Foreign Relations of the United States, 1981–1988, Volume I, Foundations of Foreign Policy

92. Memorandum of Conversation¹

Washington, April 13, 1982, 2:30–3:15 p.m.

SUBJECT

• Kissinger Group Meeting with the President

PARTICIPANTS

• The President
• Edwin Meese, III, Counselor to the President
• David R. Gergen, Assistant to the President
• Mort Allin, Assistant Press Secretary/Foreign Affairs
• William P. Clark, Assistant to the President for National Security Affairs
• Henry A. Kissinger
• Lawrence Brainard, Bankers Trust Company
• Willard Butcher, Chase Manhattan Bank
• Edmund W. Littlefield, Utah International Inc.
• Elvis L. Mason, InterFirst Corporation
• David Rockefeller
• William D. Rogers, Arnold & Porter
• George Shultz, Bechtel Group, Inc.
• Walter Wriston, First National City Bank
• Marc Leland, Under Secretary for International Affairs, Department of the Treasury
• Norman A. Bailey, NSC Staff

The meeting began with Dr. Kissinger presenting a paper entitled “Talking Points” to the President.²

Dr. Kissinger proceeded to outline the findings of his group. The main point made was that even if there is no crisis, the economic relationship has tilted in favor of the Soviet Union. In strictly economic terms, they gain. So we must counterbalance in other areas. What are our priorities? We need to organize the economic strength of the West—leading to negotiations later. Occasional unilateral sanctions don’t work well.

There are three options: (1) economic warfare, (2) continue present practices—everyone on his own, (3) period of disciplined economic pressure leading to eventual negotiations and enhanced cooperation (Kissinger group favors this option).

In the last four years most credit has been official. If the market is allowed to operate, it will handle matters. Only a Presidential initiative will work—a summit or other—to use this period of Soviet weakness to get our efforts coordinated.

We need to coordinate our objectives. What do we mean by disciplined restraints? We need to develop a coherent understanding of the purpose of sanctions.

What do we have to offer down the road in the way of economic cooperation? We have not addressed the question of differentiation. We have not addressed the question of what to do if the allies do not accept a coordinated approach.

Shultz: The Soviets need us a lot more than we need them. Nevertheless, they use these tools much more effectively than we do. Ours is technological, theirs is not. We sell our stuff on concessional terms. (He makes the point again of private vs. public lending to Poland.) If government-supported credits could be curtailed, there would be very little flow. We must have a long-term approach—a sustained effort. Curtailing of official credit.

Wriston: It’s a question of what to get the Europeans to stop doing. We need to turn the market back to market forces.

Rockefeller: (He reported on Trilateral Commission meeting on East-West economic relations.)³ We must have cooperation. It must be at a high level. Credit area is the greatest area of potential cooperation. The pipeline is a foregone conclusion.⁴ If we go along, we might get something from them.

The President: The allies are unwilling to go along with sanctions. (He uses the pipelayer example.) Have we failed to bring out to them that the concept is temporary to persuade them to come back to the “real world”? No one is out to attack them. We’ve been more successful in the credit line.

Kissinger: A reduction in arms would make the Soviets more creditworthy.

The President: They could turn their economy around.

Shultz: Their system causes the failure of agriculture.

The President: Here the situation is the opposite—high productivity, low price. We will all look at these papers with great interest.

1. Source: Reagan Library, Executive Secretariat, NSC Subject File, Memorandums of Conversation—President Reagan (April 1982). No classification marking. The meeting took place in the Roosevelt Room at the White House. No drafting information appears on the memorandum; presumably drafted by Bailey. In his personal diary entry for April 13, the President wrote: “Henry Kissinger brought group of businessmen & bankers to help with our East-West relations. A good meeting.” (Brinkley, ed., The Reagan Diaries, vol. I, January 1981–October 1985, p. 123)
2. Not found.
3. The Trilateral Commission—established in 1973 and comprised of leaders from the private sector in Japan, Europe, and North America—met in plenary session in Tokyo April 4–6. For a summary of the meeting, see Francois Sauzey, ed., Trialogue 29, Spring 1982, pp. 3–6.
4. See footnote 17, Document 53.