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PASTOR GENERAL'S REPORT, JULY 9, 1982
PAGE 5
would reduce Europe's total energy imports from the unstable
Middle East].
Sixteen days after tanks rumbled through Warsaw last December 13,
Washington imposed economic sanctions against Russia, which it
regarded then as now as directly responsible for Polish martial
law. Some of those sanctions were aimed at the projected gas
pipeline. General Electric was banned from supplying $175 mil
lion worth of parts for turbines to propel the gas along the
pipeline. A license for Caterpillar Tractor Company to export
$90 million worth of pipe-laying equipment to the Soviet Union
was canceled.
West European firms, and politicians, were appalled. Several
European firms had signed pipeline contracts, but since they used
parts built under license from GE and Caterpillar, their con
tracts were thrown into question. The firms involved included
John Brown, a British engineering firm, with a $184 million con
tract for 21 turbines, the West German concern AEG-Kanis, with a
$261 million contract for 47 turbines, the Italian firm Nuovo
Pignone, with a contract for 19 turbines.
As the Versailles summit approached, Western European leaders•••
seemed to salvage the situation••••[At Versailles itself, they]
went along with the Haig line of stepping up credit restrictions
on East-bloc deals in return for a softer U.S. line on the pipe
line deal. There was talk of dropping the GE ban. There were
rumors of behind-the-scenes deals between Reagan and European
heads-of-state to allow firms access to missing American equip
ment.
Then, 10 days later,� Reagan Administration drop ,=, d its bomb
shell on the entire proJect. It extended its sanctions embargo
to Europein""subsidiaries of U.S. companies and said no company
abroad could use licenses from U.s. companies to build vital
pipeline equipment.
Europeans reacted with outrage. Not only are billions of dollars
involved. Not only are thousands of jobs at risk in economies
staggering under unemployment far higher than in the United
States. Matters of principle are at stake. Europeans say Wash
ington is dictating to them. They say pipeline sanctions are
another attempt--as in antitrust actions--to impose U.S. laws and
policies oa other governments. Reagan, they say, is hypocritical
in blocking European deals with the Soviets while eagerly selling
American grain to Moscow.
A week after the extension of sanctions, Haig resigned. A day
after Reagan's action, West German Chancellor Helmut Schmidt told
a u.s.-west German seminar on security: "You had better
be
care
ful how you choose your words and not be emotional about what is
really important in East-West relations if you want to keep your
armies here and want to preserve stability."
Belgian Prime Minister Wilfried Martens drafted a Common Market
communique bluntly blaming Washington for putting trans-Atlantic