Foreign relations of the united states 1969–1976 volume XXXVII energy crisis, 1974–1980 department of state washington
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- 152. Summary of Conclusions of Special Coordination Committee Meeting
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151. Memorandum of Conversation 1 Washington, May 18, 1978, 1 p.m. SUBJECT Secretary’s Meeting with Saudi Foreign Minister Prince Saud: Luncheon Session PARTICIPANTS
His Royal Highness Prince Saud al-Faisal bin Abd al-Aziz, Minister of Foreign Affairs of Saudi Arabia Ali Abdallah Alireza, Ambassador of Saudi Arabia Sheikh Abdallah Alireza, Deputy Minister for Economic and Cultural Affairs, Ministry of Foreign Affairs of Saudi Arabia Dr. Nizar O. Madani, First Secretary, Embassy of Saudi Arabia
The Secretary Andrew J. Young, Permanent Representative of the United States to the United Nations
Alfred L. Atherton, Jr., Ambassador at Large Richard N. Cooper, Under Secretary for Economic Affairs Lucy Wilson Benson, Under Secretary of State for Security Assistance, Science and Technology Richard M. Moose, Jr., Assistant Secretary of State for African Affairs Harold Saunders, Assistant Secretary of State for Near Eastern and South Asian Affairs John C. West, American Ambassador to Saudi Arabia William B. Quandt, National Security Council William R. Crawford, Deputy Assistant Secretary of State for Near Eastern and South Asian Affairs Joseph W. Twinam, Director, Office of Arabian Peninsula Affairs, Bureau of Near Eastern and South Asian Affairs (Notetaker) [Omitted here is discussion unrelated to energy.] Turning to the U.S. energy picture, Mr. Cooper noted that the Pres- ident’s energy program has been before the Congress a year, that three of the five key sections of the package have been agreed to, 2 and that the fourth, natural gas price controls, appeared to be within 48 hours of agreement. The final section is the very controversial proposal of a do- mestic crude oil tax designed to raise domestic oil prices to the world 1 Source: National Archives, RG 59, Central Foreign Policy Files. Secret; Nodis. Drafted by Twinam. The meeting was held in the James Madison Room at the Depart- ment of State. The full text of this memorandum of conversation is scheduled for publica- tion in Foreign Relations, 1977–1980, volume XVIII, Middle East Regional; Arabian Peninsula. 2 These included measures dealing with public utility and regulatory policies, con- servation policy, and power plant and industrial fuel use. 365-608/428-S/80010 484 Foreign Relations, 1969–1976, Volume XXXVII price level in order to encourage conservation. 3 This may be worked out in the Congress in four to six weeks but we must think about alter- natives if it does not pass. One alternative would be to impose an im- port fee on crude oil at a level which would raise the average weighted price for all crude consumed within the United States to that price which would have prevailed had the domestic crude oil tax been passed. Mr. Cooper noted that Saudi Oil Minister Yamani had publicly expressed reservations about U.S. imposition of an import fee and he stressed that this is only a second-best alternative to the crude oil tax and that it is being considered at the technical level with no Presidential decision having been taken. Prince Saud said that Yamani obviously had been referring to the OPEC precedent that whenever industrial countries raised tariffs on oil, OPEC always increased oil prices. He cautioned that imposition of a U.S. tariff on oil to solve a domestic problem would be misinterpreted and misused abroad, that rather than solving domestic problems it would create other problems internationally. After Mr. Cooper had stressed that a U.S. import fee would not affect world price, in response to Ambassador Atherton’s question whether the imposition of a tariff by only one country would cause OPEC to raise the world price, Prince Saud said it would if that country were the United States. The Secretary noted the importance to the international economy of our cutting down on oil consumption and the consequent need for the United States to raise the price of oil consumed in this country one way or another. Mr. Cooper noted that we are also looking at other al- ternatives and will want to consult closely with Saudi Arabia, recog- nizing that the OPEC reaction is very important. Ambassador Young stressed that it is not certain how the Presi- dent will finally act but that in an open society there is a need to discuss all options publicly. Mr. Cooper added that there is of course a link between our problem of increased oil imports and turbulence in international finan- cial markets. Prince Saud noted that the Europeans are very anxious about what the United States is doing about its economic situation. Minister Alireza noted European concern about the dollar. Prince Saud asked if the Economic Summit can’t do something to deal with these problems. The Secretary noted the importance of the Economic Summit, stressing that each of the industrialized countries must contribute in its own way to the improvement of the overall international economy. In so far as the United States contribution is concerned, the key issues are 3 Reference is to the Crude Oil Equalization Tax. 365-608/428-S/80010 February 1977–January 1979 485 whether we can conserve energy and control inflation. We need to do both as our share in contribution to overall world economic progress. [Omitted here is discussion unrelated to energy.]
1 Washington, June 6, 1978, 4–5:15 p.m. SUBJECT Petroleum Supply Vulnerability Assessment PARTICIPANTS
Richard Cooper Dale Meyers Under Secretary for Economic Affairs Under Secretary for Energy William Crawford OMB Ambassador at Large Eliot Cutler
Associate Director for Natural Lynn Davis Resources, Energy, and Deputy Assistant Secretary/ISA Science
JCS CEA Lt. Gen. William Y. Smith William D. Nordhaus Assistant to the Chairman Member, CEA
Robert Bowie Samuel P. Huntington Director, National Foreign Sam Westbrook Intelligence Assessment Center Gary Sick Hans Heymann White House National Intelligence Officer David Aaron for Political and Economic Resources Treasury Helen Junz Deputy Assistant Secretary for Commodities and Natural Resources 1 Source: Carter Library, National Security Council, Institutional Files, Box 95, SCC 83: Oil Supply-Vulnerability Assessment, 6/6/78. Secret. The meeting was held in the White House Situation Room. 365-608/428-S/80010 486 Foreign Relations, 1969–1976, Volume XXXVII SUMMARY OF CONCLUSIONS Following the instructions he received after the 24 March, 1978, SCC meeting on the Petroleum Supply Vulnerability Assessment, 2 Am- bassador West discussed with Crown Prince Fahd the idea of U.S. assistance in strengthening the security of Saudi Arabian oil facilities against terrorism. 3 Fahd said the Saudis shared U.S. concerns about these problems. There is an overlapping of not fewer than five Saudi ministries’ areas of responsibility in security arrangements, however, and it is a most sensitive internal political issue. The Prince thanked Ambassador West for the USG’s offer and insisted the Saudis would not hesitate to ask for assistance if they felt they needed it. Ambassador Sullivan (Tehran) felt the Iranians would consider a U.S. offer of assist- ance very self-serving and would probably seek some quid in return for Iranian acceptance of aid. Both Ambassadors counseled against press- ing the assistance initiatives further at this time. The arms transfer decisions 4 have created a more favorable envi- ronment in which to approach the Saudis again, but this should not be done for six months. Ambassador West will monitor the situation. An offer to Iran would be reconsidered if the Saudis were to accept USG assistance at some future date. In the meantime, the interagency PSVA working group will de-sensitize the Saudi Arabian anti-terrorist initia- tives package, and State will offer the USG views on Saudi oil field vul- nerability to ARAMCO for their information and use should the oppor- tunity arise. (ARAMCO has expressed concern about oil field security in Saudi Arabia but is no longer in a position to control outlays for secu- rity measures. They could conceivably be asked their views on the mat- ter, however, and it was felt that the background material thus might help get US views aired informally.) The Department of Energy is considering ways to increase tempo- rarily over the next year the amount of oil that would be available through the Strategic Petroleum Reserve (SPR) to offset an oil supply 2 See Document 145. 3 West reported the details of this discussion in telegram 3124 from Jidda, April 25. (National Archives, RG 59, Central Foreign Policy Files, P850033–0113) Brzezinski re- ceived a summary of the conversation from the Department of State on May 16. (Carter Library, National Security Council, Institutional Files, Box 95, SCC 83: Oil Supply- Vulnerability Assessment, 6/6/78) 4 On May 1, Carter sent a message to King Khalid informing him that he had sub- mitted to Congress for review a contract to provide 60 F–15 aircraft to Saudi Arabia. (Tel- egram 110151 to Jidda; National Archives, RG 59, Central Foreign Policy Files, P850071– 2556) On May 15, the Senate voted against a move to block the sale. On June 4, West re- ported on the “initial euphoric reaction” to the contract’s approval. (Telegram 4138 from Jidda; ibid., D780233–0995)
365-608/428-S/80010 February 1977–January 1979 487 interruption. 5 Floating storage (using idled or laid-up tankers) and above ground storage in Rotterdam, the Netherlands, could each add about 30 million barrels (mmb) of oil to the reserves at a time when the permanent storage facilities had 100–125 mmb in place. The cost of tem- porary storage is estimated to average about $1 per barrel (Rotterdam is less, tankers more). The main arguments for temporary storage are: (1) the additional oil would increase by at least 50% US capability to deal with oil supply interruptions in the short term; and (2) if current storage cost estimates prove correct, a 10% oil price increase in 1979—which some predict— would make an early buy attractive from an economic standpoint. Ar- guments against temporary storage include: (1) adding management of the temporary storage program to an already overloaded SPR staff could delay the regular program even further; (2) the amount of oil in temporary storage would not add a significant amount of protection in case of an interruption (about 12 days with a total supply interruption and the International Energy Plan for sharing in effect); (3) Environ- mental Impact Statement requirements and other delays could pre- clude timely acquisition of temporary storage; (4) costs of storage and predictions of oil price increases are very uncertain and could change the economic analysis drastically; and (5) there might be problems get- ting the 30 mmb out of Europe despite informal Dutch assurances on this matter. DOE is going to continue their analysis, get firmer cost data, and report back to the SCC by 1 July, 1978. The JCS provided a status report 6 on the analysis it has done on two topics: (1) the capability of current U.S. military forces to deal with oil-related contingencies in the Persian Gulf; and (2) an assessment of the utility of air and naval bases in the Persian Gulf, Middle East, and Horn of Africa from which U.S. forces might have to operate. The first study outlined deployment times, composition, etc. for small, medium, and large force packages which could be sent to the area. This analysis will be subsumed in the larger PD–18 7 follow-on contingency require- ments study underway in DOD. The second analysis stressed the large distances involved in moving from one area in the Middle East to an- 5 On May 23, the Assistant Secretary of Energy for Resource Applications prepared for Schlesinger a draft action memorandum asking whether the Department of Energy should “contract for significant quantities of temporary aboveground and/or floating storage as a means of obtaining additional protection and flexibility for the Strategic Pe- troleum Reserve?” He recommended option 3: “Decide now to store up to 30 million barrels of crude in aboveground conventional storage both in the U.S. and overseas for a period of up to one year” and charter four VLCCs to transport oil, “with an option for their use as floating storage.” (Carter Library, National Security Council, Institutional Files, Box 95, SCC 83, Oil Supply-Vulnerability Assessment, 6/6/78) 6 Not found. 7 PD 18, August 24, 1977, is entitled “U.S. National Strategy.” 365-608/428-S/80010 488 Foreign Relations, 1969–1976, Volume XXXVII other and the difficulty of trying to support operations in one region from a base located in another. This initial technical study will be used by a small working group developing a broader politico-military as- sessment of this set of issues. 153. Memorandum From Secretary of State Vance, Secretary of the Treasury Blumenthal, the President’s Assistant for National Security Affairs (Brzezinski), and Henry Owen of the National Security Council Staff to President Carter 1 Washington, June 7, 1978. SUBJECT Action on Energy at the Summit We are seriously concerned that the forthcoming Summit 2 will be branded as a failure unless you are in a position to demonstrate forceful ac- tion on energy. Such a failure would erode your position of world lead- ership and damage your image at home—and would increase the risk of a serious attack on the dollar. The ingredients for a successful Summit form a “concerted action” program:
—German and Japanese actions to promote faster growth; —U.S. action on energy and inflation; and —Others to refrain from protectionist measures and, where appro- priate, stimulate more growth. It is clear from the preparatory meetings that if we and the Germans
Moreover, while there is some encouragement that Schmidt may agree to seek Parliamentary approval for major stimulus measures, his decision will be influenced heavily by what you can say on energy and inflation. There is little more to say on in- flation at this point. On energy, Schmidt and the others will expect a pledge
1 Source: Carter Library, National Security Council, Institutional Files, Box 69, PRC 61: Economic Summit, Energy, 6/9/78. Secret. The memorandum is typed on Secretary of the Treasury stationery. 2 The G–7 Bonn Economic Summit was scheduled for July 16–17. 365-608/428-S/80010 February 1977–January 1979 489 To meet these expectations and put maximum pressure on Schmidt, we believe you need to be prepared to: —Express confidence that Congress will approve the four bills which have been agreed upon by the conference committee. 3 —Express hope that the Congress will approve COET. —Offer your assurance that if Congress has not approved COET by a certain date (not later than December 31, 1978), you will, after consulta- tion with Congressional leaders, take administrative actions so phased as to
It is not essential to specify at the Summit exactly what actions you would take. The options of fees and/or quotas, and/or exercising your authority under the Energy Policy and Conservation Act (and the ques- tions of their mix and phasing) would be open for determination after the Summit. This may not be as strong as Schmidt would like. But it should be sufficient to give him the “quid pro quo” he feels he needs to obtain do- mestic acceptance of a German stimulus package. Anything less would give him the opportunity to assert that the U.S. is not fulfilling its responsi- bilities and that for that reason no agreement on “concerted action” is possible. If we cannot promise action on energy and the Germans and others then hold back on growth, our balance of payments prospects will dete- riorate and there is likely to be a resurgence of heavy pressure on the dollar. Our Summit partners are, at this point, prepared to accept U.S. ac-
—the “fundamentals”—as the right U.S. con- tribution to greater stability in international currency markets. If we cannot deliver on energy, this understanding will almost certainly come unglued. If basic agreements can be reached in the MTN 4 prior to the Sum- mit meeting, a Summit endorsement would provide a badly needed con- tribution to the total package. The British and French are not likely to have much to offer at the Summit beyond generalities on protectionism. But if we and the Germans fail to deliver, they are likely to expand their protectionist measures. We recognize that the course of action recommended above has implications for the energy legislation on the Hill and we have in- formed Jim Schlesinger of our proposal. Congressional consultation will be needed, and a separate memorandum will be sent to you on this point. In view of the importance of this issue we recommend that you 3 See footnote 2, Document 151. The fourth dealt with the creation of a national market for natural gas. 4 Reference is to the Tokyo Round of GATT negotiations. 365-608/428-S/80010 490 Foreign Relations, 1969–1976, Volume XXXVII meet with us and Jim prior to our leaving on Tuesday for the OECD meetings, 5 in order to arrive at a decision. 6 5 The OECD Ministerial meeting was held June 13–15 in Paris. 6 The President did not indicate whether or not he approved the meeting, but a Presidential Review Committee meeting was held on June 8 in the White House Situation Room from 2 to 3 p.m. “The dangers posed by the decline in the dollar, and the need for effective action on the energy front in order to arrest that decline, were discussed,” and “It was agreed to propose to the President that he meet with Congressional leaders to discuss the handling of energy at the Summit.” (Carter Library, National Security Council, Institutional Files, Box 69, PRC 61: Economic Summit, Energy, 6/9/78) 154. Memorandum to President Carter 1 Washington, June 14, 1978. FROM Cyrus Vance W. Michael Blumenthal James Schlesinger Charlie Schultze Stu Eizenstat Frank Moore Zbigniew Brzezinski Henry Owen SUBJECT
Congressional Consultation About Summit Energy Policy 1. This memorandum recommends that you consult with key Con- gressional leaders about the handling of US energy policy at the Summit.
2. Schmidt, Callaghan, and Fukuda have made clear that what we say on this issue will clearly determine whether we can get other coun- tries’ growth and trade pledges at the Summit. The fundamental com- 1 Source: Carter Library, National Security Council, Institutional Files, Box 69, PRC 61: Economic Summit, Energy, 6/9/78. Confidential. Sent for action. Handwritten notes indicate that Vance and Blumenthal approved the memorandum before leaving to attend the OECD meeting. The memorandum was sent to Carter under a covering memoran- dum from Owen, who wrote: “Stu and I hope that you will, before leaving for Panama, approve the recommendation in the attached joint memo authorizing Frank Moore to set up the meeting with Congressional leaders. Stu just phoned to say that if we don’t do this right away, our prospects for success on the energy front will slip.”
365-608/428-S/80010 February 1977–January 1979 491 mitment they want from us is that we will take bold action to limit oil imports.
3. We believe allied concerns would be met if you said at the Summit that: —it is your objective to raise the average US oil price paid by the users to the world level by 1980; —to achieve this objective you are pressing for legislation, which would be the most desirable outcome; —if legislation has not been enacted by the end of 1978 you will use the administrative powers at your disposal to achieve this same constraining effect on US oil imports, in ways consistent with your other relevant goals. Such a pledge would leave you free to choose among the different forms of administrative action open to you. 4. If you are to make such a statement at the Summit, you will wish to consult Congressional leaders beforehand. It would be useful to con- sult as soon as possible, so that the results can be taken into account in pre-Summit planning. The best time for such consultation would be next week, when Cy Vance and Mike Blumenthal will have returned from the OECD Ministerial Meeting, and can report first hand on rele- vant foreign attitudes. We will supply talking points before the meeting.
The members to be consulted would be Senators Baker, Bellmon, Bentsen, Byrd, Jackson, and Long; 2 and Congressmen Anderson, Ashley, Dingell, O’Neill, Staggers, and Ullman. 3
That you authorize Frank Moore to invite the members listed above to a meeting with you next week. 4 2
Robert Byrd (D–WV), Henry Jackson (D–WA), and Russell Long (D–LA). 3 Congressmen Glenn Anderson (D–CA), Thomas Ashley (D–OH), John Dingell (D–MI), Thomas “Tip” O’Neill (D–MA), Harley Staggers (D–WV), and Albert Ullman (D–OR).
4 According to the President’s Daily Diary, he met with selected members of Congress on June 22 to discuss his statement on energy at the upcoming Summit. (Carter Library, Staff Office Files) 365-608/428-S/80010 492 Foreign Relations, 1969–1976, Volume XXXVII Download 8.4 Mb. Do'stlaringiz bilan baham: 
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