Foreign Relations of the United States, 1969–1976, Volume XXXVII, Energy Crisis, 1974–1980

26. Minutes of the Secretary of State’s Staff Meeting¹

Washington, December 20, 1974, 8–9:02 a.m.

[Omitted here is discussion unrelated to energy.]

Secretary Kissinger: Which reminds me: I would like a very clear instruction sent to the members of the IEA of what the opposition is. There will be no work whatsoever on a preparatory meeting until consumer solidarity is further developed. The United States will not participate in any form whatsoever in consumer-producer preparation until solidarity is further advanced. There will be no March meeting, no preparation for a March meeting—no discussion of a March meeting.

Mr. Hartman: There’s a difference between preparing for that meeting and going on with the work already started with the IEA. There’s a subcommittee started dealing with consumer-producer relations.

Secretary Kissinger: That does not become the only expression of consumer-producer solidarity. Apparently it is not internal. You know, among the confidential cable levels, the top level that I get. (Laughter.) There is one by Hermes, or whoever that fellow is.

Mr. Hartman: Well, Hermes is a French—

Secretary Kissinger: There’s not going to be any misunderstanding. There’s going to be a cable today in which everybody is clearly informed on what the opposition is on the consumer-producer subcommittee of the IEA;² we will not drag our feet. We will handle it in our normal bureaucratic channels. That means Hermes can’t touch it on the consumer-producer cooperation until there’s more producer [consumer] cooperation.

Mr. Katz: Eward is the chairman of that group.³

Secretary Kissinger: So you’re guaranteed that nothing is said. (Laughter.)

Mr. McCloskey: 48 hours. (Laughter.)

Secretary Kissinger: Art, are you sure you understand the strategy?

Mr. Hartman: I understand it perfectly. There’s a lot of work to be done though, and the work has to go forward.

Secretary Kissinger: The work will be done after consumer cooperation is advanced. Anybody that wants to get energy or anything is going to work on consumer cooperation now.

I better get a paper that tells me what’s going to be done in what time frame.⁴ I tell you: I’ll just have to pull us out of a producer-consumer meeting until I’m satisfied there’s consumer cooperation. We will not yield on that; we will not compromise on that.

Mr. Hartman: The biggest problem there is no trouble achieving progress in the conservation field, providing the U.S. has a program.

Secretary Kissinger: There will be progress on the financial facility. The big problem there is not one of wanting to go to a producer meeting. It’s Schmidt and the 25 billion dollars; that will be what will hold it up. If Schmidt doesn’t yield, we’re not going to get a producer conference. It’s our best card, and we’re going to play it hard. And will you make sure that is made clear to the Germans in a tactful way (addressing Mr. Hartman)?

Mr. Hartman: Yes, sir.

Secretary Kissinger: They will all want to substitute talk for action. And then there will be nothing but talk at the producers conference.

[Omitted here is discussion unrelated to energy.]

Secretary Kissinger: You better make clear to the French so that there will not be a misunderstanding. We will not participate in anything until there is greater consumer solidarity. We don’t want the Martinique thing⁵ to disintegrate.

Mr. Hartman: No.

Secretary Kissinger: If they want to have a March preparatory meeting, then the best road to it is to help us speed up consumer solidarity, and then we will work with great energy on the preparatory meeting. You and EB and your shop can prepare an agenda⁶ for this—

Mr. Katz: Yes, sir.

Secretary Kissinger: —to make sure of what we can achieve in a preparatory meeting so it doesn’t turn into a non-substantive meeting.

Mr. Katz: How are we going to bring the French into the consumer solidarity, Mr. Secretary? Brunet told our Embassy in Paris yesterday what their guidance was, to their posts abroad;⁷ and they said for those countries who are members of the IEA, consumer solidarity will be worked on in the IEA. For other countries it will be in the OECD.

That, I think, is not the approach that I think we’d like to pursue.

Secretary Kissinger: What road would you like to pursue?

Mr. Katz: Well, somehow dealing with the French bilaterally. Either having—

Secretary Kissinger: Well, there was no clear decision, but my impression was that the latter would be the road—that the French would, in parallel.

Mr. Katz: Right.

Secretary Kissinger: In fact, the French said they would make a secret agreement on the IEP, if necessary—if you can keep them now.

Mr. Hartman: Yes. I think that’s the best way to do it—to have it formally in his hands, while we keep also our bilateral contacts with him, so we make sure we know what’s going on.

Secretary Kissinger: I agree, because otherwise we’re going to have the whole problem again.

Mr. Sonnenfeldt: We’ve given very hard guidance, on the basis of the phrase in the communiqué.

Secretary Kissinger: Yes, but there’s going to be a great desire of many people to fuzz up the issues.

Mr. Hartman: Since I got back, I’ve told them that is our position; and I’ve told them in exactly what fields we want to have agreements on the program.

Mr. Sonnenfeldt: But that, as a matter of fact, everything thinks is the easiest—the French.

Mr. Hartman: No. We’re going to have trouble with the Germans.

Secretary Kissinger: I think we can bring them around.

Mr. Katz: We have a proposal for you on Schmidt.⁸

Secretary Kissinger: Which is what?

Mr. Katz: This is by Burns.

Secretary Kissinger: But on which side of this debate is Burns?

Mr. Katz: I think he’s on our side.

Mr. Ingersoll: He’s on our side. He’s committed to it.

Mr. Katz: But for guarantees, not for loans.

Mr. Hartman: Their problem is the appropriation of funds.

Secretary Kissinger: Yes, I know, but we need a mechanism for financial cooperation.

Even if this one is not ideal, we can then use it for other purposes, once it exists.

Mr. Hartman: You will see Walter Levy⁹ on Monday.

Secretary Kissinger: What makes you think I’m going to see Walter Levy on Monday?

Mr. Hartman: He told me. The whole Bundy group.¹⁰

Secretary Kissinger: Walter Levy is going to stay out of any diplomatic negotiations. He’s an oil concern.

Mr. Hartman: Well, the proposal he will put forward is that we try for something like a one-year agreement.

Secretary Kissinger: You can tell Walter Levy not to advise us on oil, will you? We don’t need a negotiator.

Mr. Sonnenfeldt: Giscard did tell, in the negotiations, he would talk to a U.S. representative—according to Giscard’s press conference in Martinique.

Secretary Kissinger: Well, he’s your consultant (addressing Mr. Robinson). Will you tell him if he doesn’t? (Laughter.) If he gets out into the oil field again we’re going to have to cut him off. I don’t want to hear any compromises. If this thing is worth doing, it’s worth doing for two years.

I think it’s just playing games. It’s like these Congressional things. If Schmidt is going to do it, he’s going to do it for two years as well as one year.

His hangup is the one you’ve described; it isn’t the length of time. There’s absolutely no sense in looking for some gimmick to get Schmidt around it. Schmidt has to make some decision on whatever steps he has to take.

Mr. Katz: As we presented the plan originally, it was loans by governments, or governments directly borrowing or directly guaranteeing borrowing in the markets.

Secretary Kissinger: Look, Schmidt’s attitude was disgraceful. Basically, he said: “Let Britain go down the drain. If the Arabs don’t help them, the hell with them.” And then he wails at the political morals of the West. And I think he’s got to come along, and he will come along. If Giscard brings pressure on him, he will come along. But we don’t need Walter Levy offering a compromise for one year. For God sakes, that we can do by ourselves: And I don’t think our decision depends on it—if we’re good at it. (Laughter.)

No—it’s absolutely senseless. Do you think it depends on the length of time?

Mr. Hartman: No. I think he’s got to make a basic decision.

Secretary Kissinger: If Schmidt does it, he will do it for two years. If it isn’t for two years it will do it—if it gives us a financial structure. Once the financial structure exists, we can use it for other purposes.

Mr. Sonnenfeldt: He’s got to try and find something to get around this extra appropriation problem.

Secretary Kissinger: Well, that’s his problem—once he makes up his mind he can do it. We’re haggling over price; we’re not haggling over the principle. And it’s absolutely senseless to give too many wrong signals.

Can somebody talk to Levy?

Mr. Hartman: You will be the first one to see him. He’s in Florida at the moment.

Secretary Kissinger: All right. Somebody better take him aside then and tell him if I catch him once more representing himself as talking for us, I’ll have to separate him from it.

Mr. Katz: All right.

[Omitted here is discussion unrelated to energy.]

1. 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.
2. In telegram 279263 to Ankara, Bern, Bonn, Brussels, USEC Brussels, Copenhagen, Dublin, London, Luxembourg, Madrid, Ottawa, Paris, USOECD Paris, and Rome, December 20, the Department instructed: “All Missions should understand clearly that sequential staging toward consumer/producer conference requires establishment of consumer solidarity prior to undertaking preparations for either preparatory meeting or for ultimate conference. The United States will not rpt not attend a preparatory meeting with producers until we have clear consumer decisions and programs with regard to conservation, new supplies, and financial solidarity. This position was expressed by President and Secretary to French and repeated to IEA Governing Board December 18/19.” (Ibid., Central Foreign Policy Files, D740371–0467)
3. John Wilton of the United Kingdom was Chairman of the IEA’s Standing Group on Producer-Consumer Relations.
4. No paper was found.
5. See Document 24.
6. Not found.
7. In telegram 30441 from Paris, December 19, the Embassy reported the “substance” of the French Foreign Ministry’s guidance telegram on the economic elements of the Martinique communiqué. Its subjects included financial solidarity, the March target date for a preparatory conference, the close contact to be maintained among consuming countries between a preparatory conference and a producer-consumer conference, monetary questions, and economic coordination. It noted that consumer cooperation was “a condition to which the U.S. attaches great importance and one which we will find all the easier to satisfy because, as we have proposed, the EC will participate in the conference as a single entity, thus assuring that the views of the Nine will be carefully concerted.” It also explained that the forum for consumer consultation would be the IEA, and for those countries that did not belong to the IEA, the OECD would serve as a coordinating body. (National Archives, RG 59, Central Foreign Policy Files, D740369–0364)
8. Not found.
9. A well-known independent oil consultant who began writing about the international petroleum industry in the early 1940s. He became a White House and NSC consultant during the Carter administration.
10. No record of this meeting has been found. On January 10, 1975, Kissinger met with this group, which included McGeorge Bundy, President of the Ford Foundation and Assistant for National Security Affairs to Presidents Kennedy and Johnson; Hollis Chenery, Vice President of the World Bank; and Robert Roosa, Under Secretary of the Treasury for Monetary Affairs under Presidents Kennedy and Johnson, to discuss consumer-producer relations and the world economy. (Memorandum of conversation, January 10; National Archives, RG 59, Records of Henry Kissinger, Lot 91D414, Box 10)