Foreign Relations of the United States, 1961–1963, Volume V, Soviet Union

377. Memorandum of Conversation⁰

Washington, November 21, 1963.

SUBJECT

• Recent developments in relations with the Soviet Union

PARTICIPANTS

• Ambassador Anatoliy F. Dobrynin, USSR
• Llewellyn E. Thompson, Ambassador-at-Large, Department of State

On the occasion of the Soviet Ambassadorʼs call today, I remarked that recent developments in our relations had not been good. He said he was quite concerned about this and said he was sure that in Moscow they were at a loss to understand what was happening. He mentioned recent public speeches, the furor about the Barghoorn case and the autobahn incidents, Mr. Ballʼs trip,¹ and the wheat deal. He said that as he had little time today, he would like to have me around soon for a longer talk about these matters. I observed that with respect to speeches, that he should keep in mind that when Government officials talk about how strong we were in the military field, this had a relationship to our efforts to keep down the military budget. He said he could understand this but such speeches had different interpretations elsewhere, including Moscow.

The Ambassador said he was certain that his Government would be baffled by the fact that we had begun discussions about improving trade with the Soviet Union and the fact that immediately thereafter Mr. Ball had gone to Europe and according to press reports had endeavored to cut back Western trade with the Soviet Union. On this point I said I could categorically tell him that the newspaper reports were quite wrong and I said that some of them had undoubtedly been deliberately put out by people with a special interest to serve. I said that speaking quite frankly we were not ourselves concerned in any competitive way about credits to the Soviet Union because of our own legal restrictions. I said that on the other hand, from the point of view of the Western Alliance, we did not think it wise for the Western countries to get into a credit war with each other to see who could give the Soviet Union the longest credit. I pointed out that such developments affected the relations of our Allies with each other and it was this aspect that was of particular concern to us. I said that, moreover, Mr. Ball had not gone to Europe to deal with this question and it was only a minor item on a long agenda. Moreover, I referred to the fact that there were some standard procedures about credit to which most of the Western countries adhered, and that these applied not only to the Soviet Union, but to all other countries. I pointed out that as a country with the largest reservoir of credit, the United States might stand to gain from a competitive point of view if these practices were changed, but we did not believe that this was in the overall Western interest. When he said he understood, nevertheless, that we had tried to reduce the present trade practices of the West with the Soviet Union and to reduce this trade, I said I could assure him categorically that this was not the case.

With respect to the wheat deal, he said that he had not been in on all of the conversations but from the last one he himself had believed that we had agreed to make arrangements so that the Soviets could buy wheat at, or very nearly at, world prices. He said Borisov had so reported to the Soviet Government. He said that Borisov had no authority to go even one dollar over world prices, that he had reported recent developments to his Government, and he did not know what the answer would be.² I said that I could see that there was some ground for some misunderstanding but, on the other hand, it was quite clear from the whole tenor of the negotiations that we had not agreed to meet world prices as they defined them, including shipping. I pointed out that Mr. Ball had said specifically that we would not subsidize American shipping to meet the Soviet desires, and that he had said merely that he hoped the arrangements we were making would bring the eventual prices offered reasonably close to world prices.³

0. Source: Department of State, Central Files, POL US-USSR. Secret. Drafted and initialed by Thompson and approved in S/AL on November 21.
1. Under Secretary Ball visited Europe in mid-November for conversations on economic and trade questions. In London on November 15 he held an extensive discussion with Board of Trade and Foreign Office officials about the differences between the British and U.S. attitudes toward the extension of long-term credits to the Soviet Union. (Telegram 2391 from London, November 15; ibid., Conference Files: Lot 66 D 110, CF 2339)
2. Following the meeting with Secretary Hodges (see Document 375), Borisov had met with Thompson on November 19 and complained about the higher cost of U.S. wheat and the requirement for 50-50 shipping. Borisov ended the discussion by saying the Soviet Union was willing to buy U.S. wheat, but that it was out of the question to pay more than world prices. (Memorandum of conversation, November 19; Department of State, Central Files, INCO-WHEAT US)
3. On November 20 the President had called Thompson to ask whether he should send Khrushchev a note thanking him for interceding on the Barghoorn case. Thompson demurred and said he would raise it with Dobrynin. (Memorandum of conversation, November 20; ibid., PS 7-1 US-USSR Barghoorn) Following the conversation printed here, Thompson expressed the Presidentʼs appreciation to Dobrynin. (Memorandum of conversation, November 21; ibid., S/AL Files: Lot 67 D 2, Thompson Memoranda of Conversation)