NSC MEETING ON MONDAY TO DISCUSS THE VERSAILLES SUMMIT AND EAST-WEST ECONOMIC RELATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R000300530003-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 38
• Document Creation Date: December 20, 2016
• Document Release Date: January 3, 2008
• Sequence Number: 3
• Publication Date: May 21, 1982
• Content Type: MEMO

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JLV~
21 May 1988
MEMORANDUM FOR: DCI
FROM: SA/DCI
SUBJECT: NSC M eting on Monday to Discuss the Versailles Summit
and East-West Economic Relations
1. At 1500 hours on 21 May, we were informed that there would be an
NSC meeting chaired by the President on Monday, 24 May; the Versailles
Summit and East-West Economic Relations will be discussed. We were told
that the working papers for this meeting would be sent to CIA Hqs. by about
1200 hours on 22 May.
2. In the absence of NIO/Economics) STAT
nd DDI's Lare the action officers. Upon receipt
o agen a particulars rom e , will draft and oversee the 25X1
preparation of relevant background papers an a cing points for you. SOVA is
presently drafting an updated paper on the Yamal pipeline.
3. By way of background, discovered (from a contact on the NSC Staff)
that State was pushing for the 1 ing of all oil and gas sanctions against
the Soviets in exchange for support from all our European allies on credit
restrictions for the Soviets; thus a quid pro quo proposition for our European
allies. The NSC reportedly opposes this State position and hurriedly called
this NSC meeting; the NSC is preparing a detailed option paper on this subject
which we should receive on 22 May.
4. I've enclosed the following information which should be of background
use for this NSC:
Tab A: DDI's Versailles Summit Update for the 18 May SIG on this
subject; Talking Points for the Versailles Summit SIG meeting
on 18 May;
Tab B: SOVA 20 May memorandum on the Status of the Soviet-Western
Europe Export Pipeline Project;
Tab C: ANIO/USSR-EE's 20 May memorandum on the Japanese Request
for an Exemption to US Sanctions;
Tab D: Your 17 May memo to ExDir on the Yamal pipeline (which was
given to with a copy of the SOVA 20 May paper,
Western Alternatives to Soviet Natural Gas: Prospects and
Implications);
State Dept. review completed
ARMY review(s) completed.
Orig C1 By Signer
Rvw 21 May 1988
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JI-VI\L I
Tab E: Background papers on the Versailles Summit from the NSC
on 5 April: (1) "Strategy Paper" for the Versailles
Summit" and a tasking memorandum, and a tasking schedule
for the President's briefing book; (2) Versailles Summit
paper on East-West Economic Relations;
Tab F: Memo for the Cabinet Council on Economic Affairs on the
Versailles Summit Issues;
Tab G: Summary of conclusions on the 6 April SIG meeting on the
Versailles Summit.
5. On Monday morning you will have updated information for the meeting
and a briefing
2
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SUMMIT UPDATE NO. 5
18 May 1982
A Versailles Summit SIG meeting was held on 1? May at OEOB,
attended by the DDI and The meeting, as usual, was
co-chaired'by Hormats (State), Nau (NSC), and Sprinkel (Treasury).
The meeting was extremely frustrating as it became obvious early
on that the participants were to learn no details of the Summit
negotiating process. Hormats stated that "the White House" had
ordered a clampdown on information, including no circulation of
the draft final communique. As a result, the meeting was quite
sterile.
Hormats led off by quickly running through the five meetings
that had taken place the previous week.
1. OECD Ministerial -- "We got what we wanted, or at least
avoided what we didn't want." In particular, the US was
able to obtain agreement that inflation was the number
one priority but more as a step toward a solution to
economic problems generally than as an either/or
trade-off between inflation and unemployment.
2. Helsinki/G-5 Meeting -- Controlling inflation again agreed
as the primary objective; they also agreed that better
coordination of policies was necessary. At both the
Helsinki and OECD meetings, Sprinkel noted that the US
was able to beat down pressure for positive statements
concerning short-term fine tuning of the economy.
3. Quadrilateral Trade Meeting (US/EC/Japan/Canada) -- At this
meeting, held outside Paris, the US, according to Hormats,
made some progress; some recognition of need to improve
services trade, for example, but less willingness to move
on investment because of French and Canadian refusal to
discuss the issue. Hormats opined that in part because
of French and Canadian refusal to discuss liberaliz ni g
investment, Reagan should put some stress on this at the
Summit. The French have even gone so far as to bracket
some extremely bland language on foreign investment in the
draft final communique.
4. Political Preparatory Meeting (Stoessel) -- The political
directors tentatively agreed on general political topics
for discussion at the informal dinner/lunch meetings,
e.g., East-West, terrorism, disarmament, etc.
5. Economic Preparatory Meeting (Sherpas):
Macroeconomic/Monetary -- The "Sprinkel/Camdessus
Initiative"'appears on track. Sprinkel, while refusing
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to go into detail, described the initiative as a
very positive development, which had been promoted from
a Finance Ministers' initiative to a Heads of State
initiative, and which was "a subtle export of
Reaganomics." See Paul Lewis's 18 May NYT article,
attached, which provides much more detail than did
Sprinkel.
b. Trade -- There will be some agreement on trade, but again
no details. 25X1
c. East-West -- We actually have
side still thinks there is some hope for a compromise,
however, and the US is clearly threatening to make
waves with the pipeline or with other independent action
if we don't get our way on credits.
d. North-South -- Another problem area. All the countries
are pushing Global Negotiations, which the US is
convinced is simply a gimmick to quiet South demands
for tangible progress. The US is standing alone in
ruOusing to agree to GN. 25X1
e. Technology -- Nary another country supported the French
proposals on technology.
s a .orm o courtesy, and
in hopes of bu ing the topic, the Summit leaders will
agree to form 'h task force, one member per country, to
look at the issue of technology and report to next
year's summit. The mandate of the group will be
extremely vague, and broad, covering all areas of
technology and not simply those brought up in the
French paper.
And that was it. All the briefing papers are in to State,
although some still `wait final clearance/coordination. At this
point, the only hassJ( remaining for us is printing, in 900 sets,
17 graphics plus 17 pages of descriptive text. However, the
briefing papers are being sent to the White House today, and they
may have all kinds of new o different demands for papers. In
addition, EURA/EI/EI, has been charged with
senaing gaily briefing cables to the Agency briefinq team
at Paris/Versailles; he will be contacting many
0 ou soon to help with collecting relevant information. Everyone
has been very,helpful throughout the process. Thanks.
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THE
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Nations Seek Stability.
For Dollar, Economies
PARIS, May 17-The United States
and other major industrial countries
are near a new monetary agreement
that would stabilize the dollar's value
in currency markets and provide for
tighter coordination of economic poli-
cies, officials close to the negotiations
said today.
These countries hope to complete
the pact at the economic summit
meeting that starts at Versailles June
4. The meeting will be attended by
President Reagan. President Fran;
cois Mitterrand of France, Chancellor
Helmut Schmidt of West Germany
and the Prime Ministers of Belgium,
Britain, Canada, Italy and Japan.
The essence of the emerging ac-
cord, the officials said, is a bargain
between the United States and the
seven other countries attending the
Versailles talks.
The Reagan Administration, they
said, will reconsider its previous
policy of letting the dollar float freely
in currency markets and perhaps will
offer to intervene to smooth out its
fluctuations. In return, they said, the
other countries will accept stricter in-
ternational surveillance over their
economic policies, probably within
the framework of the International
Monetary Fund.
The goal, the officials explained, is
to promote a closer convergence be-
tween the economic policies of the
major industrial nations, making vio-
lent currency swings less likely and
reducing the need for the United
States to manage the dollar's ex-
change rate.
The new agreement expands a simi-
lar accord that was adopted at the
first Western economic summit meet-
ing, held at Rambouillet, France, in
1975. The revised pact is being negoti-
ated by the small group of senior of fi-
cials who meet discreetly from time to
time to prepare these annual meet-
ings. The group is nicknamed the
Sherpas, after the Nepalese porters
who assist climbers trying to reach
the summit of Mount Everest. The
group's final round of pre-Versailles
talks was held here last weekend.
The new plan is also likely to be dis-
cussed during the talks that George P.
Shultz, former United States Secre-
tary of the Treasury, will be holding
with government heads invited to the
Versailles meeting. He will visit them
later this month as President Rea-
gan's special envoy.
The latest Sherpas meeting made
progress on policy coordination and
Continued From First Business Page
stabilizing the dollar, according to of-
ficials, but there was less agreement
on what promises to be the second
major topic at the Versailles meeting.
This is President Raagan's call for a
general tightening up on trade with
the Soviet Union and its allies, notably
by denying them subsidized trade
credits and by limiting Western loans.
'Continuing Efforts Seen
at Versailles are expected to continue
over the next few weeks. If other coun-
tries finally accept the American
view, the officials said, there are indi-
cations the Reagan Administration
may turn a blind eye to Europe's con-
troversial plan for importing large
quantities of Soviet natural gas later
this century and may lift its embargo
on the export of vital American equip-
ment needed for the proposed pipeline
that is to carry the gas to Germany,
Italy and France.
By offering to modify its "hands-
off" policy toward the dollar's ex-
change rate, officials said, the Rea-
gan Administration is trying to meet
mounting European complaints that it
has allowed the dollar's value to fluc-
tuate violently in relation to other cur-
rencies, hindering trade and invest-
ment. In recent months, many Euro-
pean countries feel that the dollar has
risen to unjustified peaks, forcing
them to raise interest rates and un-
necessarilly deepening the recession.
In the past, the Reagan Administra- .
tion has taken the position that the dol-
lar should be left free to find its own
level in currency trading, with the
Federal Reserve only intervening to
steady it at moments of exceptional
crisis, such as the attempt on Presi-
dent Reagan's life.
New Study Suggested
But the first public signs of a shift In
emphasis came last week when Treas-
ury Secretary Donald T. Regan said at
a news conference here that the Ad-
ministration was prepared to "look at
the evidence again" and called for a
new study to be made on the effective-
ness of intervention in the currency
markets.
In return for-being more flexible
about intervention, the Reagan Ad-
ministratiun's economics team want
other industrial countries to make a
more serious attempt than previously
to work out jointly agreed policies to
combat inflation, preserve free trade
and strengthen their economic struc-
ture by phasing out uncompetitive In-
dustries. Only by securing such coop`
eration of economic policies will the
West be able to return to sustainable
economic growth and bring about a
permanent reduction in unemploy-
ment, officials have argued.
So far there is no detailed agree-
ment among the eight Versailles coun-
tries on how to strengthen economic
cooperation. But officials say the Rea-
gan Adminiirtation favors stricter
surveillance of each nation by its
peers.
Remarks by Regan
Sp,dal to The PNw Yost Timm
WASHINGTON, May 17-Treasury
Secretary Regan, justretunled from
meetings last week of finance minis-
ters in Paris and in Helsinki, Finland,
said today that every one of his Euro-
pean counterparts had complained
about high interest rates in the United
States. Many of them, he said, sug-
gested a relaxation of the Federal Re-
serve's monetary policy to bring rates
down.
Mr. Regan, meeting with a group of
reporters, also elaborated on what ap.
pears to be a major shift in the United
States policy of intervening in cur-
rency markets only in extreme situa-'
tions.
He said there had been four occa-
sions since the Reagan Administra-
tion took office in which the United
States almost intervened - apart
from the assassination attempt, when
it actually did so. He said this policy of
minimal intervention was being re-
viewed.
"We're going to surface this at the
summit," Mr. Regan said, referring
to the approaching Versailles confer-
ence.
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Memorandum for: Bob Gates, DDI
Per your request, the attached reflects how
I see tomorrow's Versailles Summit SIG meeting.
I would guess the Agency will have to say little,
with the probable exception of reporting on the
graphics.
Ueputy ie ,
Western Europe Division
17 May 1982
E U R A
Office of European Analysis
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Talking Points - Versailles Summit SIG Meeting, 18 May 1982
1. The meeting will be chaired by Robert Hormats (Assistant Secretary of
State for Economic and Business Affairs and the President's Personal
Representative (Sherpa) for the Versailles Economic Summit) and Henry Nau
(NSC). They will summarize their meetings over the week-end in Paris with the
other Personal Representative teams; the Paris meeting was the last formal
preparatory meeting before the Summit.
2. The key issues at the Summit are:
o Macroeconomic and International Monetary -- The West Europeans claim
that high US interest rates are forcing them to protect their
currencies with their own high rates, thus dimming chances for an
economic recovery. At the same time, the US refuses to intervene on
foreign exchange markets. The US, through Treasury Under Secretary
Sprinkel, is proposing a quasi-official international group to
discuss policy coordination among countries.
o East-West -- The US, through the Buckley Group, is trying to obtain
agreement to tighten credit (especially on official subsidies) to the
Soviet Union and to have this agreement blessed at Versailles.
o North-South -- The US appears to be isolated in its stand against
Global Negotiations at the UN, although our differences with the
Europeans are largely tactical or diplomatic.
o Trade and Investment -- The US is pushing for a strong anti-
protectionist statement and a commitment to talks this fall on
liberalizing trade in services. The other key issue is pressure on
Japan to increase foreign access to its domestic market. Tokyo is
likely to announce a package of trade liberalizing measures prior to
4 June.
o Energy -- This subject is taking a back seat this year. The leaders
maydiiscuss possible joint measures to maintain momentum on
conservation and alternatives to oil if oil prices resume their
? slide. The major point of potential controversy would be if the US
once again raises its opposition to the Yamal pipeline, perhaps in
the guise of discussions on European energy security.
3. At the week-end preparatory meeting, the US may have received
additional indications of how these issues will play at Versailles. (There
has been some talk of an informal agreement or trade-off, whereby the US
pledges to reduce its budget deficit and to intervene more on foreign exchange
markets, and the Europeans-in turn agree to US proposals on reducing
officially supported credit to the Soviet Union.) Other items still up in the
air include (a) the length of the communique -- the French are talking about
one page as opposed to previous communiques of 25-30 pages; and (b) the
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subject of technology -- this is a pet of Mitterrand and his Personal
Representative, Jacques Attali. Their paper on this subject is very
government oriented and idealistic. The US has been pushing for a paper more
agreeable to all the participants, in particular by putting greater accent on
private initiative. Much of this may not be important in the greater scheme
of things, but the US side is concerned about 1 well as
public relations control of the deliberations.
4. The SIG meeting is likely to turn fairly quickly to the briefing
materials for the US delegation: which agencies are delinquent witch
papers.
o We are up to date. We were specifically tasked with only one
briefing paper, on European energy supplies. The paper, prepared by
OGI, has been cleared, coordinated, and passed to State.
o We have coordinated most other agencies' papers, but a few are still
drifting in. (The deadline for passage to State was 17 May.)
o We have also undertaken to supply 17 graphics (plus 17 pages of
explanatory text, one per graphic) for the unclassified briefing
books. These were culled from a NIC paper, "The United States in the
World Economy: Elements of Strength," currently being printed.
Marshall Casse at State approved the set of suggested graphics on 14
May. The print shop is not totally sure they can have the package
(850 sets, 34 pages per set) by 25 May, a firm deadline, but they
appear to be doing their best.
5. Other support planned by the Agency includes:
o Agency briefing team in Paris/Versailles, to meet with "senior
officials or their assistants prior to each day's sessions and to
remain on call throughout the day to deliver traffic or new
information. The team is the same as last year's at Ottawa:
o In addition to culling information in the field, the team will be
supported by a small group in Headquarters led by
Chief of the Economic Issues Branch/European Issues Division/LURA.
Larry will work with the energy and economic people in OGI and with
to gather pertinent information (Summit-related and
o er and cable it to Versailles daily starting on 3 June. He
performed nction for the Venice and Ottawa teams in 1980
and. 1981.
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SECRET
20 May 1982
SUBJECT: Status of the Soviet-Western Europe Export Pipeline
Project
At the request of Acting NIO/USSR-EE,
we prepared a review of recent developments affecting the
Soviet export pipeline project, with a updated assessment
of pipeline completion and West European offtake. This
request was related to a SIG agenda item concerning policy
toward the pipeline project.
Chief
Resources Branch
Soviet Economy Division
Office of Soviet Analysis
Attachment:
SOVM82-10080
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Status of the Soviet-Western Europe Export Pipeline Project
Summary
Moscow has been stressing the high priority accorded the
natural gas export pipeline project by Kremlin leaders. It is
now more than ever a matter of national prestige, and the
pipeline is going forward in the face of delays and rising
costs. Since January the Soviets have been very active in
efforts to circumvent the US embargo on critical gas turbine
parts. Nonetheless, difficulties in lining up substitute parts
may delay for some two years the date for the turbines (which
will drive gasline compressors) to be operational. While this
would cause completion of the export pipeline to slip past the
original 1984 target, completion could still occur in 1986 as we
have projected, based on expectation of normal construction
delays.
Measures, internal and external, are being taken to
guarantee that gas exports to Western Europe commence on schedule
in October 1984, or sooner if at all possible. Large quantities
of gas can be delivered through the export pipeline with only a
fraction of the compressor power on line. Moreover, gas can be
supplied to the export terminal by "domestic" pipelines, albeit
at the cost of lowering gas supply to the Soviet economy. Some
reluctance on the part of West European buyers to commit
themselves to more Soviet gas is now emerging as the biggest
deterrent to an early start-up on gas deliveries. Re-evaluation
of the energy market outlook, disappointment over profits from
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equipment supply contracts, and strategic considerations have
dampened enthusiasm for the project. Thus far, only the West
Germans and French have signed contracts, although Italy,
Austria, and Belgium are expected to sign agreements in the near
future.
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THE DIRECTOR OF CENTRAL INTELLIGENCE
National Intelligence Council
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MEMORANDUM FOR: Director of Central Intelligence
DDI #3951-82
20 May 1982
Acting National intelligence ficer for USSR-EE
SUBJECT Japanese Request for an Exemption
to US Sanctions
1. The purpose of this memo is to acquaint you with a
Japanese consortium's request for an exemption from the embargo
of US oil and gas technology to the USSR. The embargo, which was
imposed on 30 December 1981 in retaliation for the Soviet role in
the Polish martial law declaration, is affecting planning for the
joint Soviet-Japanese exploration of off-shore Sakhalin Island
oil and gas fields. You will recall that an NSC meeting on the
subject had originally been scheduled for 13 May. As of now, it
is unclear when the meeting will be held and whether the Sakhalin
issue will be subsumed into a more comprehensive discussion of
East-West trade and credit issues. Nevertheless,, I am sending
you this memorandum now so that you can familiarize yourself with
the specific issue of the Sakhalin project at your convenience.
2. In preparation for the cancelled 13 May meeting, the NSC
had proposed the following options (presented here in summary
form):
--Deny the Japanese request for now and concentrate on
creating an alternative energy package for Japan.
--Hold the Japanese request as leverage for use in other
aspects of US-Japan relations.
--Accede to the request essentially to gain Japanese good
will. (The Options fully spelled out are on p. 5 of the 25X1
NSC memo, Att. 1)
Derv Cl By Signer
Revw on May 88
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yUJUL
NATIONAL SECURITY COUNCIL
WASHINGTON. D.C. 20500
CONFIDENTIAL WITH
SECRET ATTACH RENTS May 10, 1982
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MEMORANDUM FOR MS . NANCY BEARG DYKE
Assistant to the Vice President
for National Security Affairs
MR. L. PAUL BREMER III
Executive Secretary
Department of State
LIEUTENANT - COLONEL ROBERT P. MEEHAV
=-Assistant for-Interagency Matters-"-------"-
Office of the Secretary of Defense
MR. WILLIAM SCHNEIDER
Associate Director for National Security
and International Affairs
Office of Management and Budget
r:xecuitve -secretary --
Central Intelligence Agency
MS . JACQUELINE TILL. IAN
Executive Assistant to the United States
Representative to the United Nations
COLONEL CHARLES F. STEBBINS
Executive Assistant to the Chairman
of the Joint Chiefs of Staff
SUBJECT: Japanese Request for an Exception to the Dece:;iber
30, 1981, Sanctions on Oil and Gas Equipment Exports
to the Soviet Union (C)
The addressal of START`by the NSC has been tentatively rescheduled for
Friday, May 21, at 1:30 p.m. in the Cabinet Room. The NSC meeting on
Thursday, May 13, at 3:15 p.m. in the Cabinet Room will instead address
the above. Attached is a draft background paper for the meeting.
Please provide comments on this draft paper by 10:00 a.m. Wednesday,
May 12. (C)
CONFIDENTIAL WITH
SECRET ATTACHMENTS
Review May 10, 1988
Michael O. Wheeler
Staff. Secretary
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Jaoa es Recri-lest Vo 5o.ToroJe U.S.Licenses
for the Sakha in project
The Japanese consortium (SODECO) established seven years ago
to jointly explore and develop the gas and oil deposits off the
Sakhalin continental shelf sent a letter to Don Gregg on 3/30/82.
(Tab A) urgently requesting that we approve critical U.S_ exoor-t
licenses for equiu men t and spare parts valued at approxi as to 1 y
$2 million by May 1 in order to facilitate 1992 exploratory work
for Sakhaliin .
SODECO claims that failure to obtain the U.S. licenses would mean
the inability to commence 1982 ex-ol oratory efforts on the se-con-dary
geological structure ("Odootu") and result in Soviet abrogation
of the 1975 General Agreement goy; er-n i n the r -
g project. According
to the correspondence, this denial would also reportedly result
in the loss of up to $300 million in "front-end" .caoi tal invest-
ment by the consortium and perri t the Soviets to proceed alone
w? th the develonment of the proven reserves of the primary structure
("Chaivo") for which the exploratory work was completed in October
1981. Moreover? SODECO claims that r the Soviets will ~be able to
sell the Chaivo gas and oil to third countries at "f u' l market
Prices.." We calculate--potential Soviet hard currency ea..rnin?ws
from deliveries - of LNG- tom--Japan -over the prescr h d t:venzy yea
period of between X60.80 billion (see percentage ownership of SODECO at Tab BY.
We have obtained the information below from private sector sources
participating in. the. consortiur, which dispute several of these
claims by SODECO.
1. A May "deadline" for the release of U. S-. licenses is
rigid if 1982 exploratory work on Odootu is to proceed (Tab C
cable from our Embassy in Tokyo). However, Odoptu is a redundant
geological structure., the development of which is not required
to meet the delivery schedule of LNG and crude Oil envisioned in
the 1975 General Agreement. The Japanese repo= tedly have been
attemn tine to resist Soviet pressure to proceed with Odoptu dxi'1?' nc
for at least the past. year.. The Soviets were pressing for Odootu^
exploration to begin in the su-rn:er of 1981. TT en repeatedly asked
by the consortium why Odoptu is perceived as necessarJ when Chaivo
has more than sufficient proven reserves to ful.=ill, the terms Of
the 1975 General Agreement, the Soviets could only respond that
they cannot defend separat?ng the structures to their "National
Cormrittee." The source described this Soviet rationale as "reasons
we car: not understand." No exploratory- work has as yet begun on
Odoptu. The Soviets have insisted on the drilling of five wells
SECRET EIC-3
Review May 6, 1988 O ET
Classified by Nor :pan A. Bailey
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 SEC R FT
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at Odoptu in 1982 and six wells in 1983. They threatened to
abrogate the agreement if this sc. ed:_l e is not observed. The
original Japanese position was reportedly to resist any drilling
at - Odoptu, however., confronted with the a?_:rog tion. threat,
reluctantly acreed to the drilling of five wells in. 1982 but
reserved the right to have a new decision taken concerning 1983.
2. It was reported that deferring or even cancel ling Odeptu
exploration would probably not resul in the abrogation of the
1975 General Agreement even if it is Confirmed that the Soviets.
have such a right. under the terms of the Agreement. One Tokyo-
based firm involved in Sakhalin has reportedly already received
guidance not to taka soil borings at Odoptu because, of the
probability that U. S. 1censes .wog:l d be Gzith_ne_I3___-
3. It is regarded as "highly questionable" that the Soviets
can undertake the -development and production phase---a=-- %he Cha_ivo_
str; cture begir-riing in 1983 should the General. Agreement be
abrogated because of the possible inability to mobilize the
financing required of between $2-3 billion to cover develop-:n-ant
cos is - In addi.tio n, substitution of the U . S . export. items
(probably in Germany and : ra:?ce) would result in a costly delay
of up to 2 years,
4 . No Far Eastern. markets- other th nJapan reportedly ex` st
for Sakhalin gas (100% scheduled to be exported to Japan) . Only
the very- modest crude oil production could be used domes t i cal lu
by the USSR or sold for hard currency.
5. The Soviets, with the possible cooperation of SODECC,
are very likely "testing" the U.S. export licensing policy with
the hope of stampeding the U.S. into granting an exec t .or for
this project well in advance of the genuine requirement to obtain
licenses about 90 days prior to a December 1982 signing of the
development and production phase of the Chaivo structTu_re.
6. The Soviets reportedly placed a full work crew on at
least one of the two drill rigs at the Odoptu site six months
ago, and without `the approval c_ U.S. licenses in early may, this
skilled work force would be idle for at least one yea=.. This -
delay would be caused by climatic conditions which li.-~it the
Sakhalin work schedule to between June and. October.
7. It is estimated that the abrogation of the General
Agreement prior to the Chaivo product on phase would'orobably
represent a loss of roughly $170 million to the cons ortium-n rather
than the $500 million figure provided by SODECO.In addition to
the $170 million in the project to date , $15 million has been
earmarked for 1982 Odootu exploratory work.
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8. Japan is presently facing an Oversupply Of LTG . The
most authoritative figure on projected demand by 1990 is
said to be 38.5 million metric tons (estimate of the Energy
Institute of Japa r_) . MITI' s estimate of 43.0 million metric
tons of LNG is considered scrtewhat overstated. The tables
attached (Tab D) describe : (1) LANG imported in 19 81, (2) con-
tracted LNG to be brought on stream, (3) new projects in the
advanced olanr ng stages. Desoit e the oversu'Molv si tuat? on -.
illustrated by the tables, the Japanese govern- has reportedly
given priority to Sakhalin because (1) it has a 44% ownership
share of SODECO, (2) it has provided the bulk of the $170 Million VE
ture capi tai,' (3) the project has been under active di scussion and
exalorat_on since 1975 and abrogation due to U:S. licensing
policy would _probably_creat_ poll tidal-d f c lti es both ir.-she- -
Parliament and ;'I:~.th the Japanese b s mess CO.~.~unity. ([}
minimizing the importance of these considerations, they do not
change the fact that _Japan does not need_ Sakhal i.n - LNG or- take -
into account a potential-U.S. energy offset package to assistt_
in mitigating the adverse political and bilateral repercussions-)
9 SODECO's claim that they were exe_ ted from export
controls in 1980 and 1981 is inaccurate. No embargo existed
for oil and gas related equipment in 1980 or- 1981. The licenses
for Sakhalin_ during that period were processed according to
standard procedures.
Efforts are still underway to corroborate port' ons of thi s
ir_;aeration, particularly concerning -ie abrogation cues tion
(principally _by the Agency, Japanese sources an_d an A_-aerican
fi --.a) . The issue for decision before the dm n stmt on a-E thi s
juncture is whether or not t o permit the interrupti or_ of 1982
Odontu exploratory work and the possible but, at. this wri tin_g,
unlikely abrogation of the 1975 General Agreement. the in--
formation outlined above is deemed suffici e_ tly accurate, it
is recomended that we not approve the U. S . export licenses for
Sakhalin at this time. There~is little doubt that SODECO and
t1he J ap4nese government will register strong ci sp? easure with
this decision, but the major arguments which suuport this decision
are: ? (1) the reintroduct? on of curfews and im asition of other
restrict'? ons in Pola,'?d i n response to a new round of potent? ally
serious social unrest and violence, (2) original and oerhaos
continuing Japanese resistance to exploration of the redundant
Odootu structure , (3) the reported probabi 1 i ty that our with-
holding of export licenses wi ll not result in abrogation of the
General Agreement, (4) the relatively modest venture--capi tai
coin .fitted to date, (5) indicat? oP_S Mat hi J aoar_ese are oxen
to .discussions Of various acids, (6) to creserve the i ntegr? t y
of our across-the-board wi t_-"l holdi ng of U . S _ licenses zffor oil
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and gas related eai_icment to the USSR for, at least., a few
more valuable months to perdu" efforts to str'ucture a V? able
U. S - energy offse t package should Soviet behavior call for
a decision to permit abrogation in December 1982, (7) the
probability that the Soviets and SCDDCC will respond to this
4.4
decision by abandoni g the more ambitious strategy of circtulm-
venting U.S. controls without any ha--m to the project and begi n
to concentrate efforts on having the licenses approved prior
to the critical December 1982 signing date for the production
phase of Chaivo.
Should the Administration decide to continue to maintain controls
on all oil and gas related equipment to the USSR through 1982;
as mentioned earlier- ,it .would_..orobably - result in the--interruption
of the entire Sakhalin joint venture. The downside impact of
this decision on U.S.-Japanese relations could potentially be
mitigated by structt ring an alterna v tL.S~__energv ,package -
designed to offset Sakhalin deliveries and provide compelling
inducements for the Japanese to per it abrogation.
Although not an. expert.on these matters, a U.S. energy package
could perhaps ? include : (1) a reappraisal of the.Alas kan-Mexican
crude. oil "swap," with the objective of making ava llabs ? t o Japan
some 500-600,000 bar_els per dpi of Alaskan crude. -Should the
".swap", arrangement trove infeasible, we could explore the release
of so-ie portion of Alaskan crude presently destined for the* -
Gulf ports. The Congress perhaps could support offset efforts
to interrupt the Pacific equivalent of the Urengoi -Yambur.g gas
pipeline project, particularly if we could secure meaningful golds
from the Japanese; (2) encourage-Japan to'._unde=take an LNG
project in Alaska in the interest of promoting a "Western energy-.
security" policy framework. This LNG project would provide the
offset amount of 3 zillion tons of LNG per annum for 20 years;
and (3) increased U.S. exports of multi-use steam coal from the
present level of 3.5 million tons to a level desired by the
Japanese.
This broader strategy concerning Sakhalin could also have several
positive effects= consistent with other important U.S. policy
objectives. These benefits could potentially include: (1) denial
of $60-80 billion. in Soviet hard currency earnings and $2.7-3
billion. in subsidized. development financing and sophisticated
Western equipment and technology; (2) a dramatic easing of bi-
lateral trade tensions due to newly generated multi-billion
U.S. energy exports ; (3) upgraded military integra Lion and im-
proved leverage to seek greater concessions concerning defense
spending; (4) demonstration to the European allies that the U.S.
can act in a comprehensive framework to advance Western energy
security; and (5) critical new leverage over the completion of
the Urengoi-Yamburg gas pipeline project which depends on the
export of some 400 Komatsu pipe-lavers and annual deliveries of
SECRET
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co?
rC?hCtL"a Pa rt OnS--oL _t.~1e-_? ?
n~C7=.~t`Q.i'"T"Qv~CeC~ ale iOTTO:J~1?C~
options are available at this time for interacency review and
750,000 tans of wide-diameter steel pipe (about 50 percent
O.% total annual zmoor t recuirements of p
f z ae for the prof ec t) .
However, should the Acmin? s tr atlon Judge that broader can-
s' derations favor the fall/Winter exp. mom`' on of U.S. licenses
for Sakhalin, we would have substantially increased our leverage
by delaying this decision and thereby can exact mole meaningful
concession --From Jarman. It should be noted that "across-the-
board " lifting of sanctions on oil and gas related ec~i Amer t to
the USSR would remove any U.S. levera e over Sakhalin and make
the recommendations outlined above impracticable.
rY...
Based. on the afore m ntinned -cons ar-at ,d _i~ _
'
Deny SODECO's request for a "s-jecial" aooroval of U
S
.
.
exhort licenses in May and begin to structure a U.S. energy
offset package designed to dissuade Japan from oroceeZding with
the production, phase of Sakhalin. (This 0oaroach l es at en
i_?'L3Li-G L _~'u-T.7praviIlg. the .licenses ' n ~ e t cuar
o~ 1982 in^ reuuru ror more subs t-antia c ids __om_jac an. )
the licenses to prevent abrogation of t "he Gene-al agreement, we
_
should concentrate our negotiating efforts on _ece? ving various
quids from Japan among them being. the opening of the Japanese
cap] -al market for major untied. ?f inanc _ngs _' n the U.S., particu1a v
in the energy sector.
3. Approve the U. S. export licenses for Sakhalin in May
for more limited political benefits and economic and trade con-
cessions.
Prepared.by:
Roger W. Robinson
Since the preparation of the above paper, two documents have
been obtained which should be incorporated into your agency's
review. The first is a summary of the CIA's findings (Tab E)
and the second is an intelligence report (Tab F) which records an
incident also of relevance to your assessment.
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 k y .rr-N1 _fl 11 /f--4
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\= nc~ a.1i BLDG.
C- ODA-nU. : o3Yo 100
OLD .: SGK-2040
S_ A.Ll OsIL DEVELOP.-M
COOPERATION CO., LTD.
TLL"7?oiv? 2.) i i
i C+ t1t 1G. i oa O
3 25241,
NSC review completed - may be declassified in full rcn. 30, 1982
Mr. Donald Greg
Director of Intel? igence
National Security Council
The White House
Washington, D.C. 20500
Dear' Mr. Greg :
I am writing you this letter in reference to the recent meeting
you had with Mr. Chikara Higashi concerning the necessity of Prc='Pt
approval of SODECO's export licenses for the Sakhalin oil project.
Included as anat-facbmant-to this -ie_ter are: two d c.dents. ` e ..
first, the Status-Report, is a s = _ = y of the project frd -lts
beginning in 1975 to -present. It describes the Genera Ag:eenenc -
With the. Soviet Union. zed explains *hv a Japanese breach at this
stage in the project would be so beneficial to the Soviets. The
second,. Talking Points, presents SOD-7CO's reasons why the prompt
granting of licenses is essential.
As you will see in..the Status Report, Japan is obligated by the
General Agreement to supply materials, equipment and services the
exploration of the Sakhalin continental shelf. After seven years,
the exploration period is almost cocrol ete. It lacks only some
drilling during this summer, before the exploratory phase ends next
year. If the export licenses are not granted promptly, Japan .will
be unable to complete the final dri .ng by the end of the pericd_
Thus, it will be in breach of the General. Agreement.
Such a breach w.l1 rpovide the Soviet Union with the opportunity
to terminate the Agreement. This will result in great loss to Japan,
and great benefits to the Soviet Union. The Soviets will gain sole
and exclusive right to the oil and gas that has been discovered
during the past seven years. It will be able to sell this oil and
gas at full mar-et prices. Fi ly, the Soviets will be relieved
of its obligation under the Agreement .to pay Japan over one-half
billion dollars.
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For its part, a breach u-1l1 deprive Japan of its. guaranteed access
to 50% of an estimated 1.3 billion barrels of oil and gas over the next
decade and beyond.. This guaranteed access is. at sign fica.n.t discounts.
Further, Japan will forfeit $190 million in credits, some $22 million
in other Loans would be in . j eopardy, and $292 million in. compensation
would be lost.
It is our belief that application of the U.S. -over ent's
sanctions to these export licenses will injure only Japan, and not the
Soviet Union. It will, in fact, greatly benefit the Soviet Union.
At the price of perhaps a short and momentary delay in the development source,-:the Soviet-.Union will -reciive all the
benefits ou the Agreement and Japan's previous performance and
t
invesments. The purpose of the U.S. government's sanction program
is not, of course, to confer such -=e_mse benefits on the Soviet Union
at the expense of -an ally.
Time is an important consideration. Due to climatic conditions,
the. work period is only, between June and October. To complete this
year's' drill ng, Japan. must-_-adhere strictly to the work schedule.
There is not enough tie 1 ft befo_e the -end of the exoloratorT phase
to compensate for delays_,in.this yearns -program. 'Thus, Japan must
receive the licenses by early-.Ma - : - `
I:wil2 be coming to the United States personally in the next
few weeks.. It is my hope that this matter can be resolved at that
time. In the meantime, please do not hesitate to contact me personally
on this matter for any furhter i f or-..ation you may need-
Yours sincerely,
S. Kobayashi
President
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Sakhalin. Oil Pro j ect
Present Status
NSC review completed - may be declassified in full
1. On. Jar~t ry 28, 1975, Japan and -He Soviet Union signed a
General. Agreement for the mutua1 exl orati on, development,
production and supply to Japan of oil and gas from the Sakb.al-;.u
Island Coatineatal Shelf.
2. The Japanese party is the Sa_kha-1 i 0- Daveloprseat Cooperation
Co., Ltd., (SODECO),a coasortiu= of the Japanese lover eat
and private. cop auies . The Japanese government (Japan
National Oil Corporation) owns 44% of SODECO stock To data,
702.' of the project's financin.g has been provided by the
Japanese -over=e=t.
3. E_-cnloratioa is occurr-I n in two structur eS. - "Chaivo" aL'd
"Odoptu". The General Agreement requires Japan to. supply
equipment, machine, materials, supplies and services
dur-4-g the explorator j period, -which now extends to December
1982 for- the Chaivo area and December, 1983 for the Odoptu
area..
4. -Japan is obligated to finance the exploration by providing
the Soviets credits redeemable when successful (CRWS).
The credits are repaid when and 0-1y if the project results
in the joint production of oil and gas- As of--early 1982,
Japan.- is obligated, to supply $185 rn l lion i= CRWS . To date,
$163 raiUi.on. CRWS have actually been invested.
5. The Soviet Union is ob1i.gated to sell to Japan 50Z or. the
annual joint production of oil. The oil price is based
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o_c_^ the posted price Hof, PersizW Gulf oil of conoarabie
q~:a! itr/, less prava:-~l.ing disco, t an-, cc=. rz L- 7 Lr ^eig t.
V O
The price is further reduced by 8..4. This discount reduction
is applied to 50% of produced oil and gas for a period of 10
Years as compensation. The Soviet Union is obligated to
redeem,. the C7:1S only if the fields are jointly developed
and produced t,-ith Japan.
6. The mar-:-um compensation for Japan under the General Agreement
7. The Japanese are further
gu.ar..teed access -.to .50?1-.of the-quall
joint production for a period of 10 years. after the C2WS have
been redeemed.
8. Total estimated reserves of oil- and gas in the Chavo and
Odoptu struc't_u'res currently e/ouat to about. 2.6 bi?? n..BB
of oil (1.2 ba_Zlion) and oil ecuivalent of gas (1.4 billion).
Under the Genera] Agreement, Japan has guaranteed access to
at least 1.3 billion BBL.
9. In the event of ccr ercial gas production, Japan, is guzrazteed
a supply at prices and quantities to be determined by separate
agreement for the redemption of CRWS and. for an additional 10
year period following redemati.on. It is possible-for Japan to
receive all of the gas produced from both fields.
41
10 Japan is further obligated and has provided credits for
exploration and local needs. The credit extended thus far
amounts to $70 million. $22 m llion in credits -is st-' l
outstanding.
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11. Under the exploratory phase, 18 wells have been dri led, or
which 12 have been successful. All five of the wells drilled
in the second half of 1981 were successful. The Chaivo
structure contains oil and gas and an esti4 to of recoverable
reserves is expected shortly. The decision to develop this
.
structure will be made this year. The exploration of the
Odoptu continues until Dace=be,, 1983. By this time, the
exploration, appraisal and ecozo riic evaluation stage of the
1975.General Agreement will be coeuleted.
of the General Agreement, it must provide..mac~~-*e y.,-equ pment,_=- _-
supplies, materials and services * for the worms reouired in
12. To complete Japan's obligations under the e=- oratory phase
1982._ Due to climatic conditions, the 1982 worm period
extends only from June to .-October.. Japar`.s failure to
complete the remaining wor during the 1982 work period
that it cannot co lete its obligations under tha.
erp?c-atnry
phase before that phase ends in 1983-
13. To conduct operations in 1982, Japan must provide $20 mz11ion
of goods and services. Approx -ate1 y $2 1;won of t, 7-7s
amount consists of items requiring export licenses for
the U.S. Eighty percent of this amount represents short-
tera leased equipment, spare parts and consultant services.
Failure to obtain export licenses for these items by early May
will preclude Japanese operations during the 1982 work
period. Because of the large amount of drilling to be done iu the short time remain ng to the exploratory period, a
delay czaused by the failure to obtain the licenses promptly
will make it impossible for Japan to fulfill its obligations
under the exploratory phase of the Gene=? agreement. This
will cause a Japanese breach of the General Agreement.
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14. The pares are excused from -erforn :.ce of the-;- obl l.gacio :s
only by force majeure phrase :;hick contracts slate "as only
natural phenomena".
15. Japan has secured export tic -rses from the United States
during the entire previous seven year period of the project
including exceptions from U.S. eabargoes during 1980 and
1981.
-16. To date, work under the General Ag eemeat 'has- resulted .
$72 million of American equiv^_?at and se`v-Lces having been
_-_ - provided. under _.e3'Jort- licenses.----_
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Talki g
NSC review completed - may be declassified in full
1- Under t`e General Agreement signed bet-weer Japan and the Soviet
Union on January 28, 1975, nor the e alaratior. and develoru-n;.
of oil and gas the Sakhal,-. Island Continental She'--, the parties
have mutual obligations for the explorat=on, develop=e=t c"^ ...d
production in the area. _
2.. Japan has invested, obligated or loaned about $212 mii1ic thus
far. A total _ of _$l90 milli.cn of this if 5jn_ n::.ed is-w z.,_
r epa_d only frcat joint production. The balance is`_ in the -=o=
of other loans and... credits.
3. In the event of a breach. caused by non-parforr_nce, Japan stalls
to lose at least $190 million is the redePable credits a? .easy
obligated. Other loans and c_adi*_s, nc outstandi g in $2^_
M?111-foul- will also be j eoaa_ ? i. e^
4. the General Agreement provides to se -11 50% of oil and gas p roducec
for a period of 10 years. at a discounted _price as fi a..:c;.a1
cotp sation to Japan until such compensation reaches apprami^tely
$290 million., payment. of which is also depende;t QDoa joint produc-
tion. In the eveu-t of a breach caused by non-per=; ortL.rc,e, Japan
will lose this amount.
5. In all,. a breach will cost Japan a tota?. of over $500 million_
6.. The government of Japan_ itself has a 70Z interest in the p=j ec_.
'-ius, the greater portion of the loss will be borne directly by
the goverzmseut- It could be a serious political Issue in the
Japan's Parliament.
7. The General -Agreement also provides Japan guaranteed access to
50Z of all production fora period of 10 years after the radee bl e
credit has been redeemed. Based on present estimates of Sakila1j.
reserves, this t_anslates into 1.3 billion 3BL of oil and gas.
Japan's breach thus iri ll result loss of access to over 1.3
billion barrels of oil and gas-
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five additional wells will be dr:~.? lea in 1982. A decision to
develop and produce the Chaivo s _ructure with a : estinata reserve of
1.6 billion BBL will be made this year. A decision to develop
the Odoptu structure, with reserves of about 1.0 billion BBL,
will be made shortly. Thus, the period of risk and uncertainty
is essentially over. This risk has been borne by the Japanese
over the previous seven years of the project.
9. The failure of Japan to fu? fill its obligation under the last
stages of the exploratory phase v:[.11 cause a breach of the
Agreement that frees- the Soviet Union^ f-aitsnbligztions. to
repay credits, provide risk compensation, aid supply oil and gas
to Japan. In effect,. this mews that _Japaa .w~:.11 -have borne -all,-----
the financial risk at no cost to the Soviet Unioa_ The Soviet
Union will also have the benefit of Japanese and Western m?c. -
ner-y, equ .pment, technology and expertise in establishing these
oi? reserves free -o . any obligation under the General- cgzeen`n-
to Japan. Forcing: the Japanese ' to withd_a;: confers great benefits
to the Soviets, pile penalizing only the Japanese.
10. The gr =tr. of U.S.. exoort. licenses `or leased equi~ccaert, spare
parts and consultant services is critic-a-1 to prevent offering
the Soviet Union a power in right to declare a Japanese breach. The
exploratory phase ends In Decenbe_, 11083. Japan trust complete its
final drilling under the exploratory phase during the short work-
period from June to October of 1982_ Fai?ure to obtain export
licenses by early May, 198Z means Japan coot complete the
drilling under the exploratory phase because of- the short tine
rezaini-g before this phase ends.
U. The General Agreement does not contain any provisions excusing
Japanese non-perforrance due to fail e to obtain U.S. escort
licenses for necessary equipment and services.
12. The value of the equipment and services requiring U.S. ex- orc
licenses is negligible compared to the size of the invesaent
already made by Japan and the great benefits available to Japan
under the General Ag_eee ent.
-
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 13. Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3 =o, by
the Soviet Union w: ll be delayed sore?aa~
a::z-rer, the _ icy
risk stage of the exploration is essentply i cor/le_z3_ The
Soviet Union has consistently nainta ed that it can cc-_-p?ete
the remain ^g exploration and rave to development and produc":cn
by itself. At the least, it could obtain. the aid of third
countries. The project is so advanced :that refusal to j_a=t
export licenses will not deprive the Soviets of the benefits
from the discovery and develooren: of Sa hap n oil =i-Ids.
14. Rather than penalize the Soviets, a Japanese breach greatly
benefits the Soviet Union.:
The Soviet Union is freed from the obligation to redee the.
- Japanese risk c_edits- o $l:0
B. The Soviet Union is freed from the obligation to sell owl
and
gas frc". the Salo'? _.,_
price be1aw market,, This, the Soviet Union is freed from
the obligation-fo provic? comoe cation for Jam es?- ask.
investment ofove- $29^ vii Zion.
C. The Soviet Union is free__ from the obligation to provide
Japan guaranteed access to 50?: of production (apprc7-yarely
1.3 billion BBL of oil a=d' gas) .
D. The Soviet Union gains exclusive right to the entire 2.6
billion BBL of oil and gas for its own use, or for sale at
full market prices.
15. A cancellation. of the General Agreement due to Japanese no-
--performance- ~ri11 enable the Soviet Uision to negotiate a replace-
ment ag, eement with third co=t=_-;es at vastly more favorable
terms than presently obtains in the contract with Janaa. Rene--
gotiaticn with the Japanese will also result in a substituted
contact on more favorable terms than the existing A, eeent.
16. Thus, at worst, Japanese fa= lur to obtain U. S. es-porn lice ses
will result in the Soviet Union gaining sole and e ? re access
to 2.6 billion 3BL of oil and gas to use or sell at corid prices.
- Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3
 Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3
aria rrC.^_LCt?oa :.-iii be subject to a
modest delay, which may well be only temporary.
17. The value of the items needing U.S. export licenses for the 1982
drIl ling Program is only $2 m; ilcn, S07. of which is represented
by short-te_-m lenses, spare parts and consult4ng services.
No high tec=noLogy is being exported or transferred. No 0000M
items are involved. _
18. Japan has received export licenses for all previous items -
obtained from the U.S. and used in the project. Except:ns have
been granted unde?- previous econcm_c sanctions imposed by the
U.S. against the Soviet Union. The value of the export licenses
-required is 1982 isr sna? 1- cc ed to the value of licensas
already granted. Almost all key items of equipment supa1ied
thus far in the project have come from the U.S..
Although
19. Although the value of the U. S. - items needed ir, 1982 is ?,.ns;
ficaaa_ compared tothe mount of money already i VC$ta by Japan
-and the benefits Japan gains_ under the General Agreement --
$500 million and over 1.3 billion barrels of oil and gas -- the
t i=-217 (early May) granting of export licenses is essential ii.
Japan is- to protect its interests under- the project_.
20. ah:i s project is extremely im- oft t to Japan. In addition to
the large f=na:cial
investment Japan stands to lose, ter imation
by the Soviet Union deprives Japan of guaranteed access to nearby
oil and gas supplies of significant quantities.
21. Japanese access to Sakhalin will ease its dependence on oil
supplied from geographic areas of international instability.
Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3
 Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3
SODECO Ma-t or Sh areholders
4 4 % - Jan. an National Oil Corporation. (100
s
governr.ent owned)
Japan Petroleum Exploration Corporat_or_
(50% Govern cant owned)
Overseas Petroleua Development Corporation
(Priva
trading company shareholder)
~. Iton (project coord. nano; and .major
`Gulf Oil-" Corporation
Marub emi
Nissho Iwc
Miscellaneous (several. :Jri vale CCcT,^?anies)
NSC review completed - may be declassified in full
Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3
 Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3
_ 3:
A L TWO :1337'
O X F ? C Z X T I
4i27132 WiZ?lx?, CiaJLEM 12-
T2::
r-,hALIi OIL DEVELr- -,IT PXCJE~T
;r: ~;LIr 1IlIsS
L
NSC review completed - may be declassified in
full
,_.T.~3+?L I CA;'tATIC* HAS Et?_N PRC',IOZO
.? Et_.r' a7' %.1 SJUIEt A: FAIR- CSFt=
ar ;t::~E'F R I NZ, :ZAHALIH PET'; CLEU:1
RC.?Eyi. Ti I:: INFO;L-.AT IC.'4
Lr.2:.EHT Y.EE3 ;C;Z .. a`_cS13.'* By
'42 tt2Y 15 AT THE L?TES+.1 C.'i THE.
-,I t,::. T(2 I.= S?i!2 LIE4 ZRILL1HG -.
_ i ~_ c2IL: i?Is L I1CX IS CFF MAORE
1i:'.T3j-'c= S iAtIJ, ?a x2EA'J RT RE JIE
F -H ??;3 J: =Z J ~AIc"S_ xfO ntc 1 . PORiS.
S;A THE.
T; :JIC: 1.; r:i S. tH THE
LY.1CE3-Lfl T!= ?tr2L 3
riv;tI%C. THIS ?ERIC-
f f y.?t r
-;7E >;.;5 r`.'. C Ca1LL- 5T Tu3 RiCr.-
--ha THE RLIS:1&4
7'=E .:.?.,AL r?tX1:{i.~iURTu
Tic :At;WtAA=!) tS Clra:?ITLT UtCE3'
^...7'.T :?.:~ FCi OIL ^.-%!L'_lAS +~X Cr'- "ITI
r ~E G;F NCTT95.'e~: JA?A11 UN1IL JUN;
I j? %?~..:. iTiLzt:.3~.JI Ci? CXx rZ UHXNG..)L.
; r CJt1HtaAZ:~nS 1~ ;~-. E? TO L '1s
$ C ~;xNxs lx- CH .fl 4 ? 19::xD- PL:,%LS TO A-:RI'tt
S3 THAT IT ,;:~t acct, G31LL1JC JUwt
:`. -Y Gr THE ZOUIY:`0i1 n:tri7tRI L1C'tc.S?
iriC ?SING CziTTC L. UEt L14E GZHETSTCZZ,
?NO ells:
r: y5 :ai^. XEi.L?T'. 32r vrir+Y LAM
?F. i r+rPCIT 3Y =T??: TM E t.CI?A OiF;C1AL
yE :HE FCLLCJI>4, E~,12t~T5G. T12'~TABLE SA =2 OA
x7' 1: LRa:tr.Z TR.It a?TxTiC>E
`_c ?CUt?:'~1T ;2ATVES 11t :CLCiAJt1
ARiTYE2 3r'tlP'At gxSZ- 19 S:r:9ALI
;trtE -2 la,.aL.ATMi C' ECUIPreUT =zl' ETE
:y;E 3SGS x.71r AT' O2,LLJ 4G: SITE
;LAE CAtLLI1:- 8EG111S
4- T IS CCZ' 7TEY MAT CUE TO THE YxST T11SMC;3
1.4f --- V'!: :HO THE HEc=ITT Qr 'SiPt!H6 THE 4EA'!T
ECJIr::E-'17' 2: C=7.4 F^-EICQT. THAT THE r%7' I CEZ;CLINE
IS .EzY RE:?L. FAtLURr TO-FcAGi A OECISTCZ 97'' T:'.AT
31 THE VERY LATEST dY r-AT ISI LCUL3 SAVE
TsE `~ :FFcC L: I CECISIC)1 TC CENT THE
THE _K= Cr UR~SCT LrIC3 THE CC.~'AMT HAS
_'~k~S:cJ 1+ t= C ;[?AI;dLT ;T1G:.E0 ST THE
coUFIDENT (.L
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 Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3
J na ..
." "cns)
?? s_~a
3
-: Dba5i
To to
0.96
5.14:
2.06
8,8
16.96.
.:NG (r' 11?o?. stet c ?s)
At~stra 4
T t 1
LNG Prole
6.0 be--. 1983
6.5 bec- -1983;
6.0 bec. 1987
IS-. 5
1C S t ace
2-5
3.0
6.0
2.5
Gr - c
ct71 14'.4
V
(Z1 scheduled }'0. rat .'~z1_Ze y
1990) .
cf T,NG supplies by 1990 -- A-9-86
NSC review completed - may be declassified in
full
Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3
 Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3
NSC review completed - and takes no action on
document
Next 2 Page(s) In Document Denied
Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3
 Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3
NSC review completed - unredacted segments may be
Ldeclassified7 l;rc 114 0 nona; FPE> r'In/Ff1
25X1
FPf': v r rnr5r'Nf r
PAZ[ nO1 NC Rb 71OR
TOR: ?O0S57ZN1AY `1?
)G?1)EA T I 1
^iY r.CrCC Zr)C STATE 7ZH
T ! - 1
?1.?
)() R lEHC
)F Ftl!EF.Kll 4,'3417 1, flR%l/l
~!YCCCCC /-7H Ar1F,,'RAS y TOKYO
'O ?IJFHC/3F(-SrATF !?,P H()C T'.1*.;FI)TATE 115o
JFn (II> N;. ()/"a'+Fr?if' 15`~Y"(1SCf1' n~i7/t
IT
(1 rl F T 1) E N T I A L
M/A
tAGS: EE,;T, FPET, ,l.A
PRT AF
3'V3JECTL SaKH I,I`)
AVITS)TER'S LETTER TO PPESTPENT
. AS tFi~,TIC~iFC' SEPTEL, FnI L ~!',T'~G TS TEXT OF PPI.41E
INIS(FR'5 LETTER TO PRESTOEiN!T 0~1 9AKHALT"f?
3EGTN TEXT:
)E AP, MR. PRFS I IDE!'J:
? STVCE THE f flI._ISH AHTHnRT.TY PPnCLAV1FI) "ART1A1-
,A.1 U.) I)ECF'-!'4FR LAST YEAR, ',4ESTFP^1 COU"!T2TES,
NCL!JDT JG THE U1'?TTFD STATES A'tr) JAPAi'\lr iAVF
XPPrSSF_I) THEIR GP4VF (-O'IcEP;\l THAT I)FVFI_nP:`1F iTS
Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3
 Approved For Release 2008/01/03: CIA-RDP84B00049R000300530003-3
STATE
h 71 t)R SCn PA(-,F 00? NC H657108 TUUi' ?0Pf;S77:,1AY A?
)F THE POLISH SII11vrTOr1 CI)I.IL_U AFFECT SENTJ1J l_Y
r iF FA{;T - ST RELATIO', S Ii OFi.;F:PAL., AS ,,FLL AS
r:+E. ~~1'~LG PC. "+CF, AND ACCfa'?(UT"`-rL.YHAVE TAKEN
:C)''i(:RE_TF_ I'FA;3UPES AGAINST -THE ';,')']JET U;',TO`) 1,4HILE
-1O F' IIiVG r.0T ITS RESP0NSI.HILI IYF0P THE 31Tt.IATIfIiI
THIS SINrt";S THE [JNITYAND Ct1OPEP.ATIiIN! A'itiNr
^JESTER'\i Co'!'\!T'?TFS, '^;H.ICH, I HEI.IEVE, IS HIGHLY
VALUE0,
_ EI,I THIS CONTEXT I ~rltJLf LIKE TO OFFER Ill
THE ?.1tIF3TT0''; hF T-EF" PE"E*'4L OP THE LICEI,'SES
rtXrH PErIAPo TO SA}GEi) HYSUCH AN OUTCOME,
I A`1 FULLY A~,'ARF OF Yftii2 VARIOUS tJ IFFICUI_TIES
INVOLVED IN THIS GIJESTIi1:'a, HWAFVF4, II' VI .;?' 'IF
THE 11Pr;FP',CYT;,IVfLVED IM THE TIMING OF THE ISSUE:,
I '11JULO LU/PPARI_F
OUTCOME ON THIS ISSUE, It-; THIS Cnt'JN,ECTTiln!,
T 0tlt_O LIKE' TO ASK YP1i TO TAKE INTO CU''JS1t EPATTC;i,E
THAT JAPAN HAS BEE M 4Ji'ITAINNIING u MOST CORRECT
PI)STIIRE TO'.,AiRDS THE SOVIET U',;TON ST,,iCF THE
AFGHAHHISIA-I TP.'CIDENT, FVEN COMPARED