Foreign Relations of the United States, 1981–1988, Volume X, Eastern Europe

104. Memorandum From Secretary of State Shultz to President Reagan¹

Washington, January 14, 1983

SUBJECT

• Romanian Tax on Emigration

As your special emissary, Larry Eagleburger talked with President Ceausescu and Foreign Minister Andrei January 10 and 11 about the Romanian education tax for emigrants. Despite the fact that we told the Romanians in advance that Larry would not be bringing any “solution”—indeed that we could never make a deal to pay for emigrants and that we would take away MFN if they proceed to implement this decree—Ceausescu still showed signs of wishful thinking. He did not move away from his “principled” position that those who get free education at the expense of the Romanian State must repay the State if they are leaving the country. Ceausescu cited the USG’s move in October to require repayment of student loans as one justification.

Eagleburger may have gotten it through Romanian heads that we are different than the Germans and Israelis,² who long have payed for emigrants. He was absolutely firm in telling both the Foreign Minister and Ceausescu that if the emigration tax decree is implemented Romania will lose MFN. Nevertheless, it is Eagleburger’s judgment that Ceausescu is not yet ready to shift his position; indeed, he may never shift. We have until June 2—when you must decide whether to recommend to Congress renewal of MFN—to bring him around.

We are organizing an interagency group to make recommendations to you on how to proceed. My general view at this point is that we should continue to make clear to the Romanians that until we resolve this issue we cannot move ahead on other matters, i.e., EXIM financing for their nuclear power plant. We should try to get explicit agreement that they will not implement the decree. However by June we may face a more ambiguous situation—no explicit agreement but also no implementation. I have asked the interagency group to make recommendations on how to deal with such an eventuality. Finally, the Romanians may go ahead with implementation, in which case I will recommend that you take away MFN.

Larry told Ceausescu that we need to begin to consider how to manage a post-MFN US-Romanian relationship—recognizing our mutual interest in sustaining as much Romanian independence from the Soviet Union as possible. Ceausescu made clear that loss of MFN would assist Andropov’s efforts to restore greater unity to the Warsaw Pact, and hinted that it would lead to a reduction in current levels of emigration from Romania as well.

Eagleburger stopped briefly in Yugoslavia on his way home. The Yugoslavs are now experiencing their most serious economic and therefore political crisis since Tito’s death. The Yugoslav leadership requested that he convey to you their gratitude for the effort we initiated to help them through this period. They still may be forced to reschedule, but the US, our NATO allies and some European neutrals are trying to give them a fighting chance to avoid what they (and the Soviets) would consider a failure of the more liberal and decentralized Yugoslav system. We will know in the next few weeks whether our approach is working.

1. Source: Reagan Library, Executive Secretariat, NSC Country File, Europe and Soviet Union, Romania (01/10/1983–03/01/1983). Secret. A stamped notation indicates that is was received in the White House on January 14 at 11:36 p.m.
2. Shultz wrote to Reagan in a January 3 memorandum: “Under Secretary Eagleburger met with Israeli Ambassador Arens on January 3 to discuss Jewish emigration from Romania. Arens confirmed that Israel had an arrangement under which it paid Romania for Jewish emigrants, but Israel is now unwilling to renew it because the Romanians are demanding exorbitantly high fees in the $20–40,000 per capita range. Eagleburger said that while we could understand Israel’s motivation in paying for emigrants, the US is unwilling to do so. Eagleburger said he would tell Ceausescu next week, that the US Congress would categorically reject the idea of a financial arrangement and would undoubtedly react by refusing to extend MFN status for Romania.” (Reagan Library, Executive Secretariat, NSC Agency Files, Secretary of State’s Evening Reports, Sec State Evening Reading Report 12/17/1982–1/5/1983)