Foreign Relations of the United States, 1969–1976, Volume XXXVIII, Part 2, Organization and Management of Foreign Policy; Public Diplomacy, 1973–1976

169. Action Memorandum From the Under Secretary of State for Security Assistance (Donaldson) and the Director of the Policy Planning Staff (Lord) to Secretary of State Kissinger ¹

Washington, January 4, 1974.

Organization of the United States Government to Carry Out a Successful International Energy Policy

There is an immediate need to establish an effective mechanism to organize our international energy policy. This need has two elements: 1) an interagency coordinating mechanism, and 2) providing the necessary support of this effort within State.

The present ad hoc arrangement for dealing with your Energy Action Group proposal and broader international energy policy issues are not adequate over the longer term.² Under the informal arrangements of a Donaldson-chaired Interagency Group reporting to the Simon-led Emergency Energy Group,³ there is the likelihood that broad foreign policy goals might be short-shrifted.

FEO has been moving to preempt this field with both Executive Orders and proposed legislation.⁴ But the issue goes beyond the area of responsibility of the FEO and must include monetary and trade problems (Treasury) and nuclear energy (AEC) among others.

The proposals below are for immediate action to deal with decisions which are pending. Further proposals will be made to you to deal with long range issues and the question of legislation.

Inter-Departmental Coordination:

We propose that major international energy policy and implementation be placed within the NSC system at once. To this end we propose that responsibility for the USG action to establish an Energy Action Group and inter-departmental coordination of other major international energy policy issues be handled henceforth in one of two ways:

Option 1:

Establish within the NSC system an International Energy Policy Group, chaired by the Assistant to the President for National Security Affairs, with an Operations Group chaired by Under Secretary Donaldson .

Under this approach, a new NSC group would be established, parallel to such US groups as the Verification Panel, the DPRC, the WSAG, and the Vietnam Special Studies Group. The new group would be at the Deputy Secretary level.

The Operations Group, chaired by the Under Secretary for Security Assistance, would have as its members Deputy Under Secretary or Assistant Secretary level officials. Membership of such a senior NSC Energy Group would include, in addition to State (represented by Donaldson), Treasury, FEO, AEC, CIA, DOD, CIEP, FPC, Interior, and as required other agencies such as NSF. The Senior Group would report to the NSC as do similar NSC groups or perhaps directly to the President. The staff of the Operations Group would be in State as proposed in the following section.

An alternative to the establishment of a new NSC group would be to use the Senior Review Group with an expanded membership as the mechanism to coordinate our international energy policy. Under the SRG a Working Group would be established, chaired by Under Secretary Donaldson, to deal with the day-to-day decision-making on the interagency level. The staff of the Working Group would, however, be located in State.

Option 2:

Entrust responsibility to the NSC Under Secretaries Committee (USC) and form an Interagency Task Force under the auspices of the Committee.

Under this option Under Secretary Donaldson would be given responsibility for chairing an NSC Interagency Task Force at the Deputy Under and Assistant Secretary level to develop policy papers for the US Government and the President, and to provide interdepartmental coordination for the international aspects of energy policy. This Interagency Task Force would be similar to the Law of the Sea mechanism which has already been established.

Discussion:

Option 1—The formation of a new NSC body—is the approach followed by you in the past in staffing major new policy areas through the NSC. You personally would chair the new senior group. Even though meetings of the senior group would be limited, the new arrangement would make clear organizationally your direct and continuous personal involvement. Formation of a new group would also be in line with the somewhat different composition and orientation of the group as compared with other NSC bodies—the relatively greater role of Treasury and the AEC and the role of an entirely new agency, the FEO, and the relatively lesser role of DOD and CIA.

Further advantages of this option are:

• 1) It provides for clear lines of authority between the NSC International Energy Policy Group and its subordinate Operations Group;
• 2) it can be very flexible on membership and the establishment of sub groups with different membership; and
• 3) it would be a distinct body exclusively occupied with international energy matters.

Option 2—Use of the Under Secretaries Committee—has the advantage of broad acceptance and direct access to the regularized NSC decision-making process. The Deputy Secretary would be available in his capacity as Chairman of the USC to intercede when necessary in interagency problems. Under Secretary Donaldson, reporting to you, would provide day-to-day direction for both State and the Task Force. Further, early on other interested agencies as noted above should be brought into the work of the USC and the Task Force—particularly the AEC. This will provide for an integrated approach to the international energy question.

We recommend that you choose Option 1.

Department of State Internal Organization:

Within State, we need to move rapidly to establish a central office which can act as the focus for decision making. It should report to Under Secretary Donaldson directly as your principal deputy for energy matters. A precedent for this kind of organization exists in the Law of the Sea Task Force (D/LOS) office which serves as the staff on LOS matters for both the NSC Interagency Task Force and as the Department’s action office on this topic.

There is need, in short, for a strong, competent and coordinated effort to organize our energy policy centered here in State but with the assistance of the other interested agencies. Action on our part here at State is even more imperative since Administrator Simon has acted to establish a strong international office in the new Federal Energy Administration with some 27 professionals—more than we have working on the entire range of energy problems here at State. Pending FEA legislation also gives the new agency strong foreign affairs authority. This effort is being backed up with a strong research and statistical arm which will be the largest and most expert in the US Government. While we do not propose trying to compete with FEA in numbers, we do believe it is necessary that we have a strong staff organization and that there is a central focus for action. Further, given the narrow short-term and oil orientation of the proposed FEA, there is a vital need to keep this initiative within a foreign policy perspective.

One alternative would be to look to the individual bureaus to back-stop this effort. Under this option individual offices would be asked by you to put together the parts of the effort under their area of jurisdiction, perhaps with a coordinating committee to act as an integrator of the parts. We believe this to be an unsatisfactory approach. It does not provide for a day-to-day full time oversight of the entire package across bureau lines, except for Donaldson personally. In any case, it would be necessary to add additional experts and staff to the offices involved if they are to back-stop the EAG initiative in addition to their normal responsibilities.

For these reasons, we propose the following for your consideration:

That immediately you establish within State a temporary Task Force on International Energy Policy. This group would act as both 1) the Staff of the NSC Interagency Task Force or Operations Group to be established by a NSC memorandum, and 2) as the Action office within State to coordinate and develop our international energy policy and backstop our diplomatic initiatives.

The temporary Task Force would be headed by Under Secretary Donaldson but it would have a Staff Director who might also be designated as the Deputy Chairman of the NSC Interagency Task Force, to provide day-to-day supervisory responsibility over the work of the Task Force staff. The staff would consist of the best available individuals from within and without the government. It might draw some of this personnel from the bureaus but this would not be its primary source of slots. The bureaus would continue to perform their regular energy responsibilities and would act as support for the work of the Task Force. (The normal ongoing work on energy now keeps EB and SCI fully occupied.) We should draw upon the best outside experts for some of the key positions, especially since many of the other agencies will not want to spare their best staff.

We should eventually be thinking of a total staff of about 20 professional members. Initially we should program for about ten Departmental professional staff with the necessary secretaries. While the staff would be able to draw upon work of other agencies and bureaus, it will nevertheless, be necessary to integrate this material into a realistic and coordinated package for international discussion and negotiation. Further, the staff should have sufficient depth and knowledge to independently develop initiatives and programs on a wide range of energy fields from coal to nuclear energy. They would also have primary responsibility for coordination with other agencies. As its work load grows so should the staff.

This staff would continue through the EAG meeting and would provide much of the USG substantive input into the international task force which might be established after the first consumer meeting and perhaps after the EAG meeting itself. However, the Task Force would not be a permanent organization.

The Task Force and its staff would be assisted by an Advisory Committee made up of the best experts available. These experts would be used effectively and would be given specific assignments and when used full time paid for their work. Industry officials can be drawn upon informally as needed for information and discussion as they already have been.

We should also give consideration to the establishment of a Special Representative who would report to Under Secretary Donaldson with Ambassadorial rank whose primary function would be negotiation and consultation with foreign governments and international organizations. The Special Representative would be located in State with the Task Force. He might also be designated as the US Representative to the International EAG Task Force developing proposals for the main EAG meeting. (See Tab B for draft memo establishing new Task Force.)⁵

Recommendations:

Interagency Coordination:

Agree, EAG and international energy policy shall be placed in the NSC mechanism with the establishment of a NSC International Energy Policy Group and a Subordinate Operations Group. (At Tab A–1 is a draft NSC memo to be forwarded to the President for his approval.)⁶

Or alternatively, place EAG and related energy matters under the Senior Review Group with a Working Group chaired by Under Secretary Donaldson.

Disagree, prefer Option 2 placing EAG and international energy matters under NSC Under Secretaries Committee with Interagency Task Force chaired by Under Secretary Donaldson. (At Tab A–2 is a draft NSC memo to be forwarded to the President for his approval.)

Disagree, continue with ad hoc mechanism with Donaldson chairing group reporting to Simon-led Energy Emergency Group.

State Coordination:

Agree, establish State Task Force on International Energy Policy chaired by Under Secretary Donaldson. (At Tab B attached Action memo directing the establishment of a State Task Force.)⁷

Disagree, continue basic back-stopping in bureaus with establishment of coordinating Committee under Under Secretary Donaldson and increase in staffing for energy matters.

1. Source: National Archives, RG 59, General Administrative Correspondence Files of the Deputy Under Secretary for Management, 1968–75: Lot 78 D 295, Energy Matters 1973–74. Confidential; Nodis. Drafted by Harry C. Blaney (S/PC). Sent through Deputy Secretary Rush.
2. Kissinger proposed establishment of an International Energy Action Group of oil consumers in a speech to the Pilgrims Society in London on December 12, 1973. Flanigan, following a discussion with Shultz on January 4, proposed to Scowcroft the creation of an ad hoc energy group comprised of representatives from the State and Treasury Departments, CEA, and the Energy Emergency Action Group and chaired by Cooper. Scowcroft related the details to Kissinger in a memorandum the same day and the Secretary concurred. (Ford Library, National Security Adviser, Brent Scowcroft Daily Work Files, Box 5, Chronological File A, January 1–7, 1974)
3. President Nixon announced on December 4, 1973, that he was consolidating the energy resource management functions of the government into one agency with the establishment of the Energy Emergency Action Group under his personal chairmanship. Simon was its Executive Director. He also asked Congress to create a Federal Energy Administration and a Federal Energy Office in the Executive Office of the President. For the text of Nixon’s announcement, see Public Papers: Nixon, 1973, pp. 990–991. John A. Love, the President’s Assistant for Energy Matters, and Charles J. DiBona, the Deputy Assistant, resigned their posts on December 3.
4. The Federal Energy Office (FEO), under Simon’s direction, was created by Executive Order 11748 in anticipation of statutory authority and announced by Nixon on December 4. (Ibid.)
5. Attached but not printed.
6. Tabs A–1 and A–2 are attached but not printed. None of the options was approved or disapproved. However, on January 15, Scowcroft recommended to Kissinger that this proposal be adopted instead of Flanigan’s. (Memorandum from Scowcroft to Kissinger, January 15; Ford Library, National Security Adviser, Brent Scowcroft Daily Work Files, Box 5, Chronological File A, January 11–15, 1974) Scowcroft repeated this recommendation in a January 30 memorandum to Kissinger, to which draft copies of a NSDM outlining the details of the Donaldson–Lord plan were attached. (Ibid., January 27–31, 1974) This draft formed the basis for NSDM 244, Document 170.
7. Neither of these options, like the others, is initialed, but the memorandum at Tab B was signed by Kissinger on January 10. (National Archives, RG 59, Administrative Correspondence Files, General Correspondence Files of the Deputy Under Secretary for Management 1968–75: Lot 78 D 295, Energy Matters 1973–74)