135. Transcript of a Telephone Conversation Between the President’s Assistant for National Security Affairs (Kissinger) and John B. Connally 1
K: Hello, Mr. Secretary.
C: Hello there, Doctor, how was your trip?
K: Very interesting.
C: That’s good. I talked to Prince Saud Faisal and had a two hour visit with him. He is extremely knowledgeable about these negotiations and he is waiting to come over to see you this afternoon. He’s at the Madison Hotel. I suggested 3 or 4 o’clock because I wasn’t sure but if you don’t mind you might ask your secretary to call him and set a time.
K: Oh, good. I can’t do it at 4; I can do it at 3.
C: Well, I’m sure he’ll do it anytime, Henry.
K: Now is there anything I ought to know.
C: Yes. They apparently are pretty well locked in on a participation at 20% and escalating really to 51%. He asked me if we were worried about this net book value.
K: There are two issues. One is the participation and the other is …
C: the matter of compensation.
C: Now he says that for the most part they have everything agreed except the matter of compensation and I said “Well, it’s a very vital factor. And I said net book value—the use of that would upset us enormously. That means that you’re going to be trying to set a pattern for the rest of the world, not just in the petroleum industry but in all types of industries.” I said, “Net book value, particularly of extractive minerals industry does not in any sense reflect value.” “Well,” he said, “we can use other words. There are ways that we can affect compensation. There are many hidden compensations. Maybe we’ll have to devise new words.” And I said, “I think it’s absolutely essential that we get away from the net book value.”
K: What did he say about that?
C: He just simply said that in effect perhaps we will have to get away from that and find some new words to describe value and quit using the words of art—in other words of net book value.[Page 336]
K: Have you talked to Ken Jamieson?
C: Yes, I have and gave him a fairly good rundown on it.
K: Good. I felt an obligation.
C: I told him that we were going to try to set this up for him to see you this afternoon. He then expressed the hope that you would let him know after that. The Prince has on his own initiative asked for a week’s delay of these negotiations.
K: Oh good. Well, that’s what Jamieson wanted.
C: Jamieson is asking really for two weeks delay. I suggested to Saud that they just hold everything in abeyance until after the election. I said, “Now frankly things have reached the point where we don’t want the American oil companies negotiating foreign policy for us and I said you and I are deeply engaged in foreign policy.” I got into the whole Middle East situation with him and discussed it fairly lengthy. I said, “Now this country has been derelict in not establishing over the years a more specific oil policy and an energy policy but this President wants to do it and we’re going to do it. But we can’t do it in the next two weeks and we don’t want you all to take any action that would set you on a course that would make a confrontation with us inevitable because we’re going to be a great consuming nation. We’re the largest consuming nation in the world. You’re going to be the largest producing nation in the world. You are now. Now frankly we don’t want you to set a course that makes it absolutely impossible for us to work out and coordinate policy with you.” Then he said, “We need to get this settled. We’re not going to do anything that would make it impossible for us to work out a coordinated policy. That’s the reason His Majesty wrote the President because we had understood from things that were said in this country that this government was for the first time seriously considering the establishment of an international policy and His Majesty’s letter was for the purpose of inviting a dialogue with us.” And I said, “Well, that’s great. We’d like to have that dialogue, but you must understand that we’re all deeply involved in election procedures here now for the next 90 days. I don’t know what great urgency there is in your moving forward with these negotiations and establishing the principle of participation looking toward 51% prior to the time that we could get together and talk about it.
K: I agree with you.
C: But they want to settle this.
K: Let me proceed on that. I will follow exactly the same line. I will call Jamieson afterwards and I’ll call you.2 How long will you be down here?[Page 337]
C: I don’t know. I may be here tonight, Henry.
K: Want to have breakfast tomorrow?
C: I’m not sure because I may or not see the President. If I see him I’ll remain over, but if I don’t I’m going on home this afternoon.
K: Are you telling me that if the President sees you for breakfast you’re turning me down.
C: Yes. I hate to tell you that but that’s one of the facts of life. I’m sorry to disillusion you, but you haven’t been rejected many times.
K: Do you want to stop in after? It’s entirely up to you. I can see you next week.
C: No, I’ll probably see you next week Henry.
K: Are you coming early next week?
C: Yeh, I’ll be in Sunday night.
K: Look, I’m really quite anxious to get your judgment from—of the problem we discussed last time. That’s beginning to crystallize now and I can’t make it for breakfast on Monday but …
C: We can do it anytime Monday.
K: Shall we set a time now? 10 o’clock.
C: That’s good. See you at 10 on Monday.3