17. Telegram From the Department of State to the Embassy in West Germany1

249878. Subject: Letter to Chancellor Schmidt. For the Ambassador.

1. Please deliver the following letter from the Secretary to Chancellor Schmidt, and only repeat only to the Chancellor, the morning of Wednesday, November 13, pointing out that the Secretary hopes for an early reply.

2. Begin text: Dear Mr. Chancellor: President Ford has asked me to give you our views on the next stage of cooperative efforts to deal with the current oil crisis. I should emphasize that these views are being passed only to you, and have been communicated to no other officials outside the US Government.

3. From our discussions in July,2 I know you share our concern over the corrosive effect that strains emanating from the oil crisis can have on the strength of the Western democracies and the Alliance. You have contributed significantly to efforts beginning with the Washington Energy Conference to build the unity of purpose among the [Page 73] major Western powers which is necessary to deal with this threat. Foreign Minister Genscher and Finance Minister Apel have helped carry forward this effort in the Washington meetings in September.

4. In more recent discussions in Bonn, US representatives have reviewed the evolving strategy for consumer country cooperation with State Secretary Poehl, who will have reported these discussions to you.3 I want to raise with you two elements of this strategy in particular, financial solidarity and the organization of further discussions.

5. As you have stressed, financial cooperation is essential. We both realize that the US and the Federal Republic would be net providers of finance to any new recycling facility. That, of course, will mean persuading a potentially reluctant Congress and Bundestag. The President has, however, come to the conclusion that the US—and almost surely the Federal Republic—would be compelled to provide as much or more financing to the weaker economies bilaterally if we have no new facility. A suitably large facility would have such an effect on confidence in the financial system and the creditworthiness of participating governments that the eventual requirement for official financing would be reduced from what it otherwise would be. The Federal Republic should also find considerable advantage in having the strong economies of the US, Canada, and Japan join with it in a general consumer country facility rather than relying only on a European recycling system in which the Federal Republic alone is linked with most of the prospective net borrowers.

6. We see financial cooperation as an essential supportive element of a broader cooperative strategy. If all countries, the weak and the strong, are to stick together in a program of energy sharing in emergencies, conservation, and research and development of new non-OPEC energy supplies, some will require financial support. Assuming that the stronger economies cannot count on remaining islands of stability, it would appear in our interest to provide this support. If a consumer country recycling facility is to serve its purpose, I believe it should be convincingly sufficient to meet all contingencies. We intend to propose a $25 billion facility of callable commitments for 1975.

7. Regarding further international discussions, I feel that the meetings of the Five have now progressed to the stage where the proposals they have considered and developed should be presented to a broader group of industrial countries. We suggest that we develop the programs on conservation and new supplies in the International Energy Agency and the recycling proposal in the Group of Ten. I also in[Page 74]tend to propose a January meeting of participating countries in these efforts, at the Ministerial level, to take the political decisions to put both into effect. Such a meeting of Ministers could conveniently convene in Washington in mid January just prior to the meeting of the IMF’s Interim Committee of Governors.

8. We all will have political problems with a program of the magnitude we propose, but the magnitude is a reflection of the problem we face. In both our countries we will undoubtedly encounter critics who find it momentarily cheaper and safer to wait for miracles. But I suspect that you share my view that the oil price is not coming down now on its own and will not come down later unless we act now to create the objective conditions that will eventually accomplish this.

9. President Ford has asked me to advance some of these proposals in a speech I am giving November 14 in Chicago.4 At that time I also intend to say that we will attend a producer/consumer meeting, while stating that such a meeting should await action by consumers on the cooperative program we have begun.

10. We hope that you can support these suggestions which were in part generated by the concerns you expressed in June. If you have any urgent views prior to my speech we would be glad to consider them.

11. Warm regards, Henry A. Kissinger. End text.5

  1. Source: Ford Library, National Security Adviser, Presidential Country Files for Europe and Canada, Box 6, Germany—State Department Telegrams from SECSTATE–NODIS (1). Confidential; Niact; Immediate; Nodis. Drafted by Enders and Paul H. Boeker (EB/IFD), cleared in EUR, and approved by Kissinger.
  2. Kissinger is presumably referring to his visit to Germany July 6–8 to brief West German officials on the Moscow Summit.
  3. According to telegram 14398 from Tokyo, November 6, Enders and Cooper were scheduled to meet with Poehl and Lautenschlager on the morning of November 8 in Bonn before returning to the United States. (National Archives, RG 59, Central Foreign Policy Files, D740318–0715) No other record of the meeting has been found.
  4. In the speech that he gave in Chicago on November 14 before a University of Chicago Board of Trustees banquet, Kissinger provided a “Blueprint for Consumer Cooperation” in which the consuming countries “must act in five interrelated areas”: 1) accelerating “our national programs of energy conservation” and coordinating them “to insure their effectiveness”; 2) pressing on with the “development of new supplies of oil and alternative sources of energy”; 3) strengthening “economic security—to protect against oil emergencies and to safeguard the international financial system”; 4) assisting the “poor nations whose hopes and efforts for progress have been cruelly blunted by the oil price rises of the past year”; and 5) entering into a “dialogue with the producers to establish a fair and durable long-term relationship” on the “basis of consumer solidarity.” For the text of the speech, see Department of State Bulletin, December 2, 1974, pp. 749–756.
  5. According to telegram 17793 from Bonn, November 13, Schmidt told Deputy Chief of Mission Frank E. Cash that because he had not had time to consult with his Cabinet, he could not “do much more than give off-the-cuff reaction” to Kissinger’s letter. The Chancellor believed that the proposal for a January meeting would lead to a “confrontation with the French” and, therefore, was “not a good idea,” adding that Giscard’s proposal was “not unnecessary.” On financing, Schmidt was “not quite sure” that West Germany “would be compelled to provide financing to degree indicated” in Kissinger’s letter and that public mention of the “big fund” project discussed in both the G–5 and the Library Group forums would put his country in a “very difficult spot.” Finally, he “fully agreed” on the “necessity of sticking together in energy sharing, conservation, and research and development of new non-OPEC energy supplies” and that, if the industrialized powers could not achieve “essential cooperation” on energy, the consequences would be “very bad.” (Ford Library, National Security Adviser, Presidential Country Files for Europe and Canada, Box 6, Germany—State Department Telegrams from SECSTATE–NODIS (1))