Foreign Relations of the United States, 1969–1976, Volume XXXVII, Energy Crisis, 1974–1980

213. Memorandum by the President’s Assistant for National Security Affairs (Brzezinski)¹

Washington, June 1, 1979.

MEMORANDUM FOR

• The Secretary of State
• The Secretary of the Treasury
• United States Permanent Representative to the United Nations
• Director, International Communications Agency

SUBJECT

• Mobilizing LDC Pressure Against Oil Price Increases

The President wishes to stimulate more effective pressure by both the developing nations and industrial countries against further oil price increases.² He asks that you take appropriate steps, especially during the period before the June 26 OPEC meeting, to develop official and public awareness in all countries of the economic costs to poor countries of radical oil price increases. Such steps may include diplomatic discussions with officials of LDC, OPEC and IEA governments, public statements in speeches and press conferences, and encouragement of similar efforts by governments of other consumer countries.

Attached is a brief background paper which may be drawn upon for these purposes.

Zbigniew Brzezinski

Attachment ³

Oil Price Impact on LDCs

Oil price increases again are postponing hopes for economic progress by oil-importing LDCs. A further price increase when the OPEC oil ministers meet June 26 will deepen the distress of a majority of the world’s nations.

Soaring oil prices—already more than 30% above December 1978 levels—have hit LDCs three ways:

Directly, adding $2 billion on an annual basis to the aggregate LDC foreign exchange deficit.

Indirectly, adding about $4 billion to their annual foreign exchange deficits by aggravating inflation globally and thus raising prices of all other goods LDCs must import and by reducing global economic growth and consequent demand for LDC exports.

Bigger current account deficits will require LDCs to go deeper into debt or cut back on investment and consumption.

The inflationary impact of oil prices on LDCs has been particularly disheartening. In each of the last three years, LDCs as a group had gained in their battles against inflation. Now the resumption of radical oil price rises is reversing that hopeful trend.

The impact of OPEC price increases on LDCs is more severe now than in 1973–74 because modernization has greatly increased their dependence on oil imports.

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 48, Oil, 3–6/79. Secret.
2. On May 30, the President sent a note to Brzezinski that reads: “Re OPEC price increases effect on LDCs. We should organize a PR campaign about this with help of Andy and others. Do so.” (Ibid.)
3. No classification marking.