104. Memorandum From the Deputy Assistant Secretary of State for International Resources and Food Policy (Bosworth) to Robert Hormats of the National Security Council Staff1
SUBJECT
- First Draft of Expanded NSSM/CIEPSM 237 on US International Energy Policy
Attached is the new first draft of the expanded NSSM 237 on international energy policy.2 The NSSM follows closely the outline agreed to at the interagency working group meeting following consideration of the earlier NSSM by the meeting of principals chaired by Frank Zarb and the subsequent meeting of Under Secretary Rogers and his interagency counterparts.3 We believe that this expanded NSSM answers all the questions raised in these meetings and fulfills the requirement that the NSSM be comprehensive in nature.
During the writing of individual chapters, there have been some suggestions to reorder the structure of the NSSM. We think the current structure is the most logical way to present all of the arguments in a comprehensive manner, as requested by principals. However, at our meeting next week, one of the matters we should discuss is whether this structure or some other would be more appropriate.
As now written, the NSSM is structured in two major parts. The first part (Chapters I–X) analyzes the various issues and describes measures that might be appropriate to address the issues. The second part discusses three comprehensive energy strategies and policy options to implement the strategies, and requests decisions by principals.
A brief description of the individual chapters follows. The introductory chapter (I) sets the stage by indicating our level of dependence and demonstrating that OPEC market power did not result solely from the ’73 embargo, but was a phenomenon that had been growing since 1970. This is relevant in answering the question of what we can or cannot do to manipulate future OPEC decisions. The collective vulnerability chapter (II) defines the context for our consideration of all other aspects of the NSSM. The price/supply chapter (III) uses econometric and judgmental models to establish the parameters of future produc[Page 368]tion and pricing possibilities. Though the numbers generated by these two models are not the same, the general thrust of both is that we probably face increasing real prices between now and 1985. Chapter IV (Embargo Vulnerability) analyzes the possibilities for new politically-inspired supply disruptions and describes measures that might be taken to reduce the impact of such disruptions. Chapters V–X concentrate on the long-term global energy balance and in this connection look separately at our domestic policy (V), our policy toward other consumers in the IEA (VI), our policies toward OPEC (VII), the role of the international oil companies (VIII), our policies toward the non-oil LDCs (IX), and the role of CIEC in our overall energy policy (X).
The final chapter pulls together the pertinent analyses of the earlier chapters and poses for decision by principals three comprehensive strategies, and policy options to accomplish them, that the nation can follow in the next 10–15 years. The first of these strategies is driven by a more vigorous domestic energy program than has thus far been adopted. Adoption of this strategy, however, requires a realistic conviction on the part of the policy-makers that such a domestic program is really feasible. A number of initiatives in other areas flow from the decision on the domestic program.
The second comprehensive strategy involves recognition that we will not get a stronger domestic program than measures already adopted and that we will become more dependent on imports. It, therefore, concentrates on (1) trying to ensure adequate global production levels in the future and (2) increasing our protective measures against politically-inspired supply disruptions.
The third strategy recognizes our current inability to get stronger domestic energy measures than we now have but relies on production and pricing decisions by OPEC (restricted production, higher prices) to force us gradually to take actions for which we do not have the political will at present. Selection of this option would make it unwise for us to seek special arrangements on production or pricing with the Saudis and other producers. We would instead go through the motions to protest price increases but not really push the producers on this.
I would like us to meet on Monday at 3:00 pm in Room 1205 at New State to discuss this first draft of the NSSM.4 At this meeting, I would hope to evaluate the first draft along two lines: (1) Have all the substantive issues been appropriately addressed? (2) Is the current structure acceptable or should it be modified? Once these decisions are made, we can focus on language modifications that may be needed to make the presentation of the substance more precise and digestible.
- Source: Ford Library, National Security Council, Institutional Files, Box 41, NSSM 237—U.S. International Energy Policy (2). Secret. Drafted by Creekmore on September 29. Also sent to the other members of the interagency working group drafting the NSSM 237 study. NSSM 237 is Document 93.↩
- Attached but not printed.↩
- No records of these meetings have been found. See Document 99 and footnote 4 thereto.↩
- No record of this meeting has been found.↩