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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: USSR - Grain Embargo 1981 (2)
Box: 27
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WITHDRAWAL SHEET
Ronald Reagan Library
Collection Name MATLOCK, JACK: FILES
Withdrawer
JET 5/10/2005
File Folder
USSR-GRAIN EMBARGO 81 2/5
FOIA
F06-114/8
Box Number
27
YARHI-MILO
2702
ID Doc Type
Document Description
No of Doc Date Restrictions
Pages
9983 PAPER
THE GRAIN EMBARGO
10
ND
B1
R
9/30/2008
F06-114/8
9984 CABLE
101224Z MAR 81
2
3/10/1981
B1
B3
D
3/16/2011
F2006-114/8
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.
U.S. to Keep
Embargo on
Grain Sales
Wash. Post 2/5/81
Reagan Said to Feel
Now Isn't Time for
Concession to Soviets
By Lou Cannon and Lee Lescaze
Washington Post Staff Writers
President Reagan, impressed by the
argument of Secretary of State Alex-
ander M. Haig Jr. that now is not the
time to make concessions to the Sovi-
et Union, will keep the Russian grain
embargo in place for the foreseeable
future, according to White House
The grain embargo was a significant
issue in the 1980 presidential cam-
paign. Reagan assailed President Car-
ter for imposing it in retaliation for
the Soviet invasion of Afghanistan
and said it was hurting American
farmers far more than it was the Rus-
But this is not now the case,
Reagan was told yesterday in a full
scale discussion of the issue during a
The Soviets face severe grain short-
ages, he was told, and are using their
hard currency to buy grain from Ar-
gentina and other countries. This was
also one of the central arguments
made in a recent report by the Heri-
tage Foundation, a conservative,
Washington-based research organi-
zation that recommended extending
At his press conference last week,
Reagan said he always thought the
embargo, bitterly opposed by some
Midwest farm organizations, was
"more of a gesture than something
real." He said that the only choice he
Broadening it to include some tech-
nical products now being sent to the
Soviets is still a possibility, according
to one well-placed source. This source
pressed" with Haig's argument that, at
the very least, now is not the time to
sources.
Cabinet meeting.
the embargo.
had was to lift the embargo or broad
said that the president was "very im-
See PRESIDENT, A6. Col. 1
sians.
en it.
Reagan Reported Set to Keep Grain Embargo
PRESIDENT, From A1
than just by the National Security
ucts, most of it destined for livestock
"lower them as part of the administra-
give the Soviets the concession they
Council. However, his argument at the
feed.
tion's effort to make substantial cuts
want most by lifting the embargo.
Cabinet meeting appears to have been
Carter's support from farm organi-
in the federal budget.
This is particularly true, the presi-
undercut by this year's reduced crops,
zations declined along with farm in-
Well aware of the sensitivity of the
dent has been told, in view of the sig-
for which most farmers appear to
come, which dropped by 22 percent in
issue, the administration imposed a
nal he sent the Soviets in his news
have adequate export markets. This in
1980. There is a dispute among agri-
virtual gag order yesterday on White
conference last week when he said
effect left a national security argu-
cultural economists about the embar-
House press secretary James Brady,
that they are bent on world domina-
ment balanced against a campaign
go's role in this decline, with some
instructing him to say only that the
tion and consider it "moral" to lie,
pledge.
placing more of the blame on the glut
embargo issue was still under discus-
cheat and commit crimes toward this
The issue is highly sensitive for
caused by 1979 bumper crops.
sion and that the president had not
end.
Reagan because of his repeated prom-
Even though farmers want the em-
decided whether to retain or lift it.
Any dealing with the Soviets,
ises to lift the embargo if he were
bargo lifted, there are some signs that
Brady did as he was told, adding
Reagan added, should take this into
elected. But some of his aides argue
this is a negotiable demand that could
only that he expected the issue to
account.
privately that the situation has
be traded for others. Marvin Meek,
come up at a future Cabinet meeting.
The case for lifting the embargo
changed since he made the pledge,
the president of the American Agri-
While declining to answer questions
was made in yesterday's Cabinet
both because of the Soviet threats to
culture Movement, even while calling
about the grain embargo at the daily
meeting by Secretary of Agriculture
Poland and because there has been
for a lifting of the embargo yesterday,
White House briefing, Brady did pro-
John Block, who argued that if the
some accumulation of evidence that
said that it might be possible to go
vide the information that Reagan had
Soviets were going to be spending
the embargo has made the Soviets
along with it if price supports are in-
implored his Cabinet yesterday to "go
money abroad for grain they should
pay out more of their limited hard
creased.
ye forth and seek minorities and
be spending it in the United States.
currency, përhaps as much as $1 bil-
"It still boils down to what we said
women for your appointments."
Meeting with reporters earlier in the
lion more, than they would have with-
last November," the Associated Press
Vice President Bush made a similar
week, Block described the embargo as
out the embargo.
quoted Meek as saying. "We're willing
exhortation.
"the most ridiculous thing I ever
Carter imposed the embargo on
to go along with it as long as it
Organizations representing His-
heard of."
Jan. 4, 1980, with the support of most
doesn't destroy our markets."
panics, blacks and women have com-
Last week Block was successful in
national farm organizations. His order
However, there is no sign that price
plained that insufficient numbers of
persuading Reagan to have the issue
blocked delivery of 17 million metric
supports will be increased. On the
their constituencies are getting jobs in
considered by the full Cabinet rather
tons of wheat, corn and other prod-
contrary, an attempt may be made to
the Reagan administration.
Wash. Post, 2/6/81 Pg. A3
Reagan Undecided on Lifting Soviet Grain Embargo
President Reagan has not decided
Sen. Bob Dole (R-Kan.), a strong
by former president Carter after the
to White House press secretary James
whether to lift the Soviet grain em-
opponent of the embargo, said yester-
Soviet invasion of Afghanistan.
S. Brady.
bargo or to seek decontrol of natural
day that he thinks the president will
Senate Majority Leader Howard H.
On decontrol of natural gas,
gas by Sept. 30; White House deputy
lift it. "In my view, he made a cam-
Baker Jr. (R-Tenn.),, meanwhile, said
Speakes told reporters that "no final
press secretary Larry Speakes said
paign promise to remove it, to lift the
that a turnaround on the issue would
decisions have been made and won't
yesterday.
embargo," Dole said.
not embarrass Reagan. Conditions
be for a number of days."
As he left a presidential prayer
The president has promised Dole
change, Baker said, "It would be fool-
He indicated, however, that a deci-
breakfast Reagan was asked about a
and other anti-embargo senators from
hardy to say
positions you take in
sion on decontrol of natural gas would
farm states that he will not make a
the campaign must never be varied."
be made in the near future.
Washington Post article saying that
decision on the embargo at least until
The grain embargo was discussed
the embargo would be continued for
Baker said he favors decontrol, but
after Feb. 17, when he will meet with
during a Wednesday Cabinet meeting
would also favor imposition of a wind-
the foreseeable future. "No decision
them and listen to their arguments in
and will be discussed further at an-
fall profits tax, "at least a temporary
has been made," he replied.
favor of ending the embargo, imposed
other, Cabinet-level meeting; according
one," to accompany decontrol.
PRESERVATION COPY
THE WASHINGTON POST, FRIDAY, FEBRUARY 6, 1981
Page A15
Stephen S. Rosenfeld
It's Our Grain Deal
The president's decision to keep the Soviet
the authority to decide whether to sell more,
grain embargo in place for a while gives him,
expires in the fall. This gives the new adminis-
the bureaucracy and other politicians time to
tration the impetus and occasion to make
come to grips with the unnoted fact that
grain policy for years to come.
events have handed the United States a major
In brief, we have got the Soviet Union
strategic opportunity in dèaling with Soviet
caught between our diminishing need for their
power.
market and their large, continuing need for
For the issue is not simply whether Presi-
ours, and it's our deal.
dent Reagan will respect his campaign pledge
Under that 1976 agreement, the Soviets
to lift the embargo President Carter imposed
could and did buy eight million tons in 1980.
after Moscow invaded Afghanistan, or whether
The Carter embargo kept them from buying
this is not the right time to lift the embargo.
17 million additional tons. Most Soviet grain
It's whether the new administration will real-
imports are used to feed cattle, so the embargo
ize that a potent new combination of circum-
did not cause hunger by affecting the basic
stances exists, ready for American exploita-
bread ration. But notwithstanding Soviet spot
there is no meat will lie with those in the
tion.
purchases elsewhere, the embargo did affect
Soviet leadership who were keenest to deal
These circumstances are:
with Afghan unrest by tanks. It is the stuff of a
1) World grain patterns are changing. Such
good and continuing internal Kremlin argu-
is the increase in domestic and non-Soviet for-
"Every time a Soviet family sits down to dinner, the
ment. Now, with a succession struggle impend-
eign demand, and such are the rising costs of
ing, is a particularly good time to nourish that
growing more food at home, that no longer do
evidence of the Kremlin's failure is on the table. Call it
argument. But if the American grain market is
American farmers require the Soviet market to
again opened wide, the message the United
soak up surpluses and keep domestic prices
the Afghanistan red plate special.'
States would be inserting into that argument
high. The new pattern is analyzed in a com-
would be: anything goes.
prehensive report that Agriculture Secretary
A decision to make grain an integral and ex-
John Block inherited from his predecessor.
the supply of meat in the first year (1980) and
bage or potato, and no meat, washed down
plicit part of American foreign policy sets up
Block, in an interview, showed himself defi-
it will effect meat even more from this point
with vodka.
certain tasks. Policymakers must determine
nitely unsympathetic to this part of the report.
on as slaughtered herds are not replenished.
Public opinion as such may not exist in the
how to distribute exports among commercial,
I gathered, however, he has not yet fully di-
We must keep in mind that the standard of
Soviet Union. The Soviet people, compared,
political and humanitarian/developmental
gested the material in it.
living in the Soviet Union is still so abysmally
say, with Poles, are cows, little given to pro-
uses. Diplomats will have to head off Soviet
2) The miseries of Soviet agriculture linger.
low that, except for the elite, the quality of
test. Certainly the Soviet internal apparatus of
end runs in the few other grain-exporting na-
This is an old story. Nor is there the slightest
diet is the most important thing. Meat is the
repression is stronger. But there is reason to
tions. Propagandists must remind foreigners
glimmer that the Kremlin will do the one
principal item with which the Soviet leader-
believe that events in Poland over the last dec-
that Soviet adventurism was the cause of it all.
thing-unleash market forces-that could
ship has undertaken to improve the diet.
ade have sensitized Soviet leaders to the im-
The agricultural sector must accept a require-
ease its farm problem. That means depending
The removal of meat from the dinner table
pact that changes in the supply and price of
ment to institutionalize a nèw government role
indefinitely on American farmers to make up
is, then, a blow at the diet, a blow at the stand-
food can have on domestic stability. They can-
in the grain trade. Difficult tasks all, but possi-
Soviet shortfalls, as the Kremlin has for 20
ard of living and a blow at the Soviet leader-
not be happy looking forward to further ero-
ble to do.
years.
ship. It's not stretching to say that every time
sion of public morale, if only for its effect on
Will Reagan seize the moment? Surely he
3) The Soviet-American grain agreement of
a Soviet family sits down to dinner, the evi-
productivity in the work place.
will, if he can shed the conviction that govern-
1976, obligating the Soviet Union to buy eight
dence of the Kremlin's failure is on the table.
There is another angle. If a limit is kept on
ment has no business interfering in the market
million tons a year and giving the president
Call it the Afghanistan red plate special: cab-
Soviet purchases, the onus of explaining why
and if he can, instead, think strategically.
4
NATIONAL SECURITY COUNCIL
SECRET
February 11, 1981
MEMORANDUM FOR RICHARD PIPES
FROM
Sven Kraemer SK
SUBJECT:
M. Rashish Paper
on Grain Embargo
Attached, per our discussion, is a
copy of the Grain Embargo paper
prepared by Meyer Rashish for the
President's Interim Foreign. Advisory
Board.
Policy
I am also passing a copy on to
Henry Nau.
House DECLASSIFIED Guidelines, August 28, 1997
By White smf NARA, Date 7/23/02
DECLASSIFIED
5
NLRR' F06-114/8*9983
SECRET
BY LOJ NARA DATE 9/30/08
December 1980
THE GRAIN EMBARGO
M Rashish
The post-Afghanistan grains embargo against the USSR announced
on January 4, 1980, whatever its effectiveness, has been overtaken by
a series of events which are likely to dominate U.S. policy toward grain
trade with the USSR in 1981:
1. The evolution of the Reagan administration's
policies toward the USSR, including trade relations
and the question of linkage;
2. The possibility of extensive economic sanc-
tions against the USSR if Poland is invaded, etc.;
3. The expiration of the US-USSR grains agreement
on September 30, 1981, covering 8 million tons of
grain not affected by the embargo;
4. World grains production, supply and prices and
USSR import requirements.
Background
The grain embargo against the USSR of January 4, 1980 was part
of a program of economic and other sanctions announced by President
Carter following the Soviet invasion of Afghanistan and included
limitations of exports of high technology or other strategic items
6
SECRET
and limitations on fishing privileges in U.S. waters. The grain em-
bargo did not affect the base amount of 8 million tons of grain which
was contracted for and applied only to the 17 million tons discre-
tionary purchases by the USSR permitted by the US-USSR grain agree-
ment.
The embargo decision had all the earmarks of a hasty action:
the affected U.S. industries were not consulted as required by the
Export Administration Act of 1979 nor was there prior consultation
with U.S. allies. The Carter administration never adequately explained
why the embargo did not affect the base amount of 6-8 million tons
of grain provided for in the US-USSR agreement of October 20, 1975
which were to be supplied annually for a five-year period starting
October 1, 1976. The Carter administration was confident that the em-
bargo would not be circumvented by other grain suppliers. The 17 mil-
lion tons of embargoed grain (value = $2.3 billion) was supposed to
result in the loss to the USSR of about half of its projected grain
imports with a consequent reduction in livestock feed, herd slaughter,
and, over the longer term, a substantial reduction in meat production.
Attempts were made to secure the cooperation of other grains-exporting
countries such as Canada, Australia, the European Community and Argen-
tina. Argentina never agreed to participate in the embargo, Canada
accepted to limit grain sales to the USSR to "normal and traditional
levels". In the event, there was substantial circumvention of the
embargo notably in Argentina, the EC and Canada.
- 2 -
The USSR has been able to import a record amount of grain in
the marketing year 1979-80 (July-June) and estimates indicate a con-
tinuation of the trend for 1980-81. The total amount of grain imported
by the USSR in 1979-80 was 31.5 million tons, about 20 percent above
previous record year of 1975-76 and accounting for 16 percent of total
world grain imports. Total grain imports in the 1978-79 year were
15.6 million metric tons.
Estimated total grain imports in 1980-81 are 33.1 million metric
tons. The geographic composition of these imports has, however,
changed. Comparing July-December 1979 with January-June 1980, one sees
a marked reduction of imports from the United States from 12.2 million
metric tons (MMT) in the first period to 3.1 MMT in the second period.
While the United States accounted for 72% of the Soviet Union's grain
imports in 1978-79, the US accounted for only 48% of such imports in
1979-80. Estimates for 1980-81 show dramatically the change in the
composition of imports into the USSR: compared with a year earlier, US
exports are expected to decline from 15.3 MMT to 8.0 MMT; Canada would
increase exports from 3.8 MMT to 5.1; Argentina from 5.5 to 10.0; the
European Community from 0.7 to 3.5. Exporting countries have circum-
vented the embargo shifting sales from traditional markets to the
USSR (at premium prices) while leaving traditional markets to US grain
exporters. Argentina has been the greatest beneficiary of this diversion
and has, in addition, signed on July 10, 1980 a long-term supply agree-
ment with the USSR for 22.5 million tons of grains (corn, sorghum and
soy beans) over the next five-year period.
- 3 -
SECRET
8
Effect on the USSR
The effect of the embargo on the USSR is difficult to assess.
The USSR had anticipated a total consumption of grain in 1979-80, prior
to the embargo, of 228 MMT of which about 35 MMT was to be imported.
Of these imports, 25 MMT was to come from the United States. The em-
bargo was designed to reduce these 25 MMT to 8, a reduction of 17 MMT
part of which would be offset by imports from other sources with a
net loss of imports to the USSR of about 7 MMT; actual net reduction
in imports has been less: to the extent the USSR is experiencing a re-
duction in grain consumption below anticipated levels, the principal
cause has been her bad grain harvests in both 1979 and 1980 with pro-
duction off in each year by about 30 million metric tons. The USSR
was able to offset these losses in part by drawing down of stocks of
grain and in part by increasing imports of meat.
The diversion of imports from the U.S. to other sources has
resulted in higher prices for grain imports into the USSR. With chronic
difficulties in agriculture, bad grain harvests in the USSR and a strin-
gent supply situation in the world, the USSR (as other consumers) will
be faced with higher grain import prices. In these circumstances, there
is at least an appearance that the grain embargo is working in terms
of the availability of grain supplies to the USSR and there may in
fact be some reduction in shipments to the USSR as a result. Under
present circumstances, a curtailment in the 8 million metric
tons of grain currently authorized for exportation to the USSR (of which
- 4 -
SECRET
5.5 MMT have already been contracted for and, as yet, not shipped), a
significant impact on grain supply to the USSR could result. The
longer the bad supply situation in the USSR and the world obtains, the
greater the prospect that the USSR would have to curtail consumption of
meat by its population. In the short term, unavailability of grain
as a feedstock would result in the slaughtering of herds resulting in
an increase in the availability of meat; over the longer term, the
cut-back in herds would result in a substantial decline in meat pro-
duction and consumption in the USSR.
Effect on U.S. Farmers
The opposition of the U.S. agricultural community to the em-
bargo -- which persists -- was based initially on the expectation that
the embargo would result in a substantial depression of grain prices.
In fact, grain prices did drop initially but regained their pre-embargo
level within a month's time. In recent months, grain prices have
been rising smartly. Current stock situations for corn and wheat sug-
gest that U.S. prices will remain relatively strong. The recently
concluded four-year grain agreement with the PRC indicates that ship-
ments from the U.S. to the PRC will rise substantially by about 6 MMTs
in 1980-81 over 1979-80.
The world has experienced two years of bad agricultural har-
vests back to back. With world demand rising this has resulted in a
run-down in stocks, higher prices and, if U.S. production stands up,
- 5 -
10
SECRET
rising U.S. exports. A world that is increasingly dependent on U.S.
agricultural supplies is one in which the U.S. can more effectively
than otherwise prosecute an export denial policy. But it should be
emphasized that any such policy pursued essentially unilaterally by
the United States is bound to have limited effects. The fact that
grains are fungible and internationally traded means that substitute
supplies can be found if producing countries are not willing to par-
ticipate in supply restraint arrangements for either political reasons
or reasons of economic gain. To assure compliance by other countries,
it is necessary that they accept the objectives which the sanctions
are designed to serve and this in turn requires, at a minimum, prior
consultation with them. Under the best of circumstances, given the
nature of the world grains market, compliance will be effective if
the objective world supply and demand situation is conducive to com-
pliance.
Options
The options outlined below are applicable in the current
situation absent any event, such as an invasion of Poland by the USSR
or related action of sufficient gravity to warrant the application of
new sanctions. If such an event takes place, clearly the lifting of
the embargo by the United States is ruled out and the prospect for
the application of new economic sanctions against the USSR in concert
with allied countries is substantially enhanced.
- 6 -
SECRET
1. Lifting of embargo without preconditions in compliance with
President-elect Reagan's campaign statements.
Comment: Under present stringent supply conditions at least
for the short term, the lifting of the embargo is not likely to result
in any significant increase in U.S. grain exports to the USSR; by the
same token, it is not likely to result in any major durable impact on
U.S. grain prices which in any case have been rising. This decision
appears to come down to the question of accommodating the sentiments of
American farmers who are opposed to export controls on agricultural
goods as a matter of principle vs. the somewhat ambiguous signal that it
would emit to the USSR and our allies under the present strained cir-
cumstances of relations with the USSR.
2. Link the lifting of the embargo with some specific action
or assurance by the USSR.
Comment: Given the principle of linkage enunciated by President-
elect Reagan, suspension of the embargo could be sold for some action
by the USSR of fairly modest dimension. Even in this connection, it
would carry the implication of regularization of grain trade with the
USSR and hence imply that the US-USSR grain agreement would be renegotiated.
3. Remove soy beans only from the embargo list while retaining
the embargo with regard to corn and wheat.
Comment: U.S. production of soy beans has dropped and the carry-
over reduced so that the amount of additional soy bean exports implied
- 7 -
SECRET
by such an action is doubtful. Such a decision would constitute a com-
promise although its value in terms of bringing the farm community around
is probably very limited.
4. Defer decision on the grains embargo pending a renegotia-
tion of the US-USSR grains agreement which expires on September 30, 1981.
Comment: The Reagan administration could open negotiations with
the Russians on renewal of the agreement this spring, depending on
broader political questions. This would at least serve the purpose
of subsuming the grain embargo issue under the larger more important
rubric of what kind of arrangements we should enter into with the USSR
governing grains trade for the longer term.
5. Defer the renegotiation of the grains agreement and, after
it lapses, rely on unilateral U.S. controls to govern grain exports to
the USSR.
Comment: The US-USSR grain agreement was designed to intro-
duce a measure of stability into the grains market after the experience
of the "great grain robberies." This need persists and may require
USSR cooperation in order to be satisfied. However, as an alternative
to an agreement, the U.S. government could seek to enforce unilateral
controls on shipments of grain to the USSR directly or indirectly.
It is unlikely, however, that the U.S. farm community would look kindly
on such controls.
M.R.
December 16, 1980
- 8 -
13
SECRET
WORLD GRAIN PRODUCTION, CONSUMPTION AND STOCKS
(July-June year)
(in million metric tons)
1978-79
1979-80
1980-81 (Est.)
Production
1,579
1,521
1,520
Consumption
1,549
1,550
1,560
Change in Stocks
+30
-29
-40
Year-end stocks
231
202
162
14
SECRET
USSR GRAIN IMPORTS
(July-June year)
(in million metric tons)
1979-80
1980-81 (est.)
United States
15.3
8.0
Canada
3.8
5.1
Australia
3.9
3.5
Argentina
5.5
10.0
European Community
0.7
3.5
Spain
0.0
1.0
Others
1.3
2.0
30.5
33.1
THE WALL STREET JOURNAL - February 26, 1981
GRAIN
Soviets See Pluses in Grain Embargo
By DAVID BRAND
positive impact on the Soviet economy,
But he comes closer to a major reason
Staff Reporter of THE WALL STREET JOURNAL
helping to mobilize its resources and poten-
for the animal-feed shortage when he be-
MOSCOW - When President Carter
tials."
moans the "lack of initiative" shown by
slapped an embargo on U.S. grain exports
But many in the West disagree with this
state-farm managers. "State farms must
to the Soviet Union 13 months ago, there
assessment. "Yes, the Soviets are poten-
become self-sufficient instead of relying on
was widespread optimism that the Soviets
tially capable of becoming self-sufficient,
subsidies," he says.
would be made to pay for their adventure
but at great cost," says Everett Jacobs. an
Western experts doubt that the cumber-
in Afghanistan. Advancing tanks would be
American expert on Soviet agriculture who
some Soviet agricultural bureaucracy can
countered by retreating foodstuffs.
teaches at Sheffield University in England.
be inspired to become more efficient. Nor
Thirteen months later, the Soviets are
"It would be so costly that it would be irra-
do they believe that the Soviets will be able-
asking: Who has hurt whom?
tional to attempt it" He adds that the ca-
to boost production of alfalfa, soybeans and
The U.S. government. spent $2.4 billion
pricious Soviet climate makes harvest
rapeseed for many years. Thus the Soviets
buying up 14.5 million metric tons of Sovi-
goals difficult to meet, as was the case in
must step up efforts to bring more land
et-bound grain and soybeans, which it then
1979 and 1980.
into production.
sold at a loss of $460 million. (A metric ton
The Soviets were hit from two direc-
In the harsh landscape of the Soviet
is equivalent to 36.7 bushels of wheat or
tions last year. First came the grain em-
Union, this largely means reclaiming land
soybeans or 39.4 bushels of corn.)
bargo, which meant the loss of 17 million
from forest and swamp, treating it with
Although the Soviets have been forced
metric tons of U.S. grain that were planned
large amounts of fertilizer and minerals,
to spend heavily on grain supplies from
to be imported between October 1979 and
and building irrigation systems. Even so,
other countries, they claim the embargo
September 1980. (The U.S. government
such areas have the least-productive soil,
has provided them the resolve to become
bought up 14.5 million metric tons of this
deficient in humus and lime, and the capi-
self-sufficient in agricultural production.
tal investment needed to bring it into pro-
We have enough resources to do with-
They claim the em-
duction is high. Although more than 11,000
out imports," declares Arnold Litvinov, an
acres of these. so-called nonblack lands
agribusiness expert at the Institute of U.S.
bargo has provided
have been brought into production in the
and Canadian Studies in Moscow. He calls
past five years, the total still constitutes
agricultural self-sufficiency "a very realis-
them the resolve to be-
only 3% of Soviet arable land.
tic goal."
Despite such Soviet contentions and
come self-sufficient.
Costs Less Than Imports
strong opposition from U.S. farmers, most
But the cost can be justified, says Mr.
observers don't expect President Reagan
Nazarenko. In recent months, the Soviets
for resale. The embargo exempted eight
to lift the embargo any time soon.
have been paying as much as $226 for a
million tons a year, which the Soviets
That the embargo has stung the Soviets
metric ton of imported grain. compared
bought in the 1980 contract year and have
into action is supported by Zhores Med-
with the domestic production cost of $110 a
contracted for again this year.) Then bad
vedev, a Soviet emigre scientist who works
ton. Even though grain from the nonblack
weather reduced the harvest, targeted at
at the National Institute for Medical Re-
lands is as high as $200 a ton, it still costs
235 million metric tons, to 189.2 million.
search in London. The Soviets, he writes in
less than the imports.
The shortage is acutely affecting Soviet
a widely discussed article in The New Sci-
meat supplies because the principal grain
The Soviet research institute for non-
entist, a British magazine, are making a
imports are for animal feed. These imports
black lands-located in Minsk, capital of:
major effort to prove their independence
are now coming in at a rate of about 35
the republic of Byelorussia-i suddenly of
from U.S. imports.
million metric tons a year from Argentina,
major importance in the Soviet effort to in-,
"In general," Mr. Medvedev writes,
Canada and a number of other countries.
crease grain production.
find that the U.S. embargo, which was de-
The Soviet view-laced with consider-
Michail Severnyou, the institute's direc-
signed to expose the vulnerability of the
able hyperbole-is that a heroic effort is
tor, says 48% to 50% of the arable land in
Soviet Union, has in reality made a rather
being made to raise production of animal
nonblack areas is planted to cereal crops.
feed. Planners are considering higher
His mission, he says, is to expand that to
yields of everything from alfalfa to rape-
60%. But this will make only a minor dent
seed. "Even potatoes and beets are an im-
in the Soviet Union's feed-grain needs be
portant resource for feeding animals,"
cause the nonblack lands provide only 6%
says Mr. Litvinov of the U.S. and Canadian
of the nation's grain.
institute. Mr. Litvinov is extremely serious
The priority given to Mr. Severnyou's
when he tells a reporter: "The grain em-
institute can be seen in the facilities at its
bargo was a pleasure for our country. Be-
command. It controls 31 laboratories with
cause we had come to rely on imported
680 scientific workers and 280 scientists
feed and coarse grain from the U.S., we
and engineers. It has an experimental
weren't forced to do anything about in-
plant to test prototypes of farm machines
creasing the production of high-protein for-
and a factory with 400 workers to build the
age and coarse grain in our own country."
machines.
Mr. Severnyou is convinced that feed
Relying Is Dangerous
production can be increased on nonblack
During the years of detente, he says, it
lands with new technology and with miner-
was considered more rational to import ad-
als and organic fertilizers. "With fertilizer
ditional feed grain than to produce it, thus
alone," he says, "we can triple our hay
freeing resources for use elsewhere in the
production." The problem is that the Sovi-
economy. But, as relations between the
ets have a chronic shortage of fertilizer.
U.S. and the Soviets have deteriorated, he
In his article, Mr. Medvedev, the Soviet
says, "we now realize that it's very dan-
emigre scientist, says such efforts are part
gerous to rely on international partners."
of the "battle attitude" adopted by the So-
Exactly how the Soviets could make up
viets after the U.S. embargo. He writes:
their deficiencies in animal-feed production
"Full self-sufficiency, in production clearly
isn't clear. Victor Nazarenko, who directs
motivated several high-level agricultural-
a Moscow institute of economic research in
planning decisions taken at the beginning
agriculture, talks somewhat vaguely about
of 1980. And the effect of these decisions
improving efficiency through increased in-
will be long lasting, far beyond the limits
vestments in irrigation and storage.
of 1980."
Carter's Embargo on Grain 2/28/81 to Soviet Pg. A8 Is Reagan's Now
Wash. Post,
By Ward Sinclair
difficult to think we can have an
prices well above their pre-embargo
steady pressure for continuation of the
Reagan would lift the embargo be-
Washington Post Staff Writer
agreement with the embargo still on."
level. And despite the ban, U.S. grain
embargo. A resolution introduced by
cause he has a farm constituency
There may be times when certain
Afterward, Block said the United
exports last year exceeded 1979 fig-
Rep. Peter Peyser (D-N.Y.), with 75
"that is willing to work with him. His
Republicans wish they'd never heard
States has had no contact with the
ures,
cosponsors, expressing congressional
image is far more important in this
of a grain embargo, Much less cam-
Soviet Union on renegotiation of the
American farmers greeted the 1975
intent to maintain the ban is expected
country than any image abroad
I
paigned against it.
1975 agreement, which allowed Mos-
trade agreement with enthusiasm,
to win House committee approval in
said at our meeting that he should lift
Jimmy Carter's partial embargo on
cow to purchase American grains in
since it meant the opening of an im-
the next week or so.
the Jimmy Carter embargo and say
grain shipments to the Soviet Union,
an orderly fashion to prevent the dis-
portant new market on a regularized
"The embargo is not going to be
he has a Reagan embargo in his hip
as punishment for the Russians' inva-
ruption of U.S. domestic markets,
basis with potential for expansion, as
lifted. I'm sure of that," Peyser said
pocket and that it will be applied all
sion of Afghanistan, is quickly becom-
Sen. Walter (Dee) Huddleston (D-
in fact occurred each year after the
last week. "My sources at the State
across the board if it is needed."
ing Ronald Reagan's grain embargo.
Ky.), ranking Democrat on the Senate
pact was signed.
Department indicate that Secretary
Other farm-state Republicans, ordi-
Despite campaign promises, despite
Agriculture Committee, recently
[Alexander M.] Haig doesn't think
Their enthusiasm was dampened
narily as hard-line as Helms toward
the opposition of prominent GOP sen-
this is the time to lift it
touched on another point that has
To lift
after Soviet troops poured into Af-
the Soviets, tend to echo that view.
ators, despite a Cabinet-level review
been lost in the great debate over the
the embargo would send signals that
ghanistan in late December 1979.
Peyser and friends are loving it. "It
and a White House meeting last week,
merits of the embargo and whether it
Within days, using national security
would confuse the world and give the
surely is a contradiction," he said.
there is no sign that the embargo will
has hurt the Soviet Union as much as
Soviets the idea that we are not pre-
powers given him by export law, Car-
"Some of these same people supported
be lifted any time soon.
President Carter intended.
pared to deal seriously with their ag
ter invoked a ban on the sale of any
draft registration as a way of showing
gressive policies."
More and more it appears, as Agri-
"We seem to think the Russians
grain in excess of the 8 million metric
the Russians our seriousness. To lift
Peyser and others, meanwhile, are
culture Secretary John R. Block sug-
will want to renew the agreement
tons the United States was committed
the grain embargo would be a perfect-
savoring the delicious political ironies
gested last week, that the embargo
They have been able to make up most
to sell under the 1975 agreement.
ly rotten message for our young peo-
of the situation: here are some of the
will continue at least until the Soviet
of their shortfall from other world
ple as to how policy-making works in
That meant that about 17 million
Republican Party's leading hard-liners
this country."
Union offers some gesture of concilia-
sources," he said.
tons of grain were withheld from ship-
on Soviet policy arguing for an end to
tion toward the United States:
The Defense Intelligence Agency
ment. The U.S. government agreed to
the ban, even though there is evidence
Block, a strenuous critic of the sales
has estimated that the Russians had
buy the grain to prevent market UN-
that the embargo has caused problems
ban and ultrasensitive to Farm Belt
to spend an additional $1 billion last
Traval and price depression at home,
and extra cost for the Soviets.
displeasure with it, raised another
yea
obtain the grain, used mostly
but farmers were furious I in part
"No question about their inconsis-
point that may further try the politi-
in 1
3 livestock. Critics note, how-
because Carter had allowed a continu-
tencies," Peyser said. "The message is
cal patience of farmers intent on bol-
eve
t the embargo cost the U.S.
ation of other types of nonagricultural
clear at home, too. When agriculture
stering U.S. exports: the possibility
gov
ent about $3.4 billion; that
exports.
gets involved in these issues, the hard-
that the underlying 1975 bilateral
was 18 price of taking over the grain
The ban, most observers agree, cost
liners change their tune when the con-
grain agreement with the Russians,
that would otherwise have been sold
Carter dearly at the polls in the mid-
stituents start complaining."
which the embargo only interrupted,
to the Russians.
American grain belt last November.
will not be renewed.
Among the more prominent Senate
U.S. Department of Agriculture an-
The farmers' hope, of course, was that
conservatives who oppose the embargo
"There is great concern on my
alysts say the embargo, along with
candidate Reagan would follow
are Jesse Helms (R-N.C.), chairman of
part," Block told a House Appropria-
poor harvests, diminished Soviet meat
through with his promises and lift the
the Agriculture Committee, Armed
tions subcommittee. "Without some
production and slowed agricultural
embargo once he moved into the
Services Chairman John Tower (R-
change in the embargo situation, it
growth. U.S. farmers suffered some
White House.
Tex.) and Finance Chairman Bob
would be difficult to negotiate a new
short-term losses after the embargo,
But it hasn't worked that way.
Dole (R-Kan.). All happen to repre-
agreement
At some point, the
but the drought and a growing world
Urban members of Congress
sent large farmer constituencies.
embargo has to come off, but it seems
demand by year's end lifted grain
mostly Democrats have kept up
Helms said last week that he hoped
THE WHITE HOUSE
Office of the Press Secretary
March 9, 198L
INTERVIEW WITH THE PRESIDENT
BY FRANK REYNOLDS
ABC NEWS
The Oval Office
10:00 A.M. EST
MR. REYNOLDS: Mr. President, I'm very grateful to you,
sir, for giving this interview today because it's a particularly
important day with your message to the Congress, spelling out in
detail all of your budget cuts. The Reagan resolution is really going
to become quite clear and distinct now. Do you feel, sir, that the
honeymoon is perhaps about to come to an end?
THE PRESIDENT: Well, if there has been a honeymoon so far.
This could mark a change in it, but Frank, let me just say in addition
to answering that, it's great to see you again. It's been too long.
We missed you out on the campaign trail.
MR. REYNOLDS: Yes, well I watched you all the time. Watched
you all the time. I understand, Mr. President, you've got the budget
down now to $695.3 for Fiscal '32 and $655.2 for Fiscal '81. You've got
a $55 billion deficit for this year of '81 and a $45 billion deficit
for next year, Fiscal ' 82. Are those the correct figures?
THE PRESIDENT: Yes, if the entire program is accepted and
works out, we believe it would though. I have to point out that $45
billion next year is less than half of what the deficit would be without
the cuts because our total cuts amount to $48.6 billion.
MR. REYNOLDS: Mr. President, you've coined this phrase,
"the safety net" to define those who really need help. I'd like to
explore that with you, if I may, and one member of your administration
defined the truly needy as those who without government help would probably
not survive. How do you define the truly needy?
THE PRESIDENT: Well, I think that is a kind of succinct
way that someone put it, but I think it's easy to define. It is those
people who would have no other means of subsistance would simply be
poplarized without these government programs and it is true that where
we are making cuts, it is up in the area where over time the programs
have broadened and begun to include people that don't have that real
need classification. As in California when we reformed welfare, when
we finally were able to actually check, particularly on those people
who had some outside income in addition to welfare, in the first 10,000
names we checked, we found over 40 percent of them had understated their
outside income for purposes of establishing a better welfare check.
MR. REYNOLDS: Well, Mr. President, I think everybody's
interested in the process that you have followed at arriving at the
size of these cuts. Let's take the Food Stamp Program which is surely
one of those most prominent. Everybody agrees the program has exploded.
It now serves, I believe, like 22 million people. It would cost more
than $12 billion next year without your reductions, but how, sir, did
you determine that a family of four with an income of $11,000 a year
could get by without the extra $1400 in Food Stamps?
THE PRESIDENT: Well, the only thing I can say, Frank, in
the whole consideration was you started from the end where you thought
where expansions of the program that had begun to include people who
did not have that real need that we were mentioning before. When we
found, for example, that college students without, simply on the basis
- 10 -
MR. REYNOLDS: Mr. President, you're not going to lift
the grain embargo, are you?
THE PRESIDENT: There again, no decision. I was against
it. I thought and still think that if we ever use sanctions of that
kind, you don't just make one segment of our society pay the price as
we did with the farmers. You go across the board and make it really
painful.
I don't think we were successful as we should have been
in persuading nations friendly to us not to take over that market and
supply the Soviets with grain. We hurt the farmers, I think, worse
than we hurt them. But now, having inherited that, in view of the
international situation and what has happened, the stepped-up offense
in Afghanistan, the threat to Poland and all, we -- this has to be
a decision that's based on the whole international situation that we
now have found.
MR. REYNOLDS: The Secretary of Defense has indicated,
at least so I read him sir, that if the rebels in Afghanistan requested
help from the United States, arms from the United States, that we would
be quite willing to supply that. What is your view on that? If they
ask for aid, are we going to give it to them?
MORE
THE PRESIDENT: I didn't hear that show. I didn't
know he-- the context in which he made the remarks. I think
certainly this would be very definitely considered by us.
MR. REYNOLDS: You would consider aiding the Afghan
rebels?
THE PRESIDENT: Yes, with weapons.
MR. REYNOLDS: And what do you think would be the
Soviet reaction to that?
THE PRESIDENT: I don't know that they could really
have an objection to that. But I think it is something, as I say,
to be considered. And I'm answering this now without --
MR. REYNOLDS: Yes, sir.
THE PRESIDENT: -- having sat down with the Secretary
and others and looked at all the ramifications of that.
MR. REYNOLDS: But you would be inclined to supply the
Afghan rebels fighting the Soviets with American military assistance?
THE PRESIDENT: Yes, the --
MR. REYNOLDS: Advisers or training teams?
THE PRESIDENT: No, but we've used the term "Afghan
rebels." And, sometimes, I think the Soviet Union has been
successful in their propoganda with getting us to use terms that
semantically are incorrect. Those are freedom fighters. Those are
people fighting for their own country and not wanting to become a
satellite state of the Soviet Union which came in and established
a government of its chosing there without regard to the feelings
of the Afghans. And so I think they're freedom fighters, not
rebels.
MR. REYNOLDS: Well, they're certainly rebels against
the Soviet Union, aren't they?
THE PRESIDENT: Yes.
MR. REYNOLDS: Mr. President, the first major response
to what I guess has been termed your tough talk since you've come
into office, I mean, you've been pretty firm in discussing your
views of the Soviet Union and so forth, the first major response
has been an invitation from Brezhnev to come and sit down to talk
things over. Why don't you take him up on it?
THE PRESIDENT: We might. We're considering it. I
haven't said no to that. I have many times said that I would sit
down with him to discuss reduction of strategic nuclear weapons
to lower the threshhold of danger. Up 'til now, they've always
opposed that. They want to talk what they call "arms limitation"
that usually winds up with them somehow being able to continue
their military buildup. And the previous administration, if you'll
recall, sent someone over to propose the actual discussion of arms
reductions and he was on his way home in 24 hours.
MR. REYNOLDS: Yes.
THE PRESIDENT: And, so, no,I haven't ruled any of
that out and I do think it's very interesting that in spite of
MORE
MORE
FYI
22
PAY
grain
March 13, 1981
embargo
Dear Larry:
The President has asked me to thank you for your January
correspondence regarding the Soviet grain embargo.
We understand and share your concern about the economic impact
of the embargo on the American farmer. We must, however, view
this issue in its broadest context, taking into account foreign
as well as domestic policy considerations. Therefore, a review
has been initiated within the Administration to assess many
diverse factors including: the costs of the embargo to American
farmers and domestic economy; the impact on the USSR; the effect
on cooperative efforts by our allies and other grain producers;
the situation in Afghanistan; and the continuing threat to Poland.
Also, any action taken with respect to the embargo will be
interpreted at home and abroad as a possible signal of the
future course of United States-Soviet relations. A decision
by the United States, either to lift or to continue the embargo,
must logically await completion of this policy review.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture
John Block has repeatedly pointed out to all of us that, as
we approach the 1981 harvest season with a potentially record
wheat crop, and as the time is at hand for corn and soybean
planting, it is increasingly important that farmers know
whether sales will continue in the future. During the past
crop year the U.S. sold eight million tons of grain to the
Soviets. For these reasons the policy review on this impor-
tant issue is being given a very high priority.
We appreciate knowing your views on this matter. You may be
assured that we will give them our most careful consideration
during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Larry Pressler
United States Senate
Washington, D.C. 20510
MLF: JB: JC: CMP KIR:asr
CC: Janet Colson - FYI, Dave Wright - FYI, John Block, Sec'y.
of Agriculture - FYI
23
March 13, 1981
Dear Hal:
The President has asked me to thank you for your February 17
correspondence regarding the Soviet grain embargo.
We understand and share your concern about the economic impact
of the embargo on the American farmer. We must, however, view
this issue in its broadest context, taking into account foreign
as well as domestic policy considerations. Therefore, a review
has been initiated within the Administration to assess many
diverse factors including: the costs of the embargo to American
farmers and domestic economy; the impact on the USSR; the effect
on cooperative efforts by our allies and other grain producers;
the situation in Afghanistan; and the continuing threat to Poland.
Also, any action taken with respect to the embargo will be
interpreted at home and abroad as a possible signal of the
future course of United States-Soviet relations. A decision
by the United States, either to lift or to continue the embargo,
must logically await completion of this policy review.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture
John Block has repeatedly pointed out to all of us that, as
we approach the 1981 harvest season with a potentially record
wheat crop, and as the time is at hand for corn and soybean
planting, it is increasingly important that farmers know
whether sales will continue in the future. During the past
crop year the U.S. sold eight million tons of grain to the
Soviets. For these reasons the policy review on this impor-
tant issue is being given a very high priority.
We appreciate knowing your views on this matter. You may be
assured that we will give them our most careful consideration
during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Hal Daub
House of Representatives
Washington, D.C. 20515
MLF:JB:JC:CMP:KIR:asr
CC: Janet Colson - FYI, Dave Wright - FYI, John Block, Sec'y.
of Agriculture - FYI
March 13, 1981
Dear Steve:
The President has asked me to thank you for your March 5
letter, cosigned by 12 of your colleagues on the House
Foreign Affairs Committee, urging him to continue the
Soviet grain embargo.
We appreciate knowing your position on this important and
sensitive issue. As you well know, the President must take
into account foreign as well as domestic policy considerations
in deciding whether to lift or continue the embargo. Therefore,
a review has been initiated within the Administration to assess
many diverse factors including: the costs of the embargo to
American farmers and the domestic economy; the impact on the USSR;
the effect on cooperative efforts by our allies and other grain
producers; the situation in Afghanistan; and the continuing
threat to Poland. We also recognize that any action taken with
respect to the embargo will be interpreted at home and abroad as
a possible signal of the future course of United States-Soviet
relations.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture John
Block has repeatedly pointed out to all of us that, as we approach
the 1981 harvest season with a potentially record wheat crop,
and as the time is at hand for corn and soybean planting, it is
increasingly important that farmers know whether sales will
continue in the future. During the past crop year the U.S. sold
eight million tons of grain to the Soviets. For these reasons
the policy review on this important issue is being given a very
high priority. We appreciate knowing your views on this matter.
You may be assured that we will give them our most careful con-
sideration during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Stephen J. Solarz
House of Representatives
Washington, D.C. 20515
MLF:JB:JC:CMP:KIR:asr
CC: John Block, Sec'y. of Agriculture - FYI; Janet Colson
FYI; Dave Wright - FYI
U
March 13, 1981
Dear Ben:
The President has asked me to thank you for your March 5
letter, cosigned by 12 of your colleagues on the House
Foreign Affairs Committee, urging him to continue the
Soviet grain embargo.
We appreciate knowing your position on this important and
sensitive issue. As you well know, the President must take
into account foreign as well as domestic policy considerations
in deciding whether to lift or continue the embargo. Therefore,
a review has been initiated within the Administration to assess
many diverse factors including: the costs of the embargo to
American farmers and the domestic economy; the impact on the USSR;
the effect on cooperative efforts by our allies and other grain
producers; the situation in Afghanistan; and the continuing
threat to Poland. We also recognize that any action taken with
respect to the embargo will be interpreted at home and abroad as
a possible signal of the future course of United States-Soviet
relations.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture John
Block has repeatedly pointed out to all of us that, as we approach
the 1981 harvest season with a potentially record wheat crop,
and as the time is at hand for corn and soybean planting, it is
increasingly important that farmers know whether sales will
continue in the future. During the past crop year the U.S. sold
eight million tons of grain to the Soviets. For these reasons
the policy review on this important issue is being given a very
high priority. We appreciate knowing your views on this matter.
You may be assured that we will give them our most careful con-
sideration during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Benjamin S. Rosenthal
House of Representatives
Washington, D.C. 20515
MLF:JB:JC:CMP:KIR:asr
CC: John Block, Sec'y. of Agriculture - FYI; Janet Colson -
FYI; Dave Wright - FYI
U
March 13, 1981
Dear Mr. Lantos:
The President has asked me to thank you for your March 5
letter, cosigned by 12 of your colleagues on the House
Foreign Affairs Committee, urging him to continue the
Soviet grain embargo.
We appreciate knowing your position on this important and
sensitive issue. As you well know, the President must take
into account foreign as well as domestic policy considerations
in deciding whether to lift or continue the embargo. Therefore,
a review has been initiated within the Administration to assess
many diverse factors including: the costs of the embargo to
American farmers and the domestic economy; the impact on the USSR;
the effect on cooperative efforts by our allies and other grain
producers; the situation in Afghanistan; and the continuing
threat to Poland. We also recognize that any action taken with
respect to the embargo will be interpreted at home and abroad as
a possible signal of the future course of United States-Soviet
relations.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture John
Block has repeatedly pointed out to all of us that, as we approach
the 1981 harvest season with a potentially record wheat crop,
and as the time is at hand for corn and soybean planting, it is
increasingly important that farmers know whether sales will
continue in the future. During the past crop year the U.S. sold
eight million tons of grain to the Soviets. For these reasons
the policy review on this important issue is being given a very
high priority. We appreciate knowing your views on this matter.
You may be assured that we will give them our most careful con-
sideration during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Tom Lantos
House of Representatives
Washington, D.C. 20515
MLF:JB:JC:CMP:KIR:asr
CC: John Block, Sec'y. of Agriculture - FYI; Janet Colson -
FYI; Dave Wright - FYI
27
U
March 13, 1981
Dear Olympia:
The President has asked me to thank you for your March 5
letter, cosigned by 12 of your colleagues on the House
Foreign Affairs Committee, urging him to continue the
Soviet grain embargo.
We appreciate knowing your position on this important and
sensitive issue. As you well know, the President must take
into account foreign as well as domestic policy considerations
in deciding whether to lift or continue the embargo. Therefore,
a review has been initiated within the Administration to assess
many diverse factors including: the costs of the enbargo to
American farmers and the domestic economy; the impact on the USSR;
the effect on cooperative efforts by our allies and other grain
producers; the situation in Afghanistan; and the continuing
threat to Poland. We also recognize that any action taken with
respect to the embargo will be interpreted at home and abroad as
a possible signal of the future course of United States-Soviet
relations.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture John
Block has repeatedly pointed out to all of us that, as we approach
the 1981 harvest season with a potentially record wheat crop,
and as the time is at hand for corn and soybean planting, it is
increasingly important that farmers know whether sales will
continue in the future. During the past crop year the U.S. sold
eight million tons of grain to the Soviets. For these reasons
the policy review on this important issue is being given a very
high priority. We appreciate knowing your views on this matter.
You may be assured that we will give them our most careful con-
sideration during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Olympia Snowe
House of Representatives
Washington, D.C. 20515
MLF:JB:JC:CMP:KIR:asr
CC: John Block, Sec'y. of Agriculture - FYI; Janet Colson -
FYI; Dave Wright - FYI
18
March 13, 1981
Dear Ed:
The President has asked me to thank you for your March 5
letter, cosigned by 12 of your colleagues on the House
Foreign Affairs Committee, urging him to continue the
Soviet grain embargo.
We appreciate knowing your position on this important and
sensitive issue. As you well know, the President must take
into account foreign as well as domestic policy considerations
in deciding whether to lift or continue the embargo. Therefore,
a review has been initiated within the Administration to assess
many diverse factors including: the costs of the embargo to
American farmers and the domestic economy; the impact on the USSR;
the effect on cooperative efforts by our allies and other grain
producers; the situation in Afghanistan; and the continuing
threat to Poland. We also recognize that any action taken with
respect to the embargo will be interpreted at home and abroad as
a possible signal of the future course of United States-Soviet
relations.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture John
Block has repeatedly pointed out to all of us that, as we approach
the 1981 harvest season with a potentially record wheat crop,
and as the time is at hand for corn and soybean planting, it is
increasingly important that farmers know whether sales will
continue in the future. During the past crop year the U.S. sold
eight million tons of grain to the Soviets. For these reasons
the policy review on this important issue is being given a very
high priority. We appreciate knowing your views on this matter.
You may be assured that we will give them our most careful con-
sideration during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Edward J. Derwinski
House of Representatives
Washington, D.C. 20515
MLF:JB:JC:CMP:KIR:asr
CC: John Block, Sec'y. of Agriculture - FYI; Janet Colson -
FYI; Dave Wright - FYI
29
March 13, 1981
Dear Ben:
The President has asked me to thank you for your March 5
letter, cosigned by 12 of your colleagues on the House
Foreign Affairs Committee, urging him to continue the
Soviet grain embargo.
We appreciate knowing your position on this important and
sensitive issue. As you well know, the President must take
into account foreign as well as domestic policy considerations
in deciding whether to lift or continue the embargo. Therefore,
a review has been initiated within the Administration to assess
many diverse factors including: the costs of the embargo to
American farmers and the domestic economy; the impact on the USSR;
the effect on cooperative efforts by our allies and other grain
producers; the situation in Afghanistan; and the continuing
threat to Poland. We also recognize that any action taken with
respect to the embargo will be interpreted at home and abroad as
a possible signal of the future course of United States-Soviet
relations.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture John
Block has repeatedly pointed out to all of us that, as we approach
the 1981 harvest season with a potentially record wheat crop,
and as the time is at hand for corn and soybean planting, it is
increasingly important that farmers know whether sales will
continue in the future. During the past crop year the U.S. sold
eight million tons of grain to the Soviets. For these reasons
the policy review on this important issue is being given a very
high priority. We appreciate knowing your views on this matter.
You may be assured that we will give them our most careful con-
sideration during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Benjamin A. Gilman
House of Representatives
Washington, D.C. 20515
MLF:JB:JC:CMP:KIR:asr
CC: John Block, Sec'y. of Agriculture - FYI; Janet Colson -
FYI; Dave Wright - FYI
U
30
March 13, 1981
Dear John:
The President has asked me to thank you for your March 5
letter, cosigned by 12 of your colleagues on the House
Foreign Affairs Committee, urging him to continue the
Soviet grain embargo.
We appreciate knowing your position on this important and
sensitive issue. As you well know, the President must take
into account foreign as well as domestic policy considerations
in deciding whether to lift or continue the embargo. Therefore,
a review has been initiated within the Administration to assess
many diverse factors including: the costs of the embargo to
American farmers and the domestic economy; the impact on the USSR;
the effect on cooperative efforts by our allies and other grain
producers; the situation in Afghanistan; and the continuing
threat to Poland. We also recognize that any action taken with
respect to the embargo will be interpreted at home and abroad as
a possible signal of the future course of United States-Soviet
relations.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture John
Block has repeatedly pointed out to all of us that, as we approach
the 1981 harvest season with a potentially record wheat crop,
and as the time is at hand for corn and soybean planting, it is
increasingly important that farmers know whether sales will
continue in the future. During the past crop year the U.S. sold
eight million tons of grain to the Soviets. For these reasons
the policy review on this important issue is being given a very
high priority. We appreciate knowing your views on this matter.
You may be assured that we will give them our most careful con-
sideration during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable John Leboutillier
House of Representatives
Washington, D.C. 20515
MLF: JB: JC:
CC: John Block, Sec'y. of Agriculture - FYI; Janet Colson -
FYI; Dave Wright - FYI
31
U
March 13, 1981
Dear Jack:
The President has asked me to thank you for your March 5
letter, cosigned by 12 of your colleagues on the House
Foreign Affairs Committee, urging him to continue the
Soviet grain embargo.
We appreciate knowing your position on this important and
sensitive issue. As you well know, the President must take
into account foreign as well as domestic policy considerations
in deciding whether to lift or continue the embargo. Therefore,
a review has been initiated within the Administration to assess
many diverse factors including: the costs of the embargo to
American farmers and the domestic economy; the impact on the USSR;
the effect on cooperative efforts by our allies and other grain
producers; the situation in Afghanistan; and the continuing
threat to Poland. We also recognize that any action taken with
respect to the embargo will be interpreted at home and abroad as
a possible signal of the future course of United States-Soviet
relations.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture John
Block has repeatedly pointed out to all of us that, as we approach
the 1981 harvest season with a potentially record wheat crop,
and as the time is at hand for corn and soybean planting, it is
increasingly important that farmers know whether sales will
continue in the future. During the past crop year the U.S. sold
eight million tons of grain to the Soviets. For these reasons
the policy review on this important issue is being given a very
high priority. We appreciate knowing your views on this matter.
You may be assured that we will give them our most careful con-
sideration during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Jonathon Bingham
House of Representatives
Washington, D.C. 20515
MLF:JB:JC:CMP:KIR:asr
CC: John Block, Sec'y. of Agriculture - FYI; Janet Colson -
32
March 13, 1981
Dear Mr. Fascell:
The President has asked me to thank you for your March 5
letter, cosigned by 12 of your colleagues on the House
Foreign Affairs Committee, urging him to continue the
Soviet grain embargo.
We appreciate knowing your position on this important and
sensitive issue. As you well know, the President must take
into account foreign as well as domestic policy considerations
in deciding whether to lift or continue the embargo. Therefore,
a review has been initiated within the Administration to assess
many diverse factors including: the costs of the embargo to
American farmers and the domestic economy; the impact on the USSR;
the effect on cooperative efforts by our allies and other grain
producers; the situation in Afghanistan; and the continuing
threat to Poland. We also recognize that any action taken with
respect to the embargo will be interpreted at home and abroad as
a possible signal of the future course of United States-Soviet
relations.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture John
Block has repeatedly pointed out to all of us that, as we approach
the 1981 harvest season with a potentially record wheat crop,
and as the time is at hand for corn and soybean planting, it is
increasingly important that farmers know whether sales will
continue in the future. During the past crop year the U.S. sold
eight million tons of grain to the Soviets. For these reasons
the policy review on this important issue is being given a very
high priority. We appreciate knowing your views on this matter.
You may be assured that we will give them our most careful con-
sideration during the review process.
with cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Dante Fascell
House of Representatives
Washington, D.C. 20515
MLF:JB:JC:CMP:KIR:asr
CC: John Block, Sec'y. of Agriculture - FYI; Janet Colson -
FYI; Dave Wright - FYI
U
33
March 13, 1981
Dear Joel:
The President has asked me to thank you for your March 5
letter, cosigned by 12 of your colleagues on the House
Foreign Affairs Committee, urging him to continue the
Soviet grain embargo.
We appreciate knowing your position on this important and
sensitive issue. As you well know, the President must take
into account foreign as well as domestic policy considerations
in deciding whether to lift or continue the embargo. Therefore,
a review has been initiated within the Administration to assess
many diverse factors including: the costs of the embargo to
American farmers and the domestic economy; the impact on the USSR;
the effect on cooperative efforts by our allies and other grain
producers; the situation in Afghanistan; and the continuing
threat to Poland. We also recognize that any action taken with
respect to the embargo will be interpreted at home and abroad as
a possible signal of the future course of United States-Soviet
relations.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture John
Block has repeatedly pointed out to all of us that, as we approach
the 1981 harvest season with a potentially record wheat crop,
and as the time is at hand for corn and soybean planting, it is
increasingly important that farmers know whether sales will
continue in the future. During the past crop year the U.S. sold
eight million tons of grain to the Soviets. For these reasons
the policy review on this important issue is being given a very
high priority. We appreciate knowing your views on this matter.
You may be assured that we will give them our most careful con-
sideration during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Joel Pritchard
House of Representatives
Washington, D.C. 20515
MLF:JB:JC:CMP:KIR:asr
34
March 13, 1981
Dear Bob:
The President has asked me to thank you for your March 5
letter, cosigned by 12 of your colleagues on the House
Foreign Affairs Committee, urging him to continue the
Soviet grain embargo.
We appreciate knowing your position on this important and
sensitive issue. As you well know, the President must take
into account foreign as well as domestic policy considerations
in deciding whether to lift or continue the embargo. Therefore,
a review has been initiated within the Administration to assess
many diverse factors including: the costs of the embargo to
American farmers and the domestic economy; the impact on the USSR;
the effect on cooperative efforts by our allies and other grain
producers; the situation in Afghanistan; and the continuing
threat to Poland. We also recognize that any action taken with
respect to the embargo will be interpreted at home and abroad as
a possible signal of the future course of United States-Soviet
relations.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture John
Block has repeatedly pointed out to all of us that, as we approach
the 1981 harvest season with a potentially record wheat crop,
and as the time is at hand for corn and soybean planting, it is
increasingly important that farmers know whether sales will
continue in the future. During the past crop year the U.S. sold
eight million tons of grain to the Soviets. For these reasons
the policy review on this important issue is being given a very
high priority. We appreciate knowing your views on this matter.
You may be assured that we will give them our most careful con-
sideration during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Robert K. Dornan
House of Representatives
Washington, D.C. 20515
MLF:JB:JC:CMP:KIR:asr
CC: John Block, Sec'y. of Agriculture - FYI; Janet Colson -
FYI; Dave Wright - FYI
35
U
March 13, 1981
Dear Millicent:
The President has asked me to thank you for your March 5
letter, cosigned by 12 of your colleagues on the House
Foreign Affairs Committee, urging him to continue the
Soviet grain embargo.
We appreciate knowing your position on this important and
sensitive issue. As you well know, the President must take
into account foreign as well as domestic policy considerations
in deciding whether to lift or continue the embargo. Therefore,
a review has been initiated within the Administration to assess
many diverse factors including: the costs of the embargo to
American farmers and the domestic economy; the impact on the USSR;
the effect on cooperative efforts by our allies and other grain
producers; the situation in Afghanistan; and the continuing
threat to Poland. We also recognize that any action taken with
respect to the embargo will be interpreted at home and abroad as
a possible signal of the future course of United States-Soviet
relations.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture John
Block has repeatedly pointed out to all of us that, as we approach
the 1981 harvest season with a potentially record wheat crop,
and as the time is at hand for corn and soybean planting, it is
increasingly important that farmers know whether sales will
continue in the future. During the past crop year the U.S. sold
eight million tons of grain to the Soviets. For these reasons
the policy review on this important issue is being given a very
high priority. We appreciate knowing your views on this matter.
You may be assured that we will give them our most careful con-
sideration during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Millicent Fenwick
House of Representatives
Washington, D.C. 20515
MLF:JB:JC:CMP:KIR:asr
CC: John Block, Sec'y. of Agriculture - FYI; Janet Colson -
FYI; Dave Wright - FYI
March 13, 1981
Dear Bob:
The President has asked me to thank you for your March 5
letter, cosigned by 12 of your colleagues on the House
Foreign Affairs Committee, urging him to continue the
Soviet grain embargo.
We appreciate knowing your position on this important and
sensitive issue. As you well know, the President must take
into account foreign as well as domestic policy considerations
in deciding whether to lift or continue the embargo. Therefore,
a review has been initiated within the Administration to assess
many diverse factors including: the costs of the embargo to
American farmers and the domestic economy; the impact on the USSR;
the effect on cooperative efforts by our allies and other grain
producers; the situation in Afghanistan; and the continuing
threat to Poland. We also recognize that any action taken with
respect to the embargo will be interpreted at home and abroad as
a possible signal of the future course of United States-Soviet
relations.
The President has not forgotten the commitments on the embargo
that he made during the campaign. Secretary of Agriculture John
Block has repeatedly pointed out to all of us that, as we approach
the 1981 harvest season with a potentially record wheat crop,
and as the time is at hand for corn and soybean planting, it is
increasingly important that farmers know whether sales will
continue in the future. During the past crop year the U.S. sold
eight million tons of grain to the Soviets. For these reasons
the policy review on this important issue is being given a very
high priority. We appreciate knowing your views on this matter.
You may be assured that we will give them our most careful con-
sideration during the review process.
With cordial regards, I am
Sincerely,
Max L. Friedersdorf
Assistant to the President
The Honorable Robert J. Lagomarsino
House of Representatives
Washington, D.C. 20515
MLF:JB:JC:CMP:KIR:asr
CC: John Block, Sec'y. of Agriculture - FYI Janet Colson -
FYI; Dave Wright - FYI
THE NEW YORK TIMES, SUNDAY, MARCH 15, 1981
37
ECONOMIC AFFAIRS/Paul W. MacAvoy
The Leaks in the Grain Embargo
0
N Jan. 4, 1980, President Carter
tion costs. But they were not required
imposed an embargo on grain
How the Russians Got Their Grain
to reduce inventories or meat consump-
sales to the Soviet Union in reac-
tion insofar as can be determined.
tion to the invasion of Afghanistan. As
Their livestock. inventories are now
was the habit of the Carter Administra
On Jan. 4, 1980; President Carter announces a partial embargo on grain sales to
higher than ever, while per capita meat
tion, economic sanctions were imposed
the Soviet Union, limiting them to 8 million tons in the 1979-80 crop year. That
consumption has held steady at 1978-79
as a diplomatic response. But it is poor
leaves the Soviet Union with an expected shortfall of 17 million tons. In order to
levels. They are now in the second poor
logic and bad practice to trade eco-
protect American farmers from the shrinkage in demand, Washington promises
crop year in a row, and their grain in-
nomic apples for diplomatic and strate-
to buy enough grain to offset the lower level of exports to Moscow.
ventories are holding while their im-
gic oranges. Worse than that, the eco-
ports are increasing substantially In-
nomic apples may not be any good.
deed, they have apparently found very
The embargo limited sales to the
The Soviet Union buys
It also cuts its grain
And it imports far more
helpful trading partners in Argentina
Soviet Union to 8 million tons of wheat
grain from other
exports to Eastern
meat, thus helping to
and com in the 1979-80 crop year, an
exporters such as
Europe, making up
compensate for the
and Spain, willing not only to provide
amount already under contract in a
Argentina and Spain
another 3 million tons.
loss of feed for its own
additional supplies but also to find long-
This provides an esti
livestock
term trade agreements to keep the sup-
five-year, United States-Soviet trade
mated 11 million tons
ply level much higher than in the last
agreement. Since the Russians were
decade.
seeking 25 million tons, the embargo
But we should be much more than ir-
was designed to reduce their purchases
Customers of the other
by 17 million tons. With a poor home
Eastern Europe steps
Washington fulfills its
ritated by this whole exercise. Recall
grain exporters turn to
up purchases on the
agreement to buy
that the Agriculture Department
crop of feed grains, the Soviet Union
the United States, thus
world market, further
American grain; also
bought substantial amounts of grain to
would be punished for its Afghanistan
increasing demand.
increasing demand.
increasing demand.
compensate for the loss of Soviet de-
venture by reduced supply of bread and
mand which did not materialize
meat for home consumers
Thus the Federal authorities added
The theory is that, along the lines of
$2 billion to demand in world trade.
the Organization of Petroleum Export-
This raised prices, perhaps by as much
ing Countries in the oil trade, the
In the United States, with demand so high, prices rise, so American consumers
as $1 a bushel, and thus American infla-
United States in grain can raise or
pay more for both grain and meat and the inflation rate goes up.
lower world supply, thereby affecting
In the Soviet Union, with some grain supplies made up elsewhere and meat
tion. This effect may have been transi-
prices and sales levels of all exporting
imports substituted for other supplies, consumers feel little comfort.
tory, as other countries reduced their
stocks in reaction. Even so, American
nations. Because we are the world's
consumers paid more for bread and
major grain supplier, and our trading
hamburger for awhile, even though
partners in Australia, Argentina and
Soviet consumers most probably did
Western Europe would volui arily
comply with the embargo, the Soviet
important and obvious, and should
world market. And, indeed, Depart-
not.
The lesson to be learned from theory
Union would not obtain the supplies it
have been anticipated if American dip-
ment of Agriculture trade statistics in-
wanted. Its demand for 17 million tons
lomats knew anything about how mar-
dicate that purchases of Eastern Euro-
versus facts is that selective embar-
would evaporate as our supply was
kets operate.
pean countries in world markets in-
goes of specific countries in world com-
withheld, and the rest of trade would go
First, the Soviet Union made up a
creased by 3 million tons while the pur-
modity trade do not work. This is no
substantial portion of its needs by pur-
chases from the Soviet Union were re-
surprise to shrewd Soviet traders, or to
on as a matter of course.
If demand evaporates and supply is
chases from other grain-supplying
duced by 3 million tons. This gambit
economic analysts familiar. with the
withheld, someone is left with the in-
countries. The other suppliers were as
probably reduced the impact of the em-
history of such embargoes (including
ventory. American farmers quickly
a consequence unable to meet the de-
bargo to only 3 million tons.
the fiasco of the OPEC embargo
perceived that they were left holding
mand of their regular customers, so
against the United States in the world
the bag and so the Department of Agri-
those customers came to the United
HE third method of evasion is the
oil trade in 1973-1974).
culture promised to purchase grain and
States: While Soviet demand for United
T
most direct, and thus the easiest
But this is only a lesson in economic
carry out storage so as to maintain the
States grain exports was reduced, de-
to overlook. Since grain is to be
affairs. The lesson in diplomatic af-
market just as if the Soviet demand for
mand from elsewhere increased.
used to feed cattle and hogs, the obvi-
fairs is serious. It is difficult to trade an
17 million tons had not evaporated
Of course those running the embargo
ous method for compensating for re-
economic for a diplomatic initiative,
duced grain imports is to import more
and it is impossible to do so when the
In fact, however, the Soviet Union re-
were not quite so naive as to have
fused to be embargoed. Based on a so-
missed the leakage. The Department of
meat. Soviet imports of meat in the
economic initiative is ineffective.
phisticated understanding of how world
Agriculture acknowledged at the end of
1979-1980 crop year shot up by 425 mil-
My expectation is that the United
commodity markets work, it undertook
the 1979-1980 crop year that 11 million
lion tons from the previous year's 185
States is being laughed at for its eco-
a series of complicated and indirect
tons of the 17 million-ton embargo had
million tons. If this did not compensate
nomic foolishness in diplomatic circles
transactions. But three of its steps are
been made up by sales of other export-
for the last vestiges of the embargo,
across the world. Not in Argentina and
ing nations.
then it increased the sum total of grain
Spain, however. We put pressure on
Second, the Soviet Union took advan-
and meat imports to a level higher than
them to make an impossible scheme
Paul W. MacAvoy is Milton Stein-
tage of the fact that it is an exporter as
that before the embargo began.
work, and ended up attaching them
bach professor of organization, man-
well as an importer of grain. Its prac-
Where does this leave the Soviet
even more strongly to the Soviet trad-
agement and economics at Yale Uni-
tice was to export 3 million to 4 million
Union? Certainly the Russians must
ing bloc in grain. Squeezing other na-
versity and was a member of former
tons each year to Eastern Europe. If it
have been irritated. Given all the trou-
tions diplomatically to do the economi-
President Gerald R. Ford's Council of
reduced such exports, the Eastern
ble we made them go through to work
cally impossible in place of a diplo-
Economic Advisers.
Europeans could simply turn to the
around the embargo, they experienced
matic initiative on Afghanistan is bad
increases in purchase and transporta-
political economy.
PRESERVATION COPY