Foreign relations of the united states 1969–1976 volume XXXVII energy crisis, 1974–1980 department of state washington
Telegram From the Department of State to Selected
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- 197. Notes of Summit Preparatory Group Meeting
- 198. Letter From President Carter to French President Giscard d’Estaing
- Jimmy Carter
- 199. Briefing Memorandum From the Acting Assistant Secretary of State for Economic and Business Affairs (Hormats) to the Deputy Secretary of State (Christopher)
196. Telegram From the Department of State to Selected
Washington, April 5, 1979, 0024Z.
84259. Action for USEEC. Subject: The President’s Energy Speech.
Reference: State 83465.
1. As explained in reftel Ambassadors or senior Embassy officer
are to deliver the following personal message from the President on
April 5. In the greeting post should insert just the first name of the chief
of government except Tokyo which should insert Mr. Prime Minister.
2. Additional information on speech will follow septel.
3. Any initial reactions should be reported.
4. Begin text.
Thursday night I will announce my decision to let US oil prices be-
ginning June 1st to rise to world levels. This increase will take place
gradually, but with increased domestic production and reduced con-
sumption emphasized early in the process. Full decontrol will be
achieved in September 1981.
The phasing-out of some controls past the
December 1980 deadline set at the Bonn Summit will minimize the
Source: National Archives, RG 59, Central Foreign Policy Files, D790155–0557.
Confidential; Immediate. Drafted by Carol K. Stocker (EUR/RPE); cleared by Schles-
inger, Owen, and in EA and EB; and approved by Cooper. Sent to Bonn, Brussels, Lon-
don, Ottawa, Paris, Rome, and Tokyo.
The President’s April 5 address to the nation on energy is printed in Public Papers
of the Presidents of the United States: Jimmy Carter, 1979
, pp. 609–614. He began the speech
with the statement: “Our Nation’s energy problem is very serious—and it’s getting
In telegram 83465 to Bonn, Brussels, London, Ottawa, Paris, Rome, Tokyo, Jidda,
and Riyadh, April 3, sent in anticipation of the President’s speech, the Department in-
structed Ambassadors or senior Embassy officers to “seek an appointment with
high-level energy official to provide briefing before the President’s speech.” Briefing ma-
terials would be provided on April 4, and Carter would send “a personal message to the
heads of state of the Summit countries and Jenkins of EC notifying them of his speech and
asking them to make a public statement of support.” (National Archives, RG 59, Central
Foreign Policy Files, D790153–1227)
The Embassy in Paris reported that Lantzke “thought U.S. decision to decontrol
oil prices would be very welcome to International Energy Agency partners.” Lantzke also
said that he “doubted that there would be significant criticism of the nine-month slip-
page” from the U.S. pledge at the Bonn Summit to reach world price levels by the end of
1980. “Given U.S. domestic considerations,” he commented, “the President’s program
goes as far as can reasonably be expected.” (Telegram 11139 from Paris, April 6; ibid.,
624 Foreign Relations, 1969–1976, Volume XXXVII
burden on our anti-inflation program, which the Bonn Declaration de-
fines as the United States’ top priority.
In my speech, I will describe measures to restrain oil imports in
fulfillment of our recent pledge at the International Energy Agency.
I will also announce a major program for developing and testing
new energy technologies, which will involve substantially increased
expenditures. The costs of this intensified US energy research and de-
velopment will be met from the proceeds of new taxes which I will ask
the Congress to enact, in order to capture excessive oil company profits
resulting from decontrol. My decision to decontrol oil prices is not con-
tingent on passage of these taxes.
The actions that I will announce are intended, in large measure, to
stabilize the international oil market and currency markets, on which
all our economies depend. I would appreciate any public or private
comment you may wish to make. The initial international reaction will
be important in shaping public opinion and future decisions of energy
producers and consumers.
While my speech will deal with domestic measures, I will also
state that success in developing new energy technologies requires in-
tensified international cooperation. I hope that a wider international ef-
fort to this end can be mounted, which we can discuss at the Tokyo
5. End text.
6. Posts except Tokyo should use “Jimmy” as signature line. Tokyo
should use “Jimmy Carter”.
See footnote 3, Document 157.
Carter was referring to the March 2 IEA decision to reduce consumption by 5 per-
cent. See footnote 6, Document 192. At its March 30 meeting, the IEA Governing Board
noted that member countries “had made a start toward implementation” of its March 2
decision “to restrain aggregate demand for crude oil on world markets by five percent by
the fourth quarter of 1979.” The Board agreed that “the oil supply crisis was far from
over,” and speakers at the meeting “repeatedly stressed that only strong, collective action
could forestall a ‘disastrous’ upward price spiral.” Some delegations, as well as the IEA
Secretariat, “thought the time had come to actively seek contacts with OPEC” but most
“appeared to share the US delegation’s skepticism in that regard.” (Telegram 85953 to
OECD capitals, April 7; National Archives, RG 59, Central Foreign Policy Files,
Carter proposed a new windfall profits tax on the “unearned” profits of oil com-
panies. The taxes would fund an Energy Security Trust Fund to develop alternative en-
January 1979–January 1981 625
197. Notes of Summit Preparatory Group Meeting
Hakone, Japan, April 5, 1979.
Notes on Summit Preparatory Meeting
[Omitted here is discussion unrelated to energy.]
There was a brief discussion of the impact of Iran on the world en-
ergy picture. Hunt added that because of Iran, and for other reasons as
well, the United States’ energy situation took on even greater signifi-
cance than it did in Bonn. The United States should indicate what it had
done since Bonn. Owen agreed that the United States should be pre-
pared, and will be prepared, to provide information on developments
in its energy program. He further added that six points should be cov-
ered in the energy paper:
1) efforts to reduce consumption, 2) in-
creased investment in energy either through target pledges or increases
in specific types of investment, such as coal, 3) an understanding on
trade and coal, 4) R&D paper, multilateralizing the Japan-U.S., US/EC
arrangements, 5) a progress report on INFCE and 6) aid to LDC energy
production including R&D, support for new World Bank exploration
and financing programs and greater bilateral efforts. Froment-Meurice
said he was “pleased” that the United States will explain how it has ful-
filled its commitments at Bonn. The Summit at Tokyo should say more
about energy than Bonn. Amaya’s target for reduced oil imports is a
good idea. We should also attempt to have our efforts to build more nu-
clear plants supported by the Summit. We should agree on a
stepped-up energy dialogue with the developing countries, but the
question is how to do it. This is a Saudi proposal and we should not for-
get about it.
Cooper stressed that energy might be the theme of the Summit.
Owen agreed that the United States should provide a paper on this sub-
ject, explaining what we had done, along with other countries. Miya-
zaki said it was his impression that on the dialogue point Denmark is
exploring the issue with the Saudis. There are risks. If the atmosphere is
friendly we should encourage the dialogue, but we should avoid
Source: Carter Library, Staff Office Files, Council of Economic Adviser File, Box
86, Tokyo Summit, 1979–1. No classification marking. Drafted by Hormats. The full text
of the notes of this meeting is scheduled for publication in Foreign Relations, 1977–1980,
volume III, Foreign Economic Policy. The Preparatory Group for the Economic Summit
met in Hakone to draft papers for the Summit. See Document 203.
626 Foreign Relations, 1969–1976, Volume XXXVII
alarming noises. In any case our own conservation efforts must be
Owen added that we should point out that energy is a long-term
problem, but we must begin confronting it in the short-term. Hunt indi-
cated that we should deal with this issue quietly and do all we need to
do at the Summit to strengthen our individual and collective efforts.
This will build confidence. The IEA has been helpful. We need to do
something in addition to what we are doing and it would be helpful to
focus on this issue at the Summit. The situation will be bleak in the next
year or two. We need to strike a note of confidence. I am encouraged
that the U.S. will provide a paper.
Schulmann said he agreed with the thrust of the discussion. Some
progress had been made in reducing consumption, but we will have to
figure out how we can do more. On production, the Summit might give
a strong commitment to nuclear energy. A focus on coal might be
useful—for instance, improved mining and trade arrangements. We
should also discuss the LDC aspects of the energy problem and con-
sider the idea of a dialogue, including an assessment of its pros and
Tickell pointed out a danger in duplicating the IEA and the EC. He
pointed out that the European Council had discussed this problem, and
the EC was taking fundamental action. Hunt said this was not a prob-
lem; the Summit could give things a push. Owen stressed that the pa-
per should not, as last year,
be a consensus document. It should not
drop promising ideas just because one or two countries cannot agree
with them. Miyazaki indicated that Amaya will chair the group.
Johnstone pointed out that a lot of things were happening in the
energy field. Energy people will meet in the context of the OECD and in
the period leading up to the IEA. The Summit should go beyond the
work of other occasions and not be brought down to the level of other
organizations. We should raise our sights above other institutions.
Owen, responding to a question by Johnstone said the group should
not deal with INFCE.
Froment-Meurice said that the energy group should deal with the
1979–82 energy situation. Hunt agreed with Owen that the Amaya
group should avoid trying to seek the lowest common denominator.
Hunt argued that there should be only a small number of people, say
three, working under Amaya to avoid the lowest common denomi-
nator approach. Schulmann indicated that all participants should be
represented. It was agreed that the paper should be presented by the
end of April. There would be a meeting of one or two from each
Reference is to the Bonn Declaration; see footnote 3, Document 157.
January 1979–January 1981 627
country to help Amaya with the paper. Johnstone said that the key en-
ergy people will be getting together in Paris in April so that Amaya
might hold his meeting in conjunction with that gathering.
Schulmann indicated his concern with the lack of progress in fol-
lowing up the Bonn commitment to coordinate programs in the area of
renewable energy. In his view progress had been too slow; we should
speed up progress so that a report will be ready for the Tokyo Summit.
Cooper indicated that there was an important distinction between the
coordination of bilateral programs, which in his view was what the
group established at Bonn was supposed to do, and a coordinated pro-
gram. Schulmann agreed that Cooper’s formulation was accurate.
Johnstone indicated that he was satisfied that while the group had
begun slowly it was now well on its way to completing its report.
said that the group had already exchanged valuable information on
programs in this area and had good potential. Tickell reported that a
Commission official who was a member of the group was reasonably
pleased with progress, and that a meeting will be held on April 3 to ex-
amine drafts which contain a description of the needs of the developing
countries and how developed countries should respond. Schulmann
underlined again two concerns: first, that the Bonn Summit undertook
a commitment to coordinate efforts within one year, and that unless we
did this we would have a credibility problem with the developing
countries, and second that sometimes countries are reluctant to get into
new fields, so that an international effort will be needed to help squeeze
adequate sums out of ministries in the capitals. Miyazaki said that the
Amaya group will need to examine the work done in this area to make
sure that adequate progress has been made.
[Omitted here is discussion unrelated to energy.]
628 Foreign Relations, 1969–1976, Volume XXXVII
198. Letter From President Carter to French President Giscard
Washington, April 11, 1979.
Thank you for your generous letter.
It was good of you to signal so
forcefully and promptly your approval of the decisions that I have
taken on energy. Your statement was noted in the U.S. press, and this
We would be delighted to receive Minister Giraud, in order to ex-
change views about what has been done and needs to be done by the
European Community and the United States to conserve and produce
energy. I believe this visit would be most useful if it took place in late
May. I am sure that such an exchange would contribute greatly to a suc-
cessful Summit, where energy will be one of the main items for
We are fortunate that you are President of the European Commu-
nity at this time. The Community’s leadership and contribution will be
essential, if there is to be an effective energy program by the industrial
countries. I look forward to working closely with you to this end, in the
months immediately ahead and at the Tokyo Summit. The helpful
statement of support that you were kind enough to send me is a good
start, and a hopeful augury, in this cooperation.
I close by expressing my appreciation for the constructive attitude
shown by your government in recent MTN negotiations.
Source: Carter Library, National Security Affairs, Brzezinski Material, President’s
Correspondence with Foreign Leaders File, Box 6, France: President Valery Giscard
d’Estaing, 12/78–4/80. No classification marking. Deputy Chief of Mission of the Em-
bassy in Paris Christian Chapman delivered Carter’s letter on April 13 to Franc¸ois de
Combret, Deputy Secretary General of the Foreign Ministry, who made “no substantive
comments but expressed “genuine appreciation for the tone of the letter.” (Telegram
12093 from Paris; National Archives, RG 59, Central Foreign Policy Files, D790174–0310)
Brzezinski forwarded Giscard’s letter to the President on April 6, calling it “a very
positive message from Giscard complimenting you on your energy speech. He particu-
larly stresses the agreement by the European Community to reduce its energy consump-
tion in 1979 by about 25 million tons of oil. He wants to send his Minister of Industry here
to compare notes on both European and American energy programs. The French will an-
nounce public support for your speech on Friday April 6.” Carter wrote on Brzezinski’s
memorandum: “Zbig—Good response. J” Both Brzezinski’s memorandum and Giscard’s
letter are in Carter Library, National Security Affairs, Brzezinski Material, President’s
Correspondence with Foreign Leaders File, Box 6, France: President Valery Giscard
January 1979–January 1981 629
199. Briefing Memorandum From the Acting Assistant Secretary
of State for Economic and Business Affairs (Hormats) to the
Deputy Secretary of State (Christopher)
Producer-Consumer Conference on World Oil Market Conditions
This memorandum responds to your request
for an analysis of the
advantages and disadvantages of a conference or informal discussions
between oil producing and consuming countries on world oil market
We have been and are interested in any dialogue with oil exporters
that is likely to be productive. Such a dialogue ideally would further
convince OPEC countries of their stake in the health of the world econ-
omy, and the importance to that health of stable supplies of oil at rea-
sonable prices; it would also be a way of mobilizing pressures from de-
veloped and developing countries alike for moderate OPEC policies.
We actively pursue these ends in our bilateral relations with key OPEC
countries—notably Saudi Arabia, but also Venezuela, Kuwait, Abu
Dhabi and others. We favor a multilateral dialogue as well, but as yet
we have no reason to believe that the time is ripe for formal or informal
multilateral discussions between oil exporters and oil importers on the
key questions of oil prices and supply.
We made a major effort to achieve a meaningful dialogue in the
1977 Conference on International Economic Policy (CIEC)
but we were
stymied by the strong opposition of OPEC countries as a group, not-
withstanding indications that the Saudis and perhaps a few others
were disposed to engage in further discussions so long as they did not
deal directly with price. Since then, OPEC countries have strongly op-
posed attempts within the UN (e.g. by the Secretary General and in re-
lation to the preparations for the 1981 Conference on New and Renew-
able Energy) to promote discussions of oil supply and demand, even
when they were assured there would be no explicit references to price.
They appear to consider any multilateral discussions as a threat to their
freedom in making pricing and production decisions.
Source: National Archives, RG 59, Central Foreign Policy Files, P790149–2314.
Confidential. Drafted by Rosen on April 12 and concurred in by Robert M. Beaudry
(EUR/RPE) and Twinam. Sent through Cooper.
See footnote 2, Document 125.
630 Foreign Relations, 1969–1976, Volume XXXVII
The time for pursuit of a broad initiative for a dialogue is particu-
larly bad now, because the oil market is tight and we have little bar-
gaining power. We would risk appearing not only as demandeurs but
as supplicants. We will be in a somewhat better position when concrete
results are visible from the consuming countries’ recent decision to re-
duce oil imports by 5 percent. (Even then, it is probable that OPEC
would insist on broadening any discussion to include a whole range of
North/South issues on which we would have limited flexibility, in ef-
fect a replay of CIEC.) In this regard, in a recent memorandum pre-
pared for Dr. Brzezinski, Walter Levy concluded that before undertak-
ing any joint discussions with OPEC, oil importers need a joint policy
and course of action—including the allocation of oil among and within
countries, and measures for the support of financially weaker nations.
The Saudis appeared to be inviting a broader dialogue in a com-
munique´ issued in February.
They have since backed off, making it
clear that they are unwilling to discuss the topic of most interest to the
US—oil prices—in a multilateral forum. Saudi Petroleum Minister
Yamani told our Ambassador that he was not present when the Saudi
royal court issued the communique´, implying that its form and sub-
stance would otherwise have been substantially altered.
In Europe there is a vague but widespread desire for such a dia-
logue. The French are currently pressing the European Community to
seek a dialogue with OPEC. We understand that the French have re-
ceived little encouragement from Yamani, though they may not have
been entirely candid in their reports to other EC countries. Moreover,
we are concerned that the French may be trying to achieve a short-term
advantage in the oil market through distancing the EC from the U.S.
with respect to the Middle East peace effort. Guido Brunner, Energy
Commissioner of the European Communities, has been trying to sell
his own plan for a five man experts group, including representatives
from the U.S. and Japan. West German Chancellor Schmidt apparently
has been urging bilateral contacts between oil producers and consum-
ers but there are contradictory reports on whether he believes the time
is ripe for a multilateral dialogue.
We believe we should continue to explore the possibilities for a di-
alogue between oil exporters and importers. This should be done in a
In an April 18 memorandum to Brzezinski, Poats described Levy’s paper as
“strong on analysis of the problem and short on feasible remedies.” The paper is Tab B to
Poats’s memorandum. (Carter Library, National Security Affairs, Staff Material, Interna-
tional Economics File, Box 45, Rutherford Poats File, Chron, 4/12–30/79)
reported on February 28 that Saudi Arabia had issued a Royal
court decree announcing that it would not raise oil prices during the first quarter of 1979
and calling for a meeting of oil producers and consumers.
January 1979–January 1981 631
low key way, however, mindful of the implications for both our Middle
East policy and for our relations with key European allies.
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