4. Memorandum From the Executive Secretary of the Department of State
(Eliot) to the
President’s Assistant for National Security Affairs (Kissinger), Washington, March
14, 1973.1
2
Washington, March 14, 1973.
DEPARTMENT OF STATE
WASHINGTON, D.C. 20520
March 14, 1973
- MEMORANDUM FOR MR. HENRY A.
KISSINGER
- THE WHITE HOUSE
Subject:
-
NSSM 163/CIEPSM 24: Economic Policies for the Eastern European
Countries
Transmitted herewith in response to your request of March 7 to Under
Secretary Casey following the Senior Review Group meeting on NSSM 163/CIEPSM 24, is a brief outline on a country-by-country basis
of actions we propose to take in the coming year with regard to the
eight countries covered by that study. The outline is based on the
assumption that movement toward economic normalization with these
countries is desirable for trade promotion reasons but that it also
affords us an opportunity to press for a better atmosphere of overall
relations as well as for the completion of unfinished bilateral business
in the financial, cultural, and consular areas.
The actions proposed in the outline are based on the understanding
reached at the meeting that the principal negotiating problems ahead of
us this year concern countries with which we have diplomatic relations
but with which we have not yet normalized economic relations to the
extent of extending most-favored-nation treatment (Romania, Hungary,
Czechoslovakia, and Bulgaria). They are also based on the judgement that
we should not enter into negotiation of issues which would be included
in commercial agreements involving the extension of most-favored-nation
treatment until Congressional consideration of the trade bill is far
enough along so that it is evident that the bill will pass this session.
It therefore accepts as a working hypothesis the likelihood that
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we will not be able to start our
first negotiation of a commercial agreement until fall.
The outline also reflects the agreement reached at the meeting that
negotiation of commercial agreements should be done in sequence starting
with Romania and following next with Hungary, Czechoslovakia and
Bulgaria. The precise timing would, of course, also depend on the
progress registered on outstanding problems and in the atmosphere of
relations.
As will be seen from the attached outline, the initiation of negotiation
on cultural and scientific exchanges is the next step we plan to take
with Hungary, Czechoslovakia and Bulgaria. Pursuit of such negotiations
with Czechoslovakia and Bulgaria has been postponed over the last few
months pending a review of NSSM
163/CIEPSM 24 but we now feel, in
light of the March 7 meeting, that there is general agreement we should
pursue such negotiations, and indicate to these governments that a rapid
and successful conclusion will pave the way for negotiations looking
towards economic normalization. Inasmuch as we have already
satisfactorily concluded a cultural and scientific exchanges agreement
with Romania, we plan to proceed next with Hungary, with which we have
already exchanged drafts, and then propose drafts to Czechoslovakia and
Bulgaria as the current consular convention negotiations with these two
countries enter their final phase. We expect that, while we should be
able to initial exchanges agreements with these countries, they may
insist on delaying signature until MFN
is assured.
With all four countries, we plan to continue to intensify our
recommendations that they promptly initiate or conclude negotiations
with the Foreign Bondholders Protective Council looking toward the
settlement of defaulted pre-war bonds. With Czechoslovakia, we plan to
initiate negotiations of US claims
against Czechoslovakia for nationalized property and the return of
Czechoslovak gold. This proposal will be forwarded for NSC review in the near future.
We plan to cite our improving relations with Poland
[Page 3]
and Hungary as appropriate in our discussions
with representatives of these two countries of maters within the purview
of ICCS in Vietnam. Assistant Secretary
Green called in the Ambassadors of Poland and Hungary last week to urge
their governments to press the DRV and
the PRG to cease violations of the VN
agreement. He stated that their efforts as ICCS members would have a bearing on the improvement of our
bilateral relations with those two countries.
Inasmuch as the March 7 Senior Review Group meeting agreed that
negotiation of substance with the GDR
and Albania was still somewhat removed and that there are no major
outstanding issues for phased negotiation with Poland and Yugoslavia,
these four countries are dealt with in the attachment in a somewhat
different manner than Romania, Hungary, Czechoslovakia and Bulgaria.
Instead of a linked sequence of issues for negotiation, a simple listing
of the principal issues which remain to be resolved is presented but
with no indication of time phase or linkage.
[signed]
Theodore L. Eliot, Jr.
Executive Secretary
Attachment:
Outline of Proposed Actions
[Page 4]
Proposed Actions and Negotiations in US Relations with the Countries of Eastern Europe
during 1973 and 1974
Romania
- 1.
- Continue to urge the Romanian Government to initiate
negotiations with the Foreign Bondholders Protective Council
regarding 15.5 million worthy of defaulted pre-war bonds.
- 2.
- Continue to urge the Romanian Government to adopt a more
forthcoming policy towards dual nationals and Romanian citizens
who wish to leave Romania in order to rejoin relatives residing
in the US.
- 3.
- Continue to develop periodic cabinet-level and other high
level visits in both directions, involving consultations not
only on bilateral issues but also on such current international
issues as CSCE, MDFR, Middle
East problems, and general international initiatives such as
those we undertake in the UN.
- 4.
- Initiate negotiations of commercial issues which would be
involved in a commercial agreement including the extension of
MFN (to be undertaken when
passage of trade legislation including MFN authority appears assured, probably not before
fall).
- 5.
- Extend MFN soon after the
passage of relevant trade legislation provided satisfactory
achievement has been registered in the above areas.
Hungary
- 1.
- Pursue the negotiation of a cultural and scientific exchanges
agreement based on the US draft
(July 1972) and the Hungarian drafts (March 1973) with a view to
initialing or signing such an agreement as soon as possible -
preferably prior to the conclusion of commercial
negotiations.
- 2.
- Encourage the Hungarian Government to pursue
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the negotiations that it has started
with the Foreign Bondholders Protective Council with a view to
obtaining an agreement (although not necessarily the initiation
of payment) prior to or in conjunction with the extension of
MFN.
- 3.
- Continue to urge the Hungarian Government to play an
appropriate role in ICCS
relating this as a factor in the improvement of US-Hungarian relations.
- 4.
- Continue to encourage a more moderate and accurate treatment
of US developments and foreign
policy in Hungarian media and official pronouncements.
- 5.
- Continue to press the Hungarian-Government to review the
relatively few inconveniences (entry procedures, real estate
transfer, etc.) which, hinder normal Embassy operations in
Budapest.
- 6.
- Initiate negotiation of commercial issues with Hungary as soon
as a comparable negotiation with Romania is completed or well
advanced.
- 7.
- Extend MFN after the
conclusion of a. satisfactory commercial agreement if
satisfactory achievement in the preceding areas has been
registered.
Czechoslovakia
- 1.
- Expedite the conclusion of the Consular Convention now under
negotiation.
- 2.
- Initiate negotiations for a cultural and scientific exchanges
agreement looking toward the initialing or possibly signature of
such an agreement prior to or simultaneous with the conclusion
of commercial negotiations.
- 3.
- Continue to encourage a more moderate and accurate treatment
of US developments and foreign
policy in Czechoslovak media and official pronouncements and a
more forthcoming Czechoslovak policy on reuniting of families
through emigration.
- 4.
- Continue to encourage the Czechoslovak Government to initiate
discussions with the Foreign Bondholders Protective Council on
$2.7 million worth of defaulted bonds (although it is unlikely
that the Czechoslovaks will do so until the financial
negotiations described in paragraph 5 are proceeding in a
promising manner).
- 5.
- Initiate negotiations on the package of financial issues
including claims ($113 million), blocked accounts (on both
sides), and the return of 18.3 tons of Czechoslovak gold now
being held by a US-UK-France Tripartite Commission
looking towards an agreed settlement prior to or simultaneous
with the conclusion of commercial negotiations and the extension
of most-favored-nation treatment and ExIm credits.
- 6.
- Initiate negotiation of issues involving a commercial
agreement including MFN as soon
as a comparable negotiation with Hungary is completed or well
advanced.
- 7.
- Extend MFN when satisfactory
progress or achievement has been registered in the previous
categories and a satisfactory commercial agreement has been
concluded.
Bulgaria
- 1.
- Expedite the conclusion of the Consular Convention now under
negotiation.
- 2.
- Initiate negotiations for a cultural and scientific exchanges
agreement looking toward the initialing or possible signature of
such an agreement prior to or simultaneous with the conclusion
of commercial negotiations.
- 3.
- Continue to press the Bulgarian authorities to ameliorate the
difficult Embassy operating conditions (multiple-entry visas,
handling of pouches, access to Embassy premises, etc.) as a
demonstration of their sincerity in facilitating improved
relations.
- 4.
- Continue to encourage a more moderate and
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accurate treatment of US developments and foreign policy
in Bulgarian media and official pronouncements and a more
forthcoming policy on reuniting of families through
emigration.
- 5.
- Continue to encourage the Bulgarian Government to initiate
negotiations with the Foreign Bondholders Protective Council on
$6.5 million worth of pre-war defaulted bonds.
- 6.
- Initiate negotiations of issues involving a commercial
agreement including MFN as soon
as comparable negotiations with Czechoslovakia is completed or
well advanced.
- 7.
- Extend MFN when satisfactory
progress or achievement has been made on the listed issues and a
satisfactory commercial agreement has been concluded.
Poland
- 1.
- Continue to negotiate commercial issues already programmed by
the joint Polish-American Trade Commission.
- 2.
- Continue to urge the Polish Government to play an appropriate
role in ICCS relating this as a
factor in the improvement of US-Polish relations.
- 3.
- Continue to encourage a more moderate and accurate treatment
of US developments and foreign
policy in Polish media and official pronouncements and greater
facilitation of the reuniting of divided families through
emigration.
- 4.
- Continue to develop periodic cabinet-level and other high
level visits in both directions, involving consultations not
only on bilateral issues but also on such current international
issues as CSCE, MBFR, Middle East problems, and
general international initiatives such as those we undertake in
the UN. A visit to the US in the fall by the Polish leader
Gierek should be the
main feature in this process.
- 5.
- Encourage increasing financing by the Polish side in the joint
scientific research program.
Yugoslavia
- 1.
- Encourage the Yugoslavs to enter into negotiation of a civil
aviation agreement covering scheduled and charter
services.
- 2.
- Continue to encourage the development of joint Yugoslav-US scientific research but with
joint financing including a input from the Yugoslav side.
- 3.
- Continue to seek an improved consular understanding governing
notification and access in the cases of arrested dual
nationals.
- 4.
- Continue to endeavor to improve relations with the Yugoslav
military including certain military sales.
- 5.
- Continue the programming of cabinet-level visits in both
directions focusing on visits by the Secretary of Commerce, the
Secretary of Treasury and the Secretary of Defense to Yugoslavia
and a return visit late in 1973 or early 1974 by the Yugoslavs
Prime Minister with a view to continuing consultations on
bilateral issues and on international issues such as CSCE, MBFR, Middle East, international terrorism, and
other issues of worldwide relevance.
GDR
The GDR will be considered separately
at an appropriate time in accordance with the sense of the
meeting.
Albania
1. Continue to give occasional public indications of US readiness to negotiate resumption of
diplomatic relations.
