Giant Step in Trade

From the moment he arrived in Moscow last week, Presidential Adviser Henry Kissinger was in a particularly jovial mood, summoning a wide smile to congratulate Soviet Deputy Foreign Minister Vasily Kuznetsov on the Russians' surprise victory over the U.S. in Olympic basketball. Then he was driven to a big yellow villa in the Lenin Hills near Moscow State University to await the beginning of talks with Soviet Party Chief Leonid Brezhnev and other top Kremlin leaders. Kissinger's early optimism proved justified. By the time he left Moscow four days later, he had helped reach agreement toward the largest trade pact between the two nations since World War II.

The new accord, which will be signed later this year, is a logical consequence of President Nixon's trip to Moscow last May. It includes an understanding that the U.S. and the Soviet Union will open their ports to each other's merchant ships, and it will give permission to the U.S. to establish business facilities in Moscow. But its most important section deals with two Siberian natural-gas projects, gigantic undertakings for which the total cost will eventually run to about $10 billion. They are not expected to start until 1978 at the earliest.

Under the agreement, the U.S. would contract to purchase some 2 billion cu. ft. of natural gas per day from the Urengoiskoye fields of north central Siberia. This gas will be piped 1,500 miles across permafrost to a warm-water port near Murmansk, where it will be liquefied and then transported by supertanker to the U.S. East Coast. At the same time, the U.S. agrees to purchase between 1.5 billion and 2.5 billion cu. ft. of gas per day from eastern Siberian fields near Yakutsk. This gas in turn will be transported by a U.S.-Japanese consortium to the U.S. West Coast.

The chief stumbling block to such a comprehensive trade agreement has been the Soviet Union's outstanding debt (originally about $11 billion) to the U.S. for Lend-Lease aid during World War II. In last week's discussions the Soviets agreed to a still undisclosed formula for repayment. Settlement of this debt would in turn permit the Export-Import Bank to finance the export of U.S. goods to the Soviet Union. It would also enable the Nixon Administration to ask Congress to grant the Russians most-favored nation trade privileges and credits, an important prerequisite for extensive trade. But Congress is reluctant to grant such favors to the Russians until Moscow suspends its practice of imposing cruelly high "exit fees" on its Jewish emigrants.

The trade agreement clearly dominated last week's talks in Moscow. But other matters of importance were also discussed. Items:

> Kissinger sounded out the Russians on the possible role that the 1954 Geneva Conference, for which the co-chairmen were the Soviet Union and Britain, might play in an internationally supervised cease-fire-in-place in Viet Nam. Kissinger sought to minimize the subject's importance at the Moscow talks, emphasizing that Paris is the place for a Viet Nam settlement. He insisted that there was no quid pro quo arrangement with the Russians over the trade agreement and a Viet Nam solution, though many suspect that there must be. The Administration believes that the odds against a Viet Nam settlement before the U.S. elections in November are 70 to 30 and is privately concerned about intelligence warnings that a North Vietnamese "high point" is expected by mid-October--probably including a serious assault on Saigon's main defenses. U.S. intelligence reports also indicate that the U.S. bombing of North Viet Nam, however severe, is not likely to knock out the enemy's will to resist and that the mining of the North's harbors is not impeding enough Communist supply movement to force an end to the fighting.

> Kissinger also probed the Russians on whether they would agree to negotiations on mutual balanced force reduction (MBFR) at roughly the same time as the proposed European security conference, expected by the middle of 1973, which Washington regards as a Soviet tactic not only to confirm the status quo in Eastern Europe but also to divide the Western Alliance. The Administration is interested in securing an MBFR agreement to help relieve tension in Europe and reduce the U.S. balance of payments deficit. It is also under pressure from Congress to reduce U.S. troop levels there, but Nixon is opposed to doing this unilaterally.

> The second round of the Strategic Arms Limitations Talks (SALT), due to begin this fall in Geneva, was also discussed. The new talks, which deal with the complex issue of offensive weapons, will be far tougher than the earlier ones. The Senate last week agreed by a vote of 88 to 2 to approve the SALT I agreement limiting most offensive nuclear weapons for five years, thus clearing the way for SALT II. The Senate, with White House approval, added an amendment by Senator Henry M. Jackson urging that in any future agreement the levels of strategic forces must not leave the U.S. in an "inferior" position.

On his way home, after thanking the Russians for their "extraordinary courtesy," Kissinger paid calls on Britain's Prime Minister Edward Heath and French President Georges Pompidou. He also met in Paris with Le Duc Tho, North Viet Nam's Politburo member and negotiator at the peace talks. There were no signs of progress. But in a presidential election year, the Nixon Administration could hardly afford not to keep up the momentum for a peace settlement. Nobody is better at keeping up momentum than Henry Kissinger.

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