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287. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter 1

SUBJECT

  • PRC Review of FY 1978 Arms Sales

The PRC has met twice2 to consider the FY 1978 arms sales program including the ceiling management system, specific requests which make up the FY 1978 plan, and the reduction in sales to be achieved in FY 1978. This memorandum requests your approval of the management system and the plan, and presents options on the reduction. (S)

I. Ceiling Management

The ceiling has been broken down as indicated in the table on the following page. The allocations for follow-on support, MAP, and small cases are based on Defense and State estimates of requirements for FY 1978.

The PRC recommends a flexible predictive approach to managing the ceiling, with a particular focus on management of the ceiling dollars available for sales of new systems. At the beginning of each year known and anticipated possible sales for that year and beyond will be compiled. The PRC will make an initial assessment of those sales which should be made during the year and will list them for your consideration in order of priority. The list will subsequently be reviewed and updated on a monthly basis providing the flexibility to incorporate new information, and to respond to changing circumstances. This process does not replace the normal clearance process during which arms control, human rights and economic impacts are assessed for each individual sale before it comes to you for final approval. However the existence of the list, approved by you, will force the bureaucracy to think in terms of trade-offs when new cases arise, thereby allowing us to meet our restraint goals. (S)

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Recommendation

I recommend that you approve the predictive approach as described above for managing the arms transfer ceiling. (S)3

FY 1978 CEILING
(in billions of 1978 dollars)

FY 1978 Ceiling Baseline $ 9.3
(Based on sales of weapons and weapons-related items to other than NATO, Japan, Australia and New Zealand in FY 1977.)
Less Commitments
Signed Sales Agreements and Letters of
Officer and Acceptance outstanding. 2.4
(Includes the AWACS sale to Iran and other agreements signed so far this year as well as LOAs offered but not yet signed by the foreign government.)
Reserve for follow-on support. 1.24
(Includes ammunition, spare parts, maintenance and technical support for systems already sold.)
Reserve for MAP. .1
(Includes weapons and weapons-related portion of direct military assistance approved in the budget by Congress.)
5.3
Discretionary Balance $ 4.0
Less the Planned Reduction (.47–.745)
(Five to eight percent depending on which option you select.)
Available for Sales of New Systems (3.266–3.53)
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II. The FY 1978 Plan

A major part of new sales commitments in FY 1978 will be a package of aircraft sales to the Middle East. The value of LOAs signed this year for that package could range from $1.3 to $3.5 billion, but will most probably be in the range of $1.5 to $2.0 billion. The listing at Tab A7 represents priority groupings of other major requests—sales within groups are listed alphabetically—excluding the Middle East aircraft package. Based on the allocations in the table on the previous page, we should be able to conclude agreements on the requests contained in the first two groups in the listing at Tab A. However, the plan is not static; it will be updated monthly to reflect new requests and those which have been withdrawn. The importance of the plan is that it offers a comprehensive listing and facilitates the necessary trade-offs. It does not replace your review of individual cases before they are notified to Congress. (S)

Recommendation

I recommend that you establish the listing at Tab A as the FY 1978 Sales Plan.8

III. Planned Reductions

During the past week there has been considerable negative reaction in the press to the $13.2 billion forecast for total overall sales in FY 1978. Sales are expected to increase because of an increase in NATO sales and construction activities in Saudi Arabia, both of which are not included in the ceiling. The press stories argue that the Administration has either abandoned restraint or is practicing “slight of hand” with the numbers. In this context, there was disagreement on the appropriate size of the reduction in sales under the ceiling to be achieved in FY 1978. Opinion was divided among three possible options, all in constant (1977) dollars:

1. A five percent reduction this year. Although it may be viewed by some as insufficient to show restraint, this is attractive in that we can meet and probably exceed this target (i.e., promise five percent and deliver six–eight percent). Moreover, we can probably maintain that goal in the future as well. I support this option along with the JCS.

2. An eight percent reduction this year. Those who support this option believe that in light of the current political climate and the forecast for the high overall sales total, eight percent is the minimum politically credible figure. Because inflation is expected to run at approximately seven percent, a reduction of eight percent will show an absolute de[Page 711]crease from last year without appealing to an adjustment for inflation. However, your credibility would be at stake if this goal was not met, or if we feel compelled to reduce it in subsequent years. State and ACDA support this option.

3. At least a five percent reduction this year with the additional commitment to at least a ten percent reduction by the end of two years. This option would sustain a five percent annual reduction for two years, thereby removing uncertainty in the policy. However, it could reduce your flexibility in an area where there are substantial uncertainties. Those who support this option believe that the longer period will facilitate our arms sales planning and allow more time for other suppliers to emulate our restraint. Defense and OMB support this option; it is NSC’s second choice. (S)

Your Decision

Option 1: ______

Option 2: ______9

Option 3: ______

  1. Source: Carter Library, Brzezinski Donated Material, Box 24, Meetings: Policy Review Committee Meetings (PRC), PRC 51: 1/26/78. Secret. Sent for action. Brzezinski hand-wrote the date in the upper right-hand corner of the first page of the memorandum. Above the date, Carter wrote “C.”
  2. The first PRC meeting on FY 1978 arms sales was scheduled for January 10. No record of this meeting was found. The second meeting is Document 286.
  3. Carter did not indicate his preference with respect to this recommendation.
  4. In the right-hand margin, Carter drew an arrow pointing to the number “1.2” and wrote “This is, I presume, based on past sales—Give firm orders to DOD not to exceed.”
  5. Carter circled “.74.”
  6. Carter circled “3.26.”
  7. Tab A was not attached.
  8. Carter checked the “Approve” option.
  9. Carter checked “Option 2” and underneath wrote “JC.”