72. Memorandum of Conversation1
SUBJECT
- Charter of Economic Rights and Duties of States
PARTICIPANTS
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Mexico:
- Emilio Rabasa, Foreign Secretary of Mexico
- J. de Ollogui, Ambassador of Mexico to the U.S.
- Ambassador Sergio Gonzalez Galvez, Director of the Bureau of International Organizations
- Raul Santos Coy Cozzi, Minister-Counsellor and Private Secretary to the Foreign Minister
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U.S.:
- The Secretary
- Senator Charles Percy
- Assistant Secretary William D. Rogers
- Deputy Legal Adviser Stephen M. Schwebel
(The Secretary initially met with Secretary Rabasa only from 6:20 to 6:30 p.m., at which time the others joined, except for Senator Percy, who arrived some minutes later.)
Secretary Kissinger: With this subject, you have managed to mobilize all the nitpickers in this building. And to generate a lot of passion.
Mr. Rogers: “Nitpickers” sounds like a euphemism for lawyers.
Secretary Rabasa: Can someone say where things now stand?
Secretary Kissinger: I have told Secretary Rabasa that we can abstain if we can be given something that will allow us to do so. Where do things stand? Bill Rogers knows the situation. Bill? (At this point, Senator Percy entered.)
Senator Percy: I have a gift for you, Mr. Secretary. The Foreign Aid Bill was adopted just now by a vote of 46-45 and that’s why I am late. And the Senate adopted my amendment giving women a larger role in development activities and benefits.
Secretary Kissinger: I accept with pleasure.
Senator Percy: However, our UN contribution has been cut. Regrettable but understandable.
Secretary Kissinger: Emilio, I would like to find an excuse for abstaining. Is there anything that can be worked out in the next 48 hours, even if it would not meet Mr. Schwebel’s legal standards of the ideal?
Ambassador Gonzalez Galvez: Our situation is difficult. We started this enterprise and now we are caught in the middle. At one extreme, if I may say so, is the United States and at the other extreme are certain members of the Group of 77, Arabs and Africans. It is difficult to find a compromise on a subject such as the applicable law in case of nationalization that will satisfy both sides.
Secretary Kissinger: We reached a satisfactory compromise with Mexico in Mexico City.
Secretary Rabasa: There is no problem between us. We favor just compensation. The problem is that others cannot accept the compromise acceptable to us.
Ambassador Gonzalez Galvez: The Charter is 75 percent agreed.
Secretary Kissinger: That’s fine.
Ambassador Gonzalez Galvez: On the main disagreed article, Article 2, we have two new ideas we are trying to sell to the Group of 77 which, we think, should resolve your problem. One would do away with the “Calvo clause.” As Senator Percy and Mr. Schwebel argued very ably, the provision: “No state whose nationals invest in a foreign country shall demand privileged treatment for such investors” seems to debar diplomatic representations. So we would change that to read: “No State shall be compelled to grant privileged treatment to foreign investors.” [Page 245] Our second change relates to compensation. Steve, could you please read out what I gave you just before we joined this meeting?
Mr. Schwebel: “Each State has the right . . . to nationalize, expropriate or transfer ownership of foreign property in which case appropriate compensation should be paid by the State taking such measures, taking into account its relevant laws and regulations and all circumstances that the State considers pertinent.”
Ambassador Gonzalez Galvez: We realize that the version of Article 2 now contained in the draft Charter of the Group of 77 is unrealistic. You could not be expected to accept it. The Arabs insisted on it.
Secretary Kissinger: By Arabs, do you mean Algeria?
Ambassador Gonzalez Galvez: Libya and Algeria.
Secretary Kissinger: And Iraq?
Ambassador Gonzalez Galvez: Yes, Iraq, but specifically Libya. But now, if we can sell these two changes—and our representative, Ambassador Garcia Robles, is, as you know, very skillful—then I think we can settle things. We are dropping the bar to diplomatic representations. And we are making the payment of compensation obligatory. This is a great deal. This gives you what you need.
Secretary Kissinger: Mr. Rogers, what is your view?
Mr. Rogers: I have just heard these proposals for the first time. May I defer to Senator Percy?
Senator Percy: I would like to see this Charter revised so that we could not merely abstain but vote for it. But we cannot support, or even abstain upon, the Charter as it is. In the light of my talks with Ambassador Hoveyda, I wonder if it’s even in the interest of Iran and other OPEC members who are becoming exporters of capital to support it. If this draft of the Charter is adopted, no one may wish to invest abroad. The provisions for compensation in case of nationalization are not adequate. What we need is a provision for just compensation. And we need a text that contains some recognition of international law. This Charter is purporting to replace summarily a body of international law built up over many years. We cannot support that. Why won’t you include a reference to international law?
Ambassador Gonzalez Galvez: That’s difficult. Many of the Group of 77 do not believe that there is any international law on the subject.
Secretary Kissinger: When will the vote be?
Secretary Rabasa: Tomorrow night or Friday morning.
Secretary Kissinger: There is no time.
Mr. Rogers: We would like to have longer.
Senator Percy: We cannot abstain. We need a Charter for which we can vote. Much of the Charter is fine. But some extremists like Iraq are demanding unacceptable provisions.
[Page 246]Secretary Rabasa: We now have some 96 sponsors for our draft resolution setting out the Charter. But it is a question of quality rather than quantity. We need the support of the right States. I would like to add to the points that Ambassador Gonzalez Galvez makes that the current proposal on Article 2 provides for the settlement of disputes arising over compensation for expropriated property. If there is a dispute, there is nothing to prevent the States concerned from agreeing to arbitrate it. So I think our proposal is reasonable enough.
Secretary Kissinger: Mr. Rogers, what is your opinion of what is now proposed? You are the Assistant Secretary concerned.
May I have an expression of a view from our side?
Mr. Schwebel: May I state my views?
Secretary Kissinger: Yes.
Mr. Schwebel: The new proposal which Ambassador Gonzalez Galvez has described would improve Article 2, but only marginally. The essential problems of Article 2 would remain. There would still be the problem of according foreign investors the treatment to which they are entitled and, under this new formula, the payment of any compensation would still be optional. As Senator Percy has pointed out, there is no reference to international law nor even international obligations. Moreover, in addition to several serious problems of Article 2, other objectionable elements of the Charter remain, such as producers’ cartels, indexation, and restitution for the ravages of colonialism.
Secretary Rabasa: We don’t need authorization to form cartels. We do not need the permission of the United States or of this Charter to join producers’ associations. We have that right without it.
Mr. Schwebel: Then why, sir, do you propose to incorporate it in this Charter?
Secretary Rabasa: I mean to say that the Group of 77 should drop this provision but some insist on having it.
Senator Percy: I must say that I agree with Mr. Schwebel’s remarks. And of course nobody can stop a country from joining a producers’ organization.
Secretary Kissinger: Would it not be best to defer adoption of the Charter to 1975 and allow more time to negotiate a solution?
Secretary Rabasa: I would prefer a vote of the United States against the Charter as a whole to deferral.
Secretary Kissinger: I would like you to put us into a position in which we could abstain. Let’s have no postponement.
Senator Percy: I would like to see us in a position to vote for the Charter. If Foreign Minister Rabasa could come to New York and exercise his leadership in the Group of 77—if we could get down to cases with the benefit of his leadership—then I think we might still be able to [Page 247] reach a solution. I too oppose deferral. I can see the loss of momentum that would result. I would like to settle our problems this week.
Secretary Rabasa: I would be put in a very hard position.
Secretary Kissinger: Let’s have the vote deferred for a week; Secretary Rabasa can go to New York, and, in a week’s negotiations, bring things to the point where we can abstain.
Senator Percy: Let’s get down to the job and stick to it until we succeed, if Foreign Minister Rabasa joins us, we can.
Secretary Kissinger: Yes, let’s try. I will do my best to curb the more exacting flights of our legal department. If it were up to them, we could never do anything.
Ambassador Gonzalez Galvez: I am afraid that we do not have a week. The Assembly is going to end. It is impossible to extend the Charter beyond Friday.
Secretary Kissinger: Why? Bouteflika is ruthless. He has had no difficulty in doing all sorts of illegal things, why can’t he arrange this? I thought to kid him about being impartial. . .
Secretary Rabasa: He has not been impartial.
Ambassador Gonzalez Galvez: It really will not be possible to carry the Charter past this week.
Secretary Rabasa: Then how can we settle in a day or two what we could not settle in two years?
Secretary Kissinger: In my experience, some negotiations which have lasted for years can only reach agreement in the last few days. SALT moved ahead after years. I would like to find a way to abstain on the Charter. I am prepared to give up our more brilliant legal refinements, if you can help to meet the core of our objections. We will do our damndest. I would value your role, Emilio, and I know that Chuck would make a big effort. Is it feasible for you to try, Chuck, if Emilio goes up?
Senator Percy: Yes.
Secretary Kissinger: Mr. Schwebel, is this do-able? Can agreement be reached?
Mr. Schwebel: I do not think so.
Secretary Kissinger: You do not think it is do-able?
Mr. Schwebel: No, I do not think it is do-able. We can agree with States like Mexico, but the Group of 77 extremists will shoot any reasonable agreement down.
Secretary Kissinger: Well, I will try to help. I do not know what this subject is about but I can dig into it. I don’t think, Chuck, that it would be useful to try to get at Iraq through the Soviet Union; Moscow would just boast to the Iraqis about how they turned us down. But we have [Page 248] some credit elsewhere. With India. Chuck has strong credit in India and the Subcontinent. Even with Algeria we have some credit. I would be prepared to call Boumedienne.
Senator Percy: And on the basis of my talks, I think States like Pakistan and Sri Lanka would like to help.
Secretary Rabasa: Well then let’s get to work.
Ambassador Gonzalez Galvez: But we do not have a week.
Secretary Kissinger: Let me talk tomorrow to Scali, I want to check with him on how much time we can get. And I am prepared myself to make an effort. Chuck will go up. Chuck, where will you be tomorrow?
Senator Percy: Negotiating with Foreign Secretary Rabasa in New York.
Secretary Kissinger: Mr. Schwebel, where will you be tomorrow?
Mr. Schwebel: Where you direct.
Secretary Kissinger: I don’t know whether you will be a hindrance or a help. Let’s all meet again Friday and see where we stand. And I will talk to Ambassador Scali about extending the time for a week.
Secretary Rabasa: Let’s try to reach an agreement.
Senator Percy: Yes, I am all for trying.
Secretary Kissinger: We will do our damndest. Is that understood, Mr. Schwebel?
Mr. Schwebel: Yes.
Senator Percy: But I am afraid that, once more, we shall run up against the extremists of the Group of 77. They need Western technology, know-how, and capital but they seem determined to act in ways to prevent getting it.
Secretary Kissinger: Actually I don’t think that President Echeverria gives a damn about the flow of capital. He wants this bloody Charter, whether or not it will have any practical effect.
Well, we shall make a big effort. But if it fails, then we shall have to vote against the Charter as a whole; we shall vote “no” with a bleeding heart.
Secretary Rabasa: I am ready to work tonight.
Secretary Kissinger: And we will not urge postponement.
Senator Percy: If we fail to reach agreement, I must say that I prefer postponement to our voting negatively on the Charter as a whole.
Secretary Rabasa: I repeat that I prefer your negative vote to postponement.
Ambassador Gonzalez Galvez: A postponement would be complicated. The Charter would get lost in the agenda of next year’s Assembly. Have you seen the agenda of the Seventh Special Session?
[Page 249]Senator Percy: Horrendous.
Secretary Kissinger: I confirm that we will do our damndest to reach agreement.
(At this point, about 7:15 p.m., the meeting broke up, Foreign Secretary Rabasa remaining behind briefly with the Secretary. Senator Percy agreed with Secretary Rabasa to meet at the Park Lane Hotel in New York at 8:00 a.m., December 5.)
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Summary: Kissinger and Rabasa discussed Mexico’s proposed Charter of Economic Rights and Duties of States, which was before the United Nations General Assembly.
Source: National Archives, RG 59, Central Foreign Policy File, P820121–2628. Confidential; Nodis. Drafted by Schwebel on December 6 and approved by David Gompert in S on December 9. The conversation took place in the Secretary’s office. According to a December 5 memorandum of conversation, Kissinger told Ford that “Echeverría has his whole ego wrapped up in the Charter.” Observing that Treasury and his legal advisers opposed the Charter, Kissinger stated that “they are right on substance” and that the United States had not taken stronger action against the proposal “only because of our relations with Mexico.” Ford asked if abstention would satisfy Echeverría, and Kissinger said it would. (Ford Library, National Security Adviser, Memoranda of Conversations, Box 7, 12/5/74)
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