COMMENTS ON INR MEMORANDUM ENTITLED 'SOVIET MANEUVERING ON WHEAT DEAL WITH US' (RSB-133, OCTOBER 2, 1963)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP70T00666R000100160009-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 20, 2016
• Document Release Date: March 5, 2001
• Sequence Number: 9
• Publication Date: October 10, 1963
• Content Type: MF

Approved For Release 2007/03/03: CIA-RDP70T00666R000100160009-9
3-a
10 October 1963
I : The Honorable W. A v e r e l l 1 r ma n
Mder Secretary for Political Affairs
xmeat of State
Washington, D. C.
c&nts on 1 Mwxor8ac4um Intit
'fie attacked. subject counts were prepared before the
President f s announc oment of the wheat sale yesterday. fever-
theless, I thought they might be of some interest to you.
Deputy e, a
closure:
8utbject its
euvethug on Vneat Deal with US" (RSB-133,
October 2, 1963)
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TRANSMITTAL SLIP
DAT Oc,ber 63
TO:
ROOM NO.
BUILDING
REMARKS:
Pis note Mr.
Cline's
request
for brief comments.
1 1
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FROM: DDI
ROAM 2 BUILDING
6
EXRE JEM
FORM RFES 55 M NO 2A I REPLACES FORM 36-8 1;s GPO: 1957-0-439445 (47)
WHICH MAY BE USED.
Approved For Release 2007/03/03: CIA-RDP70T00666R000100160009-9
 l
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l%Acting SeQre~a
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FROM , ' ~1 ? ? rt Th 6"':v FOR
THE D S G ,K
" 4 !at e, ,. ;1. OmElrs T,S R , >
?'' Filxghot~ RCCIPtEYir.
N
4 ,?,f' BE t 7E0, I ANY "4 LISTI4O.Of
.i~,r I. ,,.~ ff l'~n';(i } i ?, ^t.i { . ? ' r ,' f I'kF~f+C+' ?. 14 r?
Soviet Mane IiEI
.,t .~ 1~ S , IQENCI: PROJECTS'C1NLE
uvers on~?Wheat Deal. with U9 AO~ITIONAI; r
COPIES ARE +;$
~Lj h~ ,? RECEIVED
IN NOR"
DISTRIDUTIONr
?Y:fY~y"d? .. - a f l " ! A- r[friu"1 ,~ : it ? r'} ,?
tlt? s {` *?~! ; ? ~. ~. G Lht } 4 hIr
r ,tw,Y/j Deskitsndications that the Soviets wish to b
w ,i3 Of wheat the Urgency of their need for ad itio uyl large qu8nt'itias
~, h'i~ly Sfil+' J and the r:;! f ll,'~i Ns'{o r, ,4
scope of the ir' ob jectives is unclear.,. 'leat. This paper sets r forth our view er,}
'tp r "~ '``tit (a) the Soviets have some leeway in bargain
itig with theurgent US because p, T )
their,.immediate requirements for additional wheat,are not aiad
(b)
at will probably try to use the wheat question to
5141, gain a more
II ,+I ! 11N) R S
general relaxation in US restrictions on US-Soviet trade.
iA M I 1 aA T+~ ~+
Estimated i
Degree y(y ,, ,
,irk I+; , .
{ of Soviet Need
AIaA,sx~, ~4
II '
"is +y
+
4ux`. tentative estimate
r + of phis yeax''s Soviet wheat croV hugge$ta
thgrt' present availabilities, snclud the most recent purchases to
" '~ about $ Million, tons from Canada ,~
ti tal
nd .Australia,,
should. telatci care o /gyp domes.,, lr Irt, f~~tf. . . ; c"i~l' tae i, I 1 ,~;
s v , ti , coneuigption, essential exports, and' Possibly some
reservs. replenishment,
3 =. ~'x
`off" y
( r;yd'ti... .. ?. ? .,.( t. ~*y?a ,1liiif 4 `
6" r1a3t t S+ra cK
There have been
indicationg, however, thatthe SSoviets are interest
~`, > Inr b ad
eying additional large quantities of wheat. .Soviet negotiators iadi_,.
y";sated to the Canadians that they might-be interested in a total of 10 to'
b 1 F "
ll million tons. Private US whey a traders who talked ' to the' Soviets in
t`''~*
11 ; Canada have indicated that the USSR would be interested in buying 3 millsci~'. fi "M
Ya .? tons of w4eat from the US.
AEPAR W,,3 T 4 '' STATE
r-iriii.4ti Off` ' "IixcnN 'h':
Atm .Roc ! " 'r ry+
,e?'.
. ~'++J additional wheat
sought:
for: building by the Soviets would probably be used
6 up Soviet reserves, for exports to Eastern Europe and
oseibly for exports to certain free-world customers. '
Even if' existing `.comrnit'rtents to Eastern Europe could be ialfilled with present Soviet
?supplies, these countries will need additional quantities of grain this
:-. year on account
,N{y'4~
press of a mediocre crop and the Soviet Union will be unde
',
ure to meet at least part of these additional re
' i9a:, Jr,~w~y
quirements. r
zr 16h some ineteincea ~" ~' ,,
% ~,? , wheat exxcirta play a role in Soviet tactics deal.ing with i'x~ee-world countries ? the In trade agrtemsnt for recently concluded Soviet-Bra, a
, Ica ~ , , Ap
s example., provided that the USSR would step up ex~or
of wheat to Brazil from about x'00, 000 tons in 1962 to 500, 000 tons this 1 -A
as,,r? a :"a x
Fa rj r ,y x,? , 71
Excluded from autolr'mtle downgrading
and degUICB s x
? i?t:;R'!;:''i T i ?1?i "i'Tit ?4 T4 .:`.
search`MQmoraadu>un,; i~,
8- , .October 2,. 1963;,
Approyed
se 1 0 7;310$ i.Q, F'
~p fV~i.., , ., I
%: c~ ORE ' T . DIS
 year and 600,ooo tons in i.96k.. Moscow will probably have to withdraw
there have been in(Ucwt?.ors that the Soviets are extricating themselves
from delivery contracts in Europe, and UK grain circles report that no
the Soviets probably wish to continue certain politically desirable wheat ,~
?Soviet Alternatives to Purchasing from the US
The foregoing suggests) that Soviet requirements for additional wheat::
may be for export or reserves, and prdjably not to avoid abnormal food
shortages in the urban areas of the USSR.
Furthermore, although at the moment there are no large stocks of
wheat (of a magnitude of several million tons) available for purchase
anywhere but in the US +he ustr and "
his win114er would be available sometime before the 1964 Soviet crop, enters .z
whea4 will in fact come from this winter's crop.) This would represent.
,a sizeable potential source of supply, since during the 1962-63 season
combined Australian and Argentine production, minus domestic consumption
;supply some additional quantities out of the 1963 crop.
Another possible alternative would be purchases of US wheat ,ucinn
ruropean dealers as intermediaries.. The recent Soviet purchase from
West Germany of 250,000 tons of wheat flour, which will apparently be'
grouna from uS wheat, illustrates yet another possible source of supply.
The Soviets would probably be very reluctant to?pay the US a high
price for additional wheat either in rat :ey to.-ins or in political con-
cessions, even if alternative scarces ,,f supply were not available. If
necessary, they would probably prefer fu_zrther to cut back exhorts or" to
The Soviet feed-grain Situation is extremely tight:. available
supplies will apparently be in3u:Cricient to maintain livestock herds at
present levels. This may lead the Sov:t.:ts to seek US feed grains,
particularly coax. ' Although thare are no major oources of feed grains
other than the US, the USSR would not bo forcod to buy corn from tho US
at any cost; a principal alternative would be to out back the livestock
herds by increased slaughtering.
? CONFIDENTIAL/NO FOREIGN DISSEM
 Approved For Release 2007/03/03 :.CIA-R DP70T00666R000100160009.9
CCI1'TIDDNt'IA:L/Nb r0 ZEIGN DISSEM
Al-;,ho-,?;h th,~; have l ten hin-tin? that they may need another
that a first step would belfor "Congress to change its regulations,"
acknowledging that he had in i.iind Johnson Act. A Soviet Embassy
official in Washington -t-old the presa that his government would like,
Former Soviet Ambassador to the US Maenshikov told a newsman in New York
Union is seeking wheat from US Gover:unent stocks, possibly on credit.
with the Soviets has apparently broken up, and comments by one major
company which withdrew from the negotiations indicate that the Soviet
of US brokers who have been talking with Soviet representatives in
Canada. The joint corporation formed by certain US brokers to deal
3 million tons of thus far they have refrained from making a
concrete proposal. Some disillusionment has been evident on the part
to get better terms from the US than it got from Canada.
It seems clear from Soviet actions that Moscow is convinced it
for their effect on US trade policy. They might well feel that they. are
the US press to rumors of a wheat sale to the USSR. It is by no means
inconceivable that they may have began fathering such rumors in part
holds at least some of the trumps in the wheat game. The Soviets have
undoubtedly been taking note of the eager reactions in Congress and in
.target. The Soviets may calculate that once they have obtained long-
term credits from US businessmen, most-favored-nation tariff status
in US policy on US-Soviet trade. They obviously are reluctant to con-
tract for US wheat within the framework of existing US-regulations.
Menshikov's comment suggests that Johnson Act restrictions are a prime
their allocations problemsiand at the same time to bring about changes,
in a position at one blow to obtain an additional amount of grain to ease
might shortly follow to facilitate repayment of the credits.
support for a wheat transaction, so that they will not be in the position
tion in any future negotiations on more general trade questions. As a
minimum, the Soviets probably want pr?ior assurance of Administration
In any case, the Soviets probab:"y are fishing for some affirmative
Administration action on wheat, preferably steps which would breach the
wall of US restrictions and thus strengthen the Soviet bargaining posi
01 aeing turned down on a formal proposal.
'7/iJ3lt~i