US Economic Statecraft for Survival 1933-1991 Part 12

90 Ibid.

91 Public papers of the President, 4 Jan. 1965 (US Government Printing Office, Washington DC, 1965).

92 LBJ Lib. NSF Committee File, folder: Miller Committee Meetings March 1965, 2, CIA paper, 'Soviet Bloc Use of Trade for Political Purposes in Relations with the Free World'. The only serious case cited was in relation to economic sanctions against Finland in November 1958.

93 I am not suggesting that there were not shades of opinion within the consensus. Orville Freeman, Douglas Dillon (and his successor Henry Fowler) and Stewart Udall, respectively secretaries of Agriculture, Treasury and Interior, were all more cautious than Rusk, Ball, Secretary of Defense McNamara and White House advisers. The most important convert to liberalisation was the Commerce Department under its new Secretary John Connor, who thought that 'Our export controls are somewhat out of date and the procedures should be simplified.' LBJ Lib. NSF Committee File box 23, folder: Miller Committee Conversations, John Connor, 16 Feb. 1965. Averell Harriman's view that East-West trade 'has become a sort of a game in the Department of Commerce to try to stop this trade' was no longer so appropriate after Connor took over in January 1965, ibid., Harriman, 16 Feb. 1965. Evidence of the consensus that emerged during the deliberations of the Miller Committee may be found at ibid., box 16, folder: Miller Committee Meetings, 45, 1819, 2526 March 1965, 'Review of United States Policy on East-West Trade', Philip Trezise, Deputy a.s.sistant Secretary of State for Economic Affairs, 4 March 1965, Att.i.tudes of Western Europe and j.a.pan Towards East-West Trade', Trezise, 5 March 1965, 'Prospects and Implications for Soviet Bloc Trade with the Industrial West', William Morrell, Deputy a.s.sistant Director of Research and Reports CIA, 'The Political Framework: Opportunities and Obstacles', Llewellyn Thompson, Amba.s.sador at Large a.s.sisted by Trezise et al., 18 March 1965, State Department Papers-'The Soviet Union', 'Our Allies', 'The Developing Countries' all 15 March 1965, 'The Use of Trade in Communicating With the European Communist Countries', 16 March 1965, CIA reports-'Soviet Bloc Use of Trade for Political Purposes in Relations with the Free World', 'Soviet Industrial Technology in US-USSR Trade', 'Dumping by Soviet Bloc Countries'-see Morrell to Edward Fried, Executive Secretary to the Miller Committee 12 March 1965. These are by no means all the doc.u.ments, but they are the most important and representative. For statements from private sources see ibid., box 17, folder: Miller Committee Statements submitted by private organizations 1 and 2. The most opposed to East-West trade was the CIO/AFL-'it would be utterly unrealistic to think that they [the Soviets] can do "business as usual"'.

94 Ibid., box 16, folder: Miller Committee Meetings 45, 1819, 2526 March 1965, 'Strategic Importance of Western Trade to the Soviet Bloc', Morrell, CIA, 4 March 1965.

95 Ibid., box 19, folder Miller Committee: Department of State or CIA Pieces on East-West Trade, Thomas L.Hughes, Department of State Bureau of Intelligence to Secretary of State, 18 June 1964, 'The Communist Economic Offensive Through 1963'.

96 Ibid., box 16, folder: Miller Committee Meetings 45, 1819, 2526 March 1965, Presentation by Llewellyn Thompson, Amba.s.sador at Large, a.s.sisted by Trezise et al., 18 March 1965.

97 Ibid.

98 Ibid., box 18, folder: Miller Committee Hearings at the Senate Foreign Relations Committee, statement by George F.Kennan, 26 Feb. 1965.

99 Ibid., box 23, folder: Miller Committee Conversations, 18 Feb. 1965, at same location statements of Feb. and March by Connor, Ball, Harold Linder Chairman Export Import Bank, Thomas Mann Under Secretary of State for Economic Affairs, Douglas Dillon.

100 Ibid., box 25, folder: Miller Committee Report to the President, and Miller Committee members to Johnson, 29 April 1965.

101 LBJ Lib. NSF Committee File box 6, folder: NSAM 324, Special Presidential Committee on US Trade Relations with Eastern European Countries and the Soviet Union. McGeorge Bundy memo to holders of NSAM 324.

102 LBJ Lib. WHCF Legislation box 155, folder: LE/TA, Califano to Johnson, 23 March 1966.

103 For the political discussion on tactics see LBJ Lib. Papers of George Ball, box 2 3, folder: East-West Trade.

104 LBJ Lib. NSF, NSC Meetings folder: NSC Meetings vol. 5, tab 67, 4/24/68, Eastern Europe.

105 Ibid., Administrative History, State Department, vol. 1, ch. 3, sect G, East-West trade.

106 LBJ Lib. Department of Commerce Administrative History, vol. 1, part 3, 1964 107 Ibid.108 FRUS 196468, vol. ix, doc. 194, 'US Thinking on COCOM List Review', 23 April 1968. 109 Ibid., doc. 196, State Department memo 'Export of Computer Technology to Eastern Europe and the Soviet Union by Our Allies', 21 Dec. 1968. 110 Costigliola, in Cohen and Tucker, Johnson Confronts the World.

8 Economics becomes high politics: constructing the base and building up detente, 196974 1 Richard Nixon, The Memoirs of Richard Nixon (Book Club a.s.sociates, London, 1978), p. 941.

2 Henry A. Kissinger, 'The Vietnam Negotiations, Foreign Affairs, 47 (2), 1969, pp. 21819.

3 Nixon, Memoirs, p. 602.

4 Mastanduno, Economic Containment, p. 147, quoting source US Congress, Senate Committee on Banking and Housing and Urban Affairs, Subcommittee on International Finance, 'The Role of the Export-Import Bank and Export Controls in US International Export Policy', hearings 93rd Congress, 2nd session, 2, 5, 10, 23, 25 April, and 2 May 1974, p. 352.

5 Gary K. Bertsch and Steven Elliott, 'Controlling East-West Trade in Britain: Power, Politics and Policy', in Bertsch (ed.), Controlling East-West Trade, p. 212, quoting OECD statistics.

6 An exception to this generalisation is the 1951 Battle Act and congressional pressures on the Truman Administration to tighten up export controls; however, as we have seen, Truman avoided the more draconian consequences of all this.

7 The term periphery is taken from others, in particular Robert Litwak (see below), and it is not a term that endears itself to the author. For the dangers of Cold War paradigms marginalizing other important developments and distorting the view of post-war international relations see Alan P.Dobson (ed.) with S.Malik and G.Evans (a.s.sistant eds), Deconstructing and Reconstructing the Cold War (Ashgate, Andover, 1999).

8 Cold War International History Project (CWIHP) Bulletin, 11, winter 1998, p. 166 7, Report by Four Chinese Marshals-Chen Yi, Ye Jianying, Xu Xiangqian, and Nie Rongzhen-to the Central Committee, A Preliminary Evaluation of the War Situation' 11 July, 1969.

9 For a discussion of the issues that are involved with the USA's post-war power see Dobson, in Lundestad (ed.), No End To Alliance, pp. 13467; and Dobson and Marsh, US Foreign Policy Since 1945.

10 European Community (EC) succeeded the EEC in 1967 and then became the European Union (EU) in 1993.

11 There were in fact some complex arrangements-the Smithsonian Agreement- which established a two-tier gold price, but the eventual outcome was a freely floating dollar.

12 FO 371/171957, Trevelyan to Home, 25 April 1963.

13 Ibid., Northern Dept. FO brief for the President of the Board of Trade for his visit to the USSR, Sept. 1963; see also Alan P.Dobson, 'Anglo-American Relations and Diverging Economic Defence Policies in the 1950s and 1960s', in Jonathan Hollowell (ed.) Anglo-American Relations in the Twentieth Century (Macmillan, Basingstoke, 2001).

14 Carter, International Economic Sanctions, pp. 659.

15 Henry Kissinger, The White House Years (Weidenfeld & Nicolson and Michael Joseph, London, 1979), p. 966.

16 Richard Crockatt, The Fifty Years War: The United States and the Soviet Union in World Politics, 19411991 (Routledge, London, 1995), p. 230.

17 Kissinger, White House Years, p. 403.

18 Export Administration Act, 1969, PL 91184.

19 Malloy, Economic Sanctions, pp. 529; Carter, International Economic Sanctions, pp. 649.

20 Export Administration Act, 1972, PL 92412.

21 Gaddis, Strategies of Containment, pp. 2745. Fungiello observes that 'detente was in large part the response to Russia's economic weakness', American-Soviet Trade, p. 177. Both David P.Calleo in Beyond American Hegemony: The Future of the Western Alliance (Basic Books, New York, 1987), and Thomas J.McCormick in America's Half Century: United States Foreign Policy in the Cold War (Johns Hopkins UP, Baltimore, 1989) also emphasise, though in rather different ways, the importance of the economic situations in the USA, the Soviet Union and in Eastern Europe.

22 Richard Ned Lebow and Janice Gross Stein, We All Lost the Cold War (Princeton UP, Princeton, 1994), p. 156.

23 Ibid., p. 159.

24 Raymond Garthoff, Detente and Confrontation: American-Soviet Relations From Nixon to Reagan (Brookings Inst.i.tution, Washington, 1985, revised 1994), p. 88; Nixon, Memoirs, p. 875. Some have argued that the Soviets were consistently more inclined to peaceful co-existence, and thus more trade, than most of conventional Western literature allows: see R. Bideleux, 'Soviet and Russian Perspectives on the Cold War' in Dobson and Marsh (eds) Deconstructing and Reconstructing the Cold War, pp. 22651; and R. Bideleux and I.Jeffries, A History of Eastern Europe: Crisis and Change (Routledge, London, 1998).

25 Of course, this worked on both sides. The East Europeans had an interest in detente that was easily differentiated from the Soviets', and that proved divisive within the Eastern bloc just as West European detente created tension in the Western camp. See R.Davy (ed.), European Detente: A Reappraisal (Sage/RIIA, London, 1992).

26 Schlesinger, The Imperial Presidency. 27 Nixon Project, National Archives, WHCF, FG-11, State Department box 5, folder: EX FG11, 6/1/726/30/72, Larry Brady to Flanigan, 21 June 1972, Subject Morgan Culver Hearings on Organization of the Executive Branch to Deal with the Issues of Foreign Economic Policy, Rogers' testimony. Also Roger B.Porter, Presidential Decision Making: the Economic Policy Board (Cambridge UP, New York, 1980), p. 31, footnote 2, records that the CIEP 'met infrequently'.

28 Seymour Hersh, The Price of Power: Kissinger in the Nixon White House (Summit, New York, 1983), pp. 6970; W.Isaacson, Kissinger: A Biography (Simon & Schuster, New York, 1992), p. 136.

29 Richard Thornton a.s.serts that there was a fundamental divide between the two. He claims that Nixon sought to 'preserve the bipolar order through modifications of containment', Richard Thornton, The Nixon-Kissinger Years: Reshaping America's Foreign Policy (Paragon House, New York 1989), p. 146. At the heart of this, and his 'princ.i.p.al objective' throughout his first term, was to create an adversarial relationship between the PRC and the Soviet Union by easing the difficulties in each other's strategic rear, respectively through withdrawal from Vietnam and by detente in Europe, (ibid., p. 4). This strategy would also reconfigure the power relationship between the USA, the Soviet Union and the PRC, but with the main emphasis still on the US-Soviet relationship. Thornton juxtaposes this essentially bipolar view by the strategic vision he a.s.signs to Kissinger, which emphasises multipolarity. Kissinger is then credited with aiming to reposition the USA back from its forward strategic positions and with adopting a policy of detente to stabilise relationships. By de-emphasising Kissinger's traditional geopolitical views and by emphasising his responsibility for and reliance on detente, Thornton can exonerate Nixon and blame Kissinger for the failures of US detente policy in the mid-1970s. Unfortunately for the historical record, Nixon and Kissinger aroused strong emotions in many of those who wrote about them. Thornton clearly falls into this category, as does Seymour Hersh, who is highly critical of them both, only distinguishing between them, according to Robert Schulzinger, in that 'detestation of Kissinger surpa.s.sed his [Hersh's] contempt for Richard Nixon'; Robert D. Schulzinger, Henry Kissinger: Doctor of Diplomacy (Columbia UP, New York, 1989), pp. 67. Hersh's, Price of Power is important for the theme of the present chapter because he a.s.serts a major connection between the trade in US grain and the progress of SALT. While the current a.n.a.lysis agrees that economic inducements, and grain in particular, played a more important part in SALT than either Nixon or Kissinger allow, it also challenges the degree and extent of their importance as claimed by Hersh. His book is based on extensive interviews, but the evidence is not always dealt with plausibly, there are errors, and his interpretative theme is exaggerated. The main justification for these remarks lies in the body of the present narrative, but two ill.u.s.trations follow. On p. 563 Hersh claims that Kissinger negotiated credits for US grain sales to the Soviets ex post facto on his trip to Moscow in September 1972. In fact, the credit arrangements were agreed in July 1972, but by pushing the date back to September it looks as if Kissinger was compounding previous errors by arranging credits, which Hersh claims subsidised the Soviet purchases: the credits were actually at the commercial level of 6.125 per cent. On this see Garthoff, Detente and Confrontation, p. 306; it might also be noted that Flanigan, Peterson and Butz were more important than Kissinger in dealing with the grain deal. However, he rightly points out that Kissinger was involved-harder evidence of this than he provides is to be found in the Nixon Project, Flanigan Papers, box 10. The second point is that on p. 347, in an attempt to prove that there was a direct and controlling link between SALT and grain, he quotes Jesse Calhoon, president of the Marine Engineer's Beneficial a.s.sociation, whom the Administration were trying to persuade to go along with a grain deal: '"There was one quote that sticks in my mind" he [Calhoon] said. One of Nixon's aides, stressing the urgency of the situation, solemnly cited the words of Anatoly Dobrynin, telling the union leader that Dobrynin had threatened "that there would be no SALT agreement unless the grain deal was worked out".' This, of course might be true, but it is a report three people removed from the original, and in such circ.u.mstances one could imagine an aide saying such a thing, whether or not it were actually true, in order to persuade Calhoon to come on board. It is on the basis of this kind of evidence and reasoning that the present work sees Hersh's interpretation as exaggerating the strength of the link between grain and SALT.

30 Joan Hoff, 'Nixon Doctrine' in jentleson and Patterson (eds), Encyclopedia of US Foreign Relations, vol. 3, p. 252, and her Nixon Reconsidered (New York, Basic Books, 1994). This view of the world ascribed to Nixon is very similar to that of George Kennan expressed early in the Cold War.

31 Robert S.Litwak, Detente and the Nixon Doctrine: American Foreign Policy and the Pursuit of Stability, 19691976 (Cambridge UP, Cambridge, 1986), p. 56. 32 Department of State Bulletin, LXXVI, No. 1963, 7 Feb. 1977, p. 102. 33 Litwak, Detente and the Nixon Doctrine, pp. 789. 34 Garthoff, Detente and Confrontation, pp. 6970, quoted with approval in Stephen E. Ambrose, Nixon: Volume Two-The Triumph of a Politician 19621972 (Simon & Schuster, New York, 1989), p. 233.

35 Gaddis, Strategies of Containment, p. 275.

36 Kissinger, White House Years, pp. 1356.

37 Nixon, Memoirs, p. 618.

38 Kissinger, Diplomacy, p. 714.

39 Kissinger, White House Years, p. 130.

40 See Joseph S.Nye, jr., Bound to Lead: The Changing Nature of American Power (Basic Books, New York, 1990), ch. 6, and Understanding International Conflicts (Longman, New York, 1997), ch. 8.

41 Gaddis, Strategies of Containment, p. 299, and Lebow and Stein, We All Lost the Cold War, part 2.

42 Kissinger, Diplomacy, pp. 737, 741.

43 Nixon, Memoirs, p 1036.

44 The most detailed account of this is Stern, Water's Edge.

45 Garthoff, Detente and Confrontation, p. 13.

46 Richard Rosecrance, 'Detente or Entente?', Foreign Affairs, 53 (3), 19745, pp. 46481, at p. 464.

47 Litwak, Detente and the Nixon Doctrine, pp. 923.

48 Henry Kissinger, A World Restored: Metternich, Castlereagh and the Problem of Peace 18121822 (Universal Library, New York, 1964).

49 Coral Bell, The Diplomacy of Detente: The Kissinger Era (St Martin's, New York, 1977), p. 5. Bell sees detente as a management system for adversary power relations, where tensions are consciously reduced in both central and regional balances of power, as opposed to Cold War normal conditions, where high tension is maintained.

50 Quoted from Lebow and Stein, We All Lost the Cold War, p. 154; and Nixon Memoirs, p. 618.

51 Henry Kissinger, Years of Upheaval (Little Brown, Boston, 1982), p. 585. Apparently, by this time, Nixon was incapacitated as a result of the Watergate scandal, and it was Kissinger who took the decision about how to respond to the Soviet proposal for intervention in the Middle East.

52 Lebow and Stein, We All Lost the Cold War, section 2.

53 Litwak, Detente and the Nixon Doctrine, p. 196.

54 Nixon, Memoirs, pp. 1356.

55 Isaacson, Kissinger, p. 209: source Lake interview. Also, according to Isaacson p. 201, Defense Secretary Melvin Laird ensured that he got his own man, Vice Admiral Noel Gayler, as head of the National Security Agency, so that, unknown to Kissinger, he could receive copies of all Kissinger's back-channel communications: source, Laird interview. Hersh, Price of Power, pp. 34041, claims Kissinger specifically ordered records of back-channel meetings to be edited and revised: for example, when Gerard Smith, head of the Arms Control and Disarmament Agency and chief negotiator in the 'front-channel' SALT negotiations, requested copies of the record.

56 Kissinger, Diplomacy, p. 718.

57 Nixon, Memoirs, p. 407.

58 Public Papers of the President: Richard M.Nixon 1969 (US Government Printing Office, Washington DC, 1971), 25 July 1969, p. 550.

59 Nixon, Memoirs, p. 281.

60 Nixon Project, WHCF CO box 71, folder [EX] CO 58, 11/1/7011/30/70, Flanigan to Kissinger, memo of recent meeting between Nixon and Stans, 23 Nov. 1970.

61 Nixon Project, WHCF CO box 70, folder: [EX] CO 158, USSR Begin 5/30/69, Stephen Ball to Haldeman, 22 April 1969.

62 Ibid.

63 Ibid.

64 In a memo to Haldeman, 1 May 1969, Kissinger refers to 'the NSC meeting on overall East-West trade on May 14', Nixon Project, WHCF CO box 70, folder: [EX] CO 158 USSR Begin 5/30/69. In his The White House Years, pp. 1534, he repeatedly refers to an NSC meeting on 21 May at which Nixon made the crucial decisions. There is thus some ambiguity about the dates, especially as Kissinger refers to the meeting on 14 May as being scheduled to deal with East-West trade generally and then refers to the meeting on 21 May as the one at which East-West trade came up for discussion and at which the Administration had to take a position on EAA and on a number of licensing issues. Possibly both meetings dealt with East-West trade, or the subject for the 14th was postponed until the 21st, or Kissinger made a mistake about the 14th.

65 Kissinger, White House Years, pp. 1534.

66 Ibid., p. 154.

67 Garthoff, Detente and Confrontation, p. 91.

68 Ambrose, Nixon, pp. 4612.

69 Lebow and Stein, We All Lost the Cold War, p. 173.

70 Nixon, Memoirs, p. 523.

71 Nixon Project, WHCF CO box 71 folder: [EX] CO 158, 11/1/7011/30/70, Flanigan to Kissinger, 23 Nov. 1970. Stans at Kissinger's request postponed a trip to Moscow.

72 Nixon Project, WHSF WHCF: CF box 3, folder BE 56 Post-war Planning, Peterson to Nixon, 12 April 1971.

73 Ibid., WHCF CO box 19, folder: CO 342 PRC (Red China) 1/1/715/31/71, Nixon Statement 14 April 1971. In contrast, at a press conference two days later in response to a question about Cuba, Nixon said: 'Until Cuba changes their policy towards us we are not going to change our policy toward Cuba.' See Nixon Project WHCF CO box 23, Korologos to Comesanas, quoting Nixon, 28 Sept. 1971.

74 Ibid., Theodore L. Elliot Jr. to Kissinger, 17 April 1971.

75 Ambrose, Nixon, p. 452, drawing on Hersh, Price of Power and Garthoff, Detente and Confrontation, succinctly details the secret understandings that underpinned the opening with the PRC.

76 Ambrose, Nixon, p. 451, drawing on Hersh, Price of Power and Garthoff, Detente and Confrontation.

77 Hersh, Price of Power, pp. 33449.

78 Kissinger, White House Years, p. 716.

79 Hersch, Price of Power, p. 345; Garthoff, Detente and Confrontation, pp. 92, 183; Ambrose, Nixon, p. 451; Lebow and Stein, We All Lost the Cold War, p. 173. Hersh emphasises this to the point of exaggeration-his chapter dealing with this is actually t.i.tled 'SALT: A Grain Deal', the others are more measured in their judgements. Isaacson, Kissinger, p. 805, note 33, cites an unpublished work by William Hyland, one of Kissinger's a.s.sistants, which he refers to as a reb.u.t.tal of Hersh's thesis and something he has relied on in his own work. However, he fails to spell out exactly what is reb.u.t.ted, though it is noticeable that he does not emphasise the links claimed by Hersh between SALT and the grain deal. Readers may also wish to refer back to footnote 29 of this chapter.

80 Nixon Project, WH Special Files, WH Central Files, Confidential Files box 6, folder: CO 342 PRC 197174, Peterson to John Erwin iii, 10 May 1971, subject Under Secretaries Committee review of China trade.

81 Ibid., WHCF CO box 71, folder: [EX] CO 158 10/1/7112/3/71, Whitacker to Nixon via Ehrlichman, 2 Nov. 1971. Hersh, Price of Power, pp. 3345, on basis of an interview with Colson, seems to suggest that Colson was earmarked for the job of persuading organised labour to accept a grain deal at a celebratory dinner party on the presidential yacht Sequoia on the Potomac on 19 May 1971, the eve of the SALT breakthrough announcement. However, he also subsequently records that Kissinger discussed the issues with organised labour in June, which suggests that Colson was not yet leading these discussions, though he was aware of the problem.

He did not actually take the lead until October.

82 Hersh, Price of Power, p. 347.

83 Ibid., WHSF WHCF, CF box 17, folder: FG 620 CIEP 197174, Laird to Nixon, 29 June 1971.

84 According to Isaacson, Kissinger, p. 201, Laird may very well have known precisely what was going on, but, as Kissinger and Nixon did not know that he knew, the sense of potential embarra.s.sment would still be real.

85 At the same time the USA gave the go-ahead for the sale of two British computers to the Soviet Physics Laboratory at Serpukhov. For some months the British had argued in vain with the Americans that the Laboratory was a centre for international collaboration, and therefore that the sales should be authorised. Then, after negotiations between the Pentagon, the State Department and a British delegation, it was agreed that constant British monitoring of the output and use of the computers would be sufficient to enable the deal to go ahead. In the end the Soviets did agree, but it was such a slight on their sovereign integrity that everything was kept secret by both sides. Nixon Project, WHCF CO box 80, folder: CO 160 4/1/715/30/71, Prime Minister Heath to Nixon. I am also grateful to Ralph Land, who worked for many years in the British computer industry and who gave some of the above details at a symposium on COCOM in the LSE 22 Oct. 1999.

86 Ibid., folder: [EX] CO 158 1/1/721/31/72, Hormats to Kissinger, 3Jan. 1972.