226. Minutes of the Secretary of State’s Staff Meeting1
[Omitted here are Summary of Decisions and material unrelated to oil.]
[Mr. Rush:] Ken Jamieson called me again yesterday on the oil problem—
Secretary Kissinger: That was a disaster.
Mr. Rush: —saying, in essence, that it would cost us about a million 89 hundred barrels a day—ten percent of our oil supply.
Secretary Kissinger: What’s his solution?
Mr. Rush: They don’t have a solution, but they were thinking about his going along with some of the top men in the oil companies, and I’ve discouraged this.
Secretary Kissinger: It’s too early.
Mr. Rush: I said it’s too early. Faisal had turned him down.
Secretary Kissinger: It is too early here. He has no card. Let’s wait until the scenario unfolds.
Mr. Rush: That’s what I told him. So he agreed to wait and consult with us before he moved.[Page 629]
He then said that the oil people want to put in a very urgent appeal for a coordinated oil program of the United States.
Secretary Kissinger: Well, why don’t we get Ken Jamieson—particularly this genius from Aramco, Jungers—whatever his name is—and five or six others in here—Tuesday or Wednesday2 for a meeting.
Mr. Rush: O.K.
Secretary Kissinger: Get Clements too.
[Omitted here is discussion unrelated to oil.]
[Mr. Casey:] Canada—I met with the Energy Minister and Minister of Foreign—External Affairs—and the Canadians in general behaved like the “Arabs of the North” in the Western Hemisphere. They have imposed an excise tax on the exports so it wouldn’t go to the producer; it would go to the company.
They are planning to do the same thing on gas. We took a dim view, said it was a bad precedent; but there isn’t a helluva lot we can do but pay it, in the short term.
Fundamentally, they talk about their plans. The Canadians can’t develop their resource without access to our capital. At the same time, they’re unprepared to make any kind of commitment with respect to supply prices, so we went around this extensively.
Their immediate problem is that they face acute shortages in the Atlantic provinces, which would be cut off from the Middle East crude. We won’t be able to feed the refineries.
They’re planning a pipeline at Montreal to cure this exposure. That will take six months to do. But it’s a clear threat to our Middle East–Middle Western refineries. The oil that’s now going down our Middle Western refineries will ultimately go down the pipeline.
Now, the Mackenzie Valley situation—they want to build a 7 billion dollar pipeline to get there for our Alaska gas and their Arctic gas, and they need our Alaska gas and our market to do that. If we go ahead with authorizing an application that’s been made for a gas pipeline to Alaska with LNG ships down to California, they won’t be able to float their Mackenzie Valley pipeline. So you have that kind of interrelationship between the thing we might do and the thing they might do.
You have the same kind of situation in British Columbia. You have the same kind of situation with the refinery they want to build in the St. Lawrence. They need access to the New York market to justify it.
We went over all these interrelationships; everything got laid on the table this first time and we agreed that we ought to do it more [Page 630] frequently—there ought to be continuing discussions or continuing consultations between their level—at the Energy Ministry and the External Affairs Ministry—and we agreed to set up two working groups to function immediately and see what could be done on switching supplies, as between the Atlantic provinces and Alberta fields and the Middle West to deal with the immediate emergency. They can probably increase their production in Alberta by 150 million barrels a day. We think we can probably come out ahead on the exchange.
Secretary Kissinger: Bill, my problem with all of this is I cannot get into my head what we’re trying to accomplish; and any time an oil problem comes up anywhere in the world, people tell me a billion barrels—or whatever the figures are—and I’m never clear what it is we’re after—what it is in our interest to achieve.
I know what they want, and I can figure out roughly what we ought to want. But what I’m trying to develop is some oil strategy which is comprehensive. I can’t ask you to do it in a three-day period.
Mr. Casey: That’s been worked on for a long time, and there’s an exercise going on now.
Secretary Kissinger: I mean, if they behaved like “Arabs of the North,” what can we do to get them to behave like allies?
Mr. Casey: I think that the first strategic requirement in relationship with Canada is to increase supply generally and reduce our dependency on them.
Now, they are allergic, politically. They find it impossible to accept the concept of a unified or a continental oil strategy. They’re willing to exchange information, so we know what each other is doing and can directly assess the risks and the opportunities that we each have.
Secretary Kissinger: Yes. But if they’re trying to foul up everybody, they’re trying to foul up everything else and then giving information only enables them to do it more effectively.
Mr. Casey: Everybody is trying to pursue their own interest.
Secretary Kissinger: That’s a more elegant way of saying it.
Mr. Casey: I think they’re trying to do it in a way that we can patiently pursue our own interests to mutual advantage. I mean, there are ways here.
Secretary Kissinger: But what are they?
Mr. Casey: They arise on an issue-by-issue basis, on a project-by-project basis. We should be getting involved in the capital flow necessary to develop their great resource, and we should be getting some assurance that oil will flow to us over a long term.
Now, they’re reluctant to do that. I’m satisfied we can’t do it.
Secretary Kissinger: If I’m going to see the oil company executives next week, I want to know what I have to accomplish.[Page 631]
Are you working on this?
Mr. Lord: There’s a paper we’re doing under Mr. Casey—he and my staff3—and we’ll have to shorten the deadline on that to get it to you before the meeting.
Secretary Kissinger: Yes. I want to get the basic strategy set in my mind. Then I can understand what these individual decisions mean.
I have no quarrel with anything you’re saying, Bill. Frankly, I don’t understand it. That’s my problem. I’ve never understood the oil business, and it’s one of these things. In 1969, when this Administration came in, I saw an elegant report demonstrating that we should reduce imports as much as possible,4 which was the last lesson I had in the oil business. So I am in gross need of re-education.
But in dealing, you know, with the Arabs, it’s easy. What we want is more of the oil.
But with the Europeans—you know, I had a talk with Home at the airport, the other day, in London, and he’s crying bitterly about the pressures he’s under; and I don’t know.
Mr. Casey: Well, when you analyze it, go through all the possible strategies, one thing you can do is increase the supply. The other is moderate the demand. But there are a lot of ways you can do it.
Secretary Kissinger: Yes, but what are these countries that are trying to squeeze you?
Mr. Casey: You get yourself in a position so that they can’t squeeze you. That’s why this bill5 is important. That’s why you won’t be able to cut back the consumption.
Secretary Kissinger: I’m strongly in support of that bill. You want to get into a position where you can squeeze them back on something they need.
Mr. Casey: Yes. I was unsuccessful in finding them. That doesn’t mean they’re not there.
Secretary Kissinger: They don’t exist, you say?
Mr. Casey: No; I don’t say that.
Secretary Kissinger: I don’t know.
Mr. Casey: You know, we talked about can we offset the price in oil by the equivalent price by Fuji.6
Secretary Kissinger: There’s nothing we can do to Canada that they want?[Page 632]
Mr. Casey: The important thing you can do with Canada would be to take away the exemption under the Interest Equalization Tax and cut off the flow of capital to Canada. That’s the thing they need most from us. They need our market; they need our capital.
Secretary Kissinger: This may not be the cause for which to do it, but it would be useful to know what our pressure points are.
Mr. Casey: Well, the pressure points are not giving them access to our market. As I said, they can’t develop their resources, which they’re very anxious to develop, without our capital and access to our market.
Now, if we want to cut those things off, we can exercise a lot of leverage over them. But everybody has been afraid to do it—afraid to talk about it.
Secretary Kissinger: Why?
Mr. Casey: Afraid. You bring the government down there and all kinds of horrendous things will happen.
Secretary Kissinger: I think we’ve become too dangerous to play with. And if everyone around the world knows you cannot tackle the United States, people will stop trying to tackle us.
Now, if the price to tackle us would be for them to run clacking after us, then it’s a good way to solidify it.
Now, I don’t know what the pressures are, and the first few times people do it there will be an unholy uproar. After a while, people are going to be more careful.
Now, I’m not saying this is the cause to do it.
Mr. Casey: No; I understand.
Secretary Kissinger: I don’t know if we’ve got that much of an investment in Trudeau that we can’t bring him down.
Mr. Casey: I personally don’t think so.
Mr. Rush: You don’t have any.
Mr. Casey: I think the real concern here is—
Secretary Kissinger: And if he falls, I think his successor is going to pursue—what do you think, George? Is he in your area?
Mr. Springsteen: Yes. I got them all!
Secretary Kissinger: Sisco has all of them—as much as anyone.
Mr. Springsteen: I would say Stanfield7 would come in, and Stan-field is a hardheaded businessman. He characterizes the underwear salesman, which is what Stanley produces, and I think you can do business [Page 633] with him on the grounds you are talking about. In other words, I don’t think we can be any worse off with him than with the Trudeau Government.
Secretary Kissinger: We should not use our power arbitrarily, and it should be for a sufficient cause, but I really think it ought to be our basic policy that tackling the United States is not free and if you want to gain domestic points by tackling the United States you are running a hell of a risk.
Mr. Springsteen: Here again, Mr. Secretary, I think as far as their energy development is concerned about Canadian West, that is part of American oil investment, so if we had a program—as you said here—if you had a foreign policy program for the oil, this might be another point.
Secretary Kissinger: Can you, just for my own education, give me a list of pressure points in Canada, just so I know?
Mr. Rush: Is that in your study?
Mr. Casey: A little broader look.
You know, one of the problems in this kind of a policy is what the Canadians are doing is principally protecting their own potential needs. That is the way they see it.
Secretary Kissinger: Well, this may not be the cause to do it.
Mr. Casey: That is right.
Secretary Kissinger: We shouldn’t throw our weight out without understanding what their points of view are, which ideally operate by consensus, but it isn’t a tolerable position for us where every one of our allies calls on us on the basis of indivisibility of interests when it suits their purposes but pursues a totally independent policy when it pursues their interest.
Mr. Casey: I would say everything they disclose is in their future planning for petroleum and oil. You can see how it would be reasonably justified for a prudent policy for themselves.
Secretary Kissinger: Now, the reason for other countries to be cooperative is if it would be pursued even if they couldn’t cooperate, and, therefore, if they learn, as they will learn, that if everyone in the world, including the United States, pursues their self-interest they are going to be the losers, then I think we are going to be able to get a re-establishment of a partnership concept, which I far prefer.
[Omitted here is discussion unrelated to oil.]
- Source: National Archives, RG 59, Transcripts of Secretary of State Kissinger’s Staff Meetings, 1973–1977, Box 720, Secretary’s Staff Meetings, 9/73–10/73. Secret. According to an attached list, the following people attended the meeting: Kissinger, Rush, Kubisch, Casey, Hummel, Pickering, Ross, Springsteen, Lord, Eagleburger, McCloskey, and Atherton.↩
- October 30 or 31.↩
- Not further identified.↩
- See Document 32.↩
- The National Emergency Petroleum Act, introduced by Senator Henry Jackson (D–Washington) on October 18, 1973.↩
- A question mark on the original indicates this is a transcription error.↩
- Robert L. Stanfield, Leader of the Progressive Conservative Party of Canada. His family owned the company, Stanfield Underwear.↩