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

55. Memorandum of Conversation¹

Washington, April 19, 1975.

SUBJECT

• Meeting with Yamani—Middle East and the Paris Preparatory Conference

PARTICIPANTS

• H.E. Ahmad Zaki Yamani, Minister of Petroleum and Mineral Resources
• Ibrahim Obaid, Personal Secretary to the Minister
• The Secretary
• Charles Robinson, Under Secretary for Economic Affairs
• Francois M. Dickman, Director, NEA/ARP

[Omitted here is discussion unrelated to the Paris preparatory conference.]

The Secretary: What do you think of the Paris Preparatory Conference? Did Robinson screw it up?

Yamani: Well, the Americans screwed it up. The Europeans and even your own people said that it was the US attitude which caused the conference to fail.

The Secretary: You can expect that from the Europeans.

Yamani: It was a great disappointment for me.

The Secretary: It was supposed to be an energy conference. Why did you try to transform it into a raw materials conference? I thought you wanted to discuss energy primarily, why did you change this to raw materials?

Yamani: As I told Mr. Robinson just before our meeting, it was not my understanding that this was the US attitude. I thought the US had accepted the Saudi position of a Conference which would deal with energy as well as with raw materials. Our proposal was very clear. You sent a message accepting the Saudi proposal.² You sent a message last September stating you accepted the Saudi proposal.³ Then the French came with their invitation. At first we were reluctant but we went along after we agreed on a small number of countries. Then we had our meeting in Riyadh in February.⁴ Perhaps I have misunderstood and maybe the gap is not so wide as we think.

The Secretary: That is what I think.

Yamani: The problem is that we have to have an agenda which deals with raw materials and not just energy alone.

The Secretary: We will be glad to discuss lower oil prices too!

Yamani: The Algerians wanted to solve everything at the same time. I can tell you that the Saudis, Venezuelans, and Iranians wanted and still want to discuss energy as an issue but do not expect to solve everything at the same time. What they do not want is to solve the energy issue and forget about the rest. They don’t want to discuss energy and reach agreement on just that, but they expect to have some link that will guarantee your (US) presence to discuss other raw material issues.

The Secretary: That is fair enough. On that basis, we can discuss energy first, and we would be agreeable to give you assurances that we will discuss raw materials at another conference.

Yamani: We mean the same conference.

The Secretary: Or at a continuation of the same conference.

The Secretary: What we want to avoid is a special session of the General Assembly where everybody makes demands on us which we will reject. Why create an artificial forum to discuss raw materials? You know, there are some in the US Government who are opposed to this and believe free market forces should prevail. Secretary Simon says he is opposed to a raw materials conference. I recognize however that you cannot talk stability for items which interest us and not talk about stability for items which are of interest to other countries. But if you discuss all at the same time, it will turn into platitudes much like the Charter of Economic Rights and Duties of States⁵ which my friend President Echeverria (of Mexico) has promoted. We want to find some practical way to discuss energy issues.

Yamani: We want to link energy to raw materials.

The Secretary: Well, what do you mean by a link? What is your idea of a link?

Yamani: We do not have an exact idea but we want your presence (at a raw materials conference).

The Secretary: Physical presence is not difficult.

Yamani: We want the industrial countries to agree on items of an agenda since now there is no objection to talk about raw materials.

The Secretary: Well, I personally believe we will have to come to some understanding on raw materials.

Robinson: We have a proposal we are considering.

The Secretary: All right, we have a proposal but we have to work it out within our own government. I am prepared to tell you that I do not specialize in losing interdepartmental arguments and I usually prevail, in fact I can’t think of when I did not prevail, but I cannot give you a formal US position now. However, I would be prepared to move toward some understanding on raw materials but we would want to talk about energy on its own merits and not have it submerged with other raw materials.

Yamani: Why not have the following agenda: (1) raw materials . . .

The Secretary: Including energy?

Yamani: Yes, we will say raw materials including energy; (2) international cooperation; (3) financial flows. We will concentrate on energy.

The Secretary: The trouble with you is that every time you come and see me, you always manage to convince me (laughter).

Yamani: I can tell you that this will be the position of the Iranians, Venezuelans, and Saudis, though not the Algerians, to focus on energy but at the same time to see that the shade of our discussions also falls on other raw materials.

The Secretary: Well, what do you want to discuss with the other raw materials?

Yamani: We do not expect to reach agreement on the price of tea, coffee, rubber, etc.; we are prepared to separate things. But unless we are assured that you will discuss other raw materials and there is a link, we cannot just discuss energy alone.

Since you say that you will discuss other raw materials with good will, we take this seriously. I will talk to my other colleagues. We will form a strong front.

In the meantime, we hope you will do your homework (on raw materials) soon so that we can have another meeting.

The Secretary: Another Preparatory Conference?

Yamani: Yes, it has to be, and soon.

The Secretary: Why?

Yamani: The Algerians are already pressing very hard to have another OPEC meeting at the end of this month. They are concerned over their declining earnings. They sent a cable to OPEC countries asking that we link oil prices to SDRs or a basket of currencies. This in fact is a fair thing, but I know this is only a first step in raising prices. The second step might not be something we look for. So, the sooner the better.

Your friends in Iran are also very keen to have another price increase. They want a quick one, since they think inflation is going higher. They want another increase this year.

The Secretary: You realize that another oil price increase would have unfortunate repercussions, particularly on the Arab-Israel problem. It is not because of your position but the Israelis are trying to link the two—higher oil prices with Arab pressures.

Yamani: I know that, and we want to avoid that.

The Secretary: We are having the Shah in May and we will have a chance to talk.

Yamani: The Iranians have already issued their statement.

The Secretary: Who issued it?

Robinson: It was Mr. Yeganeh, he is the Governor of the Iranian Central Bank and represented Iran at the Preparatory Conference.

Yamani: The Iranians have said in their statement they wanted indexation.

Therefore, we would like to have another meeting early in May. We can have another Paris meeting to work out an agenda. Even if the Algerians don’t want to come, we are prepared to move with our friends—the Venezuelans and Iranians.

The Secretary: Our friends tell us that we broke up the Conference. In fact I even saw reports that accused Robinson and members of his staff of not attending the meetings.

Robinson: That was the night that I let the staff leave at 11:00 pm. The report the next day was that the US was not attending the meetings.

The Secretary: We did everything we could to keep the Paris meeting going. At the last moment, we sent an instruction to our delegation telling it to take an even more active role.⁶ I am not saying that you would have liked everything we said but I will take responsibility for those actions where we took the lead with the consumers.

Yamani: Did you organize the consumers?

Robinson: The consumers were unified.

The Secretary: It really does not make any difference. They (consumers) will say that the Americans made them do it.

Yamani: What about the number of countries attending a conference. As I told you in Riyadh, we want a limited group. The prevailing idea in Paris was that 24 countries should attend a producer/consumer conference. Did you agree?

Robinson: We agreed, we did not object, but the issue was academic since the conference broke down.

Yamani: I understood that you would not have any objection if we talked about 20 countries. Once we went to the Paris Conference, there were pressures for representation from the major industrialized countries and the developing countries to widen the representation. We think the smaller the conference, the better is the atmosphere for bilateral talks.

The Secretary: We do not have strong views on increasing the number to 24. It is not a breaking point for us.

Yamani: I had strong views to hold the number to 20 but France and the LDCs wanted more. The Algerians wanted 30! But I do not want another UN.

The Secretary: How do we have concrete discussions so that we understand each other better on this issue? Through Akins?

Yamani: Yes. Besides, if we have another meeting in Paris, I can come and meet behind the doors with you.

The Secretary: I will keep this in mind.

Yamani: What we do not want is for OPEC to meet and take action against you.

The Secretary: Let us agree that when there is another meeting, we will coordinate our positions more closely.

Yamani: But we need more definitive information from you on how you stand on raw materials.

The Secretary: But we need more information from you on what you mean by a link between energy and other raw materials.

Yamani: It is the timetable, the sequence.

The Secretary: The differences do not seem that great. You don’t want to fix a price for energy without a guarantee that we will discuss raw materials and we don’t want to discuss raw materials without a guarantee from you that energy issues will be decided first.

Robinson: We have to be careful when we talk about links. All basic resources are related to energy. We are prepared to talk about other resources as they relate to energy.

The Secretary: Let us do some thinking about this and we will get word to you. I have never thought that this was an insoluble problem. We will see what we can do.

(At this point, the Secretary asked if he could speak to Minister Yamani alone for a few minutes.)

1. Source: National Archives, RG 59, Records of Henry Kissinger, Lot 91D414, Box 11, Classified External Memoranda of Conversations, April 1975. Secret; Nodis. Drafted by Dickman.
2. See footnote 9, Document 10.
3. Akins sent a message to Yamani in Geneva that reads: “Sorry to have missed you in Jidda. The Department has just instructed me to inform you that your ‘concept of a compact and tightly focused mini-conference’ is attractive. ‘We would want it to be in as low-key as possible to avoid raising expectations or, conversely, a sense of failure or despair if meeting did not result in agreement.’ The instruction goes on to say that the ‘low-key approach would also serve to diminish sense of drama of confrontation which we wish to avoid.’ I think this corresponds exactly with your suggestion.” (Telegram 5235 from Jidda, September 10, 1974; National Archives, RG 59, Central Foreign Policy Files, D740251–0334)
4. See Document 41.
5. UN General Assembly Resolution 3281 (XXIX), December 12, 1974, proclaimed the Charter, which affirmed “the need for strengthening international co-operation for development” and declared that “it is a fundamental purpose of the present Charter to promote the establishment of the new international economic order, based on equity, sovereign equality, interdependence, common interest and co-operation among all States, irrespective of their economic and social systems.” For the full text, see Yearbook of the United Nations, 1974, pp. 403–407.
6. Document 54.