Brezhnev: What an absurd premise.

Kissinger: Japan will not do it alone. The real problem is whether we can get them to do it with us at all. My judgment is that their greed will help them overcome any political problems.

Gromyko: First they were trying to talk you into it. Now you are trying to talk them into it. Such is life.

Brezhnev: On gas we expect to have 13 trillion cubic meters. The Yukutsk deposit consists of three trillion cubic meters. We could sign an agreement for 25 to 30 years. On Tyumen the deal is now for 10 trillion but it would be up to 100 trillion. Therefore, you could sign there for 50 years. There could be a total of 25 trillion liters per annum to the United States. The Yakutsk gas will take 3 or 4 billion dollars and the Tyumen may take even more than that. On the other hand, the scale is enormous. The U.S. with its powerful economy should make large scale deals on this, not ten but twenty-five trillion liters of gas per annum. Of course you have to make a great investment but we too also on our side. It will take a whole new complex that we must build. This will cause very great tension for us. That is why in this context $650 million is difficult in light of other things. It is not small.

Kissinger: I agree we should take a broad view. We are talking about very large sums, and a complete change in our economic relations and that alone will have a significant effect for all of international affairs. We are talking about a revolution in economic relations which when compared to twenty five million or less a year is trivial. When I talk to Rockefeller about mobilizing credit, what he worries about is repayment. The lend lease money itself is trivial for us. There will be additional anxieties at the onset if we have postponements on lend lease. We can't of course postpone the pipeline. On lend lease, you have agreed to one payment now and then to wait until 1976. Payment would be on the order of $25 million. This is the only difference between us.

If you take this as a regular postponement it is easier than four postponements in repaying by 2001. If there is one payment, then four postponements and payment by 2001 it doesn't do us any good. The normal way would be to add on the postponed sums after 2001. The global sum between the two percent rate and $800 million rate is three or four million. (Four and a half million a year on the $800) But we are talking about a series of measures of great scope. We do not want to be on the defense, spending all of our time explaining to Congress why you are not paying. They will think we are being taken advantage of with a disadvantageous lend lease settlement on top of gas credit. You and I must look on the big economic view. $650 million is out of the question. It will be difficult to reach agreement on a scheme in which

you have four postponements and you take three of these in the first four years. Are you confused by my presentation?

Brezhnev: You mean paying by 2001 is no good.

Kissinger: I did not explain the process. It is easier for us to add these payments on to the end than for you to make them up at the end. Economically it is easier of course the way you suggested, but politically we want to take the postponements one at a time and not know formally in advance. It would be acceptable to have an understanding, although it would not be formalized.

Brezhnev: So you are proposing that we pay in 1973 the first sum. Then in 1974 and 1975 we do not, in 1976 we do. What about 1977?

Kissinger: You could take two postponements. This way you could pay in 1973 and have postponements in 1974, 1975, and 1977 and then pay the whole thing.

Brezhnev: You get in touch with your President. I have to get in touch with my colleagues. The global sum of $800 million is quite unacceptable.

Kissinger: Both of us have declared what is unacceptable. Now we must find a solution. You have my proposal of $798 and there is yours of $651.

Brezhnev: We are making progress.

Kissinger: It is like Chinese border relations. (Laughter)

Brezhnev: We mentioned $500 million in Moscow. You mentioned $800. Why not split it in half, one hundred fifty and one hundred fifty and meet halfway?

Kissinger: It is true that you did mention the sum of $500 million. Brezhnev: Why don't you take one pie now and defer two for later. (Laughter)

Kissinger: On the sum of $500 million we were talking about a sum without interest. At a two percent interest rate, it would be $660 million, so you have actually reduced the sum by $10 million in even. payments.

Brezhnev: When you suggested your interest rate, we shouldn't talk about that. That is company level talk. We are not corporation executives. If we meet each other half way, one side cannot take ten steps while the other side takes only two steps.

Kissinger: If I get the General Secretary to take two steps toward me, I will consider that an accomplishment. But there is more to this than splitting the difference.

Brezhnev: You are trying to get me confused with these figures. (Laughter)

Kissinger: The real difference is between $650 million and $800 million. Both of these figures include interest and then we are talking about comparable figures.

Brezhnev: That is so high, we couldn't discuss it. Please get this across to the President.

Kissinger: The figure $650 million I cannot present. Of course if you demand I will present it but I can tell you now we are wasting our time. The answer to $650 million would be no. It would be tragic if I am here for two days and we don't get an agreement. I am not trying to be a clever bargainer. I just wanted to tell you frankly he will not accept that figure. And what is worse, Congress will not agree. It could jeopardize all the other agreements.

Brezhnev: To be very frank what sum, even at the cost of a strain with Congress, what sum could you accept?

Kissinger: This is not good bargaining, but the absolute minimum we could accept would be $750 million. When the sum of $500 million was released to the press, it was with a five percent interest rate. If we were simply paying off lend lease, we could probably go to Congress. Dobrynin: $750 million would really be $700 million, because the $750 million includes the pipeline.

Kissinger: It would include the pipeline. Is that understood?

Brezhnev: Well then for the time being let me convey my comments on postponement, that is on the total sum and on postponement. I will talk with my comrades. We might be able to go down to four postponements and perhaps even reduce that. In the meantime, we will be waiting for the reply from your President. On postponements they would come at a time that credits for gas and so forth would be operative.

Kissinger: My plan only adds one payment. There would be a payment, postponement, one payment and then three postponements. That is in order to prevent Congressional difficulties. We also understand that the two pipeline payments are not deferred. You owe us on the pipeline. We have held up that for this year but it will have to be paid this year and next.

Brezhnev: Would lend lease begin in 1973? This year the pipeline was postponed.

Kissinger: The first lend lease payment would be in 1973 if we pass

MFN.

Brezhnev: Then in 1974 under your scheme there would be a postponement and in 1975 pay and in 1976 and 1977 postpone. What about 1978?

Kissinger: My recommendation would be that you pay in 1978 and take your other postponement in 1979.

Brezhnev: If we come to agreement, then we could pay both of them together as of 1973.

Kissinger: It is our understanding that there is no dispute about the pipeline. Our proposal is that in 1972 and 1973 you pay the pipeline. After that it is all paid off and this is not a factor.

Secretary General Brezhnev then walked out of the room.

Dobrynin: If you propose $700 million with the understanding that there is [omission in the original] million in the pipeline, it would be better to put it this way to the Secretary General. Of the $750, $48 of it would be to the pipeline, $702 for lend lease.

Kissinger: As I understand it, when Congress passes MFN next year then the first payment would be made and that would be followed by a postponement.

Dobrynin: It is my impression that he meant...

Manzhulo: He said $650 million.

Kissinger: I understand that. These numbers are starting to sound familiar. They are similar to those for SLBM and ICBMs; therefore we have a global figure.

Gromyko: When can you get an answer from your President?

Kissinger: What am I supposed to ask? Whether $650 million is acceptable? Alright, I will get this out. You understand my point that we do not have any formal agreement as to when there is a postponement.

Dobrynin: Yes, we understand. (Note: Kissinger, Sonnenfeldt and Lynn consulted and began drafting a cable to Washington. After an interval the group returned to the room.)

[In essence the two proposals were:

-on the Soviet side a $650 million lump sum with one payment followed by four postponements.

-the U.S. counter proposal is for $750 million with one payment followed by one postponement and then a payment. This would be followed by two postponements and then perhaps one payment and then one or two postponements.]

7 Kissinger wrote Haig in message Hakto 11, September 11, regarding lend-lease: "Brezhnev maintains they cannot go above 650 million principle and 150 interest. I have come down from our 800 million to 750 million as absolute minimum. But Brezhnev wants President's response re 650 million. I think he may yield." Kissinger asked Haig to send him a telegram "from President by flash so I can show it to Soviets." Kissinger provided a draft of the telegram from Nixon to himself, which Haig sent back to Kissinger the same day as message Tohak 28, which stated that "650 million would be totally unacceptable to Congress and would therefore risk defeat of entire economic package for Soviets." It continued: "You [Kissinger] are authorized to offer 750 million as absolute minimum consistent with basic objective of building new economic relationship with USSR.” (National Archives, Nixon Presidential Materials, NSC Files, Kissinger Office Files, Box 24, HAK Trip Files, HAK's Germany, Moscow, London, Paris Trip, Sep. 9-15, 1972, HAKTO 1-35)

Gromyko: There is bad news from the Middle East. Very bad. Kissinger: Your Government has behaved very properly and with great discretion.

ago.

Gromyko: I had in mind the events which occurred a day or two

Kissinger: We had done our best to try to prevent it. We had not been told the complete truth. (By the Israelis.) Note: There was then a brief discussion of the Olympics. With reference to the basketball game, Kissinger stated it was bad enough to lose, but we were also tortured by the illusion of victory.)

Secretary General Brezhnev then returned to the meeting.

Brezhnev: Have you reached an agreement? I thought I was intimidating you so I left.

Kissinger: Your colleagues have been reminding us of all our

defeats.

Brezhnev: They have been telling us that Kissinger agrees to $650

million.

Kissinger: As the base sum (without interest).

Brezhnev: I am only kidding. We cannot make a payment of this much. We have put it all into one lump sum for you. Why don't we have a break for lunch now. I want to do some additional thinking. Kissinger: Should I send a telegram?

Brezhnev: After lunch we can take the time we need.

Gromyko: (Consulting with Brezhnev) Yes, you should do it by

cable.

Brezhnev: We can perhaps break until 6:00 p.m. Then we can take up several other issues. For example, we could discuss the agreement on non-use, SALT, European Security, Vietnam, Middle East, and Germany. Then we could start again at 10:00 a.m. tomorrow morning. It has not been very productive today. The President is going to receive two telegrams. One from you and one from me. I will tell him that either Kissinger is misreading his directives or else that I cannot recog

8 On September 9, Israel launched air raids against Palestinian guerrilla bases in Lebanon and Syria in retaliation for the kidnapping and murder of Israeli athletes at the Munich Olympics. On September 12, Vorontsov delivered a note to Haig from the Soviet leadership protesting the Israeli action, which Haig forwarded to Kissinger in message Tohak 40, September 12. The Soviet note called the air attacks "a premeditated provocation by Israel against Syria and Lebanon." It continued: "If no effective measures are taken by those who bear the main responsibility for preserving international peace and security, if Israel is not called to order and if Israel continues to aggravate the situation, then it may lead to very dangerous consequences for the cause of peace in the Middle East." (Ibid., TOHAK 1-116)