Foreign relations of the united states 1969–1976 volume XXXVII energy crisis, 1974–1980 department of state washington
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- 221. Minutes of the Tokyo Economic Summit Meeting
January 1979–January 1981 679
220. Telegram From the Department of State to Selected
Washington, June 22, 1979, 2236Z.
161420. Subject: Presidential Letters on Oil Prices.
1. Embassies are requested to deliver letters from President Carter
to head of government at earliest opportunity. Embassies Jidda and Ja-
karta only may either deliver letter or make the points orally at their
discretion. Signed copies of letters will not repeat not be sent. Text
2. First paragraph: Please note variations in opening paragraph.
A. For Caracas only: Vice President Mondale has told me of his ex-
cellent meetings with you and your associates in Caracas in March. I
understand that action is now moving forward on a number of topics
that you discussed, and I look forward to working with you in the
In the spirit of close and continuing cooperation between our two
countries, I thought that you might find it helpful before the June 26
to have some indication of the measures that I believe
Source: National Archives, RG 59, Central Foreign Policy Files, D790325–0282.
Confidential; Niact; Immediate. Drafted by Thomas A. Forbord (E), cleared by Owen and
in S, and approved by Cooper. Sent to Kuwait, Jidda, Jakarta, Lagos, Doha, Caracas,
Quito, Tokyo, and Abu Dhabi.
In his June 20 memorandum requesting that the President approve the letters,
Vance wrote: “While we should not expect too much as the result of such messages, we
concur in these assessments—as do the Treasury and Energy Departments—and think
they would be worthwhile.” (Ibid.)
The meeting was held in Geneva June 26–28. The communique´ issued at the end
of the Ministerial conference announced that OPEC would increase the market price of
crude oil to $18 per barrel. The move would allow member countries to add to the prices
of their crude a “maximum market premium” of $2 per barrel “over and above their nor-
mal differential, if and when such a market premium was necessitated by market condi-
tions.” The maximum price that member countries could charge was not supposed to ex-
ceed $23.50 per barrel, “whether on account of quality and location advantage or market
premia.” Finally, OPEC members agreed to take steps to limit transactions in the spot
market and expressed concern about the “movement of the U.S. dollar vis-a`-vis the inter-
national major currencies with a view to eroding the real price of oil.” (Telegram 10885
from Geneva, June 28; ibid.) The communique´ was published in The New York Times, June
29, 1979, p. D4. On June 30, West commented on the results of the conference: “Although
the exact outline of the new pricing structure is still hazy, it is clear that the Saudis are
convinced that they have done all they can on behalf of the United States and the West in
terms of oil pricing. In adopting a two-tier pricing system with Saudi marker crude sell-
ing at $18 as opposed to a nominal marker price of $20 for the rest of OPEC, the Saudis
reversed an earlier oft-revealed [repeated?] decision never to return to a 1977-type
two-tiered pricing system. At least for the immediate future, the Saudis perceive that they
have sacrificed OPEC unity and their own immediate financial gain in favor of the needs
and desires of the United States.” (Telegram 4848 from Jidda, June 30; National Archives,
RG 59, Central Foreign Policy Files, D740296–0966)
680 Foreign Relations, 1969–1976, Volume XXXVII
the leaders of the seven main industrial countries will agree on at the
Tokyo Summit meetings next week.
B. For Jidda and Quito only: In the spirit of close cooperation and
friendship that has characterized relations between our countries, I
thought that you might find it helpful before the June 26 OPEC meeting
to have some indication of the measures that I believe the leaders of the
seven main industrial countries will agree on at the Tokyo Summit
meetings next week.
C. For Lagos, Doha, Kuwait, Abu Dhabi, and Jakarta: I thought
that you might find it helpful before the June 26 OPEC meeting to have
some indication of the measures that I believe the leaders of the seven
main industrial countries will agree on at the Tokyo Summit meetings
3. Following six paragraphs for all repeat all letters:
A. First, we will commit ourselves to a series of long-term steps to
increase the supply of energy from alternative sources. The United
States is already taking a number of wide-ranging actions toward this
goal. Through such measures I am convinced that the economies of the
industrial countries can and will adjust to a situation in which oil is be-
coming an increasingly scarce resource.
B. But these measures will take time to produce results. No
economy can adjust successfully to very sharp and sudden increases in
the price of such an important commodity as oil. The consequence of
such increases is to promote not adjustment but unemployment and
inflation. This would mean a worldwide recession, a speedup of infla-
tion, and a significant reduction in the value of financial assets. No
country would be immune to these developments’ effects.
C. The effects would be particularly devastating for developing
countries that depend upon petroleum imports. Many of these coun-
tries already face large external deficits and have borrowed heavily
from abroad to pay for past petroleum price increases. Not only would
these countries need to borrow more to finance any increases in petro-
leum prices, but they would pay higher prices for other imports, both
because of the resulting increase in inflation elsewhere and because of
reduced demand for their exports in recession-plagued economies of
their trading partners.
D. I believe, therefore, that governments of the Summit countries
meeting in Tokyo will also undertake a second series of measures, de-
signed to ease the current imbalance between world oil demand and
supply and to help create greater stability in the world oil market.
These steps should include measures to reduce consumption and im-
ports, and to establish a means of continuously monitoring perform-
ances in achieving specific import targets.
January 1979–January 1981 681
E. Through these and other measures more specifically addressed
to the problem, we will seek to diminish substantially the role of the
spot market—and thus bring more order into the world’s oil pricing
and marketing system. We recognize that although the spot market is
only marginally important in quantitative terms, it has considerable
psychological effect on the price climate.
F. These short-term measures will only be effective, however, if
they are matched by efforts of producer countries to stabilize prices and
increase production during this transitional period. The Tokyo
Summit’s actions will be an effective response to urgings by oil ex-
porting countries to reduce reliance on oil. We hope that they will thus
help to make possible a constructive partnership between oil exporting
and importing countries to strengthen the world economy.
4. For Jakarta only (closing paragraph): We share your desire for a
highly successful meeting of the ASEAN Foreign Ministers, which Sec-
retary Vance looks forward to attending, in Bali July 2–3.
5. For all posts (complimentary closing): Sincerely, Jimmy Carter.
6. Posts may supplement presentation of letter with talking points
from State 147000
as they deem appropriate.
7. Report reaction to SecState with caption: Please pass Presidential
aircraft for Under Secretary Cooper, and to Tokyo with caption: Please
pass Under Secretary Cooper.
682 Foreign Relations, 1969–1976, Volume XXXVII
221. Minutes of the Tokyo Economic Summit Meeting
Tokyo, June 28–29, 1979.
Joe Clark, P.C., M.P., Prime Minister
Flora MacDonald, P.C., M.P, Secretary of State for External Affairs
John Crosbie, P.C., M.P., Minister of Finance
Valery Giscard d’Estaing, President
Jean Francois-Poncet, Minister of Foreign Affairs
Rene Monory, Minister of Economy
Andre Giraud, Minister of Industry
Helmut Schmidt, Federal Chancellor
Hans-Dietrich Genscher, Vice Chancellor and Federal Minister for Foreign
Hans Matthoefer, Minister of Finance
Dr. Otto Graf Lambsdorff, Federal Minister of Economics
Giulio Andreotti, President of the Council of Ministers
Arnaldo Forlani, Minister of Foreign Affairs
Filippo M. Pandolifi, Minister of the Treasury
Masayoshi Ohira, Prime Minister
Sunao Sonoda, Minister for Foreign Affairs
Ippei Kaneko, Minister of Finance
Masumi Esaki, Minister of International Trade and Industry
Margaret Thatcher, M.P., Prime Minister
Lord Carrington, Secretary of State for Foreign and Commonwealth Affairs
Sir Geoffrey Howe, M.P., Chancellor of the Exchequer
Jimmy Carter, President
Cyrus Vance, Secretary of State
W. Michael Blumenthal, Secretary of the Treasury
James R. Schlesinger, Secretary of Energy
Source: Carter Library, National Security Affairs, Staff Material, International Eco-
nomics File, Box 31, Rutherford Poats File, Summit: Tokyo, 6/28–30/79. Secret; Nodis.
Drafted by Hormats who signed at the end of the list of participants. The full text of the
minutes and other documentation on the Summit is scheduled for publication in Foreign
, 1977–1980, volume III, Foreign Economic Policy. President Carter’s personal ac-
count of the Summit is in White House Diary, pp. 335–337.
January 1979–January 1981 683
Ohira: Now that the press has left let’s get to business. I extend
greetings to all of you. I know many of you have come from afar. I am
happy to welcome the new members of our group—Mrs. Thatcher and
Prime Minister Clark. I am also a new member, and I hope I am wel-
Here in Japan we are in the process of conserving energy; we often
open our shirt necks because of the heat. In this room, we may permit
ourselves to take our jackets off and work in shirt sleeves, with your
As Chancellor Schmidt said in the Bonn Summit,
we are members
of a mountain climbing party; we were just getting out of difficult eco-
nomic troughs. But just as we were getting to the peaks, we encoun-
tered difficulties—a landslide in the form of the oil crisis. The circum-
stances today are reminiscent of Rambouillet,
or in fact more serious
than at Rambouillet. But I believe we are wiser today, because we have
gained wisdom from past experience. We should be fully utilizing it,
and must cooperate, to get out of our predicament.
We face an immediate problem. We need to take fundamental
long-range policy decisions, and we need to carry them out.
[Omitted here is discussion unrelated to energy.]
[Ohira:] As to the Agenda, I would ask that each head of state or
government make five minutes of comments to form the guidelines for
the Summit discussion. Then we would take up the specific Agenda.
Subjects will be macroeconomic issues, energy, LDCs, trade, monetary
issues, and finally the Communique´. While we are talking, the personal
representatives may be expected to start work on energy. Who would
like to lead off?
Carter: The eyes of the world are on this Summit for a number of
major reasons—the first and most important being energy. On this sub-
ject I hope that we can be bold, substantive, specific and hopefully
united when we come to the final Communique´. I prefer that we indi-
cate targets based on specific figures. We should commit ourselves to
meet these targets on a short-range basis and commit to attempt to
reach long-term targets, even though there may be somewhat more un-
certainty. In addition, we have to address the spot market, measures to
limit stocking of oil in times of tight supply, and cooperation in a multi-
lateral approach to new sources of coal, shale, tar sands, synthetics and
See Document 157.
See Document 88.
684 Foreign Relations, 1969–1976, Volume XXXVII
solar. We should pledge to meet our goals and to be sure that we do so
cooperatively and collectively. We should have the maximum consul-
tation and dialogue with OPEC. This has been lacking so far and has
caused grievous consequences. We should pledge to keep our oil im-
ports down and follow with strict conservation of total oil consumption
and increased efforts to come up with alternate supplies of energy.
[Omitted here is discussion unrelated to energy.]
Andreotti: This meeting should be mainly on energy. It should
provide an external image which conveys the political character of the
meeting. It should clarify what happened in Bonn and what was de-
cided there. It should note the difficulties arising from events since
Bonn. It should play a guiding role in shaping future events, bearing in
mind certain differences among our countries. For instance, on energy,
Canada is self sufficient, and Italy and Japan are in very large debtor
positions. It should stress the interdependence among the problems of
all countries. Our position vis-a`-vis OPEC will be all the stronger if we
take into account our requirements as well as those of the LDCs, which
will be most harmed by OPEC prices if they are constantly raised.
On alternate energy sources, and nuclear energy, we are all faced
by serious psychological problems exploited by those who oppose it. If
we put in the Communique´ something on nuclear energy that is posi-
tive it will help our individual national programs. Perhaps from Japan
can come words to inspire us on the peaceful use of nuclear energy.
Ohira: Regarding the point on peaceful nuclear energy, I feel that
the most reliable, realistic alternative to oil is nuclear energy. We have
adopted a course leading to more nuclear energy, and we expect the
most of nuclear energy as an oil alternative. With the U.S., Canada and
France we have developed and are moving forward on technical coop-
eration arrangements. Safety is of cardinal importance. We should be
thorough in insuring safety. We should especially emphasize the posi-
tive need to go ahead with peaceful nuclear energy. Our efforts are be-
hind schedule. We have much catching-up to do on the peaceful pur-
suit of nuclear energy. On nuclear energy, I hope for the further
understanding and support of the other countries here.
Giscard: The Summit is an Economic Summit. Countries are in-
vited here because of the role they play in solving the economic
problems of the globe. In the past the press has speculated on the utility
of these sorts of meetings and it has become somewhat critical. The
Bonn Summit was useful and the follow-up to Bonn was positive. I am
sure it is the hope of all that the Tokyo Summit will also be useful.
The main economic problem is the energy problem: oil supplies,
and the securing of these supplies in the short, medium and long term.
We must show that we have proposals on these time scales. Europe has
prepared for the Tokyo Summit in the European Community. We have
January 1979–January 1981 685
taken decisions and published a text.
But our Declaration only makes
sense if it goes hand in hand with decisions of our major partners. We
hope these decisions will emerge in Tokyo. Our meeting will only be
successful if we agree on quantified, specific targets to reduce imports
immediately and lastingly. If not this will be a disappointing meeting.
Also we must address prices on the spot market. Our experts
should draw up recommendations and we should take concrete actions
on the basis of these recommendations.
Regarding alternate sources, the main ones are nuclear energy and
coal. Other alternatives are not yet available. On coal and nuclear en-
ergy, we should express a determination to speed up production. We
are all clearly concerned about safety, but this should not be an a priori
condition to further new energy development, because if it is it will
delay energy development.
We should be factual and credible in our statements on LDCs. En-
ergy has hit hard the non-oil LDCs. This is not our responsibility and
was not caused by us. The cost to our economies of the oil problem
means it is more difficult for us to give more aid. We should have no
fine statements but simply say we are prepared to do what is in our
power to do, but that we cannot compensate for the effects of steep
[Omitted here is discussion unrelated to energy.]
[Schmidt:] On energy, we should identify how much we have
done following up Bonn and determine whether we can do more. I
don’t like understandings that are not fulfilled, so we should avoid
these here. I favor, as Valery and Jimmy said, necessary decisions to be
taken in the energy field. I hope they will be taken. The FRG will be as
cooperative as we can. We should not take decisions which only pre-
tend to be decisions. We should not have gimmicks which are disman-
tled by public opinion or by OPEC. The OPEC meeting adjourned to
see if we are seriously going to do something, or just engage in rhetoric.
Also, they find it difficult to agree among themselves. There are OPEC
governments who want to be moderate, who understand the impact of
oil prices on the world and see them doing more harm to the LDCs than
The energy portion of the published conclusions of the European Council, which
met in Strasbourg June 21–22, was transmitted in telegram 143 from Strasbourg, June 22.
(National Archives, RG 59, Central Foreign Policy Files, D790282–0928) The Embassy in
Brussels commented: “The European Council in Strasbourg outlined a broad Community
approach to current energy crisis but fell short of adopting French proposal for price
control in the spot market and annual country-by-country oil import reduction targets.
Belgium and Italy tended, in general terms, to support the French line in the Council,
while the FRG and the UK, generally supported by the Netherlands and Denmark, were
largely successful in watering down the French proposals.” (Telegram 11381 from Brus-
sels, June 22; ibid., D790283–0014)
686 Foreign Relations, 1969–1976, Volume XXXVII
to us. They see that they have the possibility of destroying the interna-
tional division of labor, monetary markets and so on. But it is not only
selfishness that leads some OPEC countries to ask for higher oil prices.
There is reason to believe that only a great rise in oil prices will enforce
conservation and alternative production.
All of us want to reduce demand for imported oil. All of us want to
do so by conservation of energy and by substituting for oil in specific
ways—different ways being open to different countries. The FRG has
reduced oil imports consistently since 1973. We have let the price mech-
anism work, and have no subsidies on petroleum or distillates. From
1973–1978, we have less energy demand as a percentage of economic
growth than in 1973 or before. In 1979, we will import only a little more
than in 1973 or in 1972. There have been major pressures to reduce oil
imports over the last five years. There has been a mixture of letting the
price mechanism work, and incentives to conserve, such as using gov-
ernment money for conservation. We have also subsidized the use of
coal. Our coal is 700–800 feet deep. It takes eight to ten years to build a
new pit and start production. The subsidy for one ton of coal is double
the pay to a mine worker to mine it. But this leads to a reduction in im-
ports of oil. We have reduced oil use in the generation of electricity.
Only 9 percent of our electricity is generated by oil.
The situation of our countries differs. Some of us by artificial
means have kept domestic prices of oil and distillate lower than they
might be. Some are fighting environmentalists who are fighting the use
of coal. Some are fighting the environmentalists who object to pipelines
and new refineries, including crackers. The FRG is fighting the environ-
mentalists on coal and the expansion of nuclear plants. We should tell
our personal representatives to provide a paper which includes all
those devices needed for overcoming opposition and a thoughtful,
clear message on the enlargement of nuclear production. It would also
be helpful to have something on coal. This would help Jimmy Carter as
well as us in the FRG. It would help to include in the communique´ lan-
guage needed at home to deal with the opposition to the substitutes for
oil and with the environmentalists.
I agree with Valery Giscard that it is important to show to the sup-
pliers in OPEC that we are taking this matter seriously and have a sin-
cere approach to reducing oil demand. Then, when OPEC meets, we
can build on this impression and strengthen the hands of the moder-
ates. We should not leave the OPEC moderates out in the cold. We will
have credibility only if we have medium range and long-term policies.
For the rest of the century oil prices will have to go up because oil re-
serves are gradually being used up. Also, there can be political events
like Iran, and these can increasingly lead to crunches. Coal and nuclear
energy must be expanded. Also, we should use shale, tar sands and
January 1979–January 1981 687
North Sea oil. Lots of money will be needed for pure and applied re-
search for renewable energy, which should come on stream by the mid-
dle 90’s and by the end of the century enable us to use solar, geothermal
and nuclear energy more.
I foresee a situation in the next century when we may not wish to
use hydrocarbons any more. I can envisage that in one or two decades
scientists will say we are heating up the outer atmosphere of the globe,
when it will not be tolerable for nations to do this—when there will be
too much heat and too little water, as in the Sahel. There may be a time
when we have enough bio-mass, coal and petroleum but will be told
that we should not use it. We should back up our studies by looking
ahead one or two decades into the next century.
If we cannot avoid egotistic national policies, there could be a
monetary crisis, high unemployment, and starvation and hunger in the
With respect to short term energy goals and measures, I dislike
what we were given in the draft communique´—with the energy section
blank. We should stress that our aides should give us a draft commu-
nique´ especially on energy, and especially on targets which we can
measure in terms of time, goals, periods of reference and how to group
nations, individually or together. Our aides should list the different at-
titudes and attempt to get agreement in these fields. These should not
be issues of national or individual prestige. Obviously, we will have to
express the interests of our countries and should not hide the interests
behind verbal compromise. National interests are often hidden by eco-
nomic or academic reasoning.
Thatcher: It is impossible to discuss economic prospects without
discussing energy prospects. We are one-half of the way through 1979,
but the prospects for the world economy deteriorate month to month.
We started the year with less exaggerated payments imbalances, and
the prospect of currency stability. The oil situation seemed to be under
control. Now the difference is oil, and this has also affected inflation.
This sharp oil price increase has happened for the second time within a
decade. It is a long and short term problem. All our ideas of growth
must be revised. We cannot grow as much in the future as we had
hoped. Also, the situation is worse for the LDCs—high prices, slow ex-
ports and we are less able to help them because of oil. This also means
The fact of our meeting means we can get guidelines and leader-
ship to surmount difficulties. We must face these matters realistically,
making clear what can and cannot be done. If we only have a commu-
nique´ with pious platitudes, the world will see that we have failed. We
need positive declarations in the energy area in three spheres. We must
deal with the immediate situation, but also come up with solutions
688 Foreign Relations, 1969–1976, Volume XXXVII
which continue year after year, not just talk about long term. Nuclear
power takes a long time to develop. We will not have power from the
sun or tides before the end of the century.
On energy, we must let the price mechanism work in full. But we
should not rely on this totally. We should also have tax incentives for
insulation and for shifting to other sources. The UK gets 70 percent of
its electricity from coal production and 15 percent from oil. We need
more nuclear and must convince countries that nuclear is safe.
On inflation, we have had a reduction since 1974, but we will have
more if we should accelerate inflation as a result of oil price increases.
We should fight inflation or we will have increased unemployment. We
should also not accelerate the impact of oil price increases with infla-
tionary policies. The oil price increase means loss of incomes for the
moment. We can’t get around this in the short term. On growth, we
should not be too pessimistic. We need increased efficiency in industry,
the consumer sector and agriculture. We should see the need for adjust-
ment and respond to change. The UK has not always responded ade-
quately to change but unless we do we can’t get growth.
If we are to achieve a balance of supply and demand in oil we must
make OPEC understand that oil price increases jeopardize the Western
world. We should look to increased nuclear production for the future.
We produce oil but have the same interest in saving energy as others
because we depend on the world economy. We should be realistic and
not cloak measures in soft phrases. This would give the world greater
confidence than by hiding what we mean.
Jenkins: We had a successful conclusion of the MTN in April and
now we need full implementation.
Our concerted growth strategy was
fulfilled, and as a result there has been more rapid growth in countries
other than the U.S. On the monetary side, the stabilization measures of
the United States on November 1 and the EMS have been helpful.
The least progress has been on North/South relations, but in the
EC we have renewed the Lome Agreement with 57 LDCs
1/2 of all LDCs).
But all this has been overshadowed by what has happened in en-
ergy. Energy should be the Summit theme. In the short term, imme-
diate prospects will be damaged by developments over the past six
months in the oil field. It will increase inflation, which is already going
up in our countries. The balance of payments costs will be $20 billion
The Tokyo Round of GATT negotiations ended in September.
On November 1, Carter and Blumenthal announced measures to strengthen the
dollar. The European Monetary System aimed to maintain stable exchange rates within
See footnote 8, Document 88.
January 1979–January 1981 689
per year in the OECD as a whole, and it will lead to a cut in our growth
prospects. One question is how far we add to these unpleasant but sur-
vivable problems. The oil market will balance itself over a period. But if
we do not have effective restraints and substitutes, this will be an ex-
pensive way of doing it.
The long-term trends in oil prices are going up, and we can’t avoid
oil price increases. But we should address the speed with which oil
price increases take place. If they take place suddenly there will be a
rapid transfer of resources away from us without an increase in de-
mand by OPEC. Although we save energy through a high level of re-
cession, the Schultze paper
indicates that the cost of saving a barrel of
oil through recession is $300 per barrel. The danger is that the market
will stabilize only at very high prices, and there may in fact be an ap-
parent glut on the oil market as a result. We need to change our life-
styles and produce alternative supplies. Effective voluntary restraints
are an investment in our prosperity.
Clark: It is important that the understandings we reach be serious.
They will help only if we are clear on the impact of our commitments to
individual countries. We should set goals that can be achieved. If not,
there will be skepticism about the process.
We must also be cognizant about the impact on international and
domestic opinion. We should try to insure that our people will support
us on unpopular policies by indicating the importance of such policies
to our futures. We need to change attitudes toward conservation. We
are a high energy using country. We need to look at the alternatives
very carefully. For instance, acidic rain results from the burning of coal.
A number of alternatives have environmental consequences.
The Summit should take account of different circumstances in our
countries. We anticipate a shortfall in domestic production of crude
and conventional sources of energy because of our declining well pro-
duction over the next five years. But we will have significant produc-
tion of non-traditional fuels after 1985. Also, there are major regional
differences in Canada. There is wealth where there is energy but there
is less wealth in energy importing areas. This limits the use of price in
influencing demand. Our priority national goal in energy is
self-sufficiency by 1990 through substituting for oil, natural gas and
other sources. This effort can be helped by the Tokyo Summit
Ohira: We coped with the oil situation last year, but we were naive
on the Middle East. On long-term energy development, our emphasis
690 Foreign Relations, 1969–1976, Volume XXXVII
was inadequate. We should be firm in coping with OPEC price in-
creases and should seriously pursue long-term research in energy.
The impact of energy on our economic structure should be pointed
out. But the big question is have we achieved results. Since the first oil
price increase we have diminished the impact on payments imbalances
and cooled off inflation, but unemployment and inflation are still with
us. In improving productivity, we must make a major effort at positive
With respect to Japan we are undertaking fundamental changes in
our lifestyle. Our trends are toward qualitative improvements with af-
fluence. Since I took office I have tried to produce qualitative improve-
ments in daily life bringing the country to the city and the benefits of
the city to the country. I am also interested in discussing the circum-
stances of city life. We must take a look at our lifestyles in responding
to the energy problem. We must also pay attention to relations with the
developing countries and look at the global community.
[This section of the discussion concluded at 11:10, and a coffee
break took place. The discussion resumed at 11:35.]
[Omitted here is discussion unrelated to energy.]
[Giscard:] Our economic growth rate is not tied to rates of oil con-
sumption. There was a fixed relationship between growth and oil con-
sumption. We have broken that tie. We now attain growth with alter-
nate energy sources. We must invest in alternate energy resources. This
will help on growth as well.
Andreotti: We need positive results from the Summit. Last year we
succeeded in part. Countries with greater economic possibilities in-
creased their growth rates and this helped other countries to grow.
Italy will maintain its undertaking of 4% growth.
Today the oil problem and fear of inflation may lead to slower
rates of growth in some countries. As a result we could find countries
with high rates of unemployment in difficult positions. It is important
to fight inflation but we should lay down a coordinated policy, as noted
by Giscard. We should not have a deflationary policy, but a coordi-
nated system directed to the struggle against unemployment, and this
should be set out with more emphasis in the Communique´. If we do not
it will have political repercussions on public opinion in different coun-
tries. We should not extinguish the hopes of the Bonn Summit.
Jenkins: The oil price increase had two countervailing effects. It in-
creased the cost/pull impact on inflation, and it led to a decline in de-
mand. These are difficult to reconcile. We need to come up with a bal-
ance between the two to avoid both inflationary and deflationary
Brackets in the original.
January 1979–January 1981 691
effects. We might for instance consider separate price indices, with one
in which the effect of energy price increases are not included. We could
isolate energy costs in dealing with wage indexation in certain
Carter: As a result of Bonn I directed oil price decontrol. It started
on the first of June. Domestic oil prices as a result have been increased
more rapidly than in other countries because of the price increase in our
oil, and OPEC increases. I agree that statistics would look better if we
took Roy Jenkins’ idea, but our people won’t permit our trying to pre-
vent energy costs from being incorporated in wage demands. We have
focussed on energy with some degree of success. We have made much
progress in 2½ years. Before 1973 for every 1% increase in GNP we had
a 1.05 increase in energy use. Since 1973 that figure has been .37%. We
have had a less than 50% increase in oil use as compared to GNP.
We also need to get at the roots of inflation. We have deregulated
the airline industry and we are moving on transportation. We have
modified our tax structure to encourage new investment and improve
depreciation allowances. I am concerned about productivity improve-
ment. More effort here is needed.
As a result of the MTN we reduced protection at home and have
encouraged increased R&D in the government and have called for pri-
vate industry to do the same.
Close cooperation among us is important. The issue is how to deal
with energy. Premature media exposure of our views might reduce our
flexibility and our ability to accommodate one another at this Summit. I
still think we should emphasize specificity even if it means that each
country spells out specifically what it can do and we are all locked into
the same formula.
U.S. oil production is declining. Our oil wells are old and we have
to use a great deal of tertiary recovery. Over the last 15 years we have
had a 6% annual reduction in domestic oil production.
In our Communique´ we should be specific and substantive, be-
cause the world is looking to us to do something specific on energy.
There is no substitute for this. I look forward to getting drafts from our
personal representatives. I’ll go the second mile to accommodate my
needs to yours. I must go home with the proof that others are sacri-
ficing in order to get the American people to do the same. We should
not have recriminations about performance based on lack of informa-
tion on the circumstances in each country. It is easier politically to deal
with energy if a country is almost entirely a consumer. It is more diffi-
cult if the country is sharply divided among producer and consumer
regions. I was struck here by Joe Clark’s point. Canada, like the US, is
not a homogeneous region. Some regions depend on imports and
others on exports. We should understand the circumstances of one an-
692 Foreign Relations, 1969–1976, Volume XXXVII
other. This meeting will be an abject failure if we do not accommodate
present divergencies of views about energy.
Ohira: Two or three countries alone can’t do the job. We expect the
United States to curb inflation, but inflation is serious in other countries
as well. Therefore we must minimize inflation in all of our countries.
All of us need a maximum effort to curb inflation. In FY’78 Japan’s do-
mestic demand will grow at 8.5%. Our current account surplus will be
$12 to $14 billion, although since March we have had a current account
deficit. In the last three months we have had a $700 million deficit.
Therefore in terms of GNP growth we could not reach the Bonn target
although our growth served the purpose of the Bonn target.
The second oil crisis is tragic. In April and May we have had a 20%
increase in the wholesale price index in annual terms. Clearly inflation
is an important agenda item. It is important to remedy the supply side.
Each should take major steps. We are now out of the period of post-war
technology and we are at the end of a certain pool of technological re-
sources. We need more R&D and greater technical efforts.
Ohira: Our session is about over. Each country can now brief the
press as it sees fit.
Schmidt: Why don’t we do as we did last time and let you brief the
press, Mr. Prime Minister.
First session ended 12:40 pm.
[Omitted here is discussion unrelated to energy.]
Ohira: Let us now turn to energy.
Schmidt: Let us now try to settle the energy issues now under
Thatcher: I have questions on paragraph 6.6 on the International
Coal Advisory Board.
Giscard: We are prepared to substitute a French text for 6.2.
Ohira: We will take up the German text as the basis for proceeding.
Carter: Have the special representatives already begun working on
a draft? Was the U.S. draft also being used?
Ohira: I have received from our personal representatives a request.
They want us to discuss the Communique´ language on import re-
straints. I believe that Option 1 contains a paragraph which we should
consider at this point.
Giscard: To clarify the matter, in a few moments we will have a
draft on 6.2 of the German text on limiting oil imports. I asked our
people to prepare that after lunch. We will receive it in a few minutes.
The participants are continuing their discussion of the communique´ language.
January 1979–January 1981 693
Ohira: What I want to say is that our personal representatives are
now starting to draft 6.2 in the German draft. They want to know
whether we support Options 1 or 2. They would like to make a draft
after hearing our guidance.
Clark: I understand from President Giscard that his delegation is
drafting language to take the place of Options 1 and 2. We will have
this soon. I would like to wait for the draft rather than modify these
Ohira: I now understand. Let’s wait for the French proposal.
Carter: Valery. Is there a specific reason for choosing 1978 as a base
as opposed to 1979? If we could all choose 1979, or I could agree to 1977,
we would remove confusion and distrust between the two groups.
Giscard: We can agree that in the text we can have just 1979.
Carter: If we could use 1979 it would eliminate confusion.
Ohira: 1979 is alright.
Clark: I have no difficulty with 1979.
Andreotti: I would like to wait until we get the French text.
Clark: I would like our personal representatives to consider op-
tions to add explanations on specific figures. We, for instance, have a
short-fall in production and I would like it to be in the Communique´.
Ohira: The Option most suitable to me is Option 1. We should give
these to the personal representatives and ask them to report to us later.
Carter: The French draft is satisfactory to the U.S. I would like to
fill in our figures which we accept as a goal for 1985. We can say less
than the 1977 figure. Each can have footnotes as requested. The text is
Ohira: On the spot market issue, we should give this to our per-
sonal representatives to discuss. The representatives should review the
Japanese text and all three texts.
Jenkins: We need to modify the texts somewhat. The Summit coun-
tries will specify how each country’s contribution can be met. But we
need to discuss this with our other Community countries. This should
be edited by the personal representatives.
Schmidt: I am not sure whether we are proceeding correctly. I take
it you are not intending to instruct our personal representatives to pre-
pare a paper on this issue based on the two alternatives. I don’t think
there is any sense in letting the personal representatives work with no
instructions. One block has been filled in by the American President.
Carter: I will give you a figure less than 1977.
Schmidt: The personal representatives will be left in the dark.
There is no use to shift the paper to the personal representatives. The
whole second paragraph needs general footnotes if we are to urge other
694 Foreign Relations, 1969–1976, Volume XXXVII
countries to set single objectives for themselves. We proceed on the
basis that such goals will be effective and that we will take efforts to
reach these figures. But we must take into account different patterns of
supply. Just setting a figure is ridiculous and will not impress econo-
mists or politicians.
There was the question of the dates. Jimmy Carter prefers 1979 but
will also accept 1977. 1979 is a dangerous basis to start from because we
will not have an actual figure for 1979, although we might have a pro-
jected figure for 1979. We have to use a complete year such as 1978,
1977 or 1973. I prefer 1973 because that is the year I started to conserve.
Of course, I know Jimmy can’t do that, nor can Canada. I ask what
is the purpose of putting us into a strait-jacket? We can’t refer to a pe-
riod not yet complete. We could refer to a period of the past but not a
period not complete. I could accept 1979 or 1978 but what figure would
you put for 1979?
Carter: I understand that in 1979 your imports will not exceed
1978. For 1977 U.S. imports were 8.6 million b/d. For 1979 they will be
8.5 million b/d. Both are a good basis and are okay with me. For the EC
it was agreed to use 1978. Can we change the basis so that we have a
common basis? If so we can accept 1977 or 1979. We could accept 1978
for the EC as a compromise.
Jenkins: We can accept 1978. It would be difficult to accept 1977.
Giscard: We could take 1978 for the EC with the U.S. having an-
other reference year if 1978 is not representative.
Carter: Can Japan and Canada accept 1977?
Ohira: 1977 is desirable but we will settle for 1978.
Thatcher: Let’s look at the draft presented in Option 1. It was diffi-
cult for us to get a similar base year. It is better to get Option 1 than to
reiterate the results of Canada, Japan and the U.S. We should ask our
personal representatives to consider Option 1 and to give us square
brackets tomorrow. But I am not sure that would help anyone. I am
worried about what we say to the press.
Clark: 1977 or 1978 are acceptable to Canada. It would be helpful if
we opt for one base year. The personal representatives could ask other
EC countries what they think. We could press for one base year that is
the same in all cases.
Thatcher: Some personal representatives do not know which draft
they are supposed to be working on. One half are working on one draft
and one half are working on another. We should send back more en-
ergy drafts to the personal representatives and ask them to look at Op-
tions 1 and 2. I think Option 1 should be chosen. We should probably
discuss the French proposal rather than discuss Option 1. I am inter-
January 1979–January 1981 695
ested in the French draft. All these issues should be subject to
Ohira: On the spot market we should send the German proposal to
the personal representatives meeting.
Thatcher: We have had some consultations with the Americans on
where we stand. Let me see if I can make it clear. There is a Japanese
draft which has everything but energy. There is a German draft for de-
tails with the energy issue. And there is a French draft which deals with
the oil import part of the energy issue.
Carter: You have that right, I think.
Thatcher: I am still concerned about what we say to the press. We
need agreement about what to say. Should we say the discussion on en-
ergy continued and nothing else? Also the Prime Minister of Japan can
speak on refugees.
Giscard: It would be useful if the energy ministers could give some
indication to the personal representatives as to what we discussed here.
The ministers and our notetakers can pass on the essentials of what we
said to our personal representatives.
Thatcher: Will we get a clear text tomorrow?
Ohira: On the oil import question we will give you a text on Option
1 but we will ask our personal representatives to boil it down. They will
also consider the German proposal on the spot market. They will report
to us tomorrow morning.
I apologize for the inadvertencies. We will ask our personal repre-
sentatives to work. Our notetakers will work with them. I hope our
Ministers can also help. I know they will all do good work.
At 7:30 there is a banquet in the Imperial Palace. We will meet to-
morrow at 9:30 am.
Third Session—9:50 a.m.
Ohira: You all have the communique´ language in front of you.
There have been some fluid developments in the area of petroleum at
the last minute as a result of the OPEC decisions.
We need to address
the communique´ now to give our officials guidance. I would ask our
notetakers to meet with their colleagues immediately after the session
to bring the communique´ into line with our discussions here. The key
issue is the level of import restraint on page 2.
Carter: The level of import restraint is crucial. We saw that OPEC
dealt us a blow yesterday. We need a strategy which involves a com-
mitment on oil market restraints. We are prepared to accept such re-
See footnote 3, Document 220.
696 Foreign Relations, 1969–1976, Volume XXXVII
straints. I strongly request others to do so for 1979 and 1980. I would
hope that the EC countries would accept specific national targets. And
we should have goals for 1985, Mrs. Thatcher agreed yesterday. I hope
we can carry these out without hesitancy. We should not have figures
that apply to groups but to individual countries. We are prepared to
commit ourselves in 1985 to the goal of 8.5 million barrels of oil per day.
This is our 1977 level, and what we are committed to do in 1979.
Clark: I understand from our officials that we are being given a re-
draft of the first full section on page 2—a UK draft.
Lambsdorff: We can go along with the need for strong wording.
But imports are only one-half of the problem. Consumption is another
major part of the problem. We can accept the amendment to page 2,
taking into account the position of other EC countries. [The amendment
reads: “France, Germany, Italy, and the UK have agreed to recommend
to their Community partners that each member country’s contribution
towards these annual levels will be specified.”]
Jenkins: I can confirm what Lambsdorff said. The new language is
acceptable to the EC as a whole.
Clark: Does the word “member” refer only to Summit members?
Jenkins: No, all EC members.
Giscard: I can accept modification of the text at the top of page 2.
On the bottom, can we get figures on alternatives. I would suggest,
“The seven express their will to adopt as a maximum goal for oil im-
ports in 1985 the 1978 figure for France, the FRG, Italy and the UK, and
the average 1977–78–79 figure for the U.S., Japan and Canada. The 1985
goals will be seen as references to monitor the development of alterna-
tive sources of energy.”
Carter: I prefer the year 1977. I would also say “. . . as references to
monitor conservation and the development of alternative sources of
Lambsdorff: Would you like to include 1977 for the U.S., Japan,
Canada and the EC as well?
Clark: The French proposal causes us difficulties. We will have a
production slump. Import levels will be higher in 1985 than for the
1977–78–79 period. Thus, we cannot accept the statement as phrased by
the President of France.
Ohira: Circumstances for Japan make it difficult to accept this sug-
gestion. We are making conservation efforts. But for us to specify
targets for consumption would involve difficulties for Japan. In calcu-
Brackets in the original.
January 1979–January 1981 697
lating growth, we cannot estimate year to year, and cannot estimate
Lambsdorff: We have now jumped from the top to the bottom of
page 2. We need the language in brackets out.
Clark: We can accept 1979–80 figures. We should remove the
brackets. We are prepared to commit to targets for 1985 at levels below
projected increases. But Alberta supplies have declined. Our reliance
on world markets will increase because of declining domestic supplies.
We will reduce significantly the rate of import increase needed to make
up the shortfall. We can reduce to one percent on the average our an-
nual growth of oil consumption. We can reduce oil imports by 50 thou-
sand barrels per day from projected levels. We could put this on the
bottom of the first paragraph on page 2. It would read “Canada, whose
oil production will be declining, will reduce imports by 50 thousand
barrels by 1985 below what they would have been.”
Lambsdorff: Will Japan accept a statement like those accepted by
the U.S. and Canada?
Ohira: Japan can accept the bracketed language with respect to
number 2. [Canada, Japan and the U.S. will each achieve adjusted im-
port levels to which they are pledged in the IEA for 1979, will maintain
their imports in 1980 at a level not higher than those in 1979 levels, and
will be monitoring this.]
On point 3, Canada and the US can put in a
figure for 1985, but for Japan it is impossible to give a figure.
Schmidt: I have not responded to your remarks. We should say we
welcome the inclusion of the words which President Carter mentioned:
“1985 goals will seek to refer to conservation and the development of
Carter: I am reluctant to make matters more complicated. But the
establishment of a tangible 1985 goal is the most important part of the
communique´. It is done with the important understanding that goals
will be reassessed on a periodic basis. If the goals are too stringent they
can be modified without embarrassment. If all nations set goals and
Japan is the only nation not willing to establish specific goals that
would be a serious matter to explain. I urge Japan to draft specific
targets which you believe you can meet, with the understanding that
these can be reassessed and modified on the basis of experience.
Giscard: I noted that Jimmy Carter’s amendment was accepted by
all. We can accept the figures suggested by the EC. We also have the fig-
ure of 8.5 by the US and Canada will give a figure. If these countries can
put in figures, people will expect figures for Japan. It is difficult to ac-
cept that Japan cannot set a ceiling for oil imports. We do have a provi-
Brackets in the original.
698 Foreign Relations, 1969–1976, Volume XXXVII
sion for adjustment. It is better for Japan to give a figure which could be
adjusted on an annual basis.
Clark: The figure for Canada will be 600 thousand barrels per day
for the period of 1985. On Japan’s problem, when we look at the lan-
guage it strikes us that in English there is a significant difference in im-
plication between target and goal. We can accept the word “goal,”
which should allow Japan a greater sense of latitude. There is further
latitude in the year by year basis of examining the target.
Jenkins: Is the Canadian figure 600 thousand barrels per day?
Ohira: On targets for import reduction for 1985 Japan is isolated. I
apologize for the situation. We are discussing the matter in haste. I sug-
gest we discuss paragraph 3. Japan will finish its study on this position.
Lambsdorff: Are we accepting the French proposal to have a last
sentence which reads “a high level group of seven within the OECD
will monitor the results achieved” and “the 1985 goal will serve as a ref-
erence to monitor commitment to development of new sources of
Clark: If there is flexibility on the base, the French draft is accept-
able to us. We can accept OECD monitoring.
Carter: The U.S. accepts a goal for the 1985 import level not to ex-
ceed levels of either 1977 or the adjusted target for 1979, i.e., 8.5 million
barrels per day. I assume we also accept monitoring of both energy con-
servation and the development of alternative energy sources.
Giscard: We are now engaging in a technical discussion of the
draft. We are all agreed in principle. At this point, we should refer the
draft to the economic ministers. They will put in a U.S. figure and look
at the Japanese figure. If we do not do this we are wasting time.
Schmidt: On alternative sources, which ones are we talking about
and which organizations? Three countries here have oil, shale and tar
sands. How long will it take to develop them or to get supplies or the
help of coal?
Carter: This commitment could be monitored by the OECD or the
Schmidt: I cannot place my country under a non-sovereign body.
Carter: The EC agreed to let the Community monitor its target. We
should try to strengthen the monitoring effort. We can give the duties
to the IEA or someone else. Otherwise we will have no way of monitor-
ing what we are doing.
Schmidt: I have no difficulty in submitting figures to an interna-
tional organization. But the French proposal says “monitor.”
Giscard: Perhaps we can say “review.”
January 1979–January 1981 699
Carter: There are lots of congratulations of the EC in this commu-
nique´. Can’t we limit EC congratulations to one and we will also agree
not to be congratulated.
Thatcher: The communique´ should refer to product and not crude.
The transparency of the European Community goes to the product, not
the crude. They are two different markets.
Jenkins: That is right.
Thatcher: I doubt we can make the crude market transparent. I also
would change the paragraph which says “we will require that at the
time of unloading crude cargoes documents be presented indicating
the purchase price as certified by the producer country.” We cannot
Jenkins: I appreciate your desire that there not be too much con-
gratulations for the EC. If we take out the EC proposal the paragraph
hangs in the air. Perhaps we can say we note the actions of the EC.
Giscard: It is important that all seven accept the EC program and
then we can delete EC. Let’s say, “We agree to to take steps to bring into
the open the working of oil markets by setting up a register of interna-
tional oil transactions.”
Clark: I have not seen the details of the EC proposal. The commu-
nique´ language is preferable. It refers to a section of the scheme in
Ohira: About the brackets, “We will require that at the time of un-
loading crude cargoes documents be presented indicating the purchase
price as certified by the producer country.”
Carter: No objection, I can accept the brackets.
Thatcher: The word “require” means new legislation and
Giscard: We should say we will consider a device such as this.
Thatcher: We can accept “we are considering the feasibility of
Lambsdorff: I accept Mrs. Thatcher’s suggestion.
Andreotti: When we accepted this sort of language in the EC, we
stressed the wish to control the oil market. If we do not make commit-
ments here, we are taking a step back from the EC. Countries could get
information on this from their customs authorities. If we only have a
commitment to examine, the oil companies will be left with power.
Clark: I share the reluctance to come to a conclusion at this table.
We should say we are considering the feasibility of requiring that.
Thatcher: I agree. Let’s find the facts first. I can’t agree here to in-
700 Foreign Relations, 1969–1976, Volume XXXVII
Jenkins: We are not taking a step back from what was decided.
This only emerged last night.
Thatcher: I accept the Clark modification.
Giscard: I find myself closer to Andreotti. There are documents
with the origin and the purchase price of the cargo. Oil is not sailing
around the world anonymously. The market should not be cloaked in
secrecy. We should seek to instruct our ministers to set this system up.
Thatcher: We need to study this first. We cannot require, we can
have a feasibility study but we cannot require.
Giscard: OK. I accept.
Andreotti: If we say we study the feasibility it seems to me this is a
statement with no guts. We should have studied it earlier instead of
saying “consider the feasibility of requiring . . .”
Lambsdorff: I can accept the Canadian language as modified.
Ohira: Then there is agreement on the proposal “we will consider
the feasibility of requiring . . .”. In the next set of brackets we have “We
will likewise seek to achieve better information on the profit situation
of oil companies and on the use of the funds available to these
Lambsdorff: I would like to remove the brackets.
Ohira: If there are no objections, the sentence stays in and the
brackets are removed.
Carter: I cannot accept the first sentence of the language on page 3,
“We will seek to eliminate actions that might put upward pressure on
oil prices . . .” Some of our laws provide subsidies.
Lambsdorff: We want to resist what happened in the past and pre-
vent new action. We are under pressure to take new actions and want
some strength to resist those pressures.
Schlesinger: We have by recent actions reduced the subsidy on
crude oil while increasing the subsidy on distillate.
We will minimize
the impact of our subsidy on world oil prices.
Schmidt: I understand U.S. laws. That is not the issue. It is do-
mestic. My government is under pressure from our own party to intro-
duce new heating oil subsidies. We see this as counterproductive. We
hope for additional leverage to tell Parliament that new subsidies are
not on just now. We need additional language against subsidies.
Carter: We can say we will avoid new subsidies. This is to deal
with the Congress.
Schmidt: I understand the problem. We have a Parliament too.
See footnote 2, Document 214.
January 1979–January 1981 701
Giscard: I support the Carter text.
Lambsdorff: On the nuclear issue I would like to include the
second and fourth sentences: “Without the development of nuclear en-
ergy in the coming decades, economic growth will be hard to achieve.”
And “This must be done under conditions guaranteeing our peoples
Giscard: I agree with the Germans.
Schmidt: Then the text will read “We need . . .”, “Without develop-
ment of nuclear energy . . .”, “This must be done . . .”
Carter: We can accept this except that I would prefer the language,
“Expansion of nuclear generating capacity” rather than “the develop-
ment of nuclear capacity.”
Thatcher: There seems to be a lot of new institutions in this Com-
munique´. What is this Coal Board? These seem to be quangos—quasi
autonomous non-government organizations. It is an American expres-
sion I think. This Coal Board is a quango. I am against it.
Schmidt: What is behind this?
Schlesinger: This sentence expresses support for the International
Coal Advisory Board which is presently in train in the IEA to expand
the use of coal. It is already in the IEA.
Thatcher: I might accept it, but that doesn’t mean I support it.
Clark: I have no strong views. I share Mrs. Thatcher’s desire to
avoid a proliferation of international agencies. I would be happy to
Carter: Okay to delete it.
Clark: On paragraph 3, coal “exports” are only one-half of the
problem. There must be a pledge not to interrupt coal trade under
long-term contracts. On the issue of a national emergency, why don’t
we say countries “pledge not to interrupt coal ‘trade’ under long-term
contracts unless required to do so by reason of overriding national
Lambsdorff: Australia and New Zealand need the words “national
emergency” for constitutional reasons. Besides, “national interest”
could be economic, and be less than a national emergency.
Clark: I can accept national emergency but would like to have the
Carter: That’s okay with me. There are two things the Summit
ought to achieve. Greater specificity regarding reductions of imports
and promotion of the development of new energy sources. On page 5
we should be as strong as possible on these commitments. I favor the
bracketed language on new energy technologies which says “We will
insure that these resources are made available.”
702 Foreign Relations, 1969–1976, Volume XXXVII
Schmidt: I would like to second President Carter’s proposal and
remove the brackets.
Giscard: I can accept the text and Jimmy Carter’s addition.
Carter: We want to use the bracketed language “appropriate inter-
national organizations” to include the IEA.
Giscard: Why do we have to say this? It might refer to anything. I
do not just want to link this to other organizations. Besides the IEA is
within the OECD.
Carter: The IETG could also consult with the World Bank on loans
Giscard: We should indicate what framework we are thinking of. I
am thinking in terms of the OECD.
Clark: Is this not just a review and a reporting function? It will not
imply a commitment of action as to what will follow.
Thatcher: That is also my understanding—only a report.
Carter: Why don’t we say OECD, IEA and other appropriate
Giscard: That is okay. In the OPEC Communique´ there is an un-
flattering reference to dialogue with other countries.
In view of this
we should delete “We hope these countries will participate in a contin-
uous exchange of views on energy matters as well as other matters . . .”
which implies that we are seeking a dialogue with OPEC. We can just
keep the last sentence which reads “We remain ready to examine with
oil exporting countries . . .”
Andreotti: President Giscard has the correct approach but we
should add something on LDCs.
Schmidt: This requires a political discussion. OPEC’s second para-
graph has some abusive language as regards relations between indus-
trial and developing countries. It accuses us of failure to live up to our
responsibilities to the Third World. The developing countries are aware
that OPEC’s price actions are harmful to their development. Let me
give you some figures: Brazil before 1973 used 10% of its total export
earnings to pay for oil imports. Now it uses 40% of its export earnings.
The OPEC communique´ reads in part: “[The conference] took note of proposals
for a dialogue between OPEC and industrialized countries. Some of these proposals,
however, seem to suggest that a meaningful dialogue can be carried out only on energy
matters in isolation of other global, economical and structural problems.” The communi-
que´ continued that the conference wanted to “restate its categorical rejection” of any dia-
logue that did not address “problems of development, the acquisition of advanced tech-
nology, the financial and monetary reforms, world trade and raw materials, along with
the various aspects of the energy problem.”
January 1979–January 1981 703
In 1973 Turkey used 30% of its export earnings to pay for oil. Today it
uses 100%. Many other countries like India face the same problem.
Even if we could double our aid we could not offset this. We cannot
keep silent any longer. As a matter of grand strategy we cannot keep
our mouths shut and be quiet about this. We should not keep silent.
Giscard: This is a political question. We should let the Foreign
Ministers look at the text. This should be revised. We can’t have cooper-
ation after OPEC has turned us down in such clear terms. We should
also re-draft the North/South section in light of OPEC’s price changes
and other appropriate paragraphs.
Carter: I agree that we need to respond to the international abuse
of the LDCs and ourselves by the OPEC price increase. There has been a
60% increase since December. This could go up 40–50% more by the
end of the year. They have been encouraged by the timidity coming
from us and others by our lack of response in the past. The trouble in
the past was that it was difficult for single nations to speak out against
OPEC. If one does it alone it could be subject to blackmail by OPEC, for
example threats of withdrawal of funds. This is a propitious time to in-
struct our Foreign Ministers to work on our position on the matter. We
won’t have another chance. We will be vulnerable if we act unilaterally.
We should let the Foreign Ministers draft the strongest possible state-
ment on OPEC. It is time to draw the line.
Schmidt: We should indicate that we are aware of different atti-
tudes in different OPEC countries.
Giscard: In the Foreign Ministers’ text we should reflect our
awareness of the concern by certain countries for international eco-
nomic stability. All will understand what that means.
Clark: In the environment paragraph on page 4 we should add
Giscard: We should ask our Energy Ministers to look at the oil im-
ports for 1985. Our Ministers for Foreign Affairs should clear up other
aspects of the text indicating concern for our economies and LDCs.
Lambsdorff: A Japanese number is a pre-condition.
Giscard: If there is no number, let’s leave a blank line which can be
filled in as soon as Japan gives its 1985 target.
Schmidt: I have some second thoughts on the spot market section.
We should indicate that we urge not only oil companies but also oil ex-
porting countries to moderate spot market transactions.
Ohira: I agree with Chancellor Schmidt. We agree to add oil ex-
704 Foreign Relations, 1969–1976, Volume XXXVII
[The Third Session concluded at 12:05 pm. Energy Ministers, per-
sonal representatives and notetakers adjourned to prepare the last draft
of the Communique´ section on energy.]
Began at 2:50 p.m.
Ohira: Our experts have been working on the energy section and it
should arrive here any moment. In the meantime, let me read the sec-
tion on OPEC: “We deplore the decisions taken by the recent OPEC
Conference. We recognize that relative moderation was displayed by
certain of the participants. But the rise in oil prices nevertheless agreed
are bound to have very serious economic and social consequences.
They mean more unemployment, more balance of payments difficul-
ties and will endanger stability in developed and developing countries
of the world alike.”
Carter: I would like to strengthen by adding a word. “Unwar-
ranted” in front of “rises”. Also, why not add the phrase “worldwide
inflation and less growth.”
Lambsdorff: I accept this.
Ohira: Then we have agreed to President Carter’s suggestion.
Giscard: I would suggest deleting the word “nevertheless” before
the last sentence and simply say “we will remain ready . . .”
Andreotti: I would suggest that we say what the aim of our com-
mitment at Bonn was, in the macro-economic section.
Lambsdorff: That was already mentioned earlier.
Clark: In the sentence on administrative action, I can live with the
Lambsdorff: Why don’t we say “we will seek to minimize and fi-
nally eliminate administrative actions that might put upward pressure
on oil prices that result from domestic under-pricing of oil and to avoid
new subsidies which would have the same effect.”
Ohira: Finally, we need to address the level of Japan’s import
targets for 1985. Here’s what we can say. “Japan adopts as a 1985 target
a level not to exceed the range between 6.3 and 6.9 million barrels a day.
Japan will review this target periodically and make it more precise in
light of current developments and growth projections and do their ut-
most to reduce oil imports through conservation, rationalization of use
and intensive development of alternative energy sources.”
Carter: That is a good figure. I congratulate you on making this de-
cision in the proper spirit of this Summit conference.
Brackets in the original.
January 1979–January 1981 705
Giscard: It is important that Japan has been able to produce this
figure. It is a good commitment to the success of this meeting. Your
proposal can be accepted by France, but I would like you to say that
Japan will direct its efforts to the bottom end of the range through the
development of alternative energy resources.
Schmidt: I join Jimmy and Valery in expressing gratitude for your
Andreotti: The agreement by Italy to the energy section was in the
context of the overall EC number. I would like a line to be put in which
says that the Community countries are taking their commitment “in the
overall context of the EC” or “within a framework of the overall goals
of the EC.”
Jenkins: I can understand the intention of the Italian Prime Min-
ister and Italy’s point of view. We could not have a position which prej-
udices the interests of the other five countries.
Carter: I do not understand the point Roy Jenkins was making.
Jenkins: I was saying that we could deal with this issue at the
Andreotti: That is not satisfactory.
Giscard: We can put in a French, U.K., FRG but not an Italian
figure. If Andreotti does not want to be tied down here he can take Italy
out and put Italy into the EC as a whole.
Thatcher: Why don’t we say that “France, Germany, Italy and the
U.K. will make their contribution within the overall EC agreement to
keep the 1985 figures no higher than the 1978 figures.”
Carter: That is moving away from specificity. It goes against all we
have been doing here.
Thatcher: I am following up Andreotti’s point. The paragraph on
France, Germany, Italy and the U.K. is not agreed by Andreotti. The EC
Agreement is a total agreement.
Giscard: There is only one country that has not made a commit-
ment. We have an American, a Canadian and a Japanese commitment.
Now we are backpedaling. We are weakening the text. The fact that we
say we will not import more in 1985 does not mean that within the EC
we are going to arrive at 1978 ceilings. We are saying France, Germany
and Italy will not go beyond 1978 levels. The only problem is Italy. Ger-
many and UK and France will accept 1978 ceilings; Italy will probably
go beyond it. That is Italy’s problem. France, Germany and the UK can
agree not to go beyond the 1978 figure. We can say that France, Ger-
many the U.K. and the EC will not go beyond the 1978 figures. Then we
The EC was scheduled to convene in Dublin in November.
706 Foreign Relations, 1969–1976, Volume XXXVII
will not count Italy. This will enable us to negotiate within the EC’s ceil-
ing levels. We will say we are entering into a commitment not to ask for
more than the 1978 figure. We can delete Italy and replace it by the EC
as a whole.
Carter: That is acceptable to us.
Andreotti: In terms of classification we are thus neither fish nor
fowl. Since we are in the same condition as Japan on oil we should be
entitled to the same increase as Japan. The same conditions should lead
to equality of commitment.
Giscard: We can’t decide for our partners. We can’t give one
partner a favored position. We can’t say when we share within the 1978
figure Italy will be in a preferred position. We can’t decide what Italy
will be. The only way we can do this is to eliminate reference to Italy
and refer to the EC commitment among nine major countries. We can’t
decide on one without the other. Let’s not single out Italy and put it in
the EC ceiling.
Andreotti: I am not asking for privilege. You can’t ask us to
commit to accept the 1978 ceiling today without discussing the matter
within the EC. Either we accept Mrs. Thatcher’s proposal, or we say in a
footnote that our commitment will be made in the EC.
Jenkins: In the view of what was said by Mrs. Thatcher we can say
that France, Germany, Italy and the UK will make their contribution
within the overall EC contribution to keep 1985 imports within the 1978
level. Germany, France and the UK will be able to state that they will be
able to keep their imports below the figures of 1978.
Carter: I accept President Giscard’s formulation.
Andreotti: We could have a note which would state that as far as
Italy is concerned that the commitment as to the 1978 reference is ac-
cepted within the overall context of the EC.
Carter: I agree with that. The question of the next meeting needs to
be addressed. When and where?
Andreotti: I would like to invite all of you to Venice in June of 1980.
Schmidt: I agree to Andreotti’s invitation which I am told will be
on the Isle of San Giorgio. It is desirable that we should get together
once a year to examine the economic situation of the world. If we are
not intimately in touch on economic questions we might fall into the
pits of egotistical economic policy. The danger is great. These kinds of
meetings are healthy. I want to also thank our Japanese hosts for their
Giscard: I want to thank Japan for its commitment to reduce im-
ports of oil. I also accept Prime Minister Andreotti’s invitation, al-
though I think that the next meeting should be for one week if it is on
January 1979–January 1981 707
After an exchange of pleasantries, and thanks to Prime Minister
Ohira, the meeting concluded.
individual country goals for ceilings on oil imports in 1985 (the U.S. goal was 8.5 million
barrels per day); pledged to increase the use of coal as much as possible and expand alter-
native sources of energy, including nuclear energy; and deplored the recent OPEC deci-
sion to raise oil prices. For the full text, see Public Papers of the Presidents of the United
States: Jimmy Carter, 1979
, pp. 1197–1201.
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