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301. Memorandum From Secretary of State Vance to President Carter 1

SUBJECT

  • The FY 1979 Arms Transfer Ceiling

We have reached interagency consensus on the FY 1979 arms transfer ceiling management plan (Tab 1),2 but one issue requires your decision: the reduction to be made in the ceiling.

I believe that our national security interests and arms restraint objectives in FY 1979 can be achieved with a further $734 million or 8 percent reduction from the FY 1979 baseline of $9.2 billion. After adjusting for inflation of 7.2 percent, the FY 1979 ceiling would be $8,430 million compared to actual FY 1978 ceiling sales in FY 1978 dollars of $8,539 million. This FY 1979 ceiling level would be equivalent to $7.4 billion in transfers in FY 1977 dollars, or a reduction of $1.4 billion (16 percent) in two years.

The ceiling plan is sufficiently flexible so that it can accommodate potential transfers to the Middle East, should further requests materialize and we decide to respond favorably. All major ceiling cases will be sent to you for decision prior to Congressional notification in accordance with the procedures you established.

The Office of the Secretary of Defense (OSD) and the Arms Control and Disarmament Agency agree with me that this FY 1979 ceiling level would permit us to make those sales important to our national interests while demonstrating our continuing commitment to arms transfer restraint.3

The Joint Chiefs agree that our security interests can be met within the proposed cut, but believe an 8 percent reduction is inappropriate in view of the lack of progress of our multilateral restraint initiatives.4 They point out that both the Soviets and the major NATO suppliers have failed to follow our example by adopting even modest restraints, or by agreeing to concrete measures during a year and a half of Conventional Arms Transfer (CAT) talks. The OJCS believes that a more modest reduction of 2 to 5 percent ($200–$500 million) would preserve [Page 744]the credibility of our policy and send a more appropriate signal to other arms suppliers, particularly in view of your statement last February that “the extent of next year’s reduction will depend upon the world political situation and upon the degree of cooperation and understanding of other nations.”5 The Joint Chiefs believe that a larger reduction would suggest that our restraint policies are insensitive to the actions of others, and would prompt continued intransigence in negotiations.

I do not agree with this assessment. My concern, which is shared by OSD and ACDA, is that other suppliers and domestic critics are more likely to interpret such a modest reduction as lack of Administration commitment to restraint, particularly since the CAT talks have not yet had time to produce results. Soundings we have taken with Congress at the staff level support this conclusion. At the same time, I believe that progress at CAT is necessary before we make future commitments to reduction, and that other suppliers should not count on our continuing to make reductions. Therefore, I recommend that you state in your public announcement that decisions on future arms transfer levels will depend on the cooperation on restraint we receive in the coming year from other nations. A proposed draft Presidential statement is at Tab 2.6

Recommendations:

That you approve an 8 percent reduction for FY 1979 and that you announce that decisions on future levels will depend on the cooperation of others.7

ALTERNATIVELY, that you approve a more modest reduction of 2 to 5 percent for FY 1979 and that you announce that future levels will depend on the cooperation of others, expressing disappointment at the pace of multilateral cooperation thus far.

Approve 5% reduction ______

Approve 2% reduction ______

  1. Source: Carter Library, National Security Affairs, Staff Material, Global Issues, Mathews Subject File, Box 5, Arms Transfers: 8–10/78. Confidential.
  2. Not attached.
  3. The OSD and ACDA reports were not found.
  4. Not found.
  5. See “Statement by President Carter: Arms Transfer Policy,” February 1, 1978, Documents on Disarmament, 1978, pp. 44–45.
  6. Not attached.
  7. Carter checked the “Approve” option and wrote “J. Be very careful. Don’t come too close to our limit.”