359. Memorandum of Conversation1

  • SUBJECT
    • Conversation following Dinner hosted by French Foreign Minister
    • Jean Sauvagnargues
  • PARTICIPANTS
    • (See Guest List attached)

[Omitted here is discussion unrelated to oil.]

Secretary: We have told all the Arabs that we favor a dialogue with Europe.

Sauvagnargues: I know that. We wish to establish a working relationship with them.

Secretary: Why as a group?

Sauvagnargues: Because it is more efficient.

Puaux: We didn’t want to just talk to the oil producers.

[Page 1019]

Secretary: We have to get a balance in the Arab world. We don’t talk to Syria and Egypt together.

de Courcel: They wanted to talk to us together.

Secretary: All twenty of them?

Sauvagnargues: The real question is if the Arabs raise the price of oil again it will be cataclysmic—that is the only point that we will raise on oil. We will not discuss supply problems.

Secretary: There is no way we can approach the energy problem separately. The U.S. could easily pursue a separate policy. We can’t settle those problems in the abstract. I can assure you that we will put no obstacle in the way. There is no conflict between us. We do not object to EC economic cooperation with the Arabs.

Sauvagnargues: What about the energy problem?

Secretary: On energy we had thought that the ECG was the best way to organize consumer cooperation. We are flexible on organization—that can be settled later. If the producers have a cartel, why should not the consumers cooperate.

Sauvagnargues: Don’t you still want a producer-consumer conference?

Secretary: Who wants it?

Sauvagnargues: How can you contain rising prices?

Secretary: If you have a consumer organization it can agree on such things as consumption restraint and emergency sharing. If we have a better organized position, we can confront the problem of prices. What we need is a coordinated approach. The reason we are going ahead with bilateral cooperative programs is to give the Arabs something they might risk losing if they interfere with oil supplies again. If all the consumers work together, this will be more effective.

Sauvagnargues: We don’t want a confrontation with the producers. Secretary: Sooner or later we will have a confrontation. We can’t continue to be ransomed by those weaker states who are promoting inflation in all our countries. Out of the 40 million Arabs only 3 states have efficient civil servants. We need concerted action so that we don’t act like a disorganized rabble.

Sauvagnargues: Do you think you can handle the Saudis? Secretary: We will try.

Sauvagnargues: If they produce more we can get a lower price. Secretary: We have made a major effort to keep our companies from bidding in the auctions. It seemed to work in Kuwait.

Sauvagnargues: Do you want the ECG to continue?

Secretary: Whether the ECG continues is not important to us. We can create another group. What we need is continuing cooperation [Page 1020]among consumers. We have suggested the IEP2 and we are prepared to make an effort to have France associated with this in some way.

Sauvagnargues: I am worried by this basic approach to consumer cooperation.

Secretary: What is the alternative?

Sauvagnargues: We should try to avoid confrontation.

Secretary: This is not confrontation. We want to put ourselves in a position where we can coordinate our resistance.

Sauvagnargues: But we are more vulnerable.

Secretary: What we are talking about is emergency sharing and R & D. You benefit from these. Europe has more to gain. It is a curious fact that the oil producers have not objected to this.

Sauvagnargues: You are the United States and you can afford to antagonize the Arabs.

Secretary: I can assure you that we did not wish to enter into this theological debate. We favor a united Europe but not one that would be in a constant confrontation with us. As I pointed out in Ottawa,3 we cannot sign a document in blood and force people to consult. In fact, most of Europe is prepared to consult.

Sauvagnargues: At least eight of the nine.

Secretary: I was too diplomatic to say this.

Sauvagnargues: This has been a totally unnecessary quarrel.

Secretary: You might have said that this was a cunning U.S. effort to dominate European energy policy but it is an objective fact that it would not be in our interest. What the West showed in October was that most countries acted as if they were rabbits paralyzed by the snake. Who are the Saudis—there as only four or five of them who understand the problem. If France had called a conference in Paris after my London speech,4 we would have agreed. This is a systemic problem. If you go back to the 1940’s, we helped Europe grow stronger. We now wish for our own interest and Europe’s interest to cooperate on energy. We are about to complete the first phase of the ECG work. We are flexible on locale and the American role. We can’t accept that no action is possible because it might trigger an Arab response. What we want to do is strengthen the moderate Arab group.

Sauvagnargues: What we ought to try to do is to arrange for the procedure to be adapted to the substance of the problem.

[Page 1021]

Secretary: What we have suggested does not in any way preclude a European energy policy. In fact, we would welcome the formulation of such a policy.

Sauvagnargues: I have glanced through your IEP and find some good things in it, but I believe it goes too far.

Secretary: We are open-minded on timing.

Sauvagnargues: We have to remove the suspicions from this situation.

Secretary: What we need is a report by experts.

Sauvagnargues: We also have to talk about institutions.

Brossolette: There are many doubts about what the U.S. would do for Europe in an emergency situation. If there is pressure on your oil production, would the U.S. be willing to send oil to Europe?

Secretary: No one is proposing any pressure but what if the oil producers press us?

Brossolette: What do you think we should do?

Secretary: What we have to do is avoid the kind of panic situation we ran into last October. We have to develop cooperation among consumers. Our bilateral relations are improving with the Arab countries and we hope to use those relations to keep them from taking actions against us. We are also taking steps to keep the major oil companies out of the oil auctions. The Saudis seem to welcome these actions because it will help bring the prices down. The Integrated Emergency Program should be most effective against selective embargo. There is no way that we can replace the oil if there is a total embargo. All we can hope for is a feasible amount of sharing.

Sauvagnargues: Do you expect a new embargo?

Secretary: I think that the danger is minimal. What we should really fear are price rises. The Shah is trying to drive prices up.

Sauvagnargues: Yes.

[Omitted here is discussion unrelated to oil.]

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 1030, Presidential/HAK Memcons, Memcons to Feb 8, 1975. Secret; Nodis. Drafted by Hartman. The list of attendees is not attached. The meeting was held at the Quai d’Orsay.
  2. See Document 352 and footnote 3, Document 355.
  3. The NATO Ministerial Meeting was held in Ottawa June 17–19.
  4. See Document 264.