Foreign Relations of the United States, 1977–1980 Volume XXIV, South America; Latin America Region

337. Memorandum of Conversation¹

Washington, June 29, 1977, 10:05 a.m.–11:05 a.m.

SUBJECT

• President Carter’s Second Meeting with the President of Venezuela during his State Visit

PARTICIPANTS

• The same as the first meeting.²

President Carter opened the meeting by saying that he was willing to accept Venezuela’s proposal to set up a group of representatives from 30–35 nations, including the Soviet Union and the People’s Republic of China, as well as industrialized and developing countries, to work within the U.N. on North-South economic issues.³ President Carter hoped that the US and Venezuela would work closely in this forum to develop proposals, but it was President Carter’s preference, in general, not to set up new organizations if one already existed to do the job.

On the Law of the Sea negotiations,⁴ President Carter said that Congress would never approve a treaty if the free use of the seas was restricted. If the two-hundred mile economic zone were not designated “high seas,” thereby permitting free navigation for commerce and navies, then the US could not sign the treaty.

President Perez responded by saying that Venezuela now has a clearer idea of how the North-South mechanism can be established to continue the dialogue begun in Paris.

On the Law of the Sea conference, Perez said that Venezuela, as the first sponsor of the Conference, felt a deep obligation to see the negotiations conclude. But he was also concerned about the “contradictions” which separate the industrialized countries, including the USSR, from the developing world. While trying to exterminate colonialism from the earth, the developing countries are now concerned that we may be creating it on the sea.

Perez said that Venezuela opposed the concept of a 200–mile territorial sea because it would increase international problems. He thought that accommodation could be reached on the patrimonial sea provided it was clarified as to how nations will use it. Perez pledged to talk to Ambassador Andres Aguilar about this; otherwise future generations will blame us for not negotiating a good treaty.

President Carter said that he thought that Ambassadors Aguilar and Richardson can work closely on this, “knowing how deeply you and I want a new treaty.” A new treaty is of great importance not just because of mineral wealth on the seabed, but because of the danger of aggravating international tensions in the absence of an agreed treaty. He also noted the direct importance of a treaty to Venezuela’s commerce in petroleum. Finally, the longer we delay, the more difficult it is to keep US business interests from beginning to explore for minerals. Venezuela, President Carter noted, occupies a crucial position because other nations trust it. He said that he would ask Ambassador Richardson to begin a follow-up program and work closely with Ambassador Aguilar.

President Carter said that he would appreciate if President Perez would provide his good offices to help in concluding a treaty with Panama on the Canal. The major issues have been negotiated, and the US will do its best to conclude the part dealing with economic arrangements as well.

President Perez said that he met with Torrijos before he left, with members of the US Congress the day before, with the Panamanian negotiators the night before, and Ambassadors Linowitz and Bunker for breakfast on June 29.⁵ He impressed upon the Panamanians the importance of reaching agreement because Torrijos does not have a clear idea of how the US constitutional system works.

In answer to President Perez’ point about permitting Panama to improve its economy, President Carter said that the American people could never be persuaded to pay Panama to take the Canal. Again, President Carter told Perez that his good offices in negotiating the treaty would be welcomed by the US.

President Perez said that it was in the interest of the US to have Panama fully developed by the year 2000 so as to ensure that the Canal will be secure and operated efficiently.

President Carter said he understood Panama’s point, but if the American people interpreted aid as part of a deal of giving away the Canal, that would be the end of the treaty. Once the right treaty is signed, however, President Carter said that he would use his full influence to get ratification of the Treaty by the necessary two-thirds of the Senate. He said the Treaty was very important to the US, and he asked Perez, to the extent that he saw fit, to continue to transmit the special concerns of each government to the other.

Secretary Vance repeated the point that it was key that economic assistance not be tied to a treaty for support.

President Carter also asked for Perez’s help in Southern Africa. Carter said that he had made some progress in discussions with the leaders of Canada, Britain, Germany and France to present a unified stand to Vorster to get him to take concrete and democratic steps for Namibia.⁶ Vorster pledged to take these steps. One UN observer will be responsible for administering the territory until 1980 when full independence will be achieved. Now that South Africa has taken that step, which President Carter believes may be as far as they can go, he thought it was time for the front-line Presidents⁷ to reciprocate, and he asked Perez to use his good offices with the African leaders, if he thinks it would be useful.

President Perez said that the Shah of Iran had told him of his great concern about the Soviet threat in Africa, and he was aware that King Fahd of Saudi Arabia had expressed a similar concern in his talks with President Carter.⁸ The Shah is building up his military capability because he is not certain that the US or Europe would defend Iran if Iran were threatened.

Perez was concerned that Castro and the Russians were trying to become leaders of the blacks in Africa and the Caribbean.

Returning to the South Africa problem, President Carter said that the front-line Presidents could always promote disharmony by putting forward demands that could not be met, particularly since there are five different voices speaking. Also, the Soviets are encouraging the Africans not to negotiate with the British or the U.N. But he assured Perez that the US was putting great pressure on Ian Smith on the Zimbabwe issue and on Vorster on Namibia and Southern Africa.

President Carter said that he wanted to keep Perez fully informed on developments in Southern Africa, and would ask Ambassador Andy Young to keep him up-to-date. Carter said it would be very beneficial for Venezuela to play a stronger role in Southern Africa.

President Carter placed high priority on the negotiation of an international treaty on illicit payments,⁹ and he was pleased to note that all the OECD nations support the negotiations. In that regard, he said that he would appreciate President Perez’ good offices in persuading the developing countries of the treaty’s importance. It would take several years to negotiate a comprehensive code covering all the activities of international corporations, and a multinational agreement on illicit payments would not only be a step in the right direction, it would expedite a more comprehensive agreement.

Mrs. Carter had asked the President to mention the Friendship Force,¹⁰ which was a private program that will send 350 people to Venezuela from Nashville, Tennessee, and receive the same number sometime afterwards. President Perez said he would receive the group with great interest and pleasure.

On the international bribery treaty, Perez said that if he could be assured by the United States that the code of conduct could be agreed to in a certain period, then he would begin talking to other developing country governments about moving more quickly on the illicit payments treaty. President Carter gave him assurances that the US had every intention of working hard for a code of conduct.

President Carter then raised another issue, which is not of great material concern to Venezuela, but nonetheless, he mentioned it as a gesture of friendship. He wanted to take the initiative to alleviate the problem of the OPEC-exclusionary amendment to GSP.¹¹ The problem in changing the amendment was in finding the right formula. The United States does not want to be responsive to Venezuela and Ecuador without also responding to Saudi Arabia and the other OPEC countries. The President alluded to an option which Vice President Mondale had authored, and concluded by saying that “my intention is to correct this problem.”

President Perez thanked the President for bringing up the issue and for his intention to change it. Perez then spoke about how repeal of the discriminatory provision would actually be more in the interest of the United States and the President’s humanitarian foreign policy than in Venezuela’s interest.

President Carter expressed his continuing concern with the Niehous kidnapping case. He referred to a number of inquiries from Mrs. Niehous, Senator John Glenn, and several others.¹² The President believed that President Perez was doing all he could, that he had no quarrel with the way the case has been handled, but he wanted Perez to know that the US was eager to help.

President Perez said that Ambassador Vaky had reminded him of the case several times. The investigation had advanced, but it was uncertain whether Niehous was still alive. Perez was certain, however, of the need to adopt a hard posture with kidnappings; otherwise, there would be many more.

President Carter said that he was greatly concerned about increases in the price of oil. While the United States can afford it, such increases would contribute to worldwide inflation and serve no one’s interest.

In response to President Carter’s comment that a reduction in the price of petroleum would be welcome, Perez said that a reduction in the prices of Venezuela’s imports would also be welcome. Perez complimented President Carter for supporting OPEC by urging Americans to conserve on energy. The price of oil is now related to the price of available substitutes. Thanks to oil and OPEC, Perez said, the world realized the gravity of the energy crisis. Perez informed President Carter that Saudi Arabia would announce in the next ten days its intention to raise its prices so as to unify the price level at ten percent above 1976 levels for the rest of 1977. He said that the 1978 prices will be announced early in 1978, and he noted that OPEC was also concerned about inflation.

President Carter expressed his eagerness to work with Venezuela and with other OPEC nations on scientific research on petroleum production and exploration—for example, on developing technology for the Orinoco tar belt—and also on research on the nuclear fuel cycle. The more our countries work together, the more we can be sure that decisions taken now would not create problems in the future. President Carter hoped that any increase in the 1978 price would be minimal, but he recognized that was OPEC’s decision. The US domestic price will not reach OPEC levels for several years.

President Carter thanked President Perez for Venezuela’s support in the financial consortium to assist Portugal. President Carter, in turn, supported Venezuela’s proposal for a development fund for those countries which move to democracy or show improvement in their human rights record.

President Perez said that he needed the help of the United States and other countries in developing technology for future oil development, but this is a very sensitive issue in Venezuela. Just prior to Perez’ departure, the Venezuelan press speculated that Perez was coming to the US to sell or negotiate the Orinoco tar belt.

Perez noted that any agreement to develop technology for the tar belt must be within the context of an overall plan or agreement between the United States and Venezuela. Our Ambassador and oil ministers can talk and come to an agreement which recognizes the strategic interests and concerns of the United States.

President Perez said we should think of ways to help Spain as well as Portugal since it is in our interest to strengthen these new democratic countries.

Secretary Vance commenced a rather detailed discussion of the outstanding business disputes,¹³ including the question of back taxes which the US oil companies are being asked to pay. Perez assured President Carter that the decision is up to the Venezuelan courts first, but that he is watching it carefully.

President Carter said that James Schlesinger will head the Department of Energy when it is set up, and he hoped that Valentin Hernandez will remain in close touch with Schlesinger in order to increase our cooperation in this area.

President Perez said that he hoped President Carter will find time to visit Venezuela before completing his first term. President Carter recognized the importance of personal contact, but he had sent many programs to Congress, and he wanted to remain in Washington for the first year to work on them.

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 85, Venezuela, 1/77-12/78. Confidential. The meeting took place in the Cabinet Room at the White House.
2. See Document 336.
3. In a June 28 memorandum to Carter, Vance noted that during his lunch meeting with Perez that day, they discussed “what kind of mechanisms should be developed to continue the North-South dialogue. We agreed generally that continued discussions should occur in the context of the United Nations, probably through a committee of about 30 selected by the General Assembly.” (Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 18, Evening Reports [State], 6/77) A draft memorandum of conversation for the Vance-Perez lunch meeting is in the National Archives, RG 59, USOAS Files, 1971–1985, Lot 85D427, OAS—President Carlos Andres Perez, Venezuela, State visit June 27–30, 1977.
4. For more detail regarding the Law of the Sea, see Foreign Relations, 1977–1980, vol. XXV, Global Issues; United Nations Issues, which is scheduled for publication.
5. Bunker and Linowitz briefed Perez on the status of the Panama Canal negotiations earlier that morning. See Foreign Relations, 1977–1980, vol. XXIX, Panama, Document 55.
6. For the June talks on Namibia, see Foreign Relations, 1977–1980, vol. XVI, Southern Africa, Documents 58, 60, and 61.
7. The front-line states were Angola, Botswana, Mozambique, Tanzania, and Zambia. Following the independence of Zimbabwe in 1980, the Organization of African Unity included it in this designation.
8. For the May 1977 meetings between Fahd and Carter, see Foreign Relations, 1977–1980, vol. XVIII, Middle East Region; Arabian Peninsula, footnote 8, Document 149 and Foreign Relations 1977–1980, vol. VIII, Arab–Israeli Dispute, January 1977–August 1978, Documents 36 and 37.
9. In August 1977, the United Nations Economic and Social Council directed that its Ad Hoc Intergovernmental Working Group on the Problem of Corrupt Practices should draft an international illicit payments treaty. (Yearbook of the United Nations, 1977, pp. 1224–1225)
10. See Foreign Relations, 1977–1980, vol. XXX, Public Diplomacy, Document 7.
11. The OPEC-exclusionary amendment to the Trade Act of 1974 excluded all members of OPEC from the U.S. Generalized System of Preferences, or GSP.
12. Records of the inquiries from Donna Niehous were not found. On June 27, Glenn wrote to Carter to express his “deep concern” about both the “terrorist kidnapping” of William Niehous and the “threatened expropriation” of Owens-Illinois property. (Carter Library, National Security Affairs, Staff Material, North/South, Pastor, Country Files, Box 46, Venezuela, 6/28-30/77)
13. In a June 27 briefing memorandum to Vance, Todman recommended that in his conversation with Perez, Vance “express the hope that the oil compensation payments, price regulation on the auto assembly industry and the intended Owens-Illinois nationalization will not disrupt bilateral relations.” (Carter Library, National Security Affairs, Staff Material, North/South, Pastor, Country Files, Box 46, Venezuela, 6/1-27/77)