70. Memorandum From Robert Hormats and Marshall Wright of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)1
- Nuclear Power Reactor Sale to South Africa
GE has recently inquired informally about the possibility of a $50 million direct Ex-Im credit to finance the sale of a nuclear power reactor for South Africa. Under present guidance, Ex-Im provides insurance and guarantees up to a maximum of 10 years but has not provided direct credits since 1959. The amount and form of Ex-Im participation would be a quantum jump from this. In addition, the character of the project would cause political problems in the rest of Africa. Thus, for political reasons it is desirable to avoid using Ex-Im credits to finance this sale.
A more acceptable alternative, which we, State, and Ex-Im favor, is to have the Private Export Funding Corporation (PEFCO) provide the financing using Ex-Im Bank guarantees only. PEFCO has already extended credits for nuclear power plants in Taiwan, Italy and Brazil. Although this approach would not be immune from criticism—since PEFCO would rely on Ex-Im guarantees—it maintains the distinction between USG guarantees and USG credits. Ex-Im is anxious to approach PEFCO on this matter if GE pursues the question further, and would like to get your view on this issue.
That you approve the PEFCO financing approach.2