SMALL GROUP MEETING ON THE PROPOSED BUCKLEY MISSION TO EUROPE FEBRUARY 24 1982
Document Type:
Collection:
Document Number (FOIA) /ESDN (CREST):
CIA-RDP83M00914R000500090017-4
Release Decision:
RIPPUB
Original Classification:
S
Document Page Count:
8
Document Creation Date:
December 21, 2016
Document Release Date:
June 12, 2008
Sequence Number:
17
Case Number:
Publication Date:
February 26, 1982
Content Type:
MEMO
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CIA-RDP83M00914R000500090017-4.pdf | 489.1 KB |
Body:
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SECRET
TO :
February 26, 1982
OVP
- Mrs. Nancy Bearg Dyke
- 8205054
NSC
- Mr. Michael Wheeler
- 8205055
DOD
- COL John Stanford
- 8205056
JCS
- LTC Edward Bucknell
- 8205057
CIA
USTR
Mr. Richard Heimlich
8205059
Treasury
- Mr. David Pickford
8205060
Commerce
- Ms. Jean Jones
8205061
SUBJECT: Small Group Meeting on the Proposed Buckley Mission
to Europe, February 24, 1982
Summary of Conclusions
The Small Group of the Poland SIG discussed a draft terms
of reference for the Buckley high-level mission to Europe. State,
Defense, and the NSC tabled draft TOR texts. On certain points
no consensus was possible, but the TOR text attached was devel-
oped as- the basis for further. discussion in the NSC.
Action Assignments
Treasury was requested to provide further detail on credit
curbs and default. Two papers listing topics to be addressed
were passed out as a guide to the work. They are attached.
Commerce is requested to provide an assessment of the re-
strictions now being discussed among the Europeans as well as
information on other products that they might include.
State Dept. review completed.
a Gryeme r ,
( Q./
SECRET
GDS 2/26/88
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r'eL ruary c4,-7Wf-
-'Terms of Reference for High-Level USG Mission to Europe
on Soviet.Sanctions
Rationale for Mission
-- An historic opportunity exists to weaken the Soviet Union
substantially by taking advantage of its economic and financial
situation through reducing the flow. of resources from West to
-- Our allies must be given -new incentives to induce them
to participate in a useful program before the USG is forced to
take further unilateral measures with possible negative impact
on the alliance. ?'
-- Measures to curtail Soviet access to hard currency are
essential for the Administration's, program for closing the gap
between U.S. and Soviet military investments and for creating
conditions conducive to greater security and genuine arms
control. U.S. public sentiment in support of additional sanctions
is quite strong and may be manifested by private sanctions.
Assumptions -
-- The Siberian pipeline can perhaps be delayed beyond normal
construction delays and made more costly to complete. It?cannot
.be stopped at this point by U.S. coercion without incurring
intolerable dipldmatic costs. However, by working with the
Dutch and Norwegians and through an alternative energy program,
:?:e can lessen the growth of European energy-dependence on the
Soviet Union.
-- It is in or long-term interest and that of our allies
get them to reduce or cut off new official credi t,s and
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cuarantees to the USSR and to**restrain the flow of financial
resources to the USSA.
Objectives
To begin negotiations to get the allies:
-- To cut off or severely limit and make more expensive
medium- and long-term official and officially-guaranteed
credits to the Soviet Union.
To reduce Soviet exports of non-essentials to the West.
-- To limit European dependence on Soviet energy.
~_- To make clear that we define their offers not to undercut
our sanctions to include subsidiaries and licensees of our companies
in Europe.]
By proposing an agreement that medium- or long-term
official or officially-guaranteed credits to the Soviet Union
will be restricted or the cost?increased, to be negotiated-.at a
conference-in Washington. The conference would also.consider:
measures to counteract the impact ozL the financial markets were
here to be a partial or bloc-wide default.
By convincing our allies to participate with us in a
program of raising t riffs,.and/or-imposing quotas on
non-essential Soviet exports, or by other means, to restrict.
allied imports of. these items.
-- By stressing the importance of a package of European
energy security alternatives.
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r3_
4?a
en,. en rent to interfere with
^-
gre
extension of U.S. export controls to cover equipment
manufactured by foreign subsidiaries of-U.S. companies
-and by foreign licensees of U.S. companies operating under
technology transferred prior to December 30, 1981
make-up and TimincT of Mission
The mission will be led by Under Secretary of State James
Buckley and will include Under Secretary of Defense Fred Ikle,
Under Secretary of Commerce Lional Olmer, Assistant Secretary
of the Treasury Marc Leland, Director of Policy Planning of
the National Security Council Staff Norman Bailey and a limited
nunber of-aides.
At this time, it is proposed that the mission leave in
approximately a week to ten days after the terms of reference have;.
been approved by the NSC; and visit Rome, Bonn, Paris and London,
in that order. The. Embassy _ in Takycs will be kept fully informed
and the Japanese Gove
measures agreed upon.
Definition of Success
-- Agreement on a Washington conference on credit.. limitation'
and default consultation to meet before the end of :.arch.
Success of the missior
is defined as follows:
(-- Agreement to define their promise not to undercut our
: ~ncz o::s as involving not interfering with extensicn of our
over subsidiaries and licensees ?Of. U.S. G^-: aniss I
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-- Agreement by allies to seq their tariffs or establish
quota restrictions onnSoviet a exports.
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SECRET
Restricting Credit to the Soviet Union
We need to push forward quickly on staffing out completely how
the High Level Mission to Europe should handle the issue of restrict-
ing credits to the Soviet Union. Following are areas in which we
believe staff work should be completed:
l.' -The impact on the USSR of a cessation of new official export
credits and guarantees to the Soviet Union:
(a) impact of cessation of official new export credits and
guaranteed credits;
(b) impact of cutting off official credits and guarantees
on private credits;
(c) total impact on USSR of cessation of new official and
guaranteed credits plus the reduction in private credits
that would result..
2. Impact of cessation of new official credits and guarantees to USSR
on individual European countries. How they would likely react?
Differential impact among European countries, e.g., how trade
would be affected and unemployment?
3. What other proposals can we make on credits?
4. At which point, and. in what context, should we propose raising
interest rates?
(a) What is the impact on USSR of raising to market level?
(b) What. is impact of phased increase to market level?
(c) Is there an interest rate below market level that inflicts
significant cost on Soviets?
5. What legal and regulatory authority do European governments have
to cut off new private credits, to phase them out, or to place
quantitative restrictions on new private credits.
(a) Steady reduction (in nominal terms) of official export
credits and guarantees from 1981 base?
(b) Quantitative restrictions on official export credits and
guarantees to the Soviet'Union?
(1) How to define quantitative restrictions?
Q) Could the.Z. be differentiated to equalize impact'
among European countries?.
(c) Would it be possible to target restrictions on official
credit and guarantees to USSR to certain sectors, e.g.
the-energy sector.
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SECRET
Preliminary Discussions on How to Avoid Disruption of Financial
Markets In Case of Polish Default
The High Level Mission to Europe will need to be well
_ prepared for its preliminary discussions on how to avoid
financial. disruption 'if a default is declared. The following
questions need to be explored:
1) Our'assessment of the impact on liquidity of the banks
of major European countries. Is this a danger to con-
tinued effective functioning of international financial
markets, taking into account:
a) central bank understandings on-lender of last resort;
b) deposit insurance facilities in various countries;
c) the possible unraveling of the interbank lending
market, especially for those banks, branches, and
subs operating mainly in the Euro-currency markets.
2) Our assessment of any likely impact on the foreign
exchange markets. Will impact be temporary and
manageable, or longer lasting.
3) What can the U.S. do to offer cooperation in avoiding any
possible risks?
a) promise to step up our intervention in support of
impacted European currencies?
b) point out that present intervention policy envisages
intervention to counteract exogenously derived instability?
c) offer to increase swap line-, institute new ones, increase
d) offer to be lender of last resort for all US branches and
subs'in European countries which might be affected, as
well as for European branches and subs in U.S.?
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