190. Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Ford 1
SUBJECT
- U. S. Military Sales to Chile
Section 25 of the Foreign Assistance Act of 1974 denies the use of funds for military assistance to Chile in FY 1975. It also defines military assistance to include “sales, credits and guaranties,” thus raising the question of whether FMS cash sales may be made. Congressional opponents of U.S. cooperation with the present Government of Chile (including Senator Kennedy, the sponsor of Section 25) may take the position that this section was intended to cut off cash sales as well as other forms of military assistance. The Department of State has construed the statute as permitting cash sales (Tab B). The Department of Defense does not concur in this interpretation (Tab C).
Section 25 of the FAA states:
“Notwithstanding any other provision of law, the total amount of assistance for Chile under the Foreign Assistance Act of 1961, and the Foreign Military Sales Act during Fiscal Year 1975, may not exceed dollars 25,000,000, none of which may be made available for the purpose of providing military assistance (including security supporting assistance, sales, credit sales, or guarantees, or the furnishing by any means of excess defense articles or items from stockpiles of the Department of Defense).”
There is some doubt whether the foregoing language is meant to be a prohibition on the use of funds for military “assistance” (defined so as to include cash sales), or a substantive prohibition on such “assistance” [Page 512] altogether. Under the latter interpretation (Defense’s position) no new contracts could be signed and contracts already entered into in FY 1975 would have to be cancelled or implemented but without assurance of delivery, i.e., contractual arrangements already negotiated would be continued to retain production priority standing and cost quotations, but no deliveries would be made prior to the lifting of the Congressional restriction.
The Chileans are particularly concerned by two amendments signed in FY 1975 to contracts which were signed in FY 1974. These are amendments, signed on November 16 and December 23, to the FMS sales contract for eighteen F-5E aircraft purchased on May 15, 1974. The first amendment would change three of the eighteen aircraft from the fighter to the trainer model; the second would add on the sale of the Sidewinder missile, the aircraft’s principal armament. The Chileans assumed that standard weaponry for the aircraft they had purchased would be made available. It was not included in the original contract; hence the amendment of December 23. The Chileans are also greatly concerned by a sales contract signed October 24, 1974, for the sale of spare parts required to keep operational a number of naval vessels purchased from the U.S., including two surplus destroyers transferred on January 8, 1974.
The Chileans contend that it makes no sense to deny essential items without which equipment already purchased is of little or no use. They argue that these post-July 1 amendments are not contracts for new items but add-ons to the original contracts, and that in any case the FAA should correctly be interpreted to permit FMS cash purchases. They do not understand what they regard as an unnecessary reluctance on our part to interpret and implement the legislation in a manner as favorable as possible to Chile’s needs.
The legal positions of the two Departments are summarized below:
Department of State: Section 25 of the Foreign Assistance Act of 1974 is an ambiguous provision of law. This ambiguity results from the fact that the statute is a combination of two amendments to the bill. The legislative history reveals that both amendments had their origin in efforts directed at limiting or prohibiting the use of appropriated funds for assistance to Chile in FY 1975. Further, although some inconsistent remarks were made in the Senate debate, the predominant view expressed in the legislative history, and particularly in the highly authoritative conference report, reflecting the intent of representatives of both Houses, is that Section 25 was intended to bar the use of appropriated funds for military assistance and the financing of military sales to Chile. Therefore, on the basis of the statutory language and the intent of Congress disclosed by the legislative history, the Department of State concludes that Section 25 does not constitute a legal bar to the execution or performance of cash sales contracts under the Foreign [Page 513] Military Sales Act which are not financed by U.S. credits or U.S. guaranteed loans made to the Government of Chile in prior fiscal years.
The Department of State Legal Advisor is of the opinion that unless further legislation is enacted cash sales will clearly be permissable after June 30, 1975, but believes that further legislation is likely.
Department of Defense: On its face, Section 25 (Kennedy Amendment) of the FAA expressly prohibits “sales” as well as credit sales during FY 1975. Further, the text of the Amendment is phrased in terms of a prohibition on assistance rather than the use of funds. Accordingly, there is no question of any ambiguity which might have been raised by a prohibition on the use of funds for making cash sales. The Department of Defense does not share the Department of State’s view that the word “sales” should be read out of the Kennedy Amendment and, further, that the Amendment should be construed as a prohibition on the use of funds rather than on assistance as such.
Defense does not believe the legislative history of the Amendment provides persuasive support for the State position. Senator Kennedy introduced his Amendment on the floor of the Senate on August 5, 1974. As originally introduced, the Amendment was drafted in terms of a prohibition on the obligation of funds to furnish assistance to Chile under the military assistance chapter of the Foreign Assistance Act and under the Foreign Military Sales Act.
On October 2, 1974 Senator Kennedy introduced a new Amendment on the Senate floor deleting a proposed $10 million dollar ceiling on assistance to Chile in the form of MAP, credit sales, and guaranties and substituted a complete prohibition on MAP, security supporting assistance, sales, credit sales, guaranties, and the furnishing by any means of excess defense articles or items from DOD stockpiles. In explanation of this Amendment, Senator Kennedy stated: “My amendment would halt all military assistance, including all government transfers of military equipment and assistance to Chile.”
On December 4, 1974 Senator Kennedy made a statement on the floor even stronger than the one made by him on October 2. Senator Kennedy stated:
“I want to emphasize that this Amendment prohibits all forms of military assistance including but not limited to those enumerated in the Amendment.”
Finally, the House version on which the House conferees receded also specifically suspended (as distinguished from prohibited without waiver possibility) sales as well as credit sales. The House version made an exception for MAP training in the amount of $800,000, which the House conferees also receded on. For this consideration alone, it would be incongruous to contend that the result of the Conference is to exclude FMS training cases from the scope of the Amendment.
[Page 514]Conclusion
As pointed out earlier, the immediate problem involves the conversion of eighteen F–5E aircraft to the trainer version, sale of the Sidewinder missile, and spare parts for the Chilean Navy. Both State and Defense believe that in the absence of further legislation, cash sales will be permissible after June 30, 1975. In addition, Defense believes deliveries also may be resumed on July 1, 1975 on FY 1975 sales concluded before the enactment date of the FAA of 1975. However, this position does not reflect the possibility that new legislation similar to the Kennedy Amendment could be enacted in FY 1976 with the same restrictive results. The Chileans have been waiting since December for the U.S. to resolve the legal dispute and reach a decision on these contracts. The issue could be forwarded to the Attorney General to decide but even then it could be several weeks before an opinion would be forthcoming.
White House Counsel has reviewed the issue and believes either State’s interpretation or that of Defense could be supported.
The Chileans correctly assumed that the F-5s purchased less than one year ago would be equipped with the Sidewinder missile and that spare parts required to keep their naval vessels operational would be available. I agree that it makes little sense to deny items without which previously purchased equipment is impossible of being maintained. As you know, Peru has continued to receive very substantial amounts of sophisticated military equipment from the Soviet Union. Resumption of limited FMS support at this time would be a psychological boost for the Chileans and would provide an important stabilizing factor in this volatile situation. Moreover, a new element of support for the resumption of FMS sales to Chile has been introduced by the letter from 101 Congressmen at Tab D.
It is my judgment that cash sales to Chile can be supported under the FAA and that an immediate resumption of limited FMS sales and deliveries to Chile is in the national interest.
Recommendation
That you authorize me to sign the memorandum at Tab A.
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Summary: Kissinger recommended that Ford approve the immediate resumption of limited FMS sales and deliveries to Chile.
Source: Ford Library, National Security Adviser, Presidential Country Files for Latin America, Box 3, Chile 2. Secret. Sent for action. Scowcroft initialed for Kissinger. Ford approved the recommendation. Tabs A–D are not published. Tab A is an unsigned and undated memorandum from Kissinger to Schlesinger and Ingersoll informing them of Ford’s decision to resume FMS sales and deliveries. Tab B is a March 4 memorandum from Leigh to Maw giving a legal opinion on the President’s authority to sell defense articles and services to Chile. Tab C is a March 24 memorandum from Forman to Fish outlining the legal position of the Department of Defense on military sales to Chile. Tab D is a May 15 letter from 101 Congressmen to Kissinger indicating their understanding that cash military sales to Chile would be unaffected by the legislative restrictions on military assistance. In a May 20 memorandum to Kissinger under which a draft of the May 26 memorandum was transmitted, Granger asserted that the legal positions of both the Department of State and the Department of Defense were supportable and concluded that “political considerations favor the immediate resumption of limited FMS sales and deliveries.” (Ibid.)
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