EMBASSY OF THE
UNITED STATES OF AMERICA
MEXICO

OFFICE OF THE AMBASSADOR

July 31, 1989

AUG 07 1989

The Honorable
Henry A. Kissinger
Suite 1021
1800 K Street, N.W.
Washington, D.C. 20006

Dear Henry:

Thanks for your letter of June 26 congratulating me on
the appointment to Mexico. There appears to be a
great deal of positive change taking place here,
especially in the economic area. I think this is a
particularly good time to be taking a serious look
at business opportunities in this country.

I would welcome the opportunity to see you during one
of your trips to Mexico so we can exchange impressions
about the situation here.

Thanks again very much for writing.

HENRY A. KISSINGER

June 8, 1989

Dear Mr. Nelson:

It is a great pleasure to offer my congratulations
to Monroe Leigh on his receiving the Theberge
Memorial Prize.

Monroe's long career has clearly established him
as one of the nation's leading international
lawyers. He has served with distinction in and
out of government for more than thirty years.
As Legal Advisor to the Secretary of State,
Monroe played a key role in many significant
international issues such as U.S. relations with
the Soviet Union and our efforts to bring peace
to the Middle East.

Throughout these years Monroe was a valued
colleagues, and he remains a trusted friend. I
am delighted that the American Bar Association has
chosen to honor him in recognition of his out-
standing contributions to his profession, to
international relations and to our country.

Steven C. Nelson, Esq.
American Bar Association
Section of International Law and Practice
1800 M Street, N.W.
Washington, D.C. 20036-5886

TWENTY-SIXTH FLOOR · 350 PARK AVENUE · NEW YORK, NEW YORK 10022 · (212) 759-7919

JUN - 7 1989

AMERICAN BAR ASSOCIATION

Theberge Award to Monroe Leigh

1800 M Street, N.W.
Washington, DC 20036-5886
202/331-2239
ABA/net: ABA205
FAX (202) 331-2220

1988-1989

**Chairman**
Steven C. Nelson
2200 First Bank Place East
Minneapolis, MN 55402

**Chairman-Elect**
James R. Silkenat
1290 Avenue of the Americas
New York, NY 10104

**Divisional Vice Chairmen**
General
Homer E. Moyer, Jr. DC

**Business Law**
Gerold W. Libby, CA

**Comparative Law**
Davis R. Robinson, DC

**Public International Law**
Louis B. Sohn, GA

**Secretary**
Roger W. Rosendahl, CA

**Budget Officer**
Kenneth B. Reisenfeld, DC

**Development Officer**
Michael Marks Cohen, NY

**Immediate Past Chairman**
Joseph P. Griffin, DC

**Section Delegate to the House of Delegates**
Arthur W. Rovine, NY

**Council Members**
Howard J. Bibel, NY
John A. Barrett, London
Harold H. Healy, Jr. NY
John H. Jackson, MI
Judith H. Bello, DC
Catherine E. Bocskor, DC
Robert E. Lutz, II, CA
Richard M. Mosk, CA
John I. Huhs, NY
Mark W. Janis, CT
Michael D. Sandler, WA
Jay M. Vogelson, TX

**The International Lawyer**
Editor-in-Chief
Joseph J. Norton, TX

**International Law News**
Editor-in-Chief
Susan G. Esserman, DC

**Publications Chairmen**
James F. Pedersen, MN

**Continuing Legal Education Chairman**
Shelly P. Battram, Toronto

**Foreign Lawyer Representative**
Ezekiel Solomon, NY

**Board of Governors Liaison**
Vincent J. Apruzzese, NJ

**Young Lawyers Division Representative**
Nancy D. Israel, MA

**Law Student Division Representative**
Denise L. Dirks, CA

**Staff Director**
Cynthia R. Price, DC

**Assistant Administrator**
Sarah J. Applegate, DC

**Attorney-Consultant**
Edison W. Dick, DC

May 31, 1989

Dr. Henry A. Kissinger
435 East 52nd Street
Apartment 6E
New York, NY 10022

Dear Dr. Kissinger:

Each year the American Bar Association's Section of International Law and Practice confers upon a selected recipient a prize for distinguished contributions to international law and more particularly to United States participation in the development of international law. The award is known as the Leonard J. Theberge Memorial Prize.

The prize this year will be awarded to Mr. Monroe Leigh, a distinguished international lawyer and, as you know, former Legal Adviser to the Department of State. It is our practice on the occasion of the presentation of the prize to read brief testimonial letters from a small number of present and former colleagues in a position to appreciate the recipient's contributions to international law.

My purpose in writing is to ask if you would be willing to write such a letter, of no more than two or three paragraphs, to be read at the presentation ceremony on June 15. If so, I would appreciate your addressing your letter to me in care of the ABA Section of International Law and Practice at the Washington address shown below.

We deeply appreciate your contribution to our recognition of Monroe Leigh.

Steven C. Nelson
Chairman

SCN/sja

BRUNO KREISKY

MAY 18 1989

Vienna, May 18, 1989

Dear friend,

Günther Nenning, an Austrian Journalist, whom I know through
many years, wants to initiate a discussion between us, Chairman
Arafat and others. This discussion should be covered by television
and the German magazine "Der Spiegel". I am ready to participate
and suggested to meet in my house in Vienna, July 6th or 7th. If
you could accept, I would be very happy meeting you again, as I
still remember the interesting talks we had in the past.

With best regards,

sincerely,

Mr. Henry Kissinger
New York

03/05 '89 16:00

☎ 0222 93 33 82 SCHRIFT.Z.ZEIT

(L) 01

GÜNTHER NENNING

MUSEUMSTRASSE 5 · A-1070 WIEN

Office

Mrs.Christie Neumann

Mr. Henry Kissinger

Telefaxletter 3. May 1989

MAY 03 1989

Dear Mr. Kissinger,

in accordance with the TV-station of the German magazine "Der Spiegel" I am to organize and to moderate a TV-panel discussion on developments in relations between Israel and Palestine, possibly in or near Vienna.

Participants as envisaged are Messr. Yassir Arafat, Bruno Kreisky, and Abba Eban. who agreed in principle for a date approximately at the end of June.

I invited you to participate on this highranking panel. The wish that you may be on the panel was especially expressed by Mr. Arafat.

Please let me know your answer at your earliest convenience.

Günther Nenning
phone in Vienna: 93 33 54, 93 33 53
Telefax in Vienna 93 33 82

Lg

ON NEPAL-INDIA TRADE AND TRANSIT PROBLEMS

March 17, 1989

STATEMENT BY THE SPOKESMAN OF THE
MINISTRY OF FOREIGN AFFAIRS, HIS
MAJESTY'S GOVERNMENT OF NEPAL

It is unfortunate that in recent months there has been a spate of newspaper reports and articles suggesting a widening gap in the friendly relations so happily subsisting between Nepal and India. The publications of these reports and articles have shown a tendency to create doubts and uneasiness in the minds of the people about the state of Nepal-India relations. The past few days have witnessed a rising tempo in Indian reporting on matters usually considered to be ones under negotiations between the two governments. Even the contents of a letter from one government to another have been reported in Indian newspapers. There seems to be no doubt that these reports and articles in Indian papers are officially inspired. It is desirable, in these circumstances, to keep the people fully informed of the bare facts of the matter.

On March 1, 1989, the Ministry of Commerce received a letter from the Embassy of India to Nepal, giving notice that so far as the government of India is concerned, the Treaty of Trade and the agreement of cooperation to control unauthorized trade will expire on March 23, the date on which the Treaty of Transit will also expire. India proposed that fresh negotiations be started on a single unified treaty of trade and transit in addition to an agreement about unauthorized trade. It may be mentioned that the two governments had already initialled the new treaty of trade and the agreement of cooperation to control unauthorized trade in New Delhi and Nepal was awaiting the formal signing for which an invitation had been sent to the government of India.

India's letter therefore came as a surprise serving as a notice of abrogation of an arrangement already made in good faith. The proposal for a single unified treaty is a step putting the hands

2

of the clock 11 years back. Even at this late stage we would be prepared to discuss future trade arrangements with India if the government of India so desires. It is a common practice to review trade relations between two countries from time to time. One of the factors to be taken into account is Nepal's growing annual trade deficit with India which exceeds Rs. 300 crores at present. Nepal feels that while trade is a periodic arrangement between two parties in question, transit is a necessary permanent condition for the international trade of any land-locked country. It should, therefore, be dealt with separately and on a long term basis.

Nepal always values its friendly relations with India and our endeavours have always been to maintain and promote the tradition of close relations between the two countries and peoples. We are prepared to discuss ways and means to strengthen our ties of friendship which must always serve the interests of both sides. Reviews and adjustments should be seen as a normal process in the relationship between any two countries and it must be a bilateral process undertaken with due regard to time and mutual sensitivity. No element that harms mutual respect, equality and reciprocity of interests should be encouraged. Above all, there should be full understanding of each other's legitimate aspirations, particularly their policies and actions taken in pursuance of programmes to fulfill the basic needs of the people so that they have a minimum living standard and live in peace, security and independence.

March 23, 1989 Position on Trade and Transit

Treaty of Transit expiring today and according to GOI notice
Treaty of Trade will not be continued and therefore will also
expire today. Our position is explained in our statement of
seventeenth March. Basically our position is that trade and

3

transit should be separately treated. And on that basis we are
prepared for negotiations on new arrangements for trade as well
as transit at any time. Even the Foreign Minister is prepared to
visit Delhi to initiate negotiations. It is likely that the visit
will take place in two three days. Meanwhile trade will be
conducted on Gatt principle of MFN and transit will take place
according to international law.

March 29, 1989

Some bare facts

1. Traffic-in-transit is moving slowly on two points allowed by India.

2. But traffic-in-transit already cleared before twenty third are held up on other points.

3. Despite India's assurances and public assertion regarding movement of goods between two countries on two points on Gatt principle of MFN, there has been no movement of goods from twenty fourth. Not even medicine, life saving devices or food stuff like bananas and oranges carried by individual travellers.

4. From twenty fourth India has dishonoured agreements on salt pol products and coal which were still to expire.

5. Nepal to Nepal movement is prevented.

5. Vehicular movement also is prevented.

April 1, 1989

Background Information

1. During summer of last year Indian papers particularly *Times* of India* group* began to write reports taking exceptions to arms purchase, work permit and Chinese presence on a few terai projects which were

4

internationally financed, and indicating that relations particularly
1950 Treaty should be reviewed. India's desire to review treaty
was officially confirmed last year December at meeting between two
Foreign Ministers. We accepted suggestion for review as this is a
normal process in inter-state relations and invited India to
suggest modalities for review. India said formalization will not
be needed at that time. They wanted individual separate reviewing.
We still think review should be bilateral and we are prepared for it.

2. In October last year, new treaty on trade was initialled in Delhi and we invited delegation from India for formal signature upon which new provisions would have automatically come into force. India adopted dilatory tactics in sending delegation. They said that in the mean time 60 percent waiver was given on additional duty to Chinese goods coming by land route. We said that upon signature Indian goods will get 100 percent waiver on additional duty. India was not content with the obvious 40 percent advantage. It was at this time India's letter was received on 1 March abrogating the initialled treaty proposing negotiation on a single unified treaty on trade and transit, pending which they said MFN (Most Favoured Nation) in bilateral trade will apply. We said we will negotiate on any new trade arrangement but will not accept single format which will be a retrogressive step. Trade is a periodic bilateral arrangement but transit is necessary permanent condition for international trade of any landlocked country. We proposed immediate negotiations on two formats pending which existing arrangements be continued on Ad-hoc basis. We made this proposal on several occasions: on 6 March when Mr. P.V. Narasimha Rao (Indian Minister of External Affairs) came to Nepal, in letters from the Commerce Secretary, in Mrs. Shah's (Royal Nepalese Ambassador to India Mrs. Bhinda Shah) letter to India's Foreign Secretary. Ad-hoc continuation was vigorously denied. Foreign Minister went to Delhi but request for ad-hoc continuation pending negotiations on treaties went into deaf

5

ears. We have now submitted drafts of two treaties. On transit our draft is the expired treaty. On trade our draft is on MFN (non dicriminatory GATT principles) basis as suggested by India, but taking into account free trade in primary produce (to be specified) and the interest of the border peoples on both sides. Now India seems to be saying that when they said MFN they meant MFN temporarily after expiry of the treaty and pending conclusion of new single one. We were throughout for ad-hoc continuation, and it was India which deliberately brought about a situation of no treaty regime. The excuse does not seem to hold water. Either they meant MFN when they said it or it was another tactic for pressure. Now, their official spokesmen and high dignitaries are saying that negotiations on two cannot be possible unless we take care of their interests in other areas. First they said no continuation and no two formats allegedly because we did not fulfill the understanding when Treaty of Trade was initialled, now they are saying no negotiations unless we do something in other areas. The understanding was that Indian goods will get 100 percent waiver in additional duty, but that understanding was part of treaty and will have come into effect immediately on formal signature in which they refused to send delegation. They are obviously now adding vaguely-defined conditions upon condition.

3. Just on eve of treaty expiry, Mrs. Shah was given assurances by India's Foreign Secretary that trade will pass through Raxual and Jogbani on GATT principles of MFN, and that tariff in transit will be allowed on those two points. The present situation is as follows:
1. Transit moving on those two points, 2. But traffic in transit cleared at Calcutta before 23rd are held up on other points.

3. Practically there has been no movement of goods bilaterally from 24th even on these points contrary to assurances and repeated assertions. Two consignment of vegetables were allowed from Raxual

6

but they were rotting. No medicines, baby food or the like.

4. Salt, coal, pol are not allowed from 24th even though agreements on these items expired only on 31st. There is assurance that backlog of quota goods will be allowed. But salt, pol, and coal were governed by separate corporation-to-corporation agreements.

5. No vehicular movement. 6. No Nepal to Nepal via India movement.

4. They suggested review initially and we accepted it as review is normal bilateral process. They created a no-treaty regime and suggested MFN in trade. We accepted it and submitted draft treaty on that basis. Only suggestion we have not accepted is single format for two separate things.

5. Foreign Minister has now written to Mr. P.V. Narasimha Rao asking for immediate negotiations on trade and transit in Delhi or Kathmandu. He has also said that if negotiations are not possible on trade and transit for any reason, he would like to propose as co-chairman of Joint Commission the immediate convening of a meeting of the Joint Commission. The Nepal-India Joint Commission exists for promoting and strengthening of bilateral cooperation in specified areas including the area of trade and the area of transit. But response may not be positive, as seen from their attitude of adding condition upon conditions.

April 3, 1989

Position on Trade and Transit

1. Traffic in transit on two points moving slowly. On other points they are held up although they were cleared at Calcutta before expiry. No bilateral movement of goods even on the two points, contrary to assurances and repeated assertions. Some backlog

7

of coal from last years quota has come. Nepal was to get
162000 mt out of which 85000 came before 23rd and since then
2000 has come. Pol has not entered even though it should have
come until 31st. No medicine, no baby food. Not one single thing
except two truckloads of rotting vegetables since 23rd.

2. India might say that time was needed to convert to a situation of MFN under which licensing might be required but the point to remember is that for a country which needed few hours time to mount airbourne operations in a foreign country 500 miles offshore such conversion could have been done in less time. For 12 days now nothing has been done. Question arises whether it is trade suspension or sanction. After all we are neighbours dessimilar in size, resources and population.

3. Some facts on Nepal-India bilateral trade

A. Indian manufacturers used to sell their products in Nepal after paying concessional customs tariff as provided for in the recently expired trade treaties between Nepal and India, and the tariffs are still concessional for the Indian products even after the expiry of the treaties. However, India has started imposing at least 145 percent customs duty on Nepal's exports to that country leasing to virtual stoppage in the export of Nepalese products to India as these products can no longer compete with Indian goods in the Indian market.

B. Innumerable Indian goods have been enjoying concessional customs facility in Nepal as compared to the goods imported from overseas since many years ago. But the Nepalese goods do not enjoy such facility in India. In principle, Nepal was also entitled to export sixty-six Nepalese products to India with concessional customs duty as provided for in the treaty provided that at least 80 percent of the raw material used in such goods was Nepalese or

8

Indian. However, Nepal has not been able to sell Nepalese as the procedures to get approval for the same was highly time consuming. Therefore, a limited quantity of jute goods, biscuits, oils and noodles was exported to India.

C. Under the treaty, both Nepal and India charged no customs duty on the trade of food items and livestock. But in the trade of primary goods they used to impose a nominal duty of 5 percent. The average rate of customs duty on Indian goods in Nepal is 18 percent whereas, the goods like polyester fabrics imported from third countries carry at customs duty of up to 243 percent.

D. The treaty also provided for return of the excise duty charged on the goods exported to Nepal. This arrangement was made to insure that the Indian goods entering into Nepal were not re-exported to India. The amount of the excise refund was Rs. 100 million every year for the period of the treaty.

E. There were no quantitative restrictions on the trade between the two countries. Likewise, there was no restriction on the exchange of Indian currency which provided more benefits to India.

F. The above facts show that India was gaining greater benefits than Nepal from the bilateral trade.

9

April 5, 1989

Position on Trade and Transit

1. Practically no movement in bilateral trade even on two points.

2. Indian papers have come out with the stories that India has allowed movement. The stories are false, as those goods are traffic in transit, from third countries.

3. Today is the seventeenth day India has not allowed bilateral trade.

4. Indian official spokesmen have been claiming or asserting that India is allowing things like molasses, coconut, edible oil, sugar, baby food, medicine. These assertions are false. Notices to that effect have also appeared on customs noticeboards at Jogbani and Raxaul. But not a single thing has been allowed to move.

5. Reports of harrassment to Indians in Nepal are false. On the other hand, Nepalese have been rough handled particularly in Raxaul.

6. Reports of several hundred arrests of students and journalists are false. Only a handful of known miscreants getting inspiration and funds without our territory have been temporarily held up for questioning.

7. It has taken India so very very long to modify procedures in bilateral trade. But it now appears that two previous entry of two trucks of vegetables and one entry of one truckload of cuminseed yesterday were shipped to certain traders who were already briefed about the new procedures and had thoroughly complied with all procedures. They had information which HMG did not have. They had information in advance, much in advance.

MAY 03 1989

Information received from the Ministry of Tourism.
Kathmandu, on May 1, 1989.

AIR SERVICES IN ALL TOURIST SECTORS INCLUDING JOMSOM,
LUKLA, POKHARA ARE OPERATING AS PER NORMAL SCHEDULE. NO
PROBLEM IN ANY INTERNATIONAL AND DOMESTIC AIR SERVICES IN
NEPAL.

POINTS RAISED IN THE EXTERNAL AFFAIRS MINISTER OF
INDIA'S STATEMENT IN LOK SABHA ON APRIL 26, 1989

- 0 -

POINTS RAISED AND NEPALESE VIEWS

1. India has fully financed and implemented mutual cooperation schemes for the development of Nepal's water resources like the Koshi and the Gandak.

Nepal is grateful for what it has done. We are not asking for things which India does not want to provide. Nepal on its part has also extended cooperation to India. Koshi and Gandak are living examples. But we do not expect gratitude.

2. Under various Trade and Transit Treaties since 1950, India has given Nepal highly-preferential treatment ... plus very extensive transit facilities for Nepal.

Preferential treatment

Although it is true that there was a common assumption of Nepal receiving highly preferential treatment under Indo-Nepal Treaty on Trade, closer examination of facts reveal the contrary:

A. Indian manufacturers used to sell their products in Nepal after paying concessional customs tariff.

B. Innumerable Indian goods have been enjoying concessional customs facility in Nepal as compared to the goods imported from overseas but the Nepalese goods do not enjoy such facility in India. In principle, Nepal was also entitled to export sixty six Nepalese products to India with concessional custom duty provided that at least 80 percent of the raw material used

2

in such goods was Nepalese or Indian. However, Nepal has not
been able to sell Nepalese goods as the procedures to get
approval for the same was highly time consuming. Therefore,
a limited quantity of jute goods, biscuits, oils and noodles
were exported to India.

C. Under the Treaty, both Nepal and India charged no customs duty on the trade of food items and livestock. But in the trade of primary goods they used to impose a nominal duty of 5 percent. The average rate of customs duty on Indian goods in Nepal is 18 percent whereas the goods like polyester fabrics imported from third countries carry at customs duty of up to 243 percent.

D. There were no quantitative restrictions on the trade
between the two countries. Likewise, there was no restriction
on the exchange of Indian currency which provided more benefits
to India.

Extensive transit facilities

In the case of the so called "extensive transit facilities",
many analysts have shown that the Treaty on Transit between two
countries does not satisfy the basic elements provided for in
the international law. They include the following points as example:

(i) Article I of the Treaty provides the right of freedom of transit but makes it subject to reciprocity which is against the very core principle of the Law of the Sea. Nepal being a land-locked country has this right independently of the nation of

3

reciprocity. According to Article 125 of the LOSC this right
is not subject to reciprocity.

(ii) Article III of the Treaty provides a narrow definition
of the term "traffic in transit". It excludes persons, accompanied
baggage and most importantly the means of transport while all of
these are included in the LOSC (Article 124 (i)).

(iii) Article 127 of the LOSC exempts traffic in transit from
"any customs duties, taxes of other charges except for ....
specific services". Yet, altogether there are 18 kinds of
charges to be paid for Nepalese goods.

(iv) The limited transit rights given to Nepal by the transit
Treaty are made yet more difficult to exercise because of the
cumbersome, transit and customs procedures applied by India.

(v) Hence the Treaty should be of permanent character so
that any change of government in New Delhi does not affect the
inherent right of Nepal.

Despite all the inadequacies in the Transit Treaty Nepal
on March 25, 1989 submitted draft for Transit Treaty which was
the one expired.

Nepal has informed India that she will negotiate on any
new trade arrangement but will not accept single format which
will be a retrogressive step. Trade is a periodic bilateral
arrangement but transit is necessary permanent condition for
international trade of any landlocked country.

4

3. Sadder still has been the systematic discrimination against the relatively small community of Indians in Nepal (work permits, teachers, citizenship certificate).

A. HMG has not deprived any Indian national of employment opportunity in any organized sector for not possessing work permit.

B. That the Indian teachers working in Nepal were forced out of their jobs as they could not get the work permit is also false. As the work permit has not been introduced for the teachers and it is introduced only in organized sector in a limited scale. (Actions, of course, have been taken against some teachers who were found working on the basis of fake certificates. The step was taken in order to improve standard of education and to enhance the dignity of teaching profession.)

C. The accusation that it is a deliberate move to deny the citizenship papers to million of people is totally baseless and misleading. On the contrary, the scheme is designed to enable all Nepalese citizens to get their citizenship certificates as early as possible.

3A. About 275 seats, including a large number of engineering and medical seats are offered to Nepalese students every year under various scholarships.

As for scholarships, under the Technical Scheme of Colombo Plan everyone knows that for every scholarship provided by India to Nepal, it gets at least five from countries like UK and Canada

5

for very specialized subjects. Most scholarships now provided are not channelized through the Ministry of Education of HMG but are given for political and other considerations by the Indian Embassy, which everyone of us know.

Stand by Credit

Stand by credit is a commercial arrangement between our two Central Banks. Any shortfall in Indian Currency is repaid in convertible currencies which is advantageous to India. The arrangement additionally has also effect of subsidizing Indian exports to Nepal.

4. <u>Indian exports to Nepal in 1987-88 dropped to half ...</u>
<u>Two Nepalese commitments were not met: The additional customs</u>
<u>duty on Indian goods would be removed and secondly this facility</u>
<u>would not be extended to any third country.</u>

A. The following table clearly shows the amounts of export to and imports from India and subsequent balance situation (in million Rs):

<table><thead><tr><th>Year</th><th>Exports</th><th>Imports</th><th>Balance</th></tr></thead><tbody><tr><td>1974-75</td><td>748.70</td><td>1475.70</td><td>- 729.00</td></tr><tr><td>1979-80</td><td>520.90</td><td>1786.40</td><td>-1256.50</td></tr><tr><td>1986-87</td><td>1302.60</td><td>4262.00</td><td>-2959.40</td></tr></tbody></table>

Imports from India in FY 1987-88 ending March totalled 4.5 billion rupees creating deficit of 3.5 billion for Nepal.

B. In October last year, new treaty on trade was initialled in Delhi and we invited delegation from India for

6

formal signature upon which new provisions would have automatically
come into force. India adopted dilatory tactics. They said that
in the meantime 60 percent waiver was given on additional duty
to Chinese goods coming by land route. We said that upon signature
Indian goods will get 100 percent waiver on additional duty.
India was not content with the obvious 40 percent advantage.

5. Government of India have always wanted and had until 1978, a single treaty with Nepal.

The proposal for a single unified treaty (made on March 1,
1989 only, after two governments had already initialled the new
treaty of trade in October 1988) came as a surprise serving as
a notice of abrogation of an arrangement already made in good
faith. The proposal for a single unified treaty is a step
putting the hands of the clock 11 years back. Nepal rightly
feels that while trade is a periodic arrangement between two
parties in question, transit is a necessary permanent condition
for the international trade of any landlocked country. It should,
therefore, be dealt with separately and on a long term basis.

6. India is ready and willing for this as well as to discuss
the whole gamut of relations.

We have already conveyed to Indian authorities our
readiness to have friendly talks with India on all issues
including trade and transit. We are also willing to review
the Peace and Friendship Treaty with a view to making it in
tune with time.

7

We are looking forward to having a friendly dialogue with India at the earliest to end the current impasse. We are patiently awaiting India's response regarding the agenda, level, venue and the date of the talks. Any venue proposed by India will be acceptable to Nepal.

Nepal has accepted India's suggestion of the most favoured nation (MFN) principle treatment based on GATT principles of reciprocity and non discrimination. Prime Minister Marich Man Singh Shrestha has already welcomed the reported statement of Indian Prime Minister Rajiv Gandhi that India would act according to International Law.

### 7. 1950 Treaty of Peace and Friendship

The Treaty was signed not by Late King Tribhuvan but by and during the autocratic regime of Prime Minister Mohan Shumsher who did it in the hope of saving his chair. As we have stated several times, Nepal is prepared to discuss and negotiate the entire range of relationship including the treaty and trade and transit matters at any time, place and level of India's choice. We are patiently awaiting their responses.

### 8. Essential Commodities are sent to Nepal but that there is no response from Nepal and that Nepalese traders are asked not to lift

"I doubt if he ever said that. It is for everyone to see that POL products continue to remain held up since March 23, one full week before agreements in this regard terminated at India's short notice.

Our media have been giving details of the irregular and limited supplies of other essential goods like baby food, salt and medicine coming from India. To say that our people are not lifting the goods which we are direly in need of and for which we have already made the payment is beyond comprehension."

# Indian Economic blockade threatens the Himalayan Ecosystem

## 1. Indian Blockade

Who could have imagined that India, the country of Mahatma Gandhi would put a wartime like economic blockade against Nepal, a small landlocked Hindu country. This move by India has starttled the world community and shocked the friends of both countries. Although the trade and transit treaties between Nepal and India were to expire on March 23 and the treaty on petroleum products on March 31, India on its own sealed off 13 of the 15 border entry points for import of goods from India and other countries. It was the midnight of May 19, 1989 that India, an advocate of peaceful coexistence unilaterally decided to stop all goods from entering Nepal including essential commodities like baby food and kerosene. Nepal shares its northern border with China but because of massive high Himalayan terrain, it is extremely costly for Nepal to transport even the most essential goods via Lhasa.

## 2. Himalayan Ecosystem.

Himalayas are categorized as the youngest and most fragile ecosystem of the world. Nepal occupies the Central Himalayan region and provides an unique spectrum of cultural & natural diversity. The Indoganetic plain which inhabits more than 50 millions people of Nepal, India and Bangladesh is incessantly nourished by the perennial rivers of Ganges and its tribu-

1

taries emanating from the Himalayas. According to Hindu
mythology, Himalayas are the abodes of gods and goddesses,
together they provide protection and blessing to the welfare
of these inhabitants. It is believed that Lord Shiva's Jattha
(long-matted hair) collects the impinging rain and controls
its flow providing a sustainable supply of water to the people
inhabiting the Himalayas and Indoganetic plain. A truth so
vivid and real that Jattha resembles forests which are
essential for conservation of natural environment and which
supply essential goods to the people. The forest, rain and
drought bring prosperity and suffering to millions of people
in Nepal, India & Bangladesh. In this context people are well
justified to regard Himalayas as an abode of gods and
goddesses.

Nepal is a small country roughly two percent of the size of
India. Eighty six percent of its land is mountainous where 35
percent of the people live. The rest of the people live in
the Terai, the flat land of Nepal which forms part of the
Indoganetic plain.

People living in the Himalayan Region extensively utilize
diverse resources for their livelihood. The linkage between
farming and forestry are intimate. Likewise, outside energy
input has undoubtedly contributed a lot in maintaining a
sustainable ecosystem.

2

The importance of a balanced and wholesome Himalayan ecosystem has been documented in several international seminar and publications. Even the national leaders of the SAARC region like Prime Minister of India, Mr. Rajiv Gandhi and the President of Bangladesh have given much stress on it and spoken of the importance of keeping a balanced Himalayan ecosystem. The degradation and deforestation in the Himalayan ecosystem and its effect on the downstream where a substantial portion of global population live is apparent in the recurring flash of floods and downstream sedimentation in the indogangetic plain.

Specialized international institutions like ICIMOD have been created to monitor the ecological process occurring and to devise appropriate remedial means to augment a wholesome Himalayan ecosystem. Realising the needs of a comprehensive assessment of the Forestry resources of Nepal, HMG has formulated a 25 years Forestry Master Plan of Nepal so that the ecology and economy of Nepal interact in more conducive ways.

## 2. Nepal's environmental status and Forestry Master Plan

Heavy pressure is being exerted on the forests of Nepal by increasing human and livestock population. Forestry provides a multitudes of goods and services and when utilized generate internal and external benefits and costs. The goods provided

3

are the tangible forest products like fuelwood, fodder,
constructional timber and the perennial stream of water for
drinking, irrigation & hydro electricity generation. Because
of heavy dependence on forest products for daily life, Nepal's
forest resources are shrinking both in area and in quality.
This has resulted in the degradation of watershed and
accelerated erosion. To take specific example, the percentage
reduction in the area of natural forests has been of the order
of 0.4 percent per year or an area of about 22,000 ha/year.
Similarly it is estimated that 240 million cu.ft of sediment
is eroded from the Himalayas of Nepal and is deposited in the
bay of Bengal as a result of accelerated erosion.

Based on the above factors HMG has prepared a long term Master
Plan for the Forestry Sector (MPFS) in order to streamline the
programmes of forestry sector in the direction of production,
conservation and management. The ultimate objective of the
MPFS are to meet the people's needs for fuelwood, timber,
fodder and other forest products and to conserve and maintain
a safe and wholesome environment. To achieve these objectives,
MPFS has formulated 12 programmes out of which six are primary
and six are supportive. The first two programmes are directed
to increase the supply of forest biomass and to reduce the
consumption of forest products and others are wood based
industries; medicinal and aromatic plants and other minor
forest products; soil conservation and watershed management;

4

and conservation of ecosystems and genetic resources. These programmes are based on the existing forest resource base and the expected needs of the people. The demand and supply of forest products is projected based on the simulation model. To meet the increasing needs of the forest products, the plan has proposed extensive plantation and forest management activities to meet the need of the people and at the same time conserve the biological diversity.

### 3. India's blockade and its environmental impact

India's unilateral decision to blockade Nepal has affected all aspects of Nepalese life, more specifically the developmental activities and the natural environment of Nepal. Since all the petroleum products have been stopped from entering Nepal since March 19, 1989, movement of goods has slowed down and people living in and around urban centres and bazaars are substituting fuelwood for kerosene for cooking. To give a specific example, before the blockade, about 10-12 truck load (100 to 120 MT) of fuelwood used to come to Kathmandu valley per day from the Terai. Now, after the Indian blockade, about 100 truckload of fuelwood per day are brought to Kathmandu valley. Even if we assume that each hectare of forest has 100 MT. of wood out of which 90 percent is recoverable and 80 percent is fuelwood, about 12 hectare of additional forest area will be clearcut daily to meet the present fuelwood requirement in Kathmandu valley. If we extrapolate this increased defores-

5

tation rate to whole Nepal, it can be safely said that about
200 hectares of additional forest area is lost every day with
the result of Indian blockade. In total the clearfelling of
forest would increase five times the present rate of
deforestation. The environmental and ecological effects of
this blockade are thus tremendous. Since the linkage between
Himalayan ecosystem and Indoganetic plain is intimate, the
ecological deterioration in Nepal's Himalayas will adversely
affect the people living in the Indoganetic plain. The
international community and the people of India, Bangladesh
and Nepal should thus know that responsibility for this
ecological degradation and its consequent effect lies on the
Government of India, which, ironically, clamours for wholesome
Himalayan ecosystem.

## 4. Reasons behind the Indian blockade

It was implicitly accepted by India 11 years ago that Trade
and Transit are two different things. That was the reason why
two separate treaties were signed between India and Nepal.
Those treaties were extended twice. In October 1988,
secretaries of two governments initialled a trade treaty with
the assumption that the prevailing transit treaty would be
continued. International conventions and rules have mentioned
that land locked countries have the right of access to the
sea. Even South Africa has given Lesotho the transit right.
On March 1, 1989, India unilaterally informed that India

6

wanted a unified trade and transit treaty. The reasons for this unified treaty have not been provided by India except that Indian Newspapers have published a variety of reasons for the unified treaty. Recently Indian Prime Minister has mentioned that there are two main reasons why India took such a drastic measure as to blockade Nepal. They are (1) smuggling of foreign goods to India from Nepal and (2) Institution of work permit for Indian nationals working in Nepal. Both these matters are trivial in comparison to the effects of economic blockade on Nepal. Nepal has explained that there is no discrimination against Indian nationals working in Nepal and that the government has practised registration of workers in the organised sector, which is essential for manpower planning in this district of Kathmandu valley. As to the case of smuggling of foreign goods, Nepal has always shown its willingness to sort out this problem.

There however does not seem to be any valid and solid reasons for India to sanction this drastic measure. However, if one analyses the military build up in India since 1971 and its propensity to interface in the internal affairs of its small neighbours, it appears that India openly wants to put pressure in Kathmandu to follow India's foreign policy and to let her maintain her monopoly market for its goods in Nepal.

Whatever may be the reasons India may provide for its action of economic blockade against Nepal it has been accepted by the

7

global community that this action of economic blockade is
against the ethics and norms of civilised behaviour. It is
unfortunate that a country which preaches nonviolence and the
five principles of peaceful coexistence should undertake a
measure as drastic as economic blockade against its small
landlocked neighbour.

The present blockade initiated by India will lead to far
reaching ecological consequences. The Himalayan Ecosystem will
deteriorate as a result of heavy exploitation of forests and
the people in this region will suffer untold miseries from
natural disaster. The question is whether India knows all
this?

AUG 01 1989

NEPAL-INDIA IMPASSE: AN UPDATE

1. Not having received any response for talks from India, Nepal gave a note verbale to India on May 25, 1989 proposing:

a) Kathmandu as venue

b) Foreign Minister as the level

c) First week of June or any earlier date of India's convenience as the time

d) Draft transit treaty, draft trade treaty and any mutually agreed matter as the agenda.

2. Proposed date having expired without any response from India, the Foreign Minister of Nepal wrote to External Affairs Minister of India on June 12, reiterating the proposal and saying, as regards date, that Nepal will accommodate any time frame India may have in mind.

3. Finally External Affairs Minister of India wrote on June 16 which was received on 19th suggesting items of agenda. India's letter was still silent on venue, level and time.

4. Foreign Minister of Nepal responded on June 26 positively reacting to the items of agenda proposed by India as well as clear and concrete views on wide range of bilateral relations. Reminding India's silence on venue, level and time for talks, Nepal once again suggested that the talks be held in Kathmandu at Foreign Minister level and any time frame proposed by India would be acceptable to Nepal.

5. Even until now India has not responded and as an injured party it is Nepal which is awaiting response.

- 2 -

6. The situation at present thus is:

6.1 Customary trading points along a supposedly open border of 1780 km remain arbitrarily restricted to only two out of 21.

6.2 Customary transit points, similarly, are restricted to two out of 15 points. Even in these two points there has been suspension of vehicular traffic for a petty pretext causing delays and economic loss.

6.3 Basic needs commodities such as petroleum products and coal are not allowed to enter Nepal from India. Prohibitive procedures are applied in case of several articles of daily and humanitarian need.

6.4 The tempo of both unofficial and official media campaign against Nepal shows little sign of abating. Indian Missions abroad are actively launching campaign to spread falsehood against Nepal. Even the level of Prime Minister seem to have been misinformed in India.

July 26, 1989

OCT 26 1989

THE RISING NEPAL PUBLISHED IN KATHMANDU, NEPAL ON
TUESDAY, OCTOBER 24, 1989

SUDDEN CLOSURE OF CALCUTTA PORT JETTIES

Kathmandu, Oct. 23

Calcutta Port Trust notified today (October 23) that jetties at Budge Budge has been closed indefinitely from October 21, 1989.

A ship carrying diesel and kerosene imported from Singapore by Nepal Oil Corporation arrived at "Sand Head" Calcutta on October 22 and has already completed all port and custom clearance procedures. Service charges involved in this connection have also been paid.

With the sudden closure of all jetties by the Port Trust, the Ship carrying the diesel and kerosene has not been able to berth and is waiting at "Sand Head", it is learnt from Nepal Oil Corporation officials who went to Calcutta.

ROYAL NEPALESE EMBASSY
2131 LEROY PLACE, NW
WASHINGTON, DC 20008

Max Neuhaus
«Time Piece»

Stille öffentliche Uhren

Seit altersher werden Töne benutzt, um im Laufe des Tages periodisch einen verbindenden Moment für die Gemeinschaft zu schaffen. In heutigen Gesellschaften geschieht dies in Form von Kirchenglokken und öffentlichen Uhren.

Idee der «Time Pieces» ist, solche verbindenden Momente mit Stille anstelle von Tönen hervorzubringen.

Die Methode

Die Idee wird ausgeführt, indem eine alltägliche Geräusch-Situation graduell verändert und dann ein Eindruck von Stille dadurch geschaffen wird, dass man diese Veränderungen wieder zurücknimmt.

Eine Ton-Struktur wird über Minuten hin langsam eingeführt, so dass sie nicht direkt bemerkt wird, dennoch aber für das Hören subtil eine andere oder imaginäre Ortsempfindung erzeugt. Sobald dieser Ort aufgebaut ist, wird er wieder entfernt, wird das Imaginäre dem Realen gegenübergestellt und das Reale auf neue Weise als Moment von Stille exponiert.

Es ist wichtig, dass die Geräuschquellen unsichtbar bleiben und die Arbeit ein normales Ereignis ist – eine subtile Präsenz, da und zugleich nicht da ... bemerkt, vergessen ... und wiedergefunden.

Silent public clocks

The concept of using sound to form a common moment within a community, periodically throughout the day, is an ancient one. It exists in present day society in the form of church bells and public clocks.

The idea for the Time Pieces is about forming these common moments with silence rather than sound.

The method

The concept is realized by gradually changing the acoustic environment, and then creating a sense of silence by removing these changes.

A sound texture is slowly introduced over a period of minutes so that it is not noticed directly, but subtly establishes a different or imaginary sense of place, acoustically. Once established, this place is removed, juxtaposing the imaginary with the real and exposing the real, in a new way, as a moment of quiet.

It is important that the sources of sound remain unseen, and that the work becomes a common occurrence – a subtle presence, there and at the same time not there – noticed, forgotten ... and re-found.

Kunsthalle Bern 1989

NEW YORK REPUBLICAN STATE COMMITTEE

J. PATRICK BARRETT
Chairman

October 10, 1989

OCT 20 1989

Mr. Henry A. Kissinger
1800 K St Nw
Washington, DC 20006

Dear Mr. Kissinger:

As you may be aware, I've recently had the honor of being
elected Chairman of the New York Republican State Committee.

This honor brings with it many challenges.

My main objective is to make the Republican party the
governing party of New York State. I will work to ensure Republican victories at every level.

With this goal in mind, we are making many changes. We are
working closely with Republican leaders throughout the State, and
with our national counterparts.

We are restoring our headquarters in Albany, we are expanding the professional staff, and we will frequently be in contact with you.

If there is something that you would like to see us doing,
please do not hesitate to contact me. I welcome your comments.

I am looking forward to working with you to build a winning
Republican party in our State.

315 STATE STREET

ALBANY, NEW YORK 12210

(518) 462-2601

50

MAY 15 1989

THE NEW YORK SOCIETY
FOR INTERNATIONAL AFFAIRS, INC.

DAVID A. MORSE, ESQ.
Chairman of the Board

MR. ANDREW WHIST
President

BOARD OF DIRECTORS

MR. SOL C. CHAIKIN
President Emeritus
International Ladies' Garment
Workers' Union

MR. WILLIAM H. DRAPER III
Administrator
United Nations Development Programme

MR. VICTOR GOTBAUM
Executive Director
District Council 37
American Federation of State,
County and Municipal Employees

MR. JOHN E. JACOB
President
National Urban League

MR. BRADFORD MORSE
President
Salzburg Seminar

MR. HAMISH MAXWELL
Chairman and Chief Executive Officer
Philip Morris Companies Inc.

MR. JOHN B. OAKES
The New York Times

MR. JOHN R. PETTY
Chairman and Chief Executive Officer
Marine Midland Bank

PROFESSOR INGO WALTER
New York University
Graduate School of
Business Administration

MR. LAWRENCE A. WEINBACH
Managing Partner
Arthur Andersen & Co

May 11, 1989

Dr. Henry Kissinger
KISSINGER ASSOCIATES
350 Park Avenue, 26th Floor
New York, NY 10022

Dear Dr. Kissinger:

Costa Rica has for many years demonstrated that it is a successful model of democracy and economic development. Most recently, its President, Oscar Arias, has brought the Nobel Prize for Peace to his country for efforts to lessen conflict in the Central American region. Costa Rica has been, and will continue to be, an important force regionally and globally.

Under the constitution of Costa Rica, Oscar Arias is not able to seek a second consecutive term, and presidential elections have been called for February 1990.

The Presidency will be contested by two candidates, and it is our special privilege to present both of them here in New York City. On Monday, May 22, you are cordially invited to a luncheon at The River Club, 447 East 52nd Street, from noon to 2:00 pm to meet the first candidate, Rafael Angel Calderon Fournier, a man well-known in Costa Rican politics and beyond. In fact, his father, Dr. Rafael Angel Calderon Guardia, was a former President of the Republic while he himself has held many important political posts in his country. These have included,

599 Lexington Avenue
New York, New York 10022
(212) 758-1140

[L.C.]

among others, twice being a candidate for the
Presidency of the Republic on behalf of the Christian
Socialist Union Party and serving as Minister of
Foreign Affairs from May 1978 through July 1980.
Rafael Calderon is a lawyer by training, having
received his degree from the University of Costa
Rica Law School. At forty years of age, he is
perhaps the youngest senior figure in Central and
Latin American political life today. His youth and
vast government experience in the fields of
education, social security concerns, the Costa Rican
Legislative Assembly and international issues
combine to make him an outstanding presidential
candidate.

His remarks to our Society will focus on Costa Rican
political, economic and social concerns, but he will
also discuss topics of regional importance,
including those dealing with debt and Central
American peace initiatives.

Because this program is so timely and will be
closely followed in the near future by an address to
our Society by Mr. Calderon's chief political
rival, we expect to limit attendance on a first come
first served basis. To make your reservation,
please contact Ms. Toni Perlberg, 212-758-1140 as
soon as possible.

I hope you can join us on May 22,

Sincerely,

Andrew Whist
President

AMBASSADOR AND MRS. EDWARD N. NEY

EMBASSY OF THE UNITED STATES OF AMERICA
100 WELLINGTON STREET
OTTAWA, ONTARIO K1P 5T1 CANADA
TELEPHONE: (613) 238-5335 FACSIMILE: (613) 238-8750

PLEASE SEND ALL MAIL TO:

EMBASSY OF THE UNITED STATES OF AMERICA
POST OFFICE BOX 5000
OGDENSBURG, NEW YORK 13669-0430

RESIDENCE:

500 LISGAR ROAD
ROCKCLIFFE PARK, OTTAWA

NEW YORK:

MRS. VALERIE N. ULRICH
540 MADISON AVENUE, 20TH FLOOR
NEW YORK, NEW YORK 10022

TELEPHONE: (212) 486-3631 FACSIMILE: (212) 486-3649

SEP 29 1989

AMBASSADOR AND MRS. EDWARD N. NEY'S

NEW YORK OFFICE ADDRESS
AND
TELEPHONE NUMBER
HAVE BEEN CHANGED TO:

MRS. VALERIE N. ULRICH
345 PARK AVENUE, 30TH FLOOR
NEW YORK, NEW YORK 10154

TELEPHONE: (212) 754-5566

FACSIMILE: (212) 421-9225

HENRY A. KISSINGER

Dear Stavros:

Now that I am back in my office after
a brief speaking tour on the West Coast,
I wanted to let you know that I was
delighted we had a chance to get together
for coffee and a good chat during my trip
to Paris earlier this month. One benefit
of these increasingly frequent visits to
Europe is the opportunity to catch up
with old friends, and I do look forward
to seeing you.

Nancy joins me in sending our best wishes,
and we hope to see you soon.

Mr. Stavros Niarchos
Villa Marguns
7500 St. Moritz
Switzerland

SUITE 1021 • 1800 K STREET, N. W. • WASHINGTON, D. C. 20006 • (202) 872-0300
TELEFAX (212) 753-7248

EAST-WEST RELATIONS ON THE VERGE OF A NEW ERA:
THE REVOLUTION OF 1989

by

Paul H. Nitze

John F. Kennedy School of Government
Harvard University

December 11, 1989

Thank you, Dean Putnam, for that kind introduction. It is a
pleasure once again to return to the Harvard campus and discuss
the extraordinary events and consequent issues of the day.

## Introduction

The collapse of the Soviet Empire in the last few months can
justly be called "the revolution of 1989."

It has had a long history. Much of that history is
recorded in my book, *From Hiroshima to Glasnost*. But in my
remarks this evening, I do not propose to talk about the book. I
propose to focus on the new era that now approaches us -- the
changes in the Soviet Union and in Central Europe that are now
unfolding, their background, the opportunities they open up, the
dangers they could portend, and my tentative recommendations as
to the positions we should take on the principal related policy
issues now needing answers.

## *From World War II to the Triumph of Containment*

The genesis of the changes we are now seeing can be traced
back to the last time we were on the verge of a new era -- the
days when the eventual defeat of Hitler began to seem probable
and a number of us in Washington began to think about the postwar
world. We asked ourselves then, as we are asking today, what
kind of relations among the nations of the world we would like to
see established.

There was, of course, much debate and disagreement. One
difficult problem was how to treat Germany and Japan when they
sued for peace. Some wanted vindictive terms; others did not
want to repeat the errors of the Treaty of Versailles after World
War I, whose injustice and unwisdom they saw as having been the

1

[LCT]

principal cause of World War II.

Many felt another crucial error after World War I had been the failure of the United States to back President Wilson's concept of a League of Nations. At their behest, the Dumbarton Oaks Conference was called in 1944 to begin the process of creating the United Nations.

Subsequently, Dean Acheson and others addressed the creation of organizations to deal with a new world economic order, in particular the International Monetary Fund and the World Bank, later to be supplemented by the General Agreement on Tariffs and Trade, or GATT.

It was anticipated, however, that there would be a set of problems with which the United Nations and other international agencies would be unable to deal. One such problem was the growing rejection of the remnants of colonialism throughout the world. For the U.S. to apply its weight on these issues would offend our European partners and get us into issues for which we were ill-prepared. Thus, it was decided to rely on the British to deal with this and other similar problems.

But the most serious question was how we should view our postwar relations with the Soviet Union, for it was evident by that time that the two world wars had shattered the dominant position of Europe in the world and had left the U.S. and the U.S.S.R. as the two major powers. It was also apparent that Hitler's defeat would remove the cause of our alliance with the Soviets and make cooperation with this Leninist state, dominated by a ruthlessly totalitarian and expansionist dictator, much more difficult.

The majority view was that, despite all the obvious difficulties, we must exhaust every possibility of preserving our alliance with the Soviet Union into the peace, lest we begin down the road toward serious confrontation and, eventually, a third world war.

Thus, the three pillars of postwar policy became:

- helping build the United Nations and associated agencies;

- looking to the United Kingdom to manage international problems that could not be handled by the U.N.; and

- attempting to work out a modus vivendi with the U.S.S.R. despite the difficulties involved.

By 1947, however, it became evident that none of the three pillars had any chance of success. With continuing opposition

2

from the U.S.S.R. and the use by the Soviets of their veto in the
Security Council, the U.N. was becoming largely a forum for
public debate. It had effectively lost any influence on matters
where East and West disagreed.

It had gradually become apparent that the United Kingdom had
been so drained in its material, military and psychological
resources by its heroic stand during the two world wars that it
could no longer play the role our policy had envisaged for it.

And the evidence was becoming overwhelming that Stalin and
Molotov had no intention of collaborating with the West or of
working out just and equitable arrangements in Europe.

The Soviets insisted that their brand of communists achieve
total power in Poland and that all opponents be effectively
eliminated. They refused to negotiate a peace treaty covering
all of Germany, and insisted that all opposition to their stooges
be suppressed in their zones of occupation in East Germany and
Berlin. Eventually, the same fate overwhelmed Hungary,
Czechoslovakia and, with less opposition, Bulgaria.

In response to these developments, President Truman made
several key decisions in February 1947 that radically shifted
our policy toward the Soviet Union.

In 1946, George Kennan had sent from our embassy in Moscow a
report that became known as the Long Telegram. George had
described Stalinist policy -- its origins, its evils, and its
dangers -- and argued that Stalin's expansionism had become more
powerful as it fed upon its successes. It was his belief, and
mine, that if we were successful in containing that expansionism,
the Soviet people would eventually look inward and see what was
happening to Russian institutions and culture, and would withdraw
their support for Stalinesque policies.

By 1947, an increasing number of people were coming to share
George's views. They were also becoming concerned about Soviet-
inspired security threats to Greece and Turkey. When the British
government informed the President that it could no longer bear
the burden of supporting Greek and Turkish resistance to these
threats, Mr. Truman decided that the U.S. should undertake the
task. In short order, the Greek-Turkish Aid Program, the Truman
Doctrine, and the Marshall Plan were announced, and work began on
the creation of NATO. The implementation of the policy of
containment was put into place.

To maintain this policy over the next four decades required
great perseverance by the U.S. and our allies -- through the
Korean War, crises in Berlin and Cuba, and an extended Soviet
attempt to achieve military superiority. The turning point in
this long effort seems to me to have come in 1983, when NATO held

3

[LC]

fast and proceeded with deployments of INF missiles to offset
earlier Soviet deployments, despite a concerted Soviet campaign
to stop the NATO program, culminated by a Soviet walkout from
the INF negotiations.

For, shortly thereafter, the policy of containment began to
have its desired effect -- key Soviet leaders began to look
inward.

Three or four years ago, Mikhail Gorbachev told some of us
that, even before he became General Secretary of the Communist
Party, when serving on the Politburo under Andropov, he and his
colleague, Nikolai Ryzhkov, began to examine what was wrong with
the society the Party had created -- its institutions, its
practices, its economy, and its devotion to aggressive military
capabilities. There was much they did not like. They created
teams of experts to plan the programs that became glasnost and
perestroika, and to take a new look at Soviet defense
requirements and doctrine. The seeds of a new era were thus
planted.

## The Gorbachev Reforms

Gorbachev began implementing changes soon after becoming
General Secretary in 1985. At first, it appeared that he intended
only to make the existing system work more efficiently. But,
over time -- probably because he learned that limited change was
being out-paced by events -- he turned to broader, structural
reforms.

Did Gorbachev understand the significance of these changes?
Probably not. He was able to exploit the reforms in a brilliant
campaign to isolate and defeat his principal domestic opponents
and to win political approval in the West. But I doubt he
appreciated the breadth and strength of the forces unleashed, or
the difficulties he would face.

The aims of Gorbachev's reforms seemed to be several:

- To modernize the Soviet economy, primarily by
  introducing market forces;

- To restructure the Communist Party organization and its relationship to the government, presumably to increase efficiency and the responsiveness of the ruling apparatus to the views of wider groups within the U.S.S.R.;

- To deal sympathetically, but within strict limits, with
  nationalities seeking greater independence within the
  U.S.S.R. and the Warsaw Pact;

4

[L.C.]

- To reduce the burden of military expenditures on the Soviet economy, while maintaining fully adequate military capabilities, through a combination of unilateral actions and arms control negotiations; and

- By reducing the appearance of a threat from the U.S.S.R. to release the inherent centrifugal forces in the West and entice more significant assistance of various kinds from the outside world.

Gorbachev's efforts to date to attain all but the last of these objectives have met with spreading failure.

He has not been able to introduce market forces as he had originally planned. In the meantime, the economic situation in the U.S.S.R. has radically worsened. A prerequisite to a healthy market is to have a reasonably stable medium of exchange, with a ruble exchange rate that reflects the true value of the currency. This has eluded him. He recently reduced the rate at which tourists could buy rubles for local purchases by a factor of ten to a level that approximated the black market rate, but he left untouched the rate for the much more important commercial transactions. In addition, leasing of agricultural land has not produced the anticipated results, and many of the commercial cooperatives seem to have led to corruption, creating serious political problems.

Gorbachev's efforts to restructure the Party and the government have had some success in increasing efficiency and responsiveness. But the system still is subject to his ultimate personal control. Without that ultimate control, the situation could become unstable.

The problems with internal nationalities have grown far beyond anything Gorbachev anticipated. And the limits he earlier put on the extent of reform in Eastern Europe have been swept away by the political forces let loose by the discrediting of totalitarian communism.

Gorbachev has been able to begin a process of reducing the burden of military expenditures while maintaining adequate military capabilities. But that adequacy depends on forces whose reliability is being questioned in the light of the extraordinary political changes taking place.

Perhaps Gorbachev's greatest success has been with regard to his objective of unleashing centrifugal forces in the West and eliciting external assistance. There are, indeed, those who are suggesting a complete withdrawal of U.S. forces from Europe, as well as those who are proposing a Marshall Plan to assist the Soviet Union and Warsaw Pact in making the transition from

5

[LC]

communism to systems with greater diversity and freedom.

A crucial question is the extent to which Gorbachev continues to believe in communism as the essential ideology for the U.S.S.R. Everything he has said would indicate that he continues to cling to Marxism-Leninism even though he has lost confidence in its more absolutist versions.

Objective factors also make it difficult for a democratic political philosophy to get a toe-hold in the Great Russian parts of the Soviet Union. There is no democratic heritage, no free market experience, and the spirit of entrepreneurism that in any case is rare in the Russian people has been pretty well eliminated over the last three generations. An authoritarian form of government may be necessary in the Russian parts of the Soviet Union to avoid chaos. There is even a strong sentiment among them in favor of a return to autocracy.

In sum, Gorbachev and the rest of the Soviet leadership face immense problems, and his efforts to date to overcome these problems have, for the most part, fallen far short of success. In fact, these difficulties may prove insuperable.

There has been much discussion lately of the possibility that Gorbachev might fail and be replaced as Soviet leader. Such an event might be tactically significant, but I believe it no longer would be strategically significant. For any successor to Gorbachev would have to deal with today's situation -- with the whole panoply of Soviet problems and the constraints on policy those problems create -- as much as Gorbachev will have to do if he continues in power.

## Policy Implications

Given this radically changed and uncertain situation, what are the immediate policy questions and tasks facing us and our allies?

I would suggest that the most difficult, and also the most urgent, objective is to demonstrate that states that have for some time been under the firm and destructive control of totalitarian communist regimes can successfully make the transition to free and successful governmental systems reasonably responsive to their people. Poland is the immediate problem, but Hungary, East Germany and Czechoslovakia are not that far behind.

Poland, because Catholicism was not successfully suppressed, is culturally pretty sound. Its political orientation toward the West is also established. But are there sufficient cadres to make non-centralized agriculture, commerce and industry work? It will take much Western help to make success possible.

6

[L]

The West Germans are already working hard at providing necessary help. But is there sufficient time before rampant inflation makes the task unmanageable? In any case, a policy of concerted Western assistance for Poland's effort to overcome these problems merits wide support.

Similarly, I see no great issue regarding our policy toward other Warsaw Pact states that are attempting, or may in the future attempt, the transition to market economies and representative governments. They deserve our help.

But what should our response be if, despite the transition, they wish to remain members of the Warsaw Pact, whether to avoid Soviet disapproval and possible counter-action or for some other consideration? I see little reason for us to object, as I don't believe they would give the Soviets such cooperation as would materially affect our or our allies' security interests.

A new issue arises, however, with West Germany taking the lead, now with aid to Poland, and later with aid also to East Germany, Hungary, and Czechoslovakia. This indicates a primary role for Germany not only in respect to reunification but more generally in Central Europe as a whole. How will the European Community react to this development and, potentially, a leading role for Germany in assistance to the Soviet Union itself?

Three weeks ago the European Community countries met in Paris at the invitation of President Mitterand to discuss the possibility of German reunification. They all agreed, including Chancellor Kohl, that the time for German reunification had not yet arrived. For the time being, it was decided, nothing should be done to alter borders, although future German aspirations should not be foreclosed.

Within a week political developments in both East and West Germany changed the scene so dramatically that Kohl altered his position. Now he accepts as inevitable some form of unity between the two Germanies. Kohl now says there should be no timetable toward this union, but that it will come to pass.

The European Community now appears to have given its approval. West Germany today is the strongest country on the continent economically, and next only to the Soviet Union in the field of non-nuclear military capabilities. With the unification of East and West Germany and with the development of close relations with the countries of Central Europe, Germany's position in the European Community could become dominant.

How should we view this trend? I believe it calls for serious consideration. I doubt that the U.S. should, or can effectively, oppose it. The task of dealing constructively with

7

[L.C]

burgeoning German power must largely be that of the Atlantic community as a whole, although there is a necessary role for the U.S. as well.

Another difficult policy dilemma concerns our attitude toward those nationalities within the current boundaries of the Soviet Union that seek independence or greater autonomy. Here, our values come into conflict with our pragmatic interests, for, while we rightfully support the aspirations of all nationalities for greater self-determination, we must also beware the great danger that might arise should ethnic conflicts in the Soviet Union get out of hand. The possibility of chaos or civil war in a land where tens of thousands of extremely powerful nuclear weapons are stored is not to be taken lightly.

There is no way to resolve this dilemma in a completely satisfactory manner. I would distinguish between the Baltic states and other nationality groups.

The former were absorbed, contrary to their will, many years ago, and we have never considered their annexation to have been legitimate. To change that view now, in order to help Gorbachev survive, is in my view erroneous in principle and apt to be counterproductive in practice. Therefore, I disapprove of recent U.S. statements discouraging the Baltic states from pursuing independence at this time.

I would recommend a more cautious attitude, however, toward the Georgians, Armenians, Azerbaijanis and other nationality groups. We should maintain our support for self-determination in general, but we should avoid giving encouragement to secessionist movements. The primary thrust of our policy should be to object on humanitarian grounds to any use of excessively harsh means to suppress these groups.

What should be our policy toward Soviet attempts to restore their economy from its current breakdown? I do not believe that economic chaos in the U.S.S.R. is in the interest of the Russian people, in our interest, or in that of our allies. This is an important part of the world, with vast extent and a variety of talented peoples, many of them with a long history and ancient and productive cultures. Nevertheless, I would not recommend we provide extensive material economic aid at this time. Giving them contingent support for most favored economic treatment is quite a different matter.

At some time in the future, it is likely that the Soviet part of the world will be economically so organized as to be able to take advantage of modern management and technical advances. If it were to achieve efficiencies half of those now enjoyed by Western Europe, the United States, Japan and much of East Asia, the per capita income of the population of the Soviet Union would

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[L]

be many times what it is today.

But until those in charge in the Soviet Union cast off the ideological barriers that prevent them from accepting private ownership of land, of their homes, and of small businesses, there is little prospect of economic revival. Aid, when there are ideological barriers to its proper use, is generally ineffective.

Moreover, at the present time there seems to be a movement within the Soviet Communist Party to move away from further reform and toward a reimposition of communist discipline. There are indications that Gorbachev is threatening to reestablish his control over the media, and that many in the Party are concerned about their ability to win at the polls and fear that the trends toward accommodating public opinion have gone too far. There was even a suggestion, before Malta, that Gorbachev might present to President Bush the reasons why greater discipline in the Soviet Union was necessitated by the objective situation and ask his understanding of the measures he might need to take. It seems to me unthinkable that we might give any support to a resumption of repressive measures. The issue, however, did not come up at Malta.

On the question of stabilizing reductions of conventional forces in Europe, the policy of the West seems to need little, if any, change. NATO seemed to be making progress in developing a coordinated position for the CFE talks, and the negotiations between NATO and the Warsaw Pact were converging toward what could be a useful agreement. But now, with many believing that the threat has become remote, differences among members of NATO have again come to the fore. Much diplomatic work within NATO needs to be done to keep CFE on track.

Of the arms control agreements currently under negotiation a stabilizing START agreement is particularly important to the security of the United States. To achieve a truly stabilizing agreement means not only filling in all the holes that yet remain in the U.S. negotiating position but also resolving several key issues with the Soviet Union at the political level; they have held up progress toward genuine stability for too long.

It is my view that even if we were to conclude a START agreement along the lines we have been striving for for some time, it would not provide adequate assurance of stability for the long term. There are some thirty thousand nuclear warheads and thousands of delivery systems in the U.S.S.R. Our current position does not propose that any nuclear warheads be destroyed or that there be cuts in delivery systems of sufficient magnitude to provide confidence of long term stability.

The most threatening of the Soviet long-range nuclear systems are their heavy ICBMs. They are now modernizing those

9

LCI

missiles with a new system called the SS-18 Mod 5. These will be
the most modern, most destructive, and most potentially
destabilizing systems in the world.

Recently, Gorbachev has said that the tensions in Europe
over the last decade were caused by an erroneous decision by the
Soviet Union to deploy powerful missiles (i.e., the SS-20s) in
the center of Europe without considering the anxiety it would
cause to the continental European NATO countries. He said that
it was his realization of that error and his recognition that the
lesson applied more broadly that had caused him to propose
unilateral reductions in conventional arms in Europe and much
greater reductions if NATO were to agree to reciprocate.

I believe we should now point out the analogy between the
earlier Soviet error in deploying SS-20s in the center of Europe
and their current error in insisting on maintaining and
modernizing their heavy ICBMs. But we must recognize that it is
unlikely that Gorbachev will agree.

We should not lose sight of the dangerous forces that will
remain even if we succeed in concluding START and CFE agreements
as now projected. As long as 30,000 large and potentially
destabilizing nuclear warheads and long-range delivery systems
exist in the Soviet Union, someone in the West will have to
accept the task of deterring their use should the Soviet
leadership become uncertain or irresponsible. That task will
necessarily fall to the United States. No one else is apt to
relieve us of the burden.

If we are to carry that burden, there should be an
organizational structure through which we consult with our allies
concerning the steps we should take in maintaining the bottom
line of our common defense. NATO would appear to be the natural
organization through which to conduct such consultation.
Therefore, I think it important that we and our allies resist any
suggestion that NATO be disbanded, regardless of whether the
Warsaw Pact remains intact.

There are other organizational questions, as well. What is
the framework within which the manifold issues of the new world
facing all of us can best be handled? Today we have a rich
panoply of political, economic, national security, regional, and
other specialized organizations, within which a variety of
relationships have arisen, both on a geographic and political
basis. Which of these organizations are best suited to address
arising problems, and how might they be altered to more
effectively do so?

One key organization is the European Community. Two models
suggest themselves for the manner in which the EC might be
adapted to the new era. One approach would be to develop the EC

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in depth to become what would amount to a sovereign state controlling not only the economic, but also the political and military, actions of its members. Alternatively, such integration might be restricted to a few members prepared so to do, while concurrently arrangements in greater geographic extent would be developed to take care of the special needs of other countries, including the United Kingdom, the Scandinavian countries, and neutrals such as Switzerland and Austria. I favor the latter model. The EC members three days ago appear to have come to the same conclusion.

Another useful organizational structure is the CSCE which includes the non-aligned and the neutral European countries as well as the Warsaw Pact and NATO nations. As the Warsaw Pact falls apart the CSCE may have a more important role to play.

Finally, let me address the more general policy question of how we should view glasnost, perestroika, and their originator, Mikhail Gorbachev. Should we wish for their success? If so, how much help should we be willing to provide to aid their success?

I agree with those who argue that the success of glasnost and perestroika is in our interest, that it would likely lead, in the long run, to a more open, prosperous, less militaristic Soviet Union that evidenced greater respect for individual and national rights and played a more cooperative and less ideology-driven role in resolving international problems peacefully.

But I also believe that our ability to influence the outcome is limited. As Gorbachev and his colleagues have stated on many occasions, the success of perestroika depends on the Soviets themselves.

Furthermore, I believe it would be a mistake to tie our policy too closely to a single individual. We tried that in Iran with the Shah and in China with Chiang Kai-shek. In both cases, it backfired badly.

We should be positioned to deal effectively with Gorbachev's successor, should a change of leadership occur. And, as I indicated earlier, I believe that any successor would be forced by events to follow a foreign policy not too different from Gorbachev's. This derives from two factors. First, the force of many of the changes we have seen follow each other so dramatically over the last few months has created such an alteration in the world scene that Gorbachev or any Soviet leader will have to adjust to it. Second, any Soviet leader will be constrained by much the same panoply of internal problems that have so substantially influenced Gorbachev's policies.

Nevertheless, we know Gorbachev and have had experience in dealing with him. Any successor would be bound to present

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greater uncertainties. Therefore, we should welcome success for
Gorbachev. But I also believe we are justified in exercising
caution as we continue to explore the hopeful possibilities that
currently exist.

Conclusion

The passing of the postwar era and the new world which we
are approaching present us with a new mix of challenges and
concerns. As we celebrate the revolution of 1989 and the triumph
of our policy of containment, we cannot afford to postpone the
development of a new set of policies to address this new world
we must take advantage of the myriad opportunities that present
themselves and deal with the new problems that are arising and
the dangers that remain.

With creativity tempered by prudence, we can help in the
creation of a safer, more peaceful, and more rewarding world.

-0-0-0-

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Reinhard A. Nitzl
101 West 85th Street, 2-6
New York, New York 10024
(212) 595-1624

MAR 07 1989

February 28, 1989

Mr. & Mrs. Henry A. Kissinger
1800 K Street, N. W.
Suite 400
Washington, DC 20006

Dear Mr. & Mrs. Kissinger:

A gentleman's gentleman. Now there's a term with tradition.

Or, in today's world, perhaps a lady's assistant.

We all know him, not only from real life but also from stage, screen and literature. Sometimes salaried, sometimes simply a friend, i.e., Sherlock Holmes's Doctor Watson -- but what exactly does the gentleman's gentleman do? Well, that's up to you. Consider, however...

The gentleman's gentleman, or lady's assistant, provides you with the
most important commodity of all: time.

In addition, if you feel you can discuss issues of significance with him, the gentleman's gentleman may contribute to a critical asset: the quality of your judgment.

I am a gentleman's gentleman and seek a position. Resume upon request, but generally, U.S. citizen, born and educated in Germany, academic gynnasium and university with a strong U.S. background in interior decoration and business management.

I attach a list of appropriate activities. They evolve, however, with the relationship -- you will define the position. Clearly, many tasks on the list might be handled by your butler, chauffeur, secretary or even spouse. But only the gentleman's gentleman can do it all.

Mr. & Mrs. Kissinger, if the idea has merit, please give me a call.

[L]

THE GENTLEMAN'S GENTLEMAN -- SOME POSSIBILITIES

The role of gentleman's gentleman has traditionally included sufficient
respect to permit you to discuss complex matters. I have the background,
discretion and judgment to fill that role.

Many other activities may be involved. For example:

**BALANCE YOUR CHECKBOOK -- VERIFY INVOICES:** A major time saver.

**MONITOR INVESTMENTS AND REPORT:** Many enjoy tracking their investments. For those who don't, however, it is a time-consuming activity. Having had complete financial responsibility for a business, I am equipped (with your guidance) to perform this function.

**SHOPPING:** Some enjoy this. Many don't. Either way, who has the time?

* Clothing. You may do this. Your spouse may do it for you, or your tailor may come to you. Any way you cut it, time is involved. I know style and will learn your taste.

* Gifts. Again, others may do this for you. However, their time too is precious. Even perusing catalogs takes time. Yes, there are services which will do your shopping for you -- without knowing your taste and without securing the best price for you.

**DRIVING:** Your gentleman's gentleman is not a chauffeur. On the other hand, if it seems appropriate, why not?

**SUPERVISION OF PAINTERS, PLUMBERS, INTERIOR DECORATORS, AND IN THE COUNTRY, YARD AND OTHER MAINTENANCE PEOPLE:** Monitoring such people to ensure good work, on time, at a reasonable price can be not only a time burner but also an exercise in frustration. I'm an expert in the area. You own a yacht, a second home? Who inspects and checks on them while you're away?

**ESCORT FEMALES TO SOCIAL FUNCTIONS:** From time to time, particularly if your business requires travel, this need arises. Who better to assist? I know the social scene, can move in it, and have no problem with the role of escort.

**ACTIVITIES SCHEDULING, APPOINTMENTS, RESERVATIONS:** Obviously. To be sure, your secretary may do this for you and your family, and if so -- fine. On the other hand, she may not be available all the time.

**COUNSEL CONCERNING RESTAURANTS, SHOPS, THEATRE AND CULTURAL EVENTS:** I know New York. And if you set me down in Palm Beach or wherever, I learn it -- fast. Europe? I am European.

* * * * *

Clearly, this is just a smattering of ideas. How is *your* time diverted from the *important* activities? What your gentleman's gentleman does, you work out together as confidence evolves.