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ments in the Cape sea routes have always been limited. With the reopening of the Canal, CIA believes it unlikely that Soviet use of the Cape routes will again reach even the low level that existed during the period when the Canal was closed. Moreover, the South African capability would be of little use in monitoring activities in the Indian Ocean area. On the other hand, Defense argues we would gain the advantage of a closer military relationship with South Africa.

In our judgment, confirmed informally by both State and Defense, agreement to the South African proposal would be contrary to the policy on issuance of licenses for export of arms, equipment and associated items to South Africa established by NSDM 81 of August 17, 1970 (copy at Tab D).' NSDM 81 is the most recent statement of an arms embargo policy dating back to 1963. In summary, the NSDM prohibits license issuance for all equipment which has a clear and direct application to combat or to internal security operations. It is the judgment of the Defense Department that the preponderance of items necessary for a modern surveillance system would fall into this category. For example, under the policy guidance of NSDM 81, the State Department earlier this year refused a license for export to South Africa of Sonabuoys, a water borne senser device integral to any modern surveillance system.

It appears, therefore, that an exemption to the general guidelines of NSDM 81 will be necessary to allow our agreement to the South Africa proposal. If such an exemption were to become public knowledge, as we deem likely, it could be expected to have both domestic and international consequences.

Internationally, even a limited exemption to our arms embargo policy would be seen by Third World countries, especially those in Africa, as an abrogation of moral responsibility and a reversal, in the name of narrowly defined national interest, of long-standing policy. Repercussions could be expected at the United Nations, where we consistently have supported embargo resolutions. In general, we could expect the issue to make more difficult in the short run our efforts to exercise a moderating influence in southern Africa.

Domestically, any exemption to the arms embargo policy would bring a strong reaction from elements opposed to the South African regime. The domestic economic effects, on the other hand, would be mildly favorable. Although no thorough analysis is possible in the absence of more information about the South African proposal, Defense informs us that a moderate surveillance system would cost the South Africans about $125 million over a three to four year period and pro

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vide about 1000 jobs, the majority in New Hampshire. Former Senator Norris Cotton has expressed support for the project. Recommendation

Our arms embargo toward South Africa pre-dates that of the U.N. Security Council, and, as amplified by NSDM 81, has as its objective a careful balance between conflicting U.S. interests in Southern Africa. It forms a part of our effort to maintain constructive relations with South Africa, while responding to legitimate Black African concerns (supported by a significant domestic constituency) regarding South Africa.

A change in our arms embargo policy, particularly by supplying purely military equipment would be a major shift in our posture toward southern Africa. The change would come at a time when, with the independence of Mozambique, the current Soviet efforts to influence the outcome of independence in Angola, our efforts to convince South Africa to facilitate independence in Namibia, and attempts at obtaining a Rhodesian solution, we are increasingly engaged in southern African affairs. Given these larger considerations, I recommend that you reject the South African proposal, thus confirming our arms embargo for South Africa.4

The State Department concurs in this recommendation.

Alternatively, you may wish to make an exception to our arms embargo policy and authorize the Defense Department to enter into discussions with the South Africans with a view to concluding an agreement on ocean surveillance. If you choose this option you should be aware that your action, should it become public knowledge, will be viewed by domestic and international opinion as an abrogation of our arms embargo policy.” The Department of Defense supports this option.

5

* Ford initialed his disapproval, that is, he approved the South African proposal. In an October 30 memorandum from Kissinger to the President, Ford had previously rejected the proposal. An undated note by Scowcroft on the memorandum, however, reads, "Hal Horan - The President reversed himself on this. He now wants to approve the equipment on a very low key basis. Brent. What do we do now?" (National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H-218, National Security Decision Memoranda, NSDM 81)

5 Ford initialed his approval. In a November 7 memorandum to the President, Scowcroft requested reconsideration of approval of the South African proposal, citing the potential for numerous adverse consequences: secrecy could probably not be maintained, creating problems with Congress (particularly the Black Caucus), some members of the American public, and American media; black Africa would view the agreement as a reversal of U.S. opposition to apartheid, inflaming radical African nations, and cause nations such as Nigeria and Zaire to distance themselves from the United States; and it might also embarrass NATO members attempting to counter accusations of military cooperation with South Africa. (Ibid.)

80.

Memorandum From the President's Assistant for National
Security Affairs (Scowcroft) to the Deputy Secretary of
Defense (Clements)

Washington, December 31, 1975.

SUBJECT

Cooperation with South Africa in Ocean Surveillance

The President has approved your recommendation that the U.S. accede to the request of the Government of the Union of South Africa for cooperation in ocean surveillance, to the extent of facilitating the review of requests for export of equipment and data necessary to upgrade the South African ocean surveillance system.

It is our understanding that International Signal and Controls Corporation is prepared to undertake a study to determine equipment requirements associated with providing South Africa with a modern ocean surveillance capability. Under existing regulations, such a study would require in all probability a Munitions Control license. It is further understood that International Signal and Controls Corporation would apply for specific license issuance for hardware items as subsegments of the study were completed and approved. Accordingly, to implement the President's decision, the Director of the Office of Munitions Control is authorized to invite International Signals to submit an application for a study, informing the company that the U.S. will view sympathetically but on a case-by-case basis, eventual export of reasonable amounts and kinds of ocean surveillance equipment. The Office of Munitions Control, in coordination with concerned agencies, will ensure that the study and subsequent provision of equipment do not extend to capabilities which would involve sensitive technology transfers or direct U.S. involvement.

When the study is completed, Munitions Control will—again in coordination with concerned agencies—review the final equipment requirements and facilitate, as appropriate, additional license issuance procedures.

In responding to General Armstrong's letter proposing the cooperation agreement, Admiral Holloway may indicate that the matter has been referred to the Office of Munitions Control, Department of State,

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Source: Ford Library, National Security Adviser, Scowcroft Daily Work Files, Box 21, Scowcroft Chronological File (B), Scowcroft Chronological 12/23/75–1/2/76 (4). Top Secret; Sensitive. A copy was sent to the Chairman of the Joint Chiefs of Staff.

2 See footnote 2, Document 78.

which will be prepared to consider an application for a study of South African requirements in a favorable light.

Brent Scowcroft

81.

Memorandum From Clinton Granger and Harold Horan of the National Security Council Staff to the President's Assistant for National Security Affairs (Scowcroft)

Washington, January 15, 1976.

SUBJECT

South African Ocean Surveillance

Implementation of the President's decision to facilitate issuance of licenses for South Africa to purchase ocean surveillance equipment is proceeding apace. Admiral Holloway dispatched yesterday (January 14) his letter to South African General Armstrong informing him that Munitions Control would view favorably an application by International Signals Corporation for a license to study South Africa's ocean surveillance needs; DOD is sending us a copy of this letter. Meanwhile, the Navy evidently has been in contact with the South Africans, and International Signals has informed Munitions Control that the study application would be forthcoming by January 21. State is also taking steps to ensure that Ambassador Bowdler in South Africa is informed.

One potential issue has arisen in relations between Munitions Control and International Signals. The company was intending to do business with a quasi-private South African organization which would be established by the South African Government to put the ocean surveillance project into operation. This procedure, broached by the South Africans in their original letter to Admiral Holloway, is evidently designed to save us political embarrassment. More likely, however, it would do the opposite, adding the appearance of cover-up to the political controversy which would break out should our role in the ocean surveillance project become known. State believes strongly and has told International Signals that whomever the company deals with, the

1

Source: Ford Library, National Security Adviser, Scowcroft Daily Work Files, Box 25, Scowcroft Chronological File (B), Scowcroft Chronological 1/15/76–1/19/76. Top Secret. Sent for information. A handwritten note by Scowcroft reads: "Let's do our best to hold it close while Angola is prominent."

role of the South African Government must be acknowledged in the study application—and therefore tacitly accepted by us in approving the study. We concur.

You should also be aware that, despite extraordinary efforts at State and Defense to restrict access to information about the ocean surveillance project, the circle of those aware of it is inevitably widening. Aside from State and Defense, International Signals and the South Africans are now aware that a decision has been made to consider exceptions to our embargo policy. We must assume that chances for a leak are becoming much greater.

82.

National Security Study Memorandum 2361

Washington, January 16, 1976.

TO

The Secretary of State
The Secretary of the Treasury
The Secretary of Defense
The Secretary of Commerce
The Director of Central Intelligence
The Acting Executive Director, Council on International Economic Policy

SUBJECT

United States Policy on Export-Import Bank Loans for South Africa

The President has directed a review of United States policy toward Export-Import Bank loans for exports to South Africa.

The study should describe current United States policy and the rationale for continuing or modifying that policy, taking into account the following:

- the economic benefits and costs of an Export-Import Bank policy change, with particular attention to the extent of competitive disadvantage United States business firms presently have in exporting to South Africa;

--the short and long term consequences of a changed policy for overall United States interests in Africa and elsewhere;

Source: Ford Library, National Security Adviser, NSDMs and NSSMs, Box 2, NSSMs File, NSSM 207. Secret; Sensitive. A copy was sent to the Chairman of the Export-Import Bank.

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