Office of the Historian

275. Summary of Conclusions of a Special Coordinating Committee Meeting1

Washington, May 1, 1980, 3:10–4 p.m.

SUBJECT

  • Summary of Conclusions: SCC Meeting on Soviet Grain Policy

PARTICIPANTS

  • State
  • Acting Secretary Warren Christopher
  • Richard Cooper, Under Secretary for Economic Affairs
  • Defense
  • Ellen Frost, Deputy Assistant Secretary for International Economic & Technological Affairs
  • Treasury
  • Robert Carswell, Deputy Secretary
  • Herbert Horowitz, Director, Office of East-West Economic Policy
  • Agriculture
  • Jim Williams, Deputy Secretary
  • Dale Hathaway, Under Secretary for International Affairs and Commodity Programs
  • Commerce
  • The Secretary Philip Klutznick
  • Robert Herzstein, Under Secretary for International Trade
  • USTR
  • Ambassador Robert Hormats, Deputy USTR
  • JSC
  • Brig. Gen. David Palmer
  • Lt. Col. Don Miller
  • DCI
  • Douglas Diamond, Chief USSR Eastern Europe Division, Office of Economic Research
  • OMB
  • John White, Deputy Director
  • Kitty Schirmer, Associate Director
  • Vice President’s Office
  • Gail Harrison
  • White House
  • Ambassador Henry Owen
  • Lloyd Cutler
  • NSC
  • Marshall Brement
  • Timothy Deal

The SCC reviewed a State/USDA options paper2 regarding US policy on grain sales to the USSR. The paper sets forth three options: (1) Continue the present policy. The US would sell the Soviets 8 million metric tons (MMT) of grain, as required by the bilateral grain agreement, and would ask other exporting countries to limit shipments to [Page 799] “normal and traditional” levels. (2) Seek agreement to a more restrictive program. We would hold sales to 8MMT and ask other exporters to reduce shipments below 1979/80 levels. (3) Relax all restrictions and reestablish a competitive export posture. (C)

The group agreed that the grain suspension had been effective this year. The Soviets would obtain only about 7 MMT of the 17 MMT we had denied them. Except for Argentina, the other exporting countries had been fairly cooperative in limiting shipments. But the overall commitment was imprecise, and some countries (e.g. Canada) are pushing the upper limit of “traditional” sales. Continuation of the present policy into 1980/81 (option 1) was undesirable because the American farmer would continue to bear most of the economic burden while other countries increased their share of the Soviet market. Option 3 would require the US to retreat from the decisions announced in January and was undesirable from a foreign policy standpoint. Option 2 seemed the preferable course if: (a) it would have a significant impact on the Soviet economy; and (b) other exporters would cooperate. (C)

On the first point, assuming a Soviet crop of 215 MMT (trend estimate), option 2 would impose further pressures on the Soviet livestock sector and prevent the rebuilding of stocks. If their crop is much higher than 215 MMT, there is little we could do unilaterally or jointly to punish the Soviets. They could rebuild stocks and increase livestock herds. (C)

There was detailed discussion about the prospects for gaining exporter cooperation. It was agreed that Argentina is the key. If Argentina continues massive grain shipments to the USSR, it would be difficult to convince others to hold the line, much less cut back exports. Argentina has just concluded a long term agreement with the Soviets, calling for minimum grain shipments of 5MMT annually. We might be able to convince Argentina to hold to that level. It was noted that we have little bargaining leverage with Argentina to go below this level unless we are willing to back away from our policies on human rights, nuclear nonproliferation, etc. If we don’t go below this level, other exporters would object, since 5MMT is 180% of average Argentine exports to the USSR in recent years. Canada and Australia both have large unsold stocks from this year’s crop. Canada wants our approval for the export of 1979/80 grain to the USSR. Canadian farmers claim they have borne the main burden of the embargo—just as ours do. Conceivably, Canada might conclude a long term agreement with the USSR. (C)

The group agreed that the degree of cooperation we receive will depend in large part on the size of the Soviet harvest. If their crop is good, there will be a competitive scramble for a limited market, and any agreement will fail. We will not have a good estimate of the crop until July. (C)

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Even before the Soviet crop is known, other countries might agree to establish an overall export target, say, of 30 MMT which might include individual country ceilings. This would not lead to signifi-cant cutbacks, but it would hold the line at present levels or slightly below. (C)

The SCC agreed on the following actions: (a) We will seek Argentine agreement to a cutback, or at least a commitment not to exceed the 5MMT annual limit, in discussions with Argentine Economic Minister Martinez de Hoy,3 who will be here next week. The discussions should take place at the Secretary of State level. (b) Dale Hathaway will also discuss the possibility of numerical targets with the Canadians in meetings scheduled early next week. (c) We will then review the situation at a subsequent SCC meeting and decide whether, and if so how, to approach other exporters. (C)

On other matters, USDA will provide the SCC two memos:4 the first will set forth the considerations bearing on whether to proceed with technical level consultations with the USSR in May, as required by the grain agreement. The second will consider the question of sales to the USSR of non-US grain by American grain firms. (C)

  1. Source: Carter Library, Brzezinski Donated Material, Subject File, Box 33, Meetings—SCC 308: 5/1/80. Confidential. The meeting took place in the White House Situation Room. The minutes of this meeting are in Carter Library, National Security Affairs, Staff Material, Office, Meetings File, Box 21, SCC Meeting: #308 Held 5/1/80, 4–5/80.↩
  2. Deal sent the April 30 paper “Options for Future International Cooperation to Restrict Soviet Grain Imports” under a May 1 memorandum to Brzezinski and Henry Owen. (Carter Library, National Security Affairs, Staff Material, International Economics, Tim Deal File, Box 13, USSR: Grain: 5/80)↩
  3. José Alfredo Martínez de Hoz.↩
  4. Not found.↩