191. Memorandum of Conversation1

    • Governor John A. Love, Director of Enery Policy Office
    • Dr. Henry A. Kissinger, Assistant to the President for National Security Affairs
    • Mr. John A. Knubel, NSC Staff

Meeting Between Governor Love and Dr. Kissinger August 10, 1973 (10:30 a.m.)

Governor Love: Henry, what I wanted to meet with you to discuss is the Saudi Arabian problem in the context of energy and oil. This week I met with several Aramco company representatives who just returned from Saudi Arabia and they urged that I go out to Saudi Arabia soon.2 The purpose would be to demonstrate concern for recent Saudi political statements regarding the use of oil for political means. Mine, however, would be a fact finding mission. The Aramco representatives felt that in view of Yamani’s visit scheduled for mid-September it would be most beneficial if I would go prior to that time.

Dr. Kissinger: What would you tell them?

Governor Love: I would make no explicit policy statements. It would be a fact-finding mission aimed at investigating their problems so that we would be in a better position to respond later on.

Dr. Kissinger: I’ve become convinced that the oil companies are politically irresponsible and, in fact, idiots. They are concerned only with profits, to get along with the producer-countries and they, therefore, pass along price increases. A couple of years ago, for example, I got myself into a very difficult position by agreeing to go to bat for them during some of their negotiations with the oil producer countries. After I intervened in their support, the companies cut me out of the negotiation and gave in quickly. They only got peanuts from the negotiations—a few percentage points on price. The overriding concern then as now is not to rock the boat, to maintain their access to oil at almost any price. The overriding concern of the USG in its dealings with Saudi Arabia must be to prevent its fall to the control of another Quadaffi. We must prevent Saudi Arabia from becoming radicalized [Page 511] for surely then our oil interests would be in jeopardy. If Faisal allows himself to be pushed into this political face front on the Israeli issue, he runs an increasing risk of this occurring. No Arab nation has benefitted from deep political involvement of this sort.

Governor Love: But even the existing Saudi Arabian government has, from their point of view, good reasons not to increase production. In fact, they have, as you know, been talking increasingly of using oil for political purposes—specifically to bring pressure through us on Israel.

Dr. Kissinger: Yes, I’m aware of that. We are considering both the economic and political questions in our NSSM currently underway. What is the state of the NSSM?

Mr. Knubel: We will have a copy of the Executive Summary3 to you by the weekend which will ask for your decision on how you want to proceed with regards to meetings.

Governor Love: Can we have a copy?

Mr. Knubel: Yes, you are on the distribution list and your staff has been given one.

Dr. Kissinger: The Saudi Arabians are less equipped [less than 1 line not declassified] to deal with the Israeli problem than any of the other Arab nations. Their leadership continually talks of the Moscow/Jewish conspiracy [3 lines not declassified]. It would do them no good to thrust themselves into the forefront of the political confrontation or become involved in negotiations. It is, therefore, not in the U.S. interest for them to do so. We shouldn’t encourage it. The Arab-Israeli problem is today almost insoluble. Any Arab government that would sign a settlement acceptable to the Israelis would be out in two years. Therefore, it is not in the U.S. interests to push the Saudis. Let the Arab radicals continue to suffer. They are in the forefront now and it is in our interest not to allow the Saudis to be sucked in. I’ve covered this frequently with both Yamani and with King Hussain of Jordan who agrees with me. However, the Saudis are just not sophisticated enough to understand it and they are, therefore, more dangerous. When Yamani comes over in September I would like to tell him this and will stress the undersirability of Saudi Arabia pushing themselves into the forefront of the political problem.

Governor Love: Of course from the U.S. point of view we will be extremely dependent on Saudi Arabian oil over the next years. We have no alternative over the short term but to import. The allies are in the same position. If we can’t get the oil, then we must quickly implement [Page 512] a new domestic strategy to both cut down demand and expand domestic supplies. Even then I’m not sure it’s possible to avoid the sharp increases in Saudi Arabian oil production which would be needed to meet remaining U.S. demand and those of the other consumer nations.

Dr. Kissinger: I’m not against your going to Saudi Arabia on a fact-finding mission, but I think it is extremely important that we steer clear of political discussions. We simply have nothing to say. Perhaps you could go with Under Secretary Simon who plans an economic mission sometime in November.

Governor Love: The purpose would be to have a fact-finding mission. I would specifically steer clear of Arab/Israeli questions. I don’t see that anything could be gained from an early discussion of Arab/Israeli political problems. I don’t see that anything could be gained from addressing this complex issue. I could also make the point that it would be against long-run Saudi Arabian interests for them to allow themselves to be put into the forefront of political discussions on the Israeli question. On the other hand, it seems that the Israelis understand that as time goes on, their situation will deteriorate. Principally because of increased world dependence on Arab oil, but also for other reasons.

Dr. Kissinger: I don’t agree. The Israelis tend to see time as improving their position. Principally because their claim for continued occupation of the disputed territory becomes more credible as their actual occupation lengthens. In the past, the U.S. government position has amounted to State floating proposals which have been shot at from both sides and only worsened the depth of enmity between both sides—opened old wounds. We must not be active in this regard for every initiative has tended to flare up feelings again. We could actually start a war. We need to have an idea of what a feasible proposal would look like before we begin to bring pressure on either side to negotiate. The situation is very analogous to Vietnam. In the early years, people continually asked me to bring pressure on Thieu to negotiate but I resisted it until I had a good idea of the specifics which a Vietnam settlement would incorporate. The same situation applies to the Arab/Israeli problem now. The two sides are very far apart and I cannot conceive of their existing positions being translated into a feasible agreement. For example, the Arab position is that before the state of belligerency ends and prior to the start of negotiations, the Israelis would have to return to the 1967 frontiers. They’d have to return Gaza.

Governor Love: Would they have to return Jerusalem as well?

Dr. Kissinger: Jerusalem as well, and the Israelis would rather die before they would do that. Therefore, it seems to me the Arabs are the ones that need to modify their position. They need to present a position which conceivably could be accepted by the Israelis. Our hope is [Page 513] that we could get both sides together and start negotiations without addressing the parameters of a peace agreement. We would start out on the basis of incremental discussions and leave aside the problem of the basis for an ultimate agreement. This approach seems to me to be the only possible hope in view of the existing position of both sides.

Governor Love: To change our Israeli policy now would create major problems with our domestic American-Jewish population.

Dr. Kissinger: Yes, and with the weakened state of the Presidency it would be almost impossible to deliver on such a major change in our foreign policy at this stage.

Governor Love: Yes, I’m aware of the concern on the Hill which I ran into in my early testimonies. Both Senator Jackson and Senator Javits were very concerned that the energy problem would cause us to give up on our Israeli policy.

Dr. Kissinger: In their current position, the Arabs are asking for a miracle.

Governor Love: Getting back to the idea of some special trip to Saudi Arabia. I understand you have no objection but do you honestly think it would be helpful. I don’t want to make an empty gesture.

Dr. Kissinger: Let me think about that. Perhaps it could be helpful if scheduled some time in late fall as as a fact-finding attempt to investigate Saudi problems. You’d have to steer clear of political problems. Let me ask you now about what we’re doing with the other consumer nations. For example, the Japs. Notice I didn’t say “little Japs.”

Governor Love: One of our major initiatives in that area is focused on a study which Bill Casey is heading up for me on joint R&D cooperation. As you know we discussed with them and we agreed in principle to embark on a major program aimed at sharing technology and cooperation in the research and development areas. I’m also considering making a personal trip out to Japan in response to a Japanese invitation voiced at the economic meetings in Japan.

Dr. Kissinger: That would seem to me to be a very good idea. I think you should go perhaps in October. We would, of course, want to coordinate it with a Presidential trip to Japan which is also being considered for later this year.

Governor Love: Our overall approach to both the Common Market and the Japanese is to focus on cooperation. Cooperation not only in research and development and technology sharing but also in import sharing and other emergency arrangements for meeting shortfalls in supply.

Dr. Kissinger: Cooperation is useful and we should pursue it with regard to both Europe and Japan but we must be certain that we get [Page 514] something for what we give. We don’t want to give away for nothing and we want to ensure that our initiatives in the energy area fit in with our other political objectives. For example, right now the Europeans won’t talk to us on the Year of Europe. They claim that prior to talking on a bilateral basis, they want to develop their own common position. They want to deal with us as a bloc. This is unacceptable and we should not be forthcoming in areas where they need our cooperation, particularly energy emergency sharing and research and development until they are more forthcoming with regard to the vital issues of the Year of Europe. We want to get our toes into the discussions of import sharing but we certainly don’t want to agree to anything until we are certain that its consistent with our other foreign policy.

Governor Love: Yes, I agree with the need to coordinate energy matters with the remainder of our foreign policies.

Dr. Kissinger: Can you keep control of our negotiations with respect to the emergency sharing and ensure that it’s paced so that we are coordinated with our other negotiations as part of the Year of Europe?

Governor Love: Certainly.

Dr. Kissinger: Will you do the negotiation?

(To Mr. Knubel): How will the negotiations proceed, on a bilateral or multilateral basis?

Mr. Knubel: As a result of Secretary Casey’s initiative and suggestion, the OECD secretariat is preparing an issues paper on import sharing which will lay out the various elements of a potential agreement.4 This should be done by the middle or late September and will serve as a basis for negotiating.

Dr. Kissinger: How can we insure that the OECD paper does not commit ourselves to a bad agreement?

Mr. Knubel: The report is being prepared by the U.S. representative and the tasking of the OECD working group is to present an options paper, not develop negotiating positions. Negotiations certainly will not start until it is completed. The U.S. position will be developed by the interagency group on international aspects of energy.

Dr. Kissinger: Yes, we need to keep control of the pace of the negotiation. Don’t let them run away with it and be sure it’s integrated into the rest of our foreign policy.

Governor Love: You should commit ourselves to agree to share and proceed on a deliberate basis. We should probably avoid going beyond [Page 515] R&D cooperation and emergency situations and avoid appearance of confrontation which could be non-productive.

Dr. Kissinger: Why do you think it would be non-productive?

Governor Love: For one thing, it could force prices up and could perhaps lead to further cutoffs in our supply.

Dr. Kissinger: Prices would go up in any event. If the producer countries can develop a cartel and confront the consumers, why not vice versa? I know the oil companies are afraid of this sort of policy but the oil companies are politically inept. In fact, I sometimes doubt if they are competent in oil matters. Only three years ago they were pleading with us to help limit the Shah in his desire to increase production and sell to us more oil at a dollar a barrel

Governor Love: What we’d give for oil at a dollar a barrel now. Why we could have a major reserve had we accepted.

Dr. Kissinger: Yes, I don’t have any confidence in the companies’ market projection ability and I’m sorry now that I went along with the request.

Governor Love: Let’s now turn to the particular problem of the Japanese who are the most vulnerable of all. They are very anxious to nail down sources of supply in the Middle East. They have neither the international oil companies to rely on and their projected imports will equal that of the U.S.

Dr. Kissinger: We’re treating this on a systematic basis in the NSSM. I want to have a meeting on that NSSM by the end of next week.

Mr. Knubel: Nods agreement.

Dr. Kissinger: I think it would be very useful for you to go into Japan in early October or November.

Mr. Knubel: At the Econcom meetings, the Japanese proposed a meeting of experts and Governor Love would presumably be the representative. We should respond quickly to the Japanese initiative.

Dr. Kissinger and Governor Love: Nod agreement.

Governor Love: Henry, you realize that my role will be in a sense that of an advocate for energy.

Dr. Kissinger: Of course. All I ask is that you pace your efforts in the energy area to fit in with our overall broad policy objectives.

Governor Love: I will.5

[Page 516]

Dr. Kissinger: In the meantime, we’ve got to get on with a convincing R&D program to develop domestic sources of supply. That first energy message just didn’t emphasize energy enough.6 Have you got any leads on where the primary emphasis should go in development of domestic options?

Governor Love: Yes, it seems to me coal is the area that should be developed first. We should stress development of coal gasification technology and sulphur scrubbing technology so that high sulphur coal can be burned with minimum effect on our environment. In fact, a good deal of the hundred million dollar increase in our research and development was allocated to coal-oriented research. Coal is our most plentiful domestic resource. We have almost 300 years’ supply. Next year’s R&D effort will total almost $2 billion and will again be focused on coal to a large extent.

Dr. Kissinger: Yes, we need to get considering the whole thrust of the energy problem and all its components. I want to have a NSSM meeting on this next week. We should also limit the membership. I see no reason why Interior should be represented.

Governor Love: I agree.

Dr. Kissinger: We should also push with the Japanese and get our policy going in the area of R&D and technology sharing. I also again think it would be a good idea for you to plan a trip there as soon as possible. With regard to Europe, we should also show progress but we don’t want to get ahead of ourselves in our approach to the Europeans and we want to be sure it’s coordinated with our other policies.

Governor Love: I agree and look forward to working closely with you on these matters.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 251, Agency Files, National Energy Office, Vol. III. Top Secret; Sensitive; Exclusively Eyes Only. The meeting took place in Kissinger’s office. On August 13, Odeen forwarded a copy to Scowcroft. (Ibid.)
  2. No other record of Love’s meetings has been found.
  3. Document 192.
  4. See Document 187.
  5. Love subsequently determined to visit Japan in early October. (Memorandum from Odeen to Kissinger, August 17; National Archives, Nixon Presidential Materials, NSC Files, Box 251, Agency Files, National Energy Office, Vol. III)
  6. See Document 90.