Foreign relations of the united states 1969–1976 volume XXXVII energy crisis, 1974–1980 department of state washington
Letter From President Carter to Indonesian President
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- Jimmy Carter
- 143. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter
- 144. Paper Prepared by the National Security Council Staff
- 145. Summary of Conclusions of Special Coordination Committee Meeting
141. Letter From President Carter to Indonesian President
Washington, December 14, 1977.
Dear Mr. President,
I am writing to express my hope that you will support a freeze on
oil prices at the forthcoming meeting of the Organization of Petroleum
Exporting Countries, and to explain why I believe this is necessary in
order to sustain world economic security.
I have become increasingly concerned in recent months over the
outlook for the global economy. Many nations, in both the developed
and developing worlds, suffer from persistent unemployment, massive
trade deficits, large external debt, and low rates of growth. Pressures
for protectionism are rising. International lending institutions are be-
coming more cautious.
If these conditions continue, the world economy could suffer
lasting damage. Over the last thirty years, the nations of the world have
cooperated to reduce trade barriers and to expand resources for devel-
opment. They have created an environment which offers developing
countries improving prospects for long-term growth. These gains
could be eroded by economic stagnation and protectionism.
All our countries must work closely together in the critical months
ahead to avert these setbacks. Our energy policies will be the key to the
outcome. In my energy program, I have recognized the responsibility
of the United States to reduce the growth of its demand for fossil fuels,
and thus help prevent future shortages. At the Caracas meeting, the
most effective contribution which your government and the other
member governments could make to world economic recovery would
be to freeze the price of oil, at least through 1978. I believe that a freeze
would serve the long-run economic interest of all countries, producers
as well as consumers. At this critical juncture, any increase in the price
of oil in 1978 would strain the system of trade and finance on which we
Because this question of an oil price freeze is crucial to world
economy recovery, it is at the center of my concerns in respect to both
Source: Carter Library, National Security Affairs, Brzezinski Material, President’s
Correspondence with Foreign Leaders File, Box 9, Indonesia: President Suharto,
12/77–1/80. No classification marking. A similar letter to Pe´rez was personally delivered
by Vance on November 23; see footnote 7, Document 138. On December 13, the President
also sent similar letters to Sheikhs Sabah, Khalifa, and Zayed, which are in telegram
296833 to Kuwait, telegram 296835 to Doha, and telegram 296836 to Abu Dhabi, respec-
tively. (National Archives, RG 59, Central Foreign Policy Files, D770474–0828, D770463–
466 Foreign Relations, 1969–1976, Volume XXXVII
domestic and foreign policy, and I am grateful for the opportunity to
share my views with you about it.
I am pleased that under your leadership Indonesia and the United
States have intensified their collaboration on political and social, as
well as economic, issues. I look forward to continued close cooperation
for the well-being and security of both our peoples.
Best personal wishes to you—
President Carter added the initialed postscript by hand.
142. Telegram From the Department of State to the Embassies in
the United Arab Emirates, Kuwait, and Qatar
Washington, December 23, 1977, 2252Z.
306595. Subject: Expression of Appreciation re OPEC Decision.
1. Action addressee Ambassadors should, at earliest opportunity,
express at appropriately high level satisfaction of USG that oil prices
were not raised at Caracas OPEC meeting
and USG appreciation for
the efforts of those OPEC governments which worked to prevent the
price increase. You may wish to draw on Dept’s December 22 statement
Source: National Archives, RG 59, Central Foreign Policy Files, D770480–0553.
Confidential; Immediate. Drafted by Twinam, cleared by Bosworth, and approved by So-
ber. Repeated Priority to Tehran and Jidda.
The second OPEC summit conference was held December 20–21. On the second
day, the Embassy in Caracas reported: “The Caracas OPEC conference concluded with a
freeze on oil prices for at least six months, but little else. The price issue was discussed,
and while the members could not agree on an increase, there was no open split as had oc-
curred a year ago. Pres Perez’s proposal to increase assistance to the third world appar-
ently fell on deaf ears, in part possibly due to his over enthusiastic efforts to promote it
among the assembled OPEC Ministers.” (Telegram 12394 from Caracas, December 22;
ibid., D770479–0764) Previous reports on the conference are in telegrams 12330, 12331,
and 12367 from Caracas, December 21. (All ibid., D770475–1016, D770475–1252,
February 1977–January 1979 467
on this subject (State 305543)
noting our mutual conviction that any
price increase would have been damaging to international financial
markets and the world economy and would have aggravated the al-
ready difficult economic situation of many developing countries. You
may wish to note that position of those Gulf countries opposing an in-
crease appears to us to underscore the strong common interest between
the Gulf countries and the industrial world, including the US, as well as
that cooperation among Gulf states which US policy has long wel-
comed. You should stress that the OPEC decision will help our efforts
to sustain economic expansion and reduce inflation and that we partic-
ularly welcome indications that leaders of a number of oil producing
countries oppose any price increase through at least the full year 1978.
Over coming months we will want to continue our dialogue with the
Gulf governments about the international economic situation and the
effect of oil prices on it. You should also note that for our part the US
recognizes the need to press ahead with the enactment of a strong do-
mestic energy program.
2. FYI: Separate messages are being conveyed to Jidda and Teh-
Telegram 305543 to all diplomatic posts, December 22. (Ibid., D770478–0800)
Carter sent a personal message to Khalid on December 23 expressing his “sincere
appreciation” for Saudi Arabia’s “successful efforts to prevent an increase in oil prices.”
He added that he was “heartened by press reports” of a statement by Yamani that “there
would not be any increase in oil prices throughout the year 1978” and concluded that he
intended to “push ahead with the enactment and implementation of a meaningful do-
mestic program of energy development and conservation.” (Telegram 306484 to Jidda;
ibid., D770480–0341) He also sent a message to the Shah on December 23. (Telegram
306483 to Tehran; ibid., D770480–0340)
468 Foreign Relations, 1969–1976, Volume XXXVII
143. Memorandum From the President’s Assistant for National
Security Affairs (Brzezinski) to President Carter
Washington, January 24, 1978.
Secretary Schlesinger’s Talk with Fahd and Yamani
Jim Schlesinger talked at length with Crown Prince Fahd and Zaki
Yamani last week.
Much of the conversation simply rehearsed well
known Saudi and U.S. positions. The following points are of interest:
—Fahd expressed concern that major increases in Saudi produc-
tion would damage the oil fields. Schlesinger stated this was a technical
problem that required more study.
—Yamani said that predictions of Saudi production levels of 18
mbd or even 16 mbd were not realistic. He felt there could be an in-
crease to 12 mbd by 1983. Schlesinger told Fahd he believed 14 mbd
was the outer limit for production by Saudi Arabia, and “feasible re-
ality” was between 12–14 mbd.
—Both Fahd and Yamani wondered if the Caracas price freeze
may not have been a mistake. They felt that a series of small increases
might be easier for the West to absorb than a single, huge price increase
when demand catches up with supply. At that point no one will be able
to prevent a major price increase. Yamani believed that there could be
an increase of as much as 40 percent in the price of oil by 1980.
—Yamani thought the current oil price freeze will last through
1978. He also felt the soft market for oil would last at least through the
—Yamani noted the critical role Iraq will play in the future in de-
termining oil prices. He thinks they have the capability to increase their
production from 1.7 mbd at present to 2.2 mbd.
—Yamani complained that tax problems, particularly the taxation
of individual Americans, make it difficult for Saudi Arabia to structure
Source: Carter Library, National Security Affairs, Brzezinski Material, Agency
File, Box 8, Energy Department, 5/77–5/78. Secret. Outside System. Sent for information.
A stamped notation on the first page reads: “The President has seen.”
A Department of State record of the January 14 and 15 discussions is in telegrams
453 and 454 from Jidda, January 19. (National Archives, RG 59, Central Foreign Policy
Files, P850033–0080, P850071–2617) Memoranda of conversation prepared in the Depart-
ment of Energy are in the Library of Congress, Manuscript Division, Schlesinger Papers,
Box 1, Saudi Arabia.
See footnote 2, Document 142.
The words “40 percent” and “oil by 1980” are underscored and an exclamation
point was written in the margin, presumably by Carter.
February 1977–January 1979 469
joint ventures with U.S. firms. He felt that some restructuring of the
Joint Commission could improve cooperation in technology transfer.
—Fahd stressed the necessity of including Palestinians outside the
West Bank and Gaza in any future plebiscite, citing the Palestinians in
Kuwait as an example of the “terrible events” which could occur if they
feel they are being ignored.
The Joint Economic Commission was one of the joint commissions established by
the United States and Saudi Arabia in 1974 to develop and broaden economic and mili-
tary cooperation. Documentation on the creation of the U.S.-Saudi joint commissions is
scheduled for publication in Foreign Relations, 1969–1976, volume E–9, Documents on
Middle East Region; Arabian Peninsula; North Africa, 1973-1976.
On January 25, Stansfield Turner sent Schlesinger a memorandum informing him
that the Saudi officials with whom Schlesinger had met on January 14 and 15 “were im-
pressed by the reasonableness of the Secretary’s position and his understanding of the
constraints with which the Saudi Government is faced in its oil policies.” They were also
“pleased with the Secretary’s position on moderate increases in the price of crude oil.”
(Library of Congress, Manuscript Division, Schlesinger Papers, Box 1, Saudi Arabia)
Agenda Paper for SCC Meeting on the
Petroleum Supply Vulnerability Assessment
Friday, March 24, 1978
10:30–12:00, Situation Room
The purpose of this SCC meeting is to discuss the principal issues
and conclusions arising from those portions of the interagency assess-
ment of petroleum supply vulnerabilities which do not depend on esti-
mates of future supply and demand. Supply and demand-related is-
sues will be addressed at a second SCC meeting
once analysis of
recently acquired information on technical problems in many OPEC oil
fields is completed.
More specifically, the aims of this meeting are:
Source: Carter Library, National Security Affairs, Staff Material, Office File, Box 8,
Meeting File, SCC Meeting: #67, Held 3/24/78. Secret. The paper is attached to a March
21 covering memorandum from Staff Secretary Christine Dodson to Vance, Blumenthal,
Harold Brown, Schlesinger, Turner, McIntyre, Schultze, and General George S. Brown.
See Document 152.
470 Foreign Relations, 1969–1976, Volume XXXVII
1. to discuss the progress and general direction of US programs to
reduce and to cope with petroleum supply vulnerabilities; and
2. to consider possible new policies further to reduce those
The following are the four principal topics for discussion:
A. Supply interruption contingencies for which the U.S. should be pre-
The seriousness of supply interruptions depends upon their
probability of occurrence and the degree of damage they are likely to
cause. The paper at Tab A
provides a cross section of scenarios which,
although not exhaustive, could plausibly cause interruptions, ranging
from loss of a small percentage of the normal Persian Gulf oil flow to a
total cutoff. Issues for discussion are: With what types of interruptions
should the U.S. be prepared to cope? What types of contingencies
should the U.S. plan to deter? What priorities should be assigned to
B. Military options for preventing oil supply disruptions. At Tab B is a
describing the DOD analysis of military options for dealing with
various oil supply interruption scenarios. Some preliminary analysis is
embodied in the Persian Gulf section of DOD’s Consolidated Guidance
document, and a comprehensive study is underway. Issues for discus-
sion are: What are the primary defense-related national security impli-
cations of an oil supply interruption? What progress has been made in
the DOD analysis, and what will be done in the future? Are the goals of
the DOD study effort consistent with and supportive of the overall oil
vulnerability assessment objectives? Should the scope of the study be
expanded (or contracted)?
C. Measures for coping with oil supply interruptions. The Strategic Pe-
troleum Reserve, the International Energy Agency, and oil conserva-
tion and rationing contingency plans are the three primary vehicles
being developed to ease the effects of any oil supply interruption.
Progress with respect to them is described in the paper at Tab C.
for discussion are: How adequate are existing measures to deal with
supply interruptions? What types of contingencies can these measures
deal with? What additional measures might be pursued?
D. Measures to strengthen the security of Saudi Arabian and Iranian oil
facilities against terrorism.
At Tab D
is a synopsis of two proposals de-
veloped by the Department of State, in cooperation with DOD, CIA,
and DOE, which details a set of specific initiatives for augmenting the
Attached but not printed.
Not attached, but a copy is in Carter Library, National Security Council, Institu-
tional Files, Box 93, SCC 67: Oil Supply—Vulnerability Assessment, 3/24/78.
Attached but not printed.
February 1977–January 1979 471
current anti-terrorist programs in Saudi Arabia and Iran. Issues for dis-
cussion are: What are the feasibility and desirability of offering such
improvements to Saudi Arabia? To Iran? Should the programs offered
be equivalent, or are each country’s needs basically different? What is
the most logical way to approach each of the governments? Should
others (Kuwait, UAE) be included?
145. Summary of Conclusions of Special Coordination Committee
Washington, March 24, 1978, 10:30–11:45 a.m.
Petroleum Supply Vulnerability Assessment
Under Secretary for
Executive Associate Director
Associate Director for
Assistant Secretary for
and International Affairs
International Security Affairs
Lt. Gen. William Y. Smith
Assistant to the Chairman
Senior Staff Economist
National Intelligence Officer
for Political Economy
Samuel P. Huntington
Deputy Assistant Secretary for
Sam Westbrook, III
Commodities and Natural Resources
Under Secretary for Energy
Special Assistant to Assistant
Secretary for International Affairs
Source: Carter Library, National Security Affairs, Staff Material, Office File, Box 8,
Meeting File, SCC Meeting: #67, Held 3/24/78. Secret. The meeting was held in the White
House Situation Room.
472 Foreign Relations, 1969–1976, Volume XXXVII
SUMMARY OF CONCLUSIONS
The United States must be prepared to deter or to cope with a
number of plausible oil supply interruption contingencies, including
those resulting from actions by producing governments and from
physical destruction or seizure of oil facilities. The most probable inter-
ruptions will result from accidents or terrorist or guerrilla action, but
these will usually cause only a minor disruption in the oil flow over a
short period of time. While the political situation in the Middle East
might at some point produce a voluntary production cutback and em-
bargo by OAPEC, the second most probable cause of interruption
would be Saudi decisions to cut back their production or not to increase
their productive capacity because of technical problems, the $4 billion
investment needed for expansion, and/or the feeling the oil was worth
more in the ground. Any Saudi Arabian decision to limit production
would be especially critical. Some felt, however, that Saudi interest in
maintaining their leadership position in OPEC would induce them to
make the capital investment necessary to increase production capacity
to about 13 mmbd. A detailed CIA report on technical problems in
OPEC oil fields, with a special section on Saudi Arabia, should be com-
pleted in about three weeks.
For the near term, the U.S. faces major vulnerability to petroleum
supply interruptions, even with the International Energy Plan,
would have to absorb this shortfall and distribute the imports pri-
marily through crude and product allocation regulations. By the end of
1980, the U.S. will have greater protection and flexibility—primarily
due to a 500 mmb Strategic Petroleum Reserve (SPR). The management
of the SPR has been strengthened and short term goals brought more in
line with expected results (the December 1978 estimate has been low-
ered from 150 to 100 mmb). All agreed it was probably desirable to ac-
celerate SPR purchases so as to more quickly reduce vulnerability and
take advantage of current low prices. DOE was directed to analyze
ways to accomplish this, including acquisition of temporary storage fa-
cilities in the U.S., overseas, or afloat (in oil tankers), and to be prepared
to address the subject at an SCC meeting in late April 1978.
DOD has underway an analysis of the requirements for US mili-
tary forces to protect Persian Gulf oil facilities and SLOCs against hos-
tile military action.
The point was made that this analysis should con-
sider the impact of a permanent US airbase and naval base in the
region. In addition, DOD was tasked to produce contingency plans for
See footnote 6, Document 9.
See Document 144 and footnote 4 thereto.
February 1977–January 1979 473
the use of currently available forces to deal with the most probable So-
viet and Cuban military threats (particularly by forces based in South
Yemen) as well as by hostile local governments. A report on these con-
tingency plans should also be ready for the April SCC meeting.
It was generally agreed that Saudi oil facilities were highly vulner-
able to terrorist attacks and a State-Department-developed six-point
program of action
was approved subject to further study of the
problems it might raise concerning technology transfer and of the ways
in which it could be presented to the Saudis. The fragmentation of secu-
rity planning responsibilities among a number of Saudi ministers and
ARAMCO creates complex bureaucratic rivalries which will make
gaining Saudi acceptance of an effective oil field security program par-
ticularly difficult. Ambassador West will be asked to recommend the
best way of approaching the Saudis on this sensitive subject, and State
will talk with ARAMCO officials in Washington to seek advice and
support. The desirability of proposing a similar program for Iranian fa-
cilities will also be studied. The proposals on how to approach the Sau-
dis and recommendations on an Iranian program will also be discussed
at the SCC meeting at the end of April.
See Document 144 and footnote 6 thereto.
474 Foreign Relations, 1969–1976, Volume XXXVII
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