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

237. Memorandum of Conversation¹

Washington, September 29, 1979, 10:15–11:30 a.m.

SUBJECT

• International Issues and Energy

PARTICIPANTS

• U.S.
• The President
• The Vice President
• Secretary Vance
• Secretary Duncan
• Dr. Brzezinski
• Mr. Eizenstat
• Assistant Secretary Jules Katz
• Assistant Secretary Viron Vaky
• Robert Krueger, Amb at Large-Des.
• Ambassador Patrick Lucey
• Ambassador Henry Owen
• Jerry Schecter, NSC Staff
• Guy F. Erb, NSC Staff
• Bob Pastor, NSC Staff
• Everett Briggs, State
• Mexico
• President Lopez Portillo
• Jorge Castaneda, Secretary of Foreign Relations
• Jorge de la Vega Dominguez, Secretary of Commerce
• Jose Andres Oteyza, Secretary of Patrimony and Industrial Development
• Alfonso de Rosenzweig Diaz, Under Secretary for Foreign Relations
• Jorge Diaz Serrano, Director of PEMEX
• General Miguel A. Godinez Bravo, Chief of Staff, Pres. Gen. Staff
• Rafael Izquierdo, Advisor to the President
• Jose Antonio Ugarte, Advisor to the President
• Dr. Robert Casillas Hernandez, Private Secretary to the President
• Rosa Luz Alegria, Under Secretary for National Planning and Budget
• Andres Rozenthal Gutman, Director General of North American Affairs, Secretariat of Foreign Relations
• Hugo Margain, Mexican Ambassador to the United States
• Jose Ramon Lopez Portillo, Director of Analysis, Secretariat of Programming and Budget
• Abel Garrido, Director of Bilateral Trade Relations, Ministry of Commerce

Saturday morning

President Carter said he had enjoyed the dinner and that the toasts and comments showed our publics that we are working well together.²

President Lopez Portillo agreed. He lamented the impression that had been given of the last meeting.³ The spirit had always been as it was today. He was very glad of that.

President Carter said he had looked into Lopez Portillo’s U.N. speech and his proposal for a UN Working Group,⁴ which he found to be promising. It would be advisable if the two Secretaries of State quietly kept each other informed on this matter. We would confine our public remarks to the joint positions that they reach.

President Carter said that the United States would continue to support energy development in developing countries through the World Bank and bilateral programs. At the Tokyo Summit, we and others had resolved to limit to the maximum degree possible the future imports of oil. Actions which he had taken alone and with the Congress would reduce our otherwise likely imports by four million barrels a day by 1985. Additional measures now awaiting Congressional approval would reduce our demand for oil imports by another 4 million barrels a day by 1990. With your permission, Secretary Duncan would describe briefly the presentation that he made in Paris.

Secretary Duncan described the Paris meeting of the seven Energy Ministers of the Summit countries.⁵ The meeting had opened with a determination that world oil supply and demand were in a fragile balance, but for several reasons there existed a possibility of supply interruptions. The situation seemed to be set for 1980, but that could be affected by economic changes or by political events or disruptions. In the medium and long term the fact that the system would continue to be fragile drove the need for conservation measures and constraints on imports.

Duncan then discussed the measures that had been taken since the Summit to reduce reliance on oil imports. The main questions had been what the members of the European Community would agree to as their individual targets for 1979 and 1985. They had agreed to 472 million tons, approximately 9.5 million b/d, as the ceiling for EC members in 1980. The figure of 472 million tons compared favorably to EC imports in 1979, which were projected at 515 million tons. All nine EC countries had accepted the necessity of adopting national targets and the four Summit countries in the EC had already made national commitments. Japan had accepted a range but the Japanese Energy Minister had said at the meeting and at a press conference that he would try to achieve the lower end of the range, that is 6.3 million barrels per day. Secretary Duncan also mentioned the 1980 U.S. import commitment of 8.5 million b/d and the 1979 target of 8.2 million b/d a day.

In Paris, Duncan said, they had also discussed a crude oil transaction register. It would record transactions in the crude oil market and make them public on a monthly basis. There was also a discussion of energy technology and how to communicate that technology. Improvements would be sought in the exploitation of coal, nuclear power, with an emphasis on safety, and alternative sources of fuel. Conservation was also emphasized. There had been considerable interest in the President’s energy program. With the President’s approval Secretary Duncan gave a fact sheet to Secretary Castaneda.

President Carter thanked Secretary Duncan. To summarize, the President said, all of us realized that we had been using, wasting, and importing too much oil. All agreed that despite economic growth, imports would not increase through 1985 and then would be reduced through the use of alternate sources of energy. To help maintain stable supply and stable prices we were eager to share our technology with developing countries and provide or help provide finance for exploration. He understood that these goals were compatible with Lopez Portillo’s.

President Lopez Portillo said yes, he was not saying anything new, only that there would be serious and grave consequences if there were no action. He believed that, put together, the Tokyo Summit ideas and President Carter’s energy programs were close to his U.N. proposals. But there were certain considerations that he would like to raise. The Tokyo Summit countries were trying to reduce their dependence by controlling demand. There were two problems with that approach.

If bloc policies were followed, said Lopez Portillo, then the producers would cartelize supply; they would look for balance in the market and for an advantageous situation in the world economy. Therefore, reliance on blocs was ill advised. Bloc bargaining added great danger. During the period in which we try to control demand we ran the risk of a recession because a cut in demand would reduce economic growth. A reduction in demand would cause OPEC to reduce supply and upward pressure on prices thus would continue. The position of developing-country oil importers would become even more serious. They would be cut by a scissors: the price of petroleum would rise while a recession affected their exports. This would be very unfavorable for the developing countries.

That is why President Carter’s energy program for the U.S. was interesting. What you had proposed for the United States was close to what should be approved by the entire world. We could not act on isolated parts of the whole problem. For this reason we supported your plan. President Lopez Portillo had reservations about the Tokyo results and but he hoped that reason would prevail and that energy would be taken up in a global forum.

Lopez Portillo said that there were dangers of misunderstanding. An OPEC country had already said that Mexico’s proposal had been thought up as a means of dividing OPEC. He had foreseen that this would happen and for that reason had said that the United Nations is the place in which to raise the problem. Mexico’s position was separate from the producer and consumer positions. He believed, however, that it was the correct view. He viewed the Tokyo Declaration with sympathy, but it had the dangers to which he had referred. However, the Tokyo meeting indicated that there was a trend toward order which gave him hope that it would be possible to negotiate.

President Carter said he recognized the concerns of Lopez Portillo. We were making every effort to avoid creating a recession. Our principal emphasis was on conservation and elimination of waste. Our second effort was to produce oil and gas more efficiently from existing fields and with advanced techniques for recovery. We wished to use other forms of energy which were plentiful; that is shale, coal and solar energy, as well as increase the ability of developing countries to find energy resources. We were eager to share our superior technology with all other nations and were making some progress.

[Omitted here is discussion unrelated to energy.]

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 37, Memoranda of Conversation: President, 7/79–9/79. Confidential. Drafted by Erb on October 3. The meeting was held in the Cabinet Room of the White House. The full text of this memorandum of conversation is scheduled for publication in Foreign Relations, 1977–1980, volume XXIII, Mexico, Cuba, and the Caribbean.
2. For text of the toasts at the dinner on the evening of September 28, see Public Papers of the Presidents of the United States: Jimmy Carter, 1979, pp. 1781–1784.
3. Reference is to their February 15 meeting in Mexico City; see Document 190.
4. See footnote 5, Document 236.
5. See Document 235.