Foreign Relations of the United States, 1969–1976, Volume XIV, Soviet Union, October 1971–May 1972

276. Memorandum of Conversation¹

Moscow, May 25, 1972, 2:10–3:50 p.m.

PARTICIPANTS

• Nikolai V. Podgorny, Chairman of the Presidium of the Supreme Soviet of the USSR
• Aleksei N. Kosygin, Chairman of the Council of Ministers of the USSR
• Nikolai K. Baibakov, Deputy Chairman of the Council of Ministers and Chairman of the State Planning Commission
• Andrei A. Gromyko, Minister of Foreign Affairs
• Nikolai S. Patolichev, Minister of Foreign Trade
• Georgi M. Korniyenko, Chief of USA Division, Ministry of Foreign Affairs
• Anatoli F. Dobrynin, Ambassador to the USA
• Mr. Ivanov, Chairman of the Foreign Trade Bank
• Leonid Zamyatin, Director of TASS
• Viktor M. Sukhodrev, Interpreter
• Notetaker
• The President
• William P. Rogers, Secretary of State
• Dr. Henry A. Kissinger, Assistant to the President for National Security Affairs
• Peter M. Flanigan, Assistant to the President for International Economic Affairs
• Helmut Sonnenfeldt, Senior NSC Staff Member
• Winston Lord, Special Assistant to Dr. Kissinger
• Ronald L. Ziegler, Press Secretary to the President

SUBJECT

• Economic Relations

Chairman Kosygin: Mr. President, Secretary Rogers and your Assistant for Economic Affairs were not able to finalize anything because they just did not have enough time. So, Mr. President, do you have any views or plans as to what we should take up for discussion now? After all, the general range of economic problems is very broad.

The President: I think it would be very well if we could get some agreement on Lend-Lease and get that out of the way, and then go on to other matters.

Chairman Kosygin: Certainly.

The President: we’ve been haggling over the amount. It has been hanging around for many years. There comes a time when you have to break the impasse and decide what a fair solution is. As I understand it, the difference is very substantial, $300 million on your side and $800 million on our side.

Chairman Kosygin: You actually named a figure of $751 million as the debt itself and you also named another $200 million interest on something we don’t know. Before we do begin the actual discussion of this perhaps we might reach some understanding on this basis. If we delve into prior history and start digging up all of the past deliberations we will never reach a final settlement. Of course, it is true that we have all the material on Lend-Lease from beginning to end. I am quite sure the same goes for you, even up to the point that we have all the bills, checks that you gave us at the time, just as you have all the bills of lading and receipts which we handed to you. And since at the time the Lend-Lease Agreement was effected I occupied the post of Deputy Chairman of the Council of People’s Commissars, I was closely associated with this personally, so I am deeply aware of these problems. Therefore it is very easy to flounder on all these questions and perhaps it is not so easy to rise to the surface from underwater.

I already said to Secretary Rogers that we cannot recognize the $200 million named by your side as interest. Because we feel this is a completely artificial figure that you arrived at, taking the original sum of $750 million which in any case we never recognized, and calculated the interest starting from 1960, 12 years. And that’s where you get the $200 million from. We would nonetheless like to reach an understanding and the final resolution of all questions concerning Lend-Lease.

The President: As I understand the problem really is $750 million plus $200 million, or $950 million.

Chairman Kosygin: $951 million. That is what I have in my brief.

The President: But your figure is $300 million.

Chairman Kosygin: That is right, $300 million. How you distribute [justify]² that figure, $300 million, notably in relation to the Congressional situation, is certainly up to you. But also another thing which we have to determine is the duration of the repayment period. As regards the British, I know you reached a settlement after the war on the basis of the duration of repayment of 50 years at an interest rate of 2% per annum. Generally speaking, you named a small, in effect a symbolic sum, and you said 2001. I guess they are still doing that.

The President: we’ll all be dead by then.

Chairman Kosygin/Chairman Podgorny: Who knows?

Chairman Podgorny: There will be some people around to pay.

The President: We will go to Mars together. Stick around.

Chairman Kosygin: Maybe. But you know that even today we have a man—Petrov—an old Bolshevik, now 98 years old, and still very much alive and working on the Encyclopedia. He is a very educated man, respected by all of us. He is a professor, an historian and scientist, very industrious. As soon as a man gets the title “professor,” he gets the responsibility of living a long life.

The President: He doesn’t have to work.

Chairman Kosygin: That’s your system, is it? That’s not true in our case. In this country, as soon as a man becomes an Academician then life becomes easy for him, because then he gets paid a large sum whether he works or not.

Foreign Minister Gromyko: A vacation.

The President: That’s why he [Dr. Kissinger] wants to come here.

Chairman Kosygin: It is hard to become an Academician in the United States?

Dr. Kissinger: We don’t have that title at all. We don’t have an equivalent position.

Chairman Kosygin: It’s a tough situation for scientists then. I think that one might want to organize an Academy in the United States.

The President: What is needed now, particularly at this high level, is a reasonable attitude on both sides. You cannot accept $950 million. We cannot accept $300 million. So under the circumstances we should negotiate something in between.

Chairman Kosygin: Name your figure.

The President: Why do we not go half-way?

Chairman Kosygin: $450 million.

The President: That’s not the way I learned mathematics.

Chairman Kosygin: Yes, you learned American math. Our mathematics is different.

The President: New mathematics. The new math.

Chairman Kosygin: No.

The President: Why don’t we say one-half between, and that would be $600 million?

Chairman Podgorny: That doesn’t seem to me to be a very acceptable kind of mathematics, even if it is half-way.

Chairman Kosygin: Why not approach it this way? The figure $750 million named by you, why not halve that? And then we’d get our arithmetic right. Because then we could certainly agree with that basis and reach a final settlement of this entire matter. I believe it is a figure that can be justified, and then we consider the matter finally closed.

Mr. President, if I were at this point to go into the story of what we suffered in the war I am sure you probably might even give up the whole figure altogether if we reached an understanding on that basis. If it were put to Congress in this fashion and you provided relevant documents, I think that would be enough to induce any legislative body. We did set up a special commission in 1941 during the war headed by Shvernik. The task of the commission was to collect all the documents, all the dossiers concerning human and material losses caused by the war. We have all the documents but haven’t even published them in full to this date. If we did so you would then see the full scale of the damage caused to this country.

The President: We don’t want to haggle on this. After all, we are dealing at a high level and we both want to reach a reasonable settlement. You object to interest and of course our people disagree. Let’s take $750 million as our figure—without the interest—and take the figure $300 million as your figure and then split the difference and that would be $525 million. That is half-way between the two figures without interest on either side. [Foreign Minister Gromyko corrects the interpreter and Premier Kosygin does figures on a pad.]

Chairman Kosygin: $525 million would be something we couldn’t give. Well, let’s indeed endeavor to meet each other half-way. I fully agree we are not rug merchants. Let me suggest a constructive figure of $450 million and end the matter in that way. That would be the final settlement and we believe a fair one.

The President: you’ve come up $150 million to $450 million. We’ve come down $300 million. That would be very hard for us to justify.

Chairman Kosygin: We raised 50 percent.

The President: We came down 150 percent.

Chairman Kosygin: You lowered your figure by 30 percent; we raised ours by 50 percent. You know we simply don’t have any other possible approach to a solution to this matter. We simply won’t be able to. You could say to Congress 30 years after the end of the war you have made us pay you for Lend-Lease. We have to say 30 years after the war we have to pay out a sum that you agree to. We would be in a very difficult position with our people.

The President: What we are talking about is a spirit, a climate in which both sides are forthcoming on an agreement. It seems to me we are so close together. The problem is that you’ve come from $300 to $450. We have come from $750 to $450. We have come two times as far as you have. It doesn’t sound as if we did very well.

Chairman Kosygin: I don’t see really where you have had to come so much further than us. Let me say very frankly we simply do not have the possibility of going further. We do not have either the power to negotiate a larger figure or the physical possibility. Even with this figure it would still be very hard to justify.

The President: Have you discussed $33 million on merchant ships?

Chairman Kosygin: No, we didn’t discuss that. They are included in the $750 million.

Secretary Rogers/Mr. Flanigan: Not in ours.

Secretary Rogers: We always considered that a separate item. You agreed to pay that before.

Mr. Ivanov: Well, with regard to the figure of $750. It is broken down like this. 580 is compensation for goods at the end of the war. 100 is for use of naval vessels. Another 30 million is for use of small naval vessels. 33 for merchant ships. Another 7 million for minor floating facilities, barges and cranes makes a $750 million total.

The President: Is the pipeline included?

Mr. Ivanov: That is a separate question because of the credit agreement at the end of the war. There is no question up to now because during the negotiations this was settled in Washington.

Secretary Rogers: [to the President] They paid on the pipeline for account.

Mr. Ivanov: You have an understanding to add the rest of our debts to the total and to pay during the repayment period specified for the total time.

The President: Let me suggest a solution. If you agree to $450 million on Lend-Lease—that is the figure you suggest, and then the pipeline is $46 million….

Chairman Kosygin: Yes, we suggested that.

Mr. Ivanov: You are quite right, Mr. President, the sum of $450 million is on the same basis as the $750 million sum. It includes no pipeline.

The President: Or ships?

Mr. Ivanov: Ships are included in the $750 million sum.

The President: Why not get the round figure, 450 + 46 (pipeline)?

Mr. Ivanov: Right.

The President: Take 450 plus 46 which is approximately 500 and that covers everything.

Chairman Kosygin: Mr. President, we just don’t have the possibility of doing that. We have given you all our possibilities in this matter, all that we have in our soul.

Chairman Podgorny: Up to now we have been very firm in putting forward the figure 300. Now we take it upon ourselves to increase the sum of 450 in the hope that when we present the matter to our government we will get approval.

The President: 450 plus 46 when adding the pipeline.

Mr. Ivanov: Yes, you mean it is better to include the pipeline in order to reach 500?

The President: Yes, it is better to have a round figure.

[There followed a discussion among Messrs. Ivanov, Podgorny and Kosygin.]

Chairman Kosygin: Mr. President, don’t take us by the throat. We think the best thing is to include the pipeline in the $450 million. Agree?

The President: No.

Chairman Kosygin: I’d much rather You’d said okay, instead of no.

The President: It seems to me that’s fair. You have 450. Certainly that is the lowest figure possible. With the pipeline already 46, I think if we’d just get a round figure of 500 that would be a good settlement. We have come down a lot more than you’ve come up.

Chairman Kosygin: All Americans are like that.

The President: It’s a good deal. It’s a good round figure and includes everything.

Chairman Kosygin: Mr. President, if you just think what other benefits you could offer us to get this 30-year-old problem out of the way. I am sure you will get your figures. You have gained here or something there. Especially when trade gets going between the two countries, there are lots of chances to compensate for this figure.

The President: Since we can’t agree, let’s talk about the grain deal.

Chairman Kosygin: I’d like to get this question settled, nonetheless, particularly since our positions are very close.

Chairman Podgorny: We are close.

The President: We are only $40 million dollars apart.

Chairman Kosygin: No, $50 million.

The President: $40 million.

Chairman Kosygin: 50. We are $50 million apart because you want to consider the two figures apart and I want to consider them together. We accept your proposal on the condition we agree on the duration of the payment. We proceed from a duration of payment of 50 years. That’s the period you gave the British, to all these countries to which you extended Lend-Lease you gave a period of repayment of 50 years. Why discriminate against us?

The President: Not 100?

Chairman Kosygin: That’s what you gave the British [50 years].

Secretary Rogers: I explained to the Prime Minister that would be totally out of the question. The conditions have totally changed since the end of the war.

Chairman Podgorny: But they have changed for everyone, for you and for us. You gave all other countries 50 years.

The President: You are much richer now.

Chairman Podgorny: You are too.

Chairman Kosygin: The ratio that existed at that time has changed in your favor and not ours, unfortunately.

The President [to Mr. Flanigan]: You want to discuss the interest rate now?

Mr. Flanigan: We haven’t yet, but we can, Mr. President.

The President: You have not discussed yet?

Mr. Flanigan: No.

Chairman Kosygin: Two percent is the normal rate.

The President: It is best to have discussion among the experts.

Chairman Kosygin: Certainly there is no objection to the experts discussing it but we should give them very precise instructions.

The President: we’ll make the decision.

Chairman Kosygin: Because I think we should really reach agreement on this. Otherwise the experts drag it out to another year of discussions.

The President: I have a suggestion, Mr. Prime Minister. The Prime Minister is an expert in this field and I am not. The Prime Minister is a banker and I am not. He has me at a disadvantage. It would be helpful if the Prime Minister could discuss with Mr. Flanigan and Mr. Rogers and make recommendations and you and I decide. We want to be fair.

Chairman Kosygin: I have no objections.

The President: We want to be fair. It is too complicated to talk about the rate and the length of the terms.

Chairman Kosygin: On one understanding. I agree to meet anybody designated. But I cannot accept any percentage higher than the one you gave to all the other countries. But we certainly have no objection to discussing this with the experts you designate, Secretary Rogers and Mr. Flanigan.

I want to add that we really have gone to the limit of what we can offer. It would be entirely to your advantage to accept this. You leave after the visit having received money from us, while we are giving. That will be difficult to explain.

The President: As far as the figure is concerned, what have we agreed on?

Chairman Kosygin: $500 million including the pipeline, and that we agreed to on the condition that the duration of repayment is 50 years at two percent per annum. Even so we have to pay a very large amount of money annually because that alone will involve us paying $10 million the first year, that is, the percentage. That, Mr. President, will be in our own lifetime. Fifty years hence is a matter of conjecture—whether we will still be around. We have to pay now.

Secretary Rogers: From our standpoint it doesn’t make sense. You are paying us over $11 million on the pipeline, so we are reducing the payments. You are paying us less than now.

Chairman Kosygin: But that’s just interest. But on this basis there will be principal, so the sum is double. We are paying no less than $20 million all told. We have to pay about $25 million annually on the basic sum, principal. So all told it will amount to about $25 million per year, which is a big sum of money, no laughing matter.

The President: Then we can have further discussion of the technical things tomorrow. We will see where we stand.

Chairman Kosygin: We agree. Let’s do that.

The President: Could we have a report on where we stand on grain?

Chairman Kosygin: Certainly. Just one point. I have asked Mr. Patolichev, our Foreign Trade Minister, to come here. Before he comes perhaps we can turn to other matters. What else is on your list?

The President: The next thing on the list is the Joint Economic Commission.

Chairman Kosygin: We discussed that matter with “Comrade” Rogers and your assistant.

Secretary Rogers: Alright.

The President: Is it acceptable if it is announced Saturday?

Chairman Kosygin: Yes.

The President: Mr. Peterson will come over in July.

Chairman Kosygin: Yes, we are quite willing. The chairmanship question we can decide later. You decide yours, and we decide ours. But I will give you a document on the principles of setting up the commission for your consideration.

The President: The announcement will be Saturday.³

Chairman Kosygin: Certainly. We agree. We will give you our draft on this.

Secretary Rogers: We have been working on it. It’s all right. At noon. We will have it corrected.

Foreign Minister Gromyko: It has been corrected. The Prime Minister can read it out to you.

Secretary Rogers: We have it. When should we announce it on Saturday?

Chairman Kosygin: We can hand it to the press in the morning.

Dr. Kissinger: We plan our press briefing at 7:00 in the morning. Right, Ron? Because they are going to Leningrad. Because of the papers.

Chairman Kosygin: That means only in Sunday’s morning papers and the evening papers Saturday and on radio.

The President: Saturday night on TV.

Chairman Kosygin: There is also the question of credits. We can take that up before Mr. Patolichev comes, that is, the credits extended by the United States to us.

Secretary Rogers: Export-Import Bank credits.

Chairman Kosygin: Yes, Export-Import Bank credits.

[Mr. Ivanov explains the question of Presidential authority to his colleagues.]

Chairman Kosygin: So on the matter of credits by the Export-Import Bank—as our “Comrade” was telling us—for the Export-Import Bank to extend credits requires a Presidential order to the effect that it is in line with the interest of the U.S. So we would like you to issue the order so we could begin using the credits. Unless that is done, as you know, there can be no real trade between us.

The President: I am prepared to take that action but the action should be taken concurrently with the settlement of Lend-Lease. It is easier that way. That is why it is important to discuss these two together. Since we have made progress on Lend-Lease this should be possible.

Chairman Kosygin: On the matter of Lend-Lease, how do you think we should go about having a public statement? Or should we just include something at the end of the visit?

The President: It seems to me—I haven’t thought this through—but we ought to have Lend-Lease included in Saturday’s announcement.

Chairman Kosygin: I am thinking perhaps if it is better if we included in the final communiqué.

The President: That is alright, if you prefer that.

Chairman Kosygin: I think we best indicate it in the communiqué along the following lines: The two sides have achieved agreement on the issue of Lend-Lease, without going into the details in the communiqué. So Mr. President we could then suggest the following procedures.

[Mr. Patolichev arrives.]

In the final communiqué, in that section dealing with all agreements and economic questions, we could have a line that the two sides reached agreement on the question of Lend-Lease without spelling out the details of the question. It is difficult for us.

The President: The important thing is to have Lend-Lease. We want to be forthcoming on credit because it is essential to increase trade in both countries. But we have promised the Congressional leaders that Lend-Lease would be settled first. They don’t have to be in the same document necessarily, but it should be mentioned.

Chairman Kosygin: So then we proceed from this understanding. Following the final elaboration and settlement of Lend-Lease issue, you are prepared to issue the order to the Export-Import Bank to extend credits to us which we can then begin using. [President Nixon nods yes.]

Good. Agreed.

Now Minister Patolichev is here. I would like first to say that we do agree to buy American grain and for a long-term period. But for this we will need credit and we will need to have long-term credit—longer term credit than the three-year credit to which you are so far referring. A three-year credit is not of interest to us.

If this is difficult for your side, we could perhaps circumvent the issue in the following way. We could put forth the following proposal. You would instruct the Export-Import Bank to extend to us a certain limit of credit, and we would make use of that credit to purchase grains from the United States. So we could then reach an understanding on this formulation? We could have an exchange of letters or simply an agreement among ourselves. Then we could simply bypass the question of what might be difficult for you.

On the question of transportation, well, what we can carry ourselves we will and what we cannot carry, for that we will charter ships at the prevailing rates for freighters existing in the world. And then we could have longer-term prospects regarding purchases. Let’s say that there could be an agreement extended to five years.

The President: The problem we have is with the authority. Your idea of a long-term arrangement of course is appealing. But we do not have the legislative authority to make that kind of arrangement.

Chairman Kosygin: You have no legislative authority in what particular aspect?

Mr. Flanigan: May I, Mr. President? The Grains Financing Authority prohibits credits in excess of three years to developed countries. The Export-Import Bank credits prohibits long-term credits for consumables, such as grain.

Chairman Kosygin: The Export-Import Bank does not generally extend money for grain?

Mr. Flanigan: That is correct.

Chairman Kosygin: Then perhaps we should let this question filter through the experts once again. Let them look into it and maybe they can come up with ideas. I will certainly instruct our banking authorities to look into possibilities for entering into some arrangement with your banks and to see how the purchase of grains could be financed for a longer period. Maybe we might find some solution along these lines. We are certainly prepared to look into this most carefully. Maybe some arrangement could be made for some kind of banking operation involving one of your banks and one of our banks in one of the countries in Europe and arrange purchasing that way. Comrade Ivanov is chairman of the Foreign Trade Bank. We will instruct him to look into this most carefully. Perhaps you can look into it together with him to see if there is some possible arrangement for some kind of financial backing of a deal.

Mr. Flanigan: Fine. We will do it with pleasure.

The President: Secretary Rogers will sit in too and discuss this and give a legal view.

Chairman Kosygin: Certainly. Mr. Patolichev and Mr. Ivanov from our side.

The President: Four on each side. And they will put their heads together and look into this matter.

Chairman Podgorny: A very authoritative group.

Chairman Kosygin: If they don’t come up with a solution acceptable to us it will be bad for them.

The President: Did Secretary Rogers and Mr. Flanigan and Mr. Kosygin have a chance to meet on the other question?

Chairman Kosygin: No, we didn’t have time yet.

The President: On natural gas.

Chairman Kosygin: No. We didn’t discuss that with the Secretary, but we want to find the time, perhaps tomorrow with the Secretary.

The President: I think it would be good if Flanigan is also on our side. You can have anyone else you want.

Chairman Kosygin: Certainly. We will have Comrade Baibakov, the Chairman of State Planning Commission. He could sit in for me. He is my deputy at the same time; he is deputy Prime Minister. He can handle this.

The President: I am not sure we can solve it now but we will look into it. It is a massive deal. It involves one-third of all the Export-Import Bank’s credit authority.

Chairman Kosygin: I am quite sure we will not be able to reach a final settlement. As the President said, it is a very complex problem. I think what is required now, Mr. President, is your consent to release the companies in the United States for going ahead on planning this elaborate project. In fact, they have already given us a preliminary project. We met with them. If you give the go-ahead to get the work going, they could go ahead. It requires very careful work to identify with your side where your interests lie and where our interests lie.

Mr. Flanigan: We have instructed the consortia that they are free to go ahead with studies and calculations. We have received some studies, but they are not approved on the credit aspects. With regard to studies and calculation they are entirely free to make those. As the President has already said, they have the right to make those studies.

Chairman Kosygin: That is very good. It is a step forward, but, of course, without finally settling the financial aspects nothing can come of this consortium. That I am sure you are fully aware of. I am sure they are already working on this project. They told me, when I received them, they would put it in the hands of the White House. At the same time they continue to work on this project. They were eager when they talked to me. That is a very good system in your country: any responsibility anyone has can be easily shifted to the White House and that is that.

The last thing I would like to mention is the fact, of course, that a very great positive sign of the development of economic relations between our two countries generally would be a solution of the problem of Most-Favored-Nation treatment. Let me say that we do not look at this from the standpoint of some kind of exception being made for us. Because if after the visit such as this we put out a communiqué and announce all sorts of agreements in the economic field and at the same time discriminating practices against us continue, it would sow doubt that this would be misunderstood by the public. All the more so since this [MFN] is quite common throughout the world. After all we don’t discriminate against the U.S. and had it [MFN] once. As I said yesterday, because of the present tariffs the trade between our two countries is quite negligible. We can be sure that if they remain, there will be no trade at all.

The President: As I pointed out to the Prime Minister, this is a matter in which we have to have Congressional approval. I think Congressional approval can be brought about, provided we can make significant progress in other matters being discussed today. But I am keenly aware of the fact that this is essential if we are going to develop a healthy relationship in the future in the field of trade.

Chairman Kosygin: Not even healthy, but simply for normal relations, this is necessary.

The President: We understand the Soviet Union has a special interest. But anytime Congressional action is required it does also entail the necessity of getting votes from the Congress and the Senate. That is why what we are able to accomplish—if we can make significant accords during the visit—it would be helpful to move on that as well.

Chairman Kosygin: Because under the existing situation it is more to our advantage, more profitable, to sell to the British and have them resell to you, and we get a higher profit than if we sold directly to you. Why should we have an intermediary on what we intended to sell to you?

The President: We are aware of this.

Chairman Kosygin: Maybe some situation in the U.S. will change, and it will not be Congress but someone else that decides these matters. I am not making any formal proposal. You wouldn’t accept it anyway.

The President: What I am suggesting and I want to be frank—I want to be candid on what I can do myself—is that we can move on an Export-Import credit—I have the authority. On MFN, I have to get Congressional approval. I believe I can get it if I go back. I am just pointing out that I do not want to leave the impression I can do that right now. It still takes Congressional action.

Chairman Kosygin: This we are keenly aware of, too.

The President: I can indicate it as my goal. I cannot indicate it as a reality until I can deliver.

Chairman Kosygin: Well, both of us have to act within limits on certain things. That applies to both of us.

The President: We have made progress today. We will continue to make progress that will help do the job, when I return, with Congress.

Chairman Podgorny: Well, with your persistent efforts I feel that this will become a realistic possibility.

Chairman Kosygin: In the field of trade generally I think we still have many untapped possibilities. Perhaps we don’t have the skill or you don’t have the interest. We ought to have the skill of selling commodities. Perhaps in others we have no real interest with the other side.

Let me just give a few examples. I have looked into this. I have been given a brief on the structure of your imports. I see you are buying very many items from abroad. I am surprised to see you get half your footwear from abroad; radios about one third; motocycles 90%; and many bicycles.

At first glance these are very small items. We could especially adapt several plants and factories in this country for the requirements of the American market. For this, what we need is that American companies give us the specifications required. Certain component parts are needed for the equipment. These could be supplied by the U.S. and turned out as finished products. We could look at this in a serious way and could sign contracts totalling billions of rubles. Then we could extend trade to a broader range of items. Not just primary goods like we have so far. That would require no credits.

In short, there are great opportunities ahead.

The President: I think the plan we develop for the Commission is to explore all the possibilities, what we can do. It is difficult, as the Prime Minister knows, to arrange for trade between two economies based on different financial systems and other significant differences. On the other hand this only means that we need to think more creatively, more imaginatively, so that our two economies complement each other.

Mr. Peterson is a very able man. He will have a broad charter to discuss this whole range of matters with whomever is designated on your side. He will make recommendations on how the trade of the two sides can be expanded. I hope before he comes your experts will come up with suggestions, and we will have some. From that we can generate new vistas of trade—new horizons—that we have not had before.

In addition, some of our businessmen have considerable expertise in dealing with socialist countries in setting up various schemes resulting in beneficial trade to both countries. They will be encouraged to come up with ideas as well.

I will simply say that as far as my position is concerned, I believe that more trade between the Soviet Union and the United States is good for both countries. I think it is good economically. I also think there are definite benefits in terms of creating better relations in other fields. I am prepared to give every encouragement and support that we can on the government’s side for new initiatives in the field of trade.

Chairman Kosygin: What you said about differences in the systems of financing, I don’t think that should present any great problems. We are not complex as regards banking systems or things like that. You will recall long ago with American assistance we built the Gorky Auto Plant and the Volgograd Tractor Plant. And you know, about three years ago we entered into a contract with the Italian Fiat Company which built a very big project in this country. It is safe to say that there was not the slightest difficulty or hitch in cooperating with them in this venture. You know that certain American companies also took part in building that plant.

And I just recently visited the Volgograd Plant which is now producing over a thousand cars a day and it is still going up. I saw with my own eyes U.S. equipment sold to us by the Italians. It is an enormous plant. There was never the slightest hitch. Everything went off very smoothly, without a hitch. The President of Fiat who is now dead, Signor Vellati, was a very able man. I knew him very well. He was very able.

[Chairman Kosygin then read a suggested announcement on the meeting of the day. The two sides discussed that there would be the theater that night and that they would let other officials sign agreements.]

The Soviet Side: Okay?

American Side: Okay.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 487, President’s Trip Files, The President’s Conversations in Salzburg, Moscow, Tehran, and Warsaw, May 1972, Part 2. Top Secret; Sensitive; Exclusively Eyes Only. The meeting was held in St. Catherine’s Hall at the Grand Kremlin Palace. According to the President’s Daily Diary, the meeting was from 2:08 to 3:54 p.m. (Ibid., White House Central Files)
2. All brackets in the source text.
3. May 27.