Foreign Relations of the United States, 1977–1980, Volume III, Foreign Economic Policy

214. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter ¹

Washington, May 22, 1979

SUBJECT

• Economic Summit

A two-day meeting of the Summit Preparatory Group on Friday and Saturday² produced the following, which is being reported to each of the heads of government:

I. Procedure

1. The first day of the Summit will be devoted to energy and macro-economic policy. The second day will be spent on North-South relations and reviewing the communique, which will be shorter than usual (about two pages). (C)

2. The morning meetings will begin at 9:30 and end at 12:15. After each morning and afternoon meeting, each head of government will meet briefly with his representatives to instruct them as to how he wants the issues discussed in that meeting treated in the communique. The heads of governments’ press conference on the second day will be at 5 p.m., to ensure that you get off to Korea at 7 p.m.³ This means that the Saturday afternoon meeting will end no later than 3:30 p.m. to allow time for reproducing the communique.⁴ Given the amount of time usually required for the heads of government to review the communique, this means that the Summit will be virtually a one-day meeting. (C)

3. The other heads of government want very much to meet informally before the first meeting, since two or three of them (Ohira, Thatcher, and perhaps Clark of Canada) will be new. They wanted a dinner the night before, but I think we have persuaded them to go for an 8 a.m. breakfast just before the Summit instead. (C)

4. We agreed that the following might be discussed at the two lunches, rather than at the regular meetings: political and economic relations with China, aid for Egypt (as per Schmidt’s request to you),⁵ and aid for Turkey, if it hasn’t been cleared up by then. Frank Press tells me you would like internationalization of automobile research discussed at a lunch; I think it would fit better under the regular agenda heading of energy.⁶ (C)

II. Substance

1. Energy. All agreed that the Summit’s success will hinge on whether the heads of government come up with specific actions to address the energy problem. This means:

a. Demand Restraint: We discussed whether the heads of government should extend the 1979 International Energy Agency 5% reduction⁷ into 1980, with each country specifying the means that it would employ to this end. There was general agreement that most countries would need to do more than they are now doing, if the 5% goal is to be achieved.⁸ (C)

b. Increased Production: We agreed the Summit should call for increased use and production of coal, and should ask IEA to establish an international coal advisory board that would recommend to governments the specific steps that they should take to achieve this increase. Schmidt wants the Summit to underline the usefulness of nuclear power and to support his call for an International Atomic Energy Agency study⁹ of nuclear safety. We talked of the need for increased investment in the development of alternative energy resources; all felt that agreement on specific actions to this end is crucial to success of the Summit. This hinges on our being able to submit specific US ideas so that the Summit Preparatory Group can prepare a range of options for the heads of government to review.¹⁰ It’s sad others don’t have ideas, but it’s a fact. (C)

2. Macro-Economic. Having gone as far as they can in containing inflation through restraining demand, it was agreed that the Summit countries should emphasize longer-term structural policies to increase production at Tokyo—e.g., tax incentives, deregulation, and reducing the size of the public sector. Charlie Schultze argued persuasively that this should be the new front in our battle on inflation. Thatcher, Barre, and Schmidt will like this.¹¹ (C)

3. North-South. We discussed, as you and Ohira did, the need for Summit agreement on steps to help LDCs increase their food and energy output. To this end, we focussed on increased cooperation with LDCs in research and development, which has the advantage of being both useful and cheap.¹² (C)

4. Conclusion. This Summit will differ from its two predecessors, in that it will focus largely on a single set of issues: energy and macro-economics. If we can give substantive content to this approach, the Tokyo Summit could be helpful in dramatizing the fact that we have clear programs for dealing with these problems. But this requires Summit agreement on new and common initiatives, rather than bargaining about commitment to familiar and contrasting national actions, as at Bonn. This kind of Summit is harder to prepare and more uncertain of success. But it is inherent in the situation: We face a new challenge, as a result of interacting energy and inflation threats, and this type of Summit is needed to deal with them.¹³ (C)

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Trip File, Box 24, President, Far East, 6/23/79–7/1/79: Cables and Memos, 3–5/79. Confidential. Sent for information. Carter wrote at the top of the page: “Henry. J.” Brzezinski also initialed at the top of the page.
2. May 18 and 19.
3. Carter made a State visit to Korea June 29–July 1 after the Tokyo G–7 Summit.
4. Owen’s reference to a “Saturday afternoon meeting” appears to be an error. Given that the Tokyo G–7 Summit took place on Thursday, June 28 and Friday, June 29, Owen apparently intended to refer to the Friday afternoon meeting.
5. Not further identified.
6. Carter drew an arrow pointing toward the phrase “would fit better under the regular agenda heading of energy” and wrote “ok” in the adjacent margin.
7. On March 2, IEA members agreed to cut their oil imports by 5 percent. (John Geddes, “West Sets 5% Cut in Oil Demand,” The New York Times, March 3, 1979, p. 29)
8. Carter wrote “I agree” in the margin adjacent to this paragraph.
9. Carter underlined the phrase “International Atomic Energy Agency study” and wrote “We have the INFCE ongoing” in the adjacent margin.
10. Carter drew an arrow pointing toward this sentence and the previous one and wrote “ok” in the adjacent margin. Owen subsequently gained Carter’s approval of a U.S. proposal for an International Energy Technology Group; see Foreign Relations, 1969–1976, vol. XXXVII, Energy Crisis, 1974–1980, Document 211.
11. Carter wrote “Important” in the margin adjacent to this paragraph.
12. Carter drew an arrow pointing toward the final sentence of this paragraph and wrote “Maximum staff work. Try to minimize Summit time” in the adjacent margin.
13. Carter wrote “How to deal with OPEC abuse in the most concerted and effective manner is a vital issue” below this paragraph.