167. Memorandum of Conversation1

PARTICIPANTS

  • Dr. Henry A. Kissinger, Assistant to the President for National Security Affairs
  • George Shultz, Secretary of the Treasury
  • Major General Brent Scowcroft, Deputy Assistant to the President for National Security Affairs

Shultz: We have a commitment that if the dollar strengthens, the Europeans will sell some dollars to lower their holdings. Schmidt is especially strong on this.2

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Economics will have a major impact on the political scene.

Kissinger: Yes, and few Heads of State understand it.

Shultz: Heath does.

Kissinger: And Pompidou. But Brandt is a fool. Schmidt is good and understands the political dimension.

Shultz: I'm thinking we should have a strong economic section in the NSC and not have a CIEP.

Kissinger: I agree. I hadn't wanted to get into it, but we could do it—with Sonnenfeldt over at Treasury.

Shultz: Flanigan does a lot of things well and unsel-fishly.

Kissinger: I agree, but on the big things you and I should work it out.

We'll make the announcement next Wednesday.3 We'll have language saying he can continue to be available to the NSC staff.

Shultz: He will be heavily involved in East-West trade, almost exclusively at first.

It'll be hard to abolish CIEP.

What about MFN?

Kissinger: There is a State proposal for a secret deal for 36,000 emigrants, for MFN. How could Jackson and his people withdraw their amendment4 without any explanation?

Anyway, I can't imagine State being able to manage it. You or I might.

The U.S. attitude is inexcusable—emigration policy is none of our business.

Shultz: Rogers' proposal borders on the silly.

Kissinger: The Jews won't accept any firm upper limit. And you can imagine Brezhnev's reaction.

We have three options:

  • —Put it in the general bill.
  • —Put it in a Soviet bill.
  • —Follow the Javits route.

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Shultz: Which Mills will oppose. The Soviets have done a lot.

Kissinger: But they can always revoke what they have done.

Shultz: Can't we have something that the President could announce with respect to non-market economies that the President could grant MFN when it's in the national interest?

Kissinger: This is very important to the Soviets.

Shultz: Yes. Most Congressmen think I made a deal. They don't understand.

Javits is delighted. How well he can be trusted to carry the ball, I don't know.

Within the framework of the trade bill, we don't have time before the visit5 to get anything done.

Kissinger: My instinct is to put it in a general or Soviet bill and fight.

Shultz: In a trade bill, it couldn't be passed before October.

Kissinger: My first inclination was a separate bill, but if Jackson is in the trade bill, what is the difference?

Shultz: Why not put it in the trade bill, but with a clause about the President's determination?

Kissinger: It couldn't be done if the determination contained specific language about emigration policy. The Chinese would never accept on that basis.

Shultz: The Javits formula is attractive, but it won't get past Mills.

Kissinger: I like the Javits formula.

Shultz: Maybe keep it in the trade bill. There's not much chance. Mills thinks MFN is a Congressional right. They can give it to the President, but not give it or take it back.

Shultz: Javits is good because it doesn't require a vote. I described all these in detail, so you will know what is going on when one of them appears.

If it's in the trade bill, it would say the President can grant it with a determination that it is in the national interest.

Kissinger: How about a separate bill?

Shultz: The only way to get it by the time of the visit would be a separate bill. It could still be in the trade bill. If Congress wanted to support the President, a separate bill would be easy.

Kissinger: But that isn't the case.

Shultz: The climate is bad for everything.

Kissinger: They said it would improve after Vietnam.

Shultz: It has never been worse!

  1. Source: Ford Library, National Security Adviser, Memoranda of Conversation, Box 1. Secret; Nodis. The memorandum identifies the date of the meeting as "Thursday, March 29, 1973 (?)," but there is no record of such a meeting in Kissinger's record of schedule. The memorandum identifies the meeting location as "Dr. Kissinger's Office (?)." A meeting among Kissinger, Shultz, and Scowcroft did take place on March 28 from 11:07 until 11:50 a.m. (Library of Congress, Manuscript Division, Kissinger Papers, Box 438, Miscellany, 1968–1976, Record of Schedule)
  2. Shultz met with Schmidt in Bonn on March 15. See Document 34.
  3. April 4. The White House issued the announcement naming Sonnenfeldt as Under Secretary of the Treasury on April 6.
  4. In October 1972, Senator Henry Jackson (D–Washington), with the support of 71 other Senators, attached an amendment to a bill intended to ease East-West trade that banned the granting of credits or MFN treatment to any country that barred emigration or imposed overly onerous exit conditions on citizens wishing to emigrate. The amendment was a reaction to a recently introduced Soviet education tax levied on potential émigrés a tax that proved particularly burdensome to Jewish émigrés.
  5. General Secretary Brezhnev was scheduled to visit the United States in June.