48. Telegram From the Department of State to the Embassy in Poland0

770. Deptel 763.1 Understand Embassy already aware provisions Agriculture Act 1961 which prohibit PL 480 sales at exchange rate less [Page 102]favorable than US Treasury disbursing rate. Poles here have stated categorically that for political reasons including implications re sovereignty Polish Government cannot accept situation in which another govt requires it to establish new official exchange rate. Argue also that after years of inflation and confusion Poland established present rate which it chose not to alter even in face Soviet pressure connection recent revaluation ruble and which determined to maintain. Dept believes this position firm and therefore likely that termination accommodation rate unavoidable if PL 480 agreement to be concluded. Dept aware impact termination accommodation rate and now considering steps including necessary adjustment allowances and establishment post allowance effective from date of rate change.

Re Embtel 8332 Dept plans seek include necessary authority zloty use in agreement. Will also seek obtain conversion for per diem and expense connection FAS program.

Dept has obtained Polish Ambassador’s assurance Poles will not disclose PL 480 negotiations prior conclusion agreement.3

Rusk
  1. Source: Department of State, Central Files, 611.4841/11–2161. Confidential. Drafted by Wortzel; cleared by EE, ALD, EUR/EX, FN and the Treasury Department for paragraph 1, and CU for paragraph 2; and approved by Vedeler.
  2. Telegram 763, November 20, informed the Embassy that the Department would indicate willingness to resume P.L. 480 negotiations to the Polish Ambassador. (Ibid., 611.4841/11–2061)
  3. Telegram 833, November 10, reported Embassy discussions of a Polish proposal for community schools. (Ibid., 611.4841/11–1061)
  4. In telegram 901 from Warsaw, November 24, the Embassy reported its concern about Polish “sensitivity” on the exchange rate issue and suggested that the Polish position was subject to modification. (Ibid., 611.4841/11–2461)