116. Memorandum of Conversation1

SUBJECT

  • International Economic Summit

PARTICIPANTS

  • The Secretary
  • Secretary Simon, Treas
  • L. William Seidman, CIEP
  • Alan Greenspan, CEA
  • Frederick Dent, STR
  • Frank Zarb, FEA
  • Gerald Parsky, Treas.
  • Charles Cooper, Treas.
  • The Deputy Secretary
  • John M. Dunn, CIEP
  • Robert Hormats, NSC
  • Under Secretary Robinson
  • Helmut Sonnenfeldt, C
  • Thomas Enders, EB
  • Arthur Hartman, EUR
  • Paul H. Boeker, EB/IFD (Notetaker)

Simon: I guess I’ll take over, since Henry isn’t here.

Dent: I suggest we add to the communiqué after the trade objectives: "and direct our trade officials to work toward this and our other trade objectives."

Enders: If we do this, then we should do it in the monetary section also.

Seidman: I find the economic paper too defensive.

Simon: Right, let’s not over-react to one month’s statistics. Seidman: I also meant that we should emphasize what we are trying to do structurally to revitalize the private sector, through deregulation, etc. Stimulation is not the whole answer.

Simon: Alan?

Greenspan: An excellent idea. I’ll work on it.

(The Secretary arrives)

Secretary: Bill! Get out of my chair.

As far as I can see we have only MSP and once or two other issues.

Simon: We’ve already agreed to make the economic paper more positive.

Secretary: This (briefing book) is too much for the President and too much on the finance-minister level. He ought to say something on [Page 366]democratic institutions. (I’m giving a speech tonight on this.)2 It could set the tone and save him from sniping at his heels on technical issues. Do we have any idea what others will say?

Sonnenfeldt: The Japanese will have some North/South ideas. Secretary: I see two problems. Something, an overview paper, that can tie these papers together.

Enders: Hormats is doing this.

Hormats: Yes.

Secretary: The President needs to do some preemptive setting of the framework, so it doesn’t look like others are just asking for things the U.S. turned down. How about briefing?

Sonnenfeldt: Only a stenographer will be there for notes, to disguise her among the interpreters since others won’t have one.

Secretary: I think you and Bill should do the press briefing. We have told the French one minister should be at every meal, save one, of the Heads of Government.

Simon: How about Saturday night?3

Secretary: Too early.

Seidman: If they sit there for 3 days with no briefing … Secretary: We should do something on Saturday or Sunday. Sunday would be a good night for the Heads of Government to eat alone. Where is the press?

Sonnenfeldt: The George V.

Secretary: The other two issues are how intensively we push a declaration and …

Simon: We agreed to add Fred’s suggestion about asking trade officials to follow up on trade objectives.

Secretary: Good idea.

Greenspan: Where we say "seek to restore sustained growth etc." we should go right on to "at the same time we are determined to reduce the rate of inflation."

Secretary: Is this declaration purely defensive or should we push it?

Dent: If the purpose is to restore confidence, leaders can’t meet and leave no tracks in the sands of time.

Secretary: Tracks in the sand of time … I’m glad you’re Trade Representative instead of one of my speechwriters.

[Page 367]

Shouldn’t we have George [Shultz] push our statement? It’s not a bad statement.

Enders: It will be difficult to negotiate because of the trade goals and to a lesser extent the monetary part and the economic goals.

Secretary: What is controversial about the trade goals?

Enders: France in particular and the U.K. and Italy will resist ambitious trade goals.

Dent: We have to put it forward, however.

Secretary: I agree completely. We should table a strong statement and let others water it down. Shultz is not authorized to negotiate. I think also Heads of Government should stay away from it. We should form a working group. Have we seen a French text?

Sonnenfeldt: No.

Dent: We should get the French text today.

Enders: We have to send George new instructions.

Secretary: Right. First, George should table our text. Second, we insist we work from our text, not the French. Third, he can give us his views on what of the French text we can take. I think the British will be helpful; we should show this to them.

On MSP, I see the Treasury proposal as a way to kill the scheme.

Simon: The question is whether to set a price now.

Enders: Davignon estimates this is now doable, without pre-positioning.

Secretary: What is pre-positioning?

Enders: The degree to which countries would have to pass laws now to make establishment possible. Davignon says if we don’t demand pre-positioning, MSP is doable now.

Simon: I foresee an explosion in the Congress on both sides of the aisle. If so, do we lose credibility with the Europeans if this happens?

Zarb: Seems to me if we agree to set a price, we still don’t have to have that confrontation.

Secretary: If the President waffles and doesn’t set a price, the Europeans will construe that we are walking away. I don’t care about putting it to the Congress; I’d prefer not to.

Enders: We won’t have to put it to Congress at all.

Simon: Still, you will have hearings immediately.

Secretary: What is the objection to guaranteeing a price when it is one-third below the market level?

Seidman: That we are guaranteeing a price to the Arabs.

Enders: No, that’s not right.

Secretary: What you are preventing is piratical pricing and preventing others from getting the cost benefit of our energy effort.

[Page 368]

Zarb: We have said we would protect if the price falls. Why shouldn’t we say so in MSP?

Secretary: If we don’t have MSP, we don’t have a Long-Term Program.

Parsky: No. It’s a small part of the Program. We could even agree protection has to be provided, on a basis not determined.

Secretary: That doesn’t do it. It may make the U.S. a high-cost energy country and Europe and Japan lower.

Parsky: There is no analytical basis to set a price.

Secretary: First, you objected to a "floor price", now we get a more flexible concept and you are still killing it.

Simon: Why do we argue about it any more?

Secretary: Should we take it to the President? i.e., setting a price now?

Zarb: I favor setting a price when we have decontrol set. That might not be December 1, but as soon as this condition is met.

Secretary: December 1 can be pushed off a little.

Seidman: That’s important. If we don’t have to set a price on December 1, that helps.

Zarb: Can it be slipped if we don’t have decontrol?

Enders: It can be slipped a little if we set a new date and make it clear we are set to go.

Parsky: The public expects us to go by December 1.

Secretary: You mean if we stop someone in a shopping center, they’re going to say the Administration has to move on MSP by December 1? That’s ridiculous.

Zarb: We should be ready to go on December 1, but if we are not, we will have to postpone.

Enders: Right. We will bargain hard and make it come out that way.

Secretary: But tell them the truth, at least a few of them … Simon: There’s another new policy!

Secretary: I feel we should set a price; we don’t have to put it in the Congress.

Seidman: We can raise this with the President in his general review of the briefing. That has to be tomorrow. Let’s say 4:00 o’clock.

Zarb: I can’t make it.

Secretary: Can we do it Thursday morning?4

[Page 369]

Zarb: I’d appreciate it.

Secretary: I think we need a good theoretical paper for the President. You have done a good job, Mike. We just need a paper that goes beyond purely economic matters.

  1. Source: Ford Library, National Security Adviser, NSC International Economic Affairs Staff Files, Box 4, Presidential Subject File, Economic Summits—Rambouillet (4). Confidential; Nodis. Drafted on November 20 by Boeker and approved in S on December 11. The meeting took place in the Secretary of State’s conference room.
  2. On November 11, Kissinger gave a speech in Pittsburgh, Pennsylvania, entitled "The Industrial Democracies and the Future." For the text, see Department of State Bulletin, December 1, 1975, pp. 757–764.
  3. November 15.
  4. Ford met with Kissinger, Simon, and other officials to discuss the economic summit on November 13 from 11:48 a.m. until 12:20 p.m. in the Cabinet Room. (Ford Library, President’s Daily Diary) No memorandum of conversation from this meeting was found.