70. Notes of Meeting1

Meeting with Dobrynin, Monday, March 27, 1972, 11:00–11:45 a.m.

SUBJECT

  • Patolichev Mission

1. Timing

Based upon my telephone conversation with him last week, he said he had done some preliminary checking and the situation looked quite favorable with regard to the possibility of Patolichev coming over here. We had agreed that I would not give him anything in writing and would try to be as general as possible with regard to the specific content of the agenda.

Also, it seemed to me desirable to give us enough time to prepare ourselves for this visit and we spent the first part of the meeting discussing possible dates. I gave him the general period between April 27 and May 10 as the best period from the standpoint of my own calendar. We’re thinking in terms of a visit that lasts no more than a week and, hopefully, several days.

2. Agenda

Having settled this, I then asked him when he would like to talk about it. He immediately said that as per our last meeting he would like to have a clear understanding of the specific items that would be discussed at this session and what the purpose of the session would be. He says his government feels that after the PatolichevStans visit and the visit here earlier this year, there has been a lot of ventilation of what the issues are. He thinks the time has come to work out at least a set of possible scenarios on when progress might be made on what issues and under what circumstances. I told him this did not mean that he would get specific decisions at this meeting or even the Summit meeting on [Page 227]some of the questions he would like answers to. Rather, we might be able at least to lay out what the obstacles are and what the various possibilities might be for resolving them, including timing scenarios.

He then launched into illustrative kinds of items that he would like to have discussed and started with MFN, to which I said nothing. It is obviously something that will come up and I think we have to have at least thought through what we do say about this issue.

He then went to financing. I simply said that we would be prepared to discuss the issues which arise in conjunction with financing but that I very much want Patolichev to elaborate further on the question of “reciprocal credits” that he has brought up before. Dobrynin asked for an elaboration on this and I indicated that Patolichev indicated that he might be willing to explore allowing this credit equivalent to what they bought and Dobrynin said, well, that would depend, obviously, on what we were able and willing to buy from them. I indicated that I understood this, but I wanted to be sure that we understand what the reciprocal credit arrangements might involve as we should be prepared to discuss the problems and possibilities on Ex–Im financing.

We then discussed the whole business office Kama River Purchasing Commission question which he said had been brought up before. I told him the corollary point to that, of course, was what American companies could do in the Soviet. He said that in principle they were willing to let us have company offices over there, but that it was important that we specify which companies and that the presence of those companies have a legitimate commercial trading interest in the Soviet. I then said perhaps one of the things we could think through is what the criteria might be for the placing of offices in the Soviet. He said that would be his thought and that also could we, perhaps, think of a specific list of companies that might want offices over there—again emphasizing that there should be good and practical reasons—or I should say “commercial” reasons for being there.

I then mentioned the tax treaty possibility. He said he was not very aware of that. I said that it was something that Treasury would have an interest in and it has to do with a variety of subjects, but some might well include the question of payments of income, royalty income for instance for technology. He said he would look into that.

The next subject I mentioned was tourism since it had been mentioned before and it is of specific interest to this Department. He said one of their problems was certain “natural restrictions” such as the lack of facilities—hotels and convention facilities and things of that sort. We agreed it could be a subject for discussion.

I then mentioned arbitration and the agreements on how we would handle commercial disagreements and he said “yes”, he thought that was something that should be discussed.

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I mentioned the copyrights and patents arena and he understood that.

He then mentioned “joint ventures”.

3. Joint Ventures

He mentioned joint ventures and I told him that I thought we should be prepared to at least discuss in this first meeting how we would go about approaching joint ventures. I said in my preliminary exploration of this issue it seemed to me that we were probably talking about two phases. There was the first phase of any joint venture of exploring, in depth, the feasibility of the project and whether it, indeed did make good economic and technical sense. The second phase was the actual carrying out of the project. I said that we might well talk about how we would approach the phase one aspects since there would be considerable cost involved and there would be important questions that would have to be reviewed as to how to go about sharing them. In this meeting, while he mentioned gas in his example, I did not get the sense that they were preoccupied as the one case they wanted to put all their emphasis on. He later mentioned copper, chrome, oil, and other metals. I am having, over here, work done now on how we might approach some of these other projects where I suspect the US dollar exposure might be far less.

What he did emphasize, however, was the need for their coming up with an example or a prototype as to how the United States and Russia could handle joint ventures. In other words, they wanted a case study from which we could go from the general to the specific.2

His continuing discussion of these joint ventures makes clear two things. First, if we are at all concerned about the prognosis on the gas deals (and I am waiting for Peter Flanigan’s office to give me any further indications that he has as a kind of joint effort with a Commerce group on the prognosis of the LP gas possibilities). Second, we should get other people from these other fields in to see what the prospects and problems might be there so that we haven’t put all of our emphasis just on the LP gas possibility.

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I’ll see if we can’t get some forward motion with people who might have an interest in copper, chrome, oil, etc. so we can better understand what Phase I would amount to on these other ventures as well as the kinds of dollar exposure we might be talking about. Also, we need to think through what an approach might be on these joint ventures that can form the basis of my discussion with Patolichev. For example, we have talked about the possibility of Ex–Im insuring Phase I if that became necessary and desirable to get US companies involved in the process. It may well be that our starting position should be some kind of sharing of these costs with the Soviets until we decide whether to go ahead with Phase II. Whatever we decide, I think the joint ventures are something that Kosygin is very much interested in and we should be prepared to at least discuss how we want to approach them.

4. US–Soviet Commercial Commission

Dobrynin then brought up this Commercial Commission and we agreed, as we did before, that this meeting should be devoted partly to clarifying what we mean by those commissions. He indicated to me that France and the Soviet Union had something very analogous to this. I think we should explore that one very carefully so we understand what it is all about. As we now see it, part of the Commercial Commission would be to lay out the terms of the trade agreements as well as to make specific studies of whatever important matters come up in the commercial area.

All this seemed quite agreeable and I did not give him any papers at all. After some chit chat about how my wife and I should come over and visit the granddaughter who is now staying with them, we agreed that the next step was up to him on the question of dates.3

Peter G. Peterson .4
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 718, Country Files, Europe, U.S.S.R., Vol. XX, March 1972. Secret. In an attached March 28 covering note transmitting the meeting notes to Kissinger and Flanigan, Peterson wrote: “The attached report on my meeting with Dobrynin on March 27 should speak for it self. It covers the (1) timing of such a trip; (2) agenda; (3) joint ventures; and (4) the U.S.–Soviet Commercial Commission. During the course of the visit, he mentioned the lend–lease negotiations were to begin on April 6 or 7. I had not realized they would begin so soon and will try to get our proposals done prior to that time.” Peterson outlined the purpose of the Patolichev visit in a March 22 memorandum to Kissinger and Flanigan. (Ibid., Box 493, President’s Trip Files, Dobrynin/Kissinger, 1972, Vol. 10)
  2. In a March 22 memorandum to Flanigan, Peterson wrote: “In putting together and analyzing material on subjects we need to discuss with Patolichev, I have found that we need to know much more about what institutional arrangements and mechanisms other countries have to handle economic and commercial relations with the Soviets. Specifically, what I have in mind is to send a small group to Europe next week to investigate systematically how the major Western Europe countries conduct their trade relations with the Soviets. If we are to proceed after the Summit with a kind of joint U.S./Soviet commercial mission, we need the best information that we can get on what others are now doing.” (Ibid.)
  3. On March 30 Kissinger met with both Peterson and Flanigan to discuss the next steps in discussions over trade. (Library of Congress, Manuscript Division, Kissinger Papers, Box 438, Miscellany, 1968–1976, Record of Schedule) No record of the meeting has been found, but Sonnenfeldt briefed Kissinger for this meeting in a March 29 memorandum, which advised Kissinger to “tell Peterson that next time he sees Dobrynin it should be to get replies to Peterson’s last presentation. No further U.S. initiative except to agree to Patolichev date, until we have an agreed agenda in our government.” (National Archives, Nixon Presidential Materials, NSC Files, Box 718, Country Files, Europe, U.S.S.R., Vol. XX, March 1972)
  4. Printed from a copy that bears this typed signature.