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

Document Type: 
Collection: 
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
Case Number: 
Publication Date: 
July 21, 1981
Content Type: 
MEMO
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PDF icon CIA-RDP84B00049R000601580003-4.pdf134.69 KB
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Approved For Release 2007/09/17: CIA-RDP84B00049R000601580003-4 SECRET ? MEMORANDUM FOR: Director of Central Intelligence 21 July 1981 FROM : 25X1 Acting National Intelligence Officer for USSR-EE ? 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. t t i t IYUII-ui sources u l 91 a 111 -- I lit=[1Z la J V I I I grea uncer a n 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. ? SECRET Deriv Cl By Signer Revw on July87 Approved For Release 2007/09/17: CIA-RDP84B00049R000601580003-4 Approved For Release 2007/09/17: CIA-RDP84B00049R000601580003-4 Jtl.Kt I ? ? 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-- ? ? Attachments: two As Stated -2- SECRET Approved For Release 2007/09/17: CIA-RDP84B00049R000601580003-4 Approved For Release 2007/09/17: CIA-RDP84B00049R000601580003-4 ? 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. V --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. ? Approved For Release 2007/09/17: CIA-RDP84B00049R000601580003-4 Approved For Release 2007/09/17: CIA-RDP84B00049R000601580003-4 Approved For Release 2007/09/17: CIA-RDP84B00049R000601580003-4 Approved For Release 2007/09/17: CIA-RDP84B00049R000601580003-4 THE DIRECTOR OF CENTRAL INTELLIGENCE Approved For Release 2007/09/17: CIA-RDP84B00049R000601580003-4