361. Memorandum of Conversation1

    • President Nixon
    • William Simon, Secretary of the Treasury
    • Kenneth Rush, Assistant to the President
    • Brent Scowcroft, Deputy Assistant to the President for National Security Affairs

[Omitted here is discussion unrelated to Simon’s trip.]

President: How long were you gone?

Simon: 11 days.2

President: How was it received.

Simon: Outstandingly. Even where I shouldn’t have been, I was—Kuwait.

President: But they still will raise the oil prices.

Simon: I am not so sure. I met with Henry before and again today.3

Yamani gave us an Arabian party. He still has clout with the King. The King gave him 10 million riyals. The Arabs are acting like nouveaux riches.

[Omitted here is discussion unrelated to energy.]

In my meeting with Schmidt he is very concerned with overall stability. The oil prices are a problem everywhere. Faisal says he has gone as far as he can without our help. The Shah is threatening to cut production.

President: He is our good friend, but he is playing a hard game on oil.

Simon: Faisal asks our help with the Shah. There is an internal fight in Saudi Arabia between those who want price cuts and those who wish to keep production up. Faisal really wants our help with the Shah.

In discussions with other Ministers I said Saudi Arabia has probably 150 years of production left, where Iran has only 15 years. Maybe Iran will build its industry and then when the oil runs out, they can take you and get the oil back.

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President: We have to see what we can do. I will have to meet and talk with the Shah.

Simon: The Shah has us. No one will confront him. The producer nations are locking in the consumers and keeping them away from us. Schmidt said: “If the prices don’t move down, I have to move against the companies and deal with the producers myself.” This issue will ultimately require strong action by the United States.

President: Like what? This should be developed. We need discussion with you, Ken, Henry and Brent. Keep it small.

Simon: It is a terrible problem. I was not thinking so much of energy as of balance of payments. I am worried about production cuts. Thank heavens I went to Kuwait. I played pingpong.

President: Who is the real leader? Sadat?

Simon: Yes. But there is something wrong with their thinking about wanting more and more without putting their house in order.

President: We want to go all out for Egypt. Push hard for all we can get.

You didn’t go to Syria?

Simon: No.

President: Asad is impressive.

Simon: The least impressive were the Saudis. The Kuwaitis have maybe more potential than Egypt.

President: Tell me about Europe. He is worried about the banks.

Simon: He is overboard on that. Maybe the misfortune of the Herzbank(?) did some good; it evidences the situation. With Giscard and Schmidt at the top, we have greater friendliness.

President: France will be better with Giscard.

Simon: We are making progress with them on gold. If it works out I would like to jump the gun on granting gold sales.

[Omitted here is discussion unrelated to energy.]

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 1029, Presidential/HAK Memcons, Memcons, 1 June–8 Aug 74. Secret; Nodis. The meeting occurred in the Oval Office.
  2. Simon’s July 31 report to the President is ibid., Box 290, Agency Files, US Treasury, Vol. V, Jan 1974.
  3. According to Kissinger’s Record of Schedule, he met with Simon July 30 from 9 to 9:05 a.m. No other record of this meeting has been found.