HENRY FORD AND THE KAMA RIVER PROJECT

• Document Type: CREST
• Collection: Library of Congress
• Document Number (FOIA) /ESDN (CREST): LOC-HAK-14-3-10-1
• Release Decision: RIFLIM
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: January 11, 2017
• Document Release Date: October 21, 2011
• Sequence Number: 10
• Publication Date: June 11, 1971
• Content Type: MEMO

No Objection to Declassification in Full 2012/04/23: LOC-HAK-14-3-10-1
MEMORANDUM
NATIONAL SECURITY COUNCIL
MEMORANDUM FOR:
FROM:
SUBJECT:
ACTION
June 11, 1971
DR. KISSINGER
ERNEST JOHNSTON
Henry Ford and the Kama River Project
Pete Peterson has requested your concurrence on the memorandum at
Tab A, which he proposes sending to the President on Monday. It would
take us one step along the way toward approving U.S. participation in
the Soviet Kama River Project.
Peterson informs the President that you and he will shortly submit a
memorandum to the President indicating a scenario of policy changes
relaxing our restrictions on East-West trade. (I have been working on
that with Peterson's staff. It gives a rank ordering on possible U.S.
moves.) Peterson informs the President that the inter-agency trade
potential study has been completed and concludes that a total relaxation
of our East-West trade barriers would improve our balance of payments
position by about $500 million in 1975. (After the President's expression
to Ambassador Beam of interest in such a study, Peterson may wish to
forward it.)
Peterson states that the Soviets have made substantial progress in
contracting with Renault for the Kama project but in addition have signed
a protocol with the Mack Truck Company which appears to reserve, an
important role for that company. The protocol expires June 25 though
this may be only a bargaining tool with Renault. Peterson believes it
possible that should we change our policy on the Kama River Project
the commercial benefits to the United States might reach $200 million.
He suggests that if there is any possibility of a relaxation on the Kama
River Project in the next few months that he, you, or the President should
inform Henry Ford that our policy on Kama may change and there is no
objection to his renewing his contacts with the Soviets. This would not
prejudge a favorable decision on U.S. participation in the Kama River
CONrIDENTIAL
DOS, OSD, NSS,
Reviews Completed
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11.
CONFIDENTIAL
Page 2
Project, but merely give advance warning that we may be making decisions
on formal applications by other companies for the project. I am somewhat
dubious of moving in this fashion, particularly in informing one member
of the business community about a possible change in U. S, policy, though
certainly Ford's role, because of Secretary Laird's previous public
objection, is unique. Instead of concurring with the Peterson memorandum,
you might wish to suggest that this decision await the preparation of the
memorandum outlining the scenario policy changes since a change in our
position on the Kama River Project would be an important element in the
first steps. An alternative in the scenario would be a public announcement
forewarning other companies that the U. S. may shortly be considering the
Kama project, rather than merely approving the existing formal applications.
Hal Sonnenfeldt believes that however optimistically we may perceive the
present state of relations with the USSR, our recent decision on trade with
the Soviets should stand for a while. The Soviets now have ample
opportunity to avail themselves of import opportunities, for example in the
agricultural sector, which is of special importance to the Administration.
Hal Sonnenfeldt strongly believes that at the very least there should first
be developed a coherent scenario for our trade policy, including that
relating to the East Europeans; once this has been done and the political
factors have been weighed, there will be ample time to move on individual
projects.
RECOMMENDATION:
That you inform Peterson:
(a) that you concur in his memorandum
APPeoVC ? "DiSitiePigoVE
(b) that further decisions on East-West trade relaxation should
await the scenario
APPRovC ZISAPP401/E
(0 that you oppose any move on Kama now.
IciPPR,ova --Do?APPRO VC
Concurrence: Hal Sonnenfeldt
CONFIDENTIAL
No Objection to Declassification in Full 2012/04/23: LOC-HAK-14-3-10-1
or'
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CONFIDENTIAL
MEMORANDUM FORs THE PRESIDENT
FROM: PETER C. PETERSON
Subjects
Act'xoN
Henry Ford and the Karaa River Project
The interagency group that has been doing a factual and-estimative study
of East-West trade has completeti its Feport. V hile the report has not
yet been reviewed at high levels, it is interesting that agreement was
reached that there is room for substantial increases in our exports to
the Soviet Union and Eastern Europe. Even more important, it is agreed
that we could improve our annual net balance of payments position by
about $500 million by 1975 were we to align our policies closely on the
agreed international COCO/vi standards. Even Defense, which is opposed
to relaxing our restrictions, agrees that this potential exists for trade
and balance of payments gains.
Henry and I will shortly be submitting to you a memorandum outlining
a scenario of policy changes to relax our restrictions. To the extent
that you approve; your Administration will generate morebusiness,
more jobs, and a stronger balance of payments position for the U.S. economy.
One of the early matters for your will be the Hama River Project.
As you know, the Soviets intend - with or without U. S. participation -
to construct the largest truck manufacturing complex in the world on the
Kama River site.
Last year, Henry Ford decided not to pursue conversations with the
Soviets which might have led to Ford assuming a major role for the Kama
River Project. Ford backed off after Secretary Laird's remarks which
were interpreted as indicating Administration opposition to American
business helping the Soviets produce trucks. !Today, the domestic .
political considerations may be different with the Viet-Narn withdrawal
program so far advanced - again, they may not be. This is where your
judgment will be required.
CONFIDENTIAL
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Z
In the meantime. the Soviets hattia advancecl quite far 4,3 arranging for r. French
firm. 11.ersault, to bgr the prime fQreigri contractor. White the is-iatter is still
sornewixat obscure, Lie hut net certain. thtzt Renault will Au this
role. bleverthelosr, the toviets have signed a protecot with Mack Track
which. on the fact of Lt, appears in certain circurnstancoe to reserve the
major forolgrz cot:collard role for Mack Track. The Praocol ez7iret Jtvie 25.
There is some resatom, to believe. tirAvever. tbat the Etivivts may be ailing the
protocovr1tL Ak Track to improve their negotiating position with Lel:atilt.
Their earlier effor4 t netiate a e,;ont.ract with, Daimier43ens as the 9rirnei
contractor tail thrnagh when the two parties wore unable t* agree on terms.
The Soviets also signed a letter of -inlelev-ith Ftprindell Dret-s- jar, an American
entincoring fiim. which contetripleter IYrovision ef about "413 million in
cngiaecrins cervices for zieslin of the foundriee- at fiCacria River Ansi the sul4ply
of aLoat $20 million worth of engineering eflaiproent. An intoretting feature
of title proptisal is that payment vroaln be made viitti tligh-gra4 chrome ore.
Ln short copply in the Fres World since the embargo on trade with Rhodesia
was ettablietted,.
rilaYe are also indications that were our policy to change. t.:40 Soviets +avoid
be interested in other contracts uith AerLcz firms relatoci to tho Eames
River Project. It has been estimated y the CIA that tb.a f:ziots,,i may spend.
as wiich at FA billion. ia hard currency purchasvs tho 4.st. of whie4at
i4aet '4`;20 ratilion 1.34 gootia and aervicus coiaW be purchased from the tI.E.
before the project le coaapleted.
? Nti hit* Ford may no longer be intereste-4 and it might in any carte be too late
Lor thco-i co cttir: ihrt piciazre at; iar toe ere v:aitcorae4, if therc
* poctibility it you wonid famorattly cotdi,r iiceneing app?catioho from
other Anierleen firrrae si.tetx as. Mack Track an.d1oLL 1)ressier, think it
? would be politically 4esirable for yooor lenry Kissinzor or me to .ilrorriptly
contact lienry rord end toll him, without conveying a final decision. that the
situation bat thangeri and that in theive now cirturr.c.,itaticos you 1000.id have titt
objections to his renewing his contacts with. the f3oviets if he were to inclined.
It it a matter of personal indifference to me who tjoes it but if year &Makin4 its
moving in. thigt -4.3raction. 1 thiak it woald b-o c.otart4:ema for rat:net:Use from the
Vhite ifouse to tall
.Approved. I will call Henry Ford
Apprefirtd, Henry KittwinZor i.e FON!
.Appreved Mr,; Peterson to call Henry Ford
Disapproved
amt,OtwalralWalmr
CC: IIKiesiager C ON r191- NTLet L
_"No Objection to Declassification in Full 2012/04/23 : LOC-HAK-14-3-10-1 :6 /I