21. Telegram From the Embassy in France to the Department of State1
27637. Subject: US-French Energy Relations.
1. Summary: We recommend that USG propose tradeoff to GOF on current energy issues which would balance US acceptance in principle of producer-consumer conference in mid 1975 against GOF acceptance of close preparation for such conference within IEA, and support for US recycling proposal.2 Consultations should begin soonest if this [Page 82] agreement to be formally reached, as it best would be, by two Presidents at Martinique. End summary.
2. While initial French reaction to Secretary Kissinger’s speech3 has been to downplay differences between US and French positions, it appears clear to us and undoubtedly to GOF that serious differences remain over tactics and timing for a future oil conference. French efforts to convince other invitees to accept GOF ideas for such a conference may now run into stiffer resistance as result of USG reaction, and may cause rift among EC members.
3. We believe French are unlikely to abandon conference idea readily. This is not solely because of pride or because Giscard’s opponents from both ends of political spectrum would jump on him for bowing to American pressure, but also because GOF firmly believes that dialogue with producers is required and should start as soon as possible; French balance of payments situation is such that GOF cannot afford new oil price increases while negotiating situation ripens. We believe however that French would be prepared to be flexible on timing if they were to know that oil negotiations would indeed take place before too long.
4. As seen from Paris, a USG–GOF clash over this issue would not be in our interest. It would prevent any real success at Martinique and would probably usher in a period of embittered relations with the new French Government. More importantly, it would split Europe on an issue which as we see it most European governments would rather see bridged over, and would also divert the EC from taking those joint energy policy steps—setting goals for reduced oil consumption and increased energy production—which are basically supportive of our goals in the IEA. Finally, it would probably provoke a French reversion to an aggressively independent energy policy and because of France’s key role in the EC, energy cooperation among consuming countries will continue to be much more workable with than without France.
5. We believe that a US–GOF confrontation can be avoided, and that we have the elements of a compromise which can both strengthen the consumer cooperation in IEA and ease French fears that the US intends to use the IEA to prepare for a confrontation with the oil producers. The settlement we propose could be struck at Martinique in a way which moreover could open the way to more cooperative and productive US–French relations. Our proposal would consist essentially of trading US agreement in principle to the holding of a producer-consumer conference (possibly during the summer of 1975) against French agreement to cooperate and consult fully with the members of [Page 83] the IEA in preparing a common consumer position for such a conference, and to support our recycling proposal. Such an exchange would give Giscard the conference he wants—but only after a reasonable delay in which the consumer position could be further consolidated. In return, France would have to associate itself much more closely with the formulation of that consumer position within the IEA and, if possible, commit itself to joining the IEA in due process.
6. To reach this objective, preparation through high-level discussions with the GOF must begin immediately. Giscard has put the question of EC support for French conference proposal on the agenda of the EC Summit which will probably take place December 9–10. It is essential that we have at least a tacit understanding with GOF and adequate consultations with our major IEA partners before that date if we are to avoid a harmful clash between France and the EC 8, or to bring this proposed deal to a conclusion at Martinique. If the Department agrees with this proposal, I recommend that the process of consultation begin without delay.