169. Memorandum From the Presidentʼs Assistant for National Security Affairs (Kissinger) and the Chairman of the Presidentʼs Council for International Economic Policy (Flanigan) to President Nixon1
SUBJECT
- US-Polish Economic Relations
During your visit to Poland you indicated to the Polish leaders that, upon solution of problems relating to pre-war Polish government dollar bond debts to US holders, you would be prepared to exercise your authority to extend EX–IM Bank credit facilities to Poland. You also indicated our eventual willingness to postpone repayment of dollar tranches of Polish PL–480 debt to us.
On June 14, the Polish Ambassador delivered two messages to you from Chairman of the Council of Ministers Jaroszewicz (Tabs D and E),2 one on PL–480 indicating that the Poles want a five year postponement and the other on a proposed new agricultural agreement, which we are staffing separately. The joint US-Polish communiqué which you signed in Warsaw called for the creation of a joint Polish-American Trade Commission.
Gierek, when he paid an unusual personal visit to our trade exhibition at the Poznan Fair June 11, stressed that “time is money” and expansion of US-Polish relations need not wait until next year. He alluded to his conversations with you in this regard.
We recommend that the agencies be directed to follow through promptly on your discussions in Warsaw on EX–IM Bank Credits, PL–480 Debt Deferral, and the Joint Trade Commission.
—With regard to EX–IM Bank Credits, the NSDM/CIEPDM at Tab A3 would (a) inform the Secretaries of State, Treasury and Commerce, and heads of the other agencies involved, that your decision to exercise your authority to extend credit facilities is tied to a solution of the US bondholdersʼ claims; (b) instruct the Secretaries to inform the Polish government representatives, if they press the US on when these facilities will become available, that in accordance with what you said in [Page 406] Warsaw, you will make this decision in light of the status of the negotiations between the Polish government and the bondholders; and (c) instruct the Secretary of State to inform the bondholdersʼ representatives that we continue to favor a reasonable settlement of their claims within a reasonable time.
(You can determine the precise timing of any affirmative action on EX–IM for Poland later, taking into account the status of EX–IM facilities for the Soviets. At this stage the bondholders should not come to believe that we have established too tight a linkage between EX–IM facilities for Poland and settlement of their claims, for in this case they would harden their demands and gain undue influence over the timing of your final decision.)
- —With regard to PL–480 Debt Deferral, the NSDM/CIEPDM would also direct the Secretary of State, after coordination with the Department of Commerce and other agencies, to inform the Polish government: (a) that we are prepared to postpone repayments of the annual tranches of the PL–480 dollar debt falling due in years 1973–1974 for five years, i.e., so that these annual tranche repayments would take place in 1978 and 1979; and (b) that toward the end of 1974, we will be prepared to give consideration to a deferral of further tranches. (The repayments average just over $16 million annually.)
- —The Polish governmentʼs request, made in an aide-mémoire handed Secretary Stans last year4 and repeated in Chairman Jaroszewiczʼs message to you was for a five year deferral—i.e., until the period 1978–1982—of payments due in 1973–1977. We do not believe that it is economically sound or politically wise to commit ourselves formally to this extended period. The Polesʼ main problem is with their short-range debt. Giving them a postponement and taking a look at their balance-of-payments position at the end of 1974 will give them the needed immediate relief. In terms of our relations with Poland and other PL–480 debtor countries, an undesirable precedent would be set by meeting precisely the Polesʼ wish for a deferral of as much as five annual tranches.
- —Polish-American Trade Commission
Secretary Peterson is ready to chair this Commission and is the right man. The memorandum at Tab B5 would designate him as Chairman of the US side and would instruct him to work with Polish officials to get the Commission functioning.
[Page 407]—Reply to Chairman Jaroszewicz
A proposed reply for your signature to Chairman Jaroszewiczʼs letters is at Tab C,6 and has been coordinated with Ray Priceʼs office. It indicates your favorable attitude toward PL–480 deferral. (It should be noted that the reply does not commit you on the second agricultural proposal made by Chairman Jaroszewicz.)
Recommendations
- Source: National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–234, National Security Decision Memoranda, NSDM 173. Confidential. Sent for action. A notation on the memorandum indicates the President saw it.↩
- Attached but not printed.↩
- Printed as Document 170.↩
- Not found.↩
- Attached but not printed. Signed by the President on July 7.↩
- The draft letter to Jaroszewicz, signed by Nixon on July 8, reads in part: “Thank you for your letters of June 5…. After appropriate consultations between officials of our government, I anticipate that our two countries should soon be able to reach an agreement on a five year deferral of dollar installments due for payments in 1973 and 1974 in accordance with an earlier Public Law 480 agreement between Poland and the United States. I have also requested the responsible Departments of the United States Government to give prompt consideration to your request for conclusion of a new agricultural sales agreement…. Permit me to take this opportunity, Mr. Chairman, to thank you once again for the warm welcome and generous hospitality accorded Mrs. Nixon and me during our recent trip to Warsaw. We will long cherish our memory of that visit.”↩
- The President initialed the approval option.↩
- The President initialed the approval option.↩