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COKFIBtHTIAL NOFORM
USSR: Protecting Foreign Tnveataent
Moscow recognizee that It lust provide aoae protection for foreign firms If it Is to encourage large-scale Investment In the USSR. The Soviet leadership, therefore, Is seeking to establish bilateral Investment treaties with many of Its major Vestern trading partners. Such treaties are designed to reduce political or nnimtrvrisk that political or military conditions say preclude settlement of obligations to foreign Investors and oredltora.
To date, the Soviet leadership has signed ^vestmenttreaties uirh Finland. Westm, addition ItroT^ragreement Kith the reportedly is neMUflllM treaties wifi, France and Ito ly. and ia wooing Japan and the united States to consideract.
o The agreements provide foreign investorsn fty^t
. iq-toi wnfland assurances or
it Ion.
o Thev also make some effort to nun,
ntsV the rW^Mn * earnings by the Western-partner, and lhe Unnlsh pact, inparticular, ensures the supplies of Inputs to the Joint venture, mmmmmmmi
^ Hoscow's problem Is that Western firma are only In part apprehensive about "politicalut are very concerned about financial losses which may result froa eilitlng Soviet legislation and the unsettled 'AooTOlIC Climate. The aureeaents llkelv allowrans fW nf Mrd currency earnedoint venture ratherillingness by Hoaoow to convert ruble earnings froa domestic sales Into hard currency.
Thus, most Vestern firms are reluctant to Invest company fundswith uncertain returns. Consequently, many Joint ventures have founded with combined partner equity contributions that are tooInitiate or sustain operations. Joint ventures have looked westwardbut Western bankers have been .reluctant to lend because
costs.
o While Soviet law ensures that Soviet and Western partners are not liable for obligations incurred by the joint venture, landers are likely to assess carefully the experience of both. Soviet reluctance to provide useable financial Information on Soviet entaroriai t aimoulj for Una tarn bankers to det^ralnw the rfsfca
Tl morericun lor
and rjenefTtsofDotentlal Joint ventures.
In many cases. Joint ventures could have difficulty paying off hard currency loans because ruble profits are not convertible and SovleUproduced goods are difficult to market In the West.
esult, Western banks are looking to the Sovietthe ^centralguarantee repayment of loans, but Moscow has yet to aaHetlOBI1 n
for Release
FEB 0
Areas of Potential Agrecnant on US-Soviet Counterterrorlsa Cooperation
counterterrorlsa cooperation, Moscow's ooncernerceived growing threat froe doBcatlc terrorists could give the US more leverage In future discussions. Recent US-Soviet discussions have shown the most agreement In areas of overlapping Interests, such aa airline security terrorist attacks against dlplenaU. The Soviets themselves naVe Suggested otrier areai for potential cooperailonj
oviet academician suggested In August that the US and USSR coordinate public statements on terrorist Incldenta. Including Jointly condemning acts of violence directed against innocent bystanders.
He also suggested that the United States and the Soviet Union cooperate In Halting transfera of oertaln kinds of weapona used by terrorists.
o At talks earlier this year tbe Soviets showed interest In the Americana' suggestion of chemfcaiigto help trace how they fall into terrorists' hands.
The last two ideas ere alaost certainly eiploratory in nature, but they suggest that the USSR la seriously seeking ciuon areas to eitend the discussion. The first areaublic diplomacyrobably offers the greatest potential for near-term cooperation. The US, for example, could urge the Soviets to:
o raise their profile in public statements supporting certain Latin
[
American countries' struggle against narcotics-rela ted terrorism. They could hype any counterterrorist angle IB their eitenslve military relationship with Peru.
o make their blanket statements condemning terrorist attacks moreInvolved groups by
o publicise theiropposition to specific. rTTgWfla:hey have avoided coming out of the closet and taking any heat.
o modify their policy of publicly defending Qadhafl'a acquisition of
tmrAna and nratJindlne. In ttxtt fW nf nrlUALa flailMlHHgfca the contrary, Ignorance of what he was doing at the Rabta plant. LaaamTfl
Original document.
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