Foreign Relations of the United States, 1955–1957, Foreign Aid and Economic Defense Policy, Volume X

58. Memorandum From the Chief of the Division of Functional Intelligence (Doherty) to the Special Assistant to the Secretary of State for Intelligence (Armstrong)¹

Washington, June 24, 1955.

SUBJECT

• Bargaining Value of Western Trade Controls at “Summit” Meeting²

1. We have learned that the Secretary of State and other senior government officials consider Western trade controls a valuable trump card in the forthcoming negotiations at the Summit with the Russians. Secretary Dulles recently stated that we can obtain important political concessions from the Russians by offering to relax Western controls over exports of strategic goods to the Bloc and by making available US agricultural surplus commodities at favorable terms.

The question is now being considered by the NSC Planning Board. Some Planning Board Members are taking the position that the Russians will make a major issue of the subject of trade controls because of their concern about them. Senior officials in the Departments of Commerce, Defense and Joint Chiefs of Staff also go along with the view that the US has an important bargaining position in present East-West trade controls.

2. We believe that the Russians would be unwilling to make any but the most minor concessions to obtain either a relaxation of Western trade controls or US surplus agricultural commodities. While it is extremely difficult to evaluate the impact of Western controls on the Bloc economy it is certainly not of great significance. It is much less today than it was in 1949–50 when controls were first imposed, partly because the Bloc has had time to adjust to the controls and partly because there was a major relaxation in the control system in 1954. There is evidence to suggest that lack of foreign exchange may have inhibited USSR trade with the West as much as our export controls.

While the problem of Soviet agriculture is a serious one it is by no means critical nor is it of recent origin. If food shortages, as a result of inadequate agricultural production, were causing serious internal political difficulties the USSR was always free to import food supplies from the West. The export of agricultural commodities from the West is not legally controlled. The Soviet Union might very well like to obtain US agricultural surpluses for local currency and this would help with their program of collectivization in Eastern Europe. It is our view, however, that this and any other benefits that the USSR would derive from such surpluses would not be considered of sufficient importance as to warrant the making of any real political concessions.

3. The Russians have frequently spoken out against Western trade controls. This has been a recurring theme at international conferences, and was included in the USSR disarmament proposals of last May. It was repeated again in San Francisco in the June 22 speech by Molotov, at the United Nations ceremonies.³

The purpose of these statements is largely propaganda to divide the US from its allies and to put the onus for the breakdown of the world into two rival camps on the US. The point has been made with some truth that USSR would not like to see the complete elimination of trade controls because this would deprive them of an important propaganda weapon.

1. Source: Department of State, Central Files, 460.509/6–2555. Secret. W. Park Armstrong, Jr., forwarded this memorandum to Waugh on June 25 with a brief covering note.
2. Reference is to the meeting of the Heads of Government of the United States, the United Kingdom, France, and the Soviet Union scheduled to open at Geneva on July 18. See Document 62.
3. For text of Molotov’s speech, delivered before the Tenth Anniversary Meeting of the United Nations at San Francisco, see The New York Times, June 23, 1955.