETE PLANTS IN FRENCH EXPORTS TO USSR, ALTHOUGH FRENCH SIDE INDICATED THAT IN THEIR 1981 EXPORTS OF 10 S BILLION FRANCS, THESE ITEMS ACCOUNTED FOR ONLY 18 PERCENT OF THE TOTAL (85 PERCENT OF WHICH OR 15 percent) WAS COVERED BY MEDIUM- AND LONG-TERM CREDITS. THIS LOW SHARE WAS DUE TO SMALL NUMBER OF CONTRACTS CONCLUDED IN 1977-79. IN 1982, SHARE OF CAPITAL GOODS SHOULD RETURN TO "NORMAL" 30-35 PERCENT RANGE AS MORE RECENT CONTRACTS BEGIN TO SHOW UP IN STATISTICS. DISCUSSING FRANCE' S LARGE AND GROWING TRADE DEFICIT WITH USSR, SCHNEITER SAID FRENCH X WERE NOT INCLINED TO SEEK BILATERAL BALANCE SINCE OIL AND GAS ACCOUNTED FOR 85 PERCENT OF SOVIET EXPORTS, AND D REDUCTION OF THESE PURCHASES WOULD WORK AGAINST FRENCH GOAL OF MAXIMUM DIVERSIFICATION. TURNING TO CREDIT POLICY, SCHNEITER CLAIMED THAT GOVERNMENT ROLE IN CREDIT SYSTEM S IS " ONE OF CLEAREST IN WEST" BECAUSE SUBSIDIES ARE GIVEN ON VERY CLEAR AND REGULAR BASIS. IN CASE OF USSR, SCHNEITER STRESSED THAT FRENCH HAD TERMINATED, AS OF SEPTEMBER 30, 1981, SPECIAL ARRANGEMENT ON INTEREST RATES. FRENCH CREDITS were NOW EXTENDED ONLY ON BASIS OF OECD CONSENSUS, AS OPPOSED TO PREVIOUS RATES OF 7.45 BT E X D S E X D S SECRET SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 01 OF 02 ROME 6645 DTG: 181112Z MAR 82 PSN: 001994 EOB670 AN009468 TOR: 077/1512Z CSN: HCE562 DISTRIBUTION: ISEC-01 /001 A2 E X WHTS ASSIGNED DISTRIBUTION: SIT: MCF D EOB: S OP IMMED UTS7630 DE ruehro #6645/03 0771132 o 181112Z MAR 82 FM AMEMBASSY ROME E TO SECSTATE WASHDC IMMEDIATE 4822 X INFO AMEMBASSY BONN 3884 AMEMBASSY BRUSSELS 4778 D AMEMBASSY LONDON 6393 AMEMBASSY PARIS 2195 USMISSION USNATO 7435 S SECRET SECTION 03 OF 06 ROME Ø6645 EXDIS ALSO FOR USEC PERCENT (2-5 YEARS) AND 7.84 PERCENT (5-8 YEARS). SOVIETS WERE SEEKING DISCUSSIONS ON NEW INTEREST RATE ARRANGEMENT, E IN WHICH THEY WOULD ASK FOR LONG-TERM COMMITMENT TO GO NO HIGHER THAN CURRENT OECD CONSENSUS, BUT FRENCH WOULD X REFUSE THIS DEMAND. SCHNEITER OBSERVED THAT FRENCH HAVE CALCULATED THAT TOTAL COST TO ALL WESTERN COUNTRIES OF D INTEREST RATE SUBSIDIES TO SOVIETS AMOUNTS TO ABOUT $400 PER YEAR, WITH FRENCH SHARE OF ABOUT $200 MILLION. LELAND ASKED WHAT PERCENT OF TOTAL FRENCH EXPORTS TO S USSR WAS COVERED IN ONE WAY OR ANOTHER BY OFFICIAL CREDITS OR GUARANTEES. SCHNEITER SAID THIS WAS LESS THAN 64 PER- CENT. 9. CLARIFYING SCHNEITER': S PRESENTATION, PAYE NOTED THAT WHILE FRENCH WERE NO LONGER COMMITED TO GIVE SOVIETS ANY PARTICULAR INTEREST RATE, THEY WERE COMMITED, UNDER E FIVE-YEAR agreement WHICH EXPIRES IN 1985, TO GIVE X CREDITS AND GUARANTEES. THE TERMS OF INDIVIDUAL CREDITS, I.E. RATES AND MATURITIES, DEPENDED UPON SIZE AND NATURE D OF CONTRACT. ASKED WHETHER IRON/STEEL PRODUCTS COVERED BY OFFICIAL CREDITS, PAYE SAID SOVIETS HAD DEMANDED THIS BUT FRENCH HAD REFUSED. IKLE SUGGESTED THAT FRENCH COMMITMENT TO SOVIETS WOULD NOT seem TO RULE OUT ARRANGE- S MENT WE HAVE IN MIND, BUT PAYE REPEATED THAT FRENCH REGARD THEMSELVES COMMITTED TO GIVE CREDITS. MOUTON RECALLED THAT LOWER RATES CHARGED THROUGH SEPTEMBER 30, 1981 HAD BEEN ESTABLISHED IN AN ANNEX TO THE FIVE-YEAR PROTOCOL WHICH HAD A STATED LIFE OF 18 MONTHS. LELAND ASKED WHY FRENCH COULD NOT NOW CHARGE SOVIETS RATES HIGHER THAN THOSE IN OECD CONSENSUS, SINCE THEY WERE CLEARLY LOSING MONEY ON BUSINESS. PAYE NOTED THAT "EVERYONE IS LOSING MONEY.' 10. ON SHORT-TERM CREDITS, FRENCH INDICATED THEY CHARGED ANY RATE THE MARKET WOULD BEAR. MOUTON SAID ALMOST ALL OF THE 1981 EXPORTS NOT IN CAPITAL GOODS CATEGORY (I.E. ABOUT 82 PERCENT OF TOTAL) WAS COVERED BY SHORT-TERM CREDITS AT MARKET RATES. THE SUBSIDY element, HE SAID, APPLIED ONLY TO MEDIUM/LONG TERM CREDITS FOR CAPITAL GOODS. SECRET SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 02 OF 02 ROME 6645 DTG: 181112Z MAR 82 PSN: øø1994 11. TRICHET NOTED THAT FRENCH HAVE CALCULATED THAT $8 BILLION IN EXPORT CREDITS EXTENDED TO USSR ANNUALLY INVOLVES SUBSIDY TO SOVIETS OF $400 MILLION, A SUM WHICH E HE DESCRIBED AS SUBSTANTIAL BUT NOT OF THE MAGNITUDE TO X HAVE A GREAT IMPACT ON THE USSR. HE ALSO MADE POINT THAT FRENCH REGARD CREDITS/GUARANTEES VERY IMPORTANT TO D THEIR TRADE WITH USSR, RAISING POSSIBILITY OF SOVIET "RETALIATION" IF FRENCH TOOK STEPS AGAINST SOVIET ECONOMIC INTERESTS. TRICHET ADDED THAT FRENCH BANKS CONTINUE TO REGARD USSR, AS OPPOSED TO EASTERN EUROPE, AS GOOD RISK; S LELAND REJECTED THIS ASSERTION, POINTING OUT THAT NEITHER FRENCH NOR U.S. BANKS WOULD LOAN MONEY TO SOVIETS BEYOND VERY SHORT TERMS WITHOUT GUARANTEES. TRICHET OBJECTED THAT AT LEAST HALF OF FRG'S EXPORTS TO USSR WERE COVERED BY NON-GUARANTEED CREDITS, TO WHICH LELAND POINTED OUT THAT THIS FIGURE WAS FALLING FAST AS HERMES GUARANTEES were E BEING USED MORE AND MORE. LELAND ALSO OBSERVED THAT SINCE MARCH 1981, SOVIETS HAD BEEN UNABLE TO RAISE MONEY IN X EUROCURRENCY MARKETS, AND BAILEY NOTED THAT SOVIETS WERE EVEN SEEKING LOANS FOR DOWN PAYMENTS (SUCCESSFULLY IN D CASE OF france). 12. FRENCH THEN TURNED TO QUESTION OF U.S. GRAIN SALES, S WHICH THEY SAID WAS VERY IMPORTANT IN TERMS OF BURDEN SHARING. PAYE SUGGESTED THAT SOVIETS HAD ACHIEVED SOME "REVERSE LEVERAGE" IN CASE OF U.S. GRAIN SALES. LELAND ACKNOWLEDGED THAT THERE were STRONG FORCES IN U.S. WHICH OPPOSED ANY EMBARGO, BUT POINTED OUT THAT REAL QUESTION WAS EFFECTIVENESS OF ANY U.S. ACTION IN ABSENCE COOPERATION OF CANADA AND ARGENTINA, WHICH CUT SUBSTANTIALLY E INTO U.S. SHARE OF SOVIET MARKET DURING LAST EMBARGO. BUCKLEY POINTED OUT THAT IF SOVIET HARD CURRENCY X AVAILABILITY SHRINKS DU TO CREDIT RESTRICTIONS, THEY D WILL PROBABLY CUT BACK ON PURCHASES OF U.S. GRAIN. OLMER NOTED LIMITED IMPACT OF PARTIAL EMBARGO AND CALLED ATTENTION TO U.S. SACRIFICE OF LARGE VOLUME OF CAPITAL S GOODS SALES TO USSR. RETURNING TO DANGER OF SOVIET BT E X D S SECRET SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 01 OF 02 ROME 6645 DTG: 181112Z MAR 82 PSN: 001997 EOB671 AN009469 TOR: 077/1514Z CSN: HCE563 DISTRIBUTION: ISEC-01 /001 A2 WHSR COMMENT: WPC MCF WHLR JP VP EOB SIT E X WHTS ASSIGNED DISTRIBUTION: SIT: MCF D EOB: S OP IMMED UTS7632 DE RUEHRO #6645/04 0771133 O 181112Z MAR 82 FM AMEMBASSY ROME E TO SECSTATE WASHDC IMMEDIATE 4823 X INFO AMEMBASSY BONN 3885 AMEMBASSY BRUSSELS 4779 D AMEMBASSY LONDON 6394 AMEMBASSY PARIS 2196 USMISSION USNATO 7436 S SECRE SECTION 04 OF 06 ROME 06645 EXDIS ALSO FOR USEC COUNTERMEASURES. TRICHET SUGGESTED THAT CUT OFF IN WESTERN CREDITS WOULD CAUSE SOVIETS TO DECLARE MORITORIUM ON SERVICING OF EXISTING DEBTS. LELAND SAID THIS WAS CLASSIC CASE OF REVERSE LEVERAGE IN ACTION, AND SAID SMART THING X WOULD BE TO CUT OFF FURTHER CREDITS BEFORE THE WEST FALLS EVEN DEEPER INTO THIS DANGER. EVEN PAYE SUGGESTED THAT D TRICHET' S COMMENTS INDICATED THAT SOVIETS HAD SUBSTANTIAL LEVERAGE OVER FRANCE, BUT TRICHET CLAIMED THAT LEVERAGE IN FACT WAS over COMMERCIAL BANKS. S 13. LELAND, IKLE AND BAILEY URGED GREATER INFORMATION SHARING ON STATUS OF LENDING TO THE EAST IN INTEREST OF MORE EFFECTIVE WESTERN COOPERATION AND CONTINGENCY PLANNING. FRENCH AGREED GREATER TRANSPARENCY WAS NEEDED BUT QUESTIONED WHETHER ANY SPECIAL GROUP WAS REQUIRED TO CARRY THIS OUT. OECD WOULD BE FINE, THEY SAID. LELAND E SAID OECD WAS FINE FOR SHARING OF INFORMATION ON CREDITS; X WHAT WE HAD IN MIND WAS INFORMAL GROUP WHICH WOULD NOT ONLY SHARE INFORMATION BUT CONSIDER AND AGREE ON HOW TO D ACT. 14. PAYE ASKED HOW U.S. PROPOSED TO PROCEED AFTER FIRST ROUND OF BILATERAL CONSULTATIONS. buckley SAID WE HAD NO S FIXED IDEAS BUT WERE THINKING IN TERMS OF INTENSIVE BILATERAL FOLLOW-UP, ASSUMING FIRST ROUND DEVELOPS CONCENSUS IN SUPPORT OF OUR BASIC STRATEGIC ANALYSIS, WITH MULTILATERAL MEETING AT END OF APRIL OR FIRST OF MAY. PAYE DISPLAYED CONTINUING SKEPTICISM REGARDING NEED FOR ANY NEW GROUP, SUGGESTING THAT EXISTING BODIES COULD BE USED. HE ALSO RAISED QUESTION OF EC COMPETENCE, TO WHICH LELAND POINTED OUT THAT WE ARE RAISING A SECURITY, NOT A TRADE, ISSUE; AS CONSEQUENCE, EC WOULD NOT BE DIRECTLY INVOLVED, ALTHOUGH MISSION PLANNED TO CONSULT WITH COMMISSION. PAYE ASKED WHETHER WE WERE THINKING IN TERMS OF CREDIT COCOM." BAILEY SAID WE BELIEVE THE MORE INFORMAL A STRUCTURE SELECTED, THE BETTER. THIS WAS WHY PARALLEL WITH COCOM HAD BEEN MENTIONED. 15. TURNING TO THE U.S. PROPOSAL FOR A PAUSE IN APPROVAL OF NEW CREDITS, PAYE SAID HE DID NOT SEE HOW FRENCH COULD SQUARE THIS WITH COMMITMENTS OF THEIR FIVE-YEAR AGREEMENT SECRET SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 02 OF 02 ROME 6645 DTG: 181112Z MAR 82 PSN: 001997 WITH SOVIETS. BUCKLEY ASKED WHETHER CREDITS AND GUARANTEES WERE BEING GIVEN FOR NON-CAPITAL GOODS EXPORTS. COULD THIS BE AN AREA OF FLEXIBILITY, HE ASKED? PAYE AND SCHNEITER ACKNOWLEDGED THAT SHORT-TERM CREDITS WERE NOT UNDER THEIR FIVE-YEAR agreement WITH SOVIETS; HOWEVER, BOTH ARGUED THAT STOPPING CREDITS AND GUARANTEES FOR THESE ITEMS D WOULD KILL THE TRADE, WHICH IS PARTICULARLY ATTRACTIVE SINCE NO SUBSIDIES ARE INVOLVED. IN ADDITION, A PAUSE IN THIS AREA WOULD BE PARTICULARLY DIFFICULT, THEY SAID, WITHOUT PARTICIPATION OF OTHER "EUROPEAN PARTNERS. PAYE S ALSO RAISED POSSIBILITY THAT GOF MIGHT BE "OBLIGED" TO GRANT THESE CREDITS UNDER SOME BILATERAL "STATEMENT" WITH SOVIETS OF WHICH HE WAS UNAWARE; HE UNDERTOOK TO CHECK ON THIS POINT. FINALLY, HE NOTED THAT THERE MIGHT BE SOME REGULATION UNDER WHICH FRENCH EXPORTER WOULD HAVE LEGAL "RIGHT" TO CREDITS; FRENCH HAD NOT, HE SAID, E PREVIOUSLY DENIED CREDITS/GUARANTEES ON POLITICAL GROUNDS. ASKED WHETHER FRENCH WERE CONTINUING TO GRANT CREDITS/ X GUARANTEES TO ROMANIA, TRICHET BURST OUT THAT "ROMANIA HAS NOTHING, DOUBTLESS DISPLAYING TREASURY' S EXASPERATION D WITH THAT COUNTRY' S FINANCIAL PRACTICES. 16. LELAND ASKED HOW FRENCH HANDLE HIGH-RISK SITUATIONS. S SCHNEITER SAID FRENCH HAVE "RISK-MANAGEMENT" SYSTEM FOR POLITICAL RISKS. RATES FOR COVERAGE OF THESE RISKS ARE UNIFORM, WORLD-WIDE; COMMERCIAL RISKS, ON THE OTHER HAND, ARE REFLECTED IN VARIABLE RATES DEPENDING UPON THE BORROWER. MOUTON RETURNED TO QUESTION OF WHETHER FRENCH EXPORTER HAD "RIGHT" TO COF ACE GUARANTEES, SUGGESTING THAT WHILE THIS IS NOT AUTOMATIC, ONCE APPROVAL OF COFACE E ITSELF IS SECURED, SUBSEQUENT TREASURY APPROVAL WAS "AUTOMATIC." TRICHET REMARKED THAT ANY HALT IN SHORT-TERM X GUARANTEES WOULD BE A SHATTERING SIGNAL; THERE WOULD BE D A TOTAL STOP IN LENDING. SUMMING UP ON PAUSE, PAYE REITERATED THAT GOF' S ONLY FLEXIBILITY OF MEDIUM- AND BT S E X D S SECRET SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 01 OF 02 ROME 6645 DTG: 181112Z MAR 82 PSN: 001999 EOB672 AN009470 TOR: 077/1516Z CSN: HCE564 DISTRIBUTION: ISEC-01 /001 A2 WHSR COMMENT: WPC MCF WHLR JP VP EOB SIT E X WHTS ASSIGNED DISTRIBUTION: SIT: MCF D EOB: S OP IMMED UTS7633 DE ruehro #6645/05 ø771134 O 181112Z MAR 82 FM AMEMBASSY ROME E TO SECSTATE WASHDC IMMEDIATE 4824 X INFO AMEMBASSY BONN 3886 AMEMBASSY BRUSSELS 4780 D AMEMBASSY LONDON 6395 AMEMBASSY PARIS 2197 USMISSION USNATO 7437 S SECRE SECTION 05 OF 06 ROME 06645 EXDIS ALSO FOR USEC LONG-TERM CREDITS IS IN AREA OF RATES; CREDITS THEMSELVES CANNOT BE REFUSED DUE TO FIVE-YEAR AGREEMENT WITH SOVIETS. E LELAND ASKED HOW FRENCH HAD HANDLED THEIR CREDIT AGREE- MENTS WITH ROMANIA AND POLAND WHEN FINANCIAL PROBLEMS OF X THOSE COUNTRIES BECAME ACUTE. AFTER SOME DISCUSSION D WITHIN FRENCH DELEGATION, WE were TOLD THAT agreement WITH USSR IS UNIQUE; ONLY SIMILAR agreement IS ONE WITH GDR, BUT FRENCH OBLIGATIONS IN THAT CASE WERE LESS SPECIFIC. PAYE SAID HE WOULD LOOK INTO STATUS OF SHORT-TERM S CREDITS/GUARANTEES, WHERE HE THOUGHT THERE MIGHT BE MORE FLEXIBILITY, ALTHOUGH HE RAISED QUESTION AS TO WHETHER GOF WOULD WANT "THIS TRADE TO FALL VERY FAST." BUCKLEY SUGGESTED THAT SOVIETS WOULD PAY CASH, BUT PAYE REJOINED THAT ONLY A SMALL PERCENTAGE OF CURRENT DEALS WOULD GO THROUGH ON THIS BASIS. IN RESPONSE TO LELAND' S QUESTION AS TO WHO BEARS THE RISK, TRICHET SAID THAT, "PSYCHOLO- E GICALLY, THE RISK IS SHARED BETWEEN BANKS AND EXPORTERS, X BUT HE ADDED THAT THE BANKS WOULD NOT LEND IF COF ACE WERE OUT OF THE PICTURE. D 17. PAYE TURNED TO QUESTION OF "SAFETY NET" IN EVENT OF EASTERN EUROPEAN DEFAULTS, AND ASKED WHAT U.S. HAD IN MIND: LELAND AND BAILEY EXPLAINED THAT ACTUAL MECHANISMS S (BIS AND SWAP LINES) WERE IN PLACE. WE WERE THINKING OF BETTER INFORMATION EXCHANGE TO ANTICIPATE WHERE "NET" MIGHT BE NEEDED. LELAND SUGGESTED THAT "AUTOMATIC" SOVIET ACCESS TO FRENCH CREDIT WAS QUITE DANGEROUS, AND HE NOTED WIDESPREAD VIEWS IN THE UNITED STATES THAT ANY EFFORTS TO STAVE OFF POLISH OR ROMANIAN DEFAULTS CONSTITUTED INDIRECT ASSISTANCE TO SOVIETS. TRICHET NOTED REPORTS THAT U.S. WAS CONSIDERING PUSHING FOR POLISH DEFAULT, FEELING THAT ANY NEGATIVE SIDE EFFECTS COULD BE CONTAINED. LELAND NOTED PRESIDENT' S DECISION ON THIS ISSUE BUT SAID THAT THERE WAS A WIDE VARIETY OF VIEWS ON SUBJECT IN U.S. THERE WAS GENERAL AGREEMENT IN U.S., HOWEVER, THAT WEST HAD CREATED ENORMOUS PROBLEM FOR ITSELF WITH EXTENSION OF EASY CREDIT TO SOVIETS AND EASTERN EUROPEANS AND THAT FURTHER CREDIT TO SOVIETS IN PARTICULAR HAD TO BE CAREFULLY CONTROLLED. LELAND NOTED THAT IN HIS OWN CONGRESSIONAL TESTIMONY ON POLISH DEBT ISSUE, HE HAD CITED FACTS THAT CURRENT FLOW WAS FROM EAST SECRET SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 02 OF 02 ROME 6645 DTG: 181112Z MAR 82 PSN: 001999 TO WEST AND THAT PRACTICALLY NO NEW LENDING WAS GOING TO USSR AS REASONS FOR AVOIDING DEFAULT. BAILEY REFERRED TO GERMAN CLAIM THAT SOVIETS WERE BORROWING IN WEST AND E PASSING FUNDS TO POLES FOR USE ON LATTER' S 1981 COMMERCIAL X BANK INTEREST. QUAI SOVIET/EE DIRECTOR MASSET INDICATED THAT FRENCH ASSUMED THIS WAS THE CASE. D 18. ON ENERGY SECURITY ISSUES, PAYE SAID FRANCE SHARED U.S. CONCERNS 'ON "DEPENDENCY" ISSUE AND WAS PREPARED TO S WORK WITH US, OLMER AND IKLE CALLED ATTENTION TO ENORMOUS INCREASE IN U.S. COAL EXPORT CAPACITY AND CHANGING VIEWS IN NORWAY ON GAS EXPORTS. PAYE SAID FRANCE WAS PREPARED TO INCREASE COAL IMPORTS "CAUTIOUSLY" (TO AVOID PROBLEMS WITH UNEMPLOYED FRENCH MINERS) PROVIDED IT WAS ECONOMIC. HE ALSO NOTED EFFORTS UNDERWAY IN FRANCE AND ELSEWHERE IN EUROPE TO CREATE "SAFETY NET" IN EVENT GAS SUPPLY CUT- E OFFS. UNDER THESE CIRCUMSTANCES, FRANCE WOULD BE FOOLISH NOT TO BUY SOVIET GAS IF THE PRICE WERE RIGHT. ON X MATTER OF EC CUTS IN IMPORTS FROM USSR, PAYE ACKNOWLEDGED OLMER' S EXPRESSION OF DISAPPOINTMENT WITH REMARK THAT THE D MOUNTAIN WAS BOILED DOWN TO A MOUSE. HE ADDED, HOWEVER, THAT OBJECTIVE HAD BEEN UNDERSTOOD FROM OUTSET TO BE 'SYMBOLIC, AND SUGGESTED THAT THIS HAD BEEN ACHIEVED. S 19. FOLLOWING LUNCH AT QUAI, U.S. TEAM SPLIT UP. buckley AND LELAND MET AT THE TREASURY WITH TRESOR DIRECTOR DE CABINET lagayette, JURGENSEN AND TRICHET. MESSRS. BUCKLEY AND LELAND REITERATED OUR BASIC OBJECTIVES. SOME FRENCH EXPRESSED SURPRISE AT U.S. VIEW THAT BANKS WERE LOOKING AT USSR AS LESS CREDITWORTHY NOW THAN A YEAR AGO. E MR. DE LAGAYETTE STATED THAT ONE HAD TO SEPARATE ESSENTIALLY POLITICAL AND SYMBOLIC STEPS--SUCH AS THE X RECENT EC ACTION TO RESTRICT IMPORTS OF ERTAIN GOODS D FROM THE USSR--FROM "TRUE ECONOMIC AND TRADE MEASURES" SUCH AS OUR PROPOSALS TO RESTRICT EXPORT CREDITS. HE EVINCED LITTLE INTEREST IN ANY MULTILATERAL EFFORT IN THIS AREA AND INDICATED HE SAW NO PURPOSE IN SEEING THEIR S BT E X D S SECRET SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 01 OF 02 ROME 6645 DTG: 181112Z MAR 82 PSN: 002001 EOB673 ANØ09471 TOR: 077/1517Z CSN: HCE566 DISTRIBUTION: ISEC-01 /001 A2 WHSR COMMENT: WPC MCF WHLR JP VP EOB SIT E X WHTS ASSIGNED DISTRIBUTION: SIT: MCF D EOB: S OP IMMED STU4643 DE RUEHRO *6645/06 0771136 O 181112Z MAR 82 FM AMEMBASSY ROME E TO SECSTATE WASHDC IMMEDIATE 4825 X INFO AMEMBASSY BONN 3887 AMEMBASSY BRUSSELS 4781 AMEMBASSY LONDON 6396 AMEMBASSY PARIS 2198 USMISSION USNATO 7438 S SEGREP SECTION 06 OF 06 ROME Ø6645 EXDIS ALSO FOR USEC TRADE EFFECTED AS IT WOULD BE BY CURTAILING CREDIT. FOLLOWING MR. BUCKLEY' S DEPARTURE FOR ANOTHER MEETING, E MR. LELAND HAD A MEETING WITH DIRECTOR DE TRESOR CAMDESSUS. THIS MEETING WAS EXTREMELY USEFUL. MR. LELAND X REW THE CONNECTION BETWEEN EUROPEAN WILLINGNESS TO MOVE FORWARD WITH US ON THE ISSUE OF RESTRICTING CREDITS TO D THE USSR AND OUR ABILITY TO WORK WITH THEM ON OTHER EAST- WEST FINANCIAL AND DEBT PROBLEMS. THIS CONNECTION WAS CLEARLY UNDERSTOOD BY MR. CAMDESSUS AND, IT IS S BELIEVED, ITS IMPORTANCE APPRECIATED. 20. OLMER, BAILEY, NILES AND DENYSYK MET SEPARATELY WITH ELYSEE ECONOMIC DIRECTOR SAUTTER AND OE CD SECGEN VAN LENNEP. RECALLING THAT PRESIDENT REAGAN HAD TOLD PRESIDENT MITTERRAND LAST FRIDAY OF MISSION' S VISIT AND IMPORTANCE HE ATTACHED TO IT, SAUTTER WAS QUITE EN- E COURAGING ON GOF' S OVERALL POLICY TOWARDS USSR IN X ECONOMIC AREA, NOTING THAT MITTERRAND GOVERNMENT HAD ABANDONED "PISAR" THEORY THAT THE MORE TRADE WITH THE D USSR, THE BETTER EAST-WEST POLITICAL RELATIONS WOULD BECOME. FRANCE NOW APPROACHED ECONOMIC RELATIONSHIP WITH USSR ON BASIS OF COOL ECONOMIC CALCULATIONS. UNDER S THE MITTERRAND GOVERNMENT, SAUTTER ADDED, THE USSR WAS TREATED AS JUST ANOTHER COUNTRY, I.E., NO "SPECIAL RELATIONSHIP.' AT THE SAME TIME, HOWEVER, THIS MEANT IN HIS VIEW THAT THE USSR COULD NOT BE SINGLED OUT AMONG FRANCE' S TRADING PARTNERS FOR DISCRIMINATORY TREATMENT AND EXCLUDED FROM EXPORT CREDITS AND GUARANTEES. OLMER AND BAILEY PRESENTED U.S. VIEWS ON NEED FOR ACTION NOW TO RESTRICT FLOW OF SUBSIDIZED OFFICIAL CREDITS AND CREDIT GUARANTEES TO USSR. SAUTTER EXPRESSED SKEPTICISM REGARDING MISSION' S OBJECTIVES BUT TOOK THOROUGH NOTES AND SAID HE WOULD INFORM ELYSEE SECGEN BEREGOVOY OF MISSION' S PRESENTATIONS. HE CHARACTERIZED FRANCE' REACTION, THUS FAR, TO POLISH CRISIS AS CONSISTING OF "SYMBOLIC" STEPS; RESTRICTION OF EXPORT CREDITS AND GUARANTEES, HE SAID, WOULD BE A "SUBSTANTIVE" STEP. 21. BRIEF CALL ON OECD SECGEN VAN LENNEP, IN WHICH MISSION MEMBERS WERE JOINED BY AMBASSADOR KATZ, FOCUSSED ON OECD' S ONGOING WORK ON EAST-WEST ECONOMIC RELATIONS, SECRET 12 SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 02 OF 02 ROME 6645 DTG: 181112Z MAR 82 PSN: 002001 INCLUDING CREDIT/DEBT ISSUES. VAN LENNEP SAID HE BELIEVED THAT MAY 10-11 OECD MINISTERIAL WOULD PROVIDE VERY IMPORTANT OPPORTUNITY FOR MEMBERS TO LAUNCH NEW POLICY E IN AREA OF EAST-WEST ECONOMIC RELATIONS. HE SAID HE X BELIEVED MISSION' S VISIT WAS TIMELY IN TERMS OF OECD' S WORK IN THAT IT CALLED HIGH-LEVEL ATTENTION TO THIS ISSUE. D RABB BT I S E X D I S E X D I S E X D I S SECRET CAS PIPECINE 13 10759 SECRET EUR: TMTNILES 3/22/82 EXT. 21126 T:JLBUCKLEY NSC:NBAILEY EB: AMENDT S/S-O: t: where IMMEDIATE BONN, PARIS IMMEDIATE, LONDON IMMEDIATE, ROME IMMEDIATE, BRUSSELS IMMEDIATE, OSLO IMMEDIATE, THE HAGUE IMMEDIATE IMMEDIATE USNATO - EXDIS, BRUSSELS ALSO FOR USEEC PNRis for Uso+CD JLB RDS-1 3/22/92 [BUCKLEY, JAMES L.) TMTN EFIN EEWT UR INTER-AGENCY MISSION ON EAST-WEST ECONOMIC - RELATIONS: DISCUSSION OF SIBERIAN GAS - PIPELINE 1. ENTIRE TEXT SECRET. 2. DISCUSSION OF SIBERIAN GAS PIPELINE ISSUES DURING MISSION'S VISIT REVEAL, AS EXPECTED, THAT GERMANS AND FRENCH REMAIN COMMITTED TO PROJECT AND THAT ITALIANS BARRING SOME UNEXPECTED DEVELOPMENT WILL END THEIR probably "PAUSE" WITHIN NEXT FEW WEEKS HOWEVER, SEVERAL SOFT SPOTS IN EUROPEAN SUPPORT FOR PIPELINE PROJECT DID EMERGE, AS WELL AS INFORMATION ON UK ATTITUDE TOWARD POSSIBLE GAS EXPORTS TO THE CONTINENT WHICH COULD HAVE uncess a SOME IMPACT ON DECISIONS OF THOSE COUNTRIES WHICH HAVE tangible NOT YET SIGNED ON. IN ADDITION, MISSION GAINED obtainative IMPRESSION THAT FRENCH MAY WELL BE CONSIDERING can k POSSIBILITY OF TAKING 6 BCM RATHER THAN 8 BCM. WE ALSO identified. HAVE REPORT THAT RUHRGAS CAN EXERCISE ON APRIL 1 AND NOVEMBER 1 OPTIONS TO REDUCE ITS TAKE BY TEN PERCENT ON EACH OCCASIONS. OBVIOUSLY, EVEN IF PIPULINE IS ULTIMATELY CONSTRUCTED, OUR INTEREST REMAINS TO MINIMIZE WESTERN EUROPEAN PURCHASES OF AND DEPENDENCE DECLASSIFIED SECRET NLRRF06-114/9 NLRR BY KML NARA DATE 4/7/2011 U.S. RATT: gENF one how Team left 14 SECRET 2 Giuseppa on gas informal smit yes. document mught We he would yes met have appreciate without Halis pm - support: foreson establed any may ON SOVIET SUPPLIES. IN ADDITION, THE LOWER THE and OF EUROPEAN PURCHASES FROM THE SOVIET UNION, THE LEVEL 00 to us where will The as U.S. wished GREATER THE POSSIBILITY THAT A SUFFICIENTLY LARGE assist Haliams MARKET WILL REMAIN UNSATISFIED IN THE EARLY 1990'S TO in developing JUSTIFY THE ENORMOUS INVESTMENTS WHICH WILL BE REQUIRED attentives TO DEVELOP THE HORTHERN NORWEGIAN OFFSHORE FIELDS SUCH AS 31/2and and Eleiphan rape. 3. ADDRESEE POSTS SHOULD FOLLOW UP WITH HOST GOVERNMENT AUTHORITIES AND INTERESTED COMPANIES AS APPROPRIATE: A. FOR ROME, EMBASSY SHOULD ENCOURAGE AS LONG A "PAUSE" AS POSSIBLE, USING AS ARGUMENTS THE FACT THAT ADDITIONAL CONSIDERATIONS SUCH AS UK READINESS TO EXPORT GAS TO THE CONTINENT SHOULD CHANGE SOME OF THE CALCULATIONS ON WHICH PARTICIPATION IN THE PIPELINE WAS DECIDED. B. FOR LONDON. MISSION WAS EXTREMELY ENCOURAGED TO LEARN FROM LORD BRIDGES THAT HMG HAS DECIDED TO ALLOW GAS EXPORTS TO THE CONTINENT AND TO ELIMINATE MONOPOLY POSITION OF BRITISH GAS CORPORATION IN THIS BUSINESS. WE BELIEVE THAT IT WOULD BE EXTREMELY USEFUL FOR BRITISH TO MAKE THIS DECISION AND ITS PRACTICAL IMPLICATIONS KNOWN TO CONTINENTAL COUNTRIES AS SOON AS POSSIBLE. C. FOR BONN. DEPARTMENT WOULD APPRECIATE ON URGENT BASIS CONFIRMATION OR OTHER INFORMATION RELATING TO REPORT THAT RUHRGAS MAY EXERCISE ON APRIL 1 AND OCTOBER 1 OPTIONS TO REDUCE SOVIET OFFTAKE BY TEN PERCENT. IF THESE REPORTS ARE CORRECT, WE BELIEVE RUHRGAS SHOULD BE STRONGLY ENCOURAGED TO EXERCISE SUCH OPTIONS, ON GROUNDS THAT PROJECTIONS FOR FUTURE GAS DEMAND IN EUROPE WOULD NOT SUGGEST THAT SUCH LARGE OFFTAKE IS CURRENTLY ENVISAGED, I.E., 10.5 BCM PLUS .75 BCM FOR BERLIN, ARE JUSTIFIED. EMBASSY SHOULD ALSO POINT OUT, TO RUHRGAS MANAGEMENT AS WELL AS PERHAPS TO REPRESENTATIVES OF US MULTINATIONALS IN GERMANY WHOSE COMPANIES OWN 27 PERCENT OF RUHRGAS, THIS ARGUMENT. Gazde D. FOR PARIS. WE WOULD APPRECIATE ANY INFORMATION EMBASSY CAN PROVIDE ON POSSIBILITY THAT CARAFRANCE MAY INDEED EXERCISE LOWER OF TWO OPTIONS, I.E., 6 BCM RATHER THAN 8 BCM IN ITS PIPELINE CONTRACT. WE WOULD ALSO WELCOME INFORMATION ON STATUS OF PIPELINE CONTRACTS, SPECIFICALLY WHETHER GOVERNMENT APPROVAL WHICH WE UNDERSTOOD WAS REQUIRED HAS IN FACT BEEN / SECRET promised toprovide - - Buckley on NORTH & underfake information gas prosibilities and we will SECRET 3 Send This package to the Energ within me week. GRANTED OR WHETHER THERE AS STILL AT LEAST IN FORMAL TERMS THIS REQUIREMENT. E. FOR BRUSSELS. WE GAINED IMPRESSION FROM FOREIGN MINISTER TINDEMANTS AND FOREIGN MINISTRY SECRETARY GENERAL ROELANTS THAT QUESTION OF BELGIAN PURCHASE OF SOVIET GAS IS STILL VERY MUCH OPEN. IF THIS IS TRUE, AND WE WOULD WELCOME ANY CONFIRMATION EMBASSY CAN PROVIDE, EMBASSY SHOULD CONTINUE TO ENCOURAGE BELGIANS TO HOLD OFF SIGNING CONTRACTS. ARGUMENTSTHAT UK GAS WILL IN FACT BE AVAILABLE THAT GAS DEMAND MAY INDEED TURN OUT TO BE CONSIDERABLY LESS THAN ORIGINALLY ESTIMATED AS BASIS FOR HOLDING OFF ON PURCHASES. L sesue F. FOR THE HAGUE. WE WOULD WELCOME STATUS REPORT ON DUTCH DISCUSSIONS WITH THE SOVIETS REGARDING POSSIBLE GAS PURCHASE. - G. FOR OSLO. TALKS IN EUROPE MADE CLEAR THAT NORWEGIANS HAVE GOTTEN THE MESSAGE ACROSS TO OTHER EUROPEANS THAT NORWAY IS MORE INTERESTED THAN BEFORE IN DEVELOPING AND EXPORTING IS SUBSTANTIAL GAS RESERVES. NEXT STEP IN THE PROCESS IS PROBABLY UP TO THE EUROPEANS AND PURTHER US INVOLVEMENT MP THIS STACE WOULD PROBABLY 00 UNHBOPFUL. EMBASSY'S COMMENTS WOULD BE WELCOMED. // ITS prepared to wrist accough 0.5. remains in - ANYWAY it CAN to speed development. SECRET 10752 NATIONAL SECURITY COUNCIL SECRET ATTACHMENTS WASHINGTON, D.C. O 20506 June 16, 1982 Dear Mr. Buckley: I am pleased to attach for your information the technical material which you requested on the Sakhalin and West European Soviet pipeline projects. The CIA was responsible for the background paper. This paper was reviewed by officials from State (EB and EUR), Commerce, DOD, DOE and NSC. I have added an executive summary under my own responsibility. Yours sincerely, Bice William F. Martin Attachment The Honorable James L. Buckley Under Secretary for Security Assistance, Science and Technology Department of State Washington, D.C. 20520 DECLASSIFIED NLRR F06-114/9*10752 SECRET ATTACHMENTS BY KML NARA DATE 9/25/12 10753 18 SECRET Technical Review of (1) The Sakhalin Project (2) The Siberian Gas Pipeline Project Executive Summary This paper summarizes our most current understanding of the technical facts concerning (1) the Sakhalin project and (2) the Siberian gas pipeline project. The study, prepared by the CIA, has been discussed and reviewed by State, Commerce, DOE, DOD and NSC staff. It was commissioned by Under Secretary of State Buckley and coordinated by the NSC. The following are the highlights of the study. The Sakhalin Project The Sakhalin project has similar structural characteristics to the Siberian gas pipeline project. First, it is a compensation transaction similar to the European pipeline deal, i.e., Japan would receive gas and oil over a twenty year period as a means of repayment for deliveries of equipment, technology and services on subsidized credit terms. Second, it represents another im- portant Soviet opportunity to earn large amounts of hard currency through energy exports and enhance their internal energy develop- ment. Exploration began in 1977 and 12 of 18 wells have reportedly been successful. U.S. sanctions on $2 million worth of drilling equipment and services are likely to cancel the 1982 drilling season on a secondary and redundant geological structure (Odoptu). This structure is not required to meet the delivery schedule envisioned in the original 1975 General Agreement between the Soviet Union and Japan. Necessary equipment is not available from non-U.S. supplies at present and maintenance of the embargo will probably set back the exploratory phase of the project at least one year if U.S. sanctions are maintained or extended. The development phase has been delayed twice for technical and market reasons. Production is now expected to begin in 1986 with full volumes coming on stream by 1990. Any long-term U.S. sanctions are likely to hinder Japanese fabrication of the production plat- forms and further delay production. The extent of delay depends on Japanese ingenuity in developing these technologies or on finding alternative suppliers. (The Soviets have so far failed in bids on other fronts for Western offshore technology.) SECRET DECLASSIFIED Review June 16, 2002 Derivative Classification by CIA NLRR F06-114/9 # 10753 BY KML NARA DATE 9/25/12 SECRET 2 Reserve estimates vary but reasonable assumptions lead to the conclusions that oil production could reach 80,000 barrels/day and gas 110,000 barrels/day oil equivalent by 1990. Japan is entitled to discount prices for up to half the oil and gas produced for 10 years. However, they are expected to take delivery of all of the gas produced. Soviet hard currency earnings would be roughly $32-39 billion ('82 prices) over the life of the project. This figure could be higher depending on oil prices and expanded deliveries. Continu- ation of the project may allow Moscow access to offshore drilling technology critically needed to explore Soviet continental shelves. The Japanese assert that if the agreement is breached, Japan would forfeit about $180-200 million in investments and forego up to $292 million in oil and gas price discounts granted over the 20 year life of the project. However, it appears most unlikely the Soviets would abrogate the general agreement; Soviet abrogation would remove the only export market for the gas and eliminate the potential for much-needed hard currency earnings. Furthermore, the Soviets would have extreme difficulty developing the reserves without Western equipment, technology and subsidized financing. The Soviets may, however, use the pretext of the contract breach to rescind the price discount to the Japanese. The Japanese appear to have only limited need for the gas (in fact, less than 1% of total energy supply) given prospects for slower growth in demand and the oversupply of LNG from other projects into the 1990's. Siberian Gas Pipeline Project Potential European Dependence on Soviet Gas The Soviet Union is currently delivering about 430,000 barrels/day oil equivalent (bdoe) of gas to Western Europe. The pipeline was originally conceived to carry 670,000 bdoe. New contracts have been signed to deliver as much as 330,000 bdoe to France, West Germany and Austria beginning in 1984. Additional sales of 135,000 bdoe are possible with Italy. (This would give a total of 465,000 bdoe compared to 670,000 originally planned.) Thus, quantities are still significant but less than originally believed possible. Even with this lower demand outlook, West Europe would still be dependent on Soviet gas for about 25% of its gas requirements by 1990. A longer term threat is that the Soviets may put pressure on Europeans to buy more gas than that presently foreseen. This would be a particularly attractive alternative for the Soviets should they find themselves in a credit squeeze and in need of more hard currency by the late 1980's. By pricing their gas SECRET SECRET 3 20 below market, they would be able to drive out the competition, especially the higher cost Norwegian alternative. This being the case, the Soviets could capture as much as 40% of the European gas market by the late 1990's. Alternatives to Soviet Gas Short term: If the West Europeans were to forego increases in Soviet gas deliveries because of sanctions or unforeseen political events, they could, from a technical standpoint, balance supply and demand through the 1980's through: (a) increased production of Dutch gas by 130,000 barrels/day; (b) accelerated development of Norway's relatively accessible Sleipner field (this would contribute up to 150,000 barrels/day); (c) maintaining or in- creasing domestic production levels in France, West Germany and Italy; (d) lowering gas demand through more efficient use and some fuel substitution. Longer term: Norwegian gas offers a secure but expensive alterna- tive to Soviet gas in the 1990's. Norway could supply an additional 830,000 barrels/day, which would cover the bulk of the increase projected for West European demand in the 1990's although some serious technical obstacles must be overcome and there must be a deliberate political choice to accelerate development. Remaining demands could be met by LNG from North Africa, North America and the Middle East. Problems: Longer term alternatives to Soviet gas are increasingly attractive. In the case of the short term alternatives, however, the economic and political challenges are formidable and the combination of necessary actions would be difficult to achieve. In addition, accelerated use of Dutch gas in the 1980's would heighten European needs for additional imports in the 1990's and reduce their security against a gas supply disruption from Soviet deliveries. Nevertheless, recent reports from both Norway and the Netherlands suggest that these countries may now be willing to produce at higher levels than presently anticipated. Effect of Sanctions on Soviet Gas Delivery Capability and Schedule Transmission facilities are adequate to enable an October 1, 1984 start up of new deliveries which would provide about 150,000 bdoe of the additional Soviet gas envisioned in the Siberian pipeline delivery schedule. Larger quantities of gas could be shipped but this would be at substantial costs to the internal Soviet and Eastern European economies. CIA estimates suggest that the pipeline is already off schedule. The earliest completion date (assuming U.S. sanctions are lifted) is 1986 compared to the originally planned completion date of 1984. SECRET 21 SECRET 4 Maintaining existing sanctions would add another 1 to 2 years of delay. Successful application of the doctrine of extraterritoriality could add another year of delay, stretching out the completion date of the pipeline to at least 1988. The withdrawal of sanctions would permit completion of the export pipeline in 1986 assuming that the Soviets didn't encounter other problems in construction. Prepared by William Martin Cleared by Roger Robinson SECRET UNCLASSIFIED JUNE 22 22 NATIONAL SECURITY COUNCIL sauchin MESSAGE CENTER extensive PAGE 01 OF 04 SECSTATE WASHDC 4622 DTG:232321Z JUN 82 PSN: 032158 EOB120 AN005192 TOR: 175/0027Z CSN:HCE193 IS INAPPLICABLE TO EXPORTS TO THE U.S.S.R. AND POLAND. Pupeline DISTRIBUTION: BALY-01 NAU-01 PIPE-01 ROBN-01 /004 A3 DATES: THESE RULES ARE EFFECTIVE 5:00 P.M. (EDT), JUNE 22, 1982. COMMENTS MUST BE RECEIVED BY AUGUST 21, 1982. HOWEVER, THESE REGULATIONS MAY BE REVISED BEFORE WHTS ASSIGNED DISTRIBUTION: THE CLOSE OF THE COMMENT PERIOD. SIT: EOB: ADDRESSES: WRITTEN COMMENTS (SIX COPIES WHEN POSSIBLE) SHOULD BE SENT TO: RICHARD J. ISADORE, DIRECTOR, OPERATIONS DIVISION, OFFICE OF EXPORT ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE, P. 0. BOX 273, WASHINGTON, OP IMMED D.C. 20044. DE RUEHC #4622 1742355 0 232321Z JUN 82 ZEX FOR FURTHER INFORMATION CONTACT: MR. ARCHIE ANDREWS, FM SECSTATE WASHDC DIRECTOR, EXPORTERS' SERVICE STAFF, OFFICE OF EXPORT ADMINISTRATION, DEPARTMENT OF COMMERCE, WASHINGTON, TO ALL DIPLOMATIC AND CONSULAR POSTS IMMEDIATE D.C. 20230 (TELEPHONE: (202) 377-5247 OR 377-4811). UNCLAS STATE 174622 SUPPLEMENTARY INFORMATION: E.O. 12065N/A REGULATORY CHANGES TAGS: EWWT, ESTC, EXCON SUBJECT: REGULATIONS TO IMPLEMENT AMENDMENT OF AT THE DIRECTION OF THE PRESIDENT AND PURSUANT TO CONTROLS ON OIL AND GAS EQUIPMENT AND TECHNOLOGY SECTION 6 OF THE EXPORT ADMINISTRATION ACT OF 1979, EXPORTS TO THE USSR AND SUSPENSION OF LICENSING TO AS AMENDED, THE DEPARTMENT OF COMMERCE IS AMENDING THE POLAND EXISTING OIL AND GAS CONTROLS APPLICABLE TO THE U.S.S.R. CURRENT CONTROLS RESTRICT EXPORTS AND REEXPORTS OF U.S. REFS: A) STATE 170004 (NOTAL); B) STATE 172922 (NOTAL) ORIGIN OIL AND GAS GOODS AND TECHNICAL DATA. THIS RULE EXPANDS THESE CONTROLS TO RESTRICT EXPORTS TO THE U.S.S.R. OF NON-U.S. ORIGIN GOODS OR TECHNICAL DATA BY 1. THE REGULATION QUOTED IN PARAGRAPH 2 WAS SIGNED ON U.S. OWNED OR CONTROLLED FOREIGN FIRMS. THE CURRENT JUNE 22 AND FILED IN THE FEDERAL REGISTER TO PUT INTO CONTROLS ALSO RESTRICT THE EXPORT OF FOREIGN PRODUCED EFFECT THE PRESIDENT'S JUNE 18 DECISION TO AMEND PRODUCTS OF U.S. TECHNICAL DATA IF THE EXPORT OF THE CONTROLS ON EXPORTS TO THE USSR OF OIL AND GAS EQUIPMENT DATA FROM THE UNITED STATES WAS SUBJECT TO THE RECEIPT AND TECHNOLOGY TO COVER EXPORTS OF NON-U.S -ORIGIN ITEMS BY US-CONTROLLED FIRMS OR BY LICENSEES USING OF A WRITTEN ASSURANCE FROM THE FOREIGN IMPORTER PREVIOUSLY TRANSFERRED U.S. TECHNOLOGY. THE JUNE 22 AGAINST THE TRANSFER OF THE DATA OR ITS PRODUCTS TO REGULATION ALSO PROVIDES FORMAL NOTICE OF WHAT HAS BEEN PROSCRIBED DESTINATIONS. DEFACTO LICENSING POLICY RE POLAND FOR THE LAST THREE MONTHS, NAMELY THAT VALIDATED LICENSES FOR EXPORT OR THIS RULE AMENDS CONTROLS ON FOREIGN PRODUCED PRODUCTS REEXPORT TO POLAND WILL NOT BE ISSUED. PARAGRAPH OF U.S. TECHNICAL DATA TO INCLUDE PRODUCTS OF U.S. DATA 3 PROVIDES BACKGROUND FOR SOME OF THE WORDING USED IN CASES WHERE THE RIGHT TO THE USE OF THE DATA ABROAD IN THE REGULATION. IS SUBJECT TO A LICENSING AGREEMENT WITH PERSONS SUBJECT TO THE JURISDICTION OF THE U.S. OR REQUIRES THE PAYMENT OF ROYALTIES OR OTHER COMPENSATION TO ANY SUCH- 2. THE TEXT OF THE JUNE 22 REGULATION FOLLOWS: PERSONS OR IN CASES WHERE THE RECIPIENT OF THE TECHNICAL DATA HAS AGREED TO ABIDE BY U.S. EXPORT CONTROL REGULA- QUOTE: TIONS. DEPARTMENT OF COMMERCE AS STATED BY THE PRESIDENT, THE OBJECTIVE OF THE UNITED STATES IN IMPOSING SANCTIONS HAS BEEN AND CONTINUES TO INTERNATIONAL TRADE ADMINISTRATION BE TO ADVANCE RECONCILIATION IN POLAND. THERE HAS BEEN NO MOVEMENT BY THE U.S.S.R. TOWARD THIS OBJECTIVE. 15 CFR 376 379 385 PURSUANT TO SECTION 6 OF THE EXPORT ADMINISTRATION ACT AMENDMENT OF OIL AND GAS CONTROLS TO THE U.S.S.R. OF 1979 AND AT THE DIRECTION OF THE PRESIDENT, IT HAS BEEN DETERMINED THAT THE EXPANSION OF OIL AND GAS AGENCY: OFFICE OF EXPORT ADMINISTRATION, INTERNATIONAL CONTROLS IS NECESSARY TO FURTHER SIGNIFICANTLY THE TRADE ADMINISTRATION, COMMERCE FOREIGN POLICY OF THE UNITED STATES. AS REQUIRED BY SECITON 6 (G) , ATTEMPTS TO OBTAIN COOPERATION OF COUNTRIES ACTION: INTERIM RULE WITH REQUEST FOR COMMENTS. THAT PRODUCE COMPARABLE ITEMS HAVE BEEN MADE, BUT HAVE BEEN UNSUCCESSFUL. SUMMARY: AT THE DIRECTION OF THE PRESIDENT, EXPORT CONTROLS ON OIL AND GAS GOODS AND TECHNOLOGY TO THE PURSUANT TO SECTION 4 (C), IT HAS BEEN DETERMINED THAT, USSR ARE AMENDED TO INCLUDE EXPORTS OF NON-U.S. ORIGIN NOTWITHSTANDING AVAILABILITY OF SOME OF THESE GOODS AND GOODS AND TECHNICAL DATA BY U.S. OWNED OR CONTROLLED DATA FROM FOREIGN SOURCES, FAILURE TO TAKE THIS ACTION COMPANIES WHEREVER ORGANIZED OR DOING BUSINESS, AS WELL WOULD BE DETRIMENTAL TO THE FOREIGN POLICY OF THE AS CERTAIN FOREIGN PRODUCED PRODUCTS OF U.S. TECHNICAL- UNITED STATES. IT ALSO HAS BEEN DETERMINED UNDER DATA NOT PREVIOUSLY SUBJECT TO CONTROLS. THE REGULATIONS SECTION 6 (D) THAT THERE ARE NO FEASIBLE ALTERNATIVE ARE ALSO REVISED TO STATE THAT CERTAIN POLICY GUIDANCE MEANS OF ACHIEVING THE PURPOSE OF THIS ACTION. UNCLASSIFIED UNCLASSIFIED 23 NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 02 OF 04 SECSTATE WASHDC 4622 DTG: 232321Z JUN 82 PSN: 032158 COMMENTS ARE RECEIVED, THEY MUST BE FOLLOWED BY WRITTEN MEMORANDA THAT WILL ALSO BE A MATTER OF PUBLIC RECORD APPROPRIATE PERSONS IN INDUSTRY AND THE CONGRESS HAVE AND WILL BE AVAILABLE FOR PUBLIC REVIEW. BEEN CONSULTED, AND THE CRITERIA SET FORTH IN SECITON 6 (B) OF THE ACT HAVE BEEN CONSIDERED. ACCORDINGLY, THE EXPORT ADMINSITRATION REGULATIONS (15 CFR 368, ET SEQ.) ARE AMENDED AS FOLLOWS: THESE REGULATIONS ALSO EXPLAIN THAT THE POLICY GUIDANCE CONTAINED IN SECTION 385.2 OF THE EXPORT ADMINISTRATION 1. SECTION 376.12 IS AMENDED BY REVISING THE FIRST REGULATIONS CONCERNING EXPORTS TO COUNTRY GROUPS Q, W, SENTENCE OF THE NOTE TO READ: AND Y DOES NOT APPLY TO THE U.S.S.R. OR POLAND. A GENERAL ORDER ISSUED ON DECEMBER 30, 1981 (15 CFR PART 376 SPECIAL COMMODITIES POLICIES AND PROVISIONS S390.8) SUSPENDED THE PROCESSING OF VALIDATED LICENSES AND OTHER AUTHORIZATIONS FOR EXPORT TO THE U.S.S.R. - FURTHERMORE, BECAUSE THE SITUATION IN POLAND CREATES THE UNACCEPTABLE RISK OF DIVERSION TO UNAUTHORIZED SECTION 376.12 END-USES AND/OR END-USERS, EXPORT LICENSES AND OTHER PARTS, COMPONENTS, AND MATERIALS IN FOREIGN-MADE END AUTHORIZATIONS FOR EXPORT OF NATIONAL SECURITY OR PRODUCTS NUCLEAR NON-PROLIFERATION CONTROLLED ITEMS DESTINED FOR POLAND WILL NOT BE ISSUED. RULEMAKING REQUIREMENTS NOTE THE OFFICE OF EXPORT ADMINISTRATION HAS DETERMINED THAT: IN ORDER TO DETERMINE WHETHER THE PRIOR WRITTEN APPROVAL OF THE OFFICE OF EXPORT ADMINISTRATION IS REQUIRED FOR 1. UNDER SECTION 13(A) OF THE EXPORT ADMINISTRATION THE EXPORT FROM A FOREIGN COUNTRY OF A FOREIGN MADE END ACT OF 1979 (50 U.S.C. APP. 2401 ET SEQ. (SUPP. III PRODUCT CONTAINING -ORIGIN PARTS OR COMPONENTS, 1979) ("THE ACT")), THIS RULE IS EXEMPT FROM THE PUBLIC ANSWER THE FOLLOWING QUESTIONS (AS OF THE TIME OF PARTICIPATION IN RULEMAKING PROCEDURES OF THE ADMINISTRA- EXPORT TO THE NEW DESTINATION OF THE FOREIGN-MADE END TIVE PROCEDURE ACT. PRODUCT): HOWEVER, BECAUSE OF THE IMPORTANCE OF THE ISSUES RAISED BY THESE REGULATIONS AND THE INTENT OF CONGRESS SET FORTH IN SECTION 13 (B) OF THE ACT, THESE REGULATIONS ARE ISSUED IN INTERIM FORM AND COMMENTS WILL BE CONSIDERED 2. PARAGRAPHS (A) (2) AND (3) OF SECTION 379.8 ARE IN DEVELOPING ANY FINAL REGULATIONS. THESE REGULATIONS REVISED, AND A PARAGRAPH (A) (4) IS ADDED AS FOLLOWS: MAY BE REVISED BEFORE THE END OF THE COMMENT PERIOD. ACCORDINGEY, INTERESTED PERSONS WHO DESIRE TO COMMENT 379.8 ARE ENCOURAGED TO DO so AT THE EARLIEST POSSIBLE TIME TO PERMIT THE FULLEST CONSIDERATION OF THEIR VIEWS. REEXPORT OF TECHNICAL DATA AND EXPORTS FO THE PRODUCT MANUFACTURED ABROAD BY USE OF U.S. TECHNICAL 2. THIS RULE DOES NOT IMPOSE A BURDEN UNDER THE DATA PAPERWORK REDUCTION ACT OF 1980, 44 U.S.C. 3501 ET SEQ. (A) PROHIBITED EXPORTS AND REEXPORTS 3. THIS RULE IS NOT SUBJECT TO THE REQUIREMENTS OF THE REGULATORY FLEXIBILITY ACT, 5 U.S.C. 601 ET SEQ. (1) - 4. THIS RULE IS EXEMPT FROM THE REQUIREMENTS OF (2) EXPORT ANY TECHNICAL DATA FROM THE UNITED EXECUTIVE ORDER 12291 (46 FR 13193, FEBRUARY 19, 1981), STATES WITH THE KNOWLEDGE THAT IT IS TO BE REEXPORTED, "FEDERAL REGULATION" BECAUSE IT RELATES TO A FOREIGN DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, FROM THE AUTHORIZED COUNTRY (IES) OF ULTIMATE DESTINATION; AFFAIRS FUNCTION OF THE UNITED STATES. (3) EXPORT OR REEXPORT TO COUNTRY GROUP P,Q,W,Y, THE PERIOD FOR SUBMISSION OF COMMENTS WILL CLOSE ON OR Z OR AFGHANISTAN ANY FOREIGN PRODUCED DIRECT PRODUCT AUGUST 21, 1982. COMMENTS RECEIVED AFTER THE CLOSE OF OF U.S. TECHNICAL DATA, OR ANY COMMODITY PRODUCED BY THE COMMENT PERIOD CANNOT BE ASSURED CONSIDERATION-IN ANY PLANT OR MAJOR COMPONENT THEREOF THAT IS A DIRECT THE DEVELOPMENT OF THE FINAL REGULATIONS. PUBLIC PRODUCT OF U.S. TECHNICAL DATA, IF SUCH DIRECT PRODUCT COMMENTS THAT ARE ACCOMPANIED BY A REQUEST THAT PART OR OR COMMODITY IS COVERED BY THE PROVISIONS OF SECTION ALL OF THE MATERIAL BE TREATED CONFIDENTIALLY BECAUSE 379. (F) (EXCLUDING PARAGRAPH (1) (1) (P) ) OR SECTION OF ITS BUSINESS PROPRIETARY NATURE, OR FOR ANY OTHER 379.5 (E) (1) OR (2); OR REASON, WILL NOT BE ACCEPTED. SUCH COMMENTS AND MATERIALS WILL BE RETURNED TO THE SUBMITTER AND WILL (4) EXPORT OR REEXPORT TO THE U.S.S.R., LATVIA, NOT BE CONSIDERED IN THE DEVELOPMENT OF THE FINAL LITHUANIA, ESTONIA OR AFGHANISTAN FOREIGN PRODUCED REGULATIONS. ALL PUBLIC COMMENTS TO BE CONSIDERED IN DIRECT PRODUCTS OF U.S. TECHNICAL DATA, OR ANY COMMODITY PRODUCED BY ANY PLANT OR MAJOR COMPONENT THEREOF THAT ANY REVISION TO THESE REGULATIONS WILL BE A MATTER OF IS A DIRECT PRODUCT OF U.S. TECHNICAL DATA, DESCRIBED PUBLIC RECORD AND WILL BE AVAILABLE FOR PUBLIC INSPECTION IN SECTION 379.4 (F) (1) (1) (P) IF: AND COPYING. IN THE INTEREST OF ACCURACY AND COMPLETENESS, COMMENTS IN WRITTEN FORM ARE PREFERRED. IF ORAL (1) A WRITTEN ASSURANCE WAS REQUIRED UNDER THESE UNCLASSIFIED UNCLASSIFIED NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 03 OF 04 SECSTATE WASHDC 4622 DTG: 232321Z JUN 82 PSN: 032158 THE COUNTRY OF DESTINATION, THE ULTIMATE END-USERS IN REGULATIONS WHEN THE DATA WERE EXPORTED FROM THE U.S.; THE COUNTRY OF DESTINATION; AND THE INTENDED END-USE. - (11) THE U.S. TECHNICAL DATA ARE THE SUBJECT OF A (3) APPLICATIONS COVERING CERTAIN COMMODITIES AND LICENSING AGREEMENT WITH, OR THE USE OF THE DATA IS TECHNICAL DATA THAT ARE CONTROLLED BY THE UNITED STATES CONTINGENT UPON ROYALTY PAYMENTS OR OTHER COMPENSATION To, ANY PERSON SUBJECT TO THE JURISDICTION OF THE AND CERTAIN OTHER NATIONS THAT COOPERATE IN AN INTER- UNITED STATES AS DEFINED IN SECTION 385.2(C), REGARDLESS NATIONAL EXPORT CONTROL SYSTEM AND ARE PROPOSED FOR OF WHEN THE DATA WERE EXPORTED FROM THE U.S.; OR EXPORT OR REEXPORT TO COUNTRY GROUP Q, W, OR Y MAY HAVE TO BE FORWARDED TO THE COORDINATING COMMITTEE (COCOM) - (111) THE U.S. TECHNICAL DATA IS THE SUBJECT OF A OF THIS INTERNATIONAL EXPORT CONTROL SYSTEM FOR CONSIDERA- LICENSING AGREEMENT, OR OTHER CONTRACT, WHEREBY THE TION IN ACCORDANCE WITH ESTABLISHED COCOM PROCEDURES. RECIPIENT OF THE TECHNICAL DATA HAS AGREED TO ABIDE BY U.S. EXPORT CONTROL REGULATIONS. (4) ALTHOUGH EACH PROPOSED TRANSACTION IS CONSIDERED INDIVIDUALLY, CERTAIN GOODS ON THE COMMODITY CONTROL LIST ARE MORE LIKELY TO BE APPROVED THAN OTHERS. SEE 3. SECTION 385.2 IS AMENDED AS FOLLOWS: SUPPLEMENT NO. 1 TO THIS PART 385 FOR AN IDENTIFICATION OF SUCH GOODS. - A. SECTION 385.2(A) IS REVISED TO READ: (5) THE PRECEDING POLICY GUIDANCE CANNOT BE APPLIED TO - 385.2 EXPORTS TO THE U.S.S.R. OR POLAND. PURSUANT TO THE GENERAL ORDER CONTAINED IN SECTION 390.8, LICENSE - COUNTRY GROUPS, Q, W, AND Y (SEE SUPPLEMENT NO. 1 APPLICATIONS OR OTHER AUTHORIZATIONS FOR THE U.S.S.R. TO PART 370 FOR LISTING OF COUNTRY GROUPS.); U.S.S.R., WILL BE RETURNED WITHOUT ACTION. FURTHER, BECAUSE OF OTHER WARSAW PACT COUNTRIES, ALBANIA, MONGOLIAN PEOPLE'S TH RISK THAT ITEMS DESTINED FOR POLAND THAT ARE CONTROLLED REPUBLIC, AND LAOS FOR NATIONAL SECURITY OR NUCLEAR NON-PROLIFERATION REASONS WILL BE DIVERTED TO UNAPPROVED USERS OR TO THE (A) (1) THE EXPORT ADMINISTRATION ACT OF 1979 STATES U.S.S.R. CONTRARY TO U.S. NATIONAL SECURITY INTERESTS, THAT IT IS THE POLICY OF THE UNITED STATES "TO ENCOURAGE APPLICATIONS FOR EXPORT TO POLAND OF SUCH ITEMS WILL TRADE WITH ALL COUNTRIES WITH WHICH WE HAVE DIPLOMATIC NOT BE AUTHORIZED. OR TRADING RELATIONS, EXCEPT THOSE COUNTRIES WITH WHICH SUCH TRADE HAS BEEN DETERMINED BY THE PRESIDENT TO BE - B. SECTION 385.2(C) IS REVISED TO READ: AGAINST THE NATIONAL INTEREST." THE ACT ALSO STATES THAT IT IS THE POLICY OF THE UNITED STATES "TO RESTRICT (C) (1) AS AUTHORIZED BY SECTION 6 OF THE EXPORT THE EXPORT OF GOODS AND TECHNOLOGY WHICH WOULD MAKE A ADMINISTRATION ACT OF 1979, PRIOR WRITTEN AUTHORIZATION SIGNIFICANT CONTRIBUTION TO THE MILITARY POTENTIAL OF BY THE OFFICE OF EXPORT ADMINISTRATION IS REQUIRED FOR ANY OTHER COUNTRY OR COMBINATION OF COUNTRIES WHICH FOREIGN POLICY REASONS FOR THE EXPORT OR REEXPORT TO WOULD PROVE DETRIMENTAL TO THE NATIONAL SECURITY OF THE UNITED STATES." ACCORDINGLY, AND IN COMPLIANCE WITH THE U.S.S.R. OF OIL AND GAS EXPLORATION, PRODUCTION, THE OTHER SECTIONS OF THE EXPORT ADMINISTRATION ACT OF TRANSMISSION OR REFINEMENT GOODS OF U.S. ORIGIN AS 1979, THE DEPARTMENT CONDUCTS A CONTINUING REVIEW OF DEFINED IN CCL ENTRIES 6098F, 6191F, 6388F, 6389F, COMMODITIES AND TECHNOLOGY TO ASSURE THAT PRIOR APPROVAL 639ØF, 6391F, 6431F, 6491F, 6598F, 6685F, 6779F, AND IS REQUIRED FOR THE EXPORT OR REEXPORT OF U.S.-ORIGIN 678ØF. ALSO INCLUDED IN THE SCOPE OF THIS CONTROL ARE COMMODITIES AND TECHNICAL DATA TO THE U.S.S.R., ALBANIA, TECHNICAL DATA OF U.S. ORIGIN (OTHER THAN THAT AUTHORIZED BULGARIA, CZECHOSLOVAKIA, ESTONIA, GERMAN DEMOCRATIC UNDER GENERAL LICENSE GTDA) RELATED TO OIL AND GAS REPUBLIC, HUNGARY, LAOS, LATVIA, LITHUANIA, MONGOLIAN EXPLORATION, PRODUCTION, TRANSMISSION AND REFINEMENT PEOPLE'S REPUBLIC, POLAND, AND ROMANIA ONLY IF THE AND OTHER GOODS THAT REQUIRE A VALIDATED EXPORT LICENSE COMMODITIES OR TECHNICAL DATA HAVE A POTENTIAL FOR FOR SHIPMENT TO THE SOVIET UNION AND THAT ARE INTENDED BEING USED IN A MANNER THAT WOULD PROVE DETRIMENTAL TO FOR USE IN OIL OR GAS EXPLORATION, PRODUCTION, TRANSMIS- THE NATIONAL SECURITY OF THE UNITED STATES. THE SION OR REFINEMENT. THE FOREIGN PRODUCT OF SUCH DATA GENERAL POLICY OF THE DEPARTMENT, HOWEVER, IS TO IS ALSO CONTROLLED (SEC 379.8). THE TERM "REFINEMENT" APPROVE APPLICATIONS OR REQUESTS TO EXPORT OR REEXPORT INCLUDES REFINERY OPERATIONS DIRECTED TO ENERGY USAGE, SUCH COMMODITIES AND TECHNICAL DATA TO THESE DESTINATIONS BUT EXCLUDES PETROCHEMICAL FEEDSTOCK PROCESSES. IN (OTHER THAN THE U.S.S.R. AND POLAND) WHEN THE DEPARTMENT ADDITION, PRIOR WRITTEN AUTHORIZATION IS REQUIRED FOR DETERMINES, ON A CASE-BY-CASE BASIS, THAT THE COMMODITIES THE EXPORT TO THE U.S.S.R. OF NON-U.S. ORIGIN GOODS AND OR TECHNICAL DATA ARE FOR A CIVILIAN USE OR WOULD TECHNICAL DATA BY ANY PERSON SUBJECT TO THE JURISDICTION OTHERWISE NOT MAKE A SIGNIFICANT CONTRIBUTION TO THE OF THE UNITED STATES. MILITARY POTENTIAL OF THE COUNTRY OF DESTINATION THAT - (2) FOR THE PURPOSES OF THIS SECTION 385.2(C) WOULD PROVE DETRIMENTAL TO THE NATIONAL SECURITY OF THE ONLY, THE TERM "PERSON SUBJECT TO THE JURISDICTION OF UNITED STATES. THE UNITED STATES" INCLUDES (2) TO PERMIT SUCH POLICY JUDGMENTS TO BE MADE, EACH (I) ANY PERSON, WHEREVER LOCATED, WHO IS A CITIZEN EXPORT APPLICATION AND REEXPORT REQUEST IS REVIEWED IN OR RESIDENT OF THE UNITED STATES; THE LIGHT OF PREVAILING POLICIES WITH FULL CONSIDERATION OF ALL RELEVANT ASPECTS OF THE PROPOSED TRANSACTION. (II) ANY PERSON ACTUALLY WITHIN THE UNITED STATES; THE REVIEW GENERALLY INCLUDES AN ANALYSIS OF THE KINDS AND QUANTITIES OF COMMODITIES OR TECHNOLOGIES TO BE (111) ANY CORPORATION ORGANIZED UNDER THE LAWS OF SHIPPED; THEIR MILITARY OR CIVILIAN USES; THE UNRESTRICTED THE UNITED STATES OR OF ANY STATE, TERRITORY, POSSESSION, AVAILABILITY ABROAD OF THE SAME OR COMPARABLE ITEMS; OR DISTRICT OF THE UNITED STATES; OR UNCLASSIFIED UNCLASSIFIED NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 04 OF 04 SECSTATE WASHDC 4622 DTG: 232321Z JUN 82 PSN: 032158 - (IV) ANY PARTNERSHIP, ASSOCIATION, CORPORATION, OR OTHER ORGANIZATION, WHEREVER ORGANIZED OR DOING BUSINESS, THAT IS OWNED OR CONTROLLED BY PERSONS SPECIFIED IN PARAGRAPHS (1), (II), OR (111) OF THIS SECTION. AUTHORITY: SECTIONS 4, 5, 6, 13, 15, 16, AND 21, PUB. L. 96-72, 93 STAT. 503, 50 U.S.C. APP. 2401 ET SEQ., AS AMENDED; EXECUTIVE ORDER NO. 12002 (42 FR 35623, JULY 11, 1977); AND EXECUTIVE ORDER NO. 12214 (45 FR 29783, MAY 6, 1980). DATED: JUNE 21, 1982 BOHDAN DENYSYK, DEPUTY ASSISTANT SECRETARY FOR EXPORT ADMINISTRATION END QUOTE. 3. BACKGROUND ON THE JUNE 22 REGULATION FOLLOWS: A) THIS REGULATION IS INTERIM IN ORDER TO PROVIDE A PERIOD FOR PUBLIC COMMENT BEFORE IT IS PUT IN FINAL FORM. HOWEVER, IT IS EFFECT) VE 5:00 PM (EDT) JUNE 22. B) THE DEFINITION OF PERSON SUBJECT TO THE JURISDICTION OF THE UNITED STATES, IN SECTION 385.2(C) (2), IS PATTERNED AFTER TREASURY REGULATIONS CONTROLLING EXPORTS BY US-CONTROLLED FIRMS TO NORTH KOREA, VIETNAM, KAMPUCHEA AND CUBA. (FYI: THE APPROACH DIFFERS FROM THE FORMULATION IN COMMERCE REGULATIONS CONCERNING EXPORTS BY U.S. CODTROLLED F'RMS TO THE USSR IN CONNEC- TION WITN THE MOSCOW 1980 SUMMER OLYMPICS. THE NEW REGULATIONS APPLY DIRECTLY TO U.S.-CONTROLLED FIRMS ABROAD (385.2 (C) (2) (IV); THE OLYMPICS REGULATIONS REACH TRANSACTIONS BY SUCH FOREIGN FIRMS ONLY INDIRECTLY WHERE THE CONTROLLING U.S. PERSON PARTICIPATES IN THE TRANSACTION IN SOME WAY. END FYI). C) THE FIRST OF THE THREE SITUATIONS LISTED IN SECTION 379.8(A) (4) (1) IN WHICH PRIOR USG AUTHORIZATTON IS REQUIRED FOR EXPORT OR REEXPORT OF FOREIYN PRODUCTS OF U.S. OIL AND GAS TECHNOLOGY TO THE 'SSR FOR WHTCH A WRITTEN ASSURANCE WAS REQUIRED IS NOT NEW. THE SECOND AND THIRD SITUATIONS, IN SECTION 379.8(A) (4) (11) AND (III), ARE NEW. D) THE ONLY NEW ELEMENTS IN SECTION 385.2(A) ARE TO ADD (OTHER THAN THE USSR AND POLAND)" IN PARAGRAPH (1) AND TO ADD A NEW PARAGRAPH (5). THE REFERENCE TO "NATIONAL SECURITY OR NUCLEAR NON-PROLIFERATION" CONTROLS DISTINGUISHES THE POLISH ACTION FROM THE SOVIET ACTION, SINCE SPECIAL FOREIGN POLICY CONTROLS WHICH APPLY TO THE SSR DO NOT APPLY TO POLAND ('.E. OIL AND GAS EQUIPMENT AND TECHNOLOGY, MOSCOW 1980 SUMMER OLYMPICS, AND KAMA RIVER AND ZIL TRUCK PLANTS). REGIONAL STABILITY FOREIGN POLICY CONTROLS DO APPLY TO POLAND, AS WELL AS TO MOST OTHER COUNTRIES IN THE WORLD, BUT THESE INVOLVE ONLY NATIONAL SECURITY ITEMS. HUMAN RIYHTS FOREIGN POLICY CONTROLS AFFECTING CRIME CONTROL EQUIPMENT ALSO APPLY TO POLAND. THIS EQUIPMENT INCLUDES A NUMBER OF NATIONAL SECURITY ITEMS. THE NON-SECURITY CRIME CONTROLS TTEMS ARE UNLIKELY TO PE APPROVED AT THIS TIME. HAIG BT UNCLASSIFIED SECRET 10760 NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 01 OF 02 SECSTATE WASHDC 4954 DTG: 240214Z JUN 82 PSN: 032380 EOB159 AN005215 TOR: 175/0403Z CSN: HCE226 ARTICLE 111.2. IT IS OUR INTERPRETATION OF THE 1979 GUIDANCE THAT THE LAST SENTENCE ("NO OTHER CHANGE WOULD DISTRIBUTION: RYE-01 DEGR-01 MYER-01 KRAM-01 LORD-01 PIPE-01 BE PERMITTED") MEANS THAT A CHANGE ONLY IN TERMINATION RENT-01 RUSS-01 LINH-01 /009 A3 DATE WOULD NOT BE PERMITTED. IN OUR UNDERSTANDING, THIS WAS OUT OF CONCERN THAT THE EAST MIGHT EXTEND THE LENGTH OF THE MOVEMENT INDEFINITELY OR REPEATEDLY. ACCORDING TO WHTS ASSIGNED DISTRIBUTION: THE GUIDANCE, THE ONLY THING PERMITTED IS A CHANGE SIT: IN THE STARTING AND ENDING DATES IN TANDEM. THIS IS, IN EOB: OUR VIEW, ALSO THE INTENTION OF ARTICLE 1.2, EVEN THOUGH THE WORD "AND" INSTEAD OF "CONSEQUENTLY" IS USED. DECLASSIFIED IF THIS INTERPRETATION OF THIS PARAGRAPH IS AT ISSUE, THEN CURRENT GUIDANCE SHOULD BE USED PENDING WG DISCUSSION. OP IMMED /ROUTINE DE RUEHC #4954 1750353 NLRRF06-114/9#10760 ARTICLE IV.3. THERE WAS NO INTENTION TO GO BEYOND 0 R 240214Z JUN 82 THE GUIDANCE AND WE DO NOT THINK THIS FORMULATION DOES. FM SECSTATE WASHDC BY KML NARA DATE 4/7/2011 WE DEVELOPED THIS LANGUAGE ON THE ADVICE OF OUR LAWYERS WHO INDICATED THAT PHRASES SUCH AS "NORMALLY BE MET" AND TO USMISSION USNATO IMMEDIATE 0000 "HOST OBLIGATIONS" ARE AMBIGUOUS AND OPEN TO INTERPRETATION. DEFINITION IS DESIRED so ALL PARTIES UNDERSTAND THEIR INFO AMEMBASSY LONDON 0000 OBLIGATIONS. WE BELIEVE THE SUBSTANCE OF FOOTNOTE 8 OF AMEMBASSY BONN 0000 THE GUIDANCE SHOULD BE INCORPORATED INTO THE AGREEMENT USDEL MBFR VIENNA 0000 SINCE IT PROVIDES EXPLICIT MEANING TO THE GENERAL WORDS OF USNMR SHAPE PARA 35. IF OTHER ALLIES AGREE WITH UK THAT THIS DOES GO USCINCEUR VAIHINGEN GE BEYOND THE GUIDANCE, WE COULD ACCEPT UK WORDING, BUT WOULD SUGGEST THAT THE SUBSTANCE OF THE ISSUE BE REFERRED SECRET STATE 174954 TO THE WORKING GROUP. E.O. 12065: RDS-3 6/23/92 (BOHLEN, A.) ARTICLE IV.12. UK SUGGESTION CHANGES THE GUIDANCE TAGS: PARM, NATO, MBFR (ALTHOUGH WE WOULD NOT NECESSARILY OPPOSE SUCH A CHANGE). SUBJECT: MBFR: ANNEX II WE SUGGEST THAT THIS BE REFERRED TO THE WG FOR DISCUSSION. REFS: A. USNATO 3962 (DTG 181724Z JUN 82); B. STATE ARTICLE VIII. WE COULD ACCEPT UK CHANGES IF SPC 148964 (DTG 292218Z MAY 82) DECIDES TO INCLUDE THE BRACKETED PARAGRAPHS IN THE TEXT TO BE TABLED (SEE PARA 3B, REF B). WE ARE BASICALLY NEUTRAL ON THIS QUESTION, THOUGH WE NOTE THAT DOING 1. ENTIRE TEXT). so MIGHT RAISE EASTERN QUESTIONS WE DON'T WANT TO ANSWER, ESPECIALLY SINCE WE ARE NOT PLANNING TO DEFINE SUCH WORDS IN THE NEAR FUTURE. 2. FOR PURPOSE OF EXPEDITING AGREEMENT ON ANNEX II, WE BELIEVE WE SHOULD REFRAIN FROM SUBSTANTIVE CHANGES TO TEXT OF 1979 GUIDANCE. IF ANY ALLY WISHES TO RAISE A SUBSTANTIVE 3. ALL OTHER UK SUGGESTIONS ARE ACCEPTABLE. QUESTION, WE WOULD SUGGEST THAT A LIST BE MADE OF ALL SUCH SUGGESTIONS FOR FUTURE SPC OR WORKING GROUP CONSIDERATION. 4. WE APPRECIATE MISSION'S IDENTIFICATION OF PROBLEM AS NOTED IN PARA 5, REF B, THE US MAY WISH TO RAISE SOME WITH ARTICLE 111.1 (PARA 15A, REF A). WE SUGGEST SUBSTANTIVE POINTS. WITH THIS BASIC APPROACH IN MIND, WE CHANGING "MOVEMENT BY THE PARTIES" TO "MOVEMENT BY ANY HAVE THE FOLLOWING COMMENTS ON THE SUGGESTED UK CHANGES ONE PARTY" OR "MOVEMENT BY ANY INDIVIDUAL PARTY." (PARA 12, REF A) : -- ARTICLE I.1.A.2. THE 1979 GUIDANCE DOES NOT DEFINE THE 5. WE ACCEPT MISSION'S RECOMMENDED CHANGE TO ARTICLE IV.4 WORD "SCALE," BUT GIVES EXAMPLES ("E.G., ONE DIVISION (PARA 15B, REF A). LEVEL EXERCISE; ONE ARMY/CORPS LEVEL EXERCISE WITH THREE DIVISIONS"). OUR LAWYERS ADVISED US THAT THE WORD "SCALE" 6. MISSION REPORTED IN STRAND/YOUNG TELCON OF 6/1 THAT IS AMBIGUOUS AND SHOULD BE DEFINED. BECAUSE THE EXAMPLES "PARTIES TO THE PROTOCOL" WOULD BE ADDED AS NECESSARY TO ARTICLE 1.5 BEFORE DISTRIBUTION OF THE ANNEX IN ORDER TO OF WHAT WAS MEANT BY "SCALE" RELATED TO NUMBERS AND TYPES HAVE A COMPLETE DEFINITION OF THE AREA OF APPLICATION, OF UNITS, WE USED THAT PHRASE INSTEAD OF THE AMBIGUOUS BUT THAT A PROBLEM OF CONSTRUCTION WAS RAISED IN THE SINGLE WORD. WE NOTE THAT THIS IS COMPATIBLE WITH THE LATTER PART OF THE FIRST SENTENCE. THERE APPEARS TO BE INFORMATION REQUIREMENT IN CSCE, so WE DON'T BELIEVE THIS NO NEAT WAY TO COVER THE EXTRA-EUROPEAN TERRITORY OF IS ASKING T00 MUCH. IF OTHERS AGREE WITH UK THAT THIS IS BOTH THE USSR AND TURKEY, UNLESS THE ALLIES WOULD BE NOT NECESSARILY THE INTENT OF THE GUIDANCE, AND THAT THIS WILLING TO STATE EXPLICITLY "AND IN THE EXTRA-EUROPEAN IS AN OPEN ISSUE, WE WOULD SUGGEST THAT THIS ARTICLE TERRITORY OF THE USSR AND TURKEY." SHORT OF THAT REPEAT THE LANGUAGE OF THE GUIDANCE, WITH THE PARENTHETICAL SOLUTION, WE RECOMMEND THAT THIS SENTENCE READ: "THIS EXAMPLES. THE SUBSTANTIVE ISSUE COULD BE REFERRED TO THE ARTICLE SHALL APPLY TO THE GROUND FORCE PERSONNEL OF ALL WORKING GROUP FOR CONSIDERATION. THE PARTIES AND PARTIES TO THE PROTOCOL IN THE EUROPEAN TERRITORY OF ALL THE PARTIES AND PARTIES TO THE PROTOCOL, ARTICLE I.1.B.2. IF UK SEES THIS AS A SUBSTANTIVE AND IN THE EXTRA-EUROPEAN TERRITORY OF THOSE PARTIES OR ISSUE (AS THEY INDICATED THEY DO), WE WOULD PREFER TO PARTIES TO THE PROTOCOL WHICH HAVE COMMON LAND BOUNDARIES RETAIN THE FORMULATION OF THE 1979 GUIDANCE ("MAJOR WITH THE PARTIES OF THE OTHER SIDE OR PARTIES TO THE FORMATIONS/UNITS") AND REFER THE ISSUE TO THE WG. PROTOCOL." (NOTE: THE WORD "LAND" HAS BEEN INCLUDED TO AVOID POSSIBLE INCLUSION OF THE BERING SECRET SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 02 OF 02 SECSTATE WASHDC 4954 DTG: 240214Z JUN 82 PSN: 032380 SEA BOUNDARY OF THE US AND USSR.). HAIG BT SECRET NSC/S PROFILE Pipeline ID 8204482 28 \ RECEIVED 24 JUN 82 16 TO PRESIDENT 2. DOCDATE 17 JUN 82 NSC DUBERSTEIN, K 22 JUN 82 DECLASSIFIED White House Guidelines, August 28/1997 By CAS NARA, Date 7/21/02 ARMSTRONG, WILLIAM L 18 JUN 82 KEYWORDS: USSR EAST WEST ECONOMICS GAS SANCTIONS HUMAN RIGHTS CO SUBJECT: LTR TO PRES RE EXTENSION OF SANCTIONS RE YAMAL PIPELINE ACTION: ANY FURTHER ACTION REQUIRRED DUE: 26 JUN 82 STATUS S FILES FOR ACTION FOR CONCURRENCE FOR INFO PIPES BAILEY KIMMITT MYER MARTIN NAU MCGAFFIGAN DOBRIANSKY No action required LORD (Hunon OBE (Rights COMMENTS R REF# 083875 LOG NSCIFID (L/ ) ACTION OFFICER (S) ASSIGNED ACTION REQUIRED DUE COPIES TO NSC/S C 25Jun DBE/NFAR per RP DISPATCH W/ATTCH FILE (C) — 24 June 22, 1982 Dear Senator Armstrong: President Reagan has asked me to thank you very much for your letters of June 17 and June 18 on the need to extend the sanc- tions on the Yamal pipeline project, and the President's recent decision in this regard. The President sincerely appreciated the timely presentation of your views on this important subject, and I am sharing with the appropriate national security advisers the testimony and evidence you forwarded regarding the slave labor implications of the pipe- line. I assure you that your concerns will continue to receive careful scrutiny and evaluation. Again, many thanks for keeping us apprised of your efforts with respect to these vital issues. With best wishes, Sincerely, Kenneth M. Duberstein Assistant to the President The Honorable William L. Armstrong United States Senate Washington, D.C. 20510 KMD: CMP:nap CC: w/copy of incoming letters and ORIGINAL back-up -- NSC Secretariat -- for appropriate action ec: Pam Turner - FYI WH RECORDS MANAGEMENT WILL RETAIN ORIGINAL INCOMING LETTERS ONLY WILLIAM L. ARMSTRONG 30 COLORADO United States Senate WASHINGTON, D.C. 20510 June 17, 1982 083875 The President The White House Washington, D.C. 20500 Dear Mr. President: I read with great concern a report in Thursday's Washington Post that you are giving consideration to lifting the restrictions you imposed on the parti- cipation of American firms in the construction of the Yamal pipeline. I cannot believe this report is true. There has been no relaxation of the Soviet-inspired repression in Poland. Lech Walesa is still in jail. The soldiers are still in the streets. The Polish people are still in chains. If anything, you should be giving consideration to expanding the sanctions already imposed to include the foreign subsidiaries, manufacturing associates and licensees of U.S. firms as well as the U.S. firms themselves. To lift now the few sanctions you so far have applied would strike a savage blow at the world crusade for democracy you announced in London before that crusade has even begun. I know I need not remind you of the grave strategic and economic consequences for the West if the pipeline is built. But there is another dimension to the pipeline which is equally alarming. There is mounting evidence that the Soviet Union plans to make massive use of what is, for all practical purposes, slave labor in the construction of the pipeline. I've enclosed translations of three letters I obtained from the Vietnamese emigre community which lend credence to reports that up to half a million Vietnamese will be sent to Siberia and elsewhere in Eastern Europe against their will. In addition, there is evidence that the hard, dirty, dangerous work involved in the pipeline construction will be done by the inmates of the more than 2,000 concentration camps in the Gulag Archipelago. The Yamal pipeline cannot be built without Western capital and Western tech- nology. But if U.S. firms participate in the pipeline project, are we not, in effect, condoning the massive violation of human rights that seems likely to occur in its construction? The International Finance subcommittee of the Senate Committee on Banking, Housing and Urban Affairs will hold a hearing on Friday, June 18, to explore the evidence behind these charges. I urge you to defer any decision on the lifting of sanctions until after that evidence is in. Best regards. Sincerely, William L Armstrong WLA:jke Enclosures 31 U 083875 ID # WHITE HOUSE CORRESPONDENCE TRACKING WORKSHEET TA001 O . OUTGOING H INTERNAL I INCOMING Received (YY/MM/DD) Date Correspondence 82/06/18 Name of Correspondent: William Armstrong MI Mail Report User Codes: (A) (B) (C) Subject: Expireses grave Concern over reports in the Washington Post that you are giving consideration to lifting the restrictions you imposed on the participation of American firms in the the lifting of sanctions until evidence is in concerning the allegation that massive Construction of the Yamal pipeline, Urges you to defer any decisio lolations ROUTE of TO: human rights are likely to occur ACTION in the construction DISPOSITION of the pipeline. Tracking Type Completion Action Date of Date Office/Agency (Staff Name) Code YY/MM/DD Response Code YY/MM/DD a LA DUBE 82,06,18 KD ORIGINATOR A 82 P6,22 Nsc/secretariact Referral Note: A c, 82,06,23 / / Referral Note: / / / / I Referral Note: / / / / - Referral Note: / / / / - Referral Note: ACTION CODES: DISPOSITION CODES: A - Appropriate Action I - Info Copy Only/No Action Necessary A Answered C Completed C - Comment/Recommendation R - Direct Reply w/Copy B - Non-Special Referral S Suspended D - Draft Response S For Signature F - Furnish Fact Sheet X - Interim Reply to be used as Enclosure FOR OUTGOING CORRESPONDENCE: Type of Response = Initials of Signer Code = "A" Completion Date = Date of Outgoing Comments: See also/084157 Keep this worksheet attached to the original incoming letter. Send all routing updates to Central Reference (Room 75, OEOB). Always return completed correspondence record to Central Files. Refer questions about the correspondence tracking system to Central Reference, ext. 2590. 5/81 Pupiline 33 the rym VICLA Pipes National Security Council 292 The White House RECEIVED Package # 5506 82 AUG 4 P 9 : 33 SEQUENCE TO of HAS SEEN ACTION John Poindexter Bud McFarlane / m Jacque Hill 2 Judge Clark 3 John Poindexter Staff Secretary Sit Room I-Information A-Action R-Retain D-Dispatch N-No further Action DISTRIBUTION cc: VP Meese Baker Deaver Other COMMENTS Send QUP Since item is to Highly claufied I Recommend a lib from you to Dyke You Foreign Opinion Note International Communication Agency, United States of America Washington, D. C. 20547 Office of Research USICA LACE 38 August 11, 1982 WIDE DISAPPROVAL IN EUROPE OF U.S. PIPELINE DECISION Public opinion surveys in four European countries in July found the West Germans most aware and most disapproving of the U.S. decision to prohibit the sale of U.S.-licensed equipment for the Soviet gas pipeline. West Germans and Dutch Most Knowledgeable In mid-July, two-thirds of the general public in West Germany (68%) and The Netherlands (63%) knew about the U.S. decision. Half of the British public (52%), but only a third of the French (37%), knew as well. Disapproval Widespread, But Affected by U.S. Reasons Of those aware of the U.S. decision, the margin of disapproval ranged from nearly three-to-one in the U.K. (65% to 23%) and France (64% to 24%) to about four-to-one in the FRG (74% to 17%) and The Netherlands (67% to 17%). However, disapproval dropped by roughly 10 points when people were told that reasons for the U.S. action included Poland-related sanc- tions, concern for European dependence on Soviet energy, and concern for increased Soviet military strength as a result of pipeline revenues: % Disapproval When: Not told Told Country: Reasons Reasons West Germany 74 62 The Netherlands 67 57 Britain 65 48 France 64 53 On the last point, a survey taken before the Versailles economic summit showed that one-half to two-thirds of those who approved of the pipeline would change their minds if they were persuaded that the hard-currency earnings would be used to strengthen the Soviets militarily. Publics Skeptical of Economic Impact on USSR Only minorities (from 11% to 25%) believed the U.S. decision would "mainly hurt" the Soviet economy. In fact, more people thought the impact would mainly affect West Europe's economy. This was the view of a majority (58%) in West Germany and of appreciable numbers (from 32% to 40%) in the other countries. GHursh-Cesar N-8/11/82 724-9545 PUPELLNED THE NEW YORK TIMES, WEDNESDAY, AUGUST 18, 1982 A5 cated today that construction of the The Soviet Union has promised to natural gas pipeline from Siberia to complete the 2,760-mile pipeline on time Around the World West Europe might be running into despite a United States boycott on con- some difficulties. struction materials. Reporting on a meeting of party members from the Ministry for Con- Attack by Afghan Rebels struction of Oil and Gas Enterprises and the Gas Industry Ministry, Pravda On Embassy Is Reported Spadolini's efforts to form a new gov- Mr. Spadolini's previous coalition col- said the ràte of production of compres- ernment. lapsed on Aug. 7 after the Socialists had sor stations, as well as pipeline con- ISLAMABAD, Pakistan, Aug. 17 In remarks at a meeting of the party withdrawn from the Government, ac- struction, should be 100 to 150 percent (UPI) - A Western diplomat said leadership, Mr. Craxi said he was satis- cusing their Christian Democratic part- higher than it was. today that Afghan rebels attacked the fied with Mr. Spadolini's plan for ners of sabotaging an austerity pro- Soviet Embassy in Kabul last week, changes. gram in a vote in Parliament. "More attention should be given to wounding two Afghan soliders and cap- The Socialists have apparently been supplying the workers with equipment turing two others. placated by a 10-point program that in- Soviet Concedes Delays and building materials and to providing The fighting, which lasted an hour, cludes changes in the secret ballot sys- accommodations," the newspaper said. occurred last Wednesday night, the dir tem in Parliament and calls for the In Gas Pipeline Building "Greater coordination is needed be- lomat said. Prime Minister to be able to pick minis- tween the contractor and the customer. A day before the attack, ar ters without pressure from political MOSCOW, Aug. 17 (UPI) - The Com- There are some procurement problems attended Soviet truck in a mark parties. munist Party newspaper Pravda indi- and deliveries are sometimes delayed." was blown up. 10757 6583 Pupeline 41 MEMORANDUM NATIONAL SECURITY COUNCIL CONFIDENTIAL September 21, 1982 Reporture INFORMATION MEMORANDUM FOR WILLIAM P. CLARK FROM: RICHARD PIPES N SUBJECT: CDU Statement on Soviet Sanctions The Deputy Chairman of the CDU (and the potential next Defense Minister), Manfred Woerner, issued on the 15th, in the name of the CDU/CSU factions, an important statement (Tab I) on economic policy toward the USSR . This statement, which may well represent the official policy of the next German govern- ment, goes a long way toward meeting our own stated objectives and may pave the way toward a reconciliation. (You will note particularly that the statement contains no criticism of U.S. sanctions on pipeline equipment.) In view of this, it seems especially important that nothing be done for the time being that could provide the least grounds for suspicion in Europe that we are backing off. If we were to soften our sanctions at this time in any way we would, in effect, be pulling the rug from under our German friends and supporters who are sticking their necks out on our behalf. Norman Bailey, Dennis Blair and Roger RHD Robinson concur. -nB Attachment: Tab I Rough translation of the CDU Statement issued on September 15, 1982 CONF IDENTIAL Declassify on: OADR DECLASSIFIED NLRRF06-114/9#10757 BY KML NARA DATE 4/7/2011 42 CDU Statement The Deputy Party Chairman, Dr. Manfred Woerner [on September 15], issued the following statement on behalf of the CDU/CSU parlia- mentary factions: Concerning East-West relations, Dr. Woerner, Chairman of the CDU/CSU faction, stated: The tensions and differences between Europe and the United States of America over the gas pipeline and East-West trade must be overcome by forward-looking initiatives. The Federal Republic must make a contribution to the discovery of a way out of the dilemma posed by economic relations with the Soviet Bloc. The West also must finally unite, in the economic system, upon a common and reliable strategy of flexible responses. We ask that the Federal Government develop such an initiative without delay. Its purpose should be: -- To give strong recognition to the justified political and security interests of all Alliance partners. -- To make possible concerted and decisive coordination of common East-West economic policies; and -- To clarify the special role which our economic relations to the Soviet Union and its East European allies play in the development of an East-West relationship compatible with the necessities of an active maintenance of peace. A five-point comprehensive proposal should be addressed to the United States concerning future common behavior in East-West trade: 1. On the condition that the Soviet Union -- is prepared to behave in a responsible, conflict-limiting fashion in world affairs; -- is prepared to observe international human rights agreements; -- is prepared for strengthened cooperation in efforts toward effective and verifiable arms control and disarmament; -- is prepared to accept step-by-step dismantling of the economic barriers in Europe, and to display fundamental willingness to build economic relations with the Soviet Union and the East European state-trading countries. 2. There should be responsible political and economic treatment of guarantees and credits, especially the issuance of credits according to market terms only. 43 -2- 3. There should be further limitations on the transfer of highly developed technology in the context of COCOM negotiations, especially reliable controls on second-party transfers of technologies having military uses. 4. There should be established permanent consultative and information organs concerning questions of East-West trade in the Atlantic Alliance context. 5. There should be a common reaffirmation of the NATO Council decision of January 11, 1982, concerning economic measures of alliance partners against the use of force in Afghanistan and Poland. Such a five-point initiative should be discussed by the Foreign Ministers of the European Community as well as at the informal meeting of NATO Foreign Ministers in Canada on October 2 - 3. Through such guidelines and unequivocal decisions, the resolutions of the Council of Europe, the Versailles Economic Summit and the Bonn and NATO Summits can be given concrete content and can be supported by all Atlantic partners. ITEM RETURNED To NSC SECRETARIAT IN APRIL 1987 payes12-17 Log# TCS 2922/82 225ep82 round SECRET FICE SAWCTIONS Auies 49 NATIONAL SECURITY COUNCIL MESSAGE CENTER [PiPECiNE] 10762 PAGE 01 OF 02 SECSTATE WASHDC 1552 DTG: 251312Z SEP 82 PSN: 047252 EOB497 AN008119 TOR: 268/1324Z CSN: EHA890 DISTRIBUTION: BALY-01 BLAR-01 STER-01 GAFF-01 SIGU-01 GUHN-01 KRAM-01 LEVN-01 LAUX-01 NAU-01 PIPE-01 TYSN-01 N WEIS-01 ROBN-01 MUER-01 BOV-01 /016 A2 0 WHSR COMMENT: NODIS D WHTS ASSIGNED DISTRIBUTION: SIT: MCF WHLR JP VP SIT EOB EOB: S OP IMMED /PRIORITY DE RUEHC # 1552/01 2681323 DECLASSIFIED OP 251312Z SEP 82 ZFF6 FM SECSTATE WASHDC N TO AMEMBASSY PARIS IMMEDIATE 2943 NLRRF06-114/9 #10762 0 AMEMBASSY ROME IMMEDIATE 8599 AMEMBASSY BONN IMMEDIATE 5613 D BY KML NARA DATE 4/7/20 AMEMBASSY BRUSSELS IMMEDIATE 2906 INFO AMEMBASSY TOKYO PRIORITY 0170 S WHITE HOUSE PRIORITY 8087 SECRE SECTION 01 OF 02 STATE 271552 NODIS BRUSSELS ALSO FOR USEC E.O. 12356: DECL: OARD N TAGS: EEWT SUBJECT: MEETINGS WITH THE FIVE ON SANCTIONS-RELATED 0 ISSUES D REF: STATE 263795 S 1. SECRET ENTIRE TEXT. 2. WHETHER OR NOT A MULTILATERAL MEETING WITH THE ALLIES ON SANCTIONS-RELATED AND OTHER EAST/WEST ISSUES MATERIALIZES, THESE WILL BE KEY TOPICS FOR THE SECRETARY' S BILATERAL AND OTHER MEETINGS AT THE MARGINS OF N THE UNGA. AN NSC MEETING, SEPTEMBER 22, APPROVED THE 0 APPROACH TO BE TAKEN BY THE SECRETARY. COUNSELOR BUCKLEY SEPARATELY CALLED IN, SEPTEMBER 23, WASHINGTON D AMBASSADORS (U.K.. FRG, FRANCE, ITALY) IN ORDER TO PREPARE THE GROUND FOR THE NEW YORK BILATERALS. THIS CABLE REPORTS ON THOSE CALLS. S 3. THE COUNSELOR INFORMED EACH AMBASSADOR THAT THE PRESIDENT REAFFIRMED, IN THE NSC MEETING, HIS STRONG CONCERN THAT PRESSURE BE MAINTAINED ON THE SOVIETS, AND HIS WILLINGNESS TO CONSIDER ALTERNATIVE TACTICS THAT WOULD PRODUCE EQUAL OR GREATER PRESSURE, SHOULD THE ALLIES so PROPOSE. MR. BUCKLEY TRACED THE ORIGIN OF U.S. OIL-AND GAS-RELATED SANCTIONS FROM THE 1978 SOVIET DISSIDENT INCIDENTS, THROUGH THE INVASION OF AFGHANISTAN, INTO THE PRESENT POLISH SITUATION. AFTER ASKING THE AMBASSADORS FOR THEIR PERSPECTIVE ON NEW YORK, THE COUNSELOR OUTLINED U.S. VIEWS ON SANCTIONS AND LONGER-TERM SOVIET ECONOMIC ISSUES: -- MULTILATERAL ACTION TO DEPRIVE THE SOVIETS OF SELECTED, HIGH-TECHNOLOGY OIL AND GAS ITEMS WOULD MAKE IT EASIER FOR THE U.S. TO LIFT RETROACTIVE ASPECTS OF ITS SECRET SECRET 4b NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 02 OF 02 SECSTATE WASHDC 1552 DTG: 251312Z SEP 82 PSN: 047252 OWN SANCTIONS; WORK ON RESTRAINING CREDIT TO THE SOVIETS HAS STALLED, N AND SHOULD MOVE FORWARD, USING OUR PRE-VERSAILLES O PROPOSALS AS A BASIS; -- COCOM NEEDS TIGHTENING AND, ESPECIALLY, IMPROVED ENFORCEMENT; AND WE NEED TO AVOID FUTURE EUROPEAN CONTRACTS FOR SOVIET S GAS WHICH COULD DISPLACE NON-SOVIET SUPPLIERS FROM THE 1990' S MARKET. 4. U.K. AMBASSADOR WRIGHT OBSERVED THAT MRS. THATCHER TOOK "NO PLEASURE" FROM THE PRESENT "SPAT IN THE ALLIANCE. THE AMBASSADOR SAW DETENTE AS FOUNDED ON N GERMAN AND BERLIN AGREEMENTS, AND THE HELSINKI FINAL ACT. HE SAID THE U.S. SHOULD CONVEY STRONGLY TO EUROPEAN 0 PUBLICS ITS "SERIOUSNESS OF PURPOSE" IN ARMS CONTROL TALKS. WRIGHT CHARACTERIZED THE U.K. AS " ON THE D SIDELINES" ON FUTURE ENERGY SOURCING, DUE TO NATIONAL SELF-SUFFICIENCY. WRIGHT QUESTIONED WHETHER SUCH WEIGHTY ISSUES CAN BE AIRED FULLY IN THE TIME AVAILABLE IN NEW S YORK. 5. FRG AMBASSADOR HERMES OBSERVED THAT, REGARDLESS OF THE OUTCOME OF THE GERMAN DEMOCRATIC PROCESS, FRG FOREIGN POLICY WOULD REMAIN CONSTANT IN ITS BROAD LINES. IN NEW YORK, HOWEVER, THE FRG REPRESENTATIVE COULD NOT "SPEAK UP N AS A FOREIGN MINISTER. " THE AMBASSADOR STRONGLY CRITICIZED A RECENT CONGRESSIONAL COMMITTEE ACTION 0 SEEKING TO PARE U.S. TROOP STRENGTH IN THE FRG, D EMPHASIZING THAT IT SENT THE " WRONG SIGNAL" TO THE USSR, EUROPEANS AND THE BROADER U.S. PUBLIC. ON FUTURE AVOIDANCE OF SOVIET ENERGY SOURCING, HERMES SAID THE FRG NEEDS 'COMPETITIVE SUPPLIERS" AS WELL AS THE AVAILABILITY S OF PRACTICAL ALTERNATIVES. HE RAISED THE "BROADENING CONSEQUENCES" OF U.S. SANCTIONS ENFORCEMENT, INCLUDING IMPACT ON THIRD-COUNTRY FIRMS AND U.S. BUSINESS. THE FRG' S FRAU STEEG HAD BEEN HELPFUL IN TALKS ON CREDIT RESTRAINTS, ALTHOUGH THE FRG DOES NOT ITSELF GIVE "CREDITS." HERMES CLOSED WITH THE OBSERVATION THAT N SANCTIONS SHOULD BE "REVERSIBLE" AND, IN THE FRG VIEW, 0 LINKED TO FULLFILMENT OF THE NATO THREE CONDITIONS CONCERNING POLAND. D 6. FRENCH AMBASSADOR VERNIER-PALLIEZ, S ATTEMPTED A REBUTTAL OF COUNSELOR buckley' S POINTS. HE QUESTIONED THE AVAILABILITY OF VIABLE ENERGY BT SECRET SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 01 OF 02 SECSTATE WASHDC 1552 DTG: 251312Z SEP 82 PSN: 047253 EOB498 AN008120 TOR: 268/1325Z CSN: EHA891 DISTRIBUTION: BALY-01 RYE-01 BLAR-01 STER-01 DEGR-01 GAFF-01 MYER-01 SIGU-01 GUHN-01 KRAM-01 LEVN-01 LAUX-01 N NAU-01 PIPE-01 TYSN-01 WEIS-01 LINH-01 ROBN-01 0 BOV-01. /019 A2 D WHTS ASSIGNED DISTRIBUTION: SIT: MCF WHLR JP VP SIT EOB EOB: S OP IMMED /PRIORITY DE RUEHC # 1552/02 2681323 OP 251312Z SEP 82 ZFF6 N FM SECSTATE WASHDC 0 TO AMEMBASSY PARIS IMMEDIATE 2944 AMEMBASSY ROME IMMEDIATE 8600 D AMEMBASSY BONN IMMEDIATE 5614 AMEMBASSY BRUSSELS IMMEDIATE 2907 S INFO AMEMBASSY TOKYO PRIORITY 0171 WHITE HOUSE PRIORITY 8088 SECTION 02 OF 02 STATE 271552 NODIS BRUSSELS ALSO FOR USEC N ALTERNATIVES, INCLUDING NORWEGIAN GAS, AND SUGGESTED THE U.S. DEREGULATE ITS OWN NATURAL GAS PRICING TO ELIMINATE 0 A "BASIC PROBLEM." FRANCE HAS TROUBLE WITH CREDIT D RESTRAINT, BECAUSE OTHER NATIONS CAN OFFER BETTER NON-SUBSIDIZED INTEREST RATES DUE TO LOWER DOMESTIC RATES OF INFLATION. WHILE ACCEPTING THAT A REVIEW OF ITEMS ON THE COCOM CONTROL LIST IS USEFUL, HE CAUTIONED AGAINST S ANY USE OF COCOM FOR A FOREIGN POLICY PURPOSE. VERNIER-PALLIEZ SAID THE U.S. SHOULD RECOGNIZE IT HAS NO "REAL LEADERSHIP" IN OIL AND GAS TECHNOLOGIES, EXCEPT PERHAPS IN THE SHORT TERM OF 3-4 YEARS. (COUNSELOR BUCKLEY RESPONDED THAT THE U.S. HOPED THE POLISH SITUATION WOULD BE RESOLVED BY THAT TIME.) N 0 7. ITALIAN AMBASSADOR PETRIGNANI PUT ON DISPLAY AN IMPRESSIVE UNDERSTANDING OF THE ISSUES, AND CONVEYED D ACCEPTANCE OR OPENMINDEDNESS ON ALL POINTS RAISED BY MR. BUCKLEY. MOREOVER, PETRIGNANI STRESSED THAT FOREIGN MINISTER COLOMBO IS MOST ANXIOUS THAT THE PROPOSED S FIVE-FOREIGN MINISTER MEETING IN NEW YORK BE HELD. COLOMBO WILL BEND HIS SCHEDULE, WITH THESE TALKS HAVING THE HIGHEST PRIORITY. THERE SHOULD BE NO PRECONDITIONS FOR TALKS. PETRIGNANI HEARD A "RUMOR" THAT THE EC COUNCIL OF FOREIGN MINISTERS, SEPTEMBER 20-21 IN BRUSSELS, AGREED TO THE MULTILATERAL. HE WOULD CHECK THAT OFFICIALLY WITH ROME, AND GET BACK TO MR. BUCKLEY. PETRIGNANI CONFIRMED HIS UNDERSTANDING THAT AN UNDERTAKING OF ALLIED "REVIEW" OF SELECTED OIL AND GAS ITEMS WOULD MAKE IT EASIER FOR THE U.S. TO MODIFY ASPECTS OF ITS OWN MEASURES. THE AMBASSADOR VIEWED IT IS "PROPER" THAT THE EUROPEANS MAKE PROPOSALS, BUT ALSO "PRACTICAL" TO UNDERSTAND THE U.S. IDEAS. PETRIGNANI WONDERED WHETHER THERE WOULD BE ENOUGH TIME AVAILABLE IN NEW YORK, AND OPINED THAT COLOMBO MIGHT WISH ALSO TO DISCUSS LEBANON, BROADER RELATIONS WITH THE SOVIET UNION, ARMS CONTROL INCLUDING INF, AND THE NATO MINISTERIAL IN CANADA. SECRET SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 02 OF 02 SECSTATE WASHDC 1552 DTG: 251312Z SEP 82 PSN: 047253 8. COMMENT: IT SEEMED TO US THAT PETRIGNANI WAS NOT ONLY MORE FORTHCOMING, BUT ALSO THE MOST RESPONSIVE TO THE POINTS RAISED BY COUNSELOR BUCKLEY. HE MAY WELL HAVE N BEEN THE ONLY AMBASSADOR SPEAKING FROM INSTRUCTIONS, AND 0 THEREFORE HIS REMARKS seem MORE SIGNIFICANT. END COMMENT. D 9. THE SECRETARY BEGINS HIS DISCUSSIONS THIS weekend AND, THEREFORE, YOU ARE NOT BEING REQUESTED TO DISCUSS THE ABOVE WITH YOUR HOST GOVERNMENTS. WE WOULD, OF COURSE S WELCOME ANY INFORMATION YOU CAN PROVIDE REGARDING REACTION OF HOST GOVERNMENTS TO SEPTEMBER 23 BUCKLEY BRIEFINGS. SHULTZ BT N 0 D I S N 0 D S N 0 D S SECRET PiPECiNE 4 CONF IDENTIAL NATIONAL SECURITY COUNCIL 10763 MESSAGE CENTER PAGE 01 OF 02 OSLO 5009 DTG: 011524Z OCT 82 PSN: 055847 EOB833 AN010732 TOR: 274/2100Z CSN: HCE188 DISTRIBUTION: BALY-01 BLAR-01 MYER-01 NAU-01 PIPE-01 WEIS-01 ROBN-01 /007 A3 WHSR COMMENT: CHECKLIST WHTS ASSIGNED DISTRIBUTION: D SIT: CKLS EOB: S OP IMMED /ROUTINE DECLASSIFIED UTS9713 DE RUDKSNQ #5009 2741600 O R 011524Z OCT 82 NLRR # 10763 FM AMEMBASSY OSLO E TO SECSTATE WASHDC IMMEDIATE 5015 X BY KML NARA DATE 4/7/2011 INFO AMEMBASSY BONN 3680 AMEMBASSY LONDON 5606 AMEMBASSY PARIS 3181 AMEMBASSY ROME 1729 S AMEMBASSY THE HAGUE 1889 OSLO 5009 EXDIS STATE FOR COUNSELOR JAMES BUCKLEY AND UNDERSECRETARY EAGELBURGER, FROM AMBASSADOR AUSTAD E E.O.: 12356: DECL: 2/30/12 TAGS: ENRG, UR, NO SUBJ: THE THREAT TO NORWEGIAN GAS DEVELOPMENT D REFS: (A) OSLO 4691; (B) STATE 272279; (C) PARIS 33072 1. CONF IDENTIAL - ENTIRE TEXT. S 2. SUMMARY: OUR SOUNDINGS HERE CONTINUE TO SUPPORT THE CONCLUSION THAT CONCERN IS WARRANTED WHETHER NORWAY WILL RECEIVE A HIGH ENOUGH PRICE FOR GAS FROM THE TROLL FIELD TO DEVELOP IT IN TIME TO HAVE IT ON STREAM BY THE MID 1990' S. IF NOT, THIS COULD LEAD TO EVEN GREATER PENETRATION OF THE WESTERN EUROPEAN GAS MARKET BY THE SOVIETS, OVER AND ABOVE THE FIRST STAND OF THE WEST SIBERIAN PIPELINE. SINCE THE TROLL DECISION IS MORE THAN A YEAR OFF, WHAT IS NEEDED NOW IS A X CLEAR POLITICAL SIGNAL FROM THE GOVERNMENTS OF THE MAJOR PURCHASING COUNTRIES IN WESTERN EUROPE; THEY SHOULD ACKNOW- LEDGE THE NORWEGIAN GOVERNT' S RECENT ASSURANCES THAT IT IS WILLING TO BE A MAJOR SUPPLIER OF GAS FOR WESTERN EUROPE IN THE 1990'S, ON COMMERCIAL TERMS, AND THEY SHOULD URGE THEIR COMPANIES TO CONTACT FOR NORWEGIAN GAS TO THE EXTENT IT IS S COMMERCIALLY FEASIBLE TO DO so. FURTHERMORE, THESE COMMER- CIAL CALCULATIONS SHOULD INCLUDE AN (UNDERTERMINED) PREMIUM FOR THE SECURITY OF NORWEGIAN GAS. THIS PUBLIC ACK- NOWLEDGMENT, OF WHAT IS PROBABLY THE CASE ANYWAY, COULD SERVE TO: 1) PUT THE SOVIETS ON NOTICE THAT THE ALLIANCE RECOGNIZES ITS SECURITY INTERESTS ARE PARAMOUNT; 2) BOOST NORWEGIAN CON- FIDENCE IN THE FACE OF SOFT MARKET PREDICTIONS AND CURRENT UNCERTAINTIES IN MARKETING SLEIPNER GAS (AND SOME GAS FROM MORE MARGINAL FIELDS); AND 3) MAKE AT LEAST A SMALL CONTRI- BUTION TO TRANSATLANTIC UNITY AND COOPERATION ON THIS SUBJECT WHEN IT SEEMS MOST NEEDED. ADMITTEDLY, MY PERSPECTIVE HERE IS DIFFERENT, AND I WELCOME COMMENTS FROM MY COLLEAGUES AND THE DEPARTMENT' S VIEWS. END SUMMARY. 3. NORWEGIAN OFFICIALS CONTINUE TO REPEAT -- AND EVEN EXPAND UPON -- WILLOCH' S ASSURANCES (IN AUGUST) THAT NORWAY IS CAP- ABLE AND WILLING TO BE A MAJOR SUPPLIER OF GAS TO WESTERN EUROPE IN THE 1990' S, ON COMMERCIAL TERMS. HE AND HIS FOREIGN CONF DENTIAL 50 CONF IDENTIAL NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 02 OF 02 OSLO 5009 DTG: 011524Z OCT 82 PSN: 055847 POLICY ADVISOR, KJELL COLDING, HAVE POINTED OUT THIS WILL MEAN LESS DEPENDENCE BY WESTERN EUROPE ON OUTSIDE SUPPLIERS. STATE SECRETARY FOR FOREIGN AFFAIRS EIVINN berg HAS PUT THE E CASE EVEN STRONGER. IN ADDITION, THE EUROPEAN MOVEMENT (A X CONSERVATIVE, PRO-EC GROUP FAVORING CLOSER POLITICAL TIES) HAS NOW PUBLISHED A REPORT WHICH URGES USING GAS AND OIL AS D A TOOL FOR CLOSER POLITICAL COOPERATION WITH THE EC, AND CON- CLUDES THAT FOREIGN AND SECURITY INTERESTS SHOULD BE MORE IMPORTANT FACTORS IN ENERGY POLICY THAN THEY HAVE BEEN. FOR- S EIGN MINISTER SVENN STRAY, FORMER CHAIRMAN OF THE MOVEMENT, AGREES. AND FINN SOLLIE, DIRECTOR OF THE FRIDTJOF NANSEN (ARCTIC RESEARCH) INSTITUTE, REITERATED THESE THOUGHTS TO THE ATLANTIC ASSEMBLY HERE LAST week. 4. WE ARE TOLD THAT THE FRG EMBASSY HERE REPORTED THE SIGNI- FICANCE OF WILLOCH' S SPEECH TO BONN, AND ITALIAN FORMIN COLOMBO E MUST HAVE been BRIEFED ON IT BEFORE HIS VISIT. FROM MY PER- SPECTIVE HERE IN OSLO, IT SEEMS THAT IT IS NOW TIME FOR THE X WESTERN EUROPEAN CONSUMING COUNTRIES TO INDICATE PUBLICLY THAT THEIR SECURITY INTERESTS WILL WEIGH HEAVILY IN THEIR D DECISIONS ON GAS SUPPLIES. 5. I RECOGNIZE THAT WEST EUROPEAN GAS PURCHASES ARE MADE BY S COMPANIES WHICH OPERATE, IN VARYING DEGREES, AT ARMS LENGTH FROM THEIR GOVERNMENTS. FURTHERMORE, THE NORWEGIANS ARE RE- MEMBERED FOR HAVING STRUCK A VERY HARD BARGAIN FOR STATFJORD GAS: THEY WILL UNDOUBTEDLY TRY TO GET TOP PRICE FOR SUPPLIES FROM TROLL. 6. NEVERTHELSS, I BELIEVE IT MIGHT BE USEFUL IF THE MAJOR E CONSUMER GOVERNMENTS COULD, AT AN APPROPRIATE TIME IN THE NEAR FUTURE, EXPRESS THEIR DESIRE TO PURCHASE GAS FROM NORWAY WHEN- X EVER COMMERCIALLY FEASIBLE. EVERYONE WE HAVE TALKED To, IN- D CLUDING THE FRG EMBASSY, TELLS US RUHRGAS WILL PAY A PREMIUM FOR NORWEGIAN GAS. THE ONLY QUESTION IS THE AMOUNT. IT SEEMS TO ME THAT GOVERNMENTS SHOULD ALSO ACKNOWLEDGE THIS PREMIUM, S WITHOUT ANY ATTEMPT TO QUANTIFY IT. BY so DOING, WE WILL HAVE THE SOVIETS WORKING AGAINST SOME ODDS TO SELL THEIR GAS, NOT THE NORWEGIANS. IF THE REFERENCES TO NORWEGIAN GAS ARE APPRO- PRIATELY FORMULATED, WE COULD PERHAPS BOOST NORWEGIAN CONFI- DENCE IN MARKETING TROLL GAS (AND SPEED UP DEVELOPMENT DECIS- IONS), BUT AVOID MAKING NORWAY OVERCONFIDENT ABOUT HOW MUCH IT CAN OBTAIN FOR THE "SECURITY FACTOR. E X 7. MOST IMPORTANTLY, AT A TIME WHEN TRANS-ATLANTIC TIES ARE STRAINED OVER THE SUBJECT OF WESTERN EUROPEAN GAS SUPPLIES, D ANY EXPRESSION OF AGREEMENT ON THE TOPIC BY THE FOUR EUROPEAN COUNTRIES MOST INVOLVED COULD GO FAR IN CONVEYING TO THE MEDIA AND TO OUR PUBLICS THAT WE IN THE ALLIANCE ARE LOOKING TO THE S FUTURE, NOT THE PAST. AUSTAD BT CONF IDENTIAL PiPELiNE 51 SECRET DECLASSIFIED 10764 NLRRF06-114/9 NLRR #10764 NATIONAL SECURITY COUNCIL MESSAGE CENTER BY KML NARA DATE 4/7/2011 PAGE 01 OF 02 AMCONSUL MARSEILLE 0823 DTG: 071530Z OCT 82 PSN: 008552 EOB221 AN001723 TOR: 281/1416Z CSN: HCE424 DISTRIBUTION: BALY-01 BLAR-01 MYER-01 NAU-01 PIPE-01 WEIS-01 ROBN-01 /007 A3 E X DISTRIBUTION: ISEC-01 WEIS-00 ROBN-00 YAMA-00 /001 A3 D WHTS ASSIGNED DISTRIBUTION: SIT: S EOB: OP IMMED UTS8070 DE RUFHFRM #0823/01 2801600 E O 071530Z OCT 82 (ON SVC BY WHCOMCEN) FM AMCONSUL MARSEILLE X TO SECSTATE WASHDC IMMEDIATE 3001 INFO AMEMBASSY PARIS IMMEDIATE 3792 AMEMBASSY LONDON IMMEDIATE 389 S AMEMBASSY MOSCOW IMMEDIATE 22 E SECTION 1 OF 2 MARSEILLE 823 EXDIS PARIS ONLY FOR AMB, DCM, POL COUNS, ECON COUNS, OSA E.O. 12356: DECL: OADR E TAGS: PEPR, PINS, FR, UK, UR SUBJ: WEST-SIBERIAN GAS PIPELINE X D 1. / ENTIRE TEXT). 2. CONGEN PRIVY TO FOLLOWING INSTRUCTIONS, OBTAINED FROM RELIABLE LOCAL SOURCE, WHICH WERE CABLED ON OCTOBER 6 TO S CERTAIN POSTS BY HER MAJESTY' S GOVERNMENT. INSTRUCTIONS REFLECT U.K. VIEWS ON WEST SIBERIAN GAS PIPELINE ISSUE AND RECEIVED MORNING OF OCTOBER 7 BY UK CONGEN MARSEILLE (PROTECTED SOURCE). BEGIN VERBATIM TEXT WEXT-SIBERIAN GAS PIPELINE E 3. ON 29 DECEMBER 1981, IN RESPONSE TO THE IMPOSITION OF MARTIAL X LAW IN POLAND, THE US ADMINISTRATION ANNOUNCED SELECTED ECONOMIC MEASURES TOWARDS THE USSR INCLUDING WIDER EXPORT D CONTROLS ON US ORIGIN OIL AND GAS EQUIPMENT AND TECHNOLOGY. ON 18 JUNE 1982, THE US ADMINISTRATION EXTENDED THESE MEASURES TO COVER EXPORTS BY OVERSEAS LICENCEES AND SUBSIDIARIES OF US S COMPANIES. THE MAIN PROJECT IMMEDIATELY AFFECTED IS THE WEST- SIBERIAN GAS PIPELINE FOR WHICH FIRMS, INCLUDING US SUBSIDIARIES IN THE UK, WEST GERMANY, ITALY AND FRANCE ARE SUPPLYING, SOME USING US COMPONENTS, TECHNOLOGY OR LICENCES. THE UNILATERAL, RETROACTIVE, AND EXTRATERRITORIAL NATURE OF THE ACTION TAKEN BY THE US ADMINISTRATION HAS CAUSED CONCERN IN THE EUROPEAN COMMUNITY AS A WHOLE. LINE TO TAKE 4. HMG BELIEVE THAT THE DISPUTE MUST BE RESOLVED AS SOON AS POSSIBLE BECAUSE OF THE DAMAGE IT IS CAUSING TO BRITISH AND EUROPEAN COMPANIES AND THE WESTERN ALLIANCE. THE GOVERNMENTS INVOLVED SHOULD DO THEIR BEST NOT TO AGGRAVATE THE PROBLEM, BUT TO HANDLE IT IN A MEASURED WAY. AT SOME STAGE A MEETING OF THE FIVE FOREIGN MINISTERS MOST IMMEDIATELY INVOLVED WOULD BE USEFUL. BUT THIS CAN HAPPEN ONLY WHEN ALL FIVE AGREE THAT IT IS TIMELY. WE BELIEVE THAT WE SHOULD WORK ON TWO LEVELS IN SEEKING TO DEFUSE THE PROBLEM: (1) WE SHOULD seek A CLEARER CONCLUSION ABOUT HOW EAST/WEST SECRET SECRET SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 02 OF 02 AMCONSUL MARSEILLE 0823 DTG: 071530Z OCT 82 PSN: 008552 ECONOMIC RELATIONS SHOULD BE HANDLED IN THE WEST' S OVERALL APPROACH TO THE EAST, (II) AGAINST THIS BACKGROUND THERE SHOULD BE A DETAILED EXAMINATION IN THE APPROPRIATE FORA OF HOW THE DIFFERENT X ELEMENTS OF EAST/WEST ECONOMIC RELATIONS BEST serve THAT STRATEGY. D WE BELIEVE THAT THIS APPROACH IS GENERALLY SHARED BY ALL THE GOVERNMENTS CONCERNED. THERE WILL NEED TO BE FURTHER REFLECTION IN CAPITALS, AND FURTHER OPPORTUNITIES FOR INFORMAL DISCUSSION S AT VARIOUS MEETINGS, FOR PROGRESS TO BE MADE. 5. THE SIGNIFICANCE OF THE DISPUTE SHOULD NOT BE OVERSTRESSED. THE DIFFERENCE BETWEEN THE AMERICANS AND THE EUROPEANS OVER THE PIPELINE IS FUNDAMENTALLY A DIFFERENCE OF PERCEPTION ABOUT HOW BEST TO ACHIEVE A MUTUALLY AGREED END. WE FEEL AS STRONGLY AS THE AMERICANS ABOUT SOVIET COMPLICITY IN THE E IMPOSITION OF MARTIAL LAW IN POLAND. BUT THE US ATTEMPT TO SHOW DISPLEASURE ABOUT THE POLISH SITUATION BY PREVENTING X THE EXPORT OF OIL AND GAS TECHNOLOGY TO THE SOVIET UNION IS MORE DAMAGING TO THE WEST EUROPEAN ALLIES THAN TO THE RUSSIANS, D PARTICULARLY SINCE THE RUSSIANS WOULD ALMOST CERTAINLY FIND WAYS OF COMPLETING THE PIPELINE IF ALL WESTERN SUPPLIES STOPPED NOW. S BT E X D S X D S SECRET 53 SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 01 OF 02 AMCONSUL MARSEILLE 0823 DTG: 071530Z OCT 82 PSN: 008543 EOB217 AN001724 TOR: 281/1417Z CSN: HCE425 DISTRIBUTION: BALY-01 BLAR-01 MYER-01 NAU-01 PIPE-01 WEIS-01 ROBN-01 /007 A3 X DISTRIBUTION: ISEC-01 /001 A3 D WHTS ASSIGNED DISTRIBUTION: SIT: EOB: S OP IMMED STU6526 DE RUFHFRM #0823/02 2801600 E O 071530Z OCT 82 FM AMCONSUL MARSEILLE X TO SECSTATE WASHDC IMMEDIATE 0000 D INFO AMEMBASSY PARIS IMMEDIATE 3793 AMEMBASSY LONDON IMMEDIATE 390 S AMEMBASSY MOSCOW IMMEDIATE 23 SECTION 2 OF 2 MARSEILLE 823 EXDIS PARIS ONLY FOR AMB, DCM, POL COUNS, ECON COUNS, OSA BACKGROUND 6. WE HAVE FOUND THE US MEASURES OF BOTH DECEMBER AND JUNE X OBJECTIONABLE ON TWO QUITE SEPARATE COUNTS. FIRST, THEY D PURPORT TO EXTEND US JURISDICTION BEYOND THE BORDERS OF THE UNITED STATES TO CONTROL DIRECTLY THE ACTIVITIES OF COMPANIES IN OTHER COUNTRIES, EITHER ON THE GROUNDS THAT THOSE COMPANIES ARE CONTROLLED BY US INTERESTS, OR BECAUSE THEY ARE USING S US COMPONENTS OR TECHNOLOGY. THE UK HAS FOR MANY YEARS TAKEN THE LEAD IN ARGUING AGAINST US ATTEMPTS TO EXERCISE JURISDICTION EXTRATERRITORIALLY AND THIS CASE IS THE LATEST IN A LONG LINE, ALTHOUGH ONE OF THE MOST SERIOUS. SECOND, BOTH SETS OF MEASURES HAVE RETROACTIVE EFFECT AND INTERFERE WITH EXISTING CONTRACTS WHICH WERE ENTERED INTO IN GOOD FAITH WITH THE SOVIET UNION BY BRITISH AND EUROPEAN COMPANIES. HMG AND THE GOVERN- MENTS OF FRANCE, WEST GERMANY AND ITALY, HAVE FOUND BOTH THESE X CONSEQUENCES UNACCEPTABLE. THERE IS NO BASIS IN INTERNATIONAL LAW FOR THE US CLAIM TO BE ABLE TO EXERCISE EXTRATERRITORIAL D JURISDICTION IN THIS CASE. EQUALLY WE BELIEVE THAT EXISTING CONTRACTS SHOULD BE EXEMPTED FROM SANCTIONS EXCEPT AGAINST THE BACKGROUND OF ACTUAL HOSTILITIES) AS AGREED IN NATO LAST YEAR. OTHER OBJECTIONS ARE THAT THE US MEASURES ARE: S ---UNILATERAL: THE ALLIES SHOULD CONSULT AND ACT TOGETHER, INEFFECTIVE: THE PIEPELINE WILL BE BUILT ANYWAY FROM NON-NATO SOURCES (THE RUSSIANS ARE USED TO IMPROVISING). THE MEASURES WILL NOT ADVANCE RECONCILIATION IN POLAND, ---MORE DAMAGING TO ALLIES THAN RUSSIANS: THE POLITICAL RIFT IN THE ALLIANCE HAS ONLY BENEFITTED MOSCOW. 7. FOLLOWING THE US ACTION, THE BRITISH AND EUROPEAN GOVERN- MENTS TOOK STEPS WHERE POSSIBLE TO ENSURE THAT THEIR COMPANIES COULD COMPLY WITH EXISTING AND LEGALLY BINDING CONTRACTUAL OBLIGATIONS. SECTION 1 OF THE PROTECTION OF TRADING INTERESTS ACT 1980 PROVIDES HMS WITH SUCH POWERS. THE SECRETARY OF STATE FOR TRADE HAS GIVEN DIRECTIONS UNDER SECTION 1 (3) OF THE ACT TO SPECIFIC COMPANIES CONCERNED NOT TO COMPLY WITH THE US MEASURES. TO DATE SIX COMPANIES HAVE been so DIRECTED, INCLUDING JOHN BROWN ENGINEERING. 8 THE US ADMINISTRATION HAS REACTED TO THESE STEPS BY ANNOUNCING TEMPORARY DENIAL' ORDERS PROHIBITING THE EXPORT OF ALL US OIL AND GAS EQUIPMENT, SERVICES AND RELATED TECHNOLOGY TO SECRET NATIONAL SECURITY COUNCIL MESSAGE CENTER PAGE 02 OF 02 AMCONSUL MARSEILLE 0823 DTG: 071530Z OCT 82 PSN: 008543 JOHN BROWN ENGINEERING AND THREE OF ITS SUBSIDIARIES, AND TO THREE OF THE EUROPEAN COMPANIES INVOLVED. FURTHER SUCH ORDERS AGAINST OTHER COMPANIES SHIPPING FOR THE PIEPELINE ARE EXPECTED. E IT IS NOT KNOWN HOW DAMAGING THESE TEMPORARY DENIAL ORDERS X WILL BE, BUT THE WORLD WIDE ACTIVITIES OF THE COMPANIES CONCERNED WILL CERTAINLY BE AFFECTED. D PYM END VERBATIM TEXTSACCHET I BT S E X D S E X D S E X D I S SECRET