Foreign Relations of the United States, 1969–1976, Volume XXXVII, Energy Crisis, 1974–1980

14. Telegram From the Department of State to Secretary of State Kissinger in Isfahan¹

Washington, November 2, 1974, 0508Z.

Tosec 549/241788. Subject: Camp David Follow-up. For the Secretary from Enders.

1. We had an encouraging meeting with the British (Maitland of the Foreign Office, Mitchell of the Treasury, Taylor of the Energy Ministry) today in Washington on your energy initiatives.

2. At the close, the British agreed with the following summing up of the proposals officials should now make to their Ministers:

(A) Each country should develop a national program of conservation measures, which would then be collated into collective whole, reviewed for adequacy of burden sharing and total impact, and repackaged into a group forecast of reduced import needs (Brits have something in their budget for presentation in two weeks; they didn’t give us details);

(B) An analogous process would occur on the supply side, with each country’s Project Independence to be set side by side and collated into a group forecast;

(C) On financial solidarity the main effort, and it must be very substantial, will be among the consuming countries themselves; this would not exclude some expansion of IMF facilities, with particular reference to LDC needs;

(D) On procedure, implementation should start as early as possible with the latter part of November an appropriate date, with two approaches available.

—One would be to continue to attempt to use the Five to develop concepts, with a meeting in Paris on November 19, followed by a new Camp David meeting in January.

—A second approach, not necessarily exclusive of the first, would be to aim at a meeting of Foreign and Finance Ministers of a larger group of industrial countries in mid-January, with existing organizations (the Group of 10² for finance and the new International Energy Agency for conservation and supply) to start off to implement the main elements of your initiatives already beginning in November. This latter procedure might be preferable in that (A) it would cut off Van Lennep who could attend Group of 10 meetings and present his plan, but would not control the venue for negotiations and (B) it would be much less vulnerable to French obstructionism than the smaller (and still not established) Group of Five.

3. The British thus at official level have come around to all intents and purposes to supporting our proposals. They said that Callaghan is very anxious to get on with it, and would welcome an early opportunity to meet at political level. They agreed strongly that with this second round of consultations we should now fix on a specific proposal and start to run.

4. On the Giscard initiative³ the British started out wobbly. They cited a Callaghan statement from a speech in the House of Commons on October 30 reading “President Giscard d’Estaing has recently made an interesting proposal for an international discussion between producers, consumers and developing countries on the question of oil supplies. We shall certainly wish to consider his proposal constructively. It would be necessary to work out an agenda carefully in advance and we should be ready to join in discussion for this purpose.” British said that they do not interpret this statement as committing them to attend a prepcon, and made much of the fact that Callaghan mentions no dates. They said that they continue to think that a producer/consumer conference is premature, and likely to fail. They said their intention would be to slow down such a conference through the EC, in preparatory discussions, with the hope that the initiative will collapse. However, they argued the French proposal is an established fact which we cannot now ignore.

4. I countered with these points:

(A) We do not believe that the objective conditions for the success of a producer/consumer conference have been realized, with the consumers still in disarray and only beginning to tackle the hard issues of conservation and alternative supply;

(B) That we are disturbed by the substance of Giscard’s proposal, particularly indexing;⁴ whatever French officials say (and they are downplaying substantive remarks) his stand would prejudice the conference;

(C) The French are clearly scared to death that the producers will raise prices this winter, thus aggravating the French balance of payments and either destroying their ceiling on oil payments or forcing the French Government into rationing; their proposal and its haste is intended in part to ward off such an increase; we do not see why a short term gain for the French has to be traded against a long term and major cost for the industrial countries as a whole;

(D) The lack of consultations raises the most serious question about French motives, given your initiative in picking up a French idea to create the Camp David group as a private forum; and

(E) We do not know what our response will be to the French proposal.

5. In the course of conversation, the British officials came closer and closer to accepting this view. They argued that French initiative made it immeasurably more difficult to deal with serious problems; they said that they too could not square the Giscard initiative with a cooperative stance in energy as a whole; they concluded that the initiative should if possible be killed or at least delayed.

6. It would be wrong to put much store in the toughening attitude of these officials during their Washington talks; I have no doubt that they personally share our disapproval of this French action, but from Callaghan’s statement it would appear doubtful that the British will do much more than applaud privately whatever we can do to cause the French to fail.

7. However, with little encouragement it may be possible to get the Europeans and Japanese to put enough sand in the gears to slow the French down to a crawl. I am leaving Monday, November 4 for bilaterals in Tokyo and Bonn, to be followed by an ECG meeting on November 8 in Brussels. I would like your authority to take a similar tough, skeptical position on the Giscard initiative, without moving into a position of drumming up reaction against it.

8. As you know, French Foreign Ministry Director for Economic Affairs Brunet is coming here the evening of November 3 to see the Acting Secretary on the Giscard initiative. I will see him the evening of November 2. We request your authority to take a hard-nosed non-committal stance in those talks.

Ingersoll

1. Source: Ford Library, National Security Adviser, Presidential Country Files for Middle East and South Asia, Box 13, Iran—State Department Telegrams from SECSTATE–NODIS (1). Secret; Immediate; Nodis. Drafted by Enders on November 1. Also sent Immediate to Tehran.
2. The Group of 10 (G–10) industrialized countries consulted and cooperated on economic, monetary, and financial matters. The members were Belgium, Canada, France, West Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom, and the United States. The group was established when the original 10 members, which did not include Switzerland, agreed in 1962 to participate in the General Arrangements to Borrow (GAB), a supplementary borrowing facility to the IMF. Switzerland joined the group in 1964 but the name remained the Group of 10.
3. See Document 12.
4. Indexing the price of oil to inflation.