431. Action Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon1
- Tin Disposal
In the memorandum at Tab A, General Lincoln proposes that you authorize him to begin the disposal of 18,000 lbs. of tin from the stockpile to obtain $54 million, as part of the plan to realize $750 million from stockpile receipts in FY 1971.2 Your decision is required under the terms of the Defense Mobilization Order, because there is a difference of views between OEP and State.
General Lincoln favors going forward with tin sales now because market conditions are at an optimum point. Tin prices have been for sometime at the high end of the range permitted by the Tin Council—the organization of producing and consuming nations. On April 16 the Tin Council exhausted its buffer stock in trying to keep the price from rising above the maximum. After an initial spurt, prices have now settled down to just above the maximum. There is no doubt that from an economic point of view now is an ideal time for sales of tin from the stockpile. In addition, General Lincoln points out that Congress’ failure so far to enact several disposal bills jeopardizes $300 million in receipts from stockpile sales, and a delay in selling tin could jeopardize some portion of another $54 million out of the total of $750 million we are planning to sell in FY 1971.
The State Department objects to the proposed tin sales at this time because such action would very likely upset the promising negotiations with Bolivia on compensation for Gulf Oil Company,3 which are at a very sensitive stage. Prospects for a settlement of the Gulf problem within the next few weeks appear good. However, Assistant Secretary Charles Meyer, who recently visited Bolivia, believes that any tin disposal now would be taken by the Bolivians as a direct attack by the US on the Ovando Government.[Page 1059]
Announcement of a tin disposal now—in the midst of the Gulf negotiations—would play into the hands of anti-US radicals in Bolivia, who might use this issue to try to (a) topple the already-shaky Ovando Government and (b) nationalize other US properties in Bolivia. The GOB could be expected to react by breaking off the Bolivia-Gulf talks, which in turn would raise the question of applying the Hickenlooper Amendment, with all of the adverse consequences that would present for our overall Latin American policy. State, therefore, recommends that consultations on tin disposal be delayed until the Bolivia-Gulf negotiations are satisfactorily completed, which should be within a few months.
I believe that the political costs—in Bolivia and Latin America generally—of disrupting the Bolivia-Gulf negotiations are too high to go forward with a tin disposal now. Although a 2-3 month delay until the Gulf problem is settled one way or another could entail some reduction from the anticipated $54 million in stockpile receipts, the longer-term consequences of going ahead now probably would prove far costlier. Peter Flanigan agrees with this recommendation.
That you not approve the proposed tin disposal now, but agree to reconsider the proposal after July 1, if State and OEP have not reached agreement by then.4
- Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 396, Stockpile. Confidential. Attached to an April 22 memorandum from Vaky to Kissinger recommending that he sign the memorandum to the President. A handwritten note by Vaky on his April 22 memorandum, dated April 27, reads: “Agreed with Flanigan to handle matter without memo to President. Flanigan’s office will inform Lincoln.”↩
- Lincoln’s memorandum at Tab A, dated April 8, is not printed. In Lincoln’s December 31, 1969, memorandum to Flanigan proposing measures to realize the $750 million target, item 7 was White House approval of tin/rubber disposals amounting to $70 million, which on a scale of 1-5, was given a rank of 3 for difficulty. See footnote 1, Document 422.↩
- See Documents 154 and 433.↩
- Neither the Approve nor Disapprove option is checked or initialed. Vaky wrote on his April 22 memorandum to Kissinger (see footnote 1 above): “Agreed with Flanigan to handle matter without memo to President. Flanigan’s office will inform Lincoln.”↩