Foreign Relations of the United States, 1964–1968, Volume XXXIV, Energy Diplomacy and Global Issues

65. Memorandum From the Legal Adviser (Chayes) to the Under Secretary of State (Ball)¹

Washington, March 16, 1964.

SUBJECT

• Communication Satellites

Mr. Welch, Dr. Charyk, Lee Marks, and Alvin Friedman (Special Assistant to John McNaughton in DOD) visited London, Paris, Bonn and Rome last week to discuss proposed arrangements between the United States Government (DOD) and the Corporation regarding a shared commercial-United States Government communication satellite system. They also showed and discussed the draft Interim Agreement relating to arrangements for international participation in the system, which had been prepared for the February 10 Rome Conference.

The European Conference on Communication Satellites met in London Friday and Saturday. Lee Marks returned home via London and talked with Mr. Hope-Jones, of the UK Foreign Ministry, about the Conference.

Two issues emerged—the nature of the proposed U.S. Government-Corporation “deal”, and the form and timing of negotiations on the draft Interim Agreement.

1. The U.S. Government-Corporation “deal”.

The Europeans did not react strongly to the proposed deal. They questioned whether it was technically possible to use one satellite system to meet both commercial needs and those of the U.S. Government, and they questioned whether it was politically saleable. Hope-Jones told Lee Marks Saturday that the European Conference had discussed the proposal briefly and decided it was a “political non-starter”. Sweden and Austria reportedly said flatly they could not participate in a system one-half of which was reserved exclusively for the U.S. military needs.

I believe the U.S. Government and the Corporation could nonetheless conclude a Memorandum of Understanding if it was properly drafted and presented. It is important that we not lead Congress or the Europeans to believe that the deal gives the Government the right to use half of a 24-satellite medium-altitude random-orbit system if that is the system deployed. Rather, the deal must provide a series of options—i.e., shared system, Corporation deployment of a separate system for the Government—all subject to suitable arrangements being worked out. The present draft of the Memorandum of Understanding should probably be altered to make this clear. Mr. Friedman and Dr. Charyk see this point clearly. We do not know what Secretary McNamara’s views are. This issue is complicated because the Military Operations Sub Committee (headed by Chet Holifield) of the Government Operations Committee begins two weeks of hearings on DOD use of a communications satellite system tomorrow.

2. Form and Timing of Negotiations.

As you will recall, the Europeans proposed at the Rome meeting that a group representing the European Conference come to the United States to negotiate in mid-March or early April. Although we agreed to this approach in Rome, upon reconsideration, the Corporation decided that it did not like this and we thereupon declined to set a date for the negotiating meeting. My reply to Ambassador Ortona, attached at Tab A,² suggested an alternative and was approved by the Corporation. A reply to my letter, attached at Tab B,³ was sent from London last week end. It rejects our proposal and asks for an early “informal” conference. We must now reply to Ambassador Ortona’s letter.

The Corporation prefers to negotiate bilaterally, although as a result of the trip last week, it may now realize that this is simply not possible. Alternatively, it would like to talk to a small group of countries. It doesn’t want to deal with the Conference as such, or with a group of countries on behalf of the Conference. The Europeans have a strong political stake in the European Conference and seem so far to have achieved a high degree of unity. (Hope-Jones told Lee Marks in London that the British and French Governments, at “the highest levels,” considered the political stake “enormous” because “we and the French agree on every point and together we are leading the rest of Europe.”) Moreover, they are generally irritated at the Corporation’s insistence on bilateral talks and on what they believe to be the brush-off of my letter to Ambassador Ortona.

The issue is how strongly we should press the Corporation to accept Ambassador Ortona’s proposal or to make a reasonable counter-proposal. Our problem, of course, is that if we press the Corporation to negotiate we will bear the onus for what comes out of the negotiations; and the issues of State Department involvement that were discussed so heatedly during the legislative battle over the Act, and that have popped up from time to time in recent months, will be raised again. Predominant congressional feeling is undoubtedly that the less State Department involvement the better. The FCC Staff, and several of the Commissioners (though not the Chairman) share this view.

On the other hand, DOD has an interest in this issue since the success of its deal, and indeed of a separate communication satellite system, may depend on not irritating the Europeans unnecessarily. A joint approach to the Corporation by State and DOD might be possible.

These issues will probably have to be resolved in the next few days. Pending further developments at the Corporation and DOD, we do not have any recommendations, but we believe you should be aware of the problems.⁴

1. Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1964–66, TEL 6. Drafted by Leonard Marks (USIA). Copies were sent to Cleveland (IO), Johnson (E), Nesbitt (SCI), and Edgar J. Beigel (WE).
2. Not printed. In this letter, March 5, Chayes told Ortona that the corporation faced “a number of domestic decisions and actions in the next weeks which would make it difficult to prepare for and carry out the proposed negotiations,” since COMSAT was preparing to release a prospectus and issue stock. Chayes proposed that a series of informal, bilateral sessions be held instead.
3. Not printed. On March 14 Ortona wrote to Chayes: “The members of the conference do not favor the proposal that there should be bilateral discussions. They wish once again to point out to the United States that they will be pursuing a common aim in these negotiations, and that they are determined to negotiate in common.”
4. Chayes responded to the Europeans on March 23, announcing the arrival of a U.S. delegation on April 6. “Because of the problems of publicity in connection with the stock issues of the Corporation, we would very much prefer to meet in Europe, in any city that is agreeable to you.” (Telegram 2203, March 23; National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1964–66, TEL 6)