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

174. Telegram From the Embassy in Romania to the Department of State¹

992.

Bucharest, February 10, 1988, 1649Z

SUBJECT

• The Impact of MFN Withdrawal on U.S. Operations in Romania.

REFS

• A) Bucharest 893;²
• B) Bucharest 881.³

1. Confidential—Entire text.

2. Summary: Romania’s decision to drop MFN status will likely affect a number of U.S. interests in Romania in the coming months. The most likely areas are those in which the GOR has objected to U.S. attempts to use MFN leverage. We expect emigration to drop somewhat, certainly in those categories of “problem cases” where there is no U.S. relative. Human rights cases will become harder to resolve. Access of Romanians to U.S. officials and events will also probably become more difficult, as will be Embassy officers’ access to “non-official” Romanians. There will be a tendency in the bureaucracy to move more slowly, and to take even less initiative in dealing with U.S. problems than has been the case up until now.

3. We do not expect the GOR to pull back from all aspects of the relationship. Ceausescu himself has said he wants relations to continue to develop. There are a number of areas—for example trade and military cooperation—where the Romanians will find it in their interest to continue to work with us, and where it is we who will have to decide how far we want to go. Our suggested posture at this point is that the U.S. show it intends to stay the course. We will continue to raise with the GOR human rights issues, both as part of a bilateral dialogue and under the CSCE umbrella, strive to keep emigration figures up, continue to push for USIS exhibits, seek access to Romanian citizens. By holding to a steady course, we feel we can preserve the maximum possible of U.S. interests in a post-MFN Romania. End summary.

4. Even before Ceausescu’s decision, the “benefits” to the U.S. from maintenance of MFN, while still tangible, were eroding. Over the past six months, the Romanians had let emigration figures drop off, offering us no emigration approvals at all since October 31 of last year. In the human rights field, the authorities changed tactics—while generally avoiding arresting troublesome individuals, they have harassed, fined heavily, and occasionally detained them for short periods. They have dragged their heels on several prominent issues—Bible printings, church construction—of most visible interest to the U.S. In the cultural area, they have been gradually cutting back on exhibits and Fulbright professors for some time.

5. In looking at what happens now that the GOR has stated it is withdrawing from MFN, Ceausescu’s motivations are an important factor. His decision, while emotive and probably hastily reached, is rooted in his longstanding distaste for congressional review and public criticism, and his perception of Romania’s tradition of foreign policy independence. Even if from the outside it looks as if Romania is imposing isolation on itself, Romania’s top leaders probably sincerely view themselves as defending the country’s autonomy. However, by taking the initiative, and deciding himself that MFN should be terminated, Ceausescu arguably has already fired his major salvo, and might feel less compelled to take further steps. By acting first, he may feel less compelled to retaliate in ways that would further damage our relations than if he were responding to a congressional or administration decision.

6. Nevertheless, there are clearly identifiable areas where we expect the impact of the Romanian decision to be felt in a negative way on our operations here:

Emigration

7. Ceausescu stated on February 5—i.e., before announcing, and we suspect before even taking his decision to withdraw from MFN—that emigration would continue if it is in the context of family reunification. Totu reiterated the same point in announcing the decision to drop MFN (Ref B). However, Romanians have always said they are opposed to the United States philosophically on emigration, and have accepted it because of the MFN agreement. Thus, ending MFN will certainly have an impact on emigration.

8. If the GOR were to apply the family reunification criteria broadly, counting cousins, fiances and distant relatives as family for purposes of emigration, virtually all those on our current representation lists might still get passports. More problematical would be the TCP lists: only 30 percent of the 1,496 on the current TCP list have any family in the United States.

9. That, however, is admittedly a best-case analysis. GOR spokesmen up to and including Ceausescu have stated in the past their philosophical opposition to the principle of emigration. Without the pressure of the congressional “MFN season,” we see little GOR incentive to maintain total numbers of emigrants to the U.S., since this requires bureaucratic effort. Nor will there be as much incentive to resolve difficult individual cases, should any GOR agencies object. In short, we expect emigration to the U.S. (but not Israel or Germany) will suffer from both benign neglect and objections to specific cases.

Human Rights

10. Ceausescu made clear in his conversation with the Deputy Secretary he rejects pressure on human rights, and although he and his senior officials allege their objections are because Jackson-Vanik says nothing about human rights, the current GOR posture calls for refusing any concessions on the subject.

11. At the same time, however, Ceausescu did leave a hook. He said he would abide by the Helsinki process and the commitments contained therein. No matter how narrowly the GOR interprets those commitments, they provide a full range of issues that are fair game even under Ceausescu’s new, more narrow interpretation. Moreover, the GOR manifested a continued openness to dialogue on the subject of human rights. Deputy Minister Solomonescu reiterated—even after the Ceausescu meeting and the decision to withdraw from MFN—a willingness to discuss human rights at a roundtable.

12. It remains to be seen what Romanian policy will be in practice. Certainly, U.S. leverage in human rights cases is reduced with the loss of MFN. We will almost certainly not see any more of the annual “MFN season” releases. If activist human rights lawyer Nelu Prodan gets picked up again (as he was for 12 days in December, 1987) we are not certain how much effect the pressure we bring to bear will have in obtaining his release. Romanian officials have been dragging their heels for some time on issues—Bible printing, church construction—of importance to us; that pattern will likely increase. We intend to test the Romanians on the issue, however, both trying to continue our contact with religious and political figures as in the past and raising issues with our GOR interlocutors at every appropriate occasion. Romanian actions, then, rather than words at this point, will indicate the actual extent of the impact of MFN dropping on our position here.

Access

13. A separate but related issue to human rights work is the question of Embassy access to Romanians. Already over the past several months there had been increasing difficulties in this area, as both political and economic officers here found what had been normal contacts being discouraged by their superiors from scheduling meetings. We would expect that pattern to sharply worsen in the wake of MFN loss. Already we have seen some impact: some regular USIS library visitors were told earlier this week to reduce the frequency of their visits, and two library events in the past week since the Deputy Secretary’s visit have been sparsely attended. The authorities attitude in handling the Ambassador’s non-official reception Friday, February 5, when invitees were contacted and discouraged from attending, and where police literally surrounded the Residence to discourage access there, gives us a premonition of how far they can shut off contact if they put their minds to it. We doubt that every Embassy function will receive the attention of the February 5 affair, but we expect it will be much harder to make contact in the weeks and months ahead, in part also because of the Romanian tendency to keep their heads down at moments of tension.

Economic Interests

14. U.S. firms may well be subject to much rhetoric about the absence of MFN. But the major commercial effects will, we believe, arise from the higher U.S. tariffs, not from Romanian retaliation. Romanian tariffs, if applicable at all, would not be a significant factor in GOR importing decisions.

A. Depending upon the date when U.S. MFN tariffs shift to non-MFN status, U.S. importers may initially absorb some or all of the costs of the higher tariffs, depending upon their contract terms.

B. Washington agencies have estimated that Romania might lose some 200 million dollars worth of exports without MFN. Such estimates are based upon assumptions about Romania’s willingness to lower prices to offset higher tariffs. Official GOR projections for 1988 appear to have taken some loss of exports into account. We think Romania will probably lower prices for goods wherever it finds no comparable alternative market (e.g., steel, consumer goods). From U.S. exporters’ perspective, loss of U.S. MFN tariffs will make the acceptance of countertrade goods for the U.S. market more difficult, possibly hurting export sales.

C. Loss of U.S. Government-backed export credits, by termination of the Jackson-Vanik waiver, will have little short-run effect here, given Ceausescu’s opposition to accepting credits of all kinds. But in the longer term, Romania will probably find official export credits valuable, and U.S. exporters of major capital equipment will find West European and Japanese competition hard to match. Boeing’s prospects for a sale here of 767s, for example, will likely suffer as a result.

D. We do not expect Romania to default on its obligations to Exim-Bank. Some were prepaid in 1987.

E. So long as the dollar exchange rate and U.S. prices are attractive, we do not anticipate a sharp loss of major U.S. commodity exports—soybeans, hides, coal. Long-term contracts with Island Creek for coking coal do not appear vulnerable.

F. Some shifting of Romanian imports from U.S. sources may occur, where the cost of doing so is small, simply to express irritation at higher U.S. tariffs. We expect this phenomenon to be mainly rhetorical, however.

G. The only U.S. equity investment in Romania, ROM Control Data, sells an important share of its output in the U.S.; we expect these exports to be harmed but do not know how large the tariff change will be. The firm is much more vulnerable than other Romanian exporters, since (unlike normal Romanian firms) it is managed on a hard currency, actual cost basis. It has survived other shocks, however, and both U.S. and GOR managers will have every incentive to maintain its profits, which they share on a 45–55 basis.

H. We expect GOR officials to argue for continuing U.S. economic ties, and for holding the annual Joint Economic Commission at a high level. Our response should depend on Romanian actions in the weeks and months to come.

Cultural Relations

15. The GOR has already cut back on both Fulbright professorships and on U.S. exhibits in Romania. They confirmed to us recently that, at least in the latter area, the cutbacks of major exhibits are likely to continue. Thus, without MFN, we would simply expect to see a continuation of present trends. Any high-profile exhibits such as the 1987 film show are likely out of the question entirely; other public events will be programmed, we suspect, to the extent they are discreet and do not draw large crowds. The government may already be satisfied with the reduction of Fulbright professors from ten two years ago to five this year, but a complete elimination of this program is not out of the question. There were rumors in both of the past two years that Elena Ceausescu had decided to eliminate the program. Next year would be natural if she still has it in mind. The increased control on access to and contacts with Embassy officers will be a further restriction on Embassy operations.

Military Contacts

16. If there is one area where visible contacts with the U.S. serve the Romanian image of independent foreign policy, it is their dealings with our military. Thus, we would expect the GOR would not cut such events as the annual ship visit to Constanta in June. It will be harder to read a pattern in other developments in this area, however. The one proposal in which we are awaiting a response from the Romanians, for the visit of a mountain training team, is in doubt because of very real Romanian funding difficulties. We believe the GOR will think very carefully before cancelling or refusing military exchanges. After all, they have nothing to do with MFN.

Administrative

17. GOR agencies are routinely unhelpful to all foreign embassies on the administrative side. They generate difficulties in hiring FSN’s and training them abroad. They recently held up household effects of a U.S. employee on a flimsy excuse, but they have treated other embassies much worse on matters of “national patrimony”. GOR provides housing, and often in poor condition, but here again the U.S. Embassy has sometimes received preferred treatment. In a worse case scenario, GOR could make our life extremely difficult in many ways. We consider deliberate discrimination most unlikely. Greater neglect of our requests is possible. But we will try to hold GOR at least to business as usual.

Risk—Lower Level Misinterpretation

18. Quite apart from the “instructed reaction” ordered from the higher levels of the GOR, the Embassy will have to contend with the reactions, ordered or otherwise, from the working levels of the government. Initially, we would expect even more than the usual bureaucratic immobilism, as working level officials, uncertain about what the action means to their responsibilities, simply refuse to take action. Thre is also the chance that lower level officials, in the absence of clear guidance from above, might interpret the news as a bigger break than the upper levels of the GOR would intend. Over-zealous policemen could become more truculent, bureaucrats less cooperative. We are likely to get less of what we want because of minor officials’ unwillingness to do anything beyond what is strictly ordered by superiors. It could certainly affect the atmosphere in which the Embassy does business, causing us to lose out on more minor issues and forcing us to raise more to a higher level in order to get any action.

Conclusion: Cutbacks in Some Areas

19. In sum, then, we expect some cutbacks on U.S. operations here, mostly in areas where the United States causes the most trouble to Romania—emigration and human rights, as well as in the area of access of the Embassy to Romanians, including for cultural activities. The tendency toward nationalism will be at a premium in the weeks and months following the announcement that MFN is gone, as Romanian officials try to justify themselves and their action. There will be some unpleasantness in all that.

20. Our basic objectives here, however, have not changed as a result of the Romanian decision. We continnue to want to engage the GOR on a broad range of issues, bilateral and international. We should still pressure them to make progress in all areas of human rights. We still want to get the American message across to the Romanian people, through USIS and other programs. Sale of American products here, especially the sale of aircraft and power station turbines, remains in our interest.

We feel that the best way to make the points we have been pursuing until now is to follow the course we have been on. By sticking to our present course and not falling into a tit-for-tat exchange of insults or hostile gestures with the GOR, we have the best chance of preserving our long-term interests in this country.

Kirk

1. Source: Reagan Library, Rudolf Perina Files, Romania—MFN 1987 (1). Confidential; Immediate; Nodis.
2. Telegram 893 from Bucharest, February 8, outlined the U.S. posture after Romania’s decision to terminate MFN. (Department of State, Central Foreign Policy File, no film number)
3. See Document 173.