343. Action Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon 1

SUBJECT

  • Kama River Project—Applications to Participate in the Foundry

Secretary Stans has proposed that you authorize him to approve now three pending applications for U.S. participation in the foundry plant of the Soviet Kama River truck factory (Tab A).2

The Kama River factory is expected to produce 150,000 three-axle diesel trucks annually by the late 1970s. CIA states that three-axle trucks are not tactical military vehicles, though some could end up in military motor pools. CIA estimates that the Russian expenditures on the entire Kama River project will approximate $3 billion, much of which however will be used to erect factory buildings, workers’ housing, etc. CIA estimates that perhaps $1 billion of the total will be used to procure foreign machinery and technology, of which $200 million might be spent [Page 873]in the United States if we granted blanket permission for U.S. participation. The CIA analysis is at Tab B.3

The Kama complex will consist of six discrete elements:

1.
Foundry plant
2.
Forging plant
3.
Stamping and pressing plant
4.
Engine, gear and transmission plant
5.
Assembly plant
6.
Tooling and repairing plant

Commerce now holds four formal U.S. export applications. The application by Mack Trucks, Inc., of Allentown, Pennsylvania, for $750 million of technical services and equipment is not active, since Mack is re-negotiating its arrangement with Russia. In any case, Secretary Stans doubts that the Mack Truck application is a realistic estimate of what the Soviets would procure from that company.

The other three applications are for technology and equipment for only the foundry, one of the first phases of the Kama complex. Stans estimates that the total Russian expenditure on the foundry will be $450 million, only a fraction of which would come from the U.S. The three applications are by:

  • —The Swindell/Dressler Company for $13.5 million of technical services. The company claims it has a firm offer from the Soviets, and it expects a follow-on order for $20 million of equipment. Swindell/Dressler is at Pittsburgh.
  • —The C.E. Cast Division of Combustion Engineering, Inc. for $37 million of automatic molding equipment and core making machines. The Cast Division is at Pittsburgh but Combustion Engineering has plants in Mass., N.J., Texas, Conn., N.Y., Ohio, Kansas, Illinois, Florida, R.I. and Oklahoma.
  • —The Jervis B. Webb Company for $125 million of conveyors and other foundry equipment. Webb is at Detroit, but it also has plants at Avon Lake, Ohio, Cohasset, Mass., and Boyne City, Michigan.

These applications are all partially competitive with each other, and consequently if approved would result in exports of less than their total combined value.

The applications have been pending for some time. Secretary Stans argues that even if we are not ready to approve U.S. participation in all aspects of the Kama River Project, we should go ahead with these now before the Soviets go elsewhere.

I agree with Secretary Stans. The companies have already been unable to meet two deadlines given by the Russians. Though any approval [Page 874]of U.S. participation will be seen as a major signal by the Russians, we can reduce the effect of this if we indicate that we are only approving three specific licenses at this time but are not now giving approval for U.S. participation in all aspects of the project. To keep this matter firmly under the control of the White House I plan to ask Secretary Stans to submit all future Kama applications for your consideration.

Recommendation:

That you approve Secretary Stans’ request to authorize issuance of the three pending licenses: Swindell/Dressler for $13.5 million, C. E. Cast for $37 million and Jervis B. Webb for $125 million.4

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 218, CIEP. Confidential. This memorandum is part of Tab A to Document 345. Tab A also includes other memoranda concerning the Mack Truck application: July 27, 28, and 29 memoranda from Johnston to Haig and a draft memorandum from Kissinger to Stans (prepared by Johnston) that is substantively the same as Document 346.
  2. In his July 26 memorandum to Kissinger, not printed, Stans noted that it supplemented his July 23 memorandum to the President, which has not been found.
  3. Not found.
  4. Neither the Approve nor Disapprove option is checked.