Foreign Relations of the United States, 1977–1980, Volume XX, Eastern Europe

11. Paper Prepared in the Department of State¹

Washington, undated

PRM 9—EASTERN EUROPE

The Eastern European Section of PRM/NSC 9 discussed alternative policy approaches to our goal of promoting greater internal liberalization in East European societies and enhanced East European independence from the Soviet Union. This follow-up paper examines the practical differences between the last two policy options suggested in the original study:

—Option III—Give preference to Eastern European countries that are either relatively liberal internally or relatively independent internationally, and limit our ties with those that are neither.

—Option IV—Abandon any implicit rank-ordering, and seek to expand contacts and relations across the board in Eastern Europe to the extent possible and feasible.

In sum, the practical consequences of Options III and IV would be very similar for Romania and Poland where we would continue our present forthcoming policies, and for Hungary where we would recommend return of the Crown and the seeking of MFN/credits authority under certain conditions. Both options require at least some normalization of particular aspects of our relations with Bulgaria, Czechoslovakia and the GDR before otherwise deepening bilateral relations or seeking congressional authority for MFN/credits eligibility. In general, however, Option IV is disposed to more flexibility with these three countries while Option III would require a showing of prior progress on human rights or foreign policy autonomy. The GDR is a special case under both options; resumption of diplomatic relations came so late that things began at a very low level. Option IV is inclined toward a somewhat quicker deepening of relations with the GDR following conclusion of an acceptable consular convention.

Effect on Romania, Poland and Hungary

Under either Option III or Option IV, a number of our policy lines would be the same or similar for Romania, Poland and Hungary. In particular:

Romania: We would continue to encourage Romania’s independent posture by a responsive position on Exim credits, CCC credits, disaster assistance, cooperation in space and nuclear matters, exchange of high-level visits and close consultation bilaterally and in multilateral forums.

We would continue to use the need for annual Congressional review of Romania’s MFN status—pending modification of the Jackson/Vanik amendment—to induce Romanian cooperation in allowing emigration, especially of divided family members, to the US and Israel and, because of our human rights policy, to encourage Romanian restraint in domestic human rights matters.

Poland: We would continue to support Poland’s relatively moderate position in its internal regime by extension of appropriate Exim and CCC credits, general economic cooperation, political consultations and exchange of high-level visits.

We would strengthen and heighten our insistence on better Polish performance on divided family cases, and would continue to encourage Poland to exercise the restraint it has generally shown in human rights matters.

Hungary: We would give recognition to the creditable record which Hungary has established in its treatment of its people and its domestic differentiation from the Soviet Union (greater freedom for economic enterprise, good performance on divided families, passable relations with organized religion, lesser strictures on travel, access to information and cultural pursuits).

Accordingly, after consultation with Congress and pertinent domestic interest groups, we would recommend returning the Crown of St. Stephen as a national treasure belonging to the Hungarian people. If Hungary is prepared to provide appropriate assurances regarding emigration under Jackson/Vanik, we would also recommend negotiation of a trade agreement incorporating MFN and making Hungary eligible for USG credits. If Hungary will not provide such assurances, we would then have to consider the possibility of modification or suspension of the Jackson/Vanik amendment with respect to Hungary.

Effect on Bulgaria and Czechoslovakia

Under both options—as under the provisions of NSDM 212²—several aspects of our bilateral relations with Bulgaria and Czechoslovakia would need to be nearly normalized before considering MFN and credits for each country. The following normalization steps would be envisaged:

—Bulgaria: We would encourage the Foreign Bondholders Protective Association to complete its negotiations with the Bulgarian Government on behalf of US holders of defaulted pre-war Bulgarian dollar-denominated bonds.

—Czechoslovakia: We would seek, as a matter of primary importance, to renegotiate a settlement of nationalization claims acceptable to the Congress in order to meet our responsibility to US citizen/claimants, many of whom are now advanced in years. We would complete negotiation of a cultural and scientific exchanges agreement and put into effect the consular convention which has already been negotiated.

Given these normalization steps, Bulgaria and Czechoslovakia would press for MFN and credits. However, the policy question of extending MFN/credits eligibility to Bulgaria and Czechoslovakia (or the GDR) is not expected to arise until the Jackson/Vanik amendment has been modified. This does not appear an early prospect given the present course of US-Soviet relations and attitudes on the Hill. Bulgaria and Czechoslovakia, like the Soviet Union (and the GDR), reject giving the assurances on emigration which are required by the Jackson/Vanik amendment. Modification of Jackson/Vanik may come about later in the wake of improved US-Soviet relations and practical progress on the emigration problem. In that event, the trade agreement negotiated with the Soviet Union in 1972—and providing MFN and credit eligibility for the Soviet Union—could then come into effect without further negotiation.

Under Option III, following modification or suspension of Jackson/Vanik, we would require—beyond such normalization steps as described above—some evidence that Bulgaria and Czechoslovakia (and the GDR) had made notable progress toward greater internal liberalization or greater autonomy from the Soviet Union before granting them MFN and credits. As greater autonomy is extremely unlikely in Czechoslovakia (and the GDR) where Soviet troops are present and Soviet security concerns great, or in Bulgaria which draws marked economic benefits from the Soviet connection, our decision would turn on indications of greater liberalization.

Proponents of Option III would maintain that to fail to differentiate clearly in our treatment of Eastern European countries according to the degree of repressiveness of their regimes would be inconsistent with our commitment to human rights in general and CSCE objectives in particular. It would suggest an indifference to the plight of the different peoples, which could cause us serious domestic political problems and even loss of support for continuation of the detente process. Finally, it would represent a failure on our part to utilize the benefits of improved relations with the US to encourage those regimes with better records and to inhibit those who do worse. Option III proponents would hold that withholding our cooperation could, over time, induce improved performance from the more repressive regimes along the lines of our CSCE objectives. Since it is likely that US policy can have only marginal effects on the human rights practices of such regimes, the Option III approach would at a minimum make clear our continued disapproval in the absence of such improvement.

Under Option IV, following modification or suspension of Jackson/Vanik, we would proceed without delay to negotiate trade agreements making MFN and credits available to both Bulgaria and Czechoslovakia, provided that the normalization steps noted above had been virtually completed and their behavior on human rights matters was not offensive.

Those favoring Option IV would point out that changes in the character or behavior of Communist regimes—including their behavior in human rights—are most likely to come in the context of an evolutionary process of detente rather than as a result either of US proffered cooperation (as a carrot) or of US pressure (as a stick), especially in the absence of a similar strategy on the part of our Western European allies. They would emphasize that the basic impulse for greater attention by the respective regimes to human rights comes from the indigenous populace and that the US position should play a supporting role. To make that role effective will entail steady and persistent pressure over time and, if US influence is to be effective even in a supplementary role, the US must be more engaged, more present, and more important to the regimes. It can achieve this additional involvement through expansion of cultural and scientific exchanges and other official and private exchanges, and through greater emphasis to trade promotion. In their view, an enlarged stake in the US relationship and the interplay possible with a greater US presence could act to induce greater responsiveness by the regimes to human rights concerns.

There also is a possible middle course but it would be feasible only after the problem of extending MFN credits eligibility to these countries has been overcome in the Congress and once the terms on which we are prepared to extend MFN and credits prove acceptable to the regimes in question. In particular, before granting MFN and credit eligibility, we would insist that such normalization steps as described above had been carried out; that gross violation of human rights be eliminated; and that at least some concrete progress in the human rights area be achieved. Beyond this, we would not insist on far-reaching internal liberalization before seeking MFN and credit eligibility and engaging ourselves more actively in the economic area.

For example:

—Bulgaria is a tightly controlled country with bothersome press coverage. But (largely because of its tight control), it has no visible dissident problem. And it has been and is being reasonably responsive on divided families. Thus, absent Jackson/Vanik, we might consider MFN/credits for Bulgaria.

—Czechoslovakia—Few would hold that the US should be prepared to grant Czechoslovakia MFN/credits under current conditions: active repression of human rights advocates, restrictive divided families policies, attempted precensorship of foreign journalists, and sharp and intensive press attacks on the US human rights position.

The German Democratic Republic as a Special Case

The GDR is unique in that it is not a traditional national state, as are the other members of the Warsaw Pact, but an outgrowth of the Soviet desire to maintain direct control over a substantial portion of the former German Reich. Further aspects of the GDR’s special position in Europe are the fact that Berlin is located in the center of its territory, that the GDR exerts a negative influence on the situation in West Berlin, and that the GDR is a significant industrial and military power whose potential is of great importance to the Soviets and the other Warsaw Pact allies.

US/GDR diplomatic relations were established in 1974 as part of a package of East-West agreements affecting German matters and general European security. In agreeing to establish relations, the US deferred its prior demands for an acceptable consular convention and for the satisfactory resolution of claims emanating from World War II.

When we established relations, we stipulated three objectives: (a) to resolve outstanding humanitarian cases; (b) to conclude a satisfactory consular convention; and (c) to obtain a claims settlement, including GDR recognition of Jewish claims. Given the complexity of claims issues and the fact that it is US registration procedures which are delaying commencement of talks, we have not made a claims settlement a condition for specific current movement in relations.

Given the Belgrade CSCE meeting and the keen East German interest in developing its new relationship with the US, especially in the trade area, the GDR recently has undertaken to clear up all outstanding US humanitarian cases. However, the consular agreement, which otherwise is virtually completed, has been tied up over GDR insistence that the text include specific definition of East German nationality.

Both Options III and IV would still require completion of a consular agreement before more significant steps could be taken with the GDR. As with Bulgaria and Czechoslovakia, we would require that gross violations of human rights be eliminated and that at least some concrete progress be achieved in the human rights area. Both options also would exclude MFN/credits eligibility for the GDR prior to conclusion of a satisfactory consular convention.

The difference between the two options is that Option III would also require progress in the claims talks as a condition for further movement, while Option IV would be prepared to move toward progress in other areas before movement on a claims settlement, the completion of which is liable to take years.

Proponents of Option III acknowledge the political and industrial importance of the GDR and share the Option IV wish for the gradual development of more normal relations with the East German government and people. Incremental movement to that end would be acceptable. But they believe that it would be unwise to move to structure or formalize our cultural, scientific or commercial relations, or to engage in political-level visits, before the consular convention were concluded and until progress also were made toward an acceptable claims agreement. This is because of our previous deferral of the consular and claims issues and the domestic political ramifications of the claims issue.

Implementation of Option IV with the GDR would be based on three assumptions: (a) that both because of its strategic and its industrial potential, the GDR is a nation which deserves significant American attention; (b) that the East German desire for recognition and the need for increased trade with the West provide us with a certain amount of leverage; and (c) perhaps most importantly, that with a regime as suspicious and frightened as that of the GDR, taking the initiative to establish a broader basis from which to conduct relations will over the long run pay more dividends than a policy of demanding prior concessions for each forward step. Option IV, while also conditioning further programs in conclusion of a consular convention would represent a somewhat more flexible strategy, accepting on a limited basis some of the more “normal” aspects of relations such as increased cultural exchanges, reasonably normal commercial relations and political level visits without expecting major concessions from the GDR first. Humanitarian concerns and developments in Berlin would of course continue to play a role in determining the pace of the development of relations.

Option IV would thus not mean any major steps forward with the GDR nor connote any effort by the United States to replace Soviet influence or destabilize the GDR. It would represent, in view of the GDR’s strategic importance to us, an effort to move the bilateral relationship along faster so as to: provide the basis for a long-term US presence in the GDR; develop a better understanding of it; and, by giving the GDR’s technologically based industry some stake in the Western market, give the GDR an additional stake in not raising the temperature in Berlin.

Implications for trade policy

Option III advocates would stress the leverage on human rights issues that resides in the decision to expand Eastern European trade. They would observe that Eastern European regimes place the highest value on increased economic efficiency and improved living standards as virtual requisites for relatively stable political situations. These regimes and their peoples see expanded economic relations with the West, including the US, as a major avenue toward those priority goals. But, from the US side, it is pointed out, Eastern European trade is unlikely to be a significant factor in US foreign trade. The GDR is the only country that now has significant market possibilities in the West for its engineering and high technology exports. Consequently, before opening the doors to expanded trade via MFN/credits, the US should exert the leverage involved to require greater liberalization by the more restrictive Eastern European regimes. The US can afford to wait.

Option IV adherents observe that with the more massive imports of oil the US faces a mounting and continuing problem in achieving a reasonable balance in its foreign trade. While not a large item in US foreign trade, Eastern European trade can make some contribution to the balance of payments (and US employment), as our trade balance with Eastern Europe has been and is likely to continue to be favorable. Expanded trade also creates a tangible and increasing stake in continued good relations with the US and develops broadened contacts and points of influence which, over time, will make these countries more conscious of and attentive to our interests, including our human rights concerns.

This follow-up paper has taken account of the problem of Eastern European indebtedness discussed in the original PRM–9 study. Nonetheless, we believe the problem of Eastern European indebtedness may have increasingly important implications, both for our Eastern European policy, and, more generally, for East-West relations. Accordingly, we recommend that the NSC task State, CIA, Treasury and other pertinent agencies to do a further follow-up study on the Eastern European economic situation in general and the indebtedness problem in particular. The study should take account of possible Soviet policy options; appropriate consultations with our allies in the OECD and other Western institutions; and our policy in the IMF. It should set forth appropriate policy recommendations.

Implications for US-Soviet relations

Conduct of our policy toward Eastern European countries bears on our Soviet relations in (a) its effects on the US-Soviet bilateral relationship and (b) its effects on the Soviet position in Eastern Europe.

The Soviets are of two minds about US relations with Eastern European countries. They are apprehensive about the expansion of the US presence in Eastern Europe for two reasons: because it could tend to dilute somewhat Soviet influence and control, which are priority Soviet foreign policy objectives; and because it could tend to deflect the political and economic development of the Eastern European countries in a non-Soviet direction with long-range implications for the Soviet position and security interests in the region. While these prospects are hardly imminent, the Soviets still fear that the US (and Western) influence could contribute to destabilization of some or all of the region, facing the Kremlin with costly policy choices in the European area and in the world at large. On the other hand, Moscow also recognizes that the potential for Eastern European instability stems primarily from resentment from overly tight Soviet control and from the powerful desires throughout Eastern Europe for an improved economic situation and a higher standard of living which the Soviet Union itself cannot provide. The Soviets are also mindful of the political costs of attempting to deny to Eastern Europe the fruits of detente that the Soviet Union itself seeks. Finally, Moscow reluctantly recognizes that Eastern Europe would be less of an economic burden or more of an economic asset if its economic development were spurred by the Western connection.

Consequently, the Soviet Union accepts the development of limited Western economic ties in Eastern Europe as a mixed blessing or mitigated curse, relying on close monitoring of that development and the limitations imposed by Eastern Europe’s economic needs and potential to prevent the destabilizing influence it fears.

With regard to the effects of US policy in Eastern Europe, the Soviets would probably not be unduly concerned whether we pursued either Option III or Option IV, calculating that the impact in Eastern Europe would not be very great. On balance, the Soviet Union would probably consider the net effects on Eastern European stability in the short run either to roughly balance out or to be of manageable proportions. They could be somewhat more apprehensive over the longer-term effects of the expanded US contacts and presence inherent in Option IV, worrying particularly over their effects in the GDR. On the other hand, the greater emphasis on human rights and autonomy implicit in Option III is of very great concern to the US. Moreover, Option III also aims at the development of such expanded contacts and presence in the longer-term.

West European Attitudes

Our West European allies have by and large pursued the Option IV approach to relations with Eastern Europe for some time. France has led the way in seeking to improve relations with East European countries while the FRG spent most of the early seventies in restabilizing its diplomatic presence and normalizing long-suspended relations. However, it is unlikely that the allies would have strong views one way or the other concerning the US pursuing Option III or IV in its relations with Eastern Europe. Whatever we do, the allies would be unlikely to change their own approach.

1. Source: Carter Library, National Security Council, Institutional Files, Box 27, PRM–9 [2]. Confidential. Sent under cover of a July 20 memorandum from Tarnoff to Brzezinski forwarding all four requested follow-up studies related to PRM/NSC–9.
2. See Foreign Relations, 1969–1976, vol. E–15, Part 1, Documents on Eastern Europe, 1973–1976, Document 8.