62. Telegram From the Department of State to Selected Diplomatic Posts1

110686. Subject: Secretary’s Speech on Energy and Raw Materials.

1. In speech scheduled for delivery in Kansas City May 13,2 Secretary will state US readiness to attend new meeting of energy producer-consumer prepcon, and to initiate bilateral consultations IEA countries, France and producers to this purpose. Speech will set forward US ideas on ways to begin serious discussion of raw materials/commodity problems which we hope will constitute basis for progress toward meeting concerns of many LDC’s as developed at first Prepcon in Paris last month. Text follows septel.

2. Proposals involve three main elements, which will be presented in speech along following lines:

—First, since both producers and consumers want a more reliable basis on which to do business, we will propose that the multilateral trade negotiations now underway in Geneva develop new rules and procedures on such questions as freer access to supplies and markets, promotion of mining and processing industries in these countries, and settlement of disputes.

—Secondly, we are prepared to consider and discuss whether circumstances warrant new arrangements in individual commodities, on a case-by-case basis.

—Thirdly, recognizing the importance of growth in raw material production to both producers and consumers, we will propose that the World Bank explore new ways of financing raw material investment in producing countries. We are particularly interested in exploring new ways of mobilizing capital and bringing it together with outside management and skills.

3. We believe successful dialogue along these lines could be best developed by making maximum use of existing multilateral fora (e.g., MTN’s, existing commodity groups within UNCTAD framework, and [Page 221] IBRD). We have open mind about whether these institutions should be seized directly with joint initiatives from interested countries involved in producer-consumer prepcon or whether it would be preferable for prepcon to agree to present these and related proposals to a broader producer-consumer conference which would then discuss a more fully developed scenario for further negotiations in other forums. While we believe former scenario likely result in getting serious discussion started earlier, we would wish to have views of our partners in IEA and P/C prepcon group before deciding on one or the other.

4. You should seek early opportunity to discuss these proposals and procedural options (per para 3 above) with appropriate officials in host government. We will raise directly with Shah during his visit here this week.3

5. For IEA countries: Please notify all governments of Secretary’s statement. Secretary will want to discuss the best tactics for pursuing reopening of P/C dialogue along above lines during IEA Ministerial May 27. However, earlier indication of ideas from member countries would be welcome.

6. For Brussels: Notify Davignon ASAP.

7. For Paris: French Embassy already notified. You should follow up.

8. For Riyadh: Notify Yamani ASAP.

  1. Source: National Archives, RG 59, Central Foreign Policy Files, D750166–0231. Confidential; Immediate. Drafted and approved by Dennis H. Kux (NEA/INS). Sent to Algiers, Ankara, Bern, Bonn, Brussels, Caracas, Colombo, Copenhagen, Dublin, USEC Brussels, Jidda, Kinshasa, London, Luxembourg, Madrid, New Delhi, Oslo, Ottawa, Paris, Rome, Stockholm, Tehran, The Hague, Tokyo, Vienna, Wellington, Brasilia, and USOECD Paris. The telegram is incorrectly dated May 22 (221912Z May 1975).
  2. The text of the speech, delivered to the Kansas City International Relations Council in Kansas City, Missouri, is in Department of State Bulletin, June 2, 1975, pp. 713–719.
  3. The Shah visited the United States May 15–18. He met with Ford on May 16 and told him: “The influence of oil on Western inflation is 2 percent—this is your figure. Industrial inflation was 14 percent but the prices to us have gone up 35 percent. But we must have some kind of agreement, based on some tangible predictable relationship. We must index, or any other proposal which keeps our purchasing power intact. Perhaps indexing to 20–30 commodities, although that might be difficult.” He added: “My argument in Algiers was that we have to depend on the commodity trade. But what happens to the Third World, with oil and industrial prices going up? What can we do? The Saudis will follow us—they will always be a moderating element. Between us we can do something interesting. That will give us time for reconvening the Prepcon.” Ford did not directly respond to the Shah’s remarks but instead asked how much oil Iran produced. (Ford Library, National Security Adviser, Memoranda of Conversations, Box 11) The memorandum of conversation is printed in Foreign Relations, 1969–1976, volume XXVII, Iran; Iraq, 1973–1976, Document 127.