38. Memorandum of Conversation1
- Leonid I. Brezhnev, Secretary General, CCP
- A. A. Gromyko, Minister of Foreign Affairs
- Anatoliy F. Dobrynin, Soviet Ambassador to the United States
- A. M. Alexandrov, Assistant to the Secretary General
- Manzhulo, Deputy Minister Foreign Trade (Latter part)
- Dr. Henry A. Kissinger, Assistant to the President for National Security Affairs
- James T. Lynn, Under Secretary of Commerce
- Helmut Sonnenfeldt, NSC Staff
- Commander Jonathan T. Howe, NSC Staff
The meeting began with a friendly and vigorous greeting by Brezhnev and his party who were standing behind the table on the side where the Americans were supposed to sit. In responding to Dr. Kissinger’s compliments concerning Brezhnev’s negotiating skill, the Secre[Page 99]tary General commented that he wanted to get Dr. Kissinger to a state where he simply nodded his head without having heard what Brezhnev said. After several crisp but warm exchanges, the two sides sat down.
Kissinger began the meeting by handing over pictures of his ride with Ambassador Dobrynin in the hydrofoil boat which had been a gift to President Nixon on the occasion of his visit to the Soviet Union.
Brezhnev (Observing pictures of Dr. Kissinger and Ambassador Dobrynin on the hydrofoil): Has President Nixon ridden on the new hydrofoil? I don’t see President Nixon on it.
Kissinger: Last Friday he took a group of his friends out.
Brezhnev: Is it still located on the Potomac?
Brezhnev: Well, two boats are better than one.
Kissinger: We hope that by the time the General Secretary comes to the United States you will be able to have a ride in it.
Brezhnev: That would not be a bad idea and you could fill me with meat pies.
Kissinger: I will bring some of my own but the ones you have here are really better.
(Brezhnev appeared to be reading letter from the President concerning Hydrofoil, although it is in English.)
Brezhnev: I would like to understand what you would like to discuss first. I would invite Manzhulo to be present for illumination on trade issues if you wish to discuss them. But I also would be glad to start with any question.
Kissinger: I think it is a good idea to begin with economics. Then Secretary Lynn and whomever you designate can leave and come back later after they have held discussions. In that way we can make progress because I am here to achieve whatever agreement we can.
Brezhnev: Certainly. I am certainly agreeable to that. But first I want to greet you. You have been given a most responsible mission in following up on problems pursuant to what President Nixon and I discussed when he visited here. On my part, I will make every effort to be responsive to the important task that has been entrusted to us. It is a most important mission. This is in accordance with what Ambassador Dobrynin had discussed with you in Washington.
Let me, before we turn to specific matters, say a few words. Time has elapsed since our last talk with President Nixon and members of his party. A good deal of work went into that visit and the agreements signed were of momentous significance. These actions were important indicies of our relationship. Public opinion in the Soviet Union ac[Page 100]cepted them, both the Communist party and the people and the general public, and this includes public opinion throughout the world. China of course is an exception and that is no news. They tried to distort the visit. As we see it, public opinion in the United States for the most part also took a positive attitude. There does exist hope that the U.S.-Soviet relationship will take a positive course. Although there are shades of differences, the general view is favorable, with the exception of the few of those who are in opposition. I believe we are moving on a constructive course. I hope we won’t disappoint all those who hope for favorable developments toward peace and tranquility in the world. I have said it before but I wanted to repeat it. I hope that we will have frank and forthright discussions and that they will be based on complete confidence in each other.
Kissinger: Your remarks reflect the sentiments of the President. Improving relations between our two countries is a central tenet in our foreign policy. Our two countries must maintain peace, not just to remove crises, but to improve our basic relations for peace in the world. We have made a fundamental decision, this Administration has, that our relations affect the peace in the world. They affect confidence and constructive relations in the world. We have conducted our relation with you on the basis of confidence and so have you. We do not seek little advantages in particular areas. We have shown restraint towards each other. You have done so and so have we. And we have made preliminary steps for advances here. When you come to the United States next year, we may be able to achieve advances as big as those that were made at the Summit. Meanwhile, we will make progress on a number of topics. We will proceed with an attitude of frankness, candor and a desire for constructive relations that has been set by the President. In this spirit we will conduct ourselves.
(Brezhnev reads notes while HAK’s comments are being translated. Has glasses on and marks some of the notes before him.)
Brezhnev: I am pleased to hear that. We too feel that we should proceed in that framework. Those who persist in negative speculations in the world have existed for a long time and will continue to exist. I have on occasion had to call to the attention of President Nixon and yourself anti-Soviet propaganda in the United States. It is not conducive to good relations or in bringing about greater understanding by the U.S. public toward the Soviet Union. Even we, and we perhaps are stauncher in this respect, are disenchanted at how things go on propaganda, but we hope our talks will be stronger than any speculation and that the results will be highly esteemed by history. If we are prone to minor irritants, we can never agree on any point.
Kissinger: We have done and hope to do more to steer public opinion more directly toward that which encourages constructive rela[Page 101]tions. We are sometimes held responsible by our own press for Soviet propaganda directed against us. So both of us have a responsibility. As I see it, there are two things we must accomplish:
—How to implement the Summit agreements.
—New departures to give even more momentum to what was started at the Summit.
These are the two tasks before us as we proceed.
Brezhnev (smoking and appearing thoughtful): So it is. I agree. So let us start acting.
Kissinger: First, one practical matter. I will work this out with your Foreign Minister if you prefer, but there are certain topics to discuss. Because of our peculiar way of running our government, I would like to have our Ambassador at one or two of our meetings. If we know what subjects will come up, then we might be able to select some of them for him to attend. (Gromyko and Brezhnev whisper.)
I might tell the Secretary General that after November we intend to simplify our method of government so that may simplify his task in the future. We never had a chance to thank you in May for the delicacy with which you handled our peculiarities.
Brezhnev (Smiling): Your internal setup is your affair. The present method is OK. If you worsen it, I will be troubled.
Kissinger: We will try to improve it.
Brezhnev: Don’t worsen it. So far we have had a good relation. You twist things around in such a complex way, that you are never out of options. But if you channel different things and it is a river, it can flood.
Kissinger: We will have this channel. It is just that we may be able to save you some additional effort.
Brezhnev: Good. Then let us move to more concrete things. What do we start with?
Kissinger: Since Under Secretary Lynn is here why don’t we begin with economics. Then we can make an agenda for other topics. He can work out the details with whomever you designate. Then before we leave we will work out an economic arrangement. After that we will leave it up to you.
Brezhnev: Let us begin with economics. I agree. Let us make Mr. Lynn’s destiny more easy. Why make such a burden on one so young. He will be free to drink vodka and whiskey with you the rest of the time.
Lynn: That is a delightful prospect.
Brezhnev: Dr. Kissinger wants to escape discussion of this complex subject.[Page 102]
(The interpreter then inserted that the Secretary General was concerned that Dr. Kissinger would not find any whiskey in the guest house. But the Secretary General said he could find you some moonshine.)
Lynn: We had a good discussion on that in the Crimea.2
Brezhnev: You have no objection to Manzhulo sitting in.
(Alexandrov leaves the room; Manzhulo enters.)
Brezhnev: I asked Alexandrov to get some tea and coffee and food because Dr. Kissinger is more condescending with meat patties in front of him. Last time you added only two kilograms to your waistline. That is not enough.
Kissinger: Not enough? My suits don’t fit.
Brezhnev: I have that problem and I am always having to take my coats either in or out. My tailor always leaves some room so he can either put more on or take it off.
Kissinger: I have tried to lose some weight but I will put it on here.
Gromyko: You look thin.
Brezhnev: You did not spend enough time at the Olympic games to get some weight off. Did you have a good discussion with Brandt?
Kissinger: We discussed the Security treaty, bilateral arrangements, membership in the UN, the FRG and Berlin.3 I am prepared to discuss this with you sometime during my stay here.
Brezhnev: Thank you. I am very glad to discuss that with you. On my part I will give you our considerations relating to those issues.
Kissinger: I don’t know how the General Secretary wants to proceed. Do you want my thinking on what has transpired? Or should we begin by discussing these papers? Whatever you prefer.
Brezhnev: Any way you see fit. As I see it, the agenda includes questions such as MFN and lend lease. These are two major issues. It also includes questions such as the future economic relations between our two countries, various economic principles and specific matters in the spirit of your discussions with Ambassador Dobrynin. And there are also matters such as the gas deposits at Tyumen and Yakutsak. We [Page 103] can comment on these concrete matters. Also we can discuss the granting of credits, sales of equipment and in addition we can discuss various observations and anything you have to say on this subject. Also, I will want to hear your views about the political aspect of economic cooperation. You might also discuss the reaction of your business community to our improving relations.
Kissinger: I have a few observations on the spirit of our discussions and then we can turn to concrete measures and the specific points you have raised Mr. General Secretary. Our two countries have a curious economic relationship. We are the two largest economies in the world and yet we have insignificant relations with respect to trade. They are insignificant in relation to our size and political importance. More important than any specific measure is to make a fundamental change in our overall economic and commercial ties. We would like to proceed on as broad a front as possible and not exhaust ourselves on any particular topic. That is why we believe it desirable to discuss a number of issues such as lend lease, credits, MFN, trade and gas. We hope to get all of these issues settled more or less simultaneously, at least in principle. Let me explain our attitude toward the lend lease agreement. We know what you suffered in World War II. We know that the fact that you have to pay interest to pay for that is morally repugnant to you, as the General Secretary explained so eloquently at the Summit.
Brezhnev: I tried to be as lucid as possible with Peterson. I trust he brought to the President my views. I talked to him man to man.
Kissinger: You were very impressive. We have taken what you have said extremely seriously. Our problem is this year. Immediately upon settlement of lend lease we would make $150 million available as credits on the Kama River project4 with a $500 million line of credit by the end of 1974. Legislation will be submitted to the Congress immediately in the new session for MFN. In addition, the President will put his prestige behind not just the gas project but also there will be other joint projects for national resources, a whole range of projects. We must create a climate where Congressional opinion is receptive. In that regard, I want to call your attention to this critical lead editorial on wheat sales (passes a copy of the Washington Post editorial of August 20, 1972 to Secretary General Brezhnev). (Tab A)5
Gromyko: It is an article from the Washington Post.[Page 104]
Kissinger: Half of a percent amounts to $2 million a year over 30 years. This is a tiny fraction of what we want to make available to you on credit. For this reason we want a lump sum—that is a global sum with somewhat confused interest rates. This will help us in our presentation to Congress. It will appear higher than it actually may be and can be used as a basis for credit for MFN and for gas projects on which I will talk to you at much greater length. $500 million does not include any credits that might be available to you on the gas project. These might be given in addition.
Brezhnev: That is just a newspaper, not the government policy.
Kissinger: Yes, but it is significant because it came from a liberal newspaper. It is the liberal groups who normally favor expanding trade and we will need the support of these groups to get passage of MFN. They influence our Senators whose support we need to expand our trade relationships. So it is not an insignificant newspaper in this respect as your Ambassador will no doubt confirm.
Brezhnev: Tomorrow I can instruct Pravda to criticize the Ministry of Trade for paying too high an interest rate on grain. It is not a side issue, but let’s talk about the terms of lend lease, when we will sign lend lease and when we will sign MFN. We are people of business and if you have a like attitude we can make policy. (Pounds his book emphatically while making this point.)
Kissinger: If you have read editorials in the Washington Post over the weeks you must get the idea that we can’t instruct them.
Brezhnev: Have another sweet. Let’s not get away from the spirit.
Kissinger: I agree. Let’s forget about it.
Brezhnev: One of the reasons I took a three week trip to Siberia was to get away from all sorts of articles. It was a very great pleasure this year. The harvest there was very good. I visited five areas. People there assured me we would have 1.6 million poods of grain. (One pood equals 36.11 pounds.) This will be mostly wheat but also some buckwheat. The harvest has been good in these areas and should ease our domestic situation considerably. The Volga area was hit hard but Siberia is coming to the rescue. We seldom have a year where all areas are good or all areas are bad. But if you take statistics over a considerable period, you hardly ever get one area that demonstrates uniformity throughout.
Brezhnev: The Volga in the central belt is usually the best and that in Siberia not as good. This year, it is vice versa. Kazakhstan is the danger area in this regard. The rain fall is not normally high there, but it is good this year. They are producing one billion poods of grain and it is only the second time in history in this virgin land that we have reached that high a level. And finally at my last destination I had a con[Page 105]ference with economic experts on crops in the five central Asian districts which mostly produce cotton and will reach a level of 7,150,000 tons of cotton this year. This is an all time record of great importance for our economy. Generally during my trip it was very interesting for me to meet the local peoples and leaders. I gained a great deal concerning local people and personalities (gestures, smiling). Only the time differences bother me. Four hours after breakfast one wants to go to sleep.
Kissinger: You have the same problem I have in going around the world. It is very tiring.
(Gromyko and Dobrynin comment on seven or eight hours time difference between Moscow and Washington.)
Brezhnev: In my experience once I had to go to Vladivostok to make an award. They scheduled a meeting for twelve noon but for me it was 4:00 a.m. I just could not get awake and I didn’t even leave the country.
Kissinger: Our plan is to answer your questions and to make an agreement in principle during this visit. You could then send a delegation to complete trade and lend lease agreements. This could be done during the first week in October. On Export-Import credit, we could find you eligible and in October we would make available $150 million of credit for the Kama River project. This fall we would have a Presidential statement on the national interest of the United States in a gas agreement. We would also view sympathetically Export-Import credit. We would set up a joint task force on gas to coordinate activities. Finally, we would encourage the maximum private investment. We would also encourage participation by other countries.
By the way, I was talking to David Rockefeller about mobilizing capital this fall. Legislation on MFN status will be submitted to the Congress in January. A trade agreement is necessary in order to submit the MFN legislation. Certainly, the whole package would be completed in two years and maybe by next year. All of this package can be completed, at least all of those actions which come under the jurisdiction of the Executive Branch. These can be done this year. This is our concrete program to answer your questions. This is what the President will do this year and we will wrap up the whole thing next year.
(Brezhnev writes note to Dobrynin; Dobrynin consults with him.)
There is no sense submitting MFN to the Congress this year. There are only three weeks left and our control will be better in the next Congress if we win the election, which is the probable outcome. The new Congress will begin to organize itself in January.
(Brezhnev consults with Gromyko.)[Page 106]
We can give credit without Congressional approval. That we will do in the fall. The gas can start without Congressional approval also. In other words, we can now take steps on Export-Import and on gas.
Brezhnev: And as regards to the sum for lend lease, what would the sum be? Do you want a lump sum without mentioning interest?
Kissinger: The sum we proposed to the Ambassador was $800 million by the year 2001. This is according to the same specific arrangements which I mentioned to your Ambassador.
Brezhnev: Let’s be very specific. When the President was in Moscow we mentioned $500 million, including the amount on credit.
Kissinger: Including the pipeline?6
Brezhnev: We call it the credit agreement. Now we reached then an understanding in principle. We would pay this sum in payments to the year 2001. You have indicated to our Ambassador that you find it more convenient from the standpoint of Congress that we pay a lump sum. From the standpoint of the Supreme Soviet it is not too convenient to name a large sum. But in all negotiations one must endeavor to meet the other side half way. I agree to a lump sum. I will meet you half way on that.
Kissinger: It will be very helpful to us.
Brezhnev: The U.S. is insisting on a very high interest rate. We have stated before that it is very difficult. In fact, it is quite impossible for us. This has been stated before. We do not want to repeat ourselves. Now maybe we could give on the following and agree to mention a lump sum and pay the first installment at the time of the signing. It would amount to $27 million or so. It doesn’t really matter. You could then give us a stay of payment for five years, but the remaining payments would be completed by 2001. We will increase payments so as to take care of all of them by 2001. It will be easier for us after a five-year term. It will be easier to find the money and it would all be paid up by the year 2001. So it would be completed sooner than you anticipated.
Kissinger: We had suggested three postponements.
Brezhnev: So if we take this principle you have suggested, the initial installment would be bigger and then would get smaller and smaller to the year 2001. In other words we have a declining schedule. We want an initial stay of five years, but with completion of payments by the year 2001. I do not think this is bad for the United States. If you agree on this, we can pass to the issue of a lump sum.[Page 107]
Kissinger: We were talking about equal payments to the year 2001. We would give three postponements which you would have to request. They would not be automatic.
Brezhnev: After the first installment, at what years would the postponements relate to? What years would you propose to have the postponements?
Kissinger: The point is that it would not be automatic. You would request them.
(Spirited talking across the table by a number of participants.)
Lynn (explaining the basis for the UK agreement): They made an agreement that they would not take an immediate postponement and that any postponement would be based on economic need. This was the basis for agreement with the UK.
Kissinger: Ambassador Dobrynin is aware that instead of five postponements, we are talking about three.
Brezhnev: I can give you a signed agreement right now stating that after the first payment and a five-year postponement, we would pay the remaining amount and it would be completed by the year 2001.
Kissinger: You must understand the problem:
—First, we talked about three postponements and not five.
—Secondly, in our agreement with the British, we agreed to postponements only if the economic situation required it. In other words, it is based on the economic situation. We required the UK to have an economic problem before receiving a postponement.
—Thirdly, it will be difficult to go to the Congress and say that we are finally ready to settle lend lease and that the Soviet Union agrees but wants a five-year postponement. It would be a difficult psychological atmosphere. An additional difficulty is that the pipeline is due in the next three years anyway.
I believe that two payments at the outset would help our problem with the lend lease people. After that there could be an understanding that there would be some possibility of postponement. It would be unmanageable if we extend credit now in return for your postponing payments on your debt to us. I am looking at our domestic situation.
Brezhnev (Pointing finger): I can just as easily refer you to our economic situation. We have to pay out to you. Our problem will be twice yours. From the point of view of the Supreme Soviet, a lump sum is difficult. These are no easy economic terms and they come during the final years of our five year development plan which are the most difficult for us. But the basic difference is you are getting the money. We are paying it. In the same period, we will have to pay large sums for our purchases in your country, including the interest rate on the wheat sales. The timing is what is the problem. The coincidence of timing in these [Page 108] events. That is what motivates us in putting forth these letters. We are not trying to impose a combination on you. It is just too great a strain.
Kissinger: I understand. We both have the same problem.
Lynn (to Kissinger): It will all come out the same in the end.
Kissinger: But our domestic problems are now. What we are trying to do is to justify paying out more to you than we are getting back. On lend lease, we have to wait to justify the credit. If a settlement begins with postponement it eventually comes out the same way. It isn’t what we are getting. What we get, we want to justify so that we can give more.
(Brezhnev smokes all the time, using his hands while talking. Gromyko maintains a stony poker face.)
Brezhnev: I don’t think that is in fact quite so. If you agree to grant us credits, we will have to repay with interest. If you do not give credit to us, you will give the credit to someone else. That is the normal way of operating of people who do business. On most favored nation what benefit did the U.S. gain from this policy in the past? Neither pluses nor minuses. If you do extend MFN to us, it will be profitable for us but the growth will be reciprocal in trade and so forth. It will not entail losses for the United States. The situation now is no trade. Since there is no MFN, no growth is possible. Finally, an understanding on these matters is important. It may be difficult in a purely commercial area, but by and large it is regarded by everyone as mutually advantageous. Lend lease and Most Favored Nation are not just gratuities. We look forward to devising ways of utilizing MFN in order to increase economic cooperation. We will meet you half way. We have accepted the principle of a lump sum. With the President we spoke of the sum of $300 million. Then we spoke of $400 million and finally the sum of $500 million. That is where we were at the time of the Summit. Since then you have suggested a lump sum. We could mention say a lump sum of $650 million, with a first payment and then a postponement for five years. I would be willing to talk to my comrades about a postponement of four years, but we must finish our five-year plan.
We are boldly going forward to meet you on that and after the postponements we would insure all of it was paid up by the year 2001.
Another matter is how we set it on paper. Postponement is a tactical question, but we should have an understanding about a respite. We will be paying out large sums for wheat purchases and then lend lease will be done at the same time. That is what we want to base our understanding on. Perhaps you would see a way to get President Nixon to finalize the whole thing. Perhaps you can get in touch with the President.
Kissinger: I can reach the President but we need to get the proposition in manageable form first. I know we can’t accept $650 million. Sec[Page 109]ondly, it is very difficult to begin the process by a four-year postponement. It is a suggestion I will have to discuss with Washington. A global sum is subject to some discussion but not the sum of $650 million. Suppose we say we will grant four postponements. Under the pipeline you are obliged to pay separately anyway. After MFN was approved, you could make one postponement and then have one more payment. Then there could be two years of postponement. Then there would be one more postponement for you to use at your discretion which we do not have to fix now. In other words, we would have one payment after MFN was approved by the Congress. And then the following year there would be a postponement. Then the next year you would pay and then the following two years there would be a postponement. In other words to sum it up, after the first five years you would have three postponements. This of course would have to be a secret agreement.
Gromyko: Can the fourth postponement follow the first one?
Kissinger: What I am proposing that we agree to now is that of the first five payment periods, there would be a postponement of three. There would have to be an understanding between us. President Nixon in his next term would be responsible for three of the postponements while he was President. This will not be easy. (Secretary Lynn echoes the difficulties this will cause.) I am thinking out loud. I am not sure the President will agree.
(Gromyko makes a comment with a chuckle.)
Brezhnev: All right. Let’s make the sum $651 million. I will add one million with the wave of a hand. This will show you how generous I am.
Kissinger: Without Politburo authority?
Brezhnev: Or I could change it to $649 million. Yes, I can make this change so I am sure the President can also decide matters like that as well.
Kissinger: We first mentioned the sum of $1 billion and then $900 million when Secretary Peterson was here. Now we are down to $800 million. I know $650 million is impossible. However, $798 million might be conceivable (with a smile).
Brezhnev: We started with $300 million and it rose to $500 million.
Kissinger: But that was the principle without interest.
Brezhnev: You must remember that we pay, you get. I am referring to $650 million with a $500 million base.
Kissinger(to the translator): You have not translated my proposition. On the issue of postponements the British gave us a letter indicating that they would not repeat not take a major part of their postponements in the early period. They made them in 1957, 1964, 1965, [Page 110] and 1968. Thus, they were over an eleven-year period. You want to do yours over a five-year period. We will be asked about this and whether there is a similar letter from you. We will not be able to say what we have just told you. $650 million represents less than two percent interest on the $500 million figure. I have enough experience with the General Secretary to know that he is probably prepared to discuss this further.
Brezhnev (pointing figure and gesturing): Of course we are prepared to return again and again if the sum is too small for you. It is however a great burden for us. We could give you a letter stating that after four postponements we would ask for no others on the lump sum. Then we would make a first payment and then ask for four and give you a letter saying that we would ask for no more and would make our payments complete by the year 2001.
Kissinger: I understand your problems. We would want no letter. We could write this into the agreement but it would be a mistake at the time the agreement was published to state that the postponements had already been agreed to.
Brezhnev: I was simply trying to make an analogy. If the U.K. gave you letters in that regard, we could do that also.
Kissinger: The letter said six or seven postponements. The U.K. gave us a letter but it stated that they would not take the postponements in the early part of the agreement. It was the opposite of your case. In this case we do not need a letter.
Brezhnev: This is a very big problem for us, particularly with regard to currency balance. We will be spending more than one billion dollars for U.S. purchases. This is an enormous sum.
Kissinger: Do you mean for wheat?
Brezhnev: Yes, for a three-year period. This will correspond to the period when lend lease is being paid. That is why we want deferment after one payment to settle the wheat. There are some of the payments we must make in cash. Some are not on credit. We want this done too. But it is not just politically difficult, but it is also difficult from the purely economic sense. If we agree to the Tyumen and Yakutsk gas line of credit, we have to spend enormous credits of our own domestically. It is a big deal with profits for the United States. It is not a single complex. We must take a look at the broad issues and the figures involved. On the Yakutsk gas project, if you want to do this jointly with Japan, we would have no objection. You could reach agreement with Japan yourself. We can’t just wave them aside and say that it is purely a U.S. and Soviet agreement.
Kissinger: My view is that your allies may try to discourage them. Your allies may object strenuously.[Page 111]
Brezhnev: What an absurd premise.
Kissinger: Japan will not do it alone. The real problem is whether we can get them to do it with us at all. My judgment is that their greed will help them overcome any political problems.
Gromyko: First they were trying to talk you into it. Now you are trying to talk them into it. Such is life.
Brezhnev: On gas we expect to have 13 trillion cubic meters. The Yukutsk deposit consists of three trillion cubic meters. We could sign an agreement for 25 to 30 years. On Tyumen the deal is now for 10 trillion but it would be up to 100 trillion. Therefore, you could sign there for 50 years. There could be a total of 25 trillion liters per annum to the United States. The Yakutsk gas will take 3 or 4 billion dollars and the Tyumen may take even more than that. On the other hand, the scale is enormous. The U.S. with its powerful economy should make large scale deals on this, not ten but twenty-five trillion liters of gas per annum. Of course you have to make a great investment but we too also on our side. It will take a whole new complex that we must build. This will cause very great tension for us. That is why in this context $650 million is difficult in light of other things. It is not small.
Kissinger: I agree we should take a broad view. We are talking about very large sums, and a complete change in our economic relations and that alone will have a significant effect for all of international affairs. We are talking about a revolution in economic relations which when compared to twenty five million or less a year is trivial. When I talk to Rockefeller about mobilizing credit, what he worries about is repayment. The lend lease money itself is trivial for us. There will be additional anxieties at the onset if we have postponements on lend lease. We can’t of course postpone the pipeline. On lend lease, you have agreed to one payment now and then to wait until 1976. Payment would be on the order of $25 million. This is the only difference between us.
If you take this as a regular postponement it is easier than four postponements in repaying by 2001. If there is one payment, then four postponements and payment by 2001 it doesn’t do us any good. The normal way would be to add on the postponed sums after 2001. The global sum between the two percent rate and $800 million rate is three or four million. (Four and a half million a year on the $800) But we are talking about a series of measures of great scope. We do not want to be on the defense, spending all of our time explaining to Congress why you are not paying. They will think we are being taken advantage of with a disadvantageous lend lease settlement on top of gas credit. You and I must look on the big economic view. $650 million is out of the question. It will be difficult to reach agreement on a scheme in which [Page 112] you have four postponements and you take three of these in the first four years. Are you confused by my presentation?
Brezhnev: You mean paying by 2001 is no good.
Kissinger: I did not explain the process. It is easier for us to add these payments on to the end than for you to make them up at the end. Economically it is easier of course the way you suggested, but politically we want to take the postponements one at a time and not know formally in advance. It would be acceptable to have an understanding, although it would not be formalized.
Brezhnev: So you are proposing that we pay in 1973 the first sum. Then in 1974 and 1975 we do not, in 1976 we do. What about 1977?
Kissinger: You could take two postponements. This way you could pay in 1973 and have postponements in 1974, 1975, and 1977 and then pay the whole thing.
Brezhnev: You get in touch with your President. I have to get in touch with my colleagues. The global sum of $800 million is quite unacceptable.
Kissinger: Both of us have declared what is unacceptable. Now we must find a solution. You have my proposal of $798 and there is yours of $651.
Brezhnev: We are making progress.
Kissinger: It is like Chinese border relations. (Laughter)
Brezhnev: We mentioned $500 million in Moscow. You mentioned $800. Why not split it in half, one hundred fifty and one hundred fifty and meet halfway?
Kissinger: It is true that you did mention the sum of $500 million.
Brezhnev: Why don’t you take one pie now and defer two for later. (Laughter)
Kissinger: On the sum of $500 million we were talking about a sum without interest. At a two percent interest rate, it would be $660 million, so you have actually reduced the sum by $10 million in even payments.
Brezhnev: When you suggested your interest rate, we shouldn’t talk about that. That is company level talk. We are not corporation executives. If we meet each other half way, one side cannot take ten steps while the other side takes only two steps.
Kissinger: If I get the General Secretary to take two steps toward me, I will consider that an accomplishment. But there is more to this than splitting the difference.
Brezhnev: You are trying to get me confused with these figures. (Laughter)[Page 113]
Kissinger: The real difference is between $650 million and $800 million. Both of these figures include interest and then we are talking about comparable figures.
Brezhnev: That is so high, we couldn’t discuss it. Please get this across to the President.
Kissinger: The figure $650 million I cannot present. Of course if you demand I will present it but I can tell you now we are wasting our time. The answer to $650 million would be no. It would be tragic if I am here for two days and we don’t get an agreement. I am not trying to be a clever bargainer. I just wanted to tell you frankly he will not accept that figure. And what is worse, Congress will not agree. It could jeopardize all the other agreements.
Brezhnev: To be very frank what sum, even at the cost of a strain with Congress, what sum could you accept?
Kissinger: This is not good bargaining, but the absolute minimum we could accept would be $750 million. When the sum of $500 million was released to the press, it was with a five percent interest rate. If we were simply paying off lend lease, we could probably go to Congress.
Dobrynin: $750 million would really be $700 million, because the $750 million includes the pipeline.
Kissinger: It would include the pipeline. Is that understood?
Brezhnev: Well then for the time being let me convey my comments on postponement, that is on the total sum and on postponement. I will talk with my comrades. We might be able to go down to four postponements and perhaps even reduce that. In the meantime, we will be waiting for the reply from your President. On postponements they would come at a time that credits for gas and so forth would be operative.
Kissinger: My plan only adds one payment. There would be a payment, postponement, one payment and then three postponements. That is in order to prevent Congressional difficulties. We also understand that the two pipeline payments are not deferred. You owe us on the pipeline. We have held up that for this year but it will have to be paid this year and next.
Brezhnev: Would lend lease begin in 1973? This year the pipeline was postponed.
Kissinger: The first lend lease payment would be in 1973 if we pass MFN.
Brezhnev: Then in 1974 under your scheme there would be a postponement and in 1975 pay and in 1976 and 1977 postpone. What about 1978?
Kissinger: My recommendation would be that you pay in 1978 and take your other postponement in 1979.[Page 114]
Brezhnev: If we come to agreement, then we could pay both of them together as of 1973.
Kissinger: It is our understanding that there is no dispute about the pipeline. Our proposal is that in 1972 and 1973 you pay the pipeline. After that it is all paid off and this is not a factor.
Secretary General Brezhnev then walked out of the room.
Dobrynin: If you propose $700 million with the understanding that there is [omission in the original] million in the pipeline, it would be better to put it this way to the Secretary General. Of the $750, $48 of it would be to the pipeline, $702 for lend lease.
Kissinger: As I understand it, when Congress passes MFN next year then the first payment would be made and that would be followed by a postponement.
Dobrynin: It is my impression that he meant . . .
Manzhulo: He said $650 million.
Kissinger: I understand that. These numbers are starting to sound familiar. They are similar to those for SLBM and ICBMs; therefore we have a global figure.
Gromyko: When can you get an answer from your President?
Kissinger: What am I supposed to ask? Whether $650 million is acceptable? Alright, I will get this out.7 You understand my point that we do not have any formal agreement as to when there is a postponement.
Dobrynin: Yes, we understand. (Note: Kissinger, Sonnenfeldt and Lynn consulted and began drafting a cable to Washington. After an interval the group returned to the room.)
[In essence the two proposals were:
—on the Soviet side a $650 million lump sum with one payment followed by four postponements.
—the U.S. counter proposal is for $750 million with one payment followed by one postponement and then a payment. This would be followed by two postponements and then perhaps one payment and then one or two postponements.][Page 115]
Gromyko: There is bad news from the Middle East.8 Very bad.
Kissinger: Your Government has behaved very properly and with great discretion.
Gromyko: I had in mind the events which occurred a day or two ago.
Kissinger: We had done our best to try to prevent it. We had not been told the complete truth. (By the Israelis.) Note: There was then a brief discussion of the Olympics. With reference to the basketball game, Kissinger stated it was bad enough to lose, but we were also tortured by the illusion of victory.)
Secretary General Brezhnev then returned to the meeting.
Brezhnev: Have you reached an agreement? I thought I was intimidating you so I left.
Kissinger: Your colleagues have been reminding us of all our defeats.
Brezhnev: They have been telling us that Kissinger agrees to $650 million.
Kissinger: As the base sum (without interest).
Brezhnev: I am only kidding. We cannot make a payment of this much. We have put it all into one lump sum for you. Why don’t we have a break for lunch now. I want to do some additional thinking.
Kissinger: Should I send a telegram?
Brezhnev: After lunch we can take the time we need.
Gromyko: (Consulting with Brezhnev) Yes, you should do it by cable.
Brezhnev: We can perhaps break until 6:00 p.m. Then we can take up several other issues. For example, we could discuss the agreement on non-use, SALT, European Security, Vietnam, Middle East, and Germany. Then we could start again at 10:00 a.m. tomorrow morning. It has not been very productive today. The President is going to receive two telegrams. One from you and one from me. I will tell him that either Kissinger is misreading his directives or else that I cannot recog[Page 116]nize Kissinger. I am not sure he is here. He wants me to take him to Lake Baikal. How easy it was to get his agreement.
Kissinger: Now I am in trouble with the military men and the President. I have one thought about postponement. We might combine your idea and our idea. I have not checked with Washington, but we might want to consider a certain number of consecutive postponements. You would still pay by the year 2001. In the agreement we could write a clause saying if postponements were taken in the first ten years, nevertheless the global sum would be paid by 2001. There could perhaps be one payment and three consecutive postponements followed by one payment and then take the fourth postponement. The whole would be paid off by 2001. This would establish a compromise between your position and ours. We would be proceeding from a global sum of $750 million.
Brezhnev: I thank you for these additional considerations. We can certainly think things over. However, the total sum looks very big. If there is nothing new after the break, all to the good. We will take time to talk things over.
Kissinger: One thing, it would be helpful to me to know what you plan to discuss this evening. I need to know this in terms of assigning my colleagues.
Brezhnev: We could discuss non-use and European matters as a minimum, certainly, the Security Conference. We are hoping to finalize this matter too.
Kissinger: You will defeat us in the last three seconds. (Referring to Russian defeat of U.S. Olympic basketball team.)
Brezhnev: I now know that there is a God above. Brandt must be feeling very bad.
Kissinger: Yes, he was very upset. I don’t know how they let the terrorists slip through. The Germans are given to extremes. They are now so concerned not to show too many in uniform. In 1936 there were too many uniformed people. This time, too few.
Brezhnev: Generally, they have been a very well disciplined nation. All through the war their discipline was good. When their leader said advance, they advanced. Retreat, they retreated. (Gesturing) It is true that after they surrendered not a single shot was fired at the back of our soldiers’ heads. After one battle I went to a Division area where some of my friends were and I was returning to my command post down a road strewn with vehicles. I did not have my ADC, just my driver and myself. And as we approached a little forest area about half a kilometer from the roadside, I saw a squad of armed Germans. They were coming in my direction. Night had fallen. I didn’t know whether to turn back but I finally decided to go along nonetheless. I saw they [Page 117] were headed by an officer. As they approached, they said, “Good evening, General” and all came to attention, (Brezhnev stands up gesturing) and clicked their heels. (Brezhnev imitates.) They asked which way to surrender. I told them that it was five or six kilometers away to the south. No one will touch you if you proceed in an orderly manner. The Germans stood up and saluted and I drove off. I thought some SOB would hit me in the back but instead they simply lined up and marched in the direction I had indicated. I crossed myself.
Kissinger: I had a similar experience. A German division surrendered to our unit. The problem was how to get them one hundred miles back. I told my commander to let me handle it. I told the German Division Officer that if he would give his word of honor, he would be allowed to proceed without escort. The German responded that he hadn’t spent thirty years in the Army to disgrace himself now. And as it turned out he didn’t lose a man. All he had with him was someone to show him the way.
Brezhnev: Let’s take a break.
Kissinger: Should Lynn talk about other aspects of trade in the interim. He could review our other proposals?
Brezhnev: Certainly. Talk over the other aspects. This evening we can perhaps first cover the economic problem and then shift to the nuclear problem, European Security, troop reductions.
Kissinger: May I ask our Ambassador to join us for the European subjects?
Kissinger: Then tomorrow we would discuss SALT, Vietnam, and other topics.
Brezhnev: Maybe we could move more quickly. We really need to speed up.
Kissinger: I agree.
Brezhnev: Dr. Kissinger must agree with us.
Kissinger: I appreciate the opportunity to talk to Mr. Brezhnev.
Brezhnev: We have spent four hours on the single question. At this rate it will take thirteen days. I will put this in my telegram to President Nixon. He will do it then.
Kissinger: You are trying to destroy my confidence.
Brezhnev: That is what I am worried about.
Kissinger: When I get in trouble because of you, maybe I can get a job in the Soviet Union. Your Ambassador tells me it will not be in the office of foreign affairs, perhaps defense.
Brezhnev: I will find something better.
- Source: National Archives, Nixon Presidential Materials, NSC Files, Kissinger Office Files, Box 74, Country Files—Europe—USSR, Moscow Trip—Economic Talks, Henry A. Kissinger. Top Secret; Sensitive. The meeting took place in a meeting room near Brezhnev’s office in the Kremlin. All brackets except those that indicate an omission are in the original. Kissinger summarized the meeting in message Hakto 12 to Haig, September 11. Haig summarized Kissinger’s message in a memorandum to Nixon the same day. With regard to the “atmospherics of the meeting,” Haig wrote Nixon, “Henry reports that the general atmosphere so far has been excellent and that Brezhnev clearly remains committed to his U.S. policy line. Brezhnev was relaxed and said he had just had a good trip around the country.” (Both ibid., Box 24, HAK Trip Files, HAK’s Germany, Moscow, London, Paris Trip, Sep. 9–15, 1972, HAKTO 1–35)↩
- See Document 21.↩
- Kissinger met Brandt on September 10 at the Chancellor’s villa in Feldafing outside Munich; Bahr and Hillenbrand also attended the meeting. Telegram 1583 from Berlin, September 12, transmitted an account of the discussion. (National Archives, RG 59, Central Files 1970–73, POL GER W–US)↩
- See footnote 4, Document 19.↩
- Tab A, a copy of the editorial, “Wheat Sales to Russia,” Washington Post, August 20, 1972, p. C8, is attached but not printed.↩
- A reference to the “pipeline” debt. See footnote 3, Document 13.↩
- Kissinger wrote Haig in message Hakto 11, September 11, regarding lend-lease: “Brezhnev maintains they cannot go above 650 million principle and 150 interest. I have come down from our 800 million to 750 million as absolute minimum. But Brezhnev wants President’s response re 650 million. I think he may yield.” Kissinger asked Haig to send him a telegram “from President by flash so I can show it to Soviets.” Kissinger provided a draft of the telegram from Nixon to himself, which Haig sent back to Kissinger the same day as message Tohak 28, which stated that “650 million would be totally unacceptable to Congress and would therefore risk defeat of entire economic package for Soviets.” It continued: “You [Kissinger] are authorized to offer 750 million as absolute minimum consistent with basic objective of building new economic relationship with USSR.” (National Archives, Nixon Presidential Materials, NSC Files, Kissinger Office Files, Box 24, HAK Trip Files, HAK’s Germany, Moscow, London, Paris Trip, Sep. 9–15, 1972, HAKTO 1–35)↩
- On September 9, Israel launched air raids against Palestinian guerrilla bases in Lebanon and Syria in retaliation for the kidnapping and murder of Israeli athletes at the Munich Olympics. On September 12, Vorontsov delivered a note to Haig from the Soviet leadership protesting the Israeli action, which Haig forwarded to Kissinger in message Tohak 40, September 12. The Soviet note called the air attacks “a premeditated provocation by Israel against Syria and Lebanon.” It continued: “If no effective measures are taken by those who bear the main responsibility for preserving international peace and security, if Israel is not called to order and if Israel continues to aggravate the situation, then it may lead to very dangerous consequences for the cause of peace in the Middle East.” (Ibid., TOHAK 1–116)↩