246. Telegram From the Department of State to the Embassy in Germany 1

212733. NATUS, CEDTO. Subject: Discussion of Oil Situation with FRG Economic Minister.2

1.
Under Secretary Rostow discussed the oil situation at length with FRG Economic Minister Schiller on June 19. Rostow told Schiller it was important that arrangements be worked out in OECD for declaration of emergency or threat of emergency in order to allow U.S. to permit companies to cooperate to meet oil situation. Also said it was important that agreement be reached on Industry Committee.
2.
Schiller said he was becoming more and more concerned. He had seen German press reports of rumors of rationing coming out of Paris. He had earlier been operating on assurances from companies that stocks were adequate. He now sees danger of a run on supplies in the FRG. Rostow said the question now was cooperation between producers to arrange for efficient use of tankers. OECD not talking of allocation or rationing and we hope it will not have to. Cooperation between Europe and the US is necessary, in order to minimize impact of any shortfall in Europe.
3.
Schiller said he saw declaration of emergency as connected with US antitrust laws and not a concern for Europe. Then entered into lengthy diatribe saying foreign oil companies had through rough competitive methods taken over German energy market and now had a responsibility to meet their commitments, from Western Hemisphere sources if necessary. Should it become necessary to go ahead with national energy policy in FRG (which French had already suggested), everyone would be faced with an entirely new situation in the energy field.
4.
Rostow said possibility of increasing supplies from Western Hemisphere could be one item for discussion in industry advisory group. Schiller expressed strong reservations on adverse effect on Arab oil deliveries if faced with optical collaboration of Western consumers. He favored something less apparent. Rostow impressed on him that [Page 443]Western cohesion would have a beneficial effect on conservative oil producers since it would strengthen their hand in arguing that Nasser was damaging Arab interests and would show that hard Arab line not likely to succeed. On the other hand if we do not have a common stand, we will be picked off one by one. Added that convening of industry group hardly likely to be major political event, either way.
5.
FRG Economics State Secretary Schoellhorn said FRG could accept any of three proposed approaches to question but wanted to work out something satisfactory to both US and France. Schiller said he was concerned both with domestic impact in FRG and also with impact on Arabs. He said FRG in very weak position. He could not say what cabinet would decide, but he favored second alternative because of domestic and Arab reaction. He reiterated his view that companies who conquer market must accept responsibilities. If not, everyone is going to say FRG must move in French direction. This would be a point of no return. FRG must have oil however much he personally opposed action by Government. He feared this entire process will escalate to rationing, controls and Government intervention.
6.
Rostow concluded by saying that threat in crisis not to US but to Europe. We are ready to do our part by joining in contingency planning. This seems to us only simple prudence. If Germany and other OECD members believe there is no real danger we hope they are right. But should Iraq and above all Libya—which is in bad political shape—remain closed down, there will be a serious problem. Need to reroute tankers around Cape plus failure to act so far mean that effective European stocks not much over 30 days.

For Bonn: We are disturbed by Schiller’s tone and views. If crisis persists we will need to get to German Government to overcome this narrow approach. Appreciate your views on how best to do so.3

  1. Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967–69, PET 3 OECD. Confidential; Priority. Drafted by E. Crowley (EUR/GER) on June 19; cleared by Akins (E/OR/FSE), Puhan (EUR/GER), McCall (S/S), Springsteen (EUR), and Rostow. Also sent to Paris and London. Printed from an unsigned copy.
  2. Schiller’s views were also summarized in a memorandum from Akins to Enders, June 19. (Ibid., POL 7 GERW)
  3. The oil companies were also trying to get the German Government to modify its views so they would be in a better position to respond to the crisis. On June 19 Mobil Oil in London reported that it had again instructed its German affiliate to “urge on German Government existence of emergency situation.” (Telegram 10473 from London, June 19; ibid., PET 3 OECD)