266. Memorandum From Secretary of Defense Laird to President Nixon 1

SUBJECT

  • Relations with Portugal

I have noted with some apprehension a recent trend in our relations with Portugal which, if not quickly reversed, may jeopardize our continued access to important facilities in the Azores. I share the evaluation of the Joint Chiefs of Staff that for the foreseeable future these facilities will continue to be of major strategic value to the US. In my view, these facilities are taking on added importance as the Soviets increase their naval activities in the Atlantic. [5 lines not declassified]

Two problems in particular are of present concern. The first is the US package for use in the Azores discussions. I strongly endorse Secretary Rogers’ recommendation that you authorize him to offer a PL–480 program of $5 million this fiscal year, $10 million in FY 72, and $15 million in FY 73. The Portuguese have indicated a PL–480 program is their preferred quid pro quo; the amounts involved are commensurate with our stake in the Azores; the non-military character of such assistance avoids many of the political complications which direct military aid would arouse. I fear that if the US does not develop a more satisfactory quid pro quo before we resume discussions, the ensuing impasse would seriously harm our interests in the Azores and would weaken Portugal’s ties to NATO.

Secondly, I am much concerned over the Department of State’s opposition to EXIM Bank financing to allow General Electric to sell important components for the Cabora Bassa hydroelectric project in Mozambique. Any final decisions against this undertaking could only be regarded in Lisbon as an unfriendly response to a project of great im[Page 825]portance to Portugal, and would be taken as a reversal of our 1968 decision to permit up to $55 million in EXIM Bank financing. Coming on top of present difficulties in the Azores talks, such a position on our part would only strengthen the hand of those within the Portuguese Government who question the utility of cooperation with the US. The implications for our efforts to reach a satisfactory understanding on the Azores are obvious. Beyond this, we would in effect be overriding the interests of an established NATO ally in a questionable attempt to gain favor with those who are not likely to change their attitude towards us no matter what we do—an approach hardly calculated to strengthen the Alliance. I would therefore also recommend that, in addition to increasing the PL–480 program, the EXIM Bank be authorized to support General Electric’s arrangements to sell electrical equipment for the Cabora Bassa project.

I am sending copies of this memorandum to Secretaries Rogers, Hardin, Connally and Stans for their information.

Mel Laird
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 701, Country Files—Europe, Portugal, Vol. I. Confidential. Initialed by Kissinger.