Foreign Relations of the United States, 1969–1976, Volume XXXVII, Energy Crisis, 1974–1980

227. Telegram From the Mission to the Organization for Economic Cooperation and Development to the Department of State¹

Paris, July 27, 1979, 2234Z.

24069. For Under Secretary Cooper, Assistant Secretary Katz, DAS Calingaert and EUR/RPE for Beaudry. Dept. also pass White House for Ambassador Henry Owen. Dept. also pass DOE/IA for Assistant Sec. Bergold. Subject: France and the IEA. Ref: (A) Paris 23158; (B) Paris 22903; (C) Brussels 12762.²

1. (C—entire text).

2. Summary: The established IEA/French interactions through the Community are now being tested anew by the sequence of events following the Iran revolution. Specifically, the need to coordinate Tokyo Summit decisions of the Seven with those of other OECD member countries raises new institutional questions and may require some changes in existing OECD procedures for energy policy cooperation. This message explores alternative options available to us under the assumption that the U.S. objective is that of achieving the most effective coordination possible of OECD member country energy policies and actions, including those of the French, without derogating from the central role of the IEA. In evaluating these options in terms of the objective, we looked for minimum modifications in current operations which would both be effective in carrying out Summit directives and keep open the option of an eventual French participation in the IEA or its equivalent. We conclude that (A) the existing indirect French relationship with the IEA works satisfactorily in most activities, particularly oil-sharing; (B) meetings outside the IEA context related to Tokyo Summit directives would not be damaging to IEA’s central role provided they are ad hoc, draw on IEA Secretariat assistance, stick closely to the monitoring role and do not become institutionalized through repeated meetings; (C) providing statutory restraints can be resolved, a successor organization to IEA is feasible, and (D) we should await a clear expression of French interest in joining an IEA successor and then proceed only with the understanding that the new organization would retain all of the basic IEA organizational attributes, particularly its rules on procedure and voting. We believe it important that we avoid placing ourselves in a bad negotiating position by prematurely offering proposals to the French before they expose their basic position. End summary.

I. Background and Present Situation

3. The International Energy Agency (IEA) has, since its founding in late 1974, carried out our basic objectives in a satisfactory manner and has served as an effective coordinating mechanism of participating country policies in the current crisis. French non-membership has created no major operational problems. French energy policies have been closely coordinated with the IEA through the Community and, to a lesser extent, through the OECD Committee on Energy Policy (CEP). (A recent example of the effectiveness of such coordination is the prompt French adherence, through the EC, to the IEA Governing Board March decision to cut back imports 5 percent this year.)³ The French provide IEA statistics through regular OECD channels, although with lags on some data.

4. Even on emergency sharing, French participation in the EC sharing system provides an informational and operational link which places them effectively within the IEA system, though again with some lags. They would participate immediately in allocations should an EC country trigger the sharing mechanism. Selective triggering by a non-EC participating country would also involve France, although secondarily, as supplies are reduced among the other eight EC countries. A general emergency would affect France in the same way, except more quickly. In either case, the delay would be relatively brief since it is unlikely that the EC partners would permit France to continue for long to import oil at normal levels while they are on reduced allocations.

5. The French could help IEA operations more than at present if they allowed their oil companies to become members of the Industry Advisory Board, assist statistical compilation, and ease coordination between the EC and IEA oil sharing systems. They could also bring French coal companies more fully into operational activities by permitting French executives to join the Coal Industry Advisory Board and to participate in R&D and conservation activities. These could all be done on a pragmatic basis without prejudice to France’s position toward the IEA.

6. Even though the indirect French/IEA interrelationship works operationally, the organizational untidiness may have some negative political and psychological effects. The most important of these may be the impression that OECD countries lack unity on energy issues. On the other hand, the French have contended that their basic support of the substance of IEA policies, while remaining outside the organization, has softened the IEA/OPEC confrontation.

7. The public image of the IEA within participating countries suffers somewhat from confusion over the French role. EC procedures and Tokyo Summit follow-ons are also complicated by lack of a fully-shared international forum for energy policy coordination.

8. Ideally, an expanded IEA (or its equivalent) including France would be the best instrument for OECD energy coordination in the present situation, but recent signals from the French provide an uncertain if not negative picture (reftels). While the tea leaves may be read differently, our view of their configuration is that: (A) for political and psychological reasons, the French like their position as an inside outsider, where they share in major energy decisions by OECD countries and yet are free to criticize them both at home and abroad; (B) their occasional suggestions that they may be prepared to cooperate more directly with the IEA or join a re-named equivalent may just be feelers to see how far we and other IEA members are prepared to go to meet their yet unspecified desires or, equally likely, could represent uncertainties or differences of view within the French Government on how best to achieve energy coordination without sacrifice to the basic French position on the IEA, and (C) whatever their ultimate position, they are prepared to continue their indirect relationship with the IEA, while proceeding to look for other means whereby they can more directly influence Western energy policies—e.g., post-Summit Energy Ministers meetings or “steering groups” inside or outside the OECD.

9. In sum, the present situation confronts us with the following problems and uncertainties:

—The IEA, without France, has worked well operationally but leaves an impression of disunity among OECD countries on energy policy and direction.

—Coordinating Tokyo Summit directives is complicated by lack of a central forum to which all Summit participants belong.

—Ideally, an expanded or renamed IEA, including France, would resolve these problems.

—The French have given no consistent signs that they are prepared seriously to consider joining a renamed IEA but have indicated they will continue their indirect participation.

II. Options

10. The following options include only those which would operate mainly within the OECD context and contribute to improved coordination, with greater or lesser derogation of IEA’s present role.

A. The Status Quo

Description:

Retain the IEA as principal coordinator of OECD country energy policies and actions, with French indirect participation through the EC.

Advantages:

—maintains our objectives for IEA

—works operationally

—keeps pressure on French to join IEA eventually.

Disadvantages:

—complicates coordination somewhat

—leaves France free to criticize

—risks placing post-Summit cooperation outside the OECD framework.

B. Status Quo Plus OECD Council Working Groups

Description:

Maintain basic IEA role but, for post-Summit coordination, establish one or more working or “steering” groups responsible to the OECD Council with specific mandates for Summit follow-on—e.g., overall coordination, monitoring. Organizationally similar to McPhail group,⁴ with membership open to all OECD countries.

Advantages:

—provides forum for all Summit members to coordinate with non-Summit countries

—if Secretariat support provided by combined energy staff, linkage with IEA is maintained.

Disadvantages:

—derogates from central role of IEA

—adds another layer to coordinating mechanism

—doesn’t resolve disunity question because of low visibility.

C. Upgrade the CEP

Description:

Maintain IEA operational functions but make the CEP the locus for major policy discussions, subsequently to be ratified by the IEA Governing Board, including coordination of Summit follow-ons.

Advantages:

—permits France direct participation in policy making

—provides full-membership forum for post-Summit coordination

—gives visibility to OECD unity.

Disadvantages:

—severely damages IEA role and image

—may raise legal questions with respect to the IEA Charter (1974 Agreement on an International Energy Program)

—slows down the decision-making process by application of OECD rules of procedure and consensus as against IEA rules, especially majority voting on all but new commitments

—could require time-consuming duplicate agendas by CEP and IEA Governing Board.

D. Status Quo Plus Ad Hoc Summit Coordinating Groups

Description:

Retain the IEA coordinating role, with French indirect participation through the Community, while coordinating Tokyo Summit directives through a limited number of ad hoc meetings outside a direct OECD framework of Energy Ministers or their delegates from Summit countries, possibly including several smaller OECD countries, plus EC Commission and EC Council Presidency and OECD Secretariat representation (e.g. IEA Executive Director Lantzke in his capacity as Energy Counselor to the OECD Secretary General).

Advantages:

—retains IEA’s central role

—establishes a non-institutionalized mechanism for overall Summit coordination with an informal link to IEA

—does not compromise the longer range objective of an IEA equivalent with French membership.

Disadvantages:

—though highly visible (e.g. Ministerial meetings), doesn’t fully remove impression of lack of unity

—provides risks of splitting OECD ranks between Summit and non-Summit countries.

E. IEA Successor Organization—Renaming

Description:

We propose two alternatives, though more are possible. The first is simply replacing IEA with a new equivalent. Both alternatives must meet the statutory requirements of present IEA members. The successor organization should also be modeled closely on the 1974 Agreement on an International Energy Program and on OECD Council Directive C(74)203, establishing the IEA and authorizing rules and voting procedures different from those applying to the OECD generally, a vital distinction which has been a key element in IEA’s effectiveness. This first alternative of a new IEA equivalent would operate exactly as the IEA does now, only with a new name and with French membership.

Advantages:

—provide a single forum for energy policy coordination

—give a highly visible symbol of OECD unity on energy matters

—get the French to share in the payment of that which they now receive free.

Disadvantages:

—no clear evidence France would join an organization so transparently the same as the one it has resisted for five years

—should France become a member, we have no assurance that it would be any less difficult than when outside the organization—we may simply be transferring contentious debate from the EC to the new organization

—legal issues may require new statutory authorities for member countries.

F. IEA Successor Organization—OECD Energy Council

Description:

Same basic requirements as in Option E. Establish an OECD Energy Council of approximate equivalence to the OECD Council with, however, the same basic structure and procedures as the present IEA. The IEA Governing Board would in effect become the Energy Council.

Advantages:

—provide a single forum for energy policy coordination

—dramatically display the importance given by OECD countries to energy issues

—likely to be more attractive to the French than a re-named IEA

—secures a French financial contribution.

Disadvantages:

—no clear evidence the French would join

—French could be contentious if they did join

—legal issues may require new statutory authorities for member countries

—the OECD Charter may have to be amended

—the OECD Secretary General may resist this apparent infringement on his authority.

III. Conclusions and Recommendations

11. Given (A) present uncertainties about French attitudes toward direct participation in the IEA or a successor organization, (B) the need to preserve the valuable role being played by the IEA, (C) the requirements for closer coordination with the French on Summit follow-ons and energy policies generally, and (D) weighing the pros and cons of the various options cited, Option D is the most realistic course of action as present policy while we examine the feasibility of either Options E, F or some further variation. In this regard, we should be particularly careful to avoid becoming the petitioner vis-à-vis the French by prematurely offering them a proposal before we have a better appraisal of what they really want. This would tactically put us in a disadvantageous negotiating position and, perhaps, force compromises we do not want. In our view, the disadvantages of the present situation are not of sufficient magnitude as to warrant such a risky strategy.

12. Specifically, we believe we should: (A) continue to support the IEA as the central energy policy coordinating institution; (B) encourage the French to maintain and improve their indirect participation in IEA and to stop sniping at it; (C) indicate willingness to discuss with the French any serious proposals they wish to make on joining the IEA or a successor organization, provided that statutory problems are resolvable and the French are prepared to accept a structure approximately equivalent to that of the IEA, and (D) make clear that meetings of Summit country representatives within or outside the OECD framework must not be institutionalized or otherwise derogate from the IEA role. Regarding (D), we feel that, given non-Summit sensitivities and our shared commitment to the IEA, the frequency of such Summit country meetings will be a key aspect: the more frequent these meetings, the greater the impression of institutionalization and the more divisive the effect within the IEA.

13. Ambassador Salzman actively participated in the drafting of this message and approved it prior to his departure on leave.

Ryan

1. Source: National Archives, RG 59, Central Foreign Policy Files, D790346–0118. Confidential; Noforn; Exdis. Repeated to Brussels for USEC and Ambassador Hinton.
2. In telegram 23158 from Paris, July 19, the Embassy reported: “French Elysée official told Dutch official this week we will see IEA ‘crumbling away’ and a group formed at Ministerial and official levels to cooperate on energy.” (Ibid., D790329–0637) Telegram 22903 from Paris, July 18, detailed a meeting between the Embassy’s Economic Minister and the French Foreign Ministry’s Economic Director, at which the two discussed France’s views on IEA membership and its suggestion for a meeting of Energy Ministers from the countries that had attended the Tokyo Economic Summit. (Ibid., D790324–0709) In telegram 12762 from Brussels, July 15, the Embassy informed the Department that, in a private conversation with a New York Times reporter, French Foreign Minister Jean François-Poncet remarked that France wanted to have a closer relationship with the IEA. He also said that “while France could not join, it might be possible to reconstitute organization to permit French participation.” (Ibid., D790324–0135)
3. See footnote 6, Document 192.
4. In 1978, the OECD Council established a Working Party, headed by D.S. McPhail, to assist developing countries with renewable energy sources.