207. Memorandum From the Counselor of the Department of State (Sonnenfeldt) to Secretary of State Kissinger1
SUBJECT
- Your Meeting with Dobrynin: Grain/Oil2
Before you discuss how to get both of us out of the Moscow negotiations with faces saved all around, you should make some general points. The Soviets have talked themselves into a self-righteous rage about this whole negotiation and it is time to bring them back to reality.
1. Before they feel too sorry for themselves, or too generous, about the grain agreement and the maritime agreement, they should recall that this whole matter need not have arisen in this fashion were it not for the 1972 grain deal and subsequent Soviet moves into our grain markets in total disregard of the effect on world prices (and domestic US prices) and of the needs of others. The 1972 deal is perhaps the heaviest single mortgage in détente. Admittedly, our own performance at that time was not brilliant, but all our errors were in favor of the USSR. (The 3 year credit; the subsidized price at which the Soviets were able to buy.) The result was economic chaos and a political fouling of the détente nest which still endures. Both of us must recognize that this year’s deal must overcome these disastrous residues of 1972 (and 1974).
2. The Soviets do us no unilateral favor in signing the grain deal and agreeing to the freight rate arrangement. The political realities are that without them, there will be no shipment of grain to the USSR, beginning right now. The Soviets may think the President is on the hook politically to the farmers and Patolichev with his customary delicacy has repeatedly referred to this in his talks with Robinson. But the President could easily turn this situation to his political advantage in the present mood in this country and the Soviets should be aware of that.
[Page 829]3. We have heard all kinds of outrage on the oil deal. But for years the Soviets have been eager to become energy suppliers both to earn hard currency and to build a pillar of a more normal long-term political relationship. The proposed gas deals have massive political and economic problems for us, yet the Administration has continued to support them. What better way to halp smooth the way than to begin in an area where no immediate massive US investments are required as a precondition to deliveries: oil.
4. As a matter of economic reality, however, no American firm is going to start buying oil from a new and untested source at a time when the price is such that all the oil we want is available. So, our idea of a discount is a way for the US to start becoming a regular and serious customer of the USSR, providing hard currency and, somewhat down the road, the possibility of technology which will permit the Soviets to increase oil production and increase hard currency sales to us.
5. This concept was put to Brezhnev by the President in Helsinki. Brezhnev, after he had asked about the magnitude of the proposed discount (Ford said 20–25%), never rejected the idea. On the contrary, there was agreement at Helsinki that there would be a parallel oil deal and that is the basis on which we proceeded.
6. Patolichev deliberately stalled on the oil part of the deal when Robinson first got there. Precious days were wasted while we progressed on grain—another favor to the Soviets from us. Patolichev’s tactic was clear (and in violation of the understanding at Helsinki): he wanted to get grain wrapped up in hopes that the farm pressures on the President would be so great that we would give up on oil or at least separate the two issues indefinitely. He has won his point but he may well have outsmarted himself. If there is no oil agreement, the grain may never move. And an understanding at the highest level has been nullified.
7. We recognize that Patolichev has had a great time beating up on Robinson with sarcasm and vehemence. But what Robinson has tried to do is very simply to make it possible for the Soviets to satisfy their own economic and political interest in starting up a long term oil relationship with us without embarrassment. Hence the various ideas regarding freight rates, clearing charges, deferred payments. These are no favor to us even though to the simple minded they look like it in the short run; they are the way into a profitable relationship for the Soviets. (It could have been much simpler for the Soviets to allow a modest discount.)
8. Let us therefore cut out the breastbeating and get these talks finished so that the results will work in both our favor over the coming year.
9. We are prepared to let Robinson (1) sign the grain agreement and (2) sign the letter of intent, minus the 10 day clause as Patolichev [Page 830] suggested. We would also lift the embargo on the understanding that any purchases above 5 million tons must first be discussed with us, even before they start approaching the brokers.
10. Concerning para 6 of the oil letter on prices (“assure the interests of both governments”), we think it important that there be clear understanding now that the follow-on negotiations will lead to satisfactory results. We will instruct Robinson to be as flexible as possible in working out these assurances—to encompass some or all of the ideas previously presented but not stated in precise detail—and expect the Soviets to be conciliatory. (HAK: You may want to read to D. from our proposed instruction to Robinson at Tab A).3
11. Robinson will also want a clear assurance that the oil negotiations will resume here on October 22, coterminous with the maritime negotiations, with the expectation that all matters will be concluded in time for the lapse of the present maritime agreement on December 31. (Without it no ships will move!)
- Source: National Archives, RG 59, Lot File 81D286, Records of the Office of the Counselor, Box 5, Grain Negotiations. Secret; Sensitive; Eyes Only. In a typewritten note forwarding the memorandum to Kissinger, Sonnenfeldt reported: “Here is the grain/oil package for Dobrynin. I hope you have a chance to read it. Please note at Tab A, an instruction for Robinson. This requires your approval so we can send it to him promptly. He needs a day to sort out his tactics.” Sonnenfeldt also forwarded an extract from the memorandum in a personal message to Robinson on October 16. “I thought you might be interested in a portion of the memo I sent the Secretary prior to his last talk with Dobrynin,” Sonnenfeldt explained. “I don’t think he used much of it but it gives you my views. Please hold this just to yourself.” (Ibid.)↩
- No substantive record of the meeting between Kissinger and Dobrynin on October 14 has been found. See, however, footnote 3 below.↩
- Attached but not printed. Kissinger approved the instructions, which were sent in telegram 244346 to Moscow, October 15. The telegram also included the following report: “Secretary has talked to Dobrynin about situation, in light latest Presidential decisions, assuring him you will be flexible on text side agreement and asking for Soviet flexibility. Dobrynin indicated more Soviet flexibility not to be expected, but he did not totally exclude it. Sonnenfeldt followed up reiterating to Dobrynin need for something beyond present letter of intent on price.” (National Archives, RG 59, Central Foreign Policy Files)↩