Foreign Relations of the United States, 1969–1976, Volume E–11, Part 2, Documents on South America, 1973–1976

63. Memorandum From the President’s Special Assistant for National Security Affairs (Kissinger) to President Nixon¹

Washington, May 30, 1973.

SUBJECT

• Bolivian President Banzer’s and Prime Minister Thanom’s Letters Re Tin Sales

Bolivian President Banzer and Thai Prime Minister Thanom have written you letters (Tab C and Tab D respectively) urging restraint in sales of tin from the stockpile under your recently announced excess stockpile disposal program. I have prepared replies for your signature to General Banzer (Tab A) and Prime Minister Thanom (Tab B) designed to allay their concerns about potential disruption to their countries’ economies.

Background

In March you made a series of decisions aimed at reducing the nearly $6 billion worth of materials in the stockpile that are excess to our national security requirements. One of your decisions was to lift your ban on sales of excess tin and to begin release of tin from the stockpile at a rate that would stabilize the tin price at last fall’s level plus an appropriate allowance for dollar devaluations. At that time it was estimated that a disposal rate of 5–10,000 tons/year would be required to accomplish your objective. The Department of State undertook during April formal consultations with major foreign producers on disposal of tin and 28 other excess stockpile materials. The tin disposal rate that State put forward during the consultations with the producers was 15,000 tons/year; purposely set high to give you flexibility.

The announcement of your removal of the tin sales ban triggered the expected responses from the major tin producers. General Banzer and Prime Minister Thanom with their two letters have appealed directly to you for relief from the economic harm to their countries that they allege will ensue from the tin sales.

Secretary Shultz, Fred Malek, and the General Services Administration have recommended that we proceed now with a disposal rate for tin of 10,000 tons/year. Secretary Rogers in his memorandum (Tab E) to you forwarding General Banzer’s letter recommends 9,000 tons/year. There is no evidence available that either the 9 or 10,000 ton rate would have a serious adverse impact on the Bolivian or Thai economies.

Nevertheless, to alleviate General Banzer’s and Prime Minister Thanom’s concerns, the enclosed replies state that you have reduced the rate from the 15,000 tons that was discussed with them earlier and instead are directing the disposal of 5,000 tons during the first six months of FY 74 (which of course is a rate of 10,000 tons/year). In addition it promises a review in a few months of the impact of tin sales in order to reduce the rate if warranted by serious market disruptions. If prices are not affected by our sales, the disposal rate could be increased at that point.

In view of your desire to expedite sales of the stockpile materials, Secretary Shultz and I are directing GSA and the Department of State to submit by November 15 an assessment of the impact of the sales together with proposals for changes in the rates where appropriate. If sales fail to affect prices, rates can be increased. If our foreign policy objectives are affected, you may wish to slow sales.

Recommendation

I recommend that you sign the letters to General Banzer (Tab A) and Prime Minister Thanom (Tab B) announcing a 5,000 ton rate for six months with subsequent rate review.

George Shultz and Fred Malek concur.

1. Summary: Kissinger recommended that Nixon sign letters to Banzer and Prime Minister Thanom Kittikachorn of Thailand announcing stockpile disposal of 5,000 tons of tin during the first 6 months of FY 1974.

   Source: National Archives, Nixon Presidential Materials, NSC Files, Box 749, Presidential Correspondence, President Banzer, Bolivia, 1971–1974. Confidential. A stamped note on the memorandum indicates the President saw it. Attached at Tab A is an undated draft of a letter from Nixon to Banzer, not published. The final version of the letter, dated June 4, is ibid. Tab C, Banzer’s April 13 letter to Nixon, is Document 61. Tabs B, D, and E are attached but not published.