225. Memorandum From Henry Owen of the National Security Council Staff to President Carter1
- Saudi Arabian Decision
The Saudi decision to increase production could, if maintained, go far to right the present imbalance between supply and demand. That decision owes something to the letter that you sent the Saudi government before Tokyo saying what you hoped to accomplish at the Summit,2 to the OPEC excesses at Geneva,3 and to what Dick Cooper (who visited there after Tokyo) says was the Saudis’ pleasure at what the Summit actually achieved. Bob Strauss also had a feeling that Tokyo was a factor in the Saudi decision. This leads me to the following suggestions:
1. We should claim some credit in the US for this decision, indicating that it is partly a result of your success at Tokyo in activating energy conservation and production as the Saudis have long urged. The Saudi decision would not have been made if Tokyo had failed.
2. We should underline to our own people the lesson: Efforts by the industrial countries to reduce oil demand can pay off; further efforts are needed if the temporary Saudi decision is to be extended.
3. We should make clear to the Saudis that we understand the message they have sent us. The best way to do this is to press ahead with effective Tokyo follow-up—not just in the US but in cooperation with the other main industrial countries, and make sure that this is known to the Saudis and other OPEC countries. And we should continue, in our public statements, to single out moderate OPEC countries for praise, as you did at Tokyo, and avoid indiscriminate attacks on all Arab or oil-exporting countries.
In these different ways, we can build on the Saudi decision to create a healthy awareness in both the US and Saudi Arabia that sensible energy policies by both sides can be mutually reinforcing. This awareness will make each side more likely to do the right thing—and should earn the Administration some credit at home for having followed sensible policies at Tokyo to this end.