144. Memorandum of Conversation1

SUBJECT

  • Economic Summit at Puerto Rico

PARTICIPANTS

  • State
    • Secretary Kissinger
    • Mr. Robinson
    • Mr. Rogers
    • Mr. Sonnenfeldt
    • Mr. Preeg (Notetaker)
  • Treasury
    • Secretary Simon
    • Mr. Yeo
    • Mr. Parsky
  • NSC
    • Mr. Scowcroft
    • Mr. Hormats
  • EPB
    • Mr. Porter

Secretary Simon: Are we ready to discuss the Declaration of Dorado Beach?2

Secretary Kissinger: I hope we can come up with a better phrase than that. How did the EC issue get resolved?

Mr. Sonnenfeldt: We will not know until Wednesday.3

Secretary Kissinger: Thorn is becoming impossible on this issue. Doesn’t he understand that Luxembourg only became an independent state by mistake when Napoleon screwed up the situation in 1867?

The Communiqué needs more rhetoric at the beginning. Have the others accepted this?

Mr. Yeo: The economic section is agreed with France, Germany, and the UK as a starting point.

[Page 515]

Mr. Parsky: But this language is a little different than what we gave them.

Secretary Kissinger: But we need more political rhetoric at the beginning. This is the moral foundation for these meetings. We need a page or so on the basic political commitment of the industrialized democracies, with greater elevation. There is not enough economics here to justify a summit meeting. We need two to three pages along the lines of some of the good material developed at Rambouillet. Let’s take something out of the Democratic platform.

Mr. Rogers: We haven’t finished drafting it yet.

Secretary Kissinger: Bill Rogers is working both sides of the street during the campaign.

Can we rework the Communiqué overnight? We need more moral and political content, which would help us publicly. The leaders of the major industrialized countries have a responsibility to meet regularly and to foresee major upcoming events. The rest of the statement on economic issues is not very earthshaking.

Mr. Hormats: The French have already tabled a separate draft. They want something from us tonight or tomorrow.

Secretary Kissinger: Can’t we just add a page of moral commitment by industrialized countries?

Mr. Hormats: This is what we have tried to do in the first paragraph.

Secretary Kissinger: This is what bureaucracies write: two sentences that you have to look for in order to find the point. (To Rogers) Bill, would you help out? Perhaps something along the lines of what we did at ECLA.4

Mr. Parsky: The first substantive point we have is on page 2, concerning a commitment to achieve a successful reduction in the rate of inflation. Ed Yeo would prefer "elimination." I understand Alan Greenspan thinks this is going too far, and perhaps we should say "work toward the elimination of inflation."

Mr. Robinson: Is it realistic to speak of elimination of inflation in view of the record of the past 200 years?

Secretary Simon: Yes, it is, since the annual rate of inflation over the past century has been only 1.8%.

Secretary Kissinger: This is like our energy policy. We make a commitment to reduce dependence on imported oil and our dependence continues to rise.

[Page 516]

Mr. Parsky: The next point is about steady and sustained growth. Arthur Burns would like us to add the phrase, "each of us in our own way."

Secretary Kissinger: But only if we convey the point that we are linked together towards common objectives.

Mr. Sonnenfeldt: Perhaps we could say "for all of us."

Mr. Robinson: The phrase "each in our own way" sounds too much.

Mr. Yeo: Arthur is very sensitive about this. He is worried about implications for Central Banks.

Mr. Parsky: There is a difference between coordination of national policies and coordination on North/South issues.

Secretary Kissinger: I don’t mind the phrase "each in our own way", but we must also recognize the need for frequent consultation in view of our growing interdependence.

Mr. Parsky: The next point is in the trade paragraph. The phrase "we have been successful in keeping markets open" could be misleading, and we prefer to say "keeping an open trading system."

Secretary Kissinger: That sounds better, but we need to phrase these paragraphs in terms of new pledges rather than simply reaffirmation of what happened earlier.

Mr. Parsky: Beyond the conclusion of the MTN, the last sentence is new, where we call for gradual elimination of tariffs.

Secretary Kissinger: Will the EC countries agree to this? What is a Common Market without a common tariff? Or will they simply substitute quotas and other barriers for tariffs?

Mr. Parsky: The next point at the bottom of the page which calls for "incentives", could be broadened to read "restrictions and incentives". Labor wants this in but the French will oppose it.

Mr. Hormats: We could use the word "distortions."

Secretary Kissinger: The paragraph on the top of page 3 should be stated as something new.

Mr. Parsky: This may be difficult for the EC since, even if Thorn and Ortoli 5 come, they will not have a mandate. Perhaps we can rephrase the sentence toward action by using the world "must." I like the sentence if we can get it in.

On the sentence relating to allocation of resources, we should take out the word "financial."

[Page 517]

Mr. Yeo: We don’t know yet how others will react to the bribery issue. We need something on bribery and perhaps extortion.

Secretary Kissinger: I think this whole issue is a case of rampant hypocrisy.

Mr. Parsky: I think you could change the phrase to "offering bribes or solicitation" in order to hit the other side as well.

Mr. Yeo: That may not go over well with Hays.6

Secretary Kissinger: Compared to others, Wayne Hays always kept his word when dealing with the State Department. Do we really want the bribery issue in this Communiqué? I think it’s in bad taste.

Secretary Simon: We lost this one last week. Your people came out for disclosure at the Hearings.

Mr. Robinson: No, that is not correct. We opposed all forms of legislation.

Secretary Kissinger: I am against legislation, as well as the whole campaign. I think what Church has done has been a great disservice to the country.

Secretary Simon: But the President announced today a three-point legislative proposal.7

Secretary Kissinger: No country that has a competitive choice will come to U.S. firms if we push ahead on this. If we are to maintain our trade position, we will have to stay far ahead of all others in our competitive position. Moreover, others will think we are putting them on the spot.

Mr. Yeo: We should shrink this section as far as possible.

Mr. Parsky: But we need language repeating our earlier initiatives.

Secretary Kissinger: But take out the rhetoric.

Mr. Robinson: The real threat was Levi8 in his proposal on criminality.

Secretary Kissinger: Don’t start me on our Government. We are not a Government anymore.

Let me get to the North/South issue. I would reverse the country groupings. Development comes from the major countries assembled at Puerto Rico. Therefore, there should be no competition among us. The [Page 518] LDCs have no other place to go. The point should not be made that crudely. We have an opportunity to build a coherent development strategy. Phrased positively, that should be the theme and the individual points should be sharpened considerably.

Mr. Parsky: But what about LDC responsibility?

Secretary Kissinger: Yes, but put that second. Development will be a long term process, and therefore should not come about by extortion. There should be no waffling talk.

Where is the energy part?

Mr. Parsky: That is in a separate section.

Secretary Kissinger: I will read the monetary section separately and talk later with Ed Yeo about it.

Who will be back here next week to deal with these issues?

Mr. Yeo: I will be back Wednesday through Friday.

Mr. Robinson: I’ll be here.

Mr. Rogers: I will be back by Thursday.

Secretary Kissinger: How should we prepare the President?

Mr. Parsky: We have reworked all of the papers and included talking points on each item.

Mr. Porter: The papers should be ready tonight. We have time blocked out for the President Thursday afternoon.9

Secretary Kissinger: Chuck, Brent, and Bill can get together next week to maintain a dignified, statesmanslike preparation, with no special angles. Every hotshot in town will be trying to get his own pet idea into the papers. The central theme should be that the industrialized democracies are the engine of the world economy, and that therefore it is essential that the leaders meet regularly.

Can we lay out a scenario for the President? Giscard did it masterfully at Rambouillet.

Mr. Hormats: Alan Greenspan did a piece for the President on the recovery.

Secretary Kissinger: The President shouldn’t make the first presentation. He should show more deference, and start with an introduction. That is what Giscard did. He did a ten minute introduction and [Page 519]then turned it over to someone else for the first subject. Perhaps we can let Giscard make the first presentation this time.

Mr. Yeo: We shouldn’t change the lead country topics, but we could shift the order.

Secretary Simon: Perfect.

Secretary Kissinger: Are the meals set up so that we can rotate who sits next to whom? The French had heads of government in the center of the table, but they made sure the same people didn’t sit next to each other.

Mr. Sonnenfeldt: I will talk to the advance people.

Secretary Kissinger: It is phenomenally boring to sit next to the same people each time. We should be sure to rotate Miki and Rumor.

Mr. Yeo: We will have a time problem.

Mr. Hormats: We hope to begin at 4 pm and go on to 7, covering the recovery, monetary, and perhaps trade. On the second day, we would hope to go from 9 am to 2 pm with a break. Giscard would like to leave before lunch.

Secretary Kissinger: We need a press conference with heads of government, foreign ministers and finance ministers.

Secretary Simon: Are we having a press conference? The press will be thirty miles away at San Juan and are bitching like hell.

Mr. Sonnenfeldt: There is no room at Dorado Beach.

Secretary Kissinger: That is a long thirty miles. Perhaps we can go to San Juan.

Mr. Hormats: The press should be assembled at Dorado Beach about 45 minutes before Giscard leaves.

Secretary Simon: We could do a separate press conference after the leaders meet the press.

Secretary Kissinger: However, if they play us up compared with the leaders we’re in trouble. Maybe we could take a chopper into San Juan Sunday night.10 Last time Seidman did it but the substance is less concrete this time.

Mr. Hormats: But we will not have time to make the evening news. Secretary Kissinger: Not on Sunday night but at least it will give them something. Otherwise they’ll all be bitching. Perhaps on Sunday night State and Treasury spokesmen could give a read-out, then on Monday afternoon Bill and I could do a wrap-up. But Bill, don’t shoulder me away from the lectern again.

[Page 520]

Mr. Sonnenfeldt: The paper on communist countries’ indebtedness is a good first cut. I don’t think we need to do anything further now. The British will take the lead at Puerto Rico.

Mr. Parsky: Maybe you could include some of it in the OECD speech.

Secretary Kissinger: Have you seen the latest draft of my OECD speech?11

Mr. Parsky: No, but I have discussed the basic ideas in it.

Secretary Kissinger: Don’t lie to me Parsky. My people can never keep anything from you.

A group should get together now to rewrite the Communiqué. We need more lift in the beginning. It should look more like decisions rather than reaffirmations. We can also sharpen up the specific points.

Mr. Hormats: We’ll do this tonight.

  1. Source: Ford Library, National Security Adviser, NSC International Economic Affairs Staff Files, Box 3, Presidential Subject File, Economic Summits—Puerto Rico (3). Secret; Nodis. Drafted by Preeg and approved on July 1 by Collums. The meeting took place in the Secretary of State’s conference room. A June 13 briefing memorandum from Sonnenfeldt and Hormats to Kissinger on the subject of this meeting is ibid., Trip Briefing Books and Cables for President Ford, Box 21, June 27–28, 1976—Puerto Rico Economic Summit, General (3).
  2. The economic summit took place at Dorado Beach, Puerto Rico.
  3. June 16.
  4. A reference to Kissinger’s June 9 remarks at the United Nations Economic Commission for Latin America headquarters in Santiago, Chile. For the text of his remarks, see Department of State Bulletin, July 5, 1976, pp. 23–25.
  5. Francois-Xavier Ortoli was President of the EC Commission.
  6. A reference to Representative Wayne Hays (D–Ohio), who had installed his alleged girlfriend, Elizabeth Ray, on the Congressional payroll. (The New York Times, June 5, 1976, p. 1)
  7. For President Ford’s remarks on the issue of questionable corporate payments abroad and his announcement of new initiatives in this area, see Public Papers: Ford, 1976–1977, Book II, pp. 1874–1876.
  8. Attorney General Edward Levi.
  9. On June 17, Ford attended a meeting on the economic summit in the Cabinet Room from 2:12 p.m. until 3:20 p.m. Also in attendance were Simon, Kissinger, Secretary of Labor William Usery, Dent, Greenspan, Burns, Sonnenfeldt, Malkiel, Seidman, Neesen, Assistant Secretary of Commerce for Policy Richard Darman, Yeo, Special Council Michael Raoul-Duval, Deputy Director of the Office of Management and Budget Paul O’Neill, Porder, and Hormats. (Ford Library, President’s Daily Diary) No memorandum of conversation from this meeting was found.
  10. June 27, the first day of the summit.
  11. See footnote 6, Document 140.