131. Memorandum From Secretary of State Shultz to President Reagan1
SUBJECT
- Export License for Control Data on U.S.-Romanian Joint Venture
You will recall that in August, after two years of interagency delay and disagreement, you decided to approve the licensing of 200 megabyte disc drives for assembly by Control Data Corporation’s Romanian joint venture subject to formulation by Commerce and the firm of adequate safeguard arrangements.2 To date your decision has not been implemented.
Over the past week, you met with President Ceausescu’s Special Envoy, Manea Manescu. Your meeting with the Romanian visitor was a gesture that was highly appreciated. The Vice President, Mac Baldrige and Ken Dam also all met with Manescu. To all three Manescu made a [Page 362] strong plea on President Ceausescu’s behalf for a positive response on the Control Data case. Manescu said that the Romanians want a strong economic relationship with the United States in order to decrease their dependence on the Soviet Union. He noted that Romania’s decision to defy the Soviets and come to the Olympics was intended as a political gesture to underscore their independent stance. It was nonetheless costly in terms of their relations with the Soviets. He said that Romania continues to pursue its independent course, citing Ceausescu’s refusal to cancel his visit to Bonn after the Soviets had the East German and Bulgarian visits stopped. (I might also note that the Romanians recently released their most prominent dissident in response to our requests.) In the circumstances, Manescu said that collapse of the joint venture with Control Data for want of marketable products will create a political problem for Bucharest, and an additional rationale for the Soviets in arguing against cooperation between the United States and Eastern Europe.
In New York this week, I met with Stefan Andrei, Romania’s able Foreign Minister.3 Stressing the great importance that President Ceausescu places on the survival of the Control Data joint venture, Andrei asked me to convey to you on Ceausescu’s behalf their concern that after two years this case has still not been resolved. Our inability to do so has raised questions in Ceausescu’s mind as to whether we have confidence in Romania as an economic partner.
To date we have not been able to convey to the Romanians your favorable decision on the Control Data case because of inter-Departmental differences over what might constitute appropriate safeguard arrangements. In a letter addressed last Friday to Bud McFarlane, Mac Baldrige urged acceptance of the safeguards arrangements his Department worked out with Control Data.4 He believes they adequately meet our national security concerns. He points out, in addition, that with changes in COCOM that are to be effected later this year, these articles will no longer be governed by COCOM controls and that the Soviets themselves will then be able to purchase them freely on the open market. Defense, however, continues to argue that only 24-hour, on-site supervision by a Western company representative will do. This is a condition too costly for any company to accept. Frankly, Mr. President, it is a condition so onerous that it appears designed to thwart your decision to move ahead on this Romanian case.
If we are to forestall a setback in our relations with Romania that could have far-reaching consequences for our differentiation policy throughout Eastern Europe, we need to implement your decision on the Control Data case without any further delay.
- Source: Department of State, Executive Secretariat, Sensitive and Super Sensitive Documents, 1984–1989, Lot 92 D 52, ES Sensitive, October 1–4, 1984. Secret. This memorandum was attached to an October 2 covering memorandum from Burt to Shultz. (Ibid.) The issue, as outlined in the covering memorandum, was “whether to sign the attached memorandum for the President outlining Romanian concerns over our inability to date to provide a response on the Control Data export licensing case and to urge prompt resolution.” Also according to the covering memorandum, “At your meeting with Romanian Foreign Minister Andrei on October 1, he requested that you convey to the President the deep Romanian concern. We also believe it is important for you to support Mac Baldrige’s strong recommendation that the Control Data case be promptly and favorably resolved.”↩
- See Document 128.↩
- A memorandum of conversation of the October 1 meeting was not found.↩
- See Document 130.↩