86. Telegram From the Embassy in the Soviet Union to the Department of State1

15002. Subject: Paris–Moscow Developments. Dept Pass USDel Secretary. From Under Secretary Robinson. Ref: A. Moscow 15000; B. State 248482; C. Secto 16028.2

1. As reported reftel A we finally signed documents on grain agreement and oil letter of intent in accordance instructions reftel B. We have fought lengthy and aggressive battle here in Moscow to achieve your price objectives and sincerely regret we were unsuccessful in this effort.3 However I believe that as result of your initiative commencing in July we have achieved in agreements signed today important ben[Page 294]efits for the American public, farmers and maritime interests.4 Furthermore, although we may have bent détente somewhat through our aggressive efforts to achieve Soviet acknowledgment of oil price discount, we can recover from this. Further negotiations leading to a second-stage oil agreement calling for transfer of advanced U.S. technology and equipment to expand oil production from existing Soviet facilities could prove beneficial to both sides in this effort. Our challenge will be to continue to signal U.S. agri-power and at same time develop new economic dimensions with the Soviets, thus further strengthening détente.

2. I am pleased with the final results at Prepcon II in Paris5 which was threatened at one stage with confrontation and breakdown à la Paris in April. However as result of U.S. leadership this was avoided and we established what I believe is sound basis for constructive dialogue. Your initiative in this effort was fully credited and the French have acknowledged to me their appreciation for this initiative and the U.S. leadership which resulted in successful conclusion Prepcon II. I am in full accord with you (reftel C) that we must carefully plan for Prepcon III or Ministerial meeting of the Conference on International Economic Cooperation (CIEC) now scheduled commence December 16. My office will assume responsibility for coordinating this effort and I will cable them today regarding my view of an overall plan for the December 16 meeting.6

3. I also believe it is important that my office assume coordinating responsibility in developing our position for the Economic Summit. I depart Moscow today October 20 for Paris to participate in a three-day session of the OECD Executive Committee meeting in special session and therefore will not be back in Washington until Friday afternoon October 24. However I am cabling my office today outlining suggestions for the Economic Summit and requesting that they work closely with S/P and EB in preparing message to be sent you Thursday Tokyo [Page 295] time7 regarding both the Economic Summit and the December CIEC in accordance with instructions reftel C.

4. I welcome the suggestion reftel C that once I have returned to Washington I plan to remain for time required to complete objectives paras 2 and 3 above. This is essential if I am to fulfill my commitment to provide you with effective coordination of U.S. international economic policies.

  1. Source: National Archives, RG 59, Central Foreign Policy Files, P840083–1118. Secret; Immediate; Nodis; Cherokee.
  2. In telegram 15000 from Moscow, October 20, Robinson reported the signature of a grain agreement and a letter of intent for an oil agreement with the Soviet Union, known as the “barrels-for-bushels” deal. In telegram 248482 to Moscow, October 18, the Department authorized signature of the agreements. And in telegram Secto 16028 from Tokyo, October 18, Kissinger instructed Robinson and Enders to begin preparing papers for the November Economic Summit in Rambouillet, France, and the December Ministerial producer-consumer conference in Paris. All are ibid., P850012–2398, P840178–2480, and D750362–0831. Kissinger was in Tokyo en route to Beijing.
  3. The U.S. negotiators in Moscow, led by Under Secretary Robinson, hoped to “extract from the Soviets a major oil price discount,” which would be “of use publicly in the U.S” as a “demonstration of the concessions obtained” through the use of “agro-power.” Rush reported that Robinson told him: “The Soviets are not anxious to sell us oil in the first place, since they already have export commitments. They are even less anxious to sell oil at a highly concessional price, because they can readily obtain world market prices from other countries.” (Telegram 26519 from Paris, October 12; ibid., D750355–0268) At one point, the U.S. position included a “demand” for a “straight 15 percent discount” on Soviet oil. (Telegram 26555 from Paris, October 14; ibid., P840083–0974) According to French sources, Robinson’s Soviet counterpart in the negotiations had been “visibly disturbed” by this request. (Telegram 15052 from Moscow, October 20; ibid., D750364–0388) Consequently, Robinson proposed returning to an earlier approach, using a different and less open price discount, which had previously produced tentative acceptance from the Soviet side. (Telegram 26555 from Paris, October 14; ibid.)
  4. The letter of intent provided that: 1) the Soviet Union would offer to sell 10 million metric tons of crude oil and petroleum products annually to the United States; 2) the U.S. Government could purchase the oil for its own use or U.S. firms could purchase it; 3) 70 percent of what the Soviet Union sold would be crude, and the rest would be products; 4) some portion of the crude or products would be shipped to the United States, “partly in tankers used to transport grain from the United States to the Soviet Union”; 5) some portion of the crude or products could be delivered to “Europe or other agreed marketing areas”; and 6) the prices of crude and products would be “mutually agreed at a level which will assure the interests of both the Government of the United States and the Government of the Union of Soviet Socialist Republics.” (Telegram 15048 from Moscow, October 20; ibid., D750363–0939)
  5. See Document 85.
  6. Telegram 15047 from Moscow, October 20. (National Archives, RG 59, Central Foreign Policy Files, D750368–0761)
  7. October 23. See Document 87.