18. Telegram From the Department of State to the Embassies in Japan, the United Kingdom, and France1
250994. Subject: Letter From Secretary to Foreign Minister.
1. Please deliver the following letter to the Foreign Minister not before 5:00 PM local time Thursday, November 14 in Europe, and as early as possible during the business day in Japan, Friday, November 15.2 The Secretary’s speech referred to in this letter will be delivered Thursday, November 14 in Chicago at 9:25 PM local time.3 You should ask that the Secretary’s letter be held in strictest confidence until he delivers the speech.
2. Dear Mr. Minister: The effects of the energy crisis have now become manifest—in more rapid inflation, arrested growth, increasing strains on the international financial system and narrowing opportunities for governments to control their countries’ own political and economic destiny. This relentless course of events lends new urgency to our joint efforts to design and carry out an effective strategy to overcome the problems emanating from the energy crisis.
3. The USG believes that the conclusion is inescapable that cooperation among the major oil consuming areas of Europe, North America and Japan is the fundamental prerequisite for an effective program of action. The crisis itself defies national solutions. But working together we do have options which we do not have separately. Whereas no country alone, except possibly the United States, can protect itself in a selective embargo, together we can do so.
4. We now need to move further in the cooperative endeavors begun this year at the Washington Energy Conference and carried forward in subsequent deliberations. Our work has now progressed to the stage where we should advance some of the proposals we have been considering among the Five to the broader group of countries that will need to act on them. As a part of this process, I intend to present some U.S. proposals in a speech on the evening of November 14 in Chicago. I want to share with you some of the reasoning behind these proposals, as well as the nature of the proposals themselves, although our general thoughts are already familiar to you.
[Page 76]5. On the important question of oil price, the producers have made it clear that political persuasion or negotiation is not now going to result in any notable price decrease. The alternative left us is, therefore, the difficult but workable one of action on the consumer side (1) to create the objective conditions for an eventual price reduction, and (2) to protect the vitality of our economies in the interim period of high oil prices. To achieve the first objective consuming countries need major new efforts both to reduce demand for oil through conservation and to develop new sources of energy supply. In the period until these actions reach full effectiveness consuming countries, as we have recognized, need to complete two safety nets, one to deal with any new oil supply emergency and the other to deal with any potential inability of the financial system to recycle the huge flow of oil funds.
6. Energy conservation offers us the most immediate prospect of relief from high oil prices. For political as well as economic reasons effective conservation must be a collective effort. At a minimum we should collate our individual country programs for 1975 to make sure that we are doing enough. The U.S. will propose that the industrialized countries set the goal of reducing their consumption from what it otherwise would have been by three million barrels per day (150 million tons at an annual rate) by the end of 1975. The United States has already announced a program to reduce our consumption of imported oil by one million barrels per day in 1975. In the context of a common goal of consuming countries, the United States is prepared to achieve further savings.
7. In dealing with recycling of oil funds, we need to consider three basic objectives: to protect the integrity of our financial institutions, to ensure that no nation feels forced to pursue disruptive policies for lack of adequate finance and to make sure no consuming country is compelled to accept financing on intolerable political and economic terms. The task for governments is to provide a back-up, intergovernmental facility that can augment private recycling whenever necessary. Such a safety net would help assure the stability of the entire system and the creditworthiness of participating governments.
8. With these considerations in mind the United States is proposing that the industrialized countries create a common loan and guaranty facility to provide a means for recycling up to $25 billion in 1975. Governments would individually choose how to meet their commitments to such a facility, but presumably most would choose to do so by borrowing. Calls on governments’ commitments to provide funds to the facility would be made in connection with specific decisions of participating governments on support to countries in need of financing, after full resort to private opportunities and reasonable self-help measures.
9. We are already considering new ways of assisting developing countries in their acute financial problems. We need to consider new [Page 77] possibilities of providing highly concessional financing to the developing countries most seriously hurt by the current crisis. In particular, special financing of the IMF needs to be provided on terms more suitable to these countries’ needs.
10. As you know, the US has always been in favor of a constructive dialogue with oil producing countries. Consumer country cooperation is not antagonistic to consumer-producer cooperation, but an essential preparation for this broader dialogue.
11. The USG hopes that consuming countries can move promptly to broaden our cooperative effort. The new International Energy Agency is best placed to develop a program of action on conservation, new supplies and preparation of consumer positions for the eventual consumer-producer dialogue. We suggest that the Group of 10 Finance Ministers develop a proposal for financial cooperation looking to enactment within the OECD framework.
12. The issues and tasks before us comprise a program of considerable magnitude, requiring difficult political decisions. But just as the turmoil of the immediate post-war period became a moment of great creation in international cooperation, so can the energy crisis of today be one leading to historic achievement through cooperation. The economic facts of today are stark, as they were in 1947–1948. The structure emerging from that challenge has secured our democratic institutions, economic progress and security for a generation. These achievements are now threatened. But with the same political vision, courage, and above all, cooperation that sustained us in the earlier years, we can meet the new energy challenge.
13. I look forward to working with you on these tasks in the period immediately ahead, and hope that we can count on your support and that of your government for the proposals we have made.
Signed Henry A. Kissinger.
14. For Paris: Final sentence of letter should end with words “immediately ahead”, eliminating all thereafter from “and hope” through “we have made.”4
- Source: Ford Library, National Security Adviser, Presidential Country Files for East Asia and the Pacific, Box 8, Japan—State Department Telegrams from SECSTATE–NODIS (1). Secret; Niact; Immediate; Nodis. Drafted by Boeker; cleared by Hartman, Enders, and Habib; and approved by Eagleburger.↩
- Kissinger sent the same letter to Genscher on November 14. (Telegram 250993 to Bonn; ibid., Presidential Country Files for Europe and Canada, Box 6, Germany—State Department Telegrams from SECSTATE–NODIS (1))↩
- See footnote 4, Document 17.↩
- On November 17, Kissinger sent a note to Enders in Paris instructing him “to go to European capitals to brief key figures in greater detail on the initiatives in my Chicago speech and to begin the process of lining up support for our initiatives.” He added: “I recognize that you will have opportunity to meet with some of these officials in Paris during meetings of IEA and Working Party Three. You should however go on to capitals for follow-on discussions unless you believe it would be totally redundant. You should report to me from each capital you visit as well as on the results of your talks in Paris.” (Telegram 253541 to Paris; Ford Library, National Security Adviser, Presidential Country Files for Europe and Canada, Box 4, France—State Department Telegrams from SECSTATE–NODIS (1)) Enders was in Paris for the OECD Council meeting and the first meeting of the International Energy Agency. See Document 20.↩