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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
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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
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NATIONAL SECURITY COUNCIL
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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
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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
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DISTRIBUTION: ISEC-01 /001 A2
WHSR COMMENT: WPC MCF WHLR JP VP EOB SIT
E
X
WHTS ASSIGNED DISTRIBUTION:
SIT: MCF
D
EOB:
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OP IMMED
UTS7633
DE ruehro #6645/05 ø771134
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FM AMEMBASSY ROME
E
TO SECSTATE WASHDC IMMEDIATE 4824
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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
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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
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DTG: 181112Z MAR 82 PSN: 002001
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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,
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12
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NATIONAL SECURITY COUNCIL
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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
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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
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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
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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,
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ATTEMPTED A REBUTTAL OF COUNSELOR buckley' S POINTS. HE
QUESTIONED THE AVAILABILITY OF VIABLE ENERGY
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AMEMBASSY ROME IMMEDIATE 8600
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AMEMBASSY BONN IMMEDIATE 5614
AMEMBASSY BRUSSELS IMMEDIATE 2907
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INFO AMEMBASSY TOKYO PRIORITY 0171
WHITE HOUSE PRIORITY 8088
SECTION 02 OF 02 STATE 271552
NODIS
BRUSSELS ALSO FOR USEC
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ALTERNATIVES, INCLUDING NORWEGIAN GAS, AND SUGGESTED THE
U.S. DEREGULATE ITS OWN NATURAL GAS PRICING TO ELIMINATE
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A "BASIC PROBLEM." FRANCE HAS TROUBLE WITH CREDIT
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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.)
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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.
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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
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BEEN THE ONLY AMBASSADOR SPEAKING FROM INSTRUCTIONS, AND
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THEREFORE HIS REMARKS seem MORE SIGNIFICANT. END COMMENT.
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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
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WELCOME ANY INFORMATION YOU CAN PROVIDE REGARDING REACTION
OF HOST GOVERNMENTS TO SEPTEMBER 23 BUCKLEY BRIEFINGS. SHULTZ
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O R 011524Z OCT 82
NLRR # 10763
FM AMEMBASSY OSLO
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TO SECSTATE WASHDC IMMEDIATE 5015
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BY KML NARA DATE 4/7/2011
INFO AMEMBASSY BONN 3680
AMEMBASSY LONDON 5606
AMEMBASSY PARIS 3181
AMEMBASSY ROME 1729
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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
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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
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CASE EVEN STRONGER. IN ADDITION, THE EUROPEAN MOVEMENT (A
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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
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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.
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7. MOST IMPORTANTLY, AT A TIME WHEN TRANS-ATLANTIC TIES ARE
STRAINED OVER THE SUBJECT OF WESTERN EUROPEAN GAS SUPPLIES,
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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
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AMEMBASSY LONDON IMMEDIATE 389
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AMEMBASSY MOSCOW IMMEDIATE 22
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1.
/
ENTIRE TEXT).
2. CONGEN PRIVY TO FOLLOWING INSTRUCTIONS, OBTAINED FROM
RELIABLE LOCAL SOURCE, WHICH WERE CABLED ON OCTOBER 6 TO
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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
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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
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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.
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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,
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PARTICULARLY SINCE THE RUSSIANS WOULD ALMOST CERTAINLY FIND
WAYS OF COMPLETING THE PIPELINE IF ALL WESTERN SUPPLIES
STOPPED NOW.
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AMEMBASSY LONDON IMMEDIATE 390
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AMEMBASSY MOSCOW IMMEDIATE 23
SECTION 2 OF 2 MARSEILLE 823
EXDIS
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BACKGROUND
6. WE HAVE FOUND THE US MEASURES OF BOTH DECEMBER AND JUNE
X
OBJECTIONABLE ON TWO QUITE SEPARATE COUNTS. FIRST, THEY
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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
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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
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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.
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IT IS NOT KNOWN HOW DAMAGING THESE TEMPORARY DENIAL ORDERS
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WILL BE, BUT THE WORLD WIDE ACTIVITIES OF THE COMPANIES CONCERNED
WILL CERTAINLY BE AFFECTED.
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