70. Telegram From the Embassy in Poland to the Department of State0
989. Deptel 718 December 17.1 Please see Embtel 988.2 Embassy sees no reason doubt urgent requirement additional grain imports by Poland this crop year. Even if figures inflated, Poles must purchase additionally [Page 145] at least as much wheat as we offer them. Presumably Poles would be unable purchase in Western market at terms more favorable than those normally obtained from Canadians, i.e. 10 percent down and balance in 3 years with interest rates running over 6 percent. Hence over 3-year period PL–480 offer much more favorable to Poles even when tie-in sales included.
However, Lychowski’s instructions not to accept cash purchase commitments may well be based on seriousness present policy cash position. Embassy has no way of estimating current status hard currency reserves but believes they must be precariously low in view such desperate measures as cut in number of foreign correspondents and in foreign service salaries. If longer period were allowed for tie-in cash purchases it would perhaps show whether Polish position political or based on lack of exchange. I prefer, however, approach suggested in my Embtel 988.
- Source: Department of State, Central Files, 611.4841/12–1862. Confidential.↩
- In telegram 718, the Department of State reported that Lychowski had stated under instructions that Poland could not make any cash commitments as part of a P.L. 480 arrangement. (Ibid., 611.4841/12–1762)↩
- Telegram 988, December 18, outlined ways in which Poland was profiting from its manipulation of the exchange rate. (Ibid., 611.4841/12–1862)↩