325. Memorandum From the Executive Secretary of the Department of
State (Tarnoff) to the
President’s Assistant for National Security Affairs (Brzezinski)1
Washington, December 3, 1977
SUBJECT
- Proposed DOE–SASOL
Agreement
The President has requested the Department’s recommendations regarding a
Department of Energy Proposal to sign an agreement with a South African
Government-controlled company to purchase coal liquefaction
technology.2 The attached paper has been prepared
in response to the President’s request.
Attachment
Paper Prepared in the Department of
State3
Proposed DOE–SASOL
Agreement
Background
The Department of Energy (DOE) has
been seeking for the past year Department of State clearance for its
proposal to negotiate and sign a contract with a South African
Government-controlled company (SASOL) to purchase coal liquefaction technology for an
asking price of about $1.1 million.
The contract negotiations and implementation of the contract will
require an ongoing DOE–SASOL
relationship of about 18 months. While the bulk of the relationship
on the US side will actually be handled by a DOE contractor (the Fluor
Corporation), there will be one 7–10 day visit by two DOE representatives to South Africa
and monitoring and progress meetings every four to six weeks, which
could be held in the US or in a third country. At the present time
the Fluor
[Page 987]
Corporation is
serving as overall contractor for the SASOL II plant, which when completed in 1982 will
greatly expand South Africa’s coal liquefaction capacity.
Discussion
The Department of Energy believes that the proposed contract (a) will
support the President’s energy program and help to accelerate the
reduction of our reliance on imported oil; (b) will provide
invaluable data and guidance to the US synthetic fuel program which
cannot be obtained by any other means; and (c) could reduce the time
for commercialization of DOE’s new
coal liquefaction technologies by three to five years.
The Department of State believes that the benefits of the proposed
contract to the US energy program must be weighed against the
political costs of entering into an agreement with the South African
Government at this very sensitive period in our bilateral relations.
This contract would result in the creation of a new US
Government-South African Government relationship at a time when the
Administration is considering the termination of certain other
relationships. We believe that this would be the wrong signal to
send to the South African Government in the aftermath of the
multilateral and individual actions which we have taken recently to
express our concern over the October 19 bannings and arrests in
South Africa. It is very likely that such a contract would become
public knowledge; indeed, the South African Government might well
publicize this development to demonstrate the continuing importance
of South Africa to the United States. This relationship would be
criticized as contrary to our present South African policy and would
very likely have an adverse impact upon our relations with some
African countries.
Recommendation
The Department of State strongly recommends that for overriding
political reasons DOE not negotiate
and sign the proposed contract with SASOL at this time. The Department of State proposes to
review its recommendation before the end of January 1978 in the
light of US-South African relations at that time and forward its
views to the President.4
DOE has agreed to defer any further
action with respect to this issue until the end of January 1978.
