Foreign relations of the united states 1969–1976 volume XXXVII energy crisis, 1974–1980 department of state washington
Telegram From the Embassy in France to the Department of
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Telegram From the Embassy in France to the Department of
Paris, October 18, 1974, 1850Z.
24689. For Secretary Kissinger and Secretary Simon. From Bennett,
Enders and Cooper. Subject: Camp David Follow-up.
1. Summary: During our talks October 16/18 the British moved
close to our position and the Germans indicated a basic responsiveness.
OECD Secretary General Van Lennep will launch a “defensive” recy-
cling scheme remarkably similar to our own.
But the French raised
strong objections on both substance and procedure. Predicting that
most of the OPEC surplus would gravitate to the New York market, the
French said that it would be politically more difficult for them to accept
money recycled through a consumers’ group in which the U.S. played a
leading role than through the IMF. Arguing variously that it would of-
Source: Ford Library, National Security Adviser, Presidential Country Files for
Europe and Canada, Box 4, France:—State Department Telegrams to SECSTATE–NODIS
(1). Secret; Immediate; Nodis.
Van Lennep’s recycling plan involved the OECD establishing a system whereby
funds could be mobilized quickly from financial markets and oil producers to lend to the
OECD countries “most heavily hit” by a rise in oil prices. He did not envision the plan
duplicating the IMF oil facility, which he viewed “mainly” as a channel through which
oil producers would lend money to LDCs. (Telegram 22870 from USOECD Paris, Sep-
tember 27; National Archives, RG 59, Central Foreign Policy Files, D740273–0203) For the
U.S. recycling plan, see Document 15.
August 1974–April 1975 51
fend the Community, would not be possible while we are “railroading”
the IEP through, or would accomplish nothing because the decisions
are too political, French representatives declined to envisage a meeting
of the Five
at official level. Regarding a Ministerial meeting of the Five,
they said only that the question of when and if it would be held is open.
2. Analysis: The French attitude places us before the following op-
tion: We can:
(A) Slow down the IEP, in return for French agreement to use the
Five at both official and Ministerial level for ongoing discussions of en-
ergy and financial matters; or
(B) Go ahead with the IEP, have multilateral discussion of the Van
Lennep plan in the restricted membership OECD Working Party
the basis of a U.S. paper (which the French would welcome).
3. Option A would give us an opportunity to develop the Five as a
valid and independent forum. On the other hand, since the timetable
for the IEP is already agreed, and since the French have already sig-
nalled to the Community and to us that they will not stand in its way,
delay would put the IEP and energy cooperation among the 12
ardy. In addition, there is from this first contact no reason to believe
that the French would lift their political objections to our financial pro-
posal if the IEP were delayed; rather to the contrary.
4. Option B would not exclude another Ministerial meeting of the
Five (the French were precisely non-committal on this point). It would
make the process of preparing such a meeting much less efficient, al-
though not impossible. It would bring pressure on the French (through
the fait accompli of the IEP and Van Lennep’s initiative) without our
having to bring it. And it would appear to be the fastest means of mov-
ing towards creation of the recycling mechanism we will in any case
need this winter.
(A) That we stay on course with the IEP, looking towards creation
of the new agency in the OECD November 18;
(B) That we circulate to the Five an expanded version of our “Illus-
The economic and finance officials of Working Party Three, which operated under
the OECD’s Economic Policy Committee, analyzed macroeconomic policy issues.
Members of the Energy Coordinating Group that signed the initial IEP Agreement
in Brussels on September 27. See footnote 6, Document 9.
See footnotes 13, 14, and 16, Document 9.
52 Foreign Relations, 1969–1976, Volume XXXVII
(C) That we encourage Van Lennep to flesh out his proposal for
discussion informally at dinner preceding Working Party Three
meeting on November 19; and
(D) That we continue to propose a multilateral officials meeting,
but in any case have a further round of bilateral contacts (including the
French) with a view towards a Ministerial meeting of the Five in early
December. This gives the French an option to back off if they want
without loss of face.
6. Report on London discussions: British (Treasury’s Mitchell,
FCO’s Maitland, Energy Ministry’s Williams) moved close to U.S. posi-
tions on both substance and procedure, but tried to keep open the op-
tion of doing both our recycling facility and the Healey plan.
7. On conservation, British said that the new government would
give high priority to developing package of measures such as heating
and speed limits. They argued against a public group conservation
target, saying that it would be too easy for OPEC to offset it and too dif-
ficult for the consumer to agree on burden-sharing. After some discus-
sion, however, they did agree that a group conservation target held in
private could be considered as well as a group meeting to review na-
tional measures and perhaps to package them into a coherent whole.
We insisted that serious conservation measures are an indispensable
part of the whole package and that coordination is important not only
for burden-sharing but for impressing the OPEC with the seriousness
of our intent. We added that the U.S. would be willing to consider addi-
tional conservation if others do.
8. On financial solidarity, the British repeated their concerns about
the reaction of IMF constituents, LDCs in general, and OPEC in particu-
lar, to a consumers’ financial club, but with less conviction. They said
that they had not understood our proposal at Washington and are in-
terested in it. Noting that “at official level they have never believed in
numbers as large as Healey’s” the British argued that we should do
both a medium-sized Healey plan in the IMF, and a medium-sized re-
cycling device among ourselves. We answered that there might be a
case for a moderate increase in the Witteveen Fund, and something
should be done in the IMF for the LDCs. But only a few billions would
be involved; the main effort we said must be much larger and it must be
politically under the control of the consumers through creation of a
new institution, perhaps in an OECD framework.
9. On economic relations with producers, the British agreed that all
of the measures we listed should be studied. They did not give an ap-
pearance of recoiling at the implications of economic warfare.
Healey’s proposal involved OPEC countries depositing funds in an IMF facility
for the IMF to distribute. See Document 9.
August 1974–April 1975 53
10. On procedure, the British agreed with a schedule calling for the
U.S. to circulate a revised and expanded version of its Illustrative Pro-
posals paper at the end of the month, a meeting of the Five at official
level in the U.S. in early November, and a Ministerial meeting of the
Five in early December. They agreed that the purpose of the Ministerial
should be to establish agreed concepts in each of the three categories
for subsequent negotiation and implementation, probably in other
forums. They noted their belief that the French would accept meeting
in the Five at Ministerial level but would be reluctant to do so at official
level; the British said they would cooperate with us in trying to bring
the French along.
11. Discussion in Bonn: We found the German officials (Treasury’s
Poehl and Weber, Foreign Office’s Lautenschlager, Economics Min-
istry’s Kittel) almost completely unprepared; Genscher and Apel had
evidently passed on nothing from Camp David. They expressed “deep
interest” in our proposals, some anxiety about their ultimate financial
liability in the recycling scheme, and went along with our procedural
12. On conservation, Germans noted they will come out next week
with a package of measures such as conversion of generators from oil to
coal-fired heating units in the context of their overall energy policy. At
first they said that that is all that they can do, then accepted the notion
that measures taken by each country should be evaluated together,
with a view both to equity in burden-sharing and to overall adequacy.
13. On financial solidarity, Germans remarked that our proposals
are opposite to their current emphasis on how to encourage OPEC in-
vestment in the consuming countries. They expressed concern that in-
ternational lending would be like “reparations,” ending in unpayable
claims. But they recognized that German liability would not necessarily
be greater under our scheme than under alternatives, and could be less.
They agreed to give our proposals serious attention.
14. On economic relations with the producers, the Germans noted
possible problems in addressing anything to do with trade without
some sort of EC okay, but concluded that these questions, including the
offsetting measures, should be addressed by the Five. In response to
their question, we said that conservation and financial solidarity are
not in our view preconditions for the producer/consumer dialogue,
but remarked our judgment that the dialogue will yield nothing until
the consumers are better organized.
15. On procedure, the Germans welcomed our proposal to provide
a fleshed-out version of the “Illustrative Proposals,” and agreed to
meet a` cinq during November to consider it. They were non-committal
about a December Ministerial but raised no problem. Poehl felt the
French would come along on the proposed procedure, citing Schmidt/
54 Foreign Relations, 1969–1976, Volume XXXVII
Giscard exchanges on the value of informal meetings of the Five. He
also stressed the need for secrecy and to keep the group small.
16. Discussions with OECD Secretary General Van Lennep: Draft
recycling concept Van Lennep showed to us October 18 differs from
ours only in that it (A) is written in terms of guarantees only, without
giving the loan option; and (B) gives a central role to the Basel-based
Bank for International Settlements.
17. After some discussion, Van Lennep agreed to revise his pro-
posal in both respects. He will now float it confidentially with the main
OECD countries, looking towards a discussion when OECD Working
Party Three meets October 19.
18. We did not discuss our proposals or activities with Van
19. Discussions in Paris: French officials (Foreign Office’s Brunet,
Treasury’s De Larosiere, Energy Office’s Vissacq) were welcoming, po-
lite, but somewhat less forthcoming than at Washington. Institutional
aspects (the IEP, the development of a new club rather than use of the
IMF) were clearly the center of French preoccupations.
20. On conservation, French indicated that their plans for reducing
oil imports based on need to reduce balance of payments current ac-
count deficit. Restricting heating oil to 90 percent of 1973 usage (10 per-
cent for each household, 10 percent reserve for new users) by manda-
tory cutbacks in supplies is the toughest part of program which
includes other means to limit gasoline consumption and industrial use
of fuel oil. For 1975 they projected current account reduction of $2 bil-
lion, e.g., current account deficit of $4 billion rather than $6 billion.
21. On financial solidarity, De Larosiere found little or no merit in
establishing new mechanism outside of IMF. He argued that since most
Arab dollars would come to U.S., new mechanism would simply be
way of “secondary recycling” by U.S. to others and that this would be
politically much more difficult for French than direct recycling of Arab
dollars through IMF. De Larosiere and Brunet both skeptical that U.S.
proposal would be more saleable politically in U.S. than expansion of
22. On economic relations with producers, Brunet argued for early
establishment of small group for discussions only along lines of
Brunet stressed that current situation in which Pres-
The Bank for International Settlements is the international organization of central
banks, the goal of which is to foster international monetary and financial cooperation. It is
also known as the bank for central banks.
Yamani first discussed the idea of a mini-consumer-producer conference on a trip
to London during the week of May 6. He said that Saudi Arabia wanted the United Na-
tions “to take the initiative in recommending small, restricted group of ten consumers
August 1974–April 1975 55
ident’s remarks in Detroit answered by Shah in Canberra
factory. French apparently agreed that common line among consumers
prerequisite to productive consultations with oil producers but had no
proposals on how such common line might be developed. Brunet ex-
pressed French view that common action to deal with oil price problem
by serious national efforts on conservation should be number one pri-
ority for consumers.
23. Brunet then raised subject of ECG and said French viewed IEP
as nominal accomplishment, with emergency cooperation program a
second-order accomplishment which could have been achieved in
OECD. Brunet suggested that the accelerated production and conserva-
tion elements of IEP were seemingly empty boxes thrown in at last mo-
ment because of French criticism. Brunet stated that IEP would set back
efforts to develop common energy policy in EC.
24. On procedure, French expressed strong disagreement with
idea that there should be multilateral discussions of the Five at official
level prior to Ministerial meeting and indicated no view one way or
other on desirability of early meeting at Ministerial level. Several
reasons adduced for their opposition to official meeting including po-
litical problems with other EC members outside Five, likelihood that
officials would not be able resolve problems that were essentially polit-
ical, and adequacy of national papers circulated in advance of prepara-
tions needed for Ministerial meeting. Brunet closed by indicating that if
U.S. were willing defer implementation of IEP, climate for further dis-
cussions of U.S. proposals by the Five would be much better. He virtu-
ally proposed we defer implementation of IEP if we wanted French to
participate in official discussions of U.S. proposals.
and producers meeting outside UN forum at a very high level with a minimum of public-
ity.” He suggested that participants might include the United States, EEC, Japan, India,
and Brazil from the consuming side, and Saudi Arabia, Iran, Algeria, Venezuela, and pos-
sibly Indonesia from the producing side, adding that “it was necessary first to settle on an
agenda” that dealt with issues beyond “the price question.” (Telegram 5983 from Lon-
don, May 14; National Archives, RG 59, Central Foreign Policy Files, D740118–0621)
Yamani most recently raised the issue on September 9. (Telegram 5205 from Jidda, Sep-
tember 9; ibid., D740249–1000)
Regarding Ford’s speech at the World Energy Conference in Detroit on Sep-
tember 23, see Document 8. The Shah responded to the President’s speech while on a trip
to Australia: “I have not had time to receive official texts of those declarations, but if they
are what you have just said, first of all it is not acceptable to us. Nobody could dictate to
us. No one could wave a finger at us, because we could wave back.” He also suggested
the establishment of “one fixed price of oil in the whole world, except for the geograph-
ical location and the quality of oil, and that related to an index price of say 20 to 30 com-
modities as a basket of prices.” “We have got to defend our interests,” he said. “We have
got to keep our purchasing power.” (Telegram 6505 from Canberra, October 3; National
Archives, RG 59, Central Foreign Policy Files, D740279–0901)
56 Foreign Relations, 1969–1976, Volume XXXVII
Minutes of the Secretary of State’s Staff Meeting
Washington, October 22, 1974, 9–10:10 a.m.
[Omitted here is discussion unrelated to energy issues.]
Secretary Kissinger: Tom.
Mr. Enders: As I reported to you, the French have political objec-
tions to going ahead at an official level in the Camp David follow-up.
These objections may prove to be less firm than they are right at the mo-
ment, if we proceed with floating our ideas in a policy paper. We did
not float a piece of paper in Europe, but talked orally to it. The next step
would be to talk bilaterally with the Japanese, and then to float the pro-
posals in written form.
Secretary Kissinger: These are officials that are objecting, or
Mr. Enders: They were non-committal—
Secretary Kissinger: Whom did you talk to?
Mr. Enders: They were precisely—
Secretary Kissinger: First tell me who it is that was non-committal.
Mr. Enders: The Director General of Economics for the Foreign Of-
fice, and the second man in the French Treasury. They have both talked
with their ministers beforehand. Their position was, on following up,
that they did not exclude a ministers meeting, but they did not wish to
meet at the officials level in a group of five.
Secretary Kissinger: I don’t think that proves anything. They are
willing to have a ministers meeting, but not an officials meeting. I don’t
know what that proves.
Mr. Enders: Well, what it does prove is that they want to slow
down the process. They raise a number of political objections to our
proposal, basically saying it would be easier for them to borrow money
from the Arabs than from us. What I would propose—
Secretary Kissinger: That I believe is true. Somebody could do a
great book on the decline of the west—between our madness and the
European madness, we will manage to destroy the structure yet.
Mr. Enders: However, they agreed to further bilateral talks, would
welcome a U.S. paper. I think we should go ahead now and push that.
Source: National Archives, RG 59, Transcripts of Secretary of State Kissinger’s
Staff Meetings, Lot 78D443, Box 2, Secretary’s Staff Meetings. Secret. Kissinger presided
over the meeting, which was attended by all the principal officers of the Department or
their designated alternates.
See Document 10.
August 1974–April 1975 57
Mr. Sonnenfeldt: It’s the wrong handle.
Secretary Kissinger: Well, this is an exercise we have gone through
before. I agree with Hal that it is the wrong handle.
Mr. Sonnenfeldt: It is like on our favorite subject of proliferation. I
think these things all get lost if they don’t get a push from the Elyse´e.
Secretary Kissinger: Otherwise they get the bureaucracy lined up
before the Elyse´e can act. It is a waste of time. This will have to wait
until the President meets. I don’t mind talking to the others. I don’t see
any sense—this is how the French trapped us last time.
We give them a
paper first. They will run around to the other Europeans and claim (a) a
special relationship, and (b), claim that they are defending the Euro-
peans. They are not getting a paper first.
Mr. Enders: The proposal was not that they get a paper first. The
question is whether now that we have talked bilaterally with every-
body but the Japanese, whether we should now push forward a paper.
We have to get something in focus.
Mr. Sonnenfeldt: We have six weeks before Martinique.
I think it
would be a shame to do it without getting a crack at—
Secretary Kissinger: And four weeks before he sees Schmidt.
Mr. Enders: That puts a big delay into the process, though.
Secretary Kissinger: Not if the alternative is that they dig into a
Well, who is for it?
Mr. Enders: I think the British will shift their position. They moved
substantially in the course of this meeting. The Germans haven’t done
anything in between, but I think they will come along. We have not yet
talked in detail with the Japanese. The Japanese will join whatever the
Secretary Kissinger: So what do you advance by coming up with a
paper? How will that speed things up?
Mr. Enders: Well, they have yet to see reasonably precise U.S. ideas
in a form in which they can grapple with it. The British in particular I
think would probably lock on pretty fast.
Secretary Kissinger: But if they lock on pretty fast now, they will
lock on pretty fast in December.
Mr. Enders: It is a question of whether you can afford that addi-
At the Camp David meeting on September 28; see Document 9.
Ford met with Giscard on the island of Martinique December 15–16. See Docu-
Schmidt made an official visit to Washington December 4–6. See Document 22.
58 Foreign Relations, 1969–1976, Volume XXXVII
Secretary Kissinger: Who can’t afford the delay?
Mr. Enders: I think there is some question as to how far the French
are going to come on in any case. The question really is whether you
build up sufficient momentum—by using the device of this paper, or
move around to consultations—to keep the thing going. Otherwise I’m
afraid you give the impression that you have had one round of initia-
tive, follow-up official talks, and then quit. I mean something to keep
the momentum going.
Secretary Kissinger: Let me think about that. I just know when you
give the French a paper on an official level, and they are going to orga-
nize everybody against the paper, it is going to go like my Year of Eu-
They are going to find some sentence that they can turn
into an offensive sentence. And we are in for a year’s haggling, if the of-
ficials get hold of it. And the officials we know are opposed to any such
effort on Gaullist grounds.
Mr. Sonnenfeldt: The line-up in the Quai below Sauvagnargues is
still quite unfavorable.
Secretary Kissinger: You have Piot who is totally opposed to any-
thing like that.
Mr. Hartman: There is ministerial feeling about this, too. It is not
just the officials.
Mr. Enders: They both told us that they have talked to their min-
isters—Treasury and Foreign Affairs.
Secretary Kissinger: Let me think about it. The French certainly
never come along unless you keep going without them.
Mr. Enders: That it seems to me is the main reason to keep up some
sense of motion here.
Secretary Kissinger: Okay.
[Omitted here is discussion unrelated to energy issues.]
Kissinger delivered the speech before the annual meeting of the Associated Press
editors in New York on April 23, 1973. For the text, see Department of State Bulletin, May
14, 1973, pp. 593–598.
August 1974–April 1975 59
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