Foreign relations of the united states 1969–1976 volume XXXVII energy crisis, 1974–1980 department of state washington
Letter From President Carter to French President Giscard
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119. Letter From President Carter to French President Giscard
Washington, March 2, 1977.
Dear Mr. President:
Thank you for your letter of January 29, 1977,
which Vice Presi-
dent Mondale brought to me from Paris.
He has reported to me on the
frank and useful discussions he had with you during his visit. I am
pleased at the beginning of my Administration to have your views on
the full range of major world issues which both our countries face.
I believe that we are in full agreement on the urgency of the world
energy problem. In the current market situation, it is in the interest of
the oil-consuming countries to reinforce the decision of Saudi Arabia
Source: Carter Library, White House Central Files, Subject File, Box TA–26, Trade.
No classification marking.
In his letter, Giscard recounted the details of a conversation that he had with King
Khalid during his visit to Saudi Arabia. According to Giscard, Khalid had suggested that,
for the industrialized countries to realize the benefit of his decision to limit a price in-
crease for unrefined Saudi oil to 5 percent, they would have to “try to moderate their oil
demands so as to avoid any pressure on the market.” Giscard informed Carter that the
French Government shared Khalid’s analysis and had “decided, for itself, to implement
measures that would favor some relaxation of the oil market.” Giscard added: “It seems
to me obvious that France’s efforts, or even those of Europe, will be insufficient in re-
ducing the world-wide oil demand, if your country, first importer and first consumer in
the world, doesn’t rapidly and firmly pursue the same policy.” (Telegram 35698 to Paris;
National Archives, RG 59, Central Foreign Policy Files, D770056–0767)
Mondale’s visit to France was part of a 9-day trip that began on January 23 and in-
cluded stops in Belgium, the United Kingdom, West Germany, Italy, France, and Japan.
In a February 12 message to Giscard thanking him for his “hospitality to the Vice Presi-
dent,” Carter wrote that he appreciated his letter “about the energy situation.” (Telegram
36220 to Paris; ibid., D770050–0593)
414 Foreign Relations, 1969–1976, Volume XXXVII
and the United Arab Emirates at the Qatar meeting of OPEC, to limit
the increase in the price of their oil. It is therefore important that all oil
available at the lower price be taken up through the international
As you suggest, we must also try to moderate overall demand for
oil. In this regard, I applaud the decision by your Government to con-
tinue a ceiling on oil imports. In the United States, we are trying, in
dealing with the effects of this unusually severe winter, to limit as
much as possible the extent to which our increased need for fuel results
in higher levels of oil imports.
I also agree that it is important for the major oil-consuming indus-
trialized countries to adopt serious long-term programs to reduce our
requirements for imported oil. As Vice President Mondale explained to
you, I attach the highest priority to the prompt creation of an effective
U.S. program to reduce our dependence on imported oil. By mid-April,
my Administration will develop a comprehensive set of energy pro-
posals, focusing both on conservation and on the faster development of
domestic energy sources.
I recognize the special responsibility of the United States in re-
ducing worldwide demand for OPEC oil. As you suggest, no one coun-
try—or even a group of countries such as those belonging to the Euro-
pean Community—can by itself bring about the major change in the
world energy situation needed to safeguard our shared, long-term eco-
nomic interests. Therefore, I believe we must proceed together, with
each of us helping as much as possible to reach our common goal of re-
duced dependence on imported oil and a more stable world balance of
energy supply and demand.
The United States and other members of the International Energy
Agency have begun a program to review national energy programs,
recommend ways to improve them, and establish medium-term objec-
tives for reducing dependence on imported oil. The United States will
explore new cooperative measures with our friends abroad, to rein-
force national energy efforts through developing alternative fuel sup-
plies and expanding cooperation on energy research.
I hope that through bilateral discussions, and through continuing
consultations on energy between the United States and the European
Community, we can all assure that our national programs and goals are
in harmony. You and I will, of course, have a chance at the Summit
meeting in May to discuss these matters, together with the other
leaders who will attend, and to examine new possibilities for coopera-
tion. Improvement in the energy outlook is essential to a healthy world
economy, and expanded cooperation in energy must, therefore, be a
February 1977–January 1979 415
central element in our common effort to strengthen relations among in-
Washington, March 28, 1977, 2224Z.
68642. Subject: CIEC; April 7 Vertical G–8 Meeting on Energy.
1) Please pass the following messsage from Energy Commission
co-chairman Stephen W. Bosworth to host government officials respon-
sible for work in the CIEC Energy Commission.
2) “As you know, the G–8 will hold a horizontal coordinating
meeting on April 6. I would like to have a G–8 energy meeting the fol-
3) The purpose of our April 7 meeting would be to review the
major issues and areas of agreement and disagreement between the
two sides in the Energy Commission. I intend to use schematic paper
prepared by the US and discussed at the February 28 meeting of the
to facilitate our discussions. This schematic paper
largely embraces the substance of the papers on supply, price and co-
operation sent to us by the Swiss, Japanese, and EC.
4) I do not think it useful at this meeting to try to agree on specific
language for the final CIEC document. Our past experience in CIEC
suggests that the G–19 will regard any new document we put on the ta-
ble as a new G–8 negotiating position and they will counter with a reit-
eration of their original positions of October and November. Moreover,
Source: National Archives, RG 59, Central Foreign Policy Files, D770106–0652.
Limited Official Use; Priority. Drafted by Creekmore and William B. Milam (EB/ORF/
FSE), cleared in FEA and the Commerce and Treasury Departments, and approved by
Bosworth. Sent to Canberra, Ottawa, Tokyo, Madrid, Stockholm, Bern, London, Paris,
Bonn, Rome, Dublin, Copenhagen, Brussels, The Hague, and Luxembourg. Repeated Pri-
ority to USOECD Paris and to USEC Brussels.
See Document 122.
The IEA Ad Hoc Group on International Energy Relations was led by R.A. Bur-
rows, Assistant Under Secretary in the British Foreign Office. No record of the February
28 meeting has been found.
416 Foreign Relations, 1969–1976, Volume XXXVII
we see little utility in trying to agree among ourselves on precise lan-
guage since this language in the final communique´ will have to result
from the negotiations between the two sides.
5) Consequently, I want to use the April 7 meeting to ensure that
we have G–8 agreement on the substance of the issues. It is important
that we single out areas where we believe a compromise can be reached
with the G–19 and those where the gap between the two sides appears
unbridgeable. It would be the task of the G–8 negotiators in the contact
groups and/or the Energy Commission to ensure that the final negoti-
ated language reflects an agreed substantive position. I think we
should focus particularly on the issues cited below; other delegations
may wish to raise additional points for discussion:
—The communique´ must recognize the importance of an adequate
supply of energy to the growing world economy. What degree of speci-
ficity should we insist on regarding the responsibilities of the oil ex-
porting countries to provide this supply?
—The transition period is an important concept in relation to a
general undertaking to decrease reliance on oil and gas. Are we agreed
that there should be some explicit reference to this transition period
being smooth, orderly, and progressive (or similar language that
conveys the same idea)?
—Can we accept more than general language on the timeframe re-
lating to the depletability of oil and gas and the need to increase reli-
ance on alternative sources of energy?
—What degree of emphasis do we want on the role of private capi-
tal in energy development in oil importing LDCs and the need for an
improvement in their investment climate?
—Are we prepared to recommend increased public financing for
LDC energy development? In what form?
—The issue in the supply section about future uncertainty in en-
ergy supply and demand and the need to cooperate to reduce the un-
certainty was designed to flag a later recommendation for a continuing
energy dialogue. Do we need the reference to uncertainty in Part I to
support the dialogue idea? Conversely, should we introduce the idea of
on-going consultation in this part?
—What is the best tactical means to seek G–19 acceptance of the
on-going energy dialogue? Should it be removed from Part III and
placed in a separate Part IV?
—On the price issue, should the impact of prices on the world
economy and the need for this to be a factor in the considerations of fu-
ture oil prices be a basic G–8 position? Are we prepared to go further
than did the Japanese paper on prices on the issue of purchasing
power? How far are we willing to go to meet the G–19 view that the
February 1977–January 1979 417
price of alternate energy sources should be the standard by which oil
prices are determined? Would it be better to hold firm to all our posi-
tions on price (as put forward in the Japanese paper) and seek anodyne
language on prices in the final communique´?
—How hard should we push the IEI if OPEC countries continue to
resist it? If non-oil LDCs support it?
—Should language on R&D cooperation in the communique´ be
general or should we seek specific reference to the possibility of
non-IEA members participating in IEA R&D projects?
6) We also need to discuss on April 7 tactics for the work in the
contact groups. One key question is whether it would be preferable for
the contact groups to resume work on their highly bracketed and unof-
ficial texts of November or begin again on the basis of the earlier papers
of the G–8 and G–19 that were discussed in the Energy Commission be-
tween September and November. Another is whether or not we should
refuse to treat issues that are not primarily energy specific (e.g. BOP fi-
nancing, industrialization issues, etc.) in the Energy Commission por-
tion of the communique´. A third is whether we should refuse to accept
any reference to Law of the Sea issues in CIEC.
Washington, April 16, 1977.
International Energy Issues for Your Energy Package
The 1973–74 oil embargo and the massive price increase which fol-
lowed, caused major global economic disruption. They have also dem-
onstrated the vulnerability of the industrialized world to disruptions of
OPEC oil exports. To meet future embargoes and prevent disruptive
competition for supplies, the industrialized democracies established an
emergency oil-sharing plan. The International Energy Agency (IEA)
was established to implement this plan.
Source: Carter Library, National Security Affairs, Brzezinski Material, Agency
File, Box 8, Energy Department. Confidential. Carter initialed the memorandum.
418 Foreign Relations, 1969–1976, Volume XXXVII
The IEA has become the major vehicle for cooperation to reduce
vulnerability through conservation, development of alternative
sources and R&D. It recently launched a process to generate commit-
ments by individual countries to the major energy policy measures nec-
essary to achieve reduced dependence targets. Your energy program
provides an opportunity to give major impetus to international energy
cooperation and to stimulate other countries to take equivalent action
to reduce imports.
Three areas could be stressed:
—The expansion of R&D cooperation with other industrialized
countries—and in some cases with major OPEC and energy-deficient
LDCs. This could include “cross investment” under the operational
framework of the IEA, with US participating in R&D projects in other
countries and in return opening some of our projects to participation by
them. Opportunities include improved conservation, coal combustion
and conversion techniques; nuclear waste management.
—Cooperation between oil importers and oil exporters to develop
a better understanding of the contribution both can make to a better in-
ternational energy equilibrium consistent with our interests in global
—Helping energy-deficient developing countries to increase energy
production, making use of the multilateral development institutions.
Proposed draft speech language is at Tab A.
Not found. On April 18, Carter addressed the nation for the first time on the en-
ergy issue from the Capitol’s House Chamber. The speech, broadcast live on radio and
television, begins: “Tonight I want to have an unpleasant talk with you about a problem
that is unprecedented in our history. With the exception of preventing war, this is the
greatest challenge that our country will face during our lifetime. The energy crisis has not
yet overwhelmed us, but it will if we do not act quickly. It’s a problem that we will not be
able to solve in the next few years, and it’s likely to get progressively worse through the
rest of this century.” Calling the crisis the “moral equivalent of war,” Carter outlined the
specific goals of his plan to meet this challenge: reduction in the annual growth rate in
U.S. energy demand to less than 2 percent, reduction by half of U.S. oil imports to 6 mil-
lion barrels a day, establishment of a strategic petroleum reserve of 1 billion barrels, in-
creased coal production, increased insulation in American homes and buildings, and the
use of solar energy. For the full text of the speech, see Public Papers of the Presidents of the
, pp. 656–663. In his diary, Carter called the speech “one
of the most important of my presidency.” (White House Diary, p. 41)
February 1977–January 1979 419
122. Telegram From the Mission to the Organization for
Economic Cooperation and Development to the Department
Paris, April 25, 1977, 1745Z.
12097. For Assistant Secretary Katz from Bosworth. Pass EUR and
NSC, Hormats. Subject: Revised Energy Paper for Summit.
is revised energy paper for Summit. Bergold has reviewed and ap-
proved it here.
Our basic energy objectives at the Summit are:
—Endorsement of the new U.S. energy proposals,
aim to cut oil imports, as a major contribution to our common goal of a
better world energy balance;
—Commitment by the other industrialized energy consuming
countries to make the maximum possible contribution to the creation of
a stable balance of energy supply and demand by limiting the growth
of their dependence on imported oil; and
—Commitments in principle to a major expansion of joint energy
R&D programs (e.g., coal, nuclear, and conservation).
II. Attitudes of Other Summit Participants
The Summit brings together the major energy consuming coun-
tries—the six key members of the International Energy Agency (IEA)
Source: National Archives, RG 59, Central Foreign Policy Files, D770143–1161.
Confidential; Immediate; Exdis.
The G–7 London Economic Summit was held May 7–8. PRM 7, January 21, which
“directed that the Policy Review Committee undertake an analysis of, and provide op-
tions concerning, the major policy issues to be addressed at an International Summit,” in-
itiated the process of developing the energy paper. (Carter Library, National Security Af-
fairs, Staff Material, Special Projects File, Box 26, Henry Owen, Summits) Documentation
on the Summit is scheduled for publication in Foreign Relations, 1977–1980, volume III,
Foreign Economic Policy.
Carter had outlined the specific elements of his national energy plan in a speech
before a joint session of Congress on April 20. His conservation proposals consisted pre-
dominantly of taxes and tax credits to increase efficiency and eliminate waste in the use
of energy for transportation and residences. To provide exploration incentives to gas and
oil companies, Carter proposed the deregulation of newly-discovered gas “as market
conditions permitted” and suggested that the price of newly-discovered oil be allowed to
rise over a 3-year period to the 1977 world market price. He proposed taxes to promote
the conversion from scarce fuels to coal in addition to government investment in research
and development on coal and nuclear fuel. The development of “permanent and reliable
new energy sources,” such as solar and geothermal energy, would also be encouraged by
tax incentives. A combination of taxes, tax credits, and tax rebates would ensure that no
one would “make an unfair sacrifice” or “reap an unfair benefit.” For the text of both
speeches, see Public Papers of the Presidents of the United States: Jimmy Carter, 1977, pp.
656–662 and 663–672. A Fact Sheet on the National Energy Program is ibid., pp. 672–689.
The President transmitted legislation to Congress on April 29 to implement his program.
420 Foreign Relations, 1969–1976, Volume XXXVII
plus France. The other Summit countries have done marginally better
than the U.S. over the last few years in strengthening their national en-
ergy programs. However, they all can and should do much better; none
of them can match the scope and potential impact of the new U.S. pro-
gram. With the exception of the UK and Canada, they are all even more
heavily dependent on imported oil than the U.S. and thus more vulner-
able to supply disruptions and price increases.
Germany: Schmidt is sensitive to the global political/economic di-
mensions of the energy crisis. He is concerned over growing political
malaise in industrialized countries over the failure till now of gov-
ernments to regain any control over national energy destinies. Ger-
many’s own energy program can be strengthened greatly through
mandatory conservation and fuel-switching programs.
France: Under Giscard, the French Government, which previously
tried to pursue a bilateral policy vis-a`-vis key producers, is more favor-
ably inclined toward industrialized country cooperation than was the
case under Pompidou. But given Giscard’s political difficulties he will
be unwilling to expose himself to criticism from either the left or the
Gaullists by associating France formally with the IEA. On the other
hand, these grave political difficulties dictate that Giscard show some
progress in coming to grips with the energy problems which have im-
pacted so seriously on the French economy.
Italy: The country’s profound economic reversals are attributable
in very large part to increases in oil prices. The Christian Democrats
have placed their political and economic hopes on the success of a mas-
sive nuclear program for which Italy is going to require major amounts
of foreign technology and capital.
UK: North Sea oil and gas gives the UK the prospect of energy
self-sufficiency and, with proper management, turn around in its bal-
ance of payments by 1980. Disputes between the UK and the rest of the
EC over control of and access to North Sea resources are the principal
obstacle to the formation of an effective Community energy policy.
Japan: The most dependent of all the industrialized countries on
imported oil, the Japanese have become increasingly committed to con-
sumer country cooperation and the IEA; the decision to join the IEA
and adhere to the emergency oil sharing program represented a major
political commitment by the Japanese Government. Japan continues to
view its domestic energy policies as subordinate to overall economic
policies. The current Japanese energy policy envisions virtually no re-
duction in the ratio of growth of energy consumption to the growth of
Canada: The Canadians are seeking to reverse the recent trend of
rising dependence on imported oil. But their potential oil and gas re-
sources tend to be high cost, and Canada’s conservation program needs
February 1977–January 1979 421
strengthening. Canada is of course particularly sensitive about its rela-
tionship with the U.S., in energy as elsewhere.
III. Talking Points
—In the absence of greatly increased energy conservation, pro-
jected world demand for oil will approach productive capacity by the
early 1980’s and substantially exceed capacity by 1985; in these circum-
stances, prices will rise sharply to ration available supplies no matter
what Saudi Arabia does.
—Although our forecast of oil demand broadly resembles other of-
ficial and private forecasts we are more pessimistic about the implica-
tion; our pessimism is largely based on (A) the estimate that the USSR
will change from an exporter to a substantial importer of oil, and
(B) our examination of the actual supply capacity of OPEC (especially
Saudi Arabia) and non-OPEC countries.
—The U.S. has just announced a new domestic energy program;
highest priority is given to obtaining public and Congressional support
for this program. The program as it is implemented will bring about a
major reduction in U.S. oil imports over the next decade.
—Reduction of U.S. imports will not by itself bring about the more
stable balance of world energy supply and demand we all seek. Other
industrialized countries must take equivalent action on energy conser-
vation and the development of new energy to limit their requirements
for OPEC oil.
—Working among ourselves and with the producers, we should
intensify our efforts multilaterally and bilaterally over the next several
months to reinforce our national energy efforts and to ensure that the
total of these efforts will be sufficient to bring about a structure of en-
ergy supply and demand compatible with our economic and political
—We should also pursue a major increase in energy R&D coopera-
tion focused on conservation, improved coal combustion and conver-
sion technologies, and measures to ensure the safe expansion of nuclear
energy. We are prepared to begin promptly work on the formulation of
joint projects, including “cross investment” in each other’s national
R&D programs and in demonstration and commercialization of new
The energy problems faced by most other nations are even more
critical than the serious problems confronting the U.S. The political vi-
tality and cohesion of the industrial democracies is threatened by ex-
cessive dependence on OPEC oil, vulnerability to supply description
[disruption?] and unilateral OPEC price increases, persistent financial
422 Foreign Relations, 1969–1976, Volume XXXVII
imbalances, and a general weakening of their economies and investor
confidence. The massive oil price increases since 1973 have impacted
even more heavily on those developing countries that lack domestic oil
supplies. Their scope for conservation is limited, and as increasing
amounts of scarce foreign exchange must be spent for essential oil im-
ports, other development needs suffer.
The medium-term world energy outlook, based on current trends
of consumption and production, is alarming. Recent studies confirm
that world demand for oil could significantly exceed available supplies
by the early or mid 1980’s, even assuming major increases in Saudi Ara-
bian production. Such a market situation would almost certainly lead
to another round of sharp price increases, serious declines in economic
growth and rising unemployment. The political ramifications of such a
deterioration are clear. There would be major strain on democratic in-
stitutions in the industrialized economies, erosion of Western security
alliances, and threat of serious instability in the Third World.
We want to use the Summit to give high-level momentum to a
global strategy to reverse these trends. This global approach should
consist of three highly interrelated elements:
1. Industrialized Country Action. The industrialized countries,
consumers of the great bulk of world energy, must bear primary re-
sponsibility for the creation of a more stable global balance of energy
supply and demand by limiting, and in some cases—such as that of the
U.S.—reducing, their dependence on OPEC oil.
2. Strengthened Bilateral and Multilateral Ties with Key OPEC
Countries. We must smooth the integration of these newly important
economic powers into the Western trading and financial systems.
Working both through bilateral relationships and multilateral forums
such as the Conference on International Economic Cooperation (CIEC),
we want to increase the perception of Saudi Arabia, Iran, Venezuela,
and others of their direct stake in the economic and political well-being
of the industrialized countries and their need to take account of their
new responsibilities for the well-being of the world economy in their oil
pricing and production policies.
3. Assistance to Non-Oil Exporting Developing Countries. We are
looking for effective ways to assist these countries in off-setting the im-
pact of the world energy crisis. In the CIEC, we are exploring possible
initiatives to facilitate their access to appropriate energy technology
and planning and, through expansion of IBRD activity, to assist them in
attracting the private and public capital needed to develop their indige-
nous energy resources.
New U.S. Energy Program:
The new U.S. energy program serves as an example to others and a
basis for U.S. leadership in the overall reduced import dependence ef-
February 1977–January 1979 423
fort. The U.S. is the largest energy consumer, largest oil importer, and
the largest energy producer among the industrialized countries. The
U.S. can and will make a significant reduction in oil imports under the
new energy plan. Most of the other industrial nations, so much more
heavily dependent on oil imports, cannot reduce their imports from
current levels, but they can make a major contribution by restraining
the levels of import growth. The effectiveness of U.S. efforts to create a
more stable world energy structure by reducing our oil imports will be
undercut if the Europeans and Japanese allow their requirements for
OPEC oil to continue to rise unchecked.
The new U.S. energy program, with its emphasis on conservation
and increased coal utilization, puts us in a strong position to argue
forcefully for similar stress in the energy programs of other Summit
participants. In particular, we wish to encourage the Europeans and
Japanese to shift from increasing dependence on oil toward greater use
of coal and light water reactors for electricity generation, and for direct
use in industry. There is considerable scope for increased coal utiliza-
tion in industrialized countries. The substitution of coal for oil would
be encouraged by cooperative R&D in the coal area (see below). The
Summit communique´ should highlight fuel switching to provide a
major alternative to oil.
The International Energy Agency (IEA) is currently establishing a
political and technical framework for the creation of a more stable
global energy supply and demand balance and the reduction of de-
pendence on imported oil. We are working toward a Ministerial level
meeting this fall at which the member governments will (1) fix a group
objective for the reduction of dependence on imported oil, and (2) make
political commitments to the national policy measures necessary to
achieve this objective, including cooperative programs in R&D,
coal utilization, etc. The new U.S. plan will constitute the U.S. con-
tribution to this program. We will be working over the coming
months to ensure that the Europeans and Japanese make a compar-
able contribution through policy measures to limit any increase in
their import dependence. France will be included in the broader
framework of this reduced dependence effort, bilaterally and through
In most Summit participant countries, nuclear power plays a key
role in future energy strategy. This is particularly true for the FRG,
Japan and Italy, which see themselves as energy resource poor and re-
quiring a viable economic alternative to increased oil imports. Because
of the overriding importance of non-proliferation concerns and in view
424 Foreign Relations, 1969–1976, Volume XXXVII
of your recent statements on nuclear policy,
the Summit is an oppor-
tune time to obtain support for our comprehensive approach to nuclear
questions. This cooperative framework would draw together the ele-
ments of our non-proliferation concerns and efforts to promote eco-
nomic, but carefully safeguarded, use of nuclear energy. In particular,
we want support for the international fuel cycle evaluation program.
(See separate paper on nuclear issues for the Summit.)
Cooperation in Energy R&D: New energy technologies can reduce
the need for oil imports in the medium term (1985–2000) and accelerate
the shift to renewable energy resources in the longer term. All Summit
participants have energy R&D programs, but the U.S. effort is signifi-
cantly larger than the rest combined. We already have a number of joint
R&D projects in operation in the IEA (e.g., coal-burning, solar power,
nuclear safety, etc.). Such R&D cooperation has both political and sub-
There is an opportunity for a major expansion of our R&D cooper-
ation with other industrialized countries—and in some cases—with
major OPEC and non-oil exporting developing countries. The U.S. is
prepared to consider possibilities for “cross investment” in key R&D
projects. Using the operational framework of the IEA, we would partic-
ipate in R&D projects in other countries and in return open some of our
major projects to participation by them. (France could participate di-
rectly in IEA-centered projects or indirectly through the EC.) This cross
investment concept could extend beyond the R&D stage into the dem-
onstration and commercialization phases for new technologies.
The following are those areas in which we now see opportunities
for a useful expansion of R&D cooperation and on which we are now
prepared to begin intensive discussions to formulate specific joint
1) Coal—improved combustion techniques and technologies for
conversion to gas and liquid fuels;
2) Conservation—transportation, industrial process heat, building
3) Nuclear—waste management and other R&D programs which
emerge from the international fuel cycle evaluation program.
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