39. Memorandum From Secretary of State Rusk to President Kennedy0

SUBJECT

  • Report on Status of Pending PL 480 Negotiations with Poland

Pursuant to your request, made during the call of the Polish Ambassador on July 19,1 there follows a report on the status of current PL 480 negotiations with Poland.

As I indicated in my memorandum of June 22,2 reporting on the background of United States assistance programs to Poland since 1957, a new round of economic talks was initiated with Polish representatives at Washington on June 2. In its initial presentation, the Polish side expressed interest in (1) a large, four-year Title I agreement under PL 480 (sales for Polish currency); (2) a Title IV, PL 480 agreement (long-term dollar credit) for commodities ineligible under Title I; (3) purchase of $150 million worth of United States industrial equipment and technology over the next four years to be financed out of private and United States Government credits and Poland’s own funds; (4) a technical exchange agreement; and (5) utilization of PL 480 zloty proceeds on flood control and other land improvement projects.

In response to the Polish presentation, the United States representative stated that due to legal obstacles, pending legislation and international political uncertainties, we were not prepared at this time to consider long-term arrangements under PL 480. Neither were we prepared to consider credits for purchase of industrial goods. We were prepared however to consider (1) a one-year PL 480 agreement under Title I; (2) increased Polish industrial purchases in the United States without reference to United States credits (i.e., out of Poland’s own dollar resources); (3) a possible technical exchange agreement; and (4) uses of United States zloty holdings for projects in Poland which might be possible in the event the Battle Act is amended.

Our discussions with the Poles over the past month have concentrated primarily on the subject of a possible one-year PL 480 agreement. The Poles have requested a program amounting to $190–$200 million. [Page 79]We are now conducting third-country consultations on a program of $91–$125 million. It is our intention, however, to hold the program, if agreed upon, close to a level of $100 million.

In view of heightening tensions arising out of the Berlin crisis there is a question whether we should now proceed with any further agreements with Poland. I note that in your conversation with the Polish Ambassador on July 19, you alluded to this question. I believe that a refusal on our part to conclude a PL 480 agreement with Poland in the next few weeks would have serious consequences in our relations with Poland and might well mean the end of the special relationship with that country which has developed since the advent of the Gomulka regime. The Polish Government would conclude that it could not rely upon the United States as a source of supply for important agricultural commodities and would move quickly to make other arrangements. It would seek imports from other sources, including the USSR, but would probably also introduce a series of restrictive measures at home upon consumers and upon the peasantry.

I do not believe that the time has yet come when we should abandon our present policy toward Poland. Maintenance of Poland’s dependence upon the United States for agricultural commodities may in fact be useful since it may encourage Gomulka to exercise some restraint upon Khrushchev, although this hope should not be relied upon. The principal problem we face, however, is that of explaining publicly the conclusion of a $100 million program for Poland at a time when we are facing the Berlin threat and are taking military and economic measures to meet this threat. I think this explanation can be made. I would recommend that your address to the nation on July 253 establish the general posture that it would be undesirable to alter precipitately those established relations and policies we have developed toward the countries of Eastern Europe pending further developments and a more precise appraisal of Soviet intentions and actions regarding Berlin. If this is done, conclusion of an agreement with Poland in the coming weeks can be justified by reference to this general posture.

If you agree with this reasoning, we would like to present our initial PL 480 proposal to the Poles early in the week of July 24.4

Dean Rusk5
  1. Source: Kennedy Library, National Security Files, Country Files, Poland. Confidential.
  2. A memorandum of President Kennedy’s July 19 conversation with Ambassador Drozniak is in Department of State, Central Files, 611.48/7–1961.
  3. Not printed. (Ibid., 785.5–MSP/6–2261)
  4. For text of the President’s address, see Public Papers of the Presidents of the United States: John F. Kennedy, 1961, pp. 533–540.
  5. Minutes of the U.S.-Polish meetings are in Department of State, Polish Desk Files: Lot 67 D 19.
  6. Printed from a copy that bears this stamped signature.