266. Telegram From the Department of State to the Embassies in France, the United Kingdom, Italy, West Germany, Japan, and Canada1
85839. Subject: Venice Summit: Energy Preparatory Meeting.
1. Summary. The Energy Preparatory Meeting chaired in Germany by Engelmann (FRG) on March 26–27, agreed that the oil market outlook was serious (although the UK remains skeptical) and that the Venice Summit should focus on longer term (1990), but delegations differed significantly on specific actions to be taken. The United States was represented by Fried (NSC), Treat (DOE), and Pickering (State). The FRG and the UK opposed quantified objectives, preferring general although strengthened commitments to additional policy measures and monitoring of results. After a year or so experience, they argued, the base might exist to establish 1990 goals. However, neither excluded some quantification as a possible compromise. Canada, Japan, and Italy all expressed some support for quantified objectives if limited to two or three aggregate targets, e.g., oil consumption, non-oil supply, energy/GNP ratio. Only France indicated strong support for the U.S. position, which called for sectoral oil consumption goals and targets for coal, synthetics, and nuclear power. In spite of FRG and UK opposition, strong U.S. advocacy of quantified objectives resulted in clear majority for at least some quantification. Energy group will meet again May 25–26 in Rome to complete preparations for the Summit. End summary.
2. Summit Objectives. All delegations agreed that short and medium term (1981, 1985) should be the subject of the IEA Ministerial, with the Venice Summit focussing on the longer term. All delegations agreed that the oil market outlook was pessimistic, although UK (Jones), citing a recent OECD study (“Shriner Report”) insisted that a soft market was still a possibility in 1990. Chairman Engelmann outlined his intention to redraft his discussion paper for eventual presentation at the April preparatory meeting in Sardinia, but agreed at U.S. insistence to attach U.S. draft communiqué containing quantitative projections. Delegations were invited to submit latest 1990 forecasts by April 2 so that Engelmann could disseminate second draft by April 4. Energy group will convene again May 25–26 in Rome, following IEA Ministerial, to complete draft communiqué. At that meeting, IEA Exec [Page 840] utive Director Lantzke will provide a report on the progress made in implementing the decisions taken at the Bonn and Tokyo Summits, fulfilling commitment to monitor results.
3. Oil Consumption Objectives. U.S. pushed hard for reduced consumption targets for major sectors (utility, residential/commercial, industry, and transport). Only the French indicated support for this approach. FRG and UK strongly opposed quantified sectoral targets, citing lack of credibility of previous targets and inadequate time for analysis of appropriate consumption levels. Canada, Japan, and Italy took middle ground, supporting concept of some quantified objectives for oil consumption, but not accepting need for targets in each sector. FRG and UK left door open for possible compromise, with Engelmann agreeing to present options in his redrafted backup paper.
4. Coal. All delegations supported strong statement on doubling the use and production of coal, although Canada insists on an equally strong statement on protecting the environment. UK urged consultation with non-Summit countries, particularly Australia, at IEA Ministerial to avoid any misunderstanding.
5. Synthetics. All delegations agreed Summit should endorse IETG report, but U.S. proposal to set 2 MMB/D goal for synthetics production in 1990 met widespread opposition. Delegations also concluded the work should go forward in OECD/IEA on developing new energy technologies and constructing demonstration plants. FRG and UK were particularly vehement in opposing establishment of 1990 targets on grounds (ostensibly) that such a decision went beyond the hard-fought IETG compromise on a two-phase approach and would be “revising” the report only days after its adoption. U.S. argued that while IETG report did not have quantitative goals, it was within the province of Ministers or Heads of Government to react to the report by setting goals.
6. Nuclear Energy. With the exception of objections by the FRG and the UK to the idea of quantified objectives for 1990, there was a general agreement that, in the nuclear energy area, increased efforts should be made to develop nuclear power. In doing so, account should be taken of the requirement to improve health and safety protection and to undertake programs to demonstrate the safe storage and disposal of nuclear waste. Germany proposed, as did the U.S. draft communiqué, that special account be taken of the work of INFCE and that the IAEA be the center for future cooperative works. Japan proposed more support for reprocessing and the creation of a nuclear energy pressure group, but did not receive support. France, and to a lesser extent Canada and Japan, supported the U.S. proposal for quantitative targets.
7. LDC Energy Production. U.S. proposal for considering establishment of a new energy development facility affiliated with the [Page 841] World Bank received sympathetic hearing from all delegations. While other delegations stressed need to consult in capitals with Finance Ministries, all indicated strong support for additional action to encourage primary energy production in LDCs and indicated interest in specific U.S. proposal on conditions that OPEC surplus countries would participate. In addition to briefing by World Bank (Chardenet) on status of its energy program, group focussed extensively on tactics of presentation. Strong desire to win OPEC financial support translated into differing views on appropriate form of Summit action. FRG and others initially counselled slow approach, suggesting no new initiative should be presented at Summit, but should wait for progress in the UN global negotiations. However most other delegations joined U.S. in favoring Summit action in June. Engelmann agreed that issue would be discussed again at May meeting.
8. Relations With Producers. No delegations expressed expectation of imminent breakthrough in prospects for producer/consumer dialogue. Group generally accepted U.S. draft language for communiqué, but preferred to omit specific reference to price and supply as potentially dangerous. All considered this area as troubling and most expressed perplexity as to what should be done.
- Source: National Archives, RG 59, Central Foreign Policy Files, D800165–0421. Confidential. Drafted by Treat; cleared by Treat, Fried, and Pickering; and approved by Pickering.↩