NSPG MEETING 22 JULY 1981 ON (A) SOVIET GRAIN AGREEMENT (B) CORN SALE TO POLAND

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R000601580003-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 20, 2016
• Document Release Date: September 17, 2007
• Sequence Number: 3
• Publication Date: July 21, 1981
• Content Type: MEMO

Approved For Release 2007/09/17: CIA-RDP84B00049R000601580003-4
SECRET
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MEMORANDUM FOR: Director of Central Intelligence
21 July 1981
FROM : 25X1
Acting National Intelligence Officer for USSR-EE
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SUBJECT . NSPG Meeting 22 July 1981 on
(a) Soviet Grain Agreement
(b) Corn Sale to Poland
1. The NSC discussion paper attached at Tab A adequately presents
the two issues to be discussed and the options to be considered. The
corn sale to Poland is so obviously desirable, and the grain agreement
with the USSR so much more important that I will confine myself to this
latter issue here. Several points need to be stressed:
Soviet grain crop -- en if our Soviet grain crop projection
190 million tons 1j4 off by + 10 million tons, the USSR
will need to import 1 the grain it can unload and distribute
in country -- i.e., 40-45 tons in the year beginning
1 October 1981.
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IYUII-ui sources u l 91 a 111 -- I lit=[1Z la J V I I I grea
uncer
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y about the amount of grain that will be available from non-US
sources. US government experts and trade sources believe that 3 -
these sources may have as much as 35 million tons available
for export to the USSR after all their regular customers are
served. This would require some premium payments by the Soviets.
In addition, the Soviets could bid away, at premium prices,
perhaps 5 million tons or more of grain through transshipment
from third countries. US farmers would, of course, largely
fill in behind, and would not be significantly worse off.
? Soviet grain demand from US -- Under normal circumstances --
i.e., without any US- or Soviet-imposed market constraints the US could expect to capture between 20 and 25 million tons
of Soviet grain purchases. If the USSR were to discriminate
against the US and resort to non-US source grain to a maximum
(including paying premium prices), the US direct sales to the
USSR could be reduced to zero. This is, of course, a worst
case contingency.
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SECRET Deriv Cl By Signer
Revw on July87
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Jtl.Kt I
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? The US-Soviet LTA -- One thing is clear: The Soviets
will not accept an extension of the current LTA without
the guarantee. If we insist on its removal, and the LTA
discussions come to naught, the USSR would still have the
option of drawing on US grain in the open market as they
chose. Alternatively, they could discriminate against
the US as described above. What they would loose without
an agreement is the explicit guarantee of access to the
minimum of 6-8 million tons of grain provided for in the
present LTA.
2. I am attaching a fact sheet on the current LTA expiring
this September at Tab B--
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Attachments: two
As Stated
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SECRET
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TAB 8"
US-USSR Grain Agreement
(1 October 1976 to 30 September 1981)
Terms and Conditions
Authorized the USSR to purchase from private commercial firms
6 million metric tons of US wheat and corn, in approximately
equal proportions.
Allowed the USSR to purchase an additional 2 million tons of
grain in any given 12 month period without additional
consultation.
Purchases in excess of these quantities would
be authorized only after consultation.
Gave the US authority to suspend the guaranteed minimum purchase
if US supplies totaled less than 225 million tons.
Purchases and/or sales of wheat and corn were to be made at
prevailing market prices and with no provision for official
US funding.
A US-USSR Maritime Agreement defining terms for transporting
US grain to the USSR was negotiated separately.
Advantages of the LTA
The LTA provided obvious advantages to both Washington
and Moscow.
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--For the US, the agreement guaranteed sales of 6-8 million tons
of US grain regardless of Soviet demand; it offered US farmers
the prospect of substantially greater sales in time of relatively
low Soviet demand. In 1977, for example, 6 million tons of the
10.5 million tons the USSR imported came from the US. (In
contrast the USSR had bought only 3 million tons of US grain six
years earlier). It also provided a degree of insulation from
swings in foreign grain demand. Finally, by providing the prospect
of a more stable and assured foreign market it eliminated some
of the uncertainty of domestic production decisions.
--For the USSR, the agreement provided access to the world's largest
most stable grain producer at a time when agricultural sales were
under embargo. It too provided a tangible sign of US intent to
pursue detente with the USSR.
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THE DIRECTOR OF CENTRAL INTELLIGENCE
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