269. Memorandum From the President’s Special Assistant (Rostow) to President Johnson1
SUBJECT
- Sale of Automotive Equipment to the USSR
Commerce, with the concurrence of State and Defense, is preparing to license $8.9 million of gear cutting, testing and measuring machines for the automotive plant Fiat is building in the USSR. The machinery is made by the Gleason Works of Rochester, New York.
The reasons for licensing this equipment are:
- —CIA and Defense say it is not strategic and does not involve problems of new or advanced technology. They are sure it will in fact be used in the manufacture of Fiat cars.
- —The sale will not disrupt defense priorities at the Gleason plant.
- —Comparable equipment is readily available from Switzerland and West Germany. They will make the sale if we don’t.
- —Financing is all private. No U.S. Government credit or guaranty facilities are involved.
- —We licensed similar machinery made by the same firm in 1966 for use in a Soviet-built automotive plant.
You should know, however, that protests will probably follow approval of the license. We expect adverse reaction from those members of Congress who have consistently opposed this trade. Commerce does not plan to issue a press release but it is preparing a statement of facts to answer inquiries. The Ashley Subcommittee on International Trade of the House Banking and Currency Committee will be informed.
[Page 643]This is a clear case of advantageous peaceful trade with the USSR. The Fiat plant will have a political impact in the USSR that is in our national interest. Furthermore, the sale is a net gain for our balance of payments.2