nizing nominally non-Rhodesian chrome imports. Secretary Rogers' proposal for a more vigorous effort with the UK to insure compliance by other industrial countries with the embargo is intended to reduce this disadvantage to American companies. Existing tax laws provide relief for US firms affected by the Rhodesian sanctions. We should however ensure that these firms are fully informed of these relief provisions. 4. Foreign Policy Aspects Your administration is fully committed to the embargo on imports from Rhodesia. Your message to Congress of February 186 stated bluntly our opposition to the racial policies of the white-ruled regimes; and our policy statement on Africa of March 267 unqualifiedly pledged our continuing support for the economic sanctions. Moreover, your decision set forth in NSDM 47 plainly indicated your determination to meet our obligations under the Security Council Resolutions on Rhodesia, for which we have voted three times. 5. Who is Being Hurt? The actual issue for decision, therefore, is not whether to adhere to the embargo but rather what relief can be given within the terms of the embargo to those firms which claim undue hardship. These cases fall into two categories: (a) Union Carbide. Carbide claims to have paid for 150,000 tons of chrome ore after the Security Council Resolution but before the first Executive Order was issued prohibiting the Rhodesian imports. The White House announcement of the Executive Order imposing the embargo stated that provision would be made for "cases of undue hardship arising from transactions commenced before the date" of the Executive Order. The Carbide case seems to fit squarely in that category. Moreover, the Treasury Department announced in March of 1967 that licenses for import would in general be issued where payment had been made prior to January 5, 1967. Again, the Union Carbide case fits. Carbide is the only case of an American firm which paid for but failed to export Rhodesian commodities prior to the effective date of the Executive Order. Justice, Treasury, Commerce, and OEP feel that an ex 6 Reference is to the President's "First Annual Report to the Congress on United States Foreign Policy for the 1970s." For Nixon's remarks regarding racial policies of the white minority regimes, see Public Papers: Nixon, 1970, pp. 158–159. 7 For the text of the Department's position on economic sanctions, see the Department of State Bulletin, April 20, 1970, p. 520. 8 Executive Order 11322, January 5, 1967. ception for Union Carbide should be granted, and would be consistent with our international obligations. State disagrees. (b) Sale of American Owned Assets in Rhodesia. Some American firms, including Foote Mineral and Universal Leaf Tobacco, have said that if they are unable to import Rhodesian commodities owned by their Rhodesian subsidiaries, they would like to sell their Rhodesian assets. At the present time, our regulations make such sales difficult. The UN Security Council Resolution, however, does not explicitly prohibit the sale of assets. We could, therefore, merely by reinterpreting our own regulations, permit the sale of American owned Rhodesian assets. Treasury, Commerce and OEP favor such action. State opposes it, on the grounds that the UN Resolutions implicitly prohibit such sales. 6. Political Pressure Aspects Mr. L.G. Bliss of Foote Mineral has been very active in opposing the embargo of imports from Rhodesia. He has asked for a chrome import license under circumstances which would constitute a clear violation of the Security Council Resolutions and the existing Executive Orders. He has told OEP that if he is not given the license he will attempt to prevent Congressional approval of further sales from our chrome stockpile. I find it difficult to believe that Mr. Bliss will deliver on his threat. First, the effect of his action would be to increase the already high price of chrome, a subject upon which Mr. Bliss is already considerably exercised. Second, OEP believes the two major firms in the chrome producing field, Union Carbide and AIRCO, can be persuaded to oppose Mr. Bliss's move. This should be particularly true if you grant the recommended approval of a hardship exception for Union Carbide. Third, if you approve the recommended sale of American owned assets in Rhodesia, this will open an avenue of relief to Mr. Bliss, which may dissuade him from pushing his application for an import license to such extremes. OEP believes Mr. Bliss might be able to deliver on his threat this session, but agrees that he would find it difficult to do so if you approve the recommendations regarding Carbide and the sale of U.S. assets in Rhodesia. In any event, the granting of an import license to Foote Mineral would, as stated above, be a clear violation of the Security Council Resolution, and would involve foreign policy costs which transcend the cost involved in a Congressional refusal to sanction additional sales from the chromite stockpile surplus. (Of the $750 million you hope to realize from FY '71 stockpile sales, OEP plans to get $30 million from chrome sales.) The facts of the Foote application are as follows: Foote sent money into Rhodesia after the date of the first Executive Order prohibiting imports, and with the full knowledge that no ore produced as a result could be licensed for import to the United States. The ostensible purpose of the transaction at the time was to prevent the flooding of a Foote-owned mine in Rhodesia. State and Treasury oppose the granting of a license to Foote. Commerce favors granting the license. OEP defers to State and Treasury on the question of legality, but is worried about Bliss's threat to its plans to sell chromite from the stockpile. Corning Glass previously had a troublesome problem stemming from its reliance on an ore available only from Rhodesia. However, a domestic substitute has been developed and Corning's problem is resolved. There are applications from Metallurg to import chrome, from Dibrell to import tobacco and from American Asbestos to import high grade asbestos. None of these firms, however, have paid any money, and they do not, therefore, fall within the hardship category. Asbestos has alternative sources of supply. Granting import licenses to any of these firms would clearly be a violation of the Security Council Resolutions and would be inconsistent with existing Executive Orders. Summation If the facts are as presented by Union Carbide, this seems a clear case of "undue hardship". Their purchase of chromite ore in Rhodesia was legal at the time the funds were transferred. The granting of a license to Carbide would be consistent with current U.S. regulations, and although it might be subjected to criticism, it could not fairly be characterized as a break in the U.S. implementation of the embargo. I believe a license should be granted to Union Carbide. In view of your desire to avoid undue hardship on American firms, I see no reason why we should, in our implementation of the sanctions, go beyond the steps required by the Security Council Resolution. I therefore think we should permit the sale of American owned assets in Rhodesia. To be blunt about it, the Foote Mineral application to import chromite ore is an exercise in embargo busting. The grant of a license to Foote could not plausibly be defended as anything other than a fundamental change in the U.S. embargo of Rhodesian imports and a U.S. refusal to comply with the Security Council Resolutions. Moreover, if you approve the sale of American owned assets in Rhodesia, this will open to Foote Mineral an avenue of relief. I am also attracted to Secretary Rogers' suggestion that we attempt to lessen the competitive disadvantages of U.S. firms by tightening the enforcement of the embargo by the other major industrial nations. Recommendations:9 1. That you approve, contingent upon the confirmation by Treasury that the facts are as stated by Union Carbide, the issuance to Carbide of a license to import 150,000 tons of chromite ore from Rhodesia. 2. That you approve licenses for U.S. firms to sell their assets in Rhodesia to any buyer. 3. That you approve a more active U.S. effort-in concert with the U.K.-to ensure better compliance by other industrial nations in the UN embargo on Rhodesian chrome. 4. That you approve the continuing refusal of licenses to import Rhodesian goods from any firm which entered into a transaction after the effective date of the Executive Order prohibiting such imports. 5. That you direct the Under Secretaries Committee to review periodically the supply situation on chrome, and call to your attention any change which threatens our strategic needs for this commodity. 6. That you direct Treasury to ensure that U.S. firms affected by sanctions or Rhodesian currency restrictions are aware of all tax relief provisions available to them under existing laws and regulations. 9 Nixon approved recommendations 1-6 on July 31. 38. Telegram From the Department of State to All African Washington, July 24, 1970, 0045Z. 118846. Subject: Arms Sales to South Africa and the Security Council. Ref: State 116834 and 117924.2 1. Action addressees are requested to seek early appointment with Fonoff to explain reasons for US abstention on July 23 SC resolution on 1 Source: National Archives, RG 59, Central Files 1970-73, DEF 12-5 S AFR. Confidential; Priority. Drafted on July 23 by Jacobs, cleared in substance in IO, cleared in AF/S and IO/UNP, and approved by Moore. Repeated to Cape Town, Pretoria, London, Paris, Lisbon, Algiers, and Khartoum. 2 For telegram 116834, see footnote 2, Document 36. Telegram 117924 is printed as Document 36. arms sales to South Africa.3 Resolution carried by 12 votes to 0 with 3 abstentions (US, UK, France). Text by septel.+ 2. In their démarches, addressees should emphasize to host governments the positive aspects of US policy and stance re South Africa. USG wholeheartedly condemns apartheid and would have wished to join majority in voting for resolution had it not contained special problems described below. Addressees should make clear US abstention in no way implies change in US position with respect to apartheid or connotes any weakening in our support of existing UN resolutions on arms sales to South Africa. US regrets that it placed in a position where we had to abstain. We have carried out provisions of the existing resolutions strictly and conscientiously and would not wish the distinction between our embargo policies and those of others to be obscured. 3. As US statement in Security Council (sent wireless file) indicated, our own embargo was reaffirmed by the Administration in March this year and Secretary Rogers noted this reaffirmation as late as July 11 during his London visit. Quotation from US statement apropos here. Quote And an official spokesman of Department of State only yesterday reaffirmed that the US supports the Council's resolution on the sale of arms to South Africa and indicated that our government would not be able to associate itself with any measures which might result in an increase in the flow of arms to South Africa. Unquote. 4. Referring to statements by preceding speakers about military equipment we have supplied to South Africa over past few years, US representative said deliveries currently being made consist entirely of spare parts and stem from contracts entered into prior to effective date of US embargo, i.e., December 31, 1963. Deliveries of major items of military equipment under these contracts have long since been completed. However, it is basic tenet of US trade policy that valid contracts, such as those for supply of spare parts, should be honored. 5. US would not go so far as to characterize situation in South Africa as potential threat to international peace and security. In our view, such characterization goes beyond facts of situation and, therefore, would be inappropriate. In particular, proposals contained in operative 3 For Buffum's statement and the text of Resolution 282, see Department of State Bulletin, August 17, 1970, pp. 203–205. Telegram 127112 to Dar es Salaam, Gaborone, and Bujumbura, August 6, provided specific reasons for the U.S. abstention on the arms embargo resolution. One cause for concern was that the resolution went well beyond the sale of military equipment to a general embargo on sales to the South African Defense Forces, hampering the U.S. Government's ability to honor pre-embargo contracts to supply non-lethal spare parts. (National Archives, RG 59, Central Files 1970-73, DEF 12-5 S AFR) See also Yearbook of the United Nations, 1970, pp. 120–124. 4 Telegram 1548 from USUN, July 23, transmitted the text of Resolution 282. (National Archives, RG 59, Central Files 1970-73, DEF 12-5 S AFR) |