Foreign relations of the united states 1969–1976 volume XXXVII energy crisis, 1974–1980 department of state washington
Notes of a Meeting Between Secretary of State Kissinger and
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Notes of a Meeting Between Secretary of State Kissinger and
French President Giscard d’Estaing
Paris, February 19, 1975.
NOTES FOR THE SECRETARY—BREAKFAST MEETING WITH
PRESIDENT GISCARD D’ESTAING
1. February 19 breakfast meeting included President Giscard
d’Estaing, Foreign Minister Sauvagnargues, Secretary Kissinger and
myself. Atmosphere was relaxed and friendly. A broad range of sub-
jects was covered, with particular emphasis on the Middle East and
[Omitted here is discussion unrelated to energy.]
6. Turning to the question of energy, the Secretary and the Presi-
dent agreed from their recent meetings with the Shah
that he presently
is more cooperative than was the case last November. He was more
worried about the West’s economy, and much less assured that all
factors, including the pricing of oil, were under his control. The Secre-
tary said that last November the Shah believed he was in complete con-
trol of the pricing situation. He is now less sure and may even be recep-
tive to lowering prices. The President said the Shah was not even
excited about the so-called “guaranteed price” now under discussion
among the consumers. Secretary Kissinger explained that by “floor
price” we mean a guaranteed price established below the current price.
The producers, in order to protect themselves, might want to have
long-term contracts which would include such a floor price. Americans
and Europeans alike seem to be thinking in terms of $6.00 or $7.00 a
barrel. Prices could be raised unilaterally by each country, but an agree-
ment in principle among consumers not to go below the floor price
should be reached in order to protect needed new investment. Chan-
cellor Schmidt and Prime Minister Wilson seem to agree with this
7. Replying to a question from the President, the Secretary said he
had not thought through just how France could participate in guaran-
teed price procedures, but that this question should not present insur-
Source: Library of Congress, Manuscript Division, Kissinger Papers, Box CL 140,
Geopolitical File, France, February–March, 1975. Secret; Nodis. Drafted by Rush on Feb-
Kissinger met with the Shah in Zurich on February 18.
144 Foreign Relations, 1969–1976, Volume XXXVII
8. The President noted that the French press had characterized Sec-
retary Kissinger’s introduction of the floor price proposals
frontation” and as a repudiation of important aspects of the Martinique
understanding. The Secretary replied that this obviously was not the
case and by way of analogy pointed out that the U.S. press always at-
tempted to portray events or statements as being confrontational. The
was also brought up by the President, who noted
that the French had not reacted adversely. The Secretary expressed
9. Returning to the Middle East, the President said there are cred-
ible reports that the U.S. is increasing its military strength in the area.
The Secretary replied that we did have an additional aircraft carrier
there and some other vessels. Responding to the President’s inquiry, he
then outlined what he had meant in the Business Week article about the
use of military force. The circumstances under which we would use
force would have to be a massive onslaught on the economy of the
West, and Europe would be very deeply affected. The US, of course,
would not use military force without consultation. As of now, the Sec-
retary could see no conceivable circumstances where the use of force
would even be considered. Replying to the President’s inquiries, he
stated that it would be feasible to carry out military action and that in
such an event he did not believe the USSR would react seriously.
10. With regard to the proposed consumer/producer conference, it
was agreed that an attempt should be made to keep participation as
presently envisioned, at least for the first round, that the Yamani list of
countries looked about right, and that the conference should be re-
stricted to the energy problem. The President said that prestige was not
an issue, as far as France is concerned, in the conference; rather what is
desired are substantive results. He said the Shah seemed to think the
Saudis had agreed with the U.S. line and would be a stalking horse for
the United States. To this the Secretary replied that we have no under-
standing with the Saudis concerning the line to be pursued at the con-
ference and that the United States would speak for itself.
11. Concerning the question of when the conference should be con-
vened, the Secretary pointed out that some work remains to be done.
(a) Guaranteed Price. What is wanted is a general agreement in prin-
ciple. There is no requirement that a price be fixed precisely. A general
range ($6 to $7) could be used. It would seem that this requirement
could be quickly met.
See footnote 4, Document 39.
See Document 30.
August 1974–April 1975 145
(b) A date. Secretary Kissinger suggested the date for the prepara-
tory meeting be April 10, rather than the latter part of March, as he will
be in the Middle East in late March and will need some time after his
return to help prepare the U.S. position. The President replied that this
would pose no problem. The date is not a matter of principle, but he
would like to send the invitations as quickly as possible.
(c) Level. It was agreed that participation in the preparatory confer-
ence should be at a high expert level. Secretary Kissinger said the U.S.
delegate would probably be the new Under Secretary for Economic Af-
fairs, Mr. Robinson, although it possibly might be Mr. Enders. The
President said that the French representative would probably be M. de
Guiringaud and agreed that this was the proper level.
12. With regard to the IEA being a participant in the meeting, Pres-
ident Giscard did not think that this would be advisable. The EEC,
OECD, OPEC would be represented and Davignon could be physically
present but not as a representative of the IEA. Secretary Kissinger will
discuss this in Washington and will inform the President or the Foreign
13. The President said that he had understood that Secretary Kiss-
inger had suggested to the Irish Foreign Minister that the conference be
held in Dublin. The Secretary replied that this was not the case, that he
had not made any such suggestion but that something might have been
said in jest. The meeting should be in Paris, with the French taking the
chair at the beginning and thereafter the chairmanship should rotate.
[Omitted here is discussion unrelated to energy.]
In a February 26 letter to Sauvagnargues, Kissinger wrote: “Now after careful ex-
amination of the question I wish to express to you my firm conviction that the IEA should
be represented at the preparatory meeting. Such participation corresponds to the hopes
we both have that the conference succeed. We both envision a serious conference to deal
with issues of grave importance to the world economy. We will not be able to deal with
these issues effectively if the oil consumer organization, the IEA, is not present. The
OECD simply cannot fill this role. Although the OECD provides a framework for the IEA,
it has not been the locus of consumer cooperation.” (Telegram 43054 to Paris, February
26; Ford Library, National Security Adviser, Presidential Country Files for Europe and
Canada, Box 4, France—State Department Telegrams from SECSTATE–NODIS (2))
146 Foreign Relations, 1969–1976, Volume XXXVII
Memorandum of Conversation
Washington, February 20, 1975, 3:50–4:10 p.m.
The Honorable Henry A. Kissinger, Secretary of State
Deputy Secretary Ingersoll
Assistant Secretary Enders
Kissinger: I still don’t understand how we got into this mess with
Treasury. I thought this problem had been worked out with Simon’s
Enders: I don’t understand it either. Did you talk to the President
Kissinger: Never mind the President. I know what he knows. He
knows what I told him. Now how did this happen? Did you not tell me
what Bennett’s objections to the floor price were?
Enders: Yes I did. I thought we had worked it out. You had better
Kissinger: I’m not talking to Parsky.
Enders: I was careful in Paris to put both the floor price and
common tariff concept on the table, and this is the approach I took in
my backgrounder with the press. Parsky, in his talks with the press,
chose to emphasize the differences between the two approaches. I have
the feeling that when he got back Simon told him he’d been had.
cret; Sensitive; Nodis. Drafted by Lawrence R. Raicht (EB/ORF/FSE). The meeting was
held in the Secretary’s office.
At the February 5–7 IEA Governing Board meeting in Paris, Enders presented the
price floor plan as an “administration proposal,” whereas Parsky reportedly “denied”
that it was “more than the State Department position.” (The Washington Post, February 13,
1975, p. A19) The text of Enders’s statements to the Board on February 5 and 6 are in tele-
grams 3210 and 3338 from USOECD Paris, February 6 and 7, respectively. (National Ar-
chives, RG 59, Central Foreign Policy Files D750043–1095, D750045–0740) According to
their joint report on the meeting: “Canada, Netherlands, Switzerland, Denmark favored a
floor price approach. Britain said the trend of their government discussions is towards
the floor price. All of these countries but Canada would be interested in a low floor (i.e.
$5–$7 a barrel); Canada might want a higher figure after the Athabasca tar sands bailout.
Italy, Germany and Japan expressed serious reservations about the floor price on
grounds of general economic policy, although Germany recognized that some coordi-
nated action by the consumers is necessary, and Japan said it would not rule out the floor
price if it were accompanied by assurances of access to energy within the group.” (Tele-
gram 3453 from USOECD Paris, February 7; Ford Library, National Security Adviser,
Presidential Country Files for Europe and Canada, Box 4, France—State Department
Telegrams to SECSTATE–NODIS (2))
August 1974–April 1975 147
Kissinger: But I don’t understand their concept. If this approach is
successful and the price falls, we will have worked to get low prices for
the Europeans. Is that what they want?
Enders: I’m not sure they know what they want.
Kissinger: But they keep talking about $4–5 oil prices. How can the
market get alternative sources in that range?
Enders: It can’t.
Kissinger: The price will never break below $6 unless we have al-
ternative sources. Either we protect them alone and give Europe a gift
or we do it by an international agreement.
Ingersoll: Bill expects the cartel to collapse and prices to fall.
Kissinger: I don’t believe that. If the cartel doesn’t collapse we’ll
soon be up to 60% and OPEC will be charging $25.
Enders: Bill believes we can do the same thing through the
Kissinger: But Congress just legislated against the god damn tariff,
Enders: Yes, the Treasury proposal is just not credible.
Ingersoll: He has not accepted the fact . . .
Kissinger: Is Bill back in town?
Enders: Yes, we appeared before Dingell’s committee together on
We both agreed in our statements on the need for some pro-
tection and indicated that the President would have to decide later on
the mechanism to be used.
Kissinger: I don’t care how we do it. That doesn’t make any
Enders: What reaction did you get from Faisal?
Kissinger: He has no problems with the concept.
press just doesn’t understand. They keep asking whether I have ob-
tained agreement from the producers to our floor price proposal.
I personally think we will be able to get a floor price within a year.
If we do, we don’t need agreement with the producers and we could
tell them to go screw themselves.
Now where do we stand? The Germans, French and British are
ready to go along with a protected price.
Enders: They’re ready to accept the concept?
February 17. Representative John D. Dingell, Jr. (D–MI) was Chairman of the
House Committee on Energy and Commerce.
No memorandum of conversation has been found of the February 15 meeting be-
tween Kissinger and King Faisal.
148 Foreign Relations, 1969–1976, Volume XXXVII
Kissinger: Giscard said he could agree to a price below $7. The
British want $8.
Enders: Then the Japanese are the only major problem. They seem
ready to go along with a protected price as long as they have assur-
ances on participation.
Kissinger: Well why not let them buy in?
Enders: Your second tier lets them do that.
Kissinger: Are you discussing this with Treasury?
Enders: We haven’t gotten anywhere in your absence.
Kissinger: Do they know I’m totally displeased with their actions?
Enders: They have been very docile while you were away, but I
think they are ready to get on board now.
Kissinger: How do they explain the Newsweek interviews?
Enders: Well they said they gave them.
Kissinger: Do they think it helps for them to admit it?
Enders: I don’t know, but I think they are ready to go along with
Kissinger: Who gave the information to Joe Kraft on the PANAM
Enders: Treasury has been pushing it.
Kissinger: Well I was mildly favorable but I did not get a chance to
study it in detail.
Next, in the IEA. You will continue to push for a floor price agree-
ment. I will tell the French next week that we are ready to go to a meet-
ing if they are prepared to go along with the floor price.
Enders: Should we try to set a level now or should we leave it
Kissinger: I think we ought to try for a range of $6 to $8. I would
like you to draft a letter for me to Schmidt.
Enders: I take it you didn’t like the other we sent you.
Kissinger: I was not ready, I thought it was premature. Schmidt is
hipped about the danger of bank failures because of Arab maneu-
vering. He doesn’t want to hear from us that there is no problem, he is
convinced there is one. Every time he talks to Simon, Simon tells him
there is no problem. Schmidt told me this doesn’t help if a German
Kissinger is presumably referring to the February 10 issue of Newsweek. The cover
story is entitled “All About the New Oil Money.”
Syndicated columnist Joseph Kraft wrote about questions raised within the gov-
ernment about an Iranian loan to Pan American Airlines. The Washington Post, February
18, 1975, p. A15.
August 1974–April 1975 149
bank fails. All he wants from us is some kind of contingency plan. He is
sending someone over to discuss it.
Enders: Who is he sending? Dr. Hiss? He is pretty good.
I think you should send a letter to Miki too.
Kissinger: OK, you draft it.
One more article about you in the papers, Enders and you are
through. Now I’m serious about that.
Enders: Do you have any openings in Africa?
Kissinger: You know Bob, in my years here I have made one im-
provement. The press used to be masochistic. They used to say all the
people I appointed were bad, that was wrong. Now they say all of the
people I appoint are good, and that is equally inaccurate.
But Enders will you stop making inflammatory statements about
economic blockade being like nuclear warfare?
Enders: I’ll try to work out an economic structure with Zarb for the
floor price so that we’ll have protection when prices drop below the
But on the international side we’ll need letters to the Japanese and
Kissinger: OK, we’ll do the letters. Tell them I’m ready to go along
with the meeting if they’re ready to agree on a floor price. Emphasize
two basic ideas: the importance of massive alternatives soon and the
range of the floor price.
I talked with Giscard about Davignon’s attendance at the meeting.
He is agreeable to have him there as a member of the OECD Delegation.
Enders: We can’t go along with that. OPEC will be there along with
the UN and the OECD as observers. If we go without the IEA it signals
that we are ready to drift back.
Kissinger: I’m never ready to drift back. Why should we give up
our strongest assets? Tom, you deal with EUR on this. I want you to
make clear that we won’t go along.
Who is this Renner?
Ingersoll: He’s one of Hartman’s people in Brussels.
Kissinger: Well send him an instruction that we don’t accept the
Enders: Do you want to send a letter to Sauvagnargues?
John C. Renner was in the Office of Trade Policy, Bureau of Economic and Busi-
150 Foreign Relations, 1969–1976, Volume XXXVII
Kissinger: Yes, but clear it with Hartman.
Enders: I’ll do that. Is there anything else?
Enders: What about our strategy on the Hill? Did you discuss this
with the President this morning?
Enders: I think we need to move quickly.
[Omitted here is discussion unrelated to energy.]
[Kissinger]: OK, I think I would like to talk without the note taker
in the room.
(Note taker left at 4:10.)
Washington, February 22, 1975, 0148Z.
40604. Subject: IEA Agreement on Alternative Sources.
1. Request you deliver the following letter from President Ford to
Prime Minister Miki.
2. Begin text. Dear Mr. Prime Minister: Our two governments are
now working with the other members of the International Energy
Agency to complete an overall framework of consumer country coop-
eration on financial solidarity, energy conservation and the accelerated
development of new energy supplies. We have already reached agree-
ments on the first two of these. We must now complete our overall co-
operative efforts with basic understandings on our approach to acceler-
As I see it, our common policy on accelerated development should
fulfill the following requirements. It should assure rapid development
of available energy opportunities in the consuming countries without
giving investors a wholly risk-free opportunity. It should allow for the
diversity in energy opportunities among the consuming countries,
while recognizing that all consuming countries will benefit equally
Source: Ford Library, National Security Adviser, Presidential Country Files
for East Asia and the Pacific, Box 8, Japan—State Department Telegrams from
SECSTATE–NODIS (6). Confidential; Immediate; Nodis. Drafted by Enders, cleared in
FEA and by Parsky, and approved by Kissinger.
August 1974–April 1975 151
from the market impact of increased production of energy by any one
of them. And it should create a basis on which stable economic and po-
litical relationships can be negotiated with the producing countries.
At my request, Secretary Kissinger has advanced a set of proposals
for consumer cooperation on accelerated development. These pro-
posals include a commitment by members of the International Energy
Agency to provide protection against future price uncertainty for in-
vestors in conventional nuclear and fossil fuels in our countries, either
by a common floor price or tariff; an agreement setting forth the general
terms and conditions under which member countries could participate
in each other’s programs to develop synthetic fuels and other higher
cost energy sources; and a similar agreement under which two or more
member countries could pool their energy research and development
efforts in specific areas and projects.
Within this framework, it should be possible to assure an equitable
balance of cost and benefits among participating countries. Countries
with large fossil fuel potential would achieve greater self-sufficiency,
but would have to assume the larger share of the investment burden.
Countries whose principal domestic energy opportunity is increased
nuclear power would obtain the balance of payments and fiscal benefit
of lower oil pices as investment in other parts of the IEA resulted in
lower world prices. We would all agree not to increase our consump-
tion of imported oil if prices fell.
I understand that countries such as Japan, which have relatively
little domestic potential to develop fossil fuels, might be concerned
over the need to assure that they would have access to the new energy
supplies produced in other IEA countries under such a framework of
cooperation. We understand this concern and believe that in an effort to
strengthen our overall cooperative framework, we should examine the
merits of possible undertakings regarding access to supply and to mar-
kets for energy produced within our countries.
I am optimistic that we will be able to make substantial progress in
this area within the next few weeks and thus that we will be in a posi-
tion to hold a preparatory meeting by the end of March for the formal
dialogue with the oil producing countries. Clearly, we will not be able
to reach detailed agreement on all aspects of our cooperation in acceler-
ated development by the end of March.
However, I believe we must reach a firm understanding on the
basic elements and principles of our overall approach on accelerated
development before beginning discussions with the producers. We
cannot hope to achieve agreement with producers on the elements of a
long-term equilibrium of interests between us unless we as consumers
have firmly established our own common measures of cooperation in
this important area of our overall cooperative effort.
152 Foreign Relations, 1969–1976, Volume XXXVII
I would like to take this opportunity to convey to you personally
my appreciation for the positive contribution Japan is making to the
work of the International Energy Agency and your very constructive
role in our joint effort to resolve the energy crisis. Sincerely, Gerald R.
Ford. End text.
3. You should raise in low key manner that it might be worthwhile
to have bilateral discussions on this subject before the next meeting of
the Governing Board of the IEA and inquire whether Prime Minister
Miki believes that it would be useful for senior US officials to travel to
Tokyo for this purpose early next month. US representatives would be
Assistant Secretaries Enders and Parsky, FEA Assistant Administrator
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