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

SUBJECT

  • Rhodesian Sanctions

In NSDM 47 (Tab 4)2 you ordered the closing of our Salisbury Consulate, and directed a review of our sanctions against Rhodesia. You expressed interest in minimizing hardships to U.S. firms acting in good faith, particularly chrome importers, while at the same time meeting our obligations under the UN Resolutions.

At Tab 1 is a memorandum from the Secretary of State regarding this matter. At Tab 2 is an exhaustive report on this problem from the Under Secretaries Committee. At Tab 3 is a memorandum to you from the Secretary of Commerce taking issue with the Secretary of State’s recommendations.3

The options presented in the Under Secretaries Report go beyond your instruction. They range from no revision at all of our current regulations, to revisions which would, in effect, break the embargo and put us in violation of the UN Security Council Resolutions.4 Neither of these extremes is consistent with your instruction. This memorandum, [Page 106] therefore, addresses itself primarily to steps that we might take without reneging on our international commitments.

However, I should call to your attention that the Secretary of State recommends that there be no change whatsoever in our current implementation of the embargo. Secretary Rogers argues that we are legally bound to the letter of the UN Resolution (which makes no provision for relief in hardship cases). He further argues that any relaxation at all of our present procedures would “seriously undermine the genuine good will toward your administration . . . of many black African leaders.” Finally, the Secretary asserts that any change in our procedures might lead to a general collapse of the embargo, and our being charged with the responsibility therefor. The Secretary therefore recommends to you that we make a more vigorous effort in the United Nations to ensure compliance by other countries with the embargo and, pending the result of those efforts, adhere strictly to our present procedures. This, of course, means that we would go in a direction directly opposite to the one decided at the NSC meeting.5

Secretary Stans, on the other hand, is frankly opposed to the embargo on chrome imports from Rhodesia. He argues that it leaves us excessively dependent on the USSR for chrome, and enables the Soviets to manipulate prices to the disadvantage of U.S. purchasers. Although not pressing at this time for open abrogation of the embargo, he states that the approval of import licenses to both Union Carbide and Foote Mineral are “necessary to relieve our dependence on the Soviet Union for the long term availability of” chrome. In the Carbide case, the money was paid before our embargo went into effect, and with full knowledge of it. A license for Foote would be hard to portray as anything but an open violation of the embargo. In addition, Secretary Stans’ arguments lose some of their force from the following facts: (1) even before the embargo, we were buying as much chrome from Russia as from Rhodesia, (2) the Foote import would cover less than 7 percent of one year’s U.S. needs. It would therefore hardly affect our dependence on the USSR for about half of our current chrome needs and would have no effect on the “long term” situation.

I do not agree with either Secretary’s views. Neither does Treasury or Defense. This is an extremely complex and multi-faceted issue, but what follows is an earnest attempt to reduce it to the minimal essentials which you should know before making a decision.

1. The Legal Situation

State and Justice disagree. State argues that our compliance with the letter of the Security Council Resolutions is mandatory and permits [Page 107] of no discretion in its implementation. State also argues that the intervening three years of enforcement have wiped out whatever justification there might have been for hardship exceptions in the early stages of the embargo.

This matter was personally reviewed by the Attorney General and Mr. Kleindienst who find the State Department’s legal argument without merit. Mr. Kleindienst points out that the White House announcement of the Rhodesia sanctions said that “provision will be made . . . to deal with cases of undue hardship arising from transactions commenced before the date of the order.” Mr. Kleindienst further points out that the Executive Order itself authorized the issuance of import licenses, and that this authorization would hardly have been granted if it had been the intent to permit no exceptions to the embargo. Finally, Mr. Kleindienst points out that licenses have been issued in hardship cases and that no protest was received from the United Nations or any member countries because they understood, as a practical matter, that the implementation of the Security Council Resolution would necessarily involve some hardship exceptions. Justice holds the State argument on timing to be irrelevant in the case of Union Carbide, which has been pending since the embargo went into effect.

2. Security Aspects

An adequate supply of chromite ore is a strategic necessity. However, as of now, our supplies are adequate. All agencies are agreed on that fact.

Our current consumption needs are met by imports from Russia, Turkey and South Africa, and sales from the surplus in our chromite stockpile. Should the USSR cut off sales to us of chromite ore or if Rhodesian ore were to continue to be unavailable for a number of years, we might eventually experience a shortage. There is, however, no indication whatever that the Soviet Union is contemplating such a move; and adjustments to the long-range effect of the Rhodesian embargo is something that can be faced, if and when it becomes a problem. We should, however, keep a continuing watch on the chromite supply situation.

3. Economic Aspects

The sanctions have helped our tobacco industry by enabling us to replace Rhodesian exports to the UK. However the Rhodesian sanctions do put an economic burden on US chrome purchasers. Chrome prices have risen sharply since 1966. The USSR (a major source of our chromite both before and after sanctions) has been able to tie the purchase of lower grade ore to the high grade ore we require. Finally, US and UK firms are disadvantaged by the fact that France, Italy, West Germany, Switzerland and Japan are less careful than we in scruti[Page 108]nizing nominally non-Rhodesian chrome imports. Secretary Rogers’ proposal for a more vigorous effort with the UK to insure compliance by other industrial countries with the embargo is intended to reduce this disadvantage to American companies.

Existing tax laws provide relief for US firms affected by the Rhodesian sanctions. We should however ensure that these firms are fully informed of these relief provisions.

4. Foreign Policy Aspects

Your administration is fully committed to the embargo on imports from Rhodesia. Your message to Congress of February 186 stated bluntly our opposition to the racial policies of the white-ruled regimes; and our policy statement on Africa of March 267 unqualifiedly pledged our continuing support for the economic sanctions. Moreover, your decision set forth in NSDM 47 plainly indicated your determination to meet our obligations under the Security Council Resolutions on Rhodesia, for which we have voted three times.

5. Who is Being Hurt?

The actual issue for decision, therefore, is not whether to adhere to the embargo but rather what relief can be given within the terms of the embargo to those firms which claim undue hardship. These cases fall into two categories:

(a)

Union Carbide. Carbide claims to have paid for 150,000 tons of chrome ore after the Security Council Resolution but before the first Executive Order was issued prohibiting the Rhodesian imports.8 The White House announcement of the Executive Order imposing the embargo stated that provision would be made for “cases of undue hardship arising from transactions commenced before the date” of the Executive Order. The Carbide case seems to fit squarely in that category. Moreover, the Treasury Department announced in March of 1967 that licenses for import would in general be issued where payment had been made prior to January 5, 1967. Again, the Union Carbide case fits.

Carbide is the only case of an American firm which paid for but failed to export Rhodesian commodities prior to the effective date of the Executive Order. Justice, Treasury, Commerce, and OEP feel that an ex[Page 109]ception for Union Carbide should be granted, and would be consistent with our international obligations. State disagrees.

(b)
Sale of American Owned Assets in Rhodesia. Some American firms, including Foote Mineral and Universal Leaf Tobacco, have said that if they are unable to import Rhodesian commodities owned by their Rhodesian subsidiaries, they would like to sell their Rhodesian assets. At the present time, our regulations make such sales difficult. The UN Security Council Resolution, however, does not explicitly prohibit the sale of assets. We could, therefore, merely by reinterpreting our own regulations, permit the sale of American owned Rhodesian assets. Treasury, Commerce and OEP favor such action. State opposes it, on the grounds that the UN Resolutions implicitly prohibit such sales.

6. Political Pressure Aspects

Mr. L.G. Bliss of Foote Mineral has been very active in opposing the embargo of imports from Rhodesia. He has asked for a chrome import license under circumstances which would constitute a clear violation of the Security Council Resolutions and the existing Executive Orders. He has told OEP that if he is not given the license he will attempt to prevent Congressional approval of further sales from our chrome stockpile.

I find it difficult to believe that Mr. Bliss will deliver on his threat. First, the effect of his action would be to increase the already high price of chrome, a subject upon which Mr. Bliss is already considerably exercised. Second, OEP believes the two major firms in the chrome producing field, Union Carbide and AIRCO, can be persuaded to oppose Mr. Bliss’s move. This should be particularly true if you grant the recommended approval of a hardship exception for Union Carbide. Third, if you approve the recommended sale of American owned assets in Rhodesia, this will open an avenue of relief to Mr. Bliss, which may dissuade him from pushing his application for an import license to such extremes. OEP believes Mr. Bliss might be able to deliver on his threat this session, but agrees that he would find it difficult to do so if you approve the recommendations regarding Carbide and the sale of U.S. assets in Rhodesia.

In any event, the granting of an import license to Foote Mineral would, as stated above, be a clear violation of the Security Council Resolution, and would involve foreign policy costs which transcend the cost involved in a Congressional refusal to sanction additional sales from the chromite stockpile surplus. (Of the $750 million you hope to realize from FY ’71 stockpile sales, OEP plans to get $30 million from chrome sales.)

The facts of the Foote application are as follows: Foote sent money into Rhodesia after the date of the first Executive Order prohibiting [Page 110] imports, and with the full knowledge that no ore produced as a result could be licensed for import to the United States. The ostensible purpose of the transaction at the time was to prevent the flooding of a Foote-owned mine in Rhodesia. State and Treasury oppose the granting of a license to Foote. Commerce favors granting the license. OEP defers to State and Treasury on the question of legality, but is worried about Bliss’s threat to its plans to sell chromite from the stockpile.

Corning Glass previously had a troublesome problem stemming from its reliance on an ore available only from Rhodesia. However, a domestic substitute has been developed and Corning’s problem is resolved. There are applications from Metallurg to import chrome, from Dibrell to import tobacco and from American Asbestos to import high grade asbestos. None of these firms, however, have paid any money, and they do not, therefore, fall within the hardship category. Asbestos has alternative sources of supply. Granting import licenses to any of these firms would clearly be a violation of the Security Council Resolutions and would be inconsistent with existing Executive Orders.

Summation

If the facts are as presented by Union Carbide, this seems a clear case of “undue hardship”. Their purchase of chromite ore in Rhodesia was legal at the time the funds were transferred. The granting of a license to Carbide would be consistent with current U.S. regulations, and although it might be subjected to criticism, it could not fairly be characterized as a break in the U.S. implementation of the embargo. I believe a license should be granted to Union Carbide.

In view of your desire to avoid undue hardship on American firms, I see no reason why we should, in our implementation of the sanctions, go beyond the steps required by the Security Council Resolution. I therefore think we should permit the sale of American owned assets in Rhodesia.

To be blunt about it, the Foote Mineral application to import chromite ore is an exercise in embargo busting. The grant of a license to Foote could not plausibly be defended as anything other than a fundamental change in the U.S. embargo of Rhodesian imports and a U.S. refusal to comply with the Security Council Resolutions. Moreover, if you approve the sale of American owned assets in Rhodesia, this will open to Foote Mineral an avenue of relief.

I am also attracted to Secretary Rogers’ suggestion that we attempt to lessen the competitive disadvantages of U.S. firms by tightening the enforcement of the embargo by the other major industrial nations.

[Page 111]

Recommendations:9

1.
That you approve, contingent upon the confirmation by Treasury that the facts are as stated by Union Carbide, the issuance to Carbide of a license to import 150,000 tons of chromite ore from Rhodesia.
2.
That you approve licenses for U.S. firms to sell their assets in Rhodesia to any buyer.
3.
That you approve a more active U.S. effort—in concert with the U.K.—to ensure better compliance by other industrial nations in the UN embargo on Rhodesian chrome.
4.
That you approve the continuing refusal of licenses to import Rhodesian goods from any firm which entered into a transaction after the effective date of the Executive Order prohibiting such imports.
5.
That you direct the Under Secretaries Committee to review periodically the supply situation on chrome, and call to your attention any change which threatens our strategic needs for this commodity.
6.
That you direct Treasury to ensure that U.S. firms affected by sanctions or Rhodesian currency restrictions are aware of all tax relief provisions available to them under existing laws and regulations.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–214, National Security Decision Memoranda, NSDM 47. Secret; Nodis. Sent for action.
  2. Tab 4 is printed as Document 28.
  3. Tabs 1, 2, and 3 are attached but not printed.
  4. See footnote 5, Document 8.
  5. See Documents 20 and 23.
  6. Reference is to the President’s “First Annual Report to the Congress on United States Foreign Policy for the 1970s.” For Nixon’s remarks regarding racial policies of the white minority regimes, see Public Papers: Nixon, 1970, pp. 158–159.
  7. For the text of the Department’s position on economic sanctions, see the Department of State Bulletin, April 20, 1970, p. 520.
  8. Executive Order 11322, January 5, 1967.
  9. Nixon approved recommendations 1–6 on July 31.