Foreign relations of the united states 1969–1976 volume XXXVII energy crisis, 1974–1980 department of state washington
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- 275. Memorandum From Secretary of Energy Duncan to President Carter
- 276. Telegram From the Department of State to All Diplomatic and Consular Posts
- 277. Telegram From the Department of State to the Embassy in Saudi Arabia
On June 21, Fahd replied: “As Your Excellency is well aware, we here in the
Kingdom of Saudi Arabia give great attention to your points of view and we sincerely
wish to cooperate with you on all of the above mentioned considerations and strengthen
the traditional friendship between our two countries. I find that the exchange of advice
and opinions between our two countries on matters of common importance leads to
achieving greater bilateral understanding an cooperation.” (Telegram 3859 from Jidda,
June 23; National Archives, RG 59, Central Foreign Policy File, P870094–0872)
864 Foreign Relations, 1969–1976, Volume XXXVII
275. Memorandum From Secretary of Energy Duncan to President
Washington, June 7, 1980.
Meeting with Sheik Yamani, June 5, 1980
I was with Sheik Yamani for 6 hours and 15 minutes on Thursday,
June 5th, at his home in Surrey, England. Part of this time was devoted
to a birthday dinner in honor of his daughter.
—Summary: We discussed a variety of energy issues and details
follow. The key points were our discussion of the Strategic Petroleum
Reserve, and his statement that he “is recommending to Crown Prince
Fahd the continuance of a 9.5 million barrels per day production rate
for the third quarter.”
—United States Energy Developments: I briefed him on legislative
programs, our conservation achievements thus far in 1980, and re-
sponded to his questions concerning Congressional action to discon-
tinue your authority to impose a conservation import fee on crude oil to
be allocated to gasoline. He was impressed with our legislative pro-
gram and conservation achievements, and was disdainful of the
Congress for their unwillingness to support you on the fee, citing the
low U.S. tax rate on gasoline as compared to other industrialized coun-
tries. (It was interesting to see the change in his position on this issue
since our visit in Riyadh.)
—World Economic Conditions: We discussed generally the economic
conditions prevailing in the United States, the industrialized nations
and the less developed countries, making the point that further energy
price increases or supply constraints at this time would be severely dis-
advantageous. He seemed to understand this position.
—International Energy Agency Meeting: He was interested in the
IEA meeting in Paris and I gave him a rather complete debrief.
—Future Price Prospects: He told me he had been very disappointed
when other producing countries raised their prices following the Saudi
increase of $2.00 per barrel on May 14th. He told me he felt he had firm
commitments that other producers would not raise their prices. He
Source: Carter Library, National Security Affairs, Brzezinski Material, Agency
File, Box 8, Energy Department, 11/79–9/80. Secret. Copies were sent to Muskie, Brown,
Miller, Brzezinski, Eizenstat, and Owen.
See Document 263.
See Document 273.
January 1979–January 1981 865
does not anticipate achieving pricing unity at the June 9 OPEC meeting
in Algiers. He hopes this might be possible later in the year, if sufficient
crude oil availability continues throughout the next few months. He
thought a $30.00 “unified” price would be the appropriate level, and
that an indexing formula to increase beyond that level should be con-
sidered. This would involve a further $2.00 increase for Saudi Arabia,
but decreases for many other countries. Our average cost of imported
crude would be about $2.00 per barrel less than at present. I was left
with the impression that his view of the timing for a unified price was
late this year.
—Saudi Production Levels for the Third Quarter: He agreed that main-
taining the 9.5 million barrels per day production level was important
in view of the economic issues and pricing considerations mentioned
above, and said he “was recommending the 9.5 million barrel per day
production rate to Prince Fahd for the third quarter.” He said this state-
ment should be very closely held and I have classified this document
“Secret” for that reason.
—National Security: I made the point that inflation was eroding the
capacity of most nations to fund adequate defense needs which contrib-
uted adversely to the Western-Soviet military balance. This situation
was energy derived to a significant extent. It was a mutual problem. I
said that Harold Brown would be discussing their military equipment
needs with Prince Sultan. I did not discuss the national security issue as
fully as contemplated in my agreed talking points because every time it
was mentioned, he would launch into a discussion of the counter-
productiveness of the U.S. policy towards Israel. Detail on this issue is
best left to Harold.
—Strategic Petroleum Reserve (SPR): I mentioned the language in
or the discontinuance of production at the Naval Petroleum Reserve.
He said while Saudi Arabia is not a democracy, the opinion leaders
there argue for a lower production level on technical and business
grounds. Our filling the SPR will cause concern and we shouldn’t be
surprised if this happens. He said we should do everything possible to
control publicity on the SPR, and lower the visibility threshold. I told
him I understood these considerations, but he should understand our
political considerations too, that we would work to minimize the pub-
licity, and that it would not be constructive to sell further Naval Petro-
leum Reserve oil at exorbitant prices.
Introduced in the Senate on April 9, 1979, the bill became the Energy Security Act
of 1980 (P.L. 96–294), which President Carter signed on June 30. Among other things, it
established the Synthetic Fuels Corporation.
866 Foreign Relations, 1969–1976, Volume XXXVII
—Your letter to Prince Fahd: I mentioned your letter to Prince Fahd,
and the general points made.
He did not react.
—Venice Summit: He was very interested in the agenda and the ex-
tent to which energy issues would be involved. I told him energy was
very heavily involved, and that I felt the meeting would be a good one
with respect to energy issues. I mentioned our expectations as to out-
come, in the identical way we had done with the IEA member countries
in Paris. He responded favorably to the forty percent target for oil’s
share of total energy consumption for Summit countries by 1990, and
the target of .6 for the ration of growth in energy consumption to
growth in Gross National Product.
—Future Duncan/Yamani Meeting: He inquired as to whether I
would be at the Venice Summit. When I responded affirmatively, he
asked if we could get together immediately following the Summit. He
said he could brief me on the OPEC meeting and I could brief him on
the Summit. We made a tentative date to get together on June 23rd in
either London or Geneva.
He was concerned about the United States political scene, men-
—the adverse consequences of Senator Kennedy’s continuing to
seek the nomination.
—the possible adverse consequences of the Anderson candidacy.
—his concern that Ronald Reagan does not comprehend energy
issues, could only be a one-term President because of his age, and said
“If Ronald Reagan is elected, it would set the Middle East back five
He wants very badly for you to be reelected and thinks it would be
severely disadvantageous to the interest of the Middle East in general,
and Saudi Arabia in particular if this did not happen.
See Document 274.
Congressman John Anderson (R–IL) ran as an independent candidate for Presi-
dent in 1980.
January 1979–January 1981 867
276. Telegram From the Department of State to All Diplomatic
and Consular Posts
Washington, July 9, 1980, 2239Z.
180781. Subject: Highlights of Venice Summit, June 22–23, and
Follow-Up Action. Ref: (A) Secto 04021, (B) State 177830.
1. The Venice Summit was a well-prepared, highly successful, and
harmonious event. The sessions were marked by a strong sense of
unity—“we are all in the same gondola”, as the Japanese Foreign Min-
ister said—and an awareness that the difficult decisions that will need
to be taken in the period ahead will be less difficult if the industrial de-
mocracies act together. Energy dominated the economic discussions
and Afghanistan the political. Participants reached a common assess-
ment of the strategic importance of these and related challenges facing
the Western world, as the communique´s make clear. Their language is
strong, forthright, and unambiguous; the positions and decisions are
fully consistent with, and indeed supportive of, US policies. Whether
the long-term goals the principals endorsed at Venice will be given ef-
fect will depend on sustained follow-up action by all the Summit
2. The communique´s are being repeated to all diplomatic and con-
sular posts: the “Declaration of the Venice Summit”,
which is the
major statement on key economic issues; the separate political commu-
nique´ on Afghanistan, Secto 04021; the statements on hijacking, and on
Posts have already received the Summit declaration on the
taking of hostages, State 177830.
3. For the first time since the economic summits were initiated in
1975, one of the main sessions in the two-day period was set aside for
political discussion. The other two sessions were devoted to the eco-
Source: National Archives, RG 59, Central Foreign Policy Files, D800329–0967.
Limited Official Use; Immediate. Drafted by Ruth S. Gold, Special Assistant to the As-
sistant Secretary of State for Economic and Business Affairs; cleared by Hormats and
Treat and in EUR/RPE, EA/J, S/P, E, and the Treasury Department; and approved by
Telegram Secto 4021, June 22, contains the Political Communique´ from the Venice
Summit. (Ibid., D800303–0574) Telegram 177830 to all diplomatic and consular posts, July
6, contains the Venice Declaration on the Taking of Hostages. (Ibid., D800324–0816) All of
the statements issued at the Summit, the Final Declaration of June 23, and Carter’s inter-
view in Venice with reporters at the Summit’s conclusion are printed in Public Papers of
the Presidents of the United States: Jimmy Carter, 1980
, pp. 1170–1204. For Carter’s personal
recollections of the Summit, see White House Diary, pp. 439–442.
Transmitted in telegram 192218, July 21. (National Archives, RG 59, Central For-
eign Policy Files, D800349–0815)
Transmitted in telegram 184724, July 13. (Ibid., D800336–0955)
868 Foreign Relations, 1969–1976, Volume XXXVII
nomic agenda. In addition, the participants took their meals together,
the Heads of Government in one group, the Foreign Ministers in an-
other, and the Finance and Energy Ministers in a third group, at all of
which there were useful wide-ranging informal discussions. The
Summit also provided opportunities for bilateral meetings. President
Carter met separately with each of the Heads of Government and with
the President of the EEC Commission.
Thus the value of the Summit
meeting lies not only in the decisions reached but also, and equally im-
portant, in the expanded contacts and understanding among national
leaders that the two-day meeting encouraged. It lies also in the benefits
derived from the preparatory process and follow-up. The work of pre-
paring this Summit began in February and served not only to resolve
contentious issues which would otherwise have required the attention
of heads of government, but also gave impetus and direction to other
international activities, particularly the IEA and OECD Ministerials. As
a result, Summit participants were free to spend a larger part of their
limited time together discussing broad policy issues. Further, the pre-
paratory process involved frequent discussions among a range of offi-
cials from the Summit countries covering all of the issues covered in the
communique´. This process fosters a higher level of mutual understand-
ing and compromise than would be the case without the Summit. Orga-
nized follow-up is also an integral part of the Summit process, helping
to assure that commitments undertaken by Heads of Government are
pursued. The Summit series will continue with the seventh Summit
meeting scheduled to take place in Canada in 1981.
4. Political Discussion. The introduction of a separate political dis-
cussion at the Economic Summit was natural, given the strategic im-
portance of the Soviet invasion of Afghanistan and the opportunity the
Venice Summit offered the Heads of Government to share their assess-
ments of this event face to face. The principals confirmed the strong
Western reaction to the Soviet aggression. The advance work on the po-
litical agenda and communique´ prepared the leaders to deal promptly
and directly with the Soviet ploy in announcing the withdrawal of
some troops from Afghanistan on the eve of the Summit. The result was
solid Summit unity in calling for complete Soviet withdrawal from
5. Economic Discussions. Energy was clearly the central issue. As
the President said on arriving at Andrews Air Force Base, “the one
word that permeated all of the discussions was oil.”
It occupied more
Carter’s notes from the Summit are in the Carter Library, National Security Af-
fairs, Brzezinski Material, Subject File, Box 38, Presidential Memoranda of Conversation,
For the full text of his remarks on June 26, see Public Papers of the Presidents of the
United States: Jimmy Carter, 1980
, pp. 1234–1236.
January 1979–January 1981 869
than 75 percent of the time devoted to the economic agenda. “Unless
we can deal with the problems of energy, we cannot cope with other
problems” says the Summit Declaration in its opening paragraph. It
recognizes OPEC’s responsibility for exacerbating inflation, recession,
and unemployment in the industrialized world, and undermining and
in some cases destroying the prospects for growth in the developing
countries. The Declaration lays out at some length the essential ele-
ments of a strategy agreed among the seven nations to free themselves
from their excessive dependence on imported oil within this decade.
The main elements are conservation of oil in all sectors of their econo-
mies where substantial savings in the use of oil are possible, and reli-
ance on fuels other than oil to meet the energy needs of the future—
coal, nuclear, synthetics, and renewable sources—whose potential to
increase supply is estimated at the equivalent of 15–20 million barrels
daily of oil by 1990. By carrying out the agreed strategy, the partici-
pants expect that the share of oil in total energy demand will be re-
duced in the Summit countries from 53 percent now to about 40 percent
by 1990, that collective energy use will increase only 60 percent as fast
as GNP (the ratio used to be one to one), and that collective oil con-
sumption in 1990 will be significantly below present levels. The Decla-
ration notes the mutual dependence of the industrialized democracies,
the oil exporting countries, and the non-oil developing countries for the
realization of their economic aspirations, and adds, as the Western
countries have said many times before, that the participants “would
welcome a constructive dialogue . . . between energy producers and
consumers in order to improve the coherence of their policies.”
6. On his return from the Summit, President Carter said of the en-
ergy talks, “We recognize that we must break the relationship between
economic growth in the future and our dependence on energy; in other
words, to have more growth for less energy . . . Obviously our over-
dependence on foreign oil takes away our own basic security, the right
that we have to make our own decisions . . . Oil politics is literally
changing the interrelationship among nations. We must stand united,
cooperate whenever we can, and meet a common challenge to the secu-
rity and certainty of the future brought about by rapidly increasing un-
controllable prices of oil, and excess dependence by all of us on imports
[Omitted here is discussion unrelated to energy.]
870 Foreign Relations, 1969–1976, Volume XXXVII
277. Telegram From the Department of State to the Embassy in
Washington, July 1, 1980, 2358Z.
174172. For the Ambassador. Subject: Proposed Presidential Letter
1. (Secret—entire text)
2. In Secretary Duncan’s recent meeting with Yamani latter sug-
gested President urge Fahd directly to increase productive capacity
beyond 12 MBPD in order to help Yamani withstand pressures from
within SAG to abandon 12 MBPD goal.
Would appreciate your imme-
diate judgment on effectiveness of such a communication and sugges-
tions on following proposed text:
3. Begin text: “Your Royal Highness: I would like to share with you
my reflections on the implications of the Venice Economic Summit
meeting for our nations’ mutual security in the years ahead.
“The Heads of Government of the major industrial countries
agreed on the importance for world economic stability of continuing
our fight against inflation, even in the face of some increase in domestic
unemployment. We also recognized that the severe financial problems
faced by developing countries require the special attention of all gov-
ernments capable of offering assistance.
“In addition, we agreed on an ambitious plan of action to break the
link between economic growth and the consumption of oil over the
next ten years. One of the central features of this plan is the intention of
the seven countries to increase their production and use of substitutes
for oil by the equivalent of 15–20 million barrels per day over this pe-
riod. We will start toward this goal immediately.
“In setting this goal, we realized that we must work in close coop-
eration with Saudi Arabia and other responsible oil producers to effect
Source: National Archives, RG 59, Central Foreign Policy Files, P910096–0044. Se-
cret; Niact; Immediate; Nodis; Cherokee. Drafted in the Department of Energy, cleared
by Poats and Twinam, and approved by Cooper.
Duncan met with Yamani on June 25, after the Venice Summit. The memorandum
of their conversation is attached to a June 27 memorandum from Duncan to the President
summarizing the discussion with Yamani. (Carter Library, National Security Affairs,
Brzezinski Material, President’s Correspondence with Foreign Leaders File, Box 17,
Saudi Arabia: Crown Prince and First Deputy Prime Minister Fahd ibn Abd al-Aziz Al
West replied: “We agree that a letter from President to Crown Prince would be
constructive. Text set forth in reftel is excellent.” He added that in a June 25 meeting with
Yamani, the latter expressed “his satisfaction with the Duncan meeting and seemed
highly pleased with the understandings reached.” (Telegram 4057 from Jidda, July 2; Na-
tional Archives, RG 59, Central Foreign Policy Files, P900077–1443)
January 1979–January 1981 871
an orderly transition away from the excessive dependence upon the
world’s petroleum resource base, which must be preserved for future
“I stated at Venice, and I reiterate to you now, my deep apprecia-
tion for the responsible policies of your government on petroleum
matters. I can appreciate the very real difficulties that you may have ex-
perienced in advocating and pursuing policies of moderation and
“Recent international events give clear warning that our countries
face growing challenges to our vital security concerns in the years
ahead. I was reassured by the determination of all of the industrial
powers represented at Venice to strengthen our military and economic
capacity to define our common interests. I believe this posture is of
great value to Saudi Arabia, just as your country’s readiness to meet
emergency shortfalls in world oil supply is of great importance to the
industrial nations’ security.
“One of the stark lessons of the recent past is that the world’s eco-
nomic security depends heavily on the ready availability of a signifi-
cant margin of oil production capacity to offset sudden supply disrup-
tions. Saudi Arabia’s policy of raising sustainable production capacity
to 12 million barrels per day is, thus, a major contribution to world
order, and we look forward to its early realization. As the future un-
folds, I believe that you may find that a further increase in Saudi
Arabia’s capacity beyond 12 million barrels per day will be important
to assuring a secure international environment.
“Looking back over the last several years, I am pleased to see how
the dialogue between our two governments has developed on the wide
range of economic, political, and security issues that affect the present
and future well-being of our two countries and indeed of the world
community generally. In the months ahead I look forward to further
developing these close consultations and to benefitting from your
counsel.” End text.
4. This text has not been cleared by White House nor seen by the
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