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tions, terms, no nothing." The US cries poor that it hasn't got $3 billion but the US "wastes" a lot more in "certain places" (we all took this to be an obvious reference to Vietnam).

Going on, Brezhnev states that, of course, these gas projects take time. To calculate the specifics the US has experienced people and so does the Soviet Union. Then the matter can be resolved. Perhaps 80% of the gas to the US and 20% for Soviet use. These are details. The Siberian gas project is a big operation. The USSR has also had negotiations with Japan. The USSR believes it should do the Japanese gas project because there are some goods in Japan the USSR is interested in. Recently there have been rumors the US and Japan want a joint approach. The US must arrive at an understanding with the Japanese. The investment step is the heart of the matter. The terms of supply and the rest were merely matters of techniques. For example, the Soviets could guarantee us a fixed quantity at a price for a certain term and the US wouldn't have to worry about all the problems.

Brezhnev also mentions the possibility of other big projects, such as cellulose plants to be built in the USSR-perhaps a 50-50 deal. On platinum, he states he does not know the details but Patolichev is to continue looking into such a project. He mentions the USSR truck industry as a big item for development. Also a couple of big fertilizer plants, both phosphorous and nitrogen. Summarizing, he states projects could be on a "colossal" basis, worthy of the two countries.

Brezhnev states further that we can also exchange consumer goods and capital goods such as machinery. Would require credits. The United States has credits that could be made available. This requires good will and a reasonable approach. The United States should roll away the superstition and get rid of the biased opinion that used to exist against the USSR in the US. Gas is not dependent on political systems.

Peterson states he is a businessman and believes that gas alone could make the US the USSR's biggest trading partner by 1980. If Peterson were to make the decision, he would do it. Peterson states, however, that it may take a few months to convince others in the US what Peterson believes is an obvious fact. He reassures Brezhnev that he had heard him loud and clear on gas.

Peterson states that on trucks (Kama River)* and joint projects, we would be able to move soon. It is very important to get a few deals started soon, even if not the biggest ones. Once we get a few projects started, the American mentality is that other businessmen will want to do the same thing. Thereupon Brezhnev refers to Henry Ford and how,

4 See footnote 4, Document 19.

after discussions between Ford and Kosygin on the Soviet auto plant, there were such noises in the United States "Poor Henry Ford" had to suppress what he had talked about with Kosygin and the Italians ended up building the plant.

Brezhnev states that during the current five-year plan, the USSR wants to build another truck and automobile plant in Siberia, involving 150,000 units a year. This plant could be built with the US.

Peterson states that the Ford experience was pre-Summit. Already people in the United States are saying that there have been no more important, bold meetings in the modern history of the world than the Summit meetings. Brezhnev interjects that if God is willing (crossing himself) and he comes to the US he will explain to our businessmen. Peterson states that the Summit has changed things and uses as an example our attitude toward participation in the Kama River truck plant. He further states jokingly that modestly he will also point out that the Ford project was pre-Peterson, and that Patolichev knows we are ready to go on the Kama River plant.

Brezhnev states there are 250,000 million people in the USSR, and the US should take a realistic look at the country. Peterson should look hard at the Soviet requests to him. Peterson should treat the interest rate issue with a "Godly" attitude. The issue of whether 3 or 6% is important.

Peterson offers Brezhnev a bet that he states Brezhnev probably won't take that if we can get by the small technical problems in the next couple of months, the US will be the largest trading partner of the USSR by the end of this decade easily.

Brezhnev states that the US social problems are harder to solve than in the USSR, for example, unemployment and poverty. The US should take that into account. The USSR is prepared to "help out" with these problems through trade. He adds that if we were enemies, the USSR would foster crises in the United States.

Peterson states that we do have different systems and different views about our systems. As the Summit showed, both sides agree that "in a nuclear age there are no winners and losers." The same is true in trade. Both nations want peace and also have in common our efforts to improve the standard of living in our countries.

Brezhnev interjected that if we don't trade, both peoples live less good lives. Brezhnev refers to his learning about an American game of "chicken" where autos come at each other in the same lane and wait to see who will divert first. In such a case, Brezhnev said that we both know who would be left and we would have to ask ourselves how we felt about that.

Peterson states history will make Brezhnev and Nixon the greatest peacemakers in history, and beyond this each dollar saved will go into

the pockets of our people. Brezhnev replied that history inevitably judges leaders and inevitably such judgment is either good or bad. For example, the Soviet people have a good impression of Roosevelt and not so favorable impression with regard to certain other Presidents.

On the subject of allocation of national resources as between defense and consumer expenditures, Peterson states that as the President's Assistant he made a special study of Japan. Japan has had the greatest increase of GNP of any major country. It puts only 0.8% of GNP into defense. Brezhnev interjects that the Japanese advantage is both the lack of defense expenditures and its cheap labor. Peterson continues that the difference in what Japan spends on defense in relation to the US is almost exactly the amount of investment the Japanese put into plant and equipment annually.

Brezhnev states that he appreciates setting up the special working group on gas, and he authorizes Patolichev to proceed. He urges that businessmen be given a free hand. They should be pushed together. He raised this with the President. He asks Peterson to tell the President that he raised the gas project many times with Peterson. Also to tell him that Brezhnev is confident that the understandings and agreements between us will be realized.

Peterson states that the President directed Peterson to bring Principle Seven of the Summit principles into a reality." (Brezhnev then reads it.) Brezhnev then tells Peterson to "tell the President that Comrade Brezhnev is glad Peterson had me read it and we will abide by it.”

Brezhnev states that we have to solve lend-lease and states that he gave his point of view to the President. They agreed to resolve the problem on "that principle." Brezhnev doesn't like unpleasant words but it is an old problem. The United States got nothing. If Brezhnev had been General Secretary at the time and as farsighted as he is now, he would have had the USSR act in a different way. He would have had the USSR return all the lend-lease property left after the war. Thereupon the USSR would not be a debtor. Now, instead, the USSR even has to pay interest. The USSR now "has to pay" and Brezhnev wants to resolve this unpleasant problem. Brezhnev wants the President to understand the USSR proposals on time periods and feasibilities of payment.

5 Franklin D. Roosevelt, President of the United States from 1933 to 1945.

6 Presumably a reference to the Basic Principles. Article 7 reads, "The USA and the USSR regard commercial and economic ties as an important and necessary element in the strengthening of their bilateral relations and thus will actively promote the growth of such ties. They will facilitate cooperation between the relevant organizations and enterprises of the two countries and the conclusion of appropriate agreements and contracts, including long-term ones.” (Public Papers: Nixon, 1972, p. 634)

Brezhnev states he will raise one more issue, that was not on the agenda. If the US will offer "Godly" credit terms, the Soviets would discuss a long-term deal on soybeans, and makes another reference to our needing something in our hands vis-à-vis the problems with our new competitors.

Jokingly, Peterson refers to a possibility of our forming a trading bloc with the USSR if that problem is that serious.

In closing, Brezhnev tells Peterson to give Brezhnev's best regards to the President, Secretary Rogers and Dr. Kissinger. He also asked Peterson to advise the President that the USSR keeps working in the spirit of the Summit and nothing will shake its position in this regard. "We must not be hesitant."

Following the meeting, Peterson and Brezhnev met privately for about 15 minutes. At this point, Brezhnev told Peterson that he wanted him to give a private message to the President on the lend lease issue. Brezhnev said this was a very difficult issue for him and he wanted the President to know that he was not able to go beyond the 2% interest. Peterson mentioned the proposal made to the Soviets to split the difference between the old interest rate of 2% and new interest rates of 6% to 7% and that he had very much hoped that this would get both sides off the hook. Brezhnev said he understood this but he still wanted me to relay the 2% interest message to the President.

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On August 1, 1972, Secretary of Commerce Peter G. Peterson concluded the talks of the U.S.-USSR Joint Commercial Commission in Moscow. In a news conference at the Embassy in Moscow, he presented a general summary of his conversations with Soviet General Secretary Leonid I. Brezhnev and of the ongoing commercial negotiations with the Soviet Union.

On the issue of U.S. credits to the Soviet Union, Peterson said that it was "clear from this visit that interest rates are viewed differently in our society and here." He continued: "More than once during our discussions we have heard reference to the idea of 'godly' interest rates. I take this as a euphemism for low interest rates. Well, we know that there are many bankers who lend money who think that God is high in the heavens. And it might be argued, therefore, that there are somewhat different perceptions of what 'godly' interest rates mean. It is no secret that in the course of the grain agreement the Soviet Union had hoped for long-term arrangements up to 10 years and very low interest rates at 2 percent. I think that what has emerged from these sessions is growing acceptance of the basic principle that if the President decided to make any determination, it cannot be one that involves concessionary rates or concessionary procedures. He means that interest rates and terms must be the same as those offered other countries and that the procedures by which we approve credit must be the same as for other countries."

With regard to most-favored-nation status (MFN) for the Soviet Union, Peterson said: "If we were to grant each other mostfavored-nation treatment, the symmetry is obviously something less than perfect. Here, the state trade monopoly buys everything and sells everything for what are clearly reasons of its own. For that reason, what it buys, what it sells, who it buys from, who it sells to, and what it pays can obviously be subjective decisions, not market decisions. And therefore there is potential for discrimination, whether that is the intent or not." He continued that “in a non-market economy, it means that such issues as dumping become a real possibility, whether intentional or not." He concluded, "It is important, therefore, in building a permanent commercial relationship that we anticipate these possibilities and decide how they are to be handled."

Turning to lend-lease, Peterson said, “I think the two governments have come somewhat closer together on the lend-lease issue." He continued, "I think it is entirely possible that this is one of those issues that in the final analysis will have to be resolved at the highest level of both governments." At another point, he noted, "it is very unlikely that our President will extend Exim credit until the lend-lease problem is satis

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