176. Telegram From the White House to the Embassies in Saudi Arabia, Iran, and Venezuela1

WH81609. Subject: Presidential Message: OPEC Meeting.

1. Embassy is instructed to arrange the earliest feasible delivery of the following message from President Carter to, respectively, King Khalid, or the Shah, or President Perez, with a view to inducing instructions compatible with this message to their delegates to the OPEC meeting:

2. Text: (appropriate salutation)

“I have heard a number of reports that the OPEC nations may decide, at their forthcoming meeting in Abu Dhabi this Saturday, on an oil price increase that would average around 10 percent for 1979. I am deeply disturbed by these reports, because I believe that an increase of this magnitude would be highly disruptive and damaging to the world [Page 567] economy, affecting not only my own efforts to stabilize the U.S. economy and strengthen the dollar but your country’s economic interests as well. I would stress in particular that the international monetary system is at an extremely delicate stage, in which the United States, in cooperation with other major industrial nations, has committed itself not only to utilize massive foreign exchange resources but to undertake difficult domestic stabilization measures in an effort to restore and maintain world monetary order. The shock of a large oil price increase would seriously jeopardize this effort, in whose success you have a large stake.

“It is for these reasons that I am expressing to you, personally and directly, my strong hope that any oil price increase in 1979 will be extremely moderate, and that delegates to the OPEC meeting will exert their best efforts to this end.”2 (complimentary close) Jimmy Carter

(End text)3

3. Report transmittal and response.4

  1. Source: Carter Library, National Security Affairs, Brzezinski Material, President’s Correspondence with Foreign Leaders File, Box 21, Venezuela: President Carlos Andres Pérez, 6/78–3/79. Confidential; Exdis; Flash.
  2. On December 17, OPEC members announced their agreement to increase oil prices by quarterly increments in 1979, such that the weighted average for the year would total nearly 10 percent. The Embassy in Abu Dhabi, where the meeting was held, reported: “Decision reflects compromise between moderates who started out at zero and others who pressed for increases of up to 20 percent. Supply shortage caused by Iranian situation as well as impact of inflation and past weakening of dollar were stated to be principal factors which prevented moderates from holding price increase to more modest level. Adoption of quarterly incremental increases poses problems for future since it could set pattern for OPEC pricing which will be very difficult to stop.” (Telegram 3293 from Abu Dhabi, December 17; National Archives, RG 59, Central Foreign Policy Files, D780535–0534)
  3. Poats sent a memorandum to Brzezinski on December 18, in which he wrote: “The White House used my revised press release expressing hope that OPEC will reconsider before the next steps take effect. We need to follow up officially and confidentially on this. Lonely US protests are not likely to avail much. For the first time, Japan and Germany may be willing now to consider joint approaches to Saudi Arabia because they may no longer enjoy oil price insulation due to dollar depreciation. Our best hope is to get high Saudi production along with resumed full production by Iran, creating a glut that leads to price-shaving by the OPEC hawks before the June OPEC meeting.” (Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 48, Oil: 8/78–2/79) The December 17 White House press release is printed in Public Papers of the Presidents of the United States: Jimmy Carter, 1978, p. 2271.
  4. King Khalid replied: “When the Kingdom sensed that the OPEC states, under pressure of economic conditions, sought a large increase in petroleum prices, the Kingdom did its best in order to have that increase made in steps and within very reasonable limits so that its total would not exceed (10 percent) from the beginning of 1979 and so that it would not harm the world economy. Your Excellency is well aware of the efforts in this direction exerted by the Kingdom.” He added: “In order to avoid continuing rises we hope that you will continue your efforts towards raising the value of the dollar and reducing or stabilizing the price of manufactured materials. These steps will restore economic balance so that there will be no justification for raising petroleum prices in the future.” (Telegram 8857 from Jidda, December 18; National Archives, RG 59, Central Foreign Policy Files, D780522–1020)