340. Minutes of the Secretary of State’s Staff Meeting1

[Omitted here are the Summary of Decisions and discussion unrelated to oil.]

Secretary Kissinger: Bill, do you want to talk about the energy conference.2 And then we will get to Rodger [Davies].

I’m afraid you are going to succeed.

Mr. Donaldson: The general climate of the conference two days last week was much more—

Secretary Kissinger: Never put a competent man in charge of something that you want to slow down.

[Page 942]

Mr. Donaldson: There were no—well, to begin with, if we had followed on as we had in the first meeting, we expected a lot of static from the French in terms of use of the OECD for some of the purposes that we had in mind. We had none of that in Paris. The French backed off totally and allowed the OECD to come up with the various study groups that we wanted. The rest of the people were extremely forthcoming. There was no antagonism from the higher echelons as there had been at our first coordinating group meeting here.3 The meeting still was extremely procedural in nature. We did have a couple of good substantive discussions. All the work has been farmed out.

Secretary Kissinger: On what subjects?

Mr. Donaldson: The substantive thing was on basically, number one, the current condition in the oil markets, the current economic conditions, discussions led by ourselves and then chimed in on by particularly the Germans and the English, and the representatives from the IMF and the World Bank that were there.

So everybody was pretty much on the same economic wavelength, which envisioned a general softening condition of the oil markets as a result of the reduced demand that has come about as a result of the price levels—economics taking effect.

I think having said that everyone was cooperative, I think that the one thing that everyone is moving towards in varying degrees of urgency is a consumer-producer meeting—although I think there is general agreement that there is no agreement on what should be said at a consumer-producer meeting. I think they all, to varying degrees, with the British way out ahead, want to have a consumer-producer meeting as soon as possible. The British were pushing for one—

Secretary Kissinger: To discuss what?

Mr. Donaldson: Exactly.

Secretary Kissinger: What do they say when you ask them what they want to discuss there?

Mr. Donaldson: They revert to vague concepts of finding out what the Arabs are after—you know, just basically it is more back on that old theme of making sure that nobody thinks it is a confrontation, and just starting the dialogue going. When you press them, there is no concept of what anybody wants to talk about. But it is on the agenda for the next time. And when pressed in the corridors, the Germans keep saying although they want to push it ahead—they keep saying to us that we cannot push it too far ahead or we are going to throw the whole thing into the hands of the Arab-EC context. They say “We are with [Page 943]this group as long as it does something, but if it doesn’t do something, then you are going to throw this thing right back into the hands—”

Secretary Kissinger: Would they mind telling us what they want to do? Besides, we are not going to play. Let them set up something competitive. What are they going to do—see what the EC–Arab dialogue brings them in contradistinction to what the energy conference-Arab dialogue brings?

Mr. Donaldson: This was what—every time—

Secretary Kissinger: That is exactly what we won’t stand for.

Mr. Donaldson: We took the position, that the Germans supported, that if we really didn’t know what we wanted to talk about, we shouldn’t have a meeting until we knew what we wanted to talk about. Then in the corridors those that supported us on that view said, “Look, if you push this too far then—”

Secretary Kissinger: Then you say “Fine, have your conference. Either you know what you want to talk about, and then we can have it, or you don’t know what you want to talk about, in which case go off and speak in another forum.” We are not terrified by that.

Mr. Donaldson: Their answer, when you boil it down, is that if you sit down at a table and start exchanging views on what the problems are, what the economic impacts of the monetary situation are and so forth, you are advancing a dialogue with them.

Secretary Kissinger: Great. And therefore can we agree on an agenda, or does it help to go into a meeting without knowing what you want to say?

Mr. Donaldson: The agenda for our next meeting is an agenda for the Arab—for the—

Secretary Kissinger: Plus substance.

Mr. Donaldson: Yes. From the lack of substance will come the lack of substance on each one of the agenda items. But it is topic number one for discussion next time.

Mr. Hartman: One issue they are very concerned about is they think there is some movement developing among the Arabs actually to raise prices again. And one of the reasons for British pressuring to get some message to the Arabs, that we were in the process now of preparing positions, is to see whether or not some of the more moderate elements on the Arab side will hold off on any further price decisions.

Secretary Kissinger: They sure as hell won’t do it just because you tell them you are preparing a position. They might do it if you tell them you have a position.

Mr. Hartman: That is our answer. Some of them at least are beginning to see that now. They are also seeing how difficult it will be if [Page 944]they get into such a meeting without having anything positive to suggest. It may end up with the Arabs thinking they can just go ahead and raise the prices again.

Secretary Kissinger: Are we going to have a concrete idea of what we think a producer-consumer meeting ought to do?

Mr. Donaldson: Yes.

Secretary Kissinger: Okay.

Mr. Hartman: And one thing that ought to be examined at that time—and I think there was some sympathy for this—is that we ought to decide do we want to have a meeting with all the producers, because I think some of them are beginning to see that if they get them all in the same room, or if they officially deal with OPEC and OPEC alone, they may have a harder time and it may be that what we want to have at the end is a coordinated position, which we all take in our bilateral context. But so far their public discussion talks in terms of having a producer-consumer meeting—and I think the more we get into substance, the more second thoughts they may have about that as a tactic.

Secretary Kissinger: Only one of two things can happen at a producer-consumer meeting. Either the consumers have common positions or the consumers do not have common positions. Nothing else can happen. If they do not have common positions you are going to get bidding among the consumers, the objective tendency of which must be to enable the producers either to bid up prices or to bid up whatever it is that they want. There can be no other outcome. So the question to be determined at the next meeting is whether it is possible to get a common position among the consumers or if they want to go in there free-wheeling. If they want to go in there free-wheeling, it is fine with us.

Mr. Sisco: I think they were ready to go in freewheeling as an EC-Arab group, largely because in my judgment that aspect—

Secretary Kissinger: As an EC-Arab they would not go in free-wheeling.

Mr. Sisco: I know. They have a whole agenda there. But they still see the meeting per se in my judgment as primarily a matter of political symbolism in the sense that they were taking the initiative vis-àvis the Arabs. Sure they have a specific agenda—

Secretary Kissinger: If they go in as the EC, Joe, then by their miserable constitution they are bound to one position. And that is one of the nightmares of seeing twenty Arabs with these bureaucratic Europeans. It absolutely boggles the mind how the dialogue will take place.

But if they want to do it in the EC-Arab framework, we are not going to be blackmailed with it. Our interest is in a common consumer [Page 945]position. If we cannot get a common consumer position, we can be relaxed—whether we do our bilateralism in front of others or privately, we are relaxed about this. In fact, if we cannot get a common position, maybe we ought to have a consumer-producer meeting as quickly as possible, while we still have some leverage in the Arab world, and show them who is running things. And I would think that any time until the end of June we will be in good shape. So you better find out early in April. If we are not going to work towards a common position, if there is going to be a producer-consumer meeting, I don’t mind having it as early as possible and get it over with. It is going to be chaos. I think our position in the Arab world can only decline in the second half of the year.

Mr. Hyland: There is some traffic that the French are trying to organize a common EC energy policy, put it on the Foreign Ministers agenda for April 1—I mean on the EC Foreign Ministers agenda for April 1.

Secretary Kissinger: I saw that—in order to forestall the April 4—yes, I saw that.

Mr. Hyland: They are promising a lot more cooperation.

Secretary Kissinger: I saw that.

Mr. Hartman: That is mainly related to their internal energy policy.

Mr. Hyland: It has been blocked by the French so far. Now the French are unblocking it.

Mr. Hartman: If it goes the way the French want it to go, there is going to be some German opposition, because they don’t like their internal energy policy.

Secretary Kissinger: Okay. But this is our basic strategy—it ought to be to find out whether they are willing to develop common positions among the consumers. In that case, we can go slow, until we get the common positions. If not, I would let it go to a producer-consumer meeting—get it over with. Later on we will be in worse shape.

Do you think this should be at the Foreign Ministers level?

Mr. Donaldson: I don’t think we really got that far, although I think that is—yes.

Secretary Kissinger: Well, first find out what subjects they want to discuss. Then we can make our decision at the next meeting—after the next meeting.

Mr. Ingersoll: Are the LDCs going to be drawn into this at some point?

Mr. Donaldson: Yes. This is part—we sort of melded this in as part of the total subject.

Secretary Kissinger: The LDCs are weak reeds.

Mr. Ingersoll: At least they should be kept informed.

[Omitted here is discussion unrelated to oil.]

  1. Source: National Archives, RG 59, Transcripts of Secretary of State Kissinger’s Staff Meetings, 1973–1977, Box 718, Secretary’s Staff Meetings 3/74. Secret. According to an attached list, the following people attended the meeting: Kissinger, Rush, Sisco, Donaldson, Maw, Sonnenfeldt, Brown, Ingersoll, Davies, Lord, McCloskey, Hyland, Spring-steen, Kubisch, and Vest.
  2. The OECD High Level Group met March 11–12; the Energy Coordinating Group of the OECD met March 13–14.
  3. The ECG held its organizational meeting in Washington on February 25.