107. Briefing Memorandum From the Assistant Secretary of State for European Affairs (Hartman) to Secretary of State Kissinger 1

Will The Soviets Go Along With The Trade Act?

Public and private Soviet comment since passage of the Trade Act suggests that Moscow is contemplating refusal to cooperate in bringing the 1972 Trade Agreement into force. They have in any case threatened to repudiate the Lend Lease Agreement.

The mechanics are such that the Soviets will be required to make a positive decision to bring the Trade Agreement into force. An exchange of notes is required, and we will have to seek Soviet agreement on language in the note to take account of our inability to assure that the USSR will receive MFN for the full three-year duration of the Agreement as it now stands. Thus it is not possible for Moscow simply to acquiesce silently in a train of events that would bring them MFN with no further action on their part.

The TASS announcement of December 18,2 and the concurrent release of the Gromyko letter,3 which undercut the concepts of assurances and a rising level of emigration, showed that the Soviets were prepared to risk upsetting the compromise achieved in the Congress.

It can be argued that, having taken the risk and won, the Soviets are now in a favorable position: they can get MFN and credits, having promised nothing publicly regarding emigration. They can now allow a certain increase in emigration levels over 1974 (not 1973), shrug off complaints about harassment, and expect that the 18-month waiver [Page 416] will be extended in 1976 because no US political leader will want to take the onus of stopping the flow of emigration by ending MFN.

There is however in the continuing Soviet comment an undercurrent of feeling that too much principle is being sacrificed for too little concrete gain. Two recent examples:

TASS chief and sometime Brezhnev spokesman Leonid Zamyatin published an article on December 28, calling limitations in the Trade Act “far worse” than those of the Cold War.4 He termed these limitations “in essence interference in internal affairs of other nations” and thus an encroachment on the “Basic Principles” signed at the 1972 Summit.5 And, referring to the 1972 Trade Agreement which called for unconditional granting of MFN, he warned that in this situation the failure of one side to honor its commitments “cannot but affect the commitments assumed by the other side under a series of commercial and financial agreements”—obviously meaning Lend Lease.

—The Soviet Army’s chief political officer, General of the Army Yepishev, sought out our Army Attaché in Moscow at a reception on December 23, and, brushing aside an inquiry about the Middle East, plunged into a long tirade about the Trade Act. He said it was interference in Soviet internal affairs and a step backward from détente. By all indications, this unusual outburst was not feigned. It probably reflects the attitude of a great many Soviets in leading positions.

At the same time, various Soviets have made the point that they want détente with the US to continue. This was made clear by Korniyenko to Ambassador Stoessel on December 16,6 just before the TASS announcement. While he strongly criticized the Trade Act and threatened to go back on the Lend Lease agreement, Korniyenko took the initiative in a positive discussion of other aspects of our relationship. Other Soviet officials have commented privately along similar lines.

The Soviets may still be studying the legislative and political details before making a decision. Judging from their comments and actions, their calculations include the following considerations:

—Détente with the US is still a cornerstone of their policy.

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—The political price set by the Trade Act has become very high in relation to the economic yield, particularly in view of the outcome of Ex-Im.

—It thus seems advisable to separate the complex of problems surrounding the Trade Act from the general question of political détente. They may calculate that economic questions can be settled easier at some later date if they stand now on the principle of non-interference.

—Their calculations certainly include an assessment of the impact of their actions on the US domestic political scene. They would wish to avoid giving any political assistance to Senator Jackson and if possible to undercut him as a Presidential candidate.

On the basis of incomplete evidence, the Soviet decision appears likely to be a close one. There are persuasive arguments favoring each of the two major options available to them.

1. Acquiesce in an exchange of notes which implements the Trade Agreement:

—would minimize rocking the détente boat.

—would remove the psychological irritant of the specific discrimination against Soviet goods.

—would provide some potential economic benefits for the USSR, including MFN but more particularly credits (especially if the Administration seeks sizeable additional credits and gains Congressional approval).

—could conceivably undermine the position of Senator Jackson in mid-1976 (for example, if emigration proceeds at 35,000–40,000 level but Soviets had been unresponsive re other elements of the amendment, would the Senator then reject MFN and risk the decline of emigration or acquiesce in “unsatisfactory” Soviet performance?).

—having made their points publicly about no commitments on emigration, the Soviets could feel free of obligation to comply with specific requirements and could feel they had put the onus on the Administration to hold down overt manifestations of US interference in Soviet internal affairs.

2. Decline to renegotiate the duration of the Trade Agreement:

—technically, would put the onus on the US for failing to stand by the terms of the Agreement.

—could put a stop to the tendency of some US circles to greet each Soviet concession on internal matters with a new demand. Digging in their heels now might give the Soviets a better negotiating atmosphere in the future.

—it could help dampen the militancy of Soviet citizens who wish to emigrate and of political dissidents.

—Moscow might conclude that it would be better, in terms of impact on the US domestic political scene, to take a negative move now rather than having emigration and the Trade Agreement become a political football in the summer and fall of 1976, at the end of the first waiver period.

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—The Soviets would be under no obligation to begin the regular annual payments on Lend Lease of about $25 million, which are linked to MFN. (They are obligated under the Lend Lease Agreement to make the third of three obligatory payments in July, 1975; they could conceivably, however, repudiate the Lend Lease Agreement in its entirety, including the third payment, on the ground that it was part of a package which included the Trade Agreement, although this might damage their reputation for always meeting financial commitments.)

The Soviet decision may already be foreshadowed by the highly negative public commentary on the Trade Act. While Moscow does not have to cope with public opinion as we know it, the press commentaries are probably solidifying elite opinion against accepting US dictation on Soviet internal affairs; this could make it difficult for Moscow to justify signing on to a trade agreement which gives them MFN for about one year and implies acceptance of onerous conditions.

Nevertheless there may still be some room for influencing the Soviet decision. In order to persuade them to cooperate in putting the Trade Agreement into force, we could note the realities posed by the Congressional action and point out that failure to move ahead now and utilize the opportunities provided by the Trade Reform Act could cause the beginning of a downward psychological spiral in US-Soviet relations which could affect political aspects of détente, including the domestic US political situation. We could note that we are doing our best to minimize public statements and activities on the US side which would pose difficulties (e.g., the postponement of Congressman Fish’s7 visit). We could note that there are positive economic benefits to be gained from moving ahead, particularly in credits; we would expect to go back to the Congress for authority to finance mutually beneficial projects if we exhaust the lending limits now set. And we could suggest that in the period ahead we work together toward resolving the issues and helping them to simmer down.

  1. Source: National Archives, RG 59, Lot File 81D286, Records of the Office of the Counselor, Box 8, Trade Bill, 1975. Confidential; Exdis. Drafted by Garrison on January 2 and cleared by Armitage, Wright, Trimble, Carl W. Schmidt (EB/ITP), and Kenneth A. Kerst (INR). The memorandum was forwarded through Sonnenfeldt; according to a handwritten note, it was intended to “By pass” normal channels in S/S.
  2. See footnote 2, Document 100.
  3. Document 75.
  4. The article by Zamyatin, entitled “Trade, But Without Discrimination,” was published in Sovyetskaya Rossia. For excerpts from an English translation, see Current Digest of the Soviet Press, Vol. XXVI, No. 52 (January 15, 1975), p. 7. The Embassy commented on the article in telegram 19142 from Moscow, December 30. (National Archives, RG 59, Central Foreign Policy Files)
  5. The “Basic Principles” of relations between the United States and the Soviet Union was signed in Moscow on May 29, 1972, at the end of the summit. See Public Papers: Nixon, 1972, No. 177.
  6. The Embassy reported on the meeting between Stoessel and Kornienko in telegram 18645 from Moscow, December 17. (National Archives, RG 59, Central Foreign Policy Files)
  7. Hamilton Fish, Jr. (Republican, New York).