138. Memorandum of Conversation1

PARTICIPANTS

  • President Ford
  • President Valery Giscard d'Estaing, President of the French Republic
  • Dr. Henry A. Kissinger, Secretary of State
  • Brent Scowcroft, Assistant to the President for National Security Affairs
  • Jean Sauvagnargues, Minister of Foreign Affairs
  • Amb. Kenneth Rush, U.S. Ambassador to France
  • Amb. Jacques Kosciusko-Morizet, French Ambassador to the United States

SUBJECT

  • Rambouillet II; Lebanon; Djibouti; Nuclear Non-proliferation

Ford: I thought we might discuss further the idea of a second Rambouillet. I have asked my people to say just what might lend itself to a substantive outcome.2 North-South relations would certainly be one, to include your African initiative, and other topics. [He reads the topics from the draft talking points at Tab A]. The way we did it the last time was for the private group—George Shultz for our side—laying out the details. For us, the results of Rambouillet I were very good and I have that impression from the others. I think the same thing could ensue from a follow-on meeting.

Giscard: I think there are two general items which could be discussed. (1) What will be the general attitude in a period of renewed economic activity and toward inflation. It would be interesting. I don't know whether we could find practical solutions but it would be a useful discussion. Also, it is useful to have a discussion of the North-South dialogue. We can't accept the demands of the developing countries, but there is still a large gap between your position and ours and the developing countries. I don't know whether you are ready to advance in this field.

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Kissinger: All the advances we have made have been through the President's intervention with the economic agencies. Otherwise the movement is marginal. Therefore a conference would help us internally to get motion.

Ford: We do have internal differences and the pressure of having to have a position facilitates movement.

Giscard: We shouldn't get too technical, but we are thinking of things like a research institute to look into commodities arrangements, and perhaps a fund which would finance stocks. The developing countries want to go farther—to a single fund managed by themselves. But a mixture of your ideas and ours might work. I would center it on Nairobi3 rather than the North-South dialogue, because of the participants. I think George Shultz should look at the substance of a possible communiqué as he makes his travels.

Next is the question of the time and place. Both Helmut [Schmidt] and I are coming to the United States and it would look awkward for us to come back here again so soon. Helmut suggested meeting in Germany, but I am against that. It would get into their election campaign.4 Perhaps an island in the Atlantic or in Scotland or Ireland. It would be difficult to come to the United States again so soon.

Ford: We have been thinking of the last part of June. It would be difficult for me as we get into July. We have been thinking of here, but not in Washington or Camp David. Someone mentioned Bermuda.

Giscard: Or the Virgin Islands or some place in the Caribbean.

[Discussion of some spots.]

I think somewhere in the Caribbean would be fine. The end of June is a lousy time for all of us. I am going to Great Britain and I have to leave on Friday morning, the 25th. I should really go back to France on the 1st. How about July 1 and 2? That would give you one day before your festivities.

Ford: I probably can do that.

Scowcroft: I will look into it.

Giscard: Then the question of participants. Japan I assume would be there. Then the issue of Italy and Canada. We would not stand in the way on Canada.

Ford: If we held it in this hemisphere, we feel it is best to have Canada.

Giscard: Let us start with Italy.

[Discussion of why Italy was invited to Rambouillet I and where they will be with their elections.5]

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If Italy does not come, I think it would be hard to have Canada.

Ford: I see that problem, but since Italy will be a big topic of conversation, it might be best to have them present.

Sauvagnargues: It depends on the outcome of the election.

Ford: Yes. There may be discussions that they should not attend. Arthur Burns called me this morning. He had met with Schmidt, who proposed a meeting among France, Germany, and the US to propose consortium loans to Italy if they didn't go Communist and we would state they'd get no loan if they did. I thought I should mention it because it relates to this discussion.

Sauvagnargues: It is impossible without the British.

Giscard: We can make hints about such a thing. It must be known by the Italian voters, but in a very discreet way.

Ford: It might backfire otherwise.

Giscard: But it would be difficult to have the Italians present if the Communists increase their strength or stay the same. I suggest we have only the normal five. If there is some reason to have Italy to explain its case, we can ask them at the last minute.

Ford: If we don't have Italy, it is easier to leave out Canada.

Kissinger: If Canada comes in, the British will press for the EC President. That would, by happy coincidence, be Den Uyl.6

Ford: Puerto Rico might be very good. There is a new hotel.

Giscard: It is a question of facilities. Send George Shultz around. Pierre-Brossolette is our man.

[Omitted here is discussion unrelated to the economic summit.]

Tab A

Talking Paper Prepared for President Ford 7

Specific Results of Proposed Summit Meeting

A central focal point of a summit discussion would necessarily be the problem of Italy. It will be a prominent issue over the next several months because of the political and economic implications of what happens there, especially their significance for the future of the European [Page 492]Community, the Western economic system, and the Western political and security system. One objective at the summit would be to find ways of minimizing the potential damage from possible adverse developments in Italy, and maximizing our efforts to help Italy move in constructive directions. This could include an effort to be supportive of the Christian Democrats in the immediate post-election period. It would also include consideration of the sorts of fiscal and wage stabilization measures we should encourage Italy to take to stabilize the growth of government expenditures, reduce the relative share of consumption in GNP, and thus make room for faster growth of investment and exports to support these efforts, and consideration of what assistance the western democracies can provide to support an effective stabilization program, and what role the IMF can play.

However, because a discussion of the Italian problem does not lend itself to publicity, efforts should be made to avoid portraying the summit as a meeting focusing on the Italian situation. Therefore, we must attempt also to achieve concrete results on a list of items which do lend themselves to public focus and which are also intrinsically important to the industrial democracies. This list of specific results could include:

North-South Relations

Agreement on industrialized country strategy for the second half of the Conference on International Economic Cooperation. This could include a marriage of the French approach to commodity buffer stock financing and the American approach to resources development, a common approach to the future role of the Energy Commission of the CIEC, and means of improving technology transfer drawing on the French and US UNCTAD initiatives.

An African Package

Agreement to proceed on an African aid effort. The summit could support a broad approach to African aid, including improved donor-recipient, multilateral-bilateral aid coordination. It could provide a focus on the main priorities such as the transportation network in Southern Africa, the Sahel, and countries of highest political and economic significance.

Trade

Agreement to reinforce the Rambouillet and OECD pledges to avoid restrictions on imports, to work toward a constructive tariff cutting formula in the MTN containing an important harmonization element and aiming at a significant reduction in duties, to uphold the common commitment to the basic tenets of an open and nondiscriminatory trading system as contained in the GATT, and to undertake a more intensive process of consultations among the major industrialized nations in order to avoid and manage problems which might [Page 493]weaken the system. Privately, agreement might be reached on how to deal with the possibility that Italy will impose import restrictions which violate GATT and EC rules.

Medium Term Growth Strategy

Agreement on a strategy for stable economic expansion. Most industrialized democracies are now moving from recovery to expansion. The Rambouillet summit contributed to a more favorable economic climate and improved confidence, thus helping to facilitate the present economic upturn. As industrialized nations move to economic expansion, however, they will need to resist pressures for excessive stimulation in order to avoid its inflationary consequences. Thus while working to ensure expansion by all industrialized nations at a sustainable rate, they must also cooperate to avoid overexpansion. This subject will be discussed at the OECD Ministerial Meeting on June 21–22. Agreement could be reached at the summit on an approach which gives political sanction and impetus to agreement reached at the OECD.

International Financial Issues

Agreement could be reached on ways to deal with acute financing problems, including an approach to the LDC debt issue which avoids a generalized rescheduling but which examines the problems of each country in relation to its specific position and needs. The anticipated problem of Italy's repayment of its short term debt would be examined including its impact on financial institutions in other countries; and means would be sought by which Italy and the industrialized nations can manage the problem in a manner consistent with sound financial practices and Italy's particular economic and political requirements.

The European Community>

Agreement on the economic and political significance of a strong and prosperous European Community. While there might be some reluctance on the part of European leaders to discuss Community issues in this context, there might be a discussion of ways in which Europe could evolve over the next several years and how the other industrialized nations might be most supportive of Europe's efforts. There might also be a discussion of how stringent internal measures in Italy might affect the European Community, and how the Community, and the industrialized nations in general, should react.

Investment Issues

Agreement on means of extending the investment package to be adopted at the OECD Ministerial to deal with such problems as bribery and to encourage an improved framework for the settlement of international investment disputes.

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Energy

Agreement to continue intensified energy cooperation among the industrialized democracies through strengthened technical and research cooperation, strong conservation efforts as demand increases with the pace of economic recovery, and increased efforts to encourage energy development in Third World non-oil exporting nations.

International Institutions

Agreement to identify possibilities for combining or eliminating international institutions in order to avoid duplication or redundancy.

  1. Source: Ford Library, National Security Adviser, Memoranda of Conversation, Box 19. Secret; Nodis. The conversation took place in the Oval Office. All brackets, except those that indicate omitted material, are in the original.
  2. On the previous day, President Ford and President Giscard briefly discussed the possibility of another economic summit. President Giscard had "no objections in principle" to a second Rambouillet, but added, "I think it is important to have results if we have a meeting. It is not apparent to me what results we could announce. We can't have Italy the only subject. We could discuss the recovery which is underway, and measures against inflation. But I am not sure if those are dramatic enough for a meeting." (Memorandum of conversation, May 17; ibid.)
  3. The fourth UNCTAD session was held in Nairobi, Kenya, from May 5 to 31.
  4. Bundestag elections took place in the Federal Republic of Germany on October 3.
  5. General elections took place in Italy on June 20 and 21.
  6. Dutch Prime Minister Joop den Uyl assumed the EC Presidency on July 1.
  7. Top Secret. A handwritten note at the top of the paper reads: "Used by President as Talking Paper with Giscard 5/18/76." A draft of this paper, attached to an unsigned May 18 memorandum from Scowcroft to President Ford, indicates that it was prepared in response to President Giscard's remarks in his May 17 meeting with Ford. (Ford Library, National Security Adviser Files, Scowcroft Daily Work Files, Box 13, 5/15–23/76)