140. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter 1

SUBJECT

  • Letter from Ambassador West

Attached is a letter from Ambassador West.2 Unfortunately, due to the long transmission time by pouch from Saudi Arabia, his report on talks with the Saudis about Geneva and oil prices has largely been overtaken by events.

Both Saudi Arabia and Iran have continued to honor their commitment to a price freeze at the OPEC meeting on December 20, and this has had the effect of forcing Venezuela and others to lower their sights somewhat. The price “hawks” are now talking only of a price increase between five and ten percent, as compared to estimates which ranged upward from ten percent. Nevertheless, some hard bargaining is now going on among the OPEC states, and as Ambassador West observes, there is little support for any continuation of the two-tier price system which emerged at Doha a year ago. Both Saudi Arabia and Iran have made it clear that they will insist on a consensus position at Caracas; and if the Saudis are unwilling to use their production leverage, as Ambassador West indicates, then the chances are great that the final outcome will be a compromise involving at least some price increase.

Our démarches on oil prices to industrialized and LDC states3 have generally been received with total agreement, but there is little evidence that any of these states are willing to jeopardize their relations with the oil producers by making strong representations in the OPEC capitals. Instead, they seem to be content to let the United States do the talking, while they applaud quietly from the sidelines. For our part, the range of further initiatives available to us at this stage is very limited; our views are well known, and if we overdo it in the remaining three weeks before Caracas we could undercut the solid achievements we have made thus far. One exception is Ambassador Vaky’s suggestion that you call President Perez prior to the OPEC meeting. We will be sending you a recommendation for the timing and substance of such a call in the near future.

  1. Source: Carter Library, White House Central Files, Subject File, Box TA–26, Trade. Confidential. Sent for information. The President initialed the memorandum.
  2. Attached but not printed.
  3. See footnote 6, Document 136.