62. Memorandum of Conversation, Washington, July 27, 1976, 10:55 a.m.–12:27 p.m.1 2




  • J. Malcolm Fraser, Prime Minister of Australia
  • Andrew S. Peacock, Minister for Foreign Affairs
  • Amb. Nicholas F. Parkinson, Australian
  • Ambassador to the United States
  • John L. Menadue, secretary, Department of Prime Minister and Cabinet
  • President Ford
  • Dr. Henry A. Kissinger, Secretary of State
  • Brent Scowcroft, Assistant to the President for National Security Affairs
  • Amb. James W. Hargrove, U.S. Ambassador to Australia

DATE AND TIME: Tuesday, July 27, 1976 10:55 a.m. - 12:27 p.m.

[The press came in to take photos. There were greetings and small talk about the Olympics. The press then departed].

The President: I am delighted to have you here. Congratulations on your victory — not only your personal victory, but your party’s. I envy your majority. I wish we had it, but we are working on it.

Fraser: Thank you very much, Mr. President. It is great to be here and I deeply appreciate the invitation during such a busy period. I wish you well in your coming trial. A little luck is always useful.

We particularly wanted to visit in order to wash away a few vestiges of difference between our countries.

The President: I very much appreciate the change. There has been virtually complete change on the Indian Ocean and in general attitude on national security problems, like letting our nuclear warships into ports again.

[Page 2]

We are determined to maintain a role in the Indian Ocean, and we are working on the Congress to convince them of the need for Diego Garcia. I think we will make it. I want close cooperation with you. Perhaps we can cooperate with you on the P–3 flights and other aspects of an Indian Ocean military presence. Perhaps you could be of some help with Singapore on this too.

When I was in Congress I was known as a Hawk, and I can’t change now that I am in the White House. You might be interested in where we are going on the defense budget. It’s a much better situation. Over the past decade they have regularly and systematically cut Presidential defense proposals. They’ve cut all together over $50 billion. This year I recommended an increase of $14 billion in obligations and $10 billion in expenditures, and they’ve cut less than one percent. Some of their cuts were okay; some were not. There’s been a big change in public opinion.

Fraser: Pm glad to hear it. The history was discouraging. We’ve had a similar experience. Appropriations will be increased significantly this year and for the next four years.

I understand our experts are working on renewal of Pine Gap. It had been on an annual basis, but I would propose renewal on a ten-year basis if you would find that useful.

The President: That would be very helpful.

Fraser: And I would welcome some sort of cooperative program on the P–3’s. We fly them, you know, and I think it would be good. Some of the internal equipment may be different. When Admiral Hayward was in Australia in April he asked if the airport at Learmonth [Northwest Cape] would be of use [for transit flights to Diego Garcia], but Hayward said it was too far South. But if you can use it, we’d be willing, and maybe you could use it for the P–3’s.

The President [To Scowcroft]: Who’s negotiating this for us?

Scowcroft: Probably Defense.

The President: I will tell our people to press the cooperative approach.

[Page 3]

Fraser: I spoke to some of your Congressmen on Diego Garcia.

Kissinger: You gave them the answer they didn’t want!

Fraser: I thought I had to lay it on the line. A number of countries around the Indian Ocean privately approve of your moves to counter the Soviets in those waters, even though they aren’t in a position to say so publicly. China is an example.

The President: I appreciate the letter you sent me on your trip to China. We hear nothing about Teng Hsiao-ping now.

Fraser: We got the same kind of demonstration in every village we visited. Hua Kuo-feng still seems to be in charge.

The President: Chiao Kuan-hua is still Foreign Minister, isn’t he? He was farther down the line when I was there in ’72 and he was very articulate and bright. I liked him.

Fraser: He’s impressive and forceful.

Kissinger: He’s a minor edition of Chou.

Fraser: I would think he’d be a tough negotiator.

The President: Yes, except when he was with Teng, Chiao said very little.

Fraser: And with us when he was with Hua.

The President: How about Mao?

Fraser: They stopped his appearances just before I came. They trotted out Chu Teh two weeks before he died. They had him under careful control and he seemed very vague and frail.

The President: I thought Mao was mentally very alert when I saw him.

Kissinger: Mao was better with you than when I had seen him the previous month.

[Page 4]

Fraser: I got several impressions. First is that anyone who makes predictions on China is foolhardy. I got the impression also that they aren’t going to make issues out of Southeast Asian problems or the Korean situation or the Taiwan situation. They consider the Soviet problem overriding and won’t let these less important problems complicate it.

The President: That’s our impression too.

Fraser: They are taking a sharp line on Taiwan, for example in their conversation with Senator Scott.

Kissinger: But he provoked it.

Fraser: One other impression, which may be a misunderstanding. There was only an oblique reference. They wanted us to have the feeling there was not adequate communication.

Kissinger: With Australia or with us?

Fraser, Peacock: With the United States.

Fraser: It’s true on Australia particularly but the doors to China have been shut so long and they have so much reason to be suspicious. But the impression we got was they want more dialogue with you. One thing the SALT talks going on — which we support — and they are not a part of it; they are concerned something may happen which would affect them. This was just a general feeling we got. I think we all should try patiently to draw them out and to encourage them as they emerge and engage them more freely in some wider framework. Not that you are not doing that, but I thought I should pass this on.

The President: I never had that impression during our talks in December. They were critical of some of the things we do, but I never got the feeling they thought there was a gulf.

Kissinger: The Chinese are masters. They are near-geniuses and cold-blooded analysts of the balance of power. Sentiment is not something they are concerned with. In fact, we brief them more than anyone else but our close allies. Whenever we are about to meet with the Russians at a high level, we brief them in detail. And they tell us nothing. Now they are concerned that we are weak. They see Vietnam; they see Angola; [Page 5] they see Turkey. And they would like to freeze us into total hostility to the Soviet Union. That would get them off the hook. And then they can organize the Third World against us both. Their game is very complicated but they are doing their best to maneuver us into a position where we have no options. Their policy is becoming more transparent because their leadership is less competent now. We need to maintain our options with respect to both. Being frozen into hostility with the Soviets would worsen our relations with China, not help them.

Fraser: We don’t want that. Hostility to the Soviet Union appears absolute now but the possibility of reconciliation we must keep in mind. We have to offer them an alternative home to the Soviet Union. They shouldn’t feel a need to repair their relations with the Soviets.

Kissinger: Yes, we must walk this line. It isn’t easy. They should feel they can count on us but not take us for granted.

Fraser: Any enduring relationship with China has to take into account your relations with Western Europe too.

The President: We have kept our allies fully abreast of our SALT II negotiations.

Kissinger: And the Chinese. And on MBFR.

The President: In SALT, we think a good foundation was laid in Vladivostok. The problems now are how to negotiate these ambiguous systems like Backfire and cruise missile. I happen to think SALT is in everyone’s interest. I won’t sign a bad agreement just to sign an agreement. We won’t compromise principles but I want an agreement.

Fraser: We certainly support that.

The President: We are after an agreement. Otherwise both sides will have to move ahead with major programs. So we are looking for an agreement through 1985. We don’t have much time, since the Interim Agreement ends in ’77.

Kissinger: And if we went into competition, in ten years we would be no better off really. Our estimates are that we would lose as many as 125 million people in a nuclear war if we didn’t strike first, and 110 million [Page 6] if we did. Even with our 6-to-1 advantage in warheads. We need to spend the money on conventional forces.

The President: We have a study underway now on our Navy. The figures you see are misleading since a lot of their ships are used for coastal defense and minesweeping. Our tonnage is almost double theirs. But we are taking a hard look at whether we need an extra push on Navy.

Of course we are also debating with Congress on what to do with the B-1. An evaluation will be complete by 1 November. I think we need it — the B-52 is aging.

Kissinger: It would be a disaster if the B-1 were scrapped. The thing the conservatives don’t realize is that their SALT opposition has left open the B-1 to attack.

The President: Carter supports a $7-9 billion cut in the defense budget. I don’t think it can be done.

Kissinger: Did you see the defense advisers who met with Carter yesterday? $7- 9 billion cut is just the tip of the iceberg. They would have to cut in Asia and Europe and the B-1.

The President: There’s no question they would stop the B-1 and try to modify the B-52. Humphrey tried to stop R&D on the cruise missile.

Fraser: Would they reduce the commitments to match?

Kissinger: Not necessarily.

The President: The cruise missile isn’t the ultimate weapon but it’s still necessary.

Fraser: How do you see the economy going? Was the Puerto Rico meeting a success?

The President: Yes, it was. I think things are going well. At Rambouillet we were all in the trough of the recession; we tried to coordinate our programs for recovery. At Puerto Rico the recovery was under way — with our economy way ahead. We all recognized the need to curb inflation while reducing unemployment. We also discussed North-South and East-West economic issues.

[Page 7]

[Describes domestic recovery, with relevant statistics and trends.] It’s much better than even in January. The trends are all in the right direction.

Fraser: That must be nice for later this year.

The President: Yes, though we would rather have the employment higher and the inflation lower. How about you?

Fraser: We are getting back, but it is difficult. The previous government just gave the unions anything they wanted. I think now we are in the early stages of recovery, but some indicators are going in each direction. I think inflation is the chief problem and we can’t move until we get that licked. We cut $3 billion off the budget this year and there are signs inflation is coming down. We’ve had trouble getting the unions to restrain their wage demands. Treasury is convinced the recovery is underway, but slowly.

The President: I notice the British have taken some tough decisions, but I notice they had some defectors. He can’t afford too much defection.

Fraser: No. It is always difficult taking on these very tough programs. I think it is probably better that Labor does it than the Conservatives.

The President: Callaghan called me and told me he has had to defer some defense spending, in order to insist on deferral of some social program costs, but he said it was no more than a temporary defense deferral.

Fraser: Are the NATO countries increasing their defense spending?

The President: Yes, but not as much as we would like. We are trying to improve cooperation and standardization.

Kissinger: General Haig is doing a superb job of utilizing what he has.

The President: I am very worried about the situation in Italy.

Peacock: Hasn’t Carter said he could live with Communists in the Italian government?

Kissinger: Yes. And that is disastrous. The Communists will bide their time until the U.S. election, hoping for a Carter victory and an easier posture [Page 8] from the new Administration. If the US backs down, that’ll be a disaster, because France will then follow the same road.

Once you get to arguing how much participation is okay, you are lost.

Fraser: Isn’t this how Czechoslovakia went?

Kissinger: I had a study made showing that the East European Communists were making precisely the same kind of statements in 1945 to 1948. They sound just like Berlinguer and the French Communists today. I will give you a copy tomorrow.

Fraser: Yes, I’d like that.

President: Our hard line in Portugal seems to have paid off well.

Kissinger: But Italy is more complicated. Like on Diego Garcia, many of the Europeans agree with us on Italy but criticize us in public.

Fraser: That is bad. It reminds me of Vietnam.

Kissinger: It’s interesting that all the crazies who were protesting the killing in Vietnam and elsewhere are totally silent about the 500,000 who almost certainly were killed in Cambodia.

Fraser: At least.

Peacock: The Cambodians have come to us in Peking to suggest that we establish diplomatic relations by 6 August. We couldn’t do it by then but I wanted to discuss that. There might be some advantages but that may be too soon.

Kissinger: The Chinese want to build a barrier to the Vietnamese. While the Cambodians are dreadful, it does make some sense.

Fraser: We would have to disclaim any idea of approving their actions.

Peacock: We could perhaps be useful to you — I want to talk about it in more depth.

Kissinger: It might be a good idea. Anything that would help to contain Vietnam would be good. Though I consider the Cambodian Government loathsome.

[Page 9]

The President: Do you have relations with North Korea?

Fraser: Yes. It was established by the previous government. We have kept them.

Kissinger: How do they treat you?

Fraser: There is virtually no contact. We were kicked out quickly because they didn’t like the way we abstained on the UNGA vote.

The President: Well, we are looking forward to seeing you at dinner this evening.

Fraser: There is one domestic problem I need to raise for the record — your beef imports.

The President: Yes, we have the same problem. I’m getting pressure from meat producers here.

Kissinger: I was hit with it when I was in Oregon for a speech.

Fraser: We are having a serious drought and people are killing the cattle. There are arguments on both sides of the question and I would simply like to say I mentioned it.

[There was additional brief discussion of the prospective grain crops in Australia and the U.S. The conversation then ended.]

  1. Source: Ford Library, National Security Adviser, Memoranda of Conversation, Box 20, 7/27/76. Secret; Nodis.
  2. Ford and Fraser discussed international relations.