Office of the Historian

186. Summary of Conclusions of Policy Review Committee Meeting1

Washington, February 6, 1979, 4:10–5:30 p.m.

SUBJECT

  • U.S. Policy to Mexico

PARTICIPANTS

  • State
  • Deputy Secretary Warren Christopher
  • Matthew Nimetz, Counselor
  • Jules Katz, Assistant Secretary for Economic and Business Affairs
  • Luigi Einaudi, Staff Director, NSC Interdepartmental Groups
  • Ambassador Patrick Lucey, U.S. Ambassador to Mexico
  • OSD
  • Stanley Resor, Under Secretary of Defense for Policy
  • Treasury
  • Secretary of Treasury Michael Blumenthal
  • C. Fred Bergsten, Assistant Secretary for International Affairs
  • JCS
  • Lt. Gen. William Smith, Assistant to the Chairman, JCS
  • Energy
  • Secretary of Energy James Schlesinger
  • Les Goldman, Deputy Asst. Secretary for Policy and Evaluation
  • Richard Smith, Director of Office Coordination
  • CIA
  • Admiral Turner, Director of Central Intelligence
  • Hans Heymann, National Intelligence Officer for Political Economy
  • OMB
  • James McIntyre, Director of OMB
  • Domestic Policy
  • Stu Eizenstat
  • Kitty Schirmer
  • OSTP
  • Ben Huberman
  • NSC
  • Ambassador Henry Owen
  • Robert Pastor
  • Rutherford Poats
  • White House
  • Dr. Brzezinski
  • Rick Inderfurth
[Page 594]

SUMMARY OF CONCLUSIONS

PRC on Mexico

Chaired by Warren Christopher, the PRC met for its third session on PRM-41 (U.S. relations with Mexico)2 and considered three issues: (1) energy relations, including Presidential discussions and U.S. strategy for subsequent negotiation of a gas price formula; (2) organization of the U.S. Government for a more coordinated approach to relations with Mexico, and (3) the general approach to the Presidential visit to Mexico.

Energy. It was agreed that the United States should seek to develop an extensive set of energy relationships with Mexico, designed to increase world energy supply, enhance U.S. energy security, and support rapid but stable Mexican economic and social development. The President’s visit is critical to establishing a more positive political climate for negotiations on gas supply and a possible subsequent oil supply agreement. He should sensitively refute Mexican suspicion of U.S. intentions. As a way to improve the atmosphere and place the gas issue in a broader context of energy cooperation, he could suggest: (a) joint studies of potential electric power interchange and gas transmission cooperative arrangements along the common border; (b) U.S. technical consultation and R&D cooperation on solar and geothermal development, enhanced recovery of oil, and uranium processing; and (c) if the Mexicans express interest, support of an accelerated rate of oilfield development through long-term U.S. purchase contracts for the Strategic Petroleum Reserve or the Defense Supply Agency. He should indicate to President Lopez Portillo that we are interested in a long-term arrangement for importing natural gas from Mexico.

It was agreed that the President should outline in general terms the U.S. approach to gas pricing (including the fact that our regulatory agencies must approve any agreement), and elicit Lopez Portillo’s position, but he should avoid a discussion over whether residual oil is the right price yardstick, referring it to the technical experts.3 The President should express interest in completing negotiations early. To do this, the President would designate a representative who will work with one designated by Lopez Portillo to decide on a formula for natural gas pricing that takes into account market conditions, the prices of compa [Page 595] rable products, and the long-term relationship we wish to create with Mexico.

We should seek inclusion in the joint communiqué of agreement to an early specified date for negotiation of the gas price formula. Negotiations between Mexico and the gas companies would proceed only after negotiators of the two governments agreed on standards.

In discussions of oil, the President should welcome Mexican interest in swapping Mexican oil for Alaskan in supplying Japan and the U.S. Gulf Coast, but note that this depends on U.S. Congressional approval. He also should encourage Mexico to increase oil exports to Israel.

[Omitted here are conclusions unrelated to energy.]

  1. Source: Carter Library, National Security Affairs, Staff Material, North/South File, Box 32, Pastor Country Files, Mexico: PRM 41 (Policy, 2–7/79). Confidential. The meeting was held in the White House Situation Room. The agenda paper for this meeting, which Dodson sent to the participants on February 2, is ibid.↩
  2. For PRM 41, see footnote 3, Document 167. The first two PRC meetings were held on December 6, 1978, and January 19, 1979. See footnote 2, Document 170 and footnote 2, Document 184.↩
  3. The Department of Energy’s “Staff Discussion Paper Proposing a U.S. Strategy for Mexican Natural Gas Negotiations,” January 29, is in Carter Library, National Security Affairs, Staff Material, North/South File, Box 32, Pastor Country Files, Mexico: PRM 41 (Policy, 2–7/79).↩