283. Action Memorandum From Robert Hormats, Helmut Sonnenfeldt, and Harold Saunders of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)1

SUBJECT

  • EC Trade Agreement with Spain and Israel

Peter Flanigan (Tab A)2 indicates that “it is agreed” that you and he should discuss the appropriateness of the scenario he outlines for dealing [Page 721]with trade arrangements between Spain, Israel, and the EC. He has prepared a proposed memorandum to the President on this issue which has not yet gone forward.

On November 14 we sent you a memorandum containing our views and recommendations on this matter,3 along with a proposed memorandum from you to Flanigan asking that we reconsider the amount of our claim and attempt to integrate our approach on the EC-Spain and Israel problem with a more total approach to dealing with the whole array of concerns we have with the three parties involved.

We believe that if presented properly Flanigan’s scenario need not lead to confrontation. In fact, if handled properly it can be used constructively. However, proper presentation requires that it be explained in a political context and that the parties involved understand that it is not an effort to undermine the political relationship between Spain, Israel, and the Community. Moreover, such an approach on this matter would be more effective if it is part of an overall relationship with these countries and the EC. Our true interests will be served only if we put the proposed approach into the context of our overall interests with these countries, so that we might be able to use a less than adequate response on trade to get them to make progress in other areas of interest to us. Our view, therefore, is that we should delay our approach until we have Presidential decisions on our future overall policy toward Europe, Spain and the Middle East and then handle this economic problem within that context.4

We are not arguing for interminable delay; we are arguing for putting this issue in a context where both the President’s economic and political policies could be served at the same time. Unless this is done, we could end up with the worst of two worlds.

Recommendation:

That you meet with Flanigan in the near future to discuss this matter. (Our earlier memorandum, a copy of which is at Tab B,5 outlines our views in greater detail.)6

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 322, European Common Market, Volume IV 10/72-7/73. Secret. Attached to an April 30, 1973, memorandum from Scowcroft to Dam. At the top of the page Kissinger wrote: “[illegible] Sonnenfeldt—please explain just what this implies operationally.” Hormats, Sonnenfeldt, and Saunders replied in a January 3, 1973, memorandum. They suggested that Kissinger contact Flanigan to indicate: 1) he agreed the United States must tell the EC, Spain, and Israel it would not accept preferential trade arrangements damaging to its legitimate economic interests, and would demand compensation; 2) the EC, Spain, and Israel might consider the proposed $750 million compensation claim so extreme as to jeopardize the U.S. negotiating position; 3) he agreed that at the onset of Article XXIII consultations Eberle and someone from the State Department should call on the three to explain U.S. objectives; and 4) most importantly, he recommend to Flanigan that the United States not present its views to the EC, Spain, and Israel until the President made his decisions on how he wanted to handle U.S.-European political, economic, and security relationships and relations with Israel. (Ibid.)
  2. Not printed, but see footnote 1, Document 282.
  3. Document 281.
  4. Relations with Europe were under review pursuant to NSSM 164, November 18, 1972. See Foreign Relations, 1969-1976, vol. III, Documents 106 and 108.
  5. The November 14 memorandum, Document 281.
  6. Neither the Approve nor Disapprove option is checked or initialed.