Foreign relations of the united states 1969–1976 volume XXXVII energy crisis, 1974–1980 department of state washington
Minutes of the Secretary of State’s Staff Meeting
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Minutes of the Secretary of State’s Staff Meeting
Washington, May 12, 1975, 8–8:40 a.m.
[Omitted here is discussion unrelated to energy.]
[Mr. Robinson:] We also have in Saudi Arabia from Yamani a mes-
tween commodities and oil. And he is pressing us for June 9, to do
Source: National Archives, RG 59, Transcripts of Secretary of State Kissinger’s
Staff Meetings, Lot 78D443, Box 3, Secretary’s Staff Meetings. Secret. Kissinger presided
over the meeting, which was attended by all the principal officers of the Department or
their designated alternates. A table of contents and list of attendees are not printed.
This and other references to Yamani are based on a conversation that Akins had
with him on May 9, which the Embassy reported in telegram 3303 from Jidda, May 11.
(National Archives, RG 59, Central Foreign Policy Files, D750165–0164)
218 Foreign Relations, 1969–1976, Volume XXXVII
something before June 9, which is the date of the Dakar summit
meeting of OPEC. And I have suggested a possible approach. There are
some alternatives we may consider.
Secretary Kissinger: What is that?
Mr. Robinson: Well, that we have a ministerial level meeting in
which we discuss the general issues.
Secretary Kissinger: Who is “we”?
Mr. Robinson: We—the ten participants in the prep-con.
Secretary Kissinger: No.
Mr. Robinson: Well, we have got to come up with—
Secretary Kissinger: We have got to do nothing. We will not be
blackmailed. What are they going to do? We may be willing to indicate
a willingness to have a meeting, to have another prep-con. But we will
not gear our actions to the meetings of OPEC. Let the French do it. We
Mr. Robinson: Well, I agree with that. But I think Yamani is ex-
pecting something from us.
Secretary Kissinger: Well, he can get something from us, but he
cannot get a ministerial meeting before June 9.
Mr. Robinson: No, no. It is an agreement to move in a direction that
it seems to me we should be thinking about.
Secretary Kissinger: That I am willing to do. But how would that
differ from a prep-con?
Mr. Robinson: Well, there would be no attempt to debate or re-
solve any specific issues there. The only action item would be to set up
working parties which would go off on parallel courses, one on energy
and one on commodities.
Secretary Kissinger: Yes. But then what would happen to the
Mr. Robinson: The prep-con would be merely preparatory to these
two working party programs.
Secretary Kissinger: So it would be a prep-con.
Mr. Robinson: It would be a prep-con, yes.
Secretary Kissinger: Yes. But I think we ought to let the French call
Mr. Robinson: I am not proposing we take any initiative. I am just
saying I think we have got to have some response to Yamani to indicate
we have not forgotten about our conversations here.
April 1975–October 1975 219
Secretary Kissinger: Yes. But we should be a little harder to push
than the French.
Mr. Robinson: Right.
Mr. Sober: Yamani is using us, Mr. Secretary, to take a somewhat
softer view on prices again. What he is saying is this is going to be
Secretary Kissinger: I know. But that is the tactic.
Mr. Sober: Yes, of course it is. But on the other hand, he feels—
Secretary Kissinger: I know what he feels. But we won’t let our-
selves be driven like the French are.
Mr. Sober: No, sir. I was going to say something else. He feels that
in the conversation he had on his last stop here, he was promised some
ideas from us, and we haven’t given him any. I think probably Yamani
is right in that.
Secretary Kissinger: That I agree with.
Mr. Sober: I might say on the oil question, too, the Shah is quoted
as having said at the end of his stay in Venezuela
that with inflation in
the last eighteen months they have lost 30 percent of the value of their
increase in price; and that looking at it through September also, both he
and the Saudis now unfortunately seem to be zeroing in on the need for
another price increase at the end of September.
Secretary Kissinger: We may be able to kid the Saudis, but we sure
as hell can’t kid the Shah with a prep-con. He will ask for indexation.
Mr. Sober: He is on record with the Venezuelans as talking about
the prep-con, but I don’t see any serious indication that he is concerned
Secretary Kissinger: He isn’t looking for an excuse. If he doesn’t
want to raise prices, he won’t raise them. And if he does, a prep-con
isn’t going to stop him. The Saudis have no interest in raising prices one
way or another. They have an interest in keeping out of trouble.
[Omitted here is discussion unrelated to energy.]
The Shah was in Venezuela May 5–9. A report on the highlights of his visit is in
telegram 4908 from Caracas, May 10. (National Archives, RG 59, Central Foreign Policy
220 Foreign Relations, 1969–1976, Volume XXXVII
Telegram From the Department of State to Selected
Washington, May 12, 1975, 1912Z.
110686. Subject: Secretary’s Speech on Energy and Raw Materials.
1. In speech scheduled for delivery in Kansas City May 13,
Secretary will state US readiness to attend new meeting of energy
producer-consumer prepcon, and to initiate bilateral consultations IEA
countries, France and producers to this purpose. Speech will set for-
ward US ideas on ways to begin serious discussion of raw materials/
commodity problems which we hope will constitute basis for progress
toward meeting concerns of many LDC’s as developed at first Prepcon
in Paris last month. Text follows septel.
2. Proposals involve three main elements, which will be presented
in speech along following lines:
—First, since both producers and consumers want a more reliable
basis on which to do business, we will propose that the multilateral
trade negotiations now underway in Geneva develop new rules and
procedures on such questions as freer access to supplies and markets,
promotion of mining and processing industries in these countries, and
settlement of disputes.
—Secondly, we are prepared to consider and discuss whether cir-
cumstances warrant new arrangements in individual commodities, on
a case-by-case basis.
—Thirdly, recognizing the importance of growth in raw material
production to both producers and consumers, we will propose that the
World Bank explore new ways of financing raw material investment in
producing countries. We are particularly interested in exploring new
ways of mobilizing capital and bringing it together with outside man-
agement and skills.
3. We believe successful dialogue along these lines could be best
developed by making maximum use of existing multilateral fora (e.g.,
MTN’s, existing commodity groups within UNCTAD framework, and
Source: National Archives, RG 59, Central Foreign Policy Files, D750166–0231.
Confidential; Immediate. Drafted and approved by Dennis H. Kux (NEA/INS). Sent to
Algiers, Ankara, Bern, Bonn, Brussels, Caracas, Colombo, Copenhagen, Dublin, USEC
Brussels, Jidda, Kinshasa, London, Luxembourg, Madrid, New Delhi, Oslo, Ottawa,
Paris, Rome, Stockholm, Tehran, The Hague, Tokyo, Vienna, Wellington, Brasilia, and
USOECD Paris. The telegram is incorrectly dated May 22 (221912Z May 1975).
The text of the speech, delivered to the Kansas City International Relations
Council in Kansas City, Missouri, is in Department of State Bulletin, June 2, 1975, pp.
April 1975–October 1975 221
IBRD). We have open mind about whether these institutions should be
seized directly with joint initiatives from interested countries involved
in producer-consumer prepcon or whether it would be preferable for
prepcon to agree to present these and related proposals to a broader
producer-consumer conference which would then discuss a more fully
developed scenario for further negotiations in other forums. While we
believe former scenario likely result in getting serious discussion
started earlier, we would wish to have views of our partners in IEA and
P/C prepcon group before deciding on one or the other.
4. You should seek early opportunity to discuss these proposals
and procedural options (per para 3 above) with appropriate officials in
host government. We will raise directly with Shah during his visit here
5. For IEA countries: Please notify all governments of Secretary’s
statement. Secretary will want to discuss the best tactics for pursuing
reopening of P/C dialogue along above lines during IEA Ministerial
May 27. However, earlier indication of ideas from member countries
would be welcome.
6. For Brussels: Notify Davignon ASAP.
7. For Paris: French Embassy already notified. You should follow
8. For Riyadh: Notify Yamani ASAP.
The Shah visited the United States May 15–18. He met with Ford on May 16 and
told him: “The influence of oil on Western inflation is 2 percent—this is your figure. In-
dustrial inflation was 14 percent but the prices to us have gone up 35 percent. But we
must have some kind of agreement, based on some tangible predictable relationship. We
must index, or any other proposal which keeps our purchasing power intact. Perhaps in-
dexing to 20–30 commodities, although that might be difficult.” He added: “My argu-
ment in Algiers was that we have to depend on the commodity trade. But what happens
to the Third World, with oil and industrial prices going up? What can we do? The Saudis
will follow us—they will always be a moderating element. Between us we can do some-
thing interesting. That will give us time for reconvening the Prepcon.” Ford did not di-
rectly respond to the Shah’s remarks but instead asked how much oil Iran produced.
(Ford Library, National Security Adviser, Memoranda of Conversations, Box 11) The
memorandum of conversation is printed in Foreign Relations, 1969–1976, volume XXVII,
Iran; Iraq, 1973–1976, Document 127.
222 Foreign Relations, 1969–1976, Volume XXXVII
Memorandum From the Acting Executive Director of the
Council on International Economic Policy (Dunn) to the
President’s Deputy Assistant for National Security Affairs
Washington, May 15, 1975.
United States Preparedness to Withstand an Oil Embargo
Our staffs have discussed several issues that deserve examination
relating to our preparedness to handle another oil embargo. These
a. a review of international petroleum allocation mechanisms that
would be available in the event of either the absence or failure of IEA
b. an assessment of the likelihood of OAPEC using the “financial
weapon” to augment any oil supply disruption, and measures we
might employ to counter;
c. a review of the current drawdown of worldwide petroleum
stocks—causes, implications and policy options available to encourage
supranormal stock levels if deemed necessary or desirable;
d. a review of the current military fuel stock situation.
Normal peacetime military stocks are said to be more than four
million barrels short now. This review should be joined with estimates
of military offtake from available national petroleum supplies in the
event of an embargo.
I recommend that NSC establish an adhoc group to examine gener-
ally United States preparedness to withstand another embargo includ-
ing the items outlined above. We feel that such a group should include
representatives from DOD, FEA, Treasury, State, CIA and CIEP.
Source: Ford Library, National Security Adviser, Presidential Subject File, Box 4,
Energy (9). Secret.
No record of this group has been found, but a reference to a similar group formed
in February is in Document 72.
April 1975–October 1975 223
Telegram From Secretary of State Kissinger to the Embassy
in Saudi Arabia
Paris, May 28, 1975, 0300Z.
Secto 2018. For Ambassador from Secretary. Subj: Message from
Secretary to Prince Fahd.
1. Please deliver immediately following message from Secretary to
Prince Fahd, during the morning of May 28; at same time you may
show it to Yamani and seek his reaction and support.
2. Begin text: Your Royal Highness: Since the preparatory meeting
in Paris ended without success, I have, as I know you have, been giving
much thought to how we could overcome the impasse. Today I made
public in the IEA a proposal which I hope will relaunch the dialogue.
owes much to discussions which our associates have had together. I
hope it will recommend itself to you.
Source: National Archives, RG 59, Central Foreign Policy Files, P840126–2165.
Confidential; Immediate; Nodis. Repeated Immediate to Washington. Kissinger was in
Paris to attend the IEA and OECD Ministerial meetings.
Kissinger sent similar messages to Algerian President Houari Boumediene (tele-
gram Secto 2020 to Algiers, May 28; ibid., P840126–2160), Venezuelan Foreign Minister
Ramon Escovar (telegram Secto 2017 to Caracas, May 28; ibid., P840126–2138), and Bra-
zilian Foreign Minister Antonio Francisco Azerada da Silveira (telegram Secto 2023 to
Brasilia, May 28; ibid., P840126–2150). The Secretary also sent a personal message to
Yamani, in which he asked him to use his “enormous influence among the producers” to
ensure that successful U.S. efforts to include “the subject of raw materials within the
framework of a renewed consumer-producer dialogue” be “received affirmatively and in
the same spirit of cooperation with which it was made.” (Telegram Secto 2046 from
Brussels, May 30; ibid., P840126–2144)
On May 31, Akins reported that he discussed the “new U.S. views and proposals
on the preparatory conference of energy producers and consumers” with Fahd and
Yamani. The Crown Prince “was pleased” but deferred “detailed comment” to Yamani,
who said he was “immensely gratified,” remarking that the U.S. position “was now very
close to the Saudi position.” (Telegram 3882 from Jidda, May 31; ibid., D750191–0508)
Fahd formally responded to Kissinger with a letter on June 2, in which he wrote: “We
support the necessity of a resumption of the preliminary meeting in Paris a second time
and we consider that the objective of the meeting is an agreement on a schedule including
the clauses that are agreed on for discussion.” (Telegram 4182 from Jidda, June 11; ibid.,
The text of Kissinger’s statement at the May 27 IEA Ministerial meeting in Paris is
in Department of State Bulletin, June 23, 1975, pp. 838–844. The IEA Ministers published a
communique´ in which they “reiterated their determination that the Agency should con-
tribute, as far as problems connected with energy were concerned, towards achievement”
of a “regular and stable energy supply.” They further emphasized that solutions to “cur-
rent economic problems” must be based on “the principles of inter-dependence of all
countries, mutual support and shared responsibility, so that all countries, whatever their
level of development, may be recognized as partners in the world economic system.”
(Ibid., pp. 844–846) A description of the May 27 meeting is in telegram 13526 from
USOECD Paris, May 27. (National Archives, RG 59, Central Foreign Policy Files,
224 Foreign Relations, 1969–1976, Volume XXXVII
3. The first step, as I see it, would be to reconvene the preparatory
meeting in the same format as before. The time could be relatively soon,
certainly a matter of months as I see no reason for delay. I suggest that
the format remain the same to avoid a tedious, non-productive negotia-
tion over who would attend and what the rules of procedure might be.
Clearly we have more important business to do than that.
4. The second step would be for the preparatory meeting to agree
on the creation of a number of commissions to deal with the critical
issues in relationships between developing and developed countries.
Thus commissions might be set up for energy, for the problems of the
most seriously affected nations, and for raw materials. Conceivably
there would be others. Each commission would review all aspects of
the problem assigned to it: including finance, investment, trade, and
5. The way in which each commission proceeds about its work
would depend in considerable measure on the nature of work already
being done in the field. For the most seriously affected, there is already
much activity, and the commission’s role would be essentially to mon-
itor, to supplement, and to orient that work, giving it the thrust and
purpose it must have. The commission on raw materials would have a
similar role. In the case of energy, since there is no existing interna-
tional organization in which the basic questions are dealt with, the
commission should also function as a means of addressing and re-
solving the underlying substantive issues.
6. In each case, I would envisage that the basic issues that have
been raised be addressed. Under raw materials, for example, you
would no doubt wish to raise the question of terms of trade. And we
wish on our side to consider how adequate resources can be obtained
for the development of raw materials and how in general raw material
markets can be made to function more efficiently. Actual negotiations
on commodities would remain the purview of already existing com-
modity groups such as for coffee, cocoa, tin.
7. Clearly we would want to limit membership in the commissions
to assure their effectiveness. I think we both are anxious to avoid a new
UNCTAD. In my speech today I suggested that we seek to limit the
membership by applying objective criteria. For raw materials, for ex-
ample, we could include those countries for which exports or imports
for food and other non-oil raw materials constitute a certain minimum
percentage of their total national product, and set that threshold high
enough to keep the numbers within reason. We could do the same in
energy. For the most seriously affected, we would have to seek another
formula, one in which representative countries with the lowest capita
income were chosen along with the traditional and new donors.
April 1975–October 1975 225
8. This proposed approach, Your Royal Highness, has two origins.
First, our own thinking within the American administration on raw
materials and other issues of the relationship between developed and
developing countries has been evolving over the last several months. I
expressed some of the first implications of our new thinking in a speech
at Kansas City two weeks ago.
I will have something more to say about
them tomorrow at the OECD meeting.
9. The second source is the realization that it would be difficult if
not impossible to find a basis on which oil producers and consumers
could discuss the new problems of energy without addressing the
entire range of relationships between developed and developing
10. My proposal is thus brought forward in a spirit of conciliation
and innovation. In doing so, I do not think we should attempt to dictate
too closely the timeframe of the work of the commissions—that they
could work simultaneously or consecutively and might, depending on
the difficulty of the task at hand, require a shorter or longer span of
time—nor should we attempt to structure too precisely their relation-
ship to each other. My intent, rather, is to find an approach which rec-
ognizes both the essential unity of the developing countries in seeking
an improved relationship with the developed countries, and the great
diversity of interests, forums, and subjects to be addressed.
11. I hope this approach will, as it is intended, meet many of the
concerns that the Saudi representative at the Paris preparatory meeting
expressed. I hope, Your Royal Highness, that you will find it possible to
support this concept, so that we may soon relaunch the dialogue be-
tween developed and developing countries, including on the essential
issue of energy. I know that that is your wish; I assure you that it is also
our own. Warm regards. Henry A. Kissinger. End text.
See Document 62.
The telegram is unsigned. During a May 27 meeting, Kissinger, Giscard, and Sau-
vagnargues discussed a possible future energy conference. The Secretary said that
“France should reconvene the preparatory conference under French chairmanship” and
recommended that three commissions be established “to deal with energy, other raw ma-
terials, and the problems of developing countries,” all the while insisting that “energy
must receive priority in emphasis over other raw materials.” He added that “he thought
the U.S. and France could work together to make the conference a success” because there
were “really no basic differences” between them. Sauvagnargues responded that “the
goal of the conference at the next stage should not be so much to reach conclusions as to
establish a structure for future discussions” and that such a meeting “should be global.”
While Kissinger agreed, he re-emphasized that energy should have top priority. (Tele-
gram 13581 from Paris, May 28; National Archives, RG 59, Central Foreign Policy Files,
226 Foreign Relations, 1969–1976, Volume XXXVII
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