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

30. Memorandum From the President’s Assistant for National Security Affairs (McFarlane) to President Reagan¹

Washington, August 1, 1984

SUBJECT

• Technology Transfer to East Europe

Issue

Should we permit the export of certain U.S. data processing hardware to East European countries as part of our policy of differentiating them from the Soviet Union?

Facts

Three cases have been under consideration for as long as three years, and no interagency agreement has been achieved. First, Romania applied three years ago for permission to purchase a ground station from NASA to receive near-real-time multi-spectral images from NASA’s LANDSAT. Second, the Control Data Corporation applied for permission to sell technical kits to Romania for the assembly of 200 Megabyte disk drives. These disk drives can be used to expand the memory of computers. Third, Austrian Airlines has applied for permission to reexport a used IBM central processing unit to Hungary. This processing unit would increase the computation capacity of a Soviet computer at the University of Budapest that is used for teaching and research. These cases were taken up at an Export Administration Review Board meeting on 27 June 1984.² At that time, Secretary Weinberger opposed granting the necessary licenses in all three cases. Secretary Shultz was in favor of granting the licenses. Secretary Baldrige was willing to see the LANDSAT station disapproved, but urged a positive decision on the other two.

Discussion

The primary reason in favor of the transfers that has been cited by Secretary Shultz is the U.S. policy of differentiation, embodied in NSDD 54, of September, 1982, that calls upon the U.S. government to discriminate carefully in favor of East European countries that either display relative independence of the Soviet Union in their foreign policy or which show relatively greater internal liberalization. Romania has displayed greater foreign policy independence, for example, by sending its athletes to the U.S. Olympics, but is more repressive than other East European countries.

In the case of the LANDSAT ground station, the supporters of the transfer argue that the relative independence of Romania should be rewarded by technology transfers. They note that LANDSAT was first supported by President Nixon.

In these two Romanian cases, there appears to be some danger of technology loss that needs to be weighed against the benefit we will gain by pursuing the policy of differentiation by these means. The policy of differentiation set forth in NSDD 54 is an important part of our overall strategy for managing our relations with the Soviet Union. The question is whether and how it should be applied to Romania, given the circumstances that now exist. Dramatic U.S. economic agreements with Romania carry with them the risk that the Romanians and others—for example, the Yugoslavs—may interpret our decision to make concessions to one of the most repressive regimes in Europe as U.S. indifference to political repression in Soviet bloc states. The independent stance of Romania does not depend, in our judgment, on U.S. trade policy.

It is our judgment that the technology loss risk in the LANDSAT case is such that the net political gains do not warrant approval. In the case of the disk drives, we believe that the technology loss risk can be reduced to manageable levels if adequate safeguards are developed to prevent the diversion of this technology. We urge you to approve the transfer in principle³ but return this request to the Department of Commerce and ask that it develop a plan for such safeguards.

The IBM processing unit does not carry with it significant technology loss risks, though it contravene some specific guidelines set out in NSDM 247 of 1974⁴ that are no longer relevant.

RECOMMENDATION:

That you disapprove the sale of the LANDSAT ground station to Romania;⁵

That you approve in principle the transfer of the disk drives but request the Commerce Department to develop safeguards to ensure that they are not diverted; and⁶

That you approve the reexport of the IBM unit to Hungary.⁷

1. Source: Reagan Library, Donald Fortier Files, Subject File, Technology Transfer: Romania Landsat Case 1984. Secret. Sent for action. Prepared by Donald Fortier and Stephen Rosen. The memorandum was faxed to Santa Barbara for Reagan’s attention on August 3.
2. The minutes of the meeting were not found.
3. “We urge you to approve the transfer in principle” was underlined and highlighted in the left-hand margin by an unknown hand.
4. NSDM 247, US Policy on the Export of Computers to Communist Countries, was issued on March 14, 1974. For the text of NSDM 247, see Foreign Relations, 1969–1976, vol. E-15, Part 1, Documents of Eastern Europe, 1973–1976, Document 10.
5. Reagan checked and initialed the “OK” option for this recommendation.
6. Reagan checked and initialed the “OK” option for this recommendation. “That you approve in principle” was underlined by an unknown hand. This recommendation was also highlighted in the margin.
7. Reagan checked and initialed the “OK” option for this recommendation.