234. Memorandum From Charles A. Cooper of the National Security Council Staff to Secretary of State Kissinger1
- Arab Oil Embargo and Production Cutbacks
Early Reversal of the Embargo Not Essential
The economic implications of the Arab embargo for us are unlikely to prove so burdensome that an early abandonment of the embargo is vital to our interests. Although I am not an oil industry expert, there are reasons to believe that while an Arab oil embargo against us will cause serious economic difficulties, the problems that arise will not be so serious that they cannot be tolerated:
- —There is a difference between Arab rhetoric and performance—not only is it difficult for all the Arab nations to enforce their cutback and embargo policies, but there will be both economic and political incentives for them to rely more on words and less on deeds, particularly as time goes on and crisis atmosphere lessens.
- —There are many circumstances short of a definitive settlement in the Middle East conflict under which the embargo policy itself is likely to be modified.
- —If the embargo is sustained, and somehow enforced with 100 percent effectiveness, we can get through this winter. The measures to be announced next week2 to conserve the use of petroleum, and to increase our production, and to draw down stocks, together with some increased imports from non-Arab sources, will be effective even though politically and economically burdensome.
- —As time passes, adjustments will be more effective and the economic consequences of the embargo less serious. The domestic oil policy which will be announced next week is drastic, but we would have had to take comparable conservation measures anyway over the next several years, given the basic change in Arab oil export policies.
Refusal as a Matter of Principle to Accept the Legitimacy of a Link Between the Arab Oil Embargo and Our Middle East Policy
We should treat the Arab oil embargo as an illegitimate economic act, which we will not allow in any way to influence the timing or substance of our peace efforts in the Middle East. If we threaten to delay our peace efforts unless the embargo is lifted, we put our own highest priority foreign policy concern at hostage. Even if we put indirect pressure on by calling attention to how hard it is for us to carry out our diplomatic efforts, we tend to create the same problems. We should instead take a line with the oil producers which emphasizes our determination to keep separate our policy towards the Arab/Israeli conflict and our policy towards the Arab oil embargo. The line outlined below could be taken with King Faisal, who is the key player, recognizing that while he may be genuinely concerned over the Israelis, he also has other considerations which may make him interested in a face-saving alternative to confrontation with us.
Approach to Faisal
- Inform him that we cannot allow ourselves to be influenced on a foreign policy matter of such grave concern, and one where our relations with the Soviet Union are so directly involved, by any actions he might or might not take with respect to oil shipments to us.
- Express our concern that the repercussions of a continued embargo, which are hard to predict or control in a situation so volatile, could lead to a Soviet role in the Middle East which he might find extremely uncomfortable and undesirable.
- Assure him that we intend to continue our efforts to promote a just and durable settlement of the Middle East conflict, though we are concerned that public reaction to the Arab embargo may make it harder [Page 664]to carry forward these efforts as actively and as constructively as we might otherwise be able to.
- Stress to him that we in no way believe the Arab oil embargo to be legitimate or justifiable, but that we are ourselves fully prepared to make whatever economic adjustments are needed if it continues.
- Point out that the Arab nations themselves have much to lose economically, since we, and others, will inevitably be compelled to adjust our own production and consumption, and our relationship with other oil-producers, so as to reduce or eliminate our requirements for Arab oil in the future.
- Indicate that as a practical matter a continued embargo is likely to have spill-over effects in many areas of our bilateral relationship even though we value our traditional friendship with his nation very highly and hope that it will continue in the future.
- Urge that he follow a moderate and prudent course, and that he continue to keep in mind our deep desire for friendship with him and our genuine interest in helping to achieve a settlement of the conflict between the Arabs and Israelis.
- If Faisal remains non-conciliatory, you could make the following point:
- Warn him that if the economic hardships occasioned by the Arab boycott and production cutback become too severe, particularly in other countries more dependent on Arab oil than we are, that economic countermeasures in which we might participate cannot be ruled out, although we are not considering any such actions at this time.
- If Faisal shows signs of looking for a face-saving way out, you might:
- Suggest that he may wish to take measures to sustain production so that significant cutbacks of oil to such countries as Japan and the FRG can be avoided, even though the U.S. embargo is formally continued, and that in such circumstances we would seek to avoid actions or statements which might add to any political pressures he may face.