Foreign Relations of the United States, 1969–1976, Volume XIII, Soviet Union, October 1970–October 1971

306. Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon¹

Washington, August 2, 1971.

• 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 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 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.⁴

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.⁵

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 716, Country Files, Europe, USSR, Vol. XV. Confidential. Sent for action. Johnston forwarded a draft of this memorandum to Haig on July 28. In his covering memorandum, Johnston noted that the memorandum for the President contained detailed information on the location of participating companies: “There are some in Michigan, but not in Gerry Ford’s district. Hugh Scott seems to have a near-monopoly on this project.” “As soon as our general relations with the USSR allow us to adopt some more abstract definition of our participation, i.e. the foundry,” Johnston suggested, “we should do so to reduce the awkwardness of having the President decide on specific firms in particular locations.” Kissinger wrote the following instructions in the margin: “Remind me to call Gerry Ford. Directive to Stans should go Monday [August 2] a.m. Call Peterson to keep informed.” (Ibid.) A notation on the memorandum from Kissinger indicates that the President saw it.
2. Dated July 26; attached but not printed. Stans noted that this supplemented his July 23 memorandum to the President, which recommended authorization for U.S. companies to participate in the Kama River project. (National Archives, Nixon Presidential Materials, NSC Files, Box 1328, NSC Unfiled Material, 1971 [8 of 12])
3. Dated July 16; attached but not printed.
4. In an August 5 memorandum to Stans, Kissinger reported that Nixon had approved the three pending applications but expected further applications on the project, including the foundry plant, to be referred to the White House. The memorandum is printed in Foreign Relations, 1969–1976, volume IV, Foreign Assistance, International Development, Trade Policies, 1969–1972, Document 346.
5. The President initialed his approval. According to an attached correspondence profile, Nixon formally approved the recommendation on August 6, the day after Kissinger notified Stans of the decision.