Foreign Relations of the United States, 1981–1988, Volume IV, Soviet Union, January 1983–March 1985

32. Memorandum From Secretary of State Shultz to President Reagan¹

Washington, April 1, 1983

SUBJECT

• New Long-Term Grain Agreement (LTA) with the USSR

The present one-year extension of the Long-Term Grain Agreement with the USSR expires September 30, 1983. As you know, I believe negotiating a new LTA has become a political necessity from many points of view. By moving now, you can take the initiative; receive credit with Congress and the American people; and make sure by our handling of the issue that our Allies and the Soviets understand how the move fits in our overall Soviet policy.

The Administration faces increasing pressures for an LTA from the farm community, the grain trade, and the Congress. All of these sectors view an LTA as an important test of USG support for agriculture trade and the logical culmination of your agricultural export policy. Soviet reluctance to enter our markets, despite your statements on agricultural export policy, has only reinforced the belief that an LTA is essential in reestablishing the US as a reliable supplier. Senators Percy and Dole are now pushing a sense of the Senate Resolution, which calls on you to negotiate a new LTA. It is now scheduled to come to a vote on April 13–14.

I believe that we should move forward quickly on this issue. I recommend that you announce a decision on April 12th—thus moving before the Senate vote. In doing so, however, we must take care to manage a number of political problems that are sure to arise.

The Allies need to understand that this step fits into our approach to the current studies on east-west trade and our discussions with the EC on agricultural exports. I think this problem can be managed by informing them on April 11th that our grain sales will be on commercial terms and will not be subsidized, that the LTA will structure our grain trade to avoid export dependence on the Soviet market, and by reminding them that they are pursuing normal grain sales to the Soviet Union.

The Soviets will need to understand that we are taking this step as part of our strategy of testing the Andropov leadership’s intentions on a step-by-step basis. If you agree, I would inform Ambassador Dobrynin in the context of our dialogue that this decision is a manifestation of your desire to work towards improved relations, provided the Soviets are willing to engage in give-and-take and to take similar positive steps. In recent bilateral grain consultations in Moscow, the Soviets affirmed their interest in a new LTA and suggested it could lead to increased purchases.² Of course our negotiating leverage with the Soviets will be limited by the grain market glut, the Durenberger Amendment delivery assurance and the USSR’s LTA’s with Canada and Argentina; the PIK Program, however, works in our favor.

Our public needs to understand that we are not stepping back from our firm approach to Soviet misbehavior and our Afghanistan/Poland sanctions regime. We would point out to domestic and foreign audiences that our concerns about the USSR’s behavior—including its military buildup, its geopolitical expansionism and its record of human rights violations—remain unchanged. However, the Poland sanction postponing LTA negotiations has already made our political point, and at considerable cost to the American farmer. It is unfair to make him continue to pay this price alone.

I recommend you authorize me to inform our Allies on April 11 that we are now willing to negotiate a new LTA. Bill Clark and I would inform Don Regan, Jack Block, Mac Baldrige, Cap Weinberger and Bill Brock the same day that you had decided to go ahead. I would inform Ambassador Dobrynin the next day. We also would inform key Senators and Congressmen that same day as well as issue a public statement. It is important that we keep this decision to the fewest possible people until April 11th or we will have additional problems with the Allies and lose your impact on the Congress, the public and the Soviets.³

1. Source: Reagan Library, Executive Secretariat, NSC Country File, Europe and Soviet Union, USSR (04/01/83). Secret; Sensitive. Although no drafting information appears on the memorandum, Burt forwarded a draft to Shultz on March 31. (Department of State, Executive Secretariat, S/S, Special Handling Restrictions Memos, 1979–1983, Lot 96D262, Super Sensitive, March 17–31) Clark forwarded the memorandum to the President on April 5. See Document 35 and footnote 5 thereto.
2. In telegram 3691 from Moscow, March 29, the Embassy provided a full report of these meetings: “The US-USSR semi-annual grain consultations were held in Moscow March 24–25. The sessions were cordial throughout, and the atmosphere was improved over previous consultations. The Soviets were unusually forthcoming with import data. The delegations reviewed the current world grain market and the new PIK program. The Soviet side hinted that financial conditions in 1982 had caused some drawing down of grain reserves in lieu of purchases, but did not provide any 1982 harvest figures. After voicing usual criticisms of U.S. policies toward the Soviet Union, the Soviets said they were interested in a long-term grain agreement, and implied they would buy more from the U.S. if a new LTA were negotiated. They did not rule out further purchases from the U.S. this year.” (Department of State, Central Foreign Policy File, Electronic Telegrams, D830173–0091)
3. Reagan did not initial his approval or disapproval of the recommendation, but see Document 47.