Foreign Relations of the United States, 1969–1976, Volume XXXVI, Energy Crisis, 1969–1974

349. Memorandum for the Record¹

Washington, April 12, 1974.

• SUBJECT
  • Minutes of CIEP Executive Committee Meeting, April 12, 1974 in the Roosevelt Room

ATTENDEES

• List Attached²

[Omitted here is discussion of International Investment and International Capital Markets.]

3. U.S. Policy Towards Financial Proposals to Assist LDCs to meet oil and other import problems

Mr. Volcker led off the discussion on the Treasury Department paper by pointing out that the only agreement so far was the universal recognition of the problem and many suggestions for its solution. With respect to procedural aspects of the problem, he raised the question of whether the U.S. could contribute anything by suggesting a forum for discussion to sort out the various proposals. With respect to our substantive position, he said we needed to decide what contribution the U.S. could make and what our overall attitude toward the effort will be. He concluded by noting that if we had no U.S. position then Secretary Kissinger should finesse the question during his upcoming UN speech.

Secretary Shultz indicated that we did have a position—i.e. holding our level of support to the levels projected in the budget. He felt that we would be doing extremely well if we got the amounts for aid that we had requested and that we could not make further commitments because of the Congressional problem.

Mr. Cooper pointed out that it might be somewhat premature to discuss magnitudes of overall aid to the LDCs because of questions as to the magnitude of the impact of the oil price rise and also as to the precise timing of this impact. Mr. Flanigan noted that what was needed was careful country studies to assess the size and timing of the impact.

Mr. Volcker raised the question of whether the U.S. should accept a position of no additional aid. Mr. Eberle said in his opinion we should not lock the door on the possibility of additional aid but that we should not adopt a position that accepts the continuance of the current oil price. Mr. Flanigan noted that, on the basis of what was said so far, he would feel that it would be inappropriate to bring the issue forward in an international forum like the UN before we know our own position.

Mr. Cooper indicated that informal discussions were now underway and oil producers’ indecision gave the U.S. some time to decide on its ultimate position. In his opinion what was needed was a better picture of the timing of the problem. Mr. Volcker expressed his uneasiness with respect to this kind of informal approach and Mr. Flanigan added that the U.S. would not exercise the appropriate leadership if it merely determined the parameters of the problem and waited for others to advance proposals or to take action.

The committee agreed to Mr. Flanigan’s proposal that a working group under Mr. Cooper’s chairmanship should be convened to examine the extent of the problem and timing issues and suggest options for U.S. policy.

1. Source: National Archives, RG 429, Records of the Council on International Economic Policy, 1971–77, Records of Executive Committee Meetings 1973–74, Box 252, File 53487, April 12, 1974 meeting. Confidential. Shultz chaired the meeting. According to an April 15 memorandum from Flanigan to CIEP Executive Committee members, the decision reached at the April 12 meeting on LDC’s was that, for the present, the United States “will do all it can to meet its past aid commitments, but that we could not now make any new commitments. Further work on institutional possibilities for considering the problem of particularly hard-hit LDCs, the extent and timing of the problem for specific countries, and options for a further U.S. response to the problem will be pursued through an interagency group chaired by Chuck Cooper.” (Ibid.)
2. Not attached.