[I went on to congratulate him for the role he had played in the “lessening of tensions”—diplomatic blandishment, pure and simple—and then itemized some of the obstacles we had to surmount.]
NK: As for lend-lease, we paid for that with our blood. Do you know how many soldiers we lost in the war? Twenty million.
DR: We are very mindful of the tremendous human sacrifices that your country made, but our claims in this matter do not have to do with the war or with the war effort; the transactions took place subsequent to hostilities.
NK: [Speaking slowly, with his eyes cast down, occasionally even closed.] We must proceed from the major issues. You are a capitalist and a Rockefeller. I am a Communist. You are a banker. I was a miner. You represent a capitalist nation, while I speak for the Soviet Union. Whatever you say or do, you sympathize with the strengthening of capitalism. Whatever I say or do, I sympathize with the cause of communism, which I believe to be the strength of the future, the up-and-coming philosophy. We believe capitalism has reached its sunset. The time will come when she [here he pointed to Neva] will be allied with me and my ideas. But we believe that while both systems do continue, we must work for peaceful coexistence. You say we threatened you in Cuba, but we feel threatened by you in Turkey, Denmark, Norway, and Italy, and by your allies. It is a fact that your allies are closer to us than Cuba is to you. Some of their territories are contiguous to ours. But we’re not afraid of that—we can destroy you within a matter of minutes. It is the possession of nuclear weapons that determines the conditions today and makes peaceful coexistence so necessary. I know that you are aware that we are not afraid of you or your allies, or of the fact that you have arms near our borders. We sympathize with Cuba. We feel that she has taken a significant road of development away from the declining order of capitalism. Capitalism, as Marx understood so profoundly, is not destined to survive. We lay the blame not on Cuba or on any socialist system but on the weakness of capitalism for the new developments in all these countries.
And about trade: If you want to trade, good; if not, you needn’t. We can live quite well without trade. Its usefulness lies in its political implications, which we believe will lead to the consolidation of peace in the world.
DR: I agree with you on the necessity for peace in the world. This is the reason I am here. This is the reason I am grateful to you for being generous enough to give me so much of your time. It is true, as you say, that there are irreconcilable differences between our countries. It is true, as you say, that either of us can destroy the other. It is true that we are both strong and independent peoples who are willing to accept death rather than subjugation. The only solution is to find more means of contact through which we may avoid unnecessary and irresponsible conflicts which could lead to disaster.
NK: I agree with you.
DR: Good.
We ended our discussion with mutual pleasantries, Khrushchev saying he appreciated the fact that I, “a man who owns such vast assets,” understood the necessity for peace.
It had been an extraordinary meeting—tough, at times combative, even hostile. But despite the difficult nature of the issues we had discussed, I never sensed a personal animosity toward me. On the contrary, I came away feeling a great respect for Khrushchev, and I think the feeling was reciprocated. I also came away from our encounter with a strong sense—call it a banker’s instinct—that the top Soviet leadership wanted to expand financial and commercial ties with the United States, and despite Khrushchev’s confident assertions about Soviet self-sufficiency, I felt his nation was confronting serious economic problems.
DEBRIEFING LYNDON B. JOHNSON
Soon after my return I sent a copy of Neva’s notes to Secretary of State Dean Rusk, who shared them with other senior officials in the Johnson administration. In late August, President Johnson wrote, personally inviting me to come to Washington immediately after the Democratic convention “so that we can discuss your trip.”
We met at the White House in mid-September. I already had a good relationship with the President. Johnson was extremely bright and had an intuitive grasp of the politics of any situation with which he dealt. While I disagreed with the cost and invasiveness of his “Great Society” programs, I liked him personally. LBJ was easy to work with as long as he was not crossed on a sensitive subject.*
At our meeting in the Oval Office, Johnson questioned me about Khrushchev’s mood and his attitude toward the United States. Few Americans had met personally with Khrushchev up to that time, and the President and his advisors wanted my assessment of him and the potential for change. I told them that beneath Khrushchev’s tough and dogmatic language, he was clearly opening the door to further contact with the United States.
The President seemed reassured by my account and agreed that we needed to take concrete steps to expand the opportunities for trade and other commercial ties with the Soviet Union. However, reelection was LBJ’s top priority, and he would not do anything openly until after the November elections so that Goldwater could not accuse him of being “soft on Communism.”
THE DARTMOUTH CONFERENCES
As the two superpowers circled each other warily during the late 1960s and early 1970s, private citizens and nongovernment groups began to play a greater role in the effort to stabilize and improve relations between the two countries. The Dartmouth Conferences were particularly important in this process.
For Dartmouth’s first decade, Norman Cousins dominated the selection of American participants, and more often than not they were his friends or celebrities of one kind or another: Margaret Mead, Marian Anderson, Bill Benton, James Michener, and Agnes deMille. While there was a smattering of academics and businessmen, few of them could be considered Soviet experts—George Kennan and Marshall Shulman being notable exceptions.
In 1971 the Kettering Foundation assumed principal responsibility for funding the conferences, with additional support from the Rockefeller Foundation and the Lilly Endowment. At a time when American and Soviet diplomats were discussing treaties on defense spending and the control of antiballistic missiles, Dartmouth began to be viewed in official circles in both Moscow and Washington as a serious forum that might contribute to the broader dialogue. Celebrities disappeared from the American roster and were replaced by experts on Soviet affairs such as James Billington, Richard Gardner, and Paul Warnke; scientists such as Paul Doty of Harvard and Harold Agnew of the Los Alamos Laboratory; and businessmen whose companies had an interest in the Soviet Union, such as General James Gavin of Arthur D. Little, G. William Miller of Textron, and William Hewitt of John Deere. A number of U.S. senators, including Frank Church, Mark Hatfield, Hugh Scott, and Charles (Mac) Matthias, also attended.
There was a comparable change on the Soviet side. Minor Russian luminaries and literary figures were supplemented by members of the Supreme Soviet; senior governmental officials; renowned academicians who specialized in the study of Europe, North America, and the Middle East; and retired military officers. Georgi Arbatov, head of the U.S.-Canada Department of the Soviet Academy of Sciences, assumed principal responsibility for the Soviet group in the early 1970s.
During the first half-dozen Dartmouth meetings, the temptation to use them for propaganda and ideological posturing got in the way of substantive discussions. Speaker after Soviet speaker would rise to denounce U.S. policy in the Middle East, Vietnam, and Europe; to denounce the power that Zionists had in the United States; or to reaffirm his belief in various aspects of Marxist-Leninist thought. Anyone familiar with the Soviet manner of discourse knew that these set pieces were arranged in advance and made partly to prove to their comrades that they were being appropriately tough. I noticed, however, that in small group discussions most of the party line rhetoric was dropped, and we actually had useful discussions on practical steps that could be taken on many issues.
During the Kiev meeting in the summer of 1971, I asked Georgi Arbatov to go for a walk with me. I told him that our side found these exaggerated attacks
offensive and counterproductive. I suggested we open each conference with a brief gathering that would be followed immediately by meetings of smaller groups, which would discuss specific subjects such as defense spending and trade. Arbatov agreed, and we adopted the new format for all subsequent conferences. Soon after that the Kettering Foundation asked me to take on greater responsibility for organizing the meetings, which I agreed to do.
The new format and the participation of experienced and knowledgeable individuals from both countries resulted in substantive discussions that had a direct influence on Soviet-American commercial negotiations during the first half of the 1970s, the high point of détente. After that date the growing stalemate in negotiations over nuclear arms reduction, defense spending, and trade had a negative impact on the tenor of the Dartmouth meetings. However, even as relations between the superpowers cooled, conference participants continued to deal with one another forthrightly and directly. The level of discussion on all the salient issues remained high, but convincing our respective governments of their merits became much more difficult.
Dartmouth provided me with an opportunity to get to know a number of Russians in an informal setting. I was particularly impressed with Yevgeni Primakov, who later became Russian foreign minister, and with Vladimir Petrovsky, who rose to deputy secretary-general of the United Nations.
While the Dartmouth Conferences did not change the course of history, they did provide an arena where critical issues could be discussed and new ideas proposed. Each of us who participated, whether American or Russian, learned something about the beliefs, motivations, and aspirations of our counterparts, which made it impossible to think only in the rigid ideological categories of the Cold War. Dartmouth broke down barriers and made change possible.
TRADING WITH THE “ENEMY”
Even before the Dartmouth group began to play a role in Soviet-American relations, I had become one of a small group of American businessmen who advocated increasing trade with the Soviet Union and her Eastern European satellites. From a purely economic viewpoint, the United States did not need Soviet trade. Its usefulness to us lay in its “political implications,” as Khrushchev had noted during our meeting.
It is important to remember that from the 1950s until well into the 1980s few people thought Communism would collapse or the Soviet Union itself would disintegrate. During those years people on both sides of the great Cold War divide were seeking practical ways to lessen tensions.
I made my first public statement on the issue of East-West trade in San Francisco in September 1964, shortly after I had met with Khrushchev. In it I made the following observations: If two great and rival systems are somehow to endure side by side on this planet, then each must know more about the other, and that knowledge must extend beyond the narrow confines of pronounced ideology. We must know people, their attitudes, their manner of life, the social organism that they have created and that in turn has given them shape. We need to know their history, their culture, how they think and react, and what aspirations we hold in common that may be irreconcilable but not necessarily intolerable.
Trade could be a vehicle for achieving this objective. Thus I said in the same speech that a greater trade in material goods should be in the forefront of efforts to improve our relationship with the Soviet Union.
President Nixon regarded broadening commercial intercourse with the Soviet Union an integral element in his policy of détente. The Soviet leadership, hungry for access to the modern technology and capital resources of the West, were eager to oblige, and the framework for a trade treaty was incorporated in the agreements signed at the 1972 Moscow Summit that inaugurated a “new era in Soviet-American relations.” As part of the “new era,” a Soviet-American Commission was created to work out the details that would lead to most-favored-nation (MFN) status for the Soviets.
To accomplish these general goals, the State Department set up a working group with the Russian Ministry of Foreign Trade and the Bank for Foreign Trade, and in June 1973 the two nations signed a protocol creating the U.S.-USSR Trade and Economic Council, a private group that would seek to foster normal economic relationships between the two countries.
I was not among those selected to serve. This bothered me because I felt my active involvement with the Soviets over the past decade entitled me to be a member. I never discovered if my omission was the result of a deliberate action by a government official or if others on the council preferred not to have me included for competitive reasons. I am inclined to believe the latter was the case. When I asked Secretary of Commerce Frederick Dent about it, he told me that since I was already serving on the U.S.-China Business Committee, everyone assumed I would not be interested in serving on the one dealing with the Soviet Union. Since the question had never been posed to me, I doubted the truthfulness of this explanation. In any event, Soviet minister of foreign trade Nikolai Patolichev indicated that my omission was “preposterous,” and in the end Henry Kissinger intervened to have me added to the group.
The council made significant progress initially, but then our work collided with American domestic politics. The Jackson-Vanik Amendment to the Trade Reform Act of 1974 tied the grant of MFN status to Communist nations to freedom of emigration for their citizens, particularly the right of Soviet Jews to emigrate to Israel. The amendment was aimed directly at the Soviet Union, and its inclusion made Leonid Brezhnev furious. In response to quiet pressure from Henry Kissinger, he had already substantially increased the number of Soviet Jews allowed to emigrate. He felt entitled to a positive response from our side, not punishment. Faced with the amendment and the denial of MFN, Brezhnev refused to sign the trade accord. He also reversed course on Jewish emigration and imposed an even more restrictive policy. In the end the amendment not only killed any possibility of a trade accord between the United States and the USSR, but it also effectively ended Jewish emigration from the Soviet Union.
Many experts date the end of détente to this shortsighted congressional action, and I agree with them.
THE FIRST AMERICAN BANK IN THE SOVIET UNION
My conversation with Khrushchev in 1964 made me keenly aware of the Soviet desire to expand commercial and financial ties with the United States. I was eager to see this happen and to have Chase play a role in the process. Historically, Chase was the leading American correspondent bank for what we called in those days the “socialist markets”: the Soviet Union and the “COMECON” nations of Poland, East Germany, Czechoslovakia, Hungary, Bulgaria, and Romania. Chase had long maintained relationships with both the Soviet Central Bank and the Bank for Foreign Trade, and we had also served as the lead American bank for Amtorg, the Soviet agency that purchased supplies for the Red Army during World War II. However, in the intervening years Chase had done little business with the USSR.
Our big breakthrough came when we served as one of the lead American banks in financing the billion-dollar Soviet grain deal of 1971. The following year we began discussions with Soviet authorities about opening direct operations in Moscow. In November 1972, Chase received permission to establish a representative office—the first American bank to receive a license.
We located the office at One Karl Marx Square, officially opening for “business” in May 1973. I put business in quotation marks because our activities there were tightly circumscribed, though I hoped that with time they would be allowed to expand. I had originally proposed to Ambassador Anatoly Dobrynin that we assign James Billington to head the branch. Jim, a Russian expert who spoke the language fluently, was then serving the Chase as full-time advisor on Soviet matters (he subsequently became the Librarian of Congress). Dobrynin told me politely that it wasn’t necessary to send anyone who spoke Russian; they had excellent interpreters, whom they would provide. It might be more appropriate, he said, to send someone else. Later on, Dobrynin jokingly told me that we should be less demanding of the interpreters; after all, he said, they not only had to work for Chase all day, they had to stay up all night writing
reports for their supervisors in the Ministry of the Interior.
Chase’s gala Moscow opening reception at the Metropol Hotel was an enormous success, not least in terms of the size of the crowd. We attracted every Communist functionary in Moscow; they swarmed like locusts, and in a matter of minutes the tables, covered with delicacies imported from abroad, were literally picked clean, and hardly a drop was left in any of the bottles of wine and vodka.
The Soviets gave permission to City Bank and several other American banks to open representative offices in Moscow soon after. While the Soviet market never developed for any of us, the symbolic significance of Chase—the “Rockefeller Bank”—being the first U.S. financial institution in the Soviet Union could not be denied.
CONVERSATIONS WITH KOSYGIN
I visited Moscow almost every year during the 1970s, either for Dartmouth Conference meetings or on bank business. My principal government contact during that time was Alexei Kosygin, one of the USSR’s most important political figures. Kosygin had participated in the coup that overthrew Nikita Khrushchev in 1964. A tall, thin, and rather sad-faced man, Kosygin was an able manager who had done wonders administering the unwieldy Soviet economy. By the time I met him, he had lost the power struggle within the Kremlin to Communist Party chief Leonid Brezhnev and had been subordinated to the position of premier—the chief operating officer of the Soviet economy.
While my talk with Khrushchev had become a debate on the relative merits of our respective ideologies and philosophies, my conversations with Kosygin were always pragmatic and business-oriented. In retrospect, the substance of these discussions was illuminating because of what they implied about the potential economic relationship between the United States and the USSR.
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