Foreign relations of the united states 1969–1976 volume XXXVII energy crisis, 1974–1980 department of state washington
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Memorandum of Conversation
Washington, December 9, 1974, 6:20–6:40 p.m.
The Honorable Henry A. Kissinger, Secretary of State
The Honorable Robert S. Ingersoll, Deputy Secretary of State
The Honorable Thomas O. Enders, Assistant Secretary of State
The Honorable William E. Simon, Secretary of the Treasury
The Honorable Charles A. Cooper, Assistant Secretary, Treasury
Mr. Robert Hormats, NSC Senior Staff Member
Kissinger: I wanted to have a meeting on energy before we . . . (Sec-
retary makes telephone call.) What are the issues? I realize it’s inter-
fering in Tom Enders’ style to let Cabinet officers know what he is
going to do before he does it.
Enders: Well, there are 3 major issues here.
Kissinger: I have 20 minutes.
Source: National Archives, RG 59, Central Foreign Policy Files, P840153–1413. Se-
cret; Sensitive; Nodis. Drafted by Bosworth on December 10. The meeting was held in the
88 Foreign Relations, 1969–1976, Volume XXXVII
Enders: First, is the question whether we want some elements of a
common import policy on oil in our overall approach.
Kissinger: Yes. The answer is Yes.
Kissinger: But, having said that, you haven’t said anything. The
question is, How?
Enders: The question is, Shouldn’t there be some differential be-
tween oil produced within the group of industrialized countries and
Kissinger: I talked with George Shultz about this. He says we don’t
need a floor price across the board. He argues that we need to do dif-
ferent things for different energy industries.
Simon: I also talked to George Shultz. We don’t need a floor price.
We have to do something for some industries, and we should all do
Enders: But, Bill, how do we get a common policy with everybody
subsidizing 300 different industries?
Kissinger: We do need some price protection.
Simon: Look, the current shale price is $7.50. The price for coal gas-
ification is $8.25. What we did for the rubber industry in World War II
could be a model for what we do now. The Government got into the
first generation artificial rubber manufacture and then it was eventu-
ally turned over to private firms. Synthetic rubber is now better than
the real thing.
Kissinger: But that sort of approach doesn’t help us with the other
Simon: Well, I shudder at the thought of having to persuade other
governments to subsidize our shale oil development. I think that is
going to be impossible.
Enders: What about an approach using an indicative price at $6, $7,
or $8 that we would apply and that would apply to any energy up to
Kissinger: There are two arguments that are interesting here. One,
we give the other industrialized countries something they have to do,
and two, we create some pressure on OPEC to move prices down.
Simon: But that price is too high.
Kissinger: You think it is going below $7.00?
Simon: Yes, in 10 years, certainly. For us to go up to Congress now
and ask for that sort of protection will be very difficult.
Kissinger: But the economics only point in that direction. If we do
something like this, they don’t point in the opposite direction.
August 1974–April 1975 89
Simon: Not in terms of what’s happening now. We don’t have to
do uneconomic things to solve this. We are soon going to be swimming
Enders: We could have a guide price but everyone could lock on to
it as needed.
Kissinger: Chuck, what’s your view on this?
Cooper: I want to make sure I understand what Tom is saying.
Then, you’re saying that everyone would agree to support everything
up to that price? I would prefer a common tariff but it would take time
to get there.
Kissinger: I think that the price will come down more rapidly as
we are able to articulate consumer cooperation. Also, something like
this would be very important for the political health of the West. It
would be a tremendous accomplishment if we pull it off. We have all of
these eunuchs from David Rockefeller’s Trilateral Commission
ning around town saying that we are trying to confront the Arabs. I
don’t know whatever possessed me to give those idiots my blessing. I
shouldn’t talk that way about the brother of a very good friend of mine,
but it’s true—George Ball,
and all the rest, running around saying that
we’re confronting the Arabs. What else could you expect? Lehman
Brothers is investing in those countries. Even Pete
feels this way.
That’s the New York liberal line and he doesn’t want to deviate from it.
The fact is that we are having a producer/consumer dialogue now. We
talk with the Saudis and the Iranians every day. The question is, Should
we have a multilateral dialogue? Why should we have a multilateral di-
alogue if the consumers are not organized? Why should we tie France,
Italy, and the rest around our necks? Believe me, gentlemen, they are
going to use this and they are going to make it a big issue.
Simon: I would like to suggest that Tom Enders and Chuck Cooper
and a few others sit down up at Camp David and think this thing
through and scrub it up.
Enders: That’s fine, and then we can present our recommendations
to a Cabinet committee.
Kissinger: Do you think we could ever have a Cabinet committee
meeting without people running out immediately afterwards and re-
David Rockefeller, Chairman of Chase Manhattan Bank and Chairman of the For-
eign Affairs Council, was the founder of the Trilateral Commission, a private group to
dicuss global issues and foster cooperation.
George Ball was Under Secretary of State for Economic Affairs in 1961, Under Sec-
retary of State from 1961 to 1966, and Ambassador to the United Nations in 1968.
Apparently Peter G. Peterson, Assistant to the President for International Eco-
nomic Policy and Executive Director of CIEP from 1971 until January 1972, and then Sec-
retary of Commerce until February 1, 1973.
90 Foreign Relations, 1969–1976, Volume XXXVII
porting to the President. I talked to the President about that this
morning. He was wild about the food paper. Isn’t there something we
can do? Can’t we collect the papers after the meeting, or keep the group
Enders: It really does put the President in an impossible situation.
Kissinger: Yes, he has to take the heat for all the politically difficult
positions and the other people grab the glory for the easy ones.
Enders: I suggest that we come back from Camp David and, you
will be back on when, the 16th?
Kissinger: Yes, and I will have Simon with me. Between you, me,
and Giscard d’Estaing, Bill, the President is not going to get a word in.
Enders: Well, let’s get back on the 16th and get together with
Simon, you and Rogers on the 17th and then take this directly into the
Kissinger: I have to testify on the Hill on the morning of the 17th;
we can do it in the afternoon.
Simon: I am also testifying that morning.
Enders: We would have Morton, Zarb, and a paper.
Kissinger: Is that O.K. with you, Bill?
Enders: O.K. then, Chuck and I and Parsky will scrub this up. One
other issue. Should we decide now to spread out over the Congress on
all of this?
Kissinger: No, not yet, it’s too early. We’ll look at this next week. I
think Bill and I should initiate the process. Bill, we could get together
with a large group of senators and congressmen. Let’s get the policy to
them. I could take the political point of view and Bill, you could make
the economic case.
Enders: Arthur Burns could also be there.
Kissinger: Do we need him?
Enders: The only reason I suggested getting together now to de-
cide how we will handle the Congress is a question of your time. It’s
going to be difficult for you.
Kissinger: I think this has to be kicked off at the Cabinet level. In
the meantime, Tom, keep pushing the Europeans. Don’t let them up for
air. Go back at them on the $25 billion.
Enders: Well, I am doing that, but I need a decision on this other
Kissinger: Well, you and Chuck can work that out. Now, I would
like three minutes of the Secretary of the Treasury’s time. Are you free
for a few moments, Bill?
August 1974–April 1975 91
Meeting broke up at 6:40 p.m.
Memorandum of Conversation
Martinique, December 15, 1974, 10:50 a.m.–12:26 p.m.
Valery Giscard d’Estaing, President of the French Republic
Jean Sauvagnargues, Minister of Foreign Affairs
President Gerald R. Ford
Dr. Henry A. Kissinger, Secretary of State and Assistant to the President for
National Security Affairs
Lt. General Brent Scowcroft, Deputy Assistant to the President for National
[At the beginning of the conversation the press was admitted
briefly for photographs. The two Presidents engaged in small talk with
the press. The press were then dismissed.]
Giscard: We will speak in English unless I have a particular
I know that last winter and spring there was a problem in our rela-
tions, and I will not try to fix responsibility. There was the dispute over
the energy organization. We were not a member, due to political cir-
cumstances, because we were on our own doing the same thing. It was
also due to our producer relations. The producers are very violent
against it as attempting to exert pressure. So our ministers went to
work and I discussed the situation with Secretary Kissinger. Two
things he reported to me: what to do about prices, and consumer
So in my press conference I spoke of two things—how to adjust to
the prices, and discussion with producers. I didn’t mention indexation.
Then the Nine supported our view, saying it had to be closely coordi-
Source: Ford Library, National Security Adviser, Memoranda of Conversations,
Box 8. Secret; Nodis. All brackets are in the original. The meeting was held in the Hotel
92 Foreign Relations, 1969–1976, Volume XXXVII
nated with the United States.
We also had a positive reaction from the
producers—Brazil, India, and the Arabs. This shows a desire for a kind
of cooperation, with some problem of extending it to other raw ma-
terials. The producers don’t want to seem the villain on the economic
scene. They also want to talk about inflation and other materials. I said
it is unrealistic to discuss it so broadly, but they wanted some mention
of these things, not just oil.
I asked Sauvagnargues to call you. You were in Vladivostok. He
couldn’t, so he cabled before my talk.
We can’t make an agreement without the support—not just the
consent—of the United States. To go one step further, our view is there
might be, at the end, some confrontation that is unavoidable. If the pro-
ducers cartel is unyielding, we will not accept it. But this should come
after the attempt to have discussions and cooperation. What is impor-
tant is to show our desire to make agreement; and if this fails, we would
be tough. The issues are: (1) to set up a consumer-producer conference,
and (2) preparation between the consumers. To have a disorganized
voice of the consumers would be very bad. We need to know what the
structure would be, what the list of countries would be, and so on.
Our suggestion is for a preliminary meeting for the producers, then a
stage of two-to-three months for consumer preparation, and then a
President: I have always been a strong supporter of United
States-French relations. Over the years we built a firm foundation, even
though there were differences. One of the first important votes I cast in
the Congress was for NATO. I believe the West depends on a strong At-
lantic relation. I start from the basis that we have to work together, and
with the other allies, broadened now to include Japan.
One thing which bothers Americans who are aware of this long re-
lationship is the French actions and statements which seem to undercut
U.S. positions and disparage the United States. We think that is not
You mentioned your consumer-producer suggestion. We under-
stand the problem of timing, but that perception is not always con-
veyed to the United States. Also in the UN, we know we can’t always
be together but we would hope for a closer understanding. Having said
that, we still have a close relationship.
Giscard is referring to his October 24 press conference; see Document 12. The EC
Summit was held in Paris December 9–10. Giscard’s comments to the press on release of
the communique´ are in telegram 29671 from Paris, December 11. The text of the commu-
nique´ is in telegram 29672, December 11. (Both in National Archives, RG 59, Central For-
eign Policy Files, D740358–1103 and D740359–0073)
August 1974–April 1975 93
Giscard: To understand our relationship, we have to realize our
relative size. It has been recognized since the 18th century. France was
humiliated by the travails of its political system after World War II.
When deGaulle came in he wanted to restore French dignity. That re-
quired antagonizing the major powers. For example: In the 1960’s our
ministers had to have visas to come to the United States, while Amer-
ican dignitaries came to Paris in American planes, and were met by
cars, etcetera. When Kennedy was President, the United States press
announced a new head of NATO, without any consultation. There was
a de facto situation of inequality. French political life is especially sensi-
tive to US-French relations. The Communists play on this issue.
Kissinger: It is compounded by the complexity of the French mind.
I wish we were as clever as Le Monde thinks.
Giscard: So we have this compulsion for independence and
President: We have no interest in domination. We want coopera-
tion, and those irritants should be eliminated so we can discuss
Now on energy, first, price: Something has to be done. Second,
there have been vast sums of dollars generated as a result of spiraling
prices. The question is how to do it constructively. There are three
steps: first, to have a consumer position. This is essential. We don’t plan
to go to a producer meeting for a confrontation, but we have to go to the
meeting with a consumer position and an agenda. We do have to have
substantive consumer solidarity. We need a high degree of solidarity
before we sit down with the producers. Otherwise, some of our friends
would be picked off individually—they have weaker positions and
could be susceptible to producer suggestions which would undercut
the positions of the U.S. and France and destroy the effort to resolve the
problem. We don’t need a document, but a consumer idea which gives
us our strength to meet with the producers who are well organized.
How can they complain when they themselves meet every three
months, or oftener? They are forcing down our throats higher and
higher prices while offering no solution to anything. It is in their in-
terest to solve those two problems. I hope we can resolve this.
Giscard: I have no disagreement in substance with what you say—
only in details. The producers are developing countries, with their frus-
trations, and they resent the consumer organization, not as their coun-
terpart but as an attempt at economic warfare. When they speak of
what you suggest—which is not aggressive—they talk of it as aggres-
sive. It is a psychological problem. It is the interpretation given by the
world community. If we agree that we will enter an agreement for a
consumer-producer meeting, then an agreement among consumers is
not aggressive. So the sequence should be that.
94 Foreign Relations, 1969–1976, Volume XXXVII
We are for stabilization and for restriction of the oil price, and are
prepared to take a strong position on reducing dependence on imports.
We are in favor of genuine exploration and cooperation.
Kissinger: There is a factual problem—the tendency when talking
of the producers, to tend to think of Western-type bureaucracy. Abu
Dhabi is far different from Iran. One can elicit different reactions from
different countries. But never have the producers accused us of seeking
confrontation—Saudi Arabia for example, or Iran. The producers tend
to tell their interlocutors what they want to hear. At OPEC, a spokes-
man said he hopes the world would get on with an organization so a
consumer-producer meeting could be held. Our experience is not that
confrontation is feared.
Sauvagnargues: They tell me that strong consumer groups lead to
Kissinger: I have seen Faisal five times and never has he spoken
that way to me.
Sauvagnargues: The important thing is price and that can be
solved only by consultation.
President: There are four things we should talk about: An agree-
ment on conservation—on the concept itself and a decision on the
amount. Second, the consumers should have a solid position on alter-
native sources. As you know, we have a massive U.S. program. It is es-
sential for the industrial world. We need a procedure for sharing that
technology. In the short range, what do we do in case of emergency?
Again a plan is of common interest and requires consumer solidarity.
An agreement on these four things is essential before we sit down
with the producers.
Sauvagnargues: I want to explain. At some point the price must be
discussed. OPEC has just made another small increase, but have given
nine months of essential price stability in the hope that within this time
a dialogue can take place.
Kissinger: It is essentially the same price, or maybe even, with in-
flation, a slight decrease.
At its 42nd meeting, held in Vienna December 12–13, OPEC adopted a new pric-
ing system by which, according to its press release, “the average government take from
the operating oil companies will be $10.12 per barrel for the marker crude,” leading to the
price increase mentioned by Sauvagnargues. In the press release, OPEC also announced:
“The conference, recalling its previous position of welcoming dialogue, supports all initi-
ative towards consultation between various groups of nations, among them developing
countries and the industrialized nations, and condemns all actions and manoeuvres
aimed at confrontation.” (Telegram 10378 from Vienna, December 13; ibid., D740363–
August 1974–April 1975 95
Sauvagnargues: President Giscard comes here with a sort of man-
date to reconcile our positions. We agree with you on the consumer po-
sition, but need more explicitness on what you mean by it.
We can agree on consultation on conservation. But on developing
new resources, that will take time. We want to have programs going in
six-to-nine months and we can’t stand a price increase in nine months.
The prices won’t go down by themselves. Maybe they won’t anyway,
but certainly they won’t if we don’t try.
Kissinger: We never thought that consumer solidarity would pro-
duce lower prices. Our concern is the economic consequences and the
moral and political disintegration of the West. Consumer organization
is a way to give the consumer nations a sense of control over their des-
tiny. If the focus of preparation is on consumer-producer cooperation,
we will push papers around like in CSCE, and there will be nothing
coming out of it.
We want to build some real consumer cooperation on the issues
we have outlined. France doesn’t have to join IEA. On conservation,
you are ahead of IEA. We can work out parallel paths. On the financial
side, we would work within the Group of Ten. You are in that. We
could ask your help with the Germans on this. On alternative sources—
you have two. Time is required for implementation of alternative
sources. We first want a start. Second, we would hope Europe would
develop alternative sources as Europe. We are not trying to use alterna-
tive sources as a way to make Europe dependent on us. Emergency
sharing I think we can work out satisfactorily. I think these can all be
done in two months. We would think a target date of the end of June for
the consumer-producer conference is possible. Our concern is that if we
commit ourselves to this, talk will substitute for substance.
Giscard: In the first meeting, I am not trying to get a “victory.”
President: I share that approach. The important thing is progress.
Giscard: I have two questions—how it relates to a possible con-
frontation and how it relates to cooperation in the West on energy. The
part on conservation, we support. Alternative sources—some of our
partners are not in good shape. They might prefer to deal bilaterally
with the U.S. It is easier for them. On nuclear matters, for example. We
need to work as a group on this and we need an indication of U.S. sup-
port. Your industry is much more advanced in alternative sources and
we must be sure it doesn’t give you further advantage.
The oil producers are weak—they have oil but they have to invest
their oil. We could cooperate to give them some serious outlet for their
money. We should study the question. The Swiss, for example, have
done something. We could discuss a fund in the Group of Ten. There is
confusion though. The Germans think this means it must be financed
by producer money and passed out to consumers who have poorly
96 Foreign Relations, 1969–1976, Volume XXXVII
managed their countries. The funds would have to be for the oil-price
impact, not to cover deficits from ill-managed economies.
The question of emergency measures is more difficult because it
looks like confrontation. If there is a crisis, we would participate in joint
action. But to announce it would look like confrontation. We can pri-
vately work something out without public participation.
On timing, June is a little late for a meeting. We will have had flat
prices since September and a conference wouldn’t be completed before
a summer recess. We should be able to finish it before summer.
We can probably reach some consumer agreement over the next
two months. But we need some preparatory measures at the technical
level for a consumer-producer conference.
President: If it doesn’t start with the assumption of consumer soli-
darity, what comes back is likely to break into differences which would
affect the consumer-producer meeting. The impact of a position of soli-
darity aiming at a consumer-producer meeting, with preparation of the
meeting to follow, seems a better approach. Our sequence is a con-
sumer meeting, consumer solidarity, and a consumer-producer confer-
ence. We are not legalistic about the consumer cooperation—we want
Giscard: How do you envision it practically?
Kissinger: There will be a meeting of IEA next week.
We will in-
troduce ideas on conservation and alternative sources. In the Ten in
January we will offer our proposals for financial measures. If the con-
sumers move rapidly, we can agree on the main principles by the
end of January. That is enough. Once we see consumer cooperation is
going ahead we could move immediately into preparation for a
consumer-producer conference. We just don’t want to confuse the two.
Whether the consumer-producer meeting is in June or April is not
Giscard: Are you ready to announce that a consumer-producer
meeting is desirable?
The IEA Governing Board met in Paris December 18–19. Enders, the U.S. delegate,
stressed that the group “must give serious attention to more rigorous conservation for
1975 both for obvious economic reasons” and to ensure that member countries were “in
strongest possible position vis-a`-vis the producers.” He also reiterated that the “con-
sumer position on price question must evolve from consumer decisions on cooperative
effort to reduce dependency on imported oil since these will have fundamental effect on
medium-term supply/demand balance of OPEC oil.” A summary of the discussions as
well as the Governing Board’s formal conclusions on long-term cooperation and instruc-
tions to the Standing Group on Long Term Cooperation are in telegram 281468 to Tokyo
and other capitals, December 24. (Ibid., D740374–0780)
August 1974–April 1975 97
Kissinger: We don’t want the producer conference used to wreck
consumer cooperation. We can say we consider the principle of
consumer-producer cooperation desirable if it is coupled with
strengthened consumer cooperation. If it could be done this way, it
would be okay.
Giscard: Le Monde would object! It doesn’t like you or me!
Sauvagnargues: That is the core of the problem. We can start con-
sumer cooperation now, but it will have to be strengthened over time.
In fact, we have parallel actions. Couldn’t we agree to use parallel
courses by convening a preparatory conference, perhaps giving a slight
edge to consumer solidarity? Parallelism is undeniable.
Giscard: What I don’t see in your position is how different con-
sumers could dissent from a joint position.
Kissinger: All it will take is for one producer to say that one posi-
tion is contrary to the producers’ interest to throw a monkey wrench
into the consumers position. We need a concrete commitment for soli-
darity—otherwise we are better off bilaterally, unencumbered by the
Giscard: About conservation and alternative sources, what plan
Kissinger: We have the general concern, based on experience, that
we will keep hearing this is an instrument of confrontation, etc. and
constantly more reasons not to proceed. If the consumers are totally de-
pendent on what the producers think—like Iraq—it will weaken the
West. We want rapid implementation of consumer solidarity, then
rapid preparation for a conference.
Giscard: We are ready to have studies and conversations on views
which we think are close to yours. We don’t see the problem.
Kissinger: It is based on the experience of the last year.
President: If we get consumer positions first, it forces quick com-
pletion of action.
Giscard: Suppose we agree on the principle of a conference for
spring and that this is preceded by consumer-producer preparation,
and before that actions by consumers sufficient to guarantee coopera-
tion. But we are not included in this structure. How would that appear?
Kissinger: That general formulation we could accept. We would
express it in a way which would include France.
Giscard: We are not trying to hamper your efforts with the coun-
tries you are trying to organize. I don’t know what Schmidt told you
but we will not try to complicate your actions—but we are out of it.
See Document 22.
98 Foreign Relations, 1969–1976, Volume XXXVII
Your problem is with the partners of your agreements. We have no ob-
jection—except for joint European action for the substance. I am ready
to say we will discuss with the Group of Ten about finances. So the dis-
tinction applies to your own actions.
Kissinger: And to the time. We can’t proceed to prepare until we
have a commitment to solidarity.
President: A commitment to solidarity is mandatory if we are to sit
down to meet with the producers. If we get that with IEA and in paral-
lel with you, it will be okay. We don’t seek victory, but substance, and
we think this will do it.
Giscard: Why are you so interested in France joining the agencies?
If we were opposed to it, I would understand, but we aren’t.
Kissinger: We haven’t asked France to join.
Giscard: But our partners are.
Kissinger: That is between you.
Sauvagnargues: Not recently, but it was in the beginning. But it
puts our partners in a difficult position to have one outside.
Kissinger: We are interested only in the substance, not in the legal
On the financial side, we and you agree more than we do with the
On alternative sources, we will encourage European cooperation
as long as we agree on the program. It can be a vehicle for European
Giscard: The procedure could be in four stages: First, to complete
efforts for cooperation among the consumers and within the Group of
Kissinger: You could help with that.
Giscard: Yes. We would be a little out of the picture. Second would
be the technical stage of talks with producers to see what questions
would be discussed. Third would be concrete discussions among the
consumers. Fourth, the conference, but not too late so it comes close to
the OPEC meeting on prices.
Could this be expressed in the document?
Sauvagnargues: Yes, but I have a question about stage one. How
long would it be?
Kissinger: If there is good faith by all sides and it is in the common
interest, all this should be completed by the time of the conference. If
there is obstructionism, then it would be delayed. We can’t guarantee
Sauvagnargues: But if we could put it into a specific time limit.
Giscard: Like before the summer . . .
August 1974–April 1975 99
Kissinger: We can express it as a hope. It is a tactical question,
whether we should be pushed by the producers.
Giscard: In the document, we are not required to agree. We could
express differences on the timetable.
Sauvagnargues: In terms of the communique´, we could put in the
two thoughts—consumer solidarity and consumer-producer talks.
Giscard: The rights of the consumers to organize the issues as an
objective from their own side.
Sauvagnargues: I have a paper here. [He reads a draft.]
Kissinger: I like the President’s formulation better. If we could use
the four points that the President made, to work them into a statement.
The paper is not attached and was not found.
The December 16 communique´ released at the close of the Martinique meeting de-
clared that Ford and Giscard “stressed the importance of solidarity of oil importing na-
tions” and announced that the two Presidents had agreed that these countries should
take additional steps “within the framework of existing institutions and agreements to
which they are a party, and in consultation with other interested consumers, to
strengthen their cooperation” in areas such as conservation, financial solidarity, and the
development of existing and alternative energy sources. Only after the oil-importing na-
tions achieved “substantial progress” in these areas did Ford and Giscard agree that it
would be “desirable” to hold “a preparatory meeting between consumers and producers
to develop an agenda and procedures for a consumer/producer conference,” the target
date for which was March 1975. The full text of the communique´ is in Public Papers of the
Presidents of the United States: Gerald R. Ford, 1974
, pp. 754–757.
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