Foreign relations of the united states 1969–1976 volume XXXVII energy crisis, 1974–1980 department of state washington
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- 123. Memorandum From Secretary of State Vance to President Carter
- 124. Telegram From the Department of State to Selected Diplomatic Posts
- 125. Telegram From the Department of State to the Embassy in Switzerland
- Vance 126. Telegram From the Department of State to the Embassy in Saudi Arabia
Carter addressed nuclear power policy on April 7 in remarks to reporters. See
ibid., pp. 581–587. In a news conference on April 22, he also commented: “There are other
aspects of the energy question, though, that must be addressed. One is atomic energy, re-
processing of spent nuclear fuels, a move toward nonproliferation of atomic explosive ca-
pability. So, there will be a very complicated interrelationship involving trade.” The text
of the news conference is ibid., pp. 695–701.
February 1977–January 1979 425
123. Memorandum From Secretary of State Vance to
Washington, June 7, 1977.
Summit Follow-up on Energy
The Summit Communique´
includes three energy items which re-
quire follow up:
1. National and joint efforts to limit energy demand and increase
and diversify energy supplies;
2. Exchange of technology and joint research and development in
3. The two-month nuclear study to develop terms of reference for
the international fuel cycle evaluation, and the subsequent longer-term
I. Limitation of Demand and Increase Supply
Our international efforts to limit energy demand and increase and
diversify energy supplies will focus primarily on the Paris-based Inter-
national Energy Agency (IEA) which was established in 1974, follow-
ing the oil embargo and price rise. The 19 country IEA is the principal
forum for energy cooperation among industrialized countries. Six of
the seven Summit participants are IEA members. Although France is
not a member, it has shown some willingness to associate itself with
IEA activity through its membership in the European Community. We
will work with France and its EC partners to increase the level of
The IEA member countries have agreed to reduce dependence on
imported oil through national and joint efforts. The Summit communi-
que´ and the prior announcement of the U.S. National Energy Program
Confidential. The memorandum was sent under cover of a June 7 memorandum from
Vance to Owen. (Ibid., P770118–1947) On May 20, Owen had sent a memorandum to the
Secretary requesting an outline for the President of “plans for following up the Summit
decisions about energy.” (Ibid., P770118–1953)
The Joint Declaration issued on May 8 at the conclusion of London Economic
Summit included sections on “World Economic Prospects,” “Balance of Payments Fi-
nancing,” “Trade,” “Energy,” and “North/South Relations.” For the text, see Public
Papers of the Presidents of the United States: Jimmy Carter, 1977
, pp. 819–824.
See footnote 3, Document 122.
426 Foreign Relations, 1969–1976, Volume XXXVII
have given strong political impetus to this cooperative action. Member
countries have tentatively agreed on a Ministerial meeting this fall. We
plan to work for agreement on the following measures at that meeting:
—A joint commitment to hold total oil import demand by member
countries to not more than 26 million barrels a day by 1985 (if no addi-
tional energy measures are enacted, member countries are projected to
import 31 to 36 million barrels a day by 1985).
—Agreement on a set of general principles aimed at the elimina-
tion of wasteful use of energy, greater coal utilization, expansion of nu-
clear power with appropriate controls, and increased energy research
—Agreement to review the group objective annually and the con-
tribution of each country towards achieving it.
The National Energy Plan will be the U.S. contribution to this co-
There are uncertainties surrounding future oil production levels of
OPEC members, particularly Saudi Arabia. Saudi Arabia has accom-
modated to the demand of the industrialized world for oil over the last
few years by substantially increasing production and it is essential that
they continue to do so. Our ongoing bilateral contacts with Saudi Ara-
bia including the recent visit by Prince Fahd indicate such energy poli-
cies will continue if the industrialized countries make serious efforts to
In the North-South dialogue we are attempting to convince oil pro-
ducing countries of their responsibility to provide adequate and stable
supplies of energy during the energy transition period and to increase
their sense of interdependence with the industrialized countries and
their economic viability.
If oil importing developing countries can develop their indigenous
energy resources, this will add marginally to the world energy supply.
To spur such development, we are working to enable the World Bank
to expand its lending for energy development. This new bank lending
would also induce greater flows of private capital for the same
II. Research and Development
Summit participants agreed on the need for more exchange of
technology and joint research and development directed at more effi-
cient energy use, improved recovery and use of coal and other conven-
tional resources, and the development of new energy sources.
In the IEA, we have said we are ready to intensify cooperation with
industrialized countries in conservation, coal combustion and conver-
sion, and renewable sources, such as solar energy.
February 1977–January 1979 427
We now need to develop concrete research proposals for coordina-
tion at the fall IEA Ministerial. We are considering the possibility of in-
vestment in key energy research and development projects in other
countries in return for agreement to make similar contributions to U.S.
We also want to achieve intensified coordination of national en-
ergy research and development programs to enable countries to share
the high cost of research and development and avoid needless overlap
and duplication of efforts. Such cooperation will be difficult because
our ability to influence private companies’ decisions on access to their
technology is severely limited. We will wish to maintain discretion re-
garding the transfer of government-owned technology, particularly re-
lating to nuclear energy.
We want to try to involve OPEC countries and more advanced de-
veloping countries, such as Brazil and India, in expanded energy re-
search and development cooperation with industrialized countries in
the IEA. The new participants in IEA projects would be asked to share
equitably in the costs and benefits of these projects.
To meet the needs of LDC’s for technical assistance, the U.S. has
proposed as part of the North-South dialogue the establishment of an
International Energy Institute (IEI). The IEI would address the need for
increased flows of energy technology to LDCs by providing up-to-date
information on relevant technology and facilitating access to it. It
would also provide needed technical assistance in assessing resource
potential, developing energy strategies, training technicians and man-
agers, and promoting and facilitating exploration.
A program proposal for the examination of non-nuclear alterna-
tives of energy for developing countries has been submitted to you in
support of the U.S. non-proliferation policy. This program has the ele-
ments of an energy research cooperation program plus a broader con-
ventional energy resource definition element. This program would ad-
vance our non-proliferation goals, demonstrate concern about the
quality of life in developing countries, and improve our knowledge of
conventional energy resources.
[Omitted here is discussion of international fuel cycle evaluations.]
428 Foreign Relations, 1969–1976, Volume XXXVII
124. Telegram From the Department of State to Selected
Washington, June 7, 1977, 0004Z.
130415. Subject: Fahd Visit and Oil Prices. Ref: Abu Dhabi 1623;
1. The following is for your background information and guidance
in dealing with the oil price question. Fahd’s visit provided an oppor-
tunity for highest level USG officials to express appreciation for the
price and production policies being pursued by Saudi Arabia and
to stress the importance of continued moderation. We and the
Saudis agreed that energy price increases have a particularly dam-
aging effect on poorer developing countries, on certain of the
weaker economies among the industrialized countries, and on world
economy generally. The Saudis affirmed their commitment to mod-
eration and specifically assured us that they would not use price
and production decisions to try to leverage the Middle East political
2. Our prime objective in bilateral dealings with Saudi Arabia and
other producers remains that of discouraging future OPEC price in-
creases. We gave no signal that we favor a price compromise within
Source: National Archives, RG 59, Central Foreign Policy Files, D770201–0952.
Confidential; Priority. Drafted by Donald F. Hart, Officer-in-Charge of Producer Country
Affairs (EB/ORF/FSE), cleared by Cooper, Sober, Bosworth, and in S/P, ARA, FEA, and
the Treasury Department; and approved by Katz. Sent to Cairo, Caracas, Dhahran, Doha,
Jakarta, Jidda, Kuwait, Lagos, Libreville, London, Manama, Paris, Quito, Tehran, Tripoli,
Tokyo, Baghdad, Algiers, and Abu Dhabi.
In telegram 1623 from Abu Dhabi, May 31, Ambassador Dickman asked the De-
partment to “promptly” give him “something to tell the UAE authorities regarding Fahd
visit, particularly as it relates to energy.” (Ibid., D770193–0030) In telegram 124499 to
Jidda, May 28, and repeated to other posts, the Department reported that Carter’s May
24–25 meetings with Fahd in Washington not only focused on “the Middle East prob-
lem,” but also on “a number of international and bilateral economic issues and matters
affecting Saudi and regional security.” (Ibid., D770191–1151) The memoranda of conver-
sation of their meetings are scheduled for publication in Foreign Relations, 1977–1980, vol-
ume XVIII, Middle East Regional; Arabian Peninsula. Vance’s May 24 luncheon with
Fahd is described in telegram 122169 to Jidda, May 26. (National Archives, RG 59, Central
Foreign Policy Files, D770189–0081) Schlesinger met with the Crown Prince on May 26
and expressed “his appreciation for the great contribution” that Saudi Arabia had made
“to stabilizing the price of oil.” (Memorandum of conversation, May 26; Library of
Congress, Manuscript Division, Schlesinger Papers, Box 1, Saudi Arabia)
February 1977–January 1979 429
producers to increase prices by five percent in July, they are holding
their options open. We favor no price increase. If the Saudis raise their
prices at all, we expect they would seek an understanding that would
call for a period of stability in the prices of the upper tier producers be-
yond the end of 1977.
3. The President’s proposals to Congress
to move US domestic oil
prices toward world levels through phased-in tax and price increases
do not constitute a shift in US policy toward endorsement of OPEC
price increases. The purpose of the President’s plan is to promote con-
servation by charging oil and gas users more realistic prices, recogniz-
ing the reality though not the propriety of high world oil prices.
4. US acceptance of the need to conserve energy does not indicate a
lessening of our concern about OPEC price decisions and their impact.
On the contrary, the interests of industrialized countries, LDCs and the
OPEC nations themselves, require world economic stability and thus
stability in the price of oil.
On May 20, the Embassy in Jakarta reported that Indonesia and “at least nine
members” of OPEC agreed to freeze oil prices for the remainder of 1977 instead of raising
prices by 5 percent on July 1 as had been decided at the December 15–17, 1976, meeting in
Doha. According to Indonesian Director of Oil and Gas Wijarso, a recent visit by Vene-
zuelan President Pe´rez had been the “chief catalytic agent” for the agreement. Wijarso
added that Carter’s new energy policy persuaded some OPEC members to defer an addi-
tional price hike. (Telegram 6619 from Jakarta, May 20; National Archives, RG 59, Central
Foreign Policy Files, D770180–0461) The Indonesian Minister of Mines, Mohammad
Sadli, explained the rationale behind the price freeze as a “unilateral gesture by OPEC
eleven to pave way for eventual price unity with Saudi Arabia.” He said that a compro-
mise was necessary to “preserve OPEC solidarity, maintain Third World unity, and elim-
inate differences prior to Paris CIEC meetings.” (Telegram 6738 from Jakarta, May 24;
See footnote 3, Document 122.
430 Foreign Relations, 1969–1976, Volume XXXVII
125. Telegram From the Department of State to the Embassy in
Washington, June 17, 1977, 1908Z.
141244. Subject: CIEC;
Energy Policy after CIEC; Continuing En-
ergy Consultation. Ref: Bern 2578.
1) When replying to Jolles’ questions posed reftel re energy policy
in wake of CIEC, you should make the following points.
2) The US is now reassessing, in the light of the recently concluded
CIEC, the advisability of continuing to seek an on-going energy dia-
logue between producers and consumers. We intend to consult fully
with other industrialized countries on this before deciding whether to
continue to pursue an on-going energy dialogue, and if so, the tactical
considerations of how and in what forum it should be pursued. (The
June 27–28 meeting of the IEA Governing Board
should provide an ini-
tial opportunity for such consultations.) We also believe that low-key
consultations with some major oil-importing LDCs, and perhaps key
producing countries, on these questions would be beneficial.
3) While it may or may not be advisable to continue seeking an
on-going energy dialogue, industrialized countries should realize that
Source: National Archives, RG 59, Central Foreign Policy Files, D770218–1059.
Confidential. Drafted by Milam; cleared in EUR/RPE, EB/ORF/FSE, the White House,
Treasury Department, and FEA; and approved by Bosworth. Repeated to Ankara, Ath-
ens, Bonn, Brussels for the Embassy and USEEC, Canberra, Dublin, Copenhagen, Hel-
sinki, Lisbon, London, Luxembourg, Madrid, Paris for the Embassy and USOECD, Oslo,
Ottawa, Reykjavik, Rome, Stockholm, The Hague, Tokyo, Vienna, and Wellington.
The final CIEC Ministerial meeting was held in Paris May 30–June 3. While the
countries representing the Northern and Southern Hemispheres “reached agreement on
a number of issues” regarding the CIEC’s four areas—energy, raw materials, develop-
ment, and financial affairs—a “lack of agreement on on-going energy consultation pro-
cess” signified a “gap” in the overall package. (Telegram 16350 from Paris, June 3; ibid.,
D770198–0487) Telegram 16351 from Paris, June 3, transmitted the CIEC’s final commu-
nique´. (Ibid., D770206–0274) Telegram 17849 from Paris, June 16, contains an informal pa-
per by the IEA Secretariat on the implications of the CIEC meeting’s outcome for the
Agency. (Ibid., D770215–0780)
In telegram 2578 from Bern, June 8, Ambassador Davis reported that Swiss State
Secretary for Foreign Economic Affairs Paul R. Jolles had expressed concern over the
failure of the CIEC to achieve “any continuing dialogue on energy questions with the
producing countries.” Consequently, Davis requested information on how the United
States envisioned the future role of the IEA and, more generally, on the future of U.S. for-
eign energy policy. (Ibid., D770204–0022)
At the June 27–28 meeting, the Governing Board agreed to forward for Ministerial
approval a draft decision “encompassing a group oil import objective for 1985 of 26
MMBD, endorsement of a set of 12 principles for energy policy, and strengthened na-
tional review procedures designed, inter alia, to monitor progress toward achievement of
the group objective.” The Governing Board’s endorsement of the 12 principles repre-
sented a “firm political commitment” but was “not legally binding.” (Telegram 19301
from Paris, July 1; ibid., D770252–0903)
February 1977–January 1979 431
such a dialogue does not hold the key to reducing the strain on avail-
able oil supplies now forecast for early 1980’s and the concomitant up-
ward pressure on the oil price. The only effective solution to this
problem lies in action by consuming countries to reduce dependence
on imported oil. (In fact, action to reduce dependence is a key to a suc-
cessful dialogue with producers.) For industrialized countries this
entails conservation and to increase production of alternative con-
ventional and non-conventional energy sources. For consuming devel-
oping countries it mainly entails efforts—assisted through the coopera-
tion program outlined at CIEC—to increase exploration for and
development of indigenous energy resources.
4) Our interest in and support of the IEA is undiminished. It re-
mains, in our view, the principal vehicle for industrialized country en-
ergy cooperation. We believe the reduced dependence program now in
final stages of preparation in the IEA to be a key step in our collective
progress toward that goal.
126. Telegram From the Department of State to the Embassy in
Washington, June 18, 1977, 1828Z.
142372. Subject: Oil Prices: Message From the Secretary to Crown
1. Please deliver the following letter from the Secretary to Fahd:
2. Begin text:
Your Royal Highness, your recent visit here
did much to reaffirm
and strengthen the relationship between our two countries. The Presi-
dent and the others of us who were privileged to meet with you bene-
fitted greatly from your views and counsel on a wide variety of issues.
We shall wish to keep in close touch with you on the broad range of
matters affecting the common interests of our nations.
Source: National Archives, RG 59, Central Foreign Policy Files, D770218–1164. Se-
cret; Immediate. Drafted by Sober; cleared by Katz, Cooper, and in the NSC and White
House; and approved by Vance.
See Document 124 and footnote 2 thereto.
432 Foreign Relations, 1969–1976, Volume XXXVII
I would like to raise with you at this time one subject of very high
and continuing importance to both of our countries and also to the
global economy: the question of oil prices. When you were here, the
President expressed our appreciation for the policy of your gov-
ernment on this subject, and we were extremely pleased to hear your
reaffirmation of the determination of the Kingdom of Saudi Arabia to
continue its course of moderation with regard to oil prices.
Following your visit, there have been some reports to the effect
that your government intends to increase the price of Saudi oil by five
percent within the coming month, in the context of the forthcoming
OPEC meeting. These same reports state that the eleven members of
OPEC which increased their prices by ten percent last January would
forego any additional price increase until the end of 1977. We do not
know whether these reports are correct.
From our point of view, it appears clear that the interests of the
global economy would be best served by avoiding further increases in
the price of oil. With regard to any possible price increases which your
government might be planning for the remaining months of this year,
we trust that you are also considering the desirability of achieving an
understanding that would call for a period of stability in the prices of
the other producers beyond the end of 1977.
I would value greatly your sharing with me your thoughts at this
time on the prospects for oil pricing in the months ahead.
agreed during your visit here, continued cooperation between our two
countries on energy matters will remain of the highest importance. For
our part, the President is continuing to press his proposals for a United
States energy program that places special emphasis on the need for
maximum conservation, and we will wish to keep you informed of the
progress of our efforts in this regard.
On June 29, OPEC announced: “In the interest of unity and solidarity of OPEC, the
following member countries of the organization: Algeria, Ecuador, Gabon, Indonesia,
Iran, Kuwait, Nigeria, Qatar and Venezuela have resolved to forego the application of the
5 percent increase in the price of oil as of 1 July 1977, a decision which was taken in Doha
in December 1976.” (Telegram 6143 from Vienna, June 29; National Archives, RG 59, Cen-
tral Foreign Policy Files, D770232–0451)
On June 26, Fahd replied that Saudi Arabia was “following with concern the fluc-
tuating oil prices in OPEC producing states.” He continued: “Saudi Arabia believes that
such fluctuations do not serve the common interests of the producing states themselves;
that wisdom and moderation call for an end to this situation, and thence for an attempt to
create a positive dialogue in the light of which a single formula for oil might be reached
during the coming period.” A unified price for oil, Fahd wrote, was “definitely in the in-
terest of consumers,” even if that entailed “an increase in the price of oil exported from
Saudi Arabia and the United Arab Emirates” due to “the absence of an oil price hike” by
the other OPEC members. However, Fahd concluded, “the prices—as Your Excellency is
aware—are basically subject to the law of supply and demand.” (Telegram 4503 from
Jidda; ibid., D770228–0548)
February 1977–January 1979 433
The President has asked me to convey to you, and through you to
King Khalid, his warmest wishes and his hopes for your good health. I
join in these wishes and hopes. Sincerely, Cyrus Vance End text.
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