150. Memorandum of Conversation1

SUBJECT

  • Secretary’s Lunch for Crown Prince Fahd

PARTICIPANTS

  • Saudi Arabia

    • His Royal Highness Prince Fahd bin Abd al-Aziz Al-Saud, Crown Prince and Deputy Prime Minister
    • See attached guest list
  • United States

    • The Secretary
    • See attached guest list

CIEC

At the Secretary’s request, Mr. Cooper outlined U.S. views on the prospects for CIEC.2 He indicated guarded optimism on the basis of consultations over the last few months with both developed and developing countries. In cooperation with other industrial countries, the United States hopes to put together a quite respectable package.

Turning to the four key issues, Mr. Cooper noted that commodity policy is of uppermost importance to some of the developing countries and that the United States is sympathetic to commodity agreements which would stabilize prices. The current round of discussions on sugar is the first serious commodity discussion in which the present Administration has been involved and we foresee coming up with a good proposal to stabilize the world sugar market. We do not see, for technical reasons, agreements on each of the eighteen commodities which UNCTAD has identified for consideration, but we are determined to make a sympathetic effort to make progress on those commodities where agreement appears feasible. Without prejudicing the results of technical studies which we are now conducting, we see perhaps a half-dozen commodities, all tropical, such as tin, rubber, sugar, cocoa and coffee, in which agreements appears feasible. If we are able to [Page 487]achieve agreements on a reasonable number of commodities the United States is prepared to support a common fund to facilitate their implementation. Our version of the modalities of such a fund is rather different from that proposed by the UNCTAD Secretariat but our consultations suggest some developing countries are finding our version at least equally attractive. There is hope for success in this regard later this year or early next year.

Mr. Cooper>continued with the discussion of the second key issue, overseas development assistance. He noted that a major review of foreign aid is underway in the United States Government, but without prejudicing its findings, we think we can support not only substantial increases in the quantity of our development assistance, but also improvements in its quality. Mr. Solomon stated that we are currently discussing development assistance with the Congress, with mixed reactions.

Turning to the external debt issue, Mr. Coopernoted that there is an analytical problem in the CIEC context since some of the strongest advocates of debt relief are not the countries with the worst debt problems. These countries privately admitted that they see debt relief proposals as a vehicle for resource transfer. Therefore, we see two different approaches as called for: dealing with real debt relief problems on a case-by-case basis while treating the question of resource transfer generally under the label of debt relief. We are proposing a “special action” program for the 30–40 poorest countries. This would be a special CIEC “plum” conditional on a successful outcome of CIEC. Modalities would vary country to country. In our own case, we foresee additional economic assistance, especially for Africa.

On the issue of energy, Mr. Coopernoted that is the area in which the United States and Saudi Governments are co-chairmen and that there had been excellent cooperation between us at the last meeting which had achieved progress.

He noted one difficulty in CIEC is that the Group of 193 have a limited scope for negotiating on the basis of their mandate from the Group of 77.4 Therefore, we view CIEC as a place to pull all the strands of economic international cooperation together, giving the most promising areas the impetus of ministerial level focus and then farming them out to appropriate fora for negotiation. For example, there is a role for UNCTAD in commodities and a role for the IBRD and IMF in [Page 488]economic development discussions. The one key issue which lacks a forum is energy, and we are open to suggestions as to how best to pursue the energy dialogue post-CIEC.

Minister Yamani noted that from the beginning Saudi Arabia had been concerned about isolating international discussions of energy from other economic issues and had wanted a “package deal” —hence CIEC. At the ministerial meeting in Paris next week we will be facing the original problem—how to find a forum for energy discussions which will not separate this issue from the others.

Mr. Solomon and Mr. Cooper addressed the question of continuing CIEC. Mr. Solomon , noting he was speaking frankly among friends, explained that the continuation of CIEC discussions in the other three areas would keep pressure on the industrial countries to reach positions which were not realizable. On the other hand, the energy discussions were generally without the same specificity as the discussions in the other three areas. Mr. Cooper said that the new Administration had addressed the idea of continuing CIEC with an open mind, and in discussions with both developed and developing countries he had found “universal disapproval” of this idea. Everyone wanted to wrap up CIEC. He believed that the Group of 19 felt under pressure from the Group of 77 which questioned the legitimacy of the Group of 19 as their representatives.

When Minister Yamani said the problem of the need to link energy to the other discussions remains unsolved, the Secretary asked for Saudi suggestions. Yamani stated that Saudi Arabia is not prepared to separate the issue. Movement in the energy dialogue will be restricted by separation. Prince Saud reviewed the considerations leading up to CIEC, noting that little progress had been made over the years in discussing various international economic issues separately in UNCTAD and various UN fora. CIEC was conceived as the forum which could oversee all of these related issues and in which the importance of the energy question could provide momentum for progress on the other issues.

In response to Minister Aba al-Khayl’s question of why there was need to continue to discuss energy, Mr. Cooper pointed out it would be anomalous to discuss other international commodities ignoring energy which is in effect the world’s most important “commodity,” rivaled only by grains. He noted the need to develop a global view on such questions as conservation, development of new resources, and the general supply/demand picture. The United States has no fixed idea on how best to continue the energy dialogue. Three illustrative examples would be: (1) a free-standing committee which would be an extension of the CIEC Energy Commission; (2) putting the energy dialogue into UNCTAD; or (3) a free-standing committee under some form of UN/IBRD auspices.

[Page 489]

Dr. Brzezinski noted that CIEC seems to serve two unique and important functions: it links the economic issues and it provides a political-economic linkage in the context of the North-South dialogue. If no one wants to continue CIEC it obviously should end, but he hoped that no premature conclusions were being drawn.

The Secretary indicated he shared this concern.

Minister Yamani suggested that there might be some way in which the Group of 19 could at the end of the ministerial meeting call for keeping the option of reconvening CIEC open.

Dr. Brzezinski said that this idea might be expanded to include leaving a body of experts in place to pursue discussions.

The Secretary said the first need seemed to be to obtain a better view of how the members feel about the future operation of CIEC.

Mr. Cooper noted that in his discussions with the Europeans, Japan, and a half dozen developing countries all parties, except the Commission of the European Community which has a special interest in the continuation of CIEC, wanted to wrap it up. He welcomed Minister Yamani’s idea of making provision for a number of CIEC participants to be able to call for its reconvening, but noted there is some question about keeping the committees operating. Perhaps there would be some way to keep the energy committee alive in some form.

Yamani reiterated the importance of assuring a linkage between the energy dialogue and the other issues.

The Secretary suggested giving more thought to this question and getting back in touch before the ministerial session begins.

Crown Prince Fahd urged trying to continue the concept of CIEC by trying to convince all the participating countries of its benefits. If there are obstacles to its success, there is no alternative but to try to remove these obstacles.

Yamani asked what the United States really wants from the energy dialogue. Mr. Solomon explained that there is a world concern about quantities and prices of energy. The discussions to date in the energy committee have not been specific: there has been no discussion of price. In response to Minister Yamani’s query as to whether the United States expected OPEC countries to discuss price in CIEC, Mr. Cooper explained that we would welcome discussion of the implications of pricing, but would not view CIEC as a bargaining session over oil pricing. He added that there are other issues, such as conservation and the exchange of technology in seeking new energy sources which warrant discussion.

Prince Saud suggested that since discussion of one economic issue leads to another it is important that there be a forum which links all the issues.

The Secretary reiterated the need to reflect on this problem and be back in touch.

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The Horn of Africa

The Secretary noted that the United States had given much attention and thought to the situation in the Horn of Africa and had taken certain steps of which Saudi Arabia has been kept generally informed. For example, we have been in touch with the Government of Somalia and have sent a mission to discuss economic assistance. Before going to Europe,5 the Secretary had met three weeks ago with the Somali Ambassador and military assistance had been discussed.6 The Secretary had indicated at that time that he would be prepared to be more specific on his return from Europe and after the Administration’s review of arms transfer policy had been completed. He had agreed to meet again with the Somali Ambassador in the near future. In our view, Saudi Arabia and the United States have an opportunity in the Horn of Africa and should work together exchanging views and judgments as to how to proceed. He asked Crown Prince Fahd’s advice about the desirability of forming a consortium of Western countries to provide military assistance to Somalia.

Crown Prince Fahd noted his pleasure at being able to discuss the importance of Africa, which the Soviets and communist states generally are increasingly trying to infiltrate. He said Africa feels a great need for assistance, particularly from the United States. He reviewed at some length his effort to focus U.S. attention on Somalia during his last visit to Washington in 19747 when Somalia had not yet formed strong ties with the Soviets, but when Crown Prince Fahd had sensed Somalia’s need for economic and military assistance. While Saudi Arabia had done what it could to help, Somalia eventually felt itself in circumstances making it imperative to listen to the Soviets and ties with the communist states developed. Saudi Arabia had tried to warn Somalia that this trend would be ruinous eventually; but the Soviets had jumped into the breach with aid, especially military aid. Saudi Arabia had kept in touch, and a month and a half ago Prince Saud had held wide-ranging discussions during his visit to Somalia.

Concurrently, a Somali minister and military experts had met with Crown Prince Fahd in Saudi Arabia. The Saudis discern new thinking on the part of the Somali leadership about the desirability of close ties to the Soviet Union in particular and the communist world generally. President Siad and other key officials appear convinced of the dire consequences of continuing a close tie with the Soviets and they are [Page 491]convinced of the need for good relations with the Arabs generally and Saudi Arabia in particular. Saudi Arabia has pitched in to try to help Somalia. At the same time there are elements in Somalia which will pose obstacles to a reorientation of policy and the present leadership must face the reality that it will take time and outside help to permit Somalia to extricate itself from Soviet influence.

Crown Prince Fahd continued that Somalia realizes the Soviets are seeking better relations with Ethiopia and there are of course problems between Somalia and Ethiopia. He cited Castro’s recent failure to bring about Ethiopian/Somalia rapprochement. He noted Castro is a tool of the Soviets and that his recent mission is current evidence of Soviet expansionist aims in Africa. He noted the brutality of the present Ethiopian regime. He expressed concern about Soviet aims in Angola. He said the Soviets will try to create in Zaire a base for future infiltration in Africa and that the situation in Zaire could be improved if the West rushed to Zaire’s aid. Noting that Castro met with Qaddafi on his mission, Crown Prince Fahd suggested that the threat of Soviet infiltration extends to North Africa.

Returning to Somalia specifically, Crown Prince Fahd stressed that there is now an opportunity for Saudi Arabia and the West to rush to Somalia’s aid, closing out the possibilities for Soviet intervention in Somalia and the Red Sea area. It is better to act now than later because there is a popular feeling in Somalia against the Soviet tie, but if the Soviets establish complete control, popular opinion will no longer matter. Saudi Arabia is trying to help Somalia, but its efforts will be useful only if the United States and other Western countries join in. Therefore, Crown Prince Fahd expressed pleasure in learning of the U.S. economic assistance mission, which he said would boost the morale of the Somali leadership.

The Secretary said that the United States and the Saudi views on the Horn of Africa are similar and he welcomed the opportunity to continue the discussion, reviewing what we are doing on a country-by-country basis.

After an exchange of compliments, the Secretary and Crown Prince Fahd moved to the Secretary’s office for a private meeting.8

  1. Source: Department of State, Office of the Secretariat Staff, Cyrus R. Vance, Secretary of State—1977–1980, Lot 84D241, Box 10, Vance EXDIS MemCons, 1977. Secret; Exdis. Drafted by Twinam; approved by Twaddell on June 8. The meeting took place in the James Madison Room at the Department of State. Reddy sent the memorandum of conversation to Twaddell under a May 27 memorandum, in which Reddy provided a brief summary of the conversation. Attached but not printed is a guest list for the luncheon.
  2. Reference is to the final Ministerial session of the Conference on International Economic Cooperation, which was scheduled to take place in Paris May 30–June 3.
  3. The developing nations participating in the CIEC: Algeria, Argentina, Brazil, Cameroon, Egypt, India, Indonesia, Iran, Iraq, Jamaica, Mexico, Nigeria, Pakistan, Peru, Saudi Arabia, Venezuela, Yugoslavia, Zaire, and Zambia.
  4. The Group of 77, established at the conclusion of the first United Nations Conference on Trade and Development in 1964 and comprised of 77 developing nations.
  5. Vance traveled to Europe May 5–21.
  6. Documentation on U.S.-Somali relations is scheduled for publication in Foreign Relations, 1977–1980, vol. XVII, Part 1, Horn of Africa.
  7. See footnote 6, Document 148.
  8. No memorandum of conversation of the private meeting has been found.