Foreign Relations of the United States, 1977–1980, Volume VI, Soviet Union

141. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter¹

Washington, August 29, 1978

SUBJECT

• The Dresser Case

The Dresser case has again erupted into controversy,² and is becoming politically messy. Following Jim Schlesinger’s reclama,³ it was agreed by all the parties that we would obtain an assessment from the Defense Science Board⁴ in order to provide a solid basis either for a negative or a positive decision. My hope had been that an authoritative DSB assessment would permit us to reach a unanimous and final decision, thus putting the matter to rest without your involvement.

However, though the State/Commerce decision was clearly hasty, both agencies are unwilling to reconsider their positions in spite of the clear-cut character of the DSB assessment, and are insisting that you now make the final decision.

The principal conclusions of the DSB report are as follows:

1. Deep-well drilling technology is a critical technology, which is wholly concentrated in the U.S.⁵

2. Rock drill bit manufacture is high volume and its supporting design and application technology are critical technologies. These technologies are concentrated in the U.S.

3. Electron beam welding has military significance when computer controlled:

It is easily diverted

It is not foreign-sourced; the numerical control technology is licensed from U.S.

4. Tungsten carbide has military significance:

It is easily diverted

It is not foreign-sourced, at this scale of manufacture.

With regard to substance, I am quite impressed by these three paragraphs from the letter of transmittal by J. Fred Bucy (president of Texas Instruments and a member of the DSB):

“My conclusions are that this technology is very significant to national security in the broadest terms. It is critical to significant development of major energy resources throughout the world in the 1980’s.

“There must be a few times within a decade that a subtle decision can change the course of history. My sincere belief is that a decision regarding the export of a turnkey factory for the manufacturing of drill bits for the exploration of oil is one of those.

“This transfer of technology emphasizes that the whole is greater than the sum of the parts: that each individual piece may be all right, but when put together, the whole equals something that is very significant.”

To ignore the DSB assessment and proceed as if nothing has happened would be to play into Senator Jackson’s hands,⁶ in addition to perhaps generally hurting our national security.

However, to revoke the licenses would be preemptory and would now send an excessively negative signal to the Soviet Union. Therefore, on balance I recommend a suspension on both national security and foreign policy grounds. Some might say that this is another zigzag; but the DSB report represents a new factor and a review will preempt pressure for revocation on national security grounds.

Moreover, there are also broader foreign policy considerations involved in the transfer of oil technology to the Soviet Union. In essence, as the DSB assessment suggests, “it would allow the Soviets to enter the natural oil and gas fields throughout the world with advanced drilling technical competence, presenting increased opportunities for them to exert their policy influence.”

I attach a decision memorandum, in which the positions of the different agencies are stated in their own words.

Before you make your final decision, you may wish to check with Frank Moore and Ham Jordan,⁷ because I believe that this issue is going to become increasingly sensitive domestically. Moreover, I would recommend a prompt decision; the press is already entering into the fray, stimulating competitive and increasingly damaging leaks, and there are pressures for the release of the DSB report (which is unclassified).

Attachments: Decision Memorandum

Tab A: DSB Report

Tab B: New Letter from Senator Jackson

Tab C: Proposed PRM⁸

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Subject Chron File, Box 89, Economics/International: 8–12/78. Secret. In the upper right-hand corner, Carter initialed the memorandum and wrote, “Jody [Powell] is preparing statement.”
2. In August, Kreps approved the $140 million drill bit deal with the Soviets, unbeknownst to Brzezinski who read of the approval in the paper. Schlesinger opposed the technology deal, believing that national security would be compromised. Brzezinski questioned whether it was still appropriate to continue with the deal. See Brzezinski, Power and Principle, pp. 322–325.
3. Not found.
4. Not found.
5. Carter wrote in the right-hand margin, “We knew this.”
6. Jackson wanted to prevent the deal by launching an investigation into the military and political ramifications of providing the Soviet Union with the technology. See Rowland Evans and Robert Novak, “Confusing Signals on Trade with Russia,” The Washington Post, August 16, 1978, p. A15.
7. Frank Moore, Assistant to the President for Congressional Liaison; Hamilton Jordan, White House Chief of Staff.
8. None of the attachments was found.