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Yost-In the next few weeks.
Rogers—We should move on Southwest Africa and the Consulate in Salisbury; these have the greatest visibility.
RN—Economics are the most important foreign influence on South Africa and Rhodesia. I think we should come down on the side of permitting more trade and investment.
Siciliano—This can be done with low visibility.
Telegram From the Embassy in South Africa to the
Pretoria, December 19, 1969, 1738Z.
3498. Subject: Ashe Visa.
1. As reported Pretoria reftel, arrangements were made for FonMin and me to meet PriMin in Port Elizabeth to discuss Ashe visa matter. FonMin and I flew there today where we had session in hotel with PriMin who had driven 90 miles for meeting. Time and effort involved demonstrate importance attached to subject by SAG.
2. At outset I told PriMin something of my visit to Washington and said on basis of my talks there I could assure him U.S. administration genuinely wished improve relations with South Africa. However, we deeply concerned that SAG treatment of visas for some Americans (inter alia Diggs and Reid) greatly limits U.S. freedom and flexibility. I made special point of interest of President and Secretary in Ashe visa and, using all arguments which seemed appropriate. I urged that visa be granted. I said I aware from my previous talk with Fon Min that SAG attitude had been materially affected by earlier statements by Ashe which led it to conclude his desire to visit South Africa was politically motivated. However, most recent statement by Ashe (which PriMin had) would provide S.A. opportunity issue visa with assurance that Ashe would cause no trouble while here. This would be far better than conditional visa proposed for Diggs and Reid. I said high officials who knew Ashe personally considered him responsible and had confidence he would conduct himself here as guest of S.A.
Source: National Archives, RG 59, Central Files 1967–69, PPT Ashe, Arthur. Confidential; Limdis. Repeated to Cape Town, Durban, and Johannesburg.
? Reference is presumably to telegram 3471 from Pretoria, Document 19.
3. In reply PriMin expressed sincere appreciation re attitude of President and other administration leaders concerning relations with S.A. He said South Africa fully accepted American leadership of free world and desired to be as close to U.S. as we permitted. He had been greatly impressed by President Nixon's statement in Rumania concerning U.S. relations with countries whose internal order different from our own. He could assure me that South Africa wished build upon areas of agreement wherever they existed, recognizing that we had different approaches to our respective internal problems.
4. He wished make clear that SAG attitude toward visa for Ashe was not repeat not because of his race, any more than denial of unconditional visa to Congressman Diggs was because he was Negro. It was most unfortunate that application was for visit to S.A. during crucial election period. Ashe's recent statement to which I had referred had included phrase which could present real problems, and would be seized upon by Hertzog group to "clobber" government if visa granted. That phrase dealt with Ashe's undertaking that any political remarks he might make would be only after several weeks following his departure from Johannesburg, that is, after the elections. Opposition already was preparing groundwork for charge that this was concocted by SAG and Americans so as not to embarrass National Party election prospects. Statement thus made favorable decision on application even more difficult.
5. Turning specifically to internal political situation, PriMin said he confident that, in absense new ammunition in hands of Hertzog group, it would be "destroyed" in elections. However, he wished to tell me frankly that if group succeeded in gaining even one or two seats, result would have snowball effect which could end in political disaster, and he simply could not risk destroying his party and thus stability of country. His decisions and actions must be based upon knowledge that substantial majority of Afrikaners and National Party members were in fact opposed to his outward policy, objected to “too much” being done for non-whites, criticized his refusal to enact legislation making Afrikaans the only official language, and strongly resisted his sports policy. They had to be carried along and he could do this, but he convinced that Ashe visa question, if mishandled by him, could put his back to the wall by setting into motion domestic political forces of considerably more significance than the outside world realized.
6. At this point I spelled out possible consequences to US-SA relations of refusal of visa including increased pressures against improved relations, demands for retaliation against South African athletes com
For the text of Nixon's remarks on August 2 in Bucharest, see Public Papers: Nixon, 1969, pp. 604-605.
peting in the U.S., etc. I observed that from what PriMin had said, choice for him difficult, but I thought so much would be endangered by negative decision as to warrant his willingness give further thought to means permitting Ashe to come. PriMin responded that his present thinking was that domestic political consequences of issuance of visa would be such that he must be willing to accept any external consequence of its refusal, as regrettable as this might be. He observed that if we could get over the period immediately ahead, matters of this sort could be handled more easily. He was determined to permit Maoris to participate in S.A. as members foreign team whose selection not made for political purposes. He then put forth a suggestion that if Ashe were to come to S.A. as member of U.S. Davis Cup team, not as an individual, he would be welcome. I asked if he meant only after elections, to which he replied he would be willing proceed with this even before elections because principle was so sound that it could be defended against attacks by opposition. It was Ashe coming as individual that presented special problem.
7. I expressed considerable doubt that U.S. Davis Cup team would accept invitation to play in South Africa, particularly if it appeared device to get around Ashe individual visa application. Moreover, I thought it unlikely that commitments of members of team would in any event render this practical, at least in near future. PriMin, strongly supported by FonMin, urged that I nevertheless confidentially explore this possibility of U.S. team playing S.A. team here at any time, before or after elections.
8. At conclusion of talk, PriMin said if he were pressed now for final reply re Ashe visa, it would have to be negative. He would prefer to discuss matter with Cabinet, members of which now on vacation and dispersed throughout country. Next Cabinet meeting would be in Cape Town in late January. He would prefer hold matter until then, meanwhile giving it further thought himself. I encouraged him to do so, and we arranged to pursue question again in late January.
9. Comment: While PriMin appeared sincerely to desire more time to deliberate and, as is his practice in such matters, to consult Cabinet, I seriously doubt that this will result in favorable decision next month.4 New estimate of degree potential threat of HNP might, if sharply reduced by then, encourage more venturesomeness than now appears in prospect. In any event, it would appear advisable, in order leave open whatever slight chance may remain, to suggest that Ashe await results final consideration late January.
* In a letter from Cape Town, January 28, 1970, Rountree informed President Nixon that Ashe's visa request was denied. (National Archives, Nixon Presidential Materials, NSC Files, Box 744, Country Files, Africa, South Africa, Vol. I)
Memorandum From the President's Assistant for National
Washington, December 23, 1969.
U.S. and South Africa Reach Understanding on Gold
At Tab A is an information memorandum from Treasury, alerting you to the possibility of an early understanding between the United States and South Africa on the marketing of South African gold. Such an understanding has now been reached. Treasury issued a press release this morning announcing "that a basis for a satisfactory mutual understanding may be emerging." (Tab B)2 Background
The major countries adopted the two-tiered gold system in March 1968 to divorce the monetary and private markets for gold-monetary gold now moves between national authorities at $35 per ounce while all other transations take place in private markets at whatever price develops from supply and demand. This means that monetary authorities no longer sell gold to private parties to hold the price to all comers to $35.
The agreement was a response to the crisis which began with the devaluation of sterling in November 1967 and which bled $3 billion of official gold-most of it from the U.S.-into private hands. It remains of critical importance to the United States because it prevents private purchases of gold from draining U.S. monetary reserves, and we are its primary policemen.
The two-tiered system has worked so well that it now faces a problem opposite to the problem which caused its creation: far from worrying about increases in the gold price, there have recently been sharp price declines. In fact, the free market price has declined precisely to $35—the official price. The decline has occurred because of strengthened confidence in the dollar, the decision to activate Special Drawing Rights as a substitute for gold to augment international liquidity, and the lure of Eurodollar deposits yielding more than 10 percent
Source: National Archives, Nixon Presidential Materials, NSC Files, Box 744, Country Files, Africa, South Africa, Vol. I. Confidential. Sent for information. A stamped notation on the first page indicates the President saw it. Kissinger wrote on the first page: "see note” (see footnote 3 below).
2 Tabs A and B are attached but not printed.
These price declines cause problems for the South Africans, whose major export is gold. They also arouse great concern among some of the European monetary authorities, who fear that the value of their gold reserves will come into question if the free market price drops below the official price. The two-tiered system is indeterminate on what happens at this point. U.S. Proposal
We therefore came under pressure from both South Africa and the Europeans to agree to an arrangement which will place a $35 floor under the free market. Our interest in doing so was essentially to pacify the Europeans, whose cooperation we need continually in international monetary matters—and who may have to hold a great many dollars next year if our balance of payments turns as sour as most experts expect. In addition, absent a U.S.-South African agreement it was possible that the Europeans would make their own deal with South Africa, or set up a pool among themselves to support the gold price, either of which would lead to disorderly market conditions and a serious departure from our normal monetary cooperation.
Treasury therefore negotiated an understanding with South Africa on the basis of a proposal which we had had on the table since last spring, but which South Africa had heretofore not accepted:
1. All newly mined gold to be sold into the free market when the price is above $35.
2. Sales to monetary authorities, probably through the IMF, permitted when the free market price drops below $35.
3. Sales to monetary authorities permitted when South African balance of payments deficits in a given time period exceed its gold production during that period, after all of that production is sold into the free market.
4. Sales to monetary authorities also permitted from a small “kitty" of around $250 million, representing some of South Africa's gold reserves at the time the two-tiered system was inaugurated.
The understanding assures the maintenance of the two-tiered system and assures that most of South Africa's gold will go into the free market, holding down the price and therefore promoting confidence in the official price of gold. It does not provide a legal floor for the free market, although it comes close to doing so psychologically. Political Aspects
Any U.S. understanding with South Africa will of course be subject to some political criticism. In addition, some international monetary experts—including Representatives Reuss and Widnall, the most knowledgeable Congressmen in this area-are opposed to any U.S. conces