On the eve of a decisive Cabinet-level meeting, two of the nation's largest companies have appealed to President Reagan to ease his ban on the sale of oil and gas equipment to the Soviet Union in the interest of saving jobs for Americans and keeping French and Japanese firms from capturing the business.
"We now have a situation where the Soviet market is closed to us; the Japanese have the business; the unemployment lines in Peoria, Ill., have grown longer, and it appears that the Soviet natural gas pipeline to Western Europe will be built anyway," wrote Chairman Lee L. Morgan of Caterpillar Tractor Co., which was denied permission to sell the Soviets $90 million worth of pipe-laying equipment.
And in a separate letter to Reagan, Vice President P. S. Peter of General Electric warned that continuation of the trade sanctions "would reward the French, who at Versailles were more resistant to credit restrictions on Russia," by enabling a French firm to take over contracts for turbine rotors denied to GE in the United States.
The letters were given to The Washington Post yesterday by sources supportive of the president's efforts to delay construction of the Soviets' Siberian natural gas pipeline.
At a National Security Council meeting today, the president is to consider allowing U.S. companies to go ahead with deals arranged with the Russians before his Dec. 29 trade sanctions.
But a strong faction in the administration favoring economic pressure on the Kremlin argues that an easing of restrictions, adopted now, would be out of line with the tough position the president took on Soviet trade at the Versailles economic summit earlier this month.
Administration officials, citing language in the final Versailles communique on "limiting" western financial credits to the Soviets, have portrayed this as an important personal victory for the president.
A report on the Versailles credit discussions ascribed to Henry Nau of the NSC staff declared, for example: "The U.S. obtained agreement to the word 'limiting' only after a long and tough discussion among the heads of government and state and only after French President Francois Mitterrand was completely isolated by his colleagues. We should therefore not underestimate what we achieved by obtaining this agreement on the word 'limiting.' "
The report describes Reagan and British Prime Minister Margaret Thatcher "slugging it out" with Mitterrand, West German Chancellor Helmut Schmidt and Canadian Prime Minister Pierre Elliott Trudeau and finally overcoming their strong objections to any mention of "limiting" financial credits to Moscow.
"We should not underestimate the psychological and political benefits of a statement by summit leaders which for the first time acknowledges the need to limit economic activity with the Soviet Union and Eastern Europe . . . . The use of such language by heads of government can have a discouraging effect over time on East-West trade, not unlike the encouraging effect detente language had in the 1970s," the staff report concludes.
Adding to the difficulties faced by the companies in obtaining relief from the president is the pressure from Republican ranks for a continuing tough line with the Soviet Union.
Sen. William L. Armstrong (R-Colo.) sent a letter to Reagan yesterday saying that an easing of trade sanctions would "strike a savage blow at the world crusade for democracy" announced by the president in London. Armstrong is to chair Senate Banking subcommittee hearings today on the use of concentration-camp labor in Soviet pipeline-building projects.
However, the letter from GE Vice President Peter contends that the concessions won from the Europeans have created "the right climate to relax the pipeline sanctions by grandfathering contracts in existence at the time of the Polish upheaval" last December, when Reagan announced the sanctions.
Peter said that if the Soviet Union continues to be prohibited from purchasing GE's U.S.-built turbine rotors, the Russians will turn to the French company Alstholm-Atlantique, which has a GE license.
Peter said that, in any case, the sanctions "will not stop or materially delay the pipeline."
In his letter, Caterpillar Chairman Morgan said that the Japanese firm Komatsu, the leading competitor to sell the Russians pipe-laying equipment, has moved into the gap and sold Moscow 900 pipe layers since late 1981. Although this business has now been lost, Morgan said, easing of the restrictions would enable Caterpillar to take advantage of "potential sales opportunities" resulting from Soviet plans to construct "a large number of pipelines over the next five years."