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it represents an assurance of a high probability, at a minimum, that the event to which it refers will in fact happen.

We think it will happen before the end of this month.

Q Mr. Secretary, will you indicate the direction you expect the February 11 Foreign Ministers' meeting to take?

SECRETARY KISSINGER: The conference on February 11 on energy, which was called by the President on January 9th, addresses the technical problem of the energy crisis, but even more importantly, the moral and political problem that is produced by the energy crisis.

Here we confront a difficulty that will be with us for the rest of this decade, the nature of which can be statistically demonstrated, and for which there cannot be any bilateral solution, and the basic issue that confronts the oil consuming countries is not whether they can come up with this or that technical problem, but whether they are going to behave like the Greek city states when they confronted Macedonia and Rome, and consumed themselves with petty, senseless bickering, or whether they are going to approach a multilateral solution.

We are in the position where we can deal with this crisis on an economic level without foreign assistance. We are, in fact, in a position where on strictly economic grounds, nothing would suit us better than for the bilateralism of so many of the other countries to continue, because either they are going to price themselves totally out of the market or they will force us into bilateral deals of our own in which our resources and our political influence will give us a dominant interest.

However, the only way we can achieve these victories is at the risk of a possible major economic impact all over the world, and what is even more important, at the risk of wrecking the cooperative relationships which the United States has built up in Europe and in Japan for 25 years.

- 8 -

So we will go to this conference putting before our associates the opportunity of the only solution that can possibly work. Faced with these current prices of the oil producing countries, there is no alternative to cooperation. There is no country except the United States that can meet the foreseeable deficits by trade. There is no country that can deal with it by bilateral efforts, and therefore, we will put before these countries an opportunity to share with them our analysis, some of our technology, joint efforts at consumer restraints, international mechanisms to mitigate some of these impacts and to give all countries an opportunity to solve a crisis which has no other solution.

Q Would you comment on the rumors that there are some changes in our relations with Cuba?

SECRETARY KISSINGER: There is no basis to these rumors. We have had no overtures, nor has there been up to now any visible change in Cuban policy.

####

PRESS
DEPARTMENT OF STATE

[LC]

February 6, 1974

No. 41

REMARKS OF
THE HONORABLE HENRY A. KISSINGER
SECRETARY OF STATE
BEFORE THE HARVARD/PRINCETON/YALE CLUB
WASHINGTON, D.C.

SECRETARY KISSINGER: I thought I would talk to you briefly about the energy conference that is starting next week here in Washington, to which the Foreign Ministers of thirteen countries will come together with several Finance Ministers, and heads of the energy programs of the countries concerned.

What are we trying to do?

There are some who say we are trying to organize a consumers cooperative. There are others who argue that we are trying to produce a confrontation with the producers. There are others who say that we are neglecting the less developed countries. None of these statements are accurate.

The energy problems will have to be settled in a discussion between the consumers and the producers and we expect that very soon after the conclusion of the conference of the consumers, there will be a conference, first, between the nations that are coming next week, and the consuming less developed countries. And then very shortly after that, a meeting between all of the consumers and the producing countries.

For further information contact:

A2

The reason that we thought it essential that
those nations that consume and import 85 percent of the
world's energy meet first, is because they have a common
problem of a very large size, that is manageable by cooper-
ative effort only; and that will surely lead to the ruin of
everybody if it is attempted to be settled on a unilateral
basis.

What is the problem?

It became apparent during the fall, that the
incentives for supply are not keeping up with the world-
wide demand for energy, and it became even more evident
during the winter, that the rise in prices faces all the nations
of the world with a situation that they are totally
incapable of solving on an individual basis.

Indeed, of all the nations in the world,
the United States is in the best position to solve the
problem on an individual basis.

At current prices, the advanced countries will
run a deficit of $39 billion. At current prices, the
less developed nations will run a deficit of $29 billion
for their energy bill.

The price of energy for the less developed

A3

countries is four times more than the total aid flow from all the countries in the world. To put it another way:

> If all the countries had abolished their aid program, the impact on the less developed countries would have been much less severe than the rise in prices that was agreed to in one afternoon, by the oil producing countries.

> With these deficits, no country can meet its energy needs by its own efforts. There is no way, given the requirements of the producing nations, by which the deficit can be closed through trade arrangements.

> And therefore, all nations in the world have a common problem of how to assure their supply and how to relate the prices to the structure of the world's economy.

> This is equally in the interests of the producing nations, because if there were a world economic recession, even the producing nations would suffer.

A4

The United States is approaching this conference with the attitude that as once before, at the end of World War II, when there were great dislocations in the world, the United States recognized that it had a profound interest in world economic stability -- and even more, that we have a profound interest in world cooperative relationships.

All the problems that I have described, affect the United States least.

As the President has pointed out, we can become self-sufficient with respect to energy by the end of this decade; and even during this decade we can meet most of our needs from expanded domestic production and other sources, and we are in the best position to make bilateral arrangements of our own.

On the other hand, if every nation adopts a policy of beggaring its neighbors, a collapse of the world economy will be inevitable and the whole structure of cooperative world relationships that has developed since the war will be in jeopardy.

We are, therefore, approaching the nations that we have invited -- not to ask them to join us in a

A-5

confrontation, nor in a spirit of gaining any unilateral
benefit -- but rather with the attitude that we are
prepared to share our resources and our knowledge in a
cooperative effort to improve the supply of all nations
and work out arrangements by which, when the consumers
introduce their needs, in the next two weeks or months,
they can talk about their common problems with more con-
fidence and with better vision.

We will put before our colleagues our assessment
of the supply situation, which we think need not be as
bleak as has been often described.

We will describe what we are prepared to do in
the field of consumer restraints, sharing research and
development, developing alternative sources of energy.
We shall also be prepared to discuss with the nations
involved, a system of emergency allocations in case there
should be temporary difficulties with supply.

We expect that all other nations will deal
with this as a global problem, and will recognize, as
we have recognized, that it is not possible to make any
unilateral advantage out of the situations that affect
the well-being of all of our people.

A6

We also expect to put before these nations
our profound concern, whither the plight of the
less developed countries and the necessity of helping the
less developed countries to meet their energy demands.

And finally, we expect to meet in the very
near future with the producing countries, in the same
spirit of cooperation, with the same recognition that
they, too, are part of a world community and that they too
cannot benefit from the deterioration, either of the
world economy, or of international standards of conduct.

This is what the conference next week is
about, and it marks, in our view, an important stage
to the construction and to the maintenance of the
cooperative world order that has been the objective of
every American administration -- on a bipartisan basis --
ever since World War II.

And now I'll be glad to answer your questions.

[Applause.]

Q You have indicated that the Arabs will
lift the oil embargo. Will you tell us when this can be
expected? [Laughter.]

A7

A I indicated that I would be led to expect that progress on Israeli-Arab negotiations would lead to a lifting of the oil embargo.

I have also repeatedly pointed out that the United States could understand the embargo being put on in the heat of the conflict, under conditions in which the Arab nations had not yet seen the scope of the American diplomatic effort.

Since October, the United States first brought about the cease-fire -- the six point agreement -- the disengagement between Egypt and Israel. To maintain an embargo now under these conditions must be construed as a form of blackmail and it would be highly inappropriate and cannot but affect the attitude with which we would have to pursue our diplomacy.

However, we therefore think that the decision to lift the embargo, which is essentially for the Arabs to take, will be taken in that spirit.

B-1

Q Mr. Secretary, this deals with your comments on bilateral arrangements. At present there have been negotiated bilateral country-to-country relations between Japan and some of the host countries in the Middle East and certain other countries. Will your program and your conference next week deal with revoking these, or will it take any action with respect to it?

A Obviously, arrangements that exist cannot be revoked. Nor are we opposed to bilateral deals as such. What we believe is necessary are some general rules of conduct within which these bilateral deals take place.

Let me make clear that our concern with bilateral deals is not because they affect American sources of supply in the long term. Our concern is that at present prices most of the nations making bilateral deals are going to be running out of reserves, or else they are going to be impelled to pay for them by means of commodities that have no fixed price, such as armaments, which can only destabilize the situation even further.

B-2

Our concern about bilateral deals is that they tend to support a price which is ruinous first to the nations making them and generally to the world economy. And what we would like to see are some general rules of procedures within which bilateral deals will be made, because obviously no nation is going to give us its right to deal with its own sources of supply.

Q Sir, what are your views concerning the detente with the Soviet Union, especially in view of the recent statements in the Soviet press that they consider it a chance to be something that only the communist countries want to get something from the Soviet Union and this is why they are playing up the detente?

A I am not familiar with the statement in the Soviet press to which you refer.

Let me explain our basic attitude towards detente. When this Administration came into office, we stated that we advocated negotiation and not confrontation. We also stated that we would ease up on commercial relations with the Soviet Union. At that time we were criticized by many people for making progress in the economic field dependent

B-3

on foreign policy conditions. It is only lately that the argument has been advanced that one should make progress in the economic field dependent not just on foreign policy progress but on the domestic transformation of the Soviet society.

What is the issue in the relationship with the Soviet Union? Here are two societies possessing a capability of destruction unparalleled in human history and unimaginable for most of mankind. Both sides have the capacity of destroying civilized life as we understand it. These weapons are multiplying. The confrontations around the globe, given the nature of modern communications, are increasing under conditions of tension. It is the duty of any national leader of whatever party to reduce the danger of nuclear confrontation and to spare mankind the threat of a nuclear holocaust. And, therefore, the principal obligation of the foreign policy of the United States has to be to moderate Soviet foreign policy conduct.

That does not mean we approve Soviet domestic behavior. It does not mean that we consider Soviet leaders exhibiting the same standards of domestic conduct that we expect of others. Nevertheless, in the face of the

B-4

overwhelming danger of a nuclear confrontation it is
incumbent on any leader to attempt to restrain the
outbreak of nuclear war.

Therefore, our concern with detente has been
directed to moderate Soviet foreign policy behavior.
And that has been on the whole substantially successful
with occasional aberrations, as is inevitable when nations
have flying space all over the world. This is why we are
concerned with moderating the arms race. This is why we
are concerned with forging certain links in commercial
and cultural fields. It does not mean approval of the
domestic structure of the Soviet Union. Where appropriate
we have used our influence, and successfully, as in the
case of Jewish emigration, to bring about an amelioration
of these conditions. But we should not play with the
danger of nuclear war, and we should not turn this into
an issue of domestic debate. Whether we succeed in it this year
or next year, the problem of nuclear war must be solved if
mankind is to survive.

[Applause]

I'll take one more question.

B-5

Q In light of your answer to the first question, and in light of the news that Syria has persuaded Saudi Arabia not to lift the oil embargo until Israel withdraws to its '67 borders on the Syrian front, do you feel the U.S. is currently being blackmailed? And, if so, by which country or countries?

[Laughter]

A We have not received any official information to the effect that Syria requires Israel to withdraw to the '67 border. But I have stated our general position. The United States has declared, because of its interest in peace in the Middle East, because of its conviction that a continuation of the conflict there has danger for all of mankind, for these reasons the United States has declared its readiness to help bring about the implementation of the relevant United Nations Resolution. And the United States has made major efforts, I would say exclusive efforts, to bring about every political improvement in the Middle East that has occurred since October.

If now pressure tactics are continued, it can only be construed as blackmail, and it can only be construed as blackmail by whichever country uses them.

NEWS
RELEASE

BUREAU OF PUBLIC AFFAIRS

Department of State
Office of Media Services

Speech Text:

SECRETARY KISSINGER DISCUSSES
U.S. RELATIONS WITH PANAMA,
WESTERN HEMISPHERE

February 7, 1974

FOR IMMEDIATE RELEASE

An address by Secretary of State Kissinger
at Panama February 7, 1974 on the occasion
of the signing of the Joint Statement of
Principles for negotiations on a new
Panama Canal Treaty.

We meet here today to embark upon a new adventure together. Our
purpose is to begin replacing an old treaty and to move toward a new
relationship. What we sign today hopefully marks as well the advent
of a new era in the history of our Hemisphere, and thus makes a major
contribution to the structure of world peace.

Meeting as we do on this Isthmus which links North with South and
Atlantic with Pacific, we cannot but be conscious of history -- a his-
tory which has profoundly changed the course of human affairs. Four
centuries ago the conquistadors landed here bringing faith and taking
booty. They were representatives of the traditional style and use of
power. Seventy years ago, when the Panama Canal was begun, strength
and influence remained the foundation of the world order.

Today we live in a profoundly transformed environment. Among the
many revolutions of our time, none is more significant than the change
in the nature of world order. Power has grown so monstrous that it
defies calculation; the quest for justice has become universal. A
stable world order cannot be imposed by power; it must derive from
consensus. Mankind can achieve community only on the basis of shared
aspirations.

This is why the meeting today between representatives of the most
powerful nation of the Western Hemisphere and one of the smallest holds
great significance. In the past our negotiation would have been deter-
mined by relative strength. Today we have come together in an act of
conciliation. We recognize that no agreement can endure unless the
parties to it have a stake in maintaining it. Participation in part-
nership is far preferable to reluctant acquiescence.

What we do here today contains a message, too, for our colleagues
in the Western Hemisphere who, in their recent meeting in Bogotá, gave
impetus to this negotiation. The method of solution and the spirit of
partnership between Panama and the United States as embodied in this
agreement are an example of what we mean by the spirit of community
in the Western Hemisphere -- it can be the first step toward a new
era which we believe will be given fresh hope and purpose when we
meet again with the Foreign Ministers of all the Hemisphere in two
weeks' time.

PR 42

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The United States and Panama

The relationship between Panama and the United States is rooted in extraordinary human accomplishment -- the Panama Canal, a monument to man's energy and creative genius. But as is so often the case, man's technological triumph outstripped his political imagination.

- For sixty years, the safe, efficient and equitable operation of the Canal has given to Panama, to the United States and to all nations, benefits beyond calculation.

- Yet, the Canal still operates under the terms of a treaty signed in 1903, when the realities of international affairs were still shaped by traditional precepts of power.

- The tensions generated by these contradictions -- the endless debates over the costs and benefits of the Convention of 1903 -- have jeopardized the ability of our two countries not only to work together to meet future demands upon the canal but also to develop a constructive relationship as friends.

We must assess the document we have just signed against this background of reward and frustration. Above all, we must judge it in the context of what it means for the peoples of the United States and Panama and what it can mean for the people of the Western Hemisphere.

The eight principles in this agreement constitute, as General Torrijos has said, a "philosophy of understanding." Sacrificing neither interest nor self-respect, Panama and the United States have made a choice for partnership. Meeting in dignity and negotiating with fairness, we have acknowledged that cooperation is imposed upon us by our mutual need and by our mutual recognition of the necessity for a cooperative world order. Foreign Minister Tack and Ambassador Bunker have shown that Panama's sovereignty and the vital interests of the United States in the Panama Canal can be made compatible. They have engaged in an act of statesmanship impelled by the conviction that we are part of a larger community in the Americas and in the world.

In that spirit of partnership the United States and Panama have met as equals and have determined that a just solution must recognize:

- First, that Panama and the United States have a mutual stake in the Isthmus: Panama in its greatest natural resource -- its strategic location -- and the United States in the use and defense of the canal;

- Second, that the arrangement which may have been suitable seventy years ago to both the United States and Panama must be adjusted to meet the realities of the contemporary world;

- Third, that a new treaty is required which will strengthen the relationship between us while protecting what is essential to each. A new agreement must restore Panama's territorial sovereignty while preserving the interests of the United States and its participation in what is for us an indispensable international waterway.

Our agreement is the culmination of a long and difficult negotiation.

While we have taken a great stride forward, we must still travel a difficult distance to our goal. There is opposition in both our countries to a reasonable resolution of our differences. Old slogans are often more comforting than changes that reflect new realities. It is the essence of revolutions that to their contemporaries they appear as irritating interruptions in the course of a comfortable normalcy. But it is equally true that those who fail to understand new currents are inevitably engulfed by them.

-3-

We are determined to shape our own destiny. Our negotiators will require wisdom, purposefulness, tenacity. They will meet obstacles and disagreements. Yet, they will succeed — for our relations and our commitments to a new community in this Hemisphere demand it.

In the President's name, I hereby commit the United States to complete this negotiation successfully and as quickly as possible.

## The Western Hemisphere Community

We are here today not just as two sovereign nations but as representatives of our Hemisphere. We meet at a point of time between the meetings of Foreign Ministers in Bogotá and Mexico City which can mark an historic turning point in Western Hemisphere relationships.

I know that many of my country's southern neighbors believe they have been the subject of too many surveys and too few policies. The United States is accused of being better at finding slogans for its Latin American policy than at finding answers to the problems that face us all.

Some of these criticisms are justified. At times rhetoric has exceeded performance. But the United States has been torn by many problems; only from afar does it appear as if all choices are equally open to us. We have not been willfully neglectful. And in any case, we have recognized that the time for a new approach is overdue.

I have come here today to tell you on behalf of our President that we are now fully committed to a major effort to build a vital Western Hemisphere community. We understand our own needs:

- To live in a hemisphere lifted by progress, not torn by hatreds.

- To ensure that the millions of people south of us will lead lives of fulfillment not embittered by frustration and despair.

- And, above all, to recognize that in the great dialogue between the developed and the less developed we cannot find answers anywhere if we do not find them here in the Western Hemisphere.

For with all our differences, the nations of this Hemisphere share similar histories and comparable aspirations. They have a common view of the dignity of man. They have the human and economic potential for great acts of common creation.

It is in this spirit that I shall meet my colleagues in Mexico City later this month to deal with the issues posed by them in their Bogotá meeting. We attach particular significance to the fact that the meeting in Mexico City — its substance and its impetus — is the product of Latin American initiative. It is a response to the necessities of the times such as the United States had hoped to achieve with partners elsewhere in the world.

The United States will not come to Mexico City with a program that presumes to have all the answers. Nor will we pretend that our lost opportunities can be remedied by yet another freshly-packaged program labeled "Made in the U.S.A." But we shall come with an open mind and, perhaps more importantly, with an open heart. We are at a moment of truth, and we shall speak the truth.

We know that our neighbors are worried about the blackmail of the strong. We want them to know that we are sympathetic to this concern. At the same time, blackmail is no more acceptable from any other source. We need each other. So let us seek solutions free of pressure and confrontation, based on reciprocity and mutual respect. In Mexico City we can but lay the foundations for the future. But building upon what we achieve in Mexico City we can, over the months and years ahead, erect an edifice of true partnership, real trust and fruitful collaboration.

-4-

Thus we approach the meeting in Mexico with but one prejudice: a profound belief that the Americas, too, have arrived at a moment of basic choice, a time of decision between fulfillment together and frustration apart. Our choice will be found in the answers we give to these critical questions:

- Can we make our diversity a source of strength, drawing on the richness of our material and moral heritage?

- Can we define together, concretely and realistically, the role for the United States in support of Latin American efforts to build a better Western Hemisphere?

- Can we together determine how Latin America's new identity and strength can contribute to a hemispheric community?

- In short, can the countries of Latin America, the Caribbean, and the United States, each conscious of its own identity, fashion a common vision of the world and of this Hemisphere -- not just as they are, but as they are becoming and as we feel they should be -- so that we can move together toward the achievement of common goals?

We will conduct the broader dialogue we have all set for ourselves in Mexico City with the same commitment to reciprocity, the same consideration of each other's interests, that marked the negotiations between the United States and Panama.

Thus, in Mexico, we seek to initiate a process. We want to shape a new relationship harnessing the political and economic forces of our time to move us toward beneficial cooperation rather than apart into destructive confrontation. Justice -- not size or strength -- should be the test of our relations.

We begin the quest aware that we are old friends. If we cannot creatively arrive at a modern relationship, the implications will be somber indeed for a global community which shares neither our sense of common destiny nor our history of collaboration.

For centuries men everywhere have seen this hemisphere as offering mankind the chance to break with their eternal tragedies and to achieve their eternal hopes. That was what was new about the New World. It was the drama of men choosing their own destinies.

An American poet has written:

"We shall not cease from our exploration,
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time."

Panama and the United States have now begun this exploration. Our sister republics can make the same choice. Our creativity, our energy and our sense of community will be on trial. But if we are equal to the opportunity, we will indeed arrive where we started -- a hemisphere which again inspires the world with hope by its example. Then we shall indeed know the place for the first time because for the first time we shall truly have fulfilled its promise.

NEWS

BUREAU OF PUBLIC AFFAIRS

RELEASE

U.S., PANAMA AGREE ON
PRINCIPLES FOR CANAL NEGOTIATIONS

FOR IMMEDIATE RELEASE

February 7, 1974

The Statement of Principles signed today by Secretary of State Kissinger and Foreign Minister Tack of Panama opens a new phase in the negotiations between the United States and Panama on a modern canal treaty.

In September 1973 Secretary Kissinger charged Ambassador at Large Ellsworth Bunker with renewing discussions with Panamanian officials for the purpose of arriving at a common approach to future treaty negotiations. Ambassador Bunker visited Panama November 26 to December 3, 1973 and again on January 6 and 7, 1974 to discuss with Panamanian Foreign Minister Tack general principles upon which a new treaty might be based. These discussions have resulted in the Statement of Principles of February 7.

The principles will serve as guidelines for the next round of treaty talks which are expected to get under way in the near future. The principles are general in character and do not address the many specific issues involved in defining the new treaty arrangement. These remain to be negotiated.

The United States welcomes the agreement on principles as a demonstration of how two countries with shared purposes can reach an understanding which fairly balances their interests, rights, and obligations.

Following is the text of the Joint Statement and a background paper on the status of the Panama Canal treaty negotiations:

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JOINT STATEMENT BY THE HONORABLE HENRY A. KISSINGER,
SECRETARY OF STATE OF THE UNITED STATES OF AMERICA,
AND HIS EXCELLENCY JUAN ANTONIO TACK, MINISTER OF
FOREIGN AFFAIRS OF THE REPUBLIC OF PANAMA, ON
FEBRUARY 7, 1974 AT PANAMA

The United States of America and the Republic of Panama have been en-
gaged in negotiations to conclude an entirely new treaty respecting the
Panama Canal, negotiations which were made possible by the Joint Declaration
between the two countries of April 3, 1964, agreed to under the auspices of
the Permanent Council of the Organization of American States acting provis-
ionally as the Organ of Consultation. The new treaty would abrogate the
treaty existing since 1903 and its subsequent amendments, establishing the
necessary conditions for a modern relationship between the two countries
based on the most profound mutual respect.

Since the end of last November, the authorized representatives of the
two governments have been holding important conversations which have per-
mitted agreement to be reached on a set of fundamental principles which
will serve to guide the negotiators in the effort to conclude a just and
equitable treaty eliminating, once and for all, the causes of conflict be-
tween the two countries.

The principles to which we have agreed, on behalf of our respective
governments, are as follows:

1. The treaty of 1903 and its amendments will be abrogated by the conclusion of an entirely new interoceanic canal treaty.

2. The concept of perpetuity will be eliminated. The new treaty concerning the lock canal shall have a fixed termination date.

3. Termination of United States jurisdiction over Panamanian territory shall take place promptly in accordance with terms specified in the treaty.

4. The Panamanian territory in which the canal is situated shall be returned to the jurisdiction of the Republic of Panama. The Republic of Panama, in its capacity as territorial sovereign, shall grant to the United States of America, for the duration of the new interoceanic canal treaty and in accordance with what that treaty states, the right to use the lands, waters, and airspace which may be necessary for the operation, maintenance, protection and defense of the canal and the transit of ships.

5. The Republic of Panama shall have a just and equitable share of the benefits derived from the operation of the canal in its territory. It is recognized that the geographic position of its territory constitutes the principal resource of the Republic of Panama.

6. The Republic of Panama shall participate in the administration of the canal, in accordance with a procedure to be agreed upon in the treaty. The treaty shall also provide that Panama will assume total responsibility for the operation of the canal

upon the termination of the treaty. The Republic of Panama
shall grant to the United States of America the rights neces-
sary to regulate the transit of ships through the canal,
to operate, maintain, protect and defend the canal, and to
undertake any other specific activity related to those ends,
as may be agreed upon in the treaty.

7. The Republic of Panama shall participate with the United States of America in the protection and defense of the canal in accordance with what is agreed upon in the new treaty.

8. The United States of America and the Republic of Panama, recognizing the important services rendered by the interoceanic Panama Canal to international maritime traffic, and bearing in mind the possibility that the present canal could become inadequate for said traffic, shall agree bilaterally on provisions for new projects which will enlarge canal capacity. Such provisions will be incorporated in the new treaty in accord with the concepts established in principle 2.

BACKGROUND AND STATUS OF THE PANAMA CANAL TREATY NEGOTIATIONS

The United States and Panama are currently involved in negotiations for a new treaty to replace the Treaty of 1903 relating to the Panama Canal.

In that treaty Panama granted to the United States -- in perpetuity -- the use of a 10-mile wide zone of Panamanian territory for the "construction, maintenance, operation and protection" of a canal, as well as all the rights, power and authority within that zone which the United States would "possess if it were the sovereign." The very favorable treaty for the United States was the major reason for its decision to build the canal in Panama rather than in Nicaragua as initially planned.

## Value of Canal

Since its opening in 1914, the canal has provided benefits to the United States, to Panama, and to the world without any increase in toll rates. The first increase (19.7% effective July 1, 1974) has recently been proposed by the Panama Canal Company because of current and projected losses due to recent increases in operating costs. In fiscal year 1973 the company sustained a net operating loss of more than $1 million.

Some 70 percent of the tonnage through the canal in recent years has either originated in, or been destined for, the United States. That tonnage has represented about 16 percent of the total of U.S. export and import tonnages. The proportions of exports and imports which move through the canal to and from the Latin American countries bordering upon the Caribbean and the Pacific, however, greatly exceed the U.S. proportion of 16 percent.

The canal has also served Panama well. Panama's position in the world is, in large measure, the result of the existence of the canal in its territory. More than 40 per cent of Panama's foreign exchange earnings, and nearly one-third of its gross national product, are directly or indirectly attributable to the presence of the canal.

## Panamanian Treaty Concerns

Panama has been dissatisfied with the treaty for many years. Part of this dissatisfaction has derived from Panama's views of two aspects of the negotiation of the Treaty of 1903: (1) that Panama's dependence upon the United States to protect its new-found independence from Colombia placed it in a position in which it felt that it had to accede to U.S. desires respecting the content of the treaty; and (2) that Panama's principal negotiator was a Frenchman who stood to benefit considerably if the United States purchased the private French concession to build a trans-isthmian canal.

Over the years, Panama has also charged that the United States has unilaterally interpreted the treaty to Panama's disadvantage, and given Panama an inadequate share of the benefits from the operation of the waterway. Even more objectionable in Panama's view are the provisions in the Treaty of 1903 which give governmental jurisdiction within a portion of Panamanian territory to a foreign power in perpetuity.

The United States has responded sympathetically to some of these Panamanian concerns. In 1905 it recognized Panama's titular sovereignty

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over the Canal Zone. The treaty was revised in 1936, and again in 1955, to provide Panama with a greater share of the economic benefits of the canal and to remove certain outdated aspects, such as the right granted to the United States to interfere, when it believed necessary, in Panama's internal affairs. Despite these modifications, however, many of the features of the treaty most objectionable to Panama remain unchanged.

The canal has become the major political issue in Panama, and the intensification of Panama's campaign for more favorable treaty terms in recent years has produced tensions in U.S.-Panamanian relations. In 1964 a flag-raising incident in the Canal Zone led to riots which resulted in the death of 20 Panamanians and 4 Americans and brought the Panama Canal issue to the attention of the United Nations and the Organization of American States (OAS).

## Bilateral Negotiations on New Treaty

Following discussion of the issue in the OAS, UN, and other international agencies, the U.S. and Panama agreed in 1964 to begin bilateral negotiations for a new treaty. In so doing, the U.S. recognized that a comprehensive modernization of its relationship with Panama corresponded to its long-term national interests and to a changing international environment.

U.S. officials entered the negotiations in late 1964 with three basic objectives:

- The canal should continue to be available to the world's commercial vessels on an equal basis at reasonable tolls;

- it should be operated and defended by the United States for an extended, but definite, period of time;

- it should serve world commerce efficiently. To this end, the United States should have the right to provide additional canal capacity when it is needed.

By 1967, the negotiators of both countries had prepared three draft treaties. They provided for operation of the present canal under a joint U.S.-Panamanian authority; for construction and operation of a sea-level canal under a similar joint authority; and for U.S. defense of the old and new canals for the duration of each treaty. Neither Panama nor the United States Government moved to ratify these treaties, and the new government headed by General Omar Torrijos, which assumed power in October 1968, formally rejected them.

In 1970 the Government of Panama requested the renewal of negotiations and the U.S. agreed. President Nixon established negotiating objectives similar to those set by President Johnson in 1964, although modified by developments since that time. The objectives and positions of the United States thus reflect a bipartisan approach to treaty negotiations with Panama. They also are consistent with the broader policy stated in the President's 1972 Foreign Policy Report to the Congress. In that report he made it clear that our policy is not to seek to dominate Latin American nations but rather to develop with them a mature and stable partnership.

-6-

The Panamanian negotiating team arrived in Washington in June, 1971. Intensive negotiations during the rest of the year resulted in a U.S. treaty offer covering most of the issues relevant to the treaty. The Panamanian negotiators carried the offer to Panama for review in December, 1971. Except for some informal conversations in March, 1972, and an exchange of correspondence in the fall, the negotiations were not resumed until December, 1972, when a U.S. delegation travelled to Panama.

The new talks were not productive. Panama presented the United States with a comprehensive reply to its offer of December, 1971, but in many respects Panama's proposal reflected its maximum treaty aspirations and did not acknowledge the proposed compromise developed during the negotiations in 1971. Although disappointed, the United States agreed to study the offer and provide a written response, which was delivered in February, 1973.

## UN Security Council Action

At Panama's initiative, the U.N. Security Council met in Panama City from March 15-21. In those sessions, Panama criticized the U.S. posture on the canal question and sought a resolution supporting its position. Thirteen nations voted for the resolution; the U.K. abstained. The United States vetoed the resolution on the grounds that it recognized Panama's needs but not those of the United States; that it was incomplete in its references to the negotiations; and that it was inappropriate because the treaty was a bilateral matter under amicable negotiations. In explaining the U.S. position, the U.S. Permanent Representative committed the United States to peaceful adjustment of its differences with Panama, and invited Panama to continue serious treaty negotiations.

## New U.S. Approach

After his first visit to Panama in November, 1973, Ambassador Bunker recommended that the United States initiate some changes in the nature of the U.S. presence in the Canal Zone without awaiting the conclusion of a new treaty. With concurrence by the Departments of State and Defense, President Nixon announced on December 23 his intention to submit legislation to the Congress seeking the delivery to Panama of title and jurisdiction over two unused World War II airfields -- Old and New France Fields -- as well as authorization for the sale of Panamanian lottery tickets in the Zone. The lands in question will be of significant economic benefit to Panama. These legislative requests provide a tangible sign that the United States is prepared to adjust old ways in the Canal Zone to new realities and to conclude a new and modernized treaty relationship with Panama.

Any treaty agreed upon by the negotiators and approved by the Executive Branch will be submitted to the Senate for approval, and it is expected that some implementing legislation by the Congress as a whole would be required. Panama has expressed the intention to ratify the new treaty by plebiscite to ensure that it is acceptable to the Panamanian people.

## Issues in the Negotiations

The United States and Panama agree that the Treaty of 1903 should be replaced by a modern treaty that rejects the concept of perpetuity and

-7-

accommodates the sovereignty of Panama with the interests of the United
States, on the understanding that U.S. control and defense of the Panama
Canal would continue for a period of fixed duration. Despite this agree-
ment in principle, the two negotiating delegations have thus far been
unable to reach an agreement acceptable to both governments on the major
issues involved. These are:

1. **Duration.** The United States has proposed that the new treaty provide for continued U.S. control and defense of the present canal for an extended but specific period of time, with provision for further extension in connection with expansion of canal capacity at U.S. expense. Panama has proposed that the new treaty be for a shorter period than that desired by the United States, and has thus far made no proposal for extension in connection with expansion of capacity.

2. **Jurisdiction.** The United States has proposed that Panamanian law and jurisdiction would be applied in the Canal Zone, in some areas immediately, in others over a period of years. Lands now part of the Zone would also be opened up to Panamanian development. The United States would retain only rights which are necessary to the execution of its responsibilities. Panama has accepted this concept in principle, but the extent and duration of U.S. rights remain to be negotiated.

3. **Expansion of Capacity.** Current projections indicate that additional capacity will not be needed until the end of this century. The United States seeks long-term options (a) to add a third lane of locks to the present canal and (b) to build a new sea-level canal. Panama has wanted the United States to make a commitment to start construction within a shorter period or lose all expansion rights.

4. **Land and Water Areas.** The United States has proposed that Canal Zone lands and facilities not needed for canal operation and defense should be relinquished to Panama. The area still used by the United States for canal operations would be open to Panamanian Government and private activities under arrangements to be established by treaty and would be integrated into the jurisdiction, culture, and economy of Panama. Panama has thus far proposed that the United States control a much smaller area for canal operations and defense than the United States considered necessary.

5. **Defense.** The United States and Panama have agreed that the United States will continue to defend the canal and that Panama will participate. The extent of U.S. defense rights and the nature of Panama's participation remain to be negotiated.

6. **Compensation.** The United States has proposed that the current $2 million annual payment to Panama be replaced by a royalty on tonnage that would yield about $25 million per annum at current traffic rates, and increase as traffic increases. Panama has indicated that the payments proposed by the United States should be greater, but has not specified a formula or an amount that it would consider adequate.

PRESS
DEPARTMENT OF STATE

February 11, 1974

No. 46

OPENING REMARKS OF
THE HONORABLE HENRY A. KISSINGER
SECRETARY OF STATE
WASHINGTON ENERGY CONFERENCE
WASHINGTON, D.C.
FEBRUARY 11, 1974

On behalf of the President of the United States, I welcome you to this conference.

My great predecessor, Dean Acheson, once observed that "sometimes there is nothing man can do to avert disaster but more often our failure lies in meeting big bold demanding problems with half-measures, timorous and cramped." The nations gathered in this room are confronted with an unprecedented challenge to our prosperity, and to the entire structure of international cooperation so laboriously constructed over the last generation. The impact of the energy crisis reaches around the world, raising fundamental questions about the future of the developing countries, the prospects for economic growth of all nations, and the hopes for global stability.

The dimensions of the problems were recognizable at least a year ago — indeed we addressed them as part of our original proposal for a new relationship with Europe and Japan. The challenge will be with us for at least the rest of this decade and perhaps beyond. The seriousness of the problem, its pervasiveness, and the impossibility of national solutions, all compel international cooperation: among major consumer, nations, among developed and developing nations, and among producer and consumer nations.

The United States has called this conference for one central purpose: to move urgently to resolve the energy problem on the basis of cooperation among all nations. Failure to do so would threaten the world with a vicious cycle of competition, autarky, rivalry and depression such as led to the collapse of world order in the Thirties. Fortunately, the problem is still manageable multilaterally: national policies are still evolving, practical solutions to the energy problem are technically achievable, and cooperation with the producing countries is still politically open to us.

Let me summarize the United States' views on the major issues confronting us:

First, the energy situation poses severe economic and political problems for all nations. Isolated solutions are impossible. Even those countries, like Canada and the United States, capable of solving the energy problem by largely national means, would still suffer because of the impact on them of a world economic crisis. Consumer or producer,

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PR #46

affluent or poor, mighty or weak — all have a stake in the prosperity and stability of the international economic system.

Second, this challenge can be met successfully only through concerted international action. Its impact is controllable if we work together; it is unmanageable if we do not.

Third, the developing countries must quickly be drawn into consultation and collaboration. Their futures are the most profoundly affected of all. Unable to meet present prices for oil and fertilizer, they face the threat of starvation and the tragedy of abandoned hopes for further economic development. In the name both of humanity and common sense we cannot permit this.

Fourth, cooperation *not* confrontation must mark our relationships with the producers. We each have legitimate interests. We each face looming dangers. We need each other. If we move rapidly and cooperatively toward collective action, all will benefit.

Fifth, the United States recognizes its own national responsibility to contribute significantly to a collective solution. While we are less immediately affected than others, we see it as a matter of enlightened self-interest — and moral responsibility — to collaborate in the survival and restoration of the world economic system. Project Independence, which will reduce the American demand for world supplies, can be a way station on the road to a new Project Interdependence. We are willing to share American advances in energy technology, to develop jointly new sources of supply and to establish a system of emergency sharing. We are prepared to make specific proposals in these areas in the follow-on work of this conference.

## The Energy Problem

The energy crisis has three dimensions — first, the oil embargo; second, the shortage of supply; and finally, the quantum increase in prices.

The embargo now is directed largely at the United States. We will deal with this issue and ask for no assistance. But, while the embargo's immediate economic impact may be selective, its political dimension should be of more general concern. For it carries profound implications for the world community — the manipulation of raw material supplies in order to prescribe the foreign policies of importing countries.

The basic economic problem goes deeper, however. The explosion of demand has outstripped the incentives of producers to increase production. Inflationary pressures in the consumer countries have tended to create incentives to withhold production. This is especially true in a seller's market where the producing countries can increase their income by raising prices rather than output.

But there are hopeful signs. World demand has been reduced in recent weeks — partly because of rising prices — and may well remain below last September's level. Thus, we may be at the beginning of a dramatic change in the long-term outlook for the world petroleum market. Determined conservation efforts in the consuming countries and vigorous pursuit of alternative energy sources can further reduce the rate of growth in demand for oil.

The most immediate and critical problem concerns price. Current price levels are simply not sustainable. At these levels, the industrial countries alone will incur a current account deficit of $36-40 billion in 1974. Such large increases in costs would seriously magnify both unemployment and inflation in the importing countries, while the effect on domestic production would be deflationary. Pressures for import quotas will become irresistible; a general decline in world trade will follow inevitably.

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PR #46

The threat to the world's poorer nations is even more profound. At present prices the less developed nations will face a current account deficit of $25-30 billion in 1974, of which more than $10 billion is caused by the increase in oil prices. This deficit is three times the total aid flow of the entire world in recent years. Neither the developing nations nor traditional aid donors can finance such a sum. Even the attempt would destroy two decades of hard-won progress, leaving in its wake a legacy of political tension, social turmoil and human despair.

Moreover, as a direct result of the oil price hikes the poorer nations' supply of crucial fertilizer has been severely reduced in recent months. Fertilizer prices have at least doubled, raising the spectre of famine. We cannot permit this to happen.

The producing countries themselves will not be spared these consequences. Their unprecedented opportunity for dramatic and rapid economic progress cannot escape the effect of global deflation, mounting restrictions in the world's trading and monetary system and the political tensions of unbridled competition. A major task before this conference is to begin creating a framework of cooperation that will fulfill both the hopes of the producing and the needs of the consuming nations.

These global dilemmas cannot be avoided through exclusive bilateral arrangements. We do not dispute the right of sovereign nations to make individual arrangements. But we believe that it is essential that these arrangements follow agreed rules of conduct. In their absence, unrestrained bilateralism is certain to produce disastrous political and economic consequences.

No conceivable increase in bilateral trade with the producing nations can cover the massive payments deficits that each nation faces. The only result of unmanaged bilateralism will be to bid up prices, perhaps even beyond present levels, and to stabilize them at levels that will ruin the countries making the bilateral arrangements before they ruin everyone else.

Thus the ultimate challenge is to the fragile fabric of international principles and institutions. If we fail to achieve a cooperative solution, each of us will be tempted to transfer the problem onto others. This was the approach the industrial world followed during the "beggar thy neighbor" policies of the 1930s. We all know the consequences.

## An Approach to Cooperation — A Seven Point Program

The great goal of American policy for the past quarter century has been to try to achieve a more cooperative world, to put permanently behind us the narrowly competitive approach which has traditionally ended in conflict — economic or military or both. We maintain our faith in the validity of this goal. In pursuit of the common interest, the United States is willing to make a major contribution, in effort, in science, in technology and in resources, to a common solution to the energy problem.

The United States is prepared to join with the nations assembled here, and later with the producers and other consumers, to make a truly massive effort toward this major goal: the assurance of abundant energy at reasonable costs to meet the entire world's requirements for economic growth and human needs.

To this end, we suggest that this conference consider seven areas for cooperative exploration: conservation, alternative energy sources, research and development, energy sharing, international financial cooperation, the less developed countries, consumer-producer relations.

1. **Conservation:** The development of a new energy ethic designed to promote the conservation and most efficient use of existing energy supplies is crucial. We need a basic commitment to share the sacrifices and costs of conservation and thus reduce pressures on world supply. The United States recognizes that it is the world's most profligate energy consumer. Yet our own national program has, within the past

PR #46

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four months, reduced government energy use by 20 percent, industrial consumption by more than 10 percent, gasoline consumption by 9 percent, and natural gas and electricity consumed in residential and commercial buildings by 6 and 10 percent respectively. We shall continue to expand this program. We are prepared as well to join other consumers in pledging a sustained conservation effort. The United States is willing to collaborate in a review of the national programs of each consumer country, in an appraisal of their effectiveness, and in recommendations to governments for additonal measures.

2. **Alternative Energy Sources:** The demands of this decade cannot be met unless we expand available supplies through vigorous development of alternative energy sources.

To produce quick results, we must concentrate on known fuel resources. Coal is in abundant supply, but we need to develop the technology neglected during the period of low-cost oil. Continental shelves and non-conventional deposits -- coal, shale and similar resources -- need to be developed rapidly.

The United States is prepared to explore the following possibilities for consumer cooperation:

- A collective commitment to develop the fossil fuel resources that are available within our respective borders.

- Coordinated policies to encourage the flow of private capital into the new higher cost energy industries, such as synthetic oils and gas from coal and shale.

- Governmental arrangements to accelerate the global search for new energy sources such as off shore oil.

- International programs to reduce the vulnerability of the major industrial countries to the interruption and manipulation of supply -- such as the orderly conversion of key sectors away from petroleum.

3. **Research and Development:** New technologies, and not only new explorations, can provide us with additional sources of energy. Many of our countries are launching large new programs. Our own national program contemplates the expenditure of more than $11 billion in government funds over the next 5 years, and an expected investment of $12.5 billion in private funds in the same period. But we have no monopoly on the most advanced and promising approaches. It is to our mutual benefit to coordinate and combine our efforts. Thus, the United States is prepared to make a major contribution of its most advanced energy research and development to a broad program of international cooperation in energy.

Without a doubt, a significant portion of new energy will be supplied from nuclear reactors for which increased quantites of enriched uranium will be needed. Within a framework of broad cooperation in energy, the United States is prepared to examine the snaring of enrichment technology, diffusion and centrifuge. Such a multilateral enrichment effort could be undertaken in a framework of assured supply, geographic dispersion and controls against further proliferation. We shall submit principles to guide such a cooperative enterprise for the follow-on work which we are proposing.

4. **Emergency Sharing:** The allocation of available supplies in time of emergencies and prolonged shortages is essential.

None of us can be certain how the world balance of supply and demand for petroleum will develop or what political contingencies may arise. But we cannot leave our security or our national economies to forces outside our control.

PR #46

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The United States declares its willingness to share available energy in times of emergency or prolonged shortages. We would be prepared to allocate an agreed portion of our total petroleum supply provided other consuming countries with indigenous production do likewise. As we move toward self-sufficiency, our ability for sharing would of course increase.

Building on the earlier work done in the OECD, definite recommendations should be submitted to governments including:

- a sharing formula;

- criteria to determine when a supply shortage exists;

- a mechanism which would implement and terminate the sharing arrangement; and

- complementary programs such as stockpiling and standby rationing schemes.

5. **International Financial Cooperation:** The structure and strength of the world's trading and monetary system must be restored and strengthened. If there is no way for the industrial countries collectively to eliminate the trade deficits created by their higher oil import bills, they can attempt to do so individually only at the cost of enlarging someone else's problems. In addition, the producing nations are accumulating financial claims against the consuming nations at a rate unprecedented in history.

In the past, the various national and international money markets have efficiently recycled oil revenue funds back into the economies of the consuming countries. At least for industrial countries, these markets can in large part continue to perform that function. The removal of our capital controls and the easing of controls in other countries should help. But the magnitude of the new flows could put serious strains on the operations of these markets. The funds flowing to particular consumer countries may not reflect their needs for balance of payments financing; severe instability could result if these funds were repeatedly shifted across currency boundaries without adequate financial cooperation among the industrialized countries. Here again there is a crucial congruent interest between the producers and consumers and an urgent need for cooperative solutions.

Measures to deal with the economic effects of high oil prices must be adopted on a broad front. Recommendations should include:

- New mechanisms to facilitate the distribution of international capital flows from oil revenue surpluses.

- Means for producers and consumers to cooperate in building confidence in investment policies and the integrity of investments.

- Steps to facilitate the fuller participation of producing nations in existing international institutions and to contribute to the urgent needs of the developing consumer countries.

6. **The Less Developed Countries:** The needs of the developing countries are a particularly urgent dimension of the energy crisis. Massive increases in oil import costs are occurring at a time when the export prospects of

PR #46

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many less developed countries have sharply diminished as a result of the slowdown in world economic activity. Even at lower oil prices, the balance of payments problems of the less developed countries would require sustained attention.

Our approach to this human and economic challenge should be based on
several principles:

-- The developing consumer countries should be invited to join the
next stage of our deliberations.

-- Developed countries should avoid cutting their concessional aid programs in response to balance of payments problems. In this regard, the United States will urge the Congress to restore our contribution to the International Development Association (IDA).

-- The wealth of the producer nations opens up a potential new source of large-scale capital assistance for development. The producer nations should have a special understanding for the problems facing the poorer nations. We should encourage and facilitate their participation in international and regional institutions.

-- Urgent measures must be taken to assure sufficient fertilizer supplies for the coming year. The immediate problem is to provide oil at a price that will allow existing fertilizer production capacity to be fully utilized. The longer-term problem is to create sufficient capacity to meet the world's rapidly growing needs. The United States would be prepared to contribute its technological skills to such a joint enterprise.

7. Consumer-Producer Relations: Our ultimate goal must be to create a cooperative framework within which producers and consumers will be able to accommodate their differences and reconcile their needs and aspirations. Only in this way can we assure the evolution and growth of the world economy and the stability of international relations. We must work toward the objective of preventing coercion of the weak by the strong as of the strong by the weak; the producing nations must be given a secure stake in an expanding world economy and the consuming nations a secure source of supply.

It seems clear that enlightened self-interest of consumers and producers need not and should not be in conflict. Future generations may not enjoy a permanent source of petroleum. Excessively high prices are already calling forth massive investments in alternative energy sources, which raises the prospect of lower prices and shrunken export markets for the producers in the future. But stable oil earnings, at just prices, wisely invested and increasing by the principle of compound interest, will be available as a long-term source of income.

Thus the producers must have an interest in a "just" price and in stable long-term political and economic relations. Therefore at the consumer-producer conference for which we are heading let us discuss what constitutes a just price and how to assure long-term investments. A well-conceived producer-consumer meeting, in which the consumers do not seek selfish advantages either as a group or individually, far from leading to confrontation, could instead lay the basis of a new cooperative relationship. But it will do so only if it is well-prepared -- and if the consumers have first constructed a solid basis of cooperation among themselves.

PR #46

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The Next Steps

The United States is not interested in establishing new institutions for their own sake. We are solely concerned with practical results. Some of the tasks I have suggested can be carried out by existing international mechanisms; other will break new ground. The essential requirement is to see that concrete recommendations are submitted to the next conference.

In order to carry our work forward, we believe a coordinating group should be established with the following responsibilities:

-- to relate the tasks that are assigned to existing bodies to our future work.

-- to undertake those tasks for which there are presently no suitable bodies.

-- to prepare for the next meeting.

Another conference of consumers should then be called at the foreign-minister level to assess the work in all seven areas. This conference could include representatives of the less-developed countries.

This meeting would lead to a third conference of consumers and producers.

We are open to suggestions about the locale of these next conferences.

We should aim to complete the entire process by May 1.

The approach to global cooperation outlined here has prompted the President's invitations to you to join us here today.

This conception is ambitious, but the need is great.

Therefore let us resolve:

-- To meet the special challenges and opportunities facing the major consuming nations with a program of cooperation.

-- To bring the developing nations into immediate consultation and collaboration with us.

-- To prepare for a positive and productive dialogue with the producing nations.

As we look toward the end of this century we know that the energy crisis indicates the birth pains of global interdependence. Our response could well determine our capacity to deal with the international agenda of the future.

We confront a fundamental decision. Will we consume ourselves in nationalistic rivalry which the realities of interdependence make suicidal? Or will we acknowledge our interdependence and shape cooperative solutions?

Our choice is clear; our responsibility compelling. We must demonstrate to future generations that our vision was equal to our challenge.

* * * * *

Major Oil-Consuming Countries Meet at Washington
To Discuss the Energy Problem

Following are statements made before the Washington Energy Conference on February 11 by Secretary Kissinger and Federal Energy Administrator William Simon and an outline of a statement made that day by Secretary of the Treasury George P. Shultz, together with the text of a communique issued at the conclusion of the conference on February 13.

STATEMENT BY SECRETARY KISSINGER

Press release 46 dated February 11

My great predecessor Dean Acheson once
observed that sometimes there is nothing
man can do to avert disaster but more often
our failure lies "in meeting big, bold, de-
manding problems with half measures, tim-
orous and cramped." The nations gathered
in this room are confronted with an unprece-
dented challenge to our prosperity and to the
entire structure of international cooperation
so laboriously constructed over the last gen-
eration. The impact of the energy crisis
reaches around the world, raising funda-
mental questions about the future of the
developing countries, the prospects for eco-
nomic growth of all nations, and the hopes
for global stability.

The dimensions of the problems were
recognizable at least a year ago; indeed, we
addressed them as part of our original pro-
posal for a new relationship with Europe and
Japan. The challenge will be with us for at
least the rest of this decade and perhaps
beyond. The seriousness of the problem, its

pervasiveness, and the impossibility of na-
tional solutions all compel international co-
operation—among major consumer nations,
among developed and developing nations, and
among producer and consumer nations.

The United States has called this confer-
ence for one central purpose: to move urgent-
ly to resolve the energy problem on the basis
of cooperation among all nations. Failure to
do so would threaten the world with a vicious
cycle of competition, autarky, rivalry, and de-
pression such as led to the collapse of world
order in the thirties. Fortunately, the prob-
lem is still manageable multilaterally: Na-
tional policies are still evolving, practical so-
lutions to the energy problem are technically
achievable, and cooperation with the produc-
ing countries is still politically open to us.

Let me summarize the U.S. views on the
major issues confronting us:

First, the energy situation poses severe
economic and political problems for all na-
tions. Isolated solutions are impossible. Even
those countries, like Canada and the United
States, capable of solving the energy problem
by largely national means would still suffer
because of the impact on them of a world
economic crisis. Consumer or producer,
affluent or poor, mighty or weak—all have a
stake in the prosperity and stability of the
international economic system.

Second, this challenge can be met success-
fully only through concerted international
action. Its impact is controllable if we work
together; it is unmanageable if we do not.

Third, the developing countries must
quickly be drawn into consultation and col-
laboration. Their futures are the most pro-
foundly affected of all. Unable to meet pres-

March 4, 1974

201

Fifth, the United States recognizes its own national responsibility to contribute significantly to a collective solution. While we are less immediately affected than others, we see it as a matter of enlightened self-interest—and moral responsibility—to collaborate in the survival and restoration of the world economic system. Project Independence, which will reduce the American demand for world supplies, can be a way station on the road to a new Project Interdependence. We are willing to share American advances in energy technology, to develop jointly new sources of supply, and to establish a system of emergency sharing. We are prepared to make specific proposals in these areas in the follow-on work of this conference.

## The Energy Problem

The energy crisis has three dimensions; first, the oil embargo; second, the shortage of supply; and finally, the quantum increase in prices.

The embargo now is directed largely at the United States. We will deal with this issue and ask for no assistance. But while the embargo's immediate economic impact may be selective, its political dimension should be of more general concern. For it carries profound implications for the world community —the manipulation of raw material supplies in order to prescribe the foreign policies of importing countries.

the consumer countries have tended to create incentives to withhold production. This is especially true in a sellers' market, where the producing countries can increase their income by raising prices rather than output.

But there are hopeful signs. World demand has been reduced in recent weeks—partly because of rising prices—and may well remain below last September's level. Thus we may be at the beginning of a dramatic change in the long-term outlook for the world petroleum market. Determined conservation efforts in the consuming countries and vigorous pursuit of alternative energy sources can further reduce the rate of growth in demand for oil.

The most immediate and critical problem concerns price. Current price levels are simply not sustainable. At these levels, the industrial countries alone will incur a current account deficit of $36-$40 billion in 1974. Such large increases in costs would seriously magnify both unemployment and inflation in the importing countries, while the effect on domestic production would be deflationary. Pressures for import quotas will become irresistible; a general decline in world trade will follow inevitably.

The threat to the world's poorer nations is even more profound. At present prices the less developed nations will face a current account deficit of $25-$30 billion in 1974, of which more than $10 billion is caused by the increase in oil prices. This deficit is three times the total aid flow of the entire world in recent years. Neither the developing nations nor traditional aid donors can finance such a sum. Even the attempt would destroy two decades of hard-won progress, leaving in its wake a legacy of political tension, social turmoil, and human despair.

Moreover, as a direct result of the oil price hikes the poorer nations' supply of crucial fertilizer has been severely reduced in recent months. Fertilizer prices have at least doubled, raising the specter of famine. We cannot permit this to happen.

202

Department of State Bulletin

rapid economic progress cannot escape the
effect of global inflation, mounting restric-
tions in the world's trading and monetary
system, and the political tensions of un-
bridled competition. A major task before
this conference is to begin creating a frame-
work of cooperation that will fulfill both the
hopes of the producing and the needs of the
consuming nations.

These global dilemmas cannot be avoided
through exclusive bilateral arrangements.
We do not dispute the right of sovereign na-
tions to make individual arrangements. But
we believe that it is essential that these ar-
rangements follow agreed rules of conduct.
In their absence, unrestrained bilateralism is
certain to produce disastrous political and
economic consequences.

No conceivable increase in bilateral trade
with the producing nations can cover the
massive payments deficits that each nation
faces. The only result of unmanaged bilater-
alism will be to bid up prices, perhaps even
beyond present levels, and to stabilize them
at levels that will ruin the countries making
the bilateral arrangements before they ruin
everyone else.

Thus the ultimate challenge is to the frag-
ile fabric of international principles and
institutions. If we fail to achieve a coopera-
tive solution, each of us will be tempted to
transfer the problem onto others. This was
the approach the industrial world followed
during the "beggar-thy-neighbor" policies of
the 1930's. We all know the consequences.

A Seven-Point Approach to Cooperation

The great goal of American policy for the
past quarter century has been to try to
achieve a more cooperative world, to put
permanently behind us the narrowly compet-
itive approach which has traditionally ended
in conflict—economic or military or both.
We maintain our faith in the validity of this
goal. In pursuit of the common interest, the
United States is willing to make a major con-
tribution, in effort, in science, in technology,
and in resources, to a common solution to the
energy problem.

President Nixon Expresses Satisfaction
With Outcome of Energy Conference

Statement by President Nixon ¹

I would like to express my satisfaction with
the outcome of the international energy con-
ference which has just been meeting in Wash-
ington. The United States has approached the
energy problem in a spirit of cooperativeness
—among consumers and between consumers
and producers—and I am pleased that this atti-
tude struck a responsive chord with the partici-
pants of the Washington Conference.

I believe that we are now well launched on an
international effort to deal with all aspects of
the problem. At the same time, this is only a
beginning, and all the nations concerned must
now pool their efforts and their ingenuity in the
following up of the work of the conference.
The United States is ready to do so and looks
forward to working with all the other countries
involved.

¹ Issued on Feb. 13 (White House press release, Key Biscayne, Fla.).

The United States is prepared to join with
the nations assembled here, and later with
the producers and other consumers, to make
a truly massive effort toward this major
goal: the assurance of abundant energy at
reasonable costs to meet the entire world's
requirements for economic growth and hu-
man needs.

To this end, we suggest that this confer-
ence consider seven areas for cooperative ex-
ploration: conservation, alternative energy
sources, research and development, emer-
gency sharing, international financial coop-
eration, the less developed countries, con-
sumer-producer relations.

1. Conservation: The development of a new energy ethic designed to promote the conservation and most efficient use of existing energy supplies is crucial. We need a basic commitment to share the sacrifices and costs of conservation and thus reduce pressures on world supply. The United States recognizes that it is the world's most profli-

March 4, 1974

203

gate energy consumer. Yet our own national program has, within the past four months, reduced government energy use by 20 percent, industrial consumption by more than 10 percent, gasoline consumption by 9 percent, and natural gas and electricity consumed in residential and commercial buildings by 6 and 10 percent respectively. We shall continue to expand this program. We are prepared as well to join other consumers in pledging a sustained conservation effort. The United States is willing to collaborate in a review of the national programs of each consumer country, in an appraisal of their effectiveness, and in recommendations to governments for additional measures.

2. Alternative Energy Sources: The demands of this decade cannot be met unless we expand available supplies through vigorous development of alternative energy sources.

To produce quick results, we must concentrate on known fuel resources. Coal is in abundant supply, but we need to develop the technology neglected during the period of low-cost oil. Continental shelves and non-conventional deposits—coal, shale, and similar resources—need to be developed rapidly.

- Governmental arrangements to accelerate the global search for new energy sources such as offshore oil.

- International programs to reduce the vulnerability of the major industrial countries to the interruption and manipulation of supply, such as the orderly conversion of key sectors away from petroleum.

3. Research and Development: New technologies, and not only new explorations, can provide us with additional sources of energy.

Many of our countries are launching large new programs. Our own national program contemplates the expenditure of more than $11 billion in government funds over the next five years and an expected investment of $12.5 billion in private funds in the same period. But we have no monopoly on the most advanced and promising approaches. It is to our mutual benefit to coordinate and combine our efforts. Thus the United States is prepared to make a major contribution of its most advanced energy research and development to a broad program of international cooperation in energy.

Without a doubt, a significant portion of new energy will be supplied from nuclear reactors, for which increased quantities of enriched uranium will be needed. Within a framework of broad cooperation in energy, the United States is prepared to examine the sharing of enrichment technology—diffusion and centrifuge. Such a multilateral enrichment effort could be undertaken in a framework of assured supply, geographic dispersion, and controls against further proliferation. We shall submit principles to guide such a cooperative enterprise for the follow-on work which we are proposing.

4. Emergency Sharing: The allocation of available supplies in time of emergencies and prolonged shortages is essential.

Building on the earlier work done in the OECD [Organization for Economic Cooperation and Development], definite recommendations should be submitted to governments including:

204

Department of State Bulletin

—A sharing formula;

—Criteria to determine when a supply shortage exists;

—A mechanism which would implement and terminate the sharing arrangement; and

—Complementary programs such as stockpiling and standby rationing schemes.

**5. International Financial Cooperation:**
The structure and strength of the world's trading and monetary system must be restored and strengthened. If there is no way for the industrial countries collectively to eliminate the trade deficits created by their higher oil import bills, they can attempt to do so individually only at the cost of enlarging someone else's problems. In addition, the producing nations are accumulating financial claims against the consuming nations at a rate unprecedented in history.

In the past, the various national and international money markets have efficiently recycled oil revenue funds back into the economies of the consuming countries. At least for industrial countries, these markets can in large part continue to perform that function. The removal of our capital controls and the easing of controls in other countries should help. But the magnitude of the new flows could put serious strains on the operations of these markets. The funds flowing to particular consumer countries may not reflect their needs for balance of payments financing; severe instability could result if these funds were repeatedly shifted across current boundaries without adequate financial cooperation among the industrialized countries. Here again there is a crucial congruent interest between the producers and consumers and an urgent need for cooperative solutions.

—New mechanisms to facilitate the distribution of international capital flows from oil revenue surpluses.

—Means for producers and consumers to cooperate in building confidence in investment policies and the integrity of investments.

—Steps to facilitate the fuller participation of producing nations in existing international institutions and to contribute to the urgent needs of the developing consumer countries.

**6. The Less Developed Countries:** The needs of the developing countries are a particularly urgent dimension of the energy crisis. Massive increases in oil import costs are occurring at a time when the export prospects of many less developed countries have sharply diminished as a result of the slowdown in world economic activity. Even at lower oil prices, the balance of payments problems of the less developed countries would require sustained attention.

—The developing consumer countries should be invited to join the next stage of our deliberations.

—Developed countries should avoid cutting their concessional aid programs in response to balance of payments problems. In this regard, the United States will urge the Congress to restore our contribution to the International Development Association (IDA).

—The wealth of the producer nations opens up a potential new source of large-scale capital assistance for development. The producer nations should have a special understanding for the problems facing the poorer nations. We should encourage and facilitate their participation in international and regional institutions.

—Urgent measures must be taken to assure sufficient fertilizer supplies for the coming year. The immediate problem is to provide oil at a price that will allow existing fertilizer production capacity to be fully utilized. The longer term problem is to create sufficient capacity to meet the world's rapidly growing needs. The United States would be prepared to contribute its technological skills to such a joint enterprise.

**7. Consumer-Producer Relations:** Our ultimate goal must be to create a cooperative framework within which producers and con-

March 4, 1974

205

sumers will be able to accommodate their
differences and reconcile their needs and as-
pirations. Only in this way can we assure the
evolution and growth of the world economy
and the stability of international relations.
We must work toward the objective of pre-
venting coercion of the weak by the strong
as of the strong by the weak; the producing
nations must be given a secure stake in an
expanding world economy and the consuming
nations a secure source of supply.

It seems clear that enlightened self-interest
of consumers and producers need not and
should not be in conflict. Future generations
may not enjoy a permanent source of petrole-
um. Excessively high prices are already call-
ing forth massive investments in alternative
energy sources, which raises the prospect of
lower prices and shrunken export markets
for the producers in the future. But stable oil
earnings, at just prices, wisely invested and
increasing by the principle of compound
interest, will be available as a long-term
source of income.

Thus the producers must have an interest
in a "just" price and in stable long-term
political and economic relations. Therefore,
at the consumer-producer conference for
which we are heading, let us discuss what
constitutes a just price and how to assure
long-term investments. A well-conceived pro-
ducer-consumer meeting, in which the con-
sumers do not seek selfish advantages either
as a group or individually, far from leading
to confrontation, could instead lay the basis
of a new cooperative relationship. But it will
do so only if it is well prepared—and if the
consumers have first constructed a solid basis
of cooperation among themselves.

The Next Steps

The United States is not interested in es-
tablishing new institutions for their own
sake. We are solely concerned with practical
results. Some of the tasks I have suggested
can be carried out by existing international
mechanisms; others will break new ground.
The essential requirement is to see that
concrete recommendations are submitted to

the next conference. In order to carry our
work forward, we believe a coordinating
group should be established with the follow-
ing responsibilities:

- To relate the tasks that are assigned to existing bodies to our future work.

- To undertake those tasks for which there are presently no suitable bodies.

- To prepare for the next meeting.

Another conference of consumers should
then be called at the foreign minister level to
assess the work in all seven areas. This con-
ference could include representatives of the
less developed countries.

This meeting would lead to a third confer-
ence of consumers and producers.

The approach to global cooperation out-
lined here has prompted the President's invi-
tations to you to join us here today. This
conception is ambitious, but the need is great.
Therefore let us resolve:

- To meet the special challenges and op-
portunities facing the major consuming na-
tions with a program of cooperation.

As we look toward the end of this century,
we know that the energy crisis indicates the
birth pains of global interdependence. Our
response could well determine our capacity
to deal with the international agenda of the
future.

We confront a fundamental decision. Will
we consume ourselves in nationalistic rivalry
which the realities of interdependence make
suicidal? Or will we acknowledge our inter-
dependence and shape cooperative solutions?

Our choice is clear, our responsibility com-
pelling: We must demonstrate to future gen-
erations that our vision was equal to our
challenge.

206

Department of State Bulletin

PRESS
DEPARTMENT OF STATE

[LC]

February 13, 1974

No. 50

PRESS CONFERENCE BY
THE HONORABLE HENRY A. KISSINGER
SECRETARY OF STATE
AT THE CONCLUSION OF
THE WASHINGTON CONFERENCE ON ENERGY

THE SECRETARY: I am assuming that those of you who have written constructive articles during the week have received copies of the communique. [Laughter.]

Let me make a few observations and then answer your questions.

The basic approach that led to this conference has been outlined in the speech that I gave to the Pilgrims in London in December. It was based on the assumption, on our conviction, that the world was facing a problem that had come upon it, at least in the dimensions in which we faced it, somewhat unexpectedly. And in a situation of seeming supply shortages, there was a tendency to react with panic produced in part by lack of information, and with a sense that perhaps the control over our destiny had escaped us.

To this supply shortage was added at the end

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of December the serious problem of the rapid escalation of prices.

The United States holds the view that the problem that has been produced by these two phenomena -- the demand, at least for a while, out-running supply, and the rapid increase of prices, -- can be solved only on a global basis and by multilateral action.

We hold this view, not to vindicate any particular theory of the organization of the world. We have not advocated institutions simply to create institutions. We were convinced, and remain convinced, that it is a problem of global nature, incapable of isolated solution, and indeed a problem *par excellence* in which the general interest is identical with the individual interest.

For this reason, the United States proposed, at the opening session of this conference, a seven-point program in which we offered to share technology, resources, and supplies as our contribution to a world cooperative system.

We do not conceive that this initial meeting of consumers should lead to a confrontation between consumers and producers. Indeed, if what I said earlier about the general interest being identical with the particular

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3

interest is true, then in its ultimate sense, there is
no difference, there is no incompatibility of interests,
between the consumers and the producers.

During the conference, Mr. Simon presented
an analysis in which he attempted to show, and demon-
strated, I think quite conclusively, that a barrel of
oil at a certain price -- which would then be invested at
compound interest over a ten-year period -- that that price
would have to more than double if production were to be
withheld and the same income were to be achieved ten
years from now.

And if that analysis is correct, then I believe
that a well-prepared meeting of consumers and producers
can establish a frame-work of analysis in which a discussion
about the nature of a fair price can take place in a
much less emotional and in a much more balanced atmos-
phere.

Now, as you know, from the briefings that went
on throughout the conference, there was some debate about
the nature of follow-up machinery and how one should prepare
for a meeting of consumers and producers, the desirability
of which everyone accepted. The conference, with one
negative vote, agreed on the establishment of a follow-up

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4

machinery that would correlate the efforts already going on in international institutions, that would establish ad hoc working groups that might be needed, and that would direct preparations of a conference of consumer and producer countries, if necessary, with a prior meeting of consumer countries to review the work that is going on in these various bodies.

So, we believe that a cooperative frame-work for dealing with the energy crisis has been established. We are grateful for the cooperation of the participants, and we believe that what has been established is a recognition not only of the importance of dealing with this particular problem on a cooperative basis, but that maybe a contribution has been made to a general attitude of dealing with world problems cooperatively.

With this as a background, let me now take your questions about the communique, or any aspect of the conference.

Q Mr. Secretary, what, at this point, would be the point of -- what are the prospects for another private meeting of consuming nations, now that this group has concluded its meeting?

A Whether another meeting of consumer nations

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5

should be held will be determined through the work
of the coordinating group that has been set up as a result
of this meeting. This coordinating group, which will
be composed of senior foreign office officials, and other
senior officials, will, first of all, attempt to give
focus to the work that is going on in existing institutions --
OECD, World Bank, IMF, and similar institutions. It will
establish, as I pointed out, ad hoc working groups that may
be necessary to undertake tasks for which there are at
present no suitable bodies.

I don't think we can decide, until this working
group has been in existence for some weeks, whether
another meeting of consumer nations, perhaps including
those from less-developed countries, is necessary to
assess the work of the coordinating group, or whether the
work of the coordinating group is in itself a sufficient
basis to go to a consumer-producer conference.

Our view about a consumer-producer conference
is that it will be productive only to the extent that there
is careful, detailed preparation. We are not dogmatic
about the need for another Ministerial conference. We do
believe very strongly that there is a need for follow-on
work, and that need has been recognized by the conference

PR #50 (le)

6

that met here.

Q Mr. Secretary, what is your view on
having representatives from the producing nations sitting
in with the coordinating group to prepare for the later
conference?

A Well, there are two problems, at least,
in the work of the coordinating group. One is to
analyze and to give impetus to certain types of activities
which are enumerated in the communique, such as conservation
of energy, a system of allocating oil supplies, acceleration
of the development of additional energy sources, acceleration
of energy research and development. Also the need to
find financial mechanisms to deal with some of the problems
produced by higher prices. That work of the coordinating
group seems to us to be primarily confined to the countries
that participated in this conference and countries with
similar problems.

As far as the preparations for the producer
meeting are concerned, I think an early consultation with
representatives from producer nations would be appropriate.

Q Mr. Secretary, did French opposition
at the conference here run deeper than you had originally
expected, and what effects do you believe the divisions

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7

that occurred here, within the European Common Market,
will have on the future of the Atlantic Alliance and
on your desire to reach some declarations with the
European Community.

A The French views were reasonably well-known,
at least in the two weeks or so prior to the conference.
And therefore, they were not unexpected.

The impact of these views on the conference
was, I believe, reflected in the vote of the conference,
which was unanimous on all of these points, with one
exception.

As far as the future of the Atlantic Alliance
is concerned, and the future of our European-American
relations, and European unity, the United States
considers the Atlantic relationship the pivot of its
foreign policy. Our efforts during the last year have been
directed towards strengthening that relationship.

The fact that there are some differences of
view between us and France on how this Atlantic
relationship should be strengthened should not obscure
the central importance we attach to it, nor our recognition
that friendship with all European countries, including
with France, is essential for the security of all of

(1c)

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8

the nations of the Atlantic Alliance.

So as far as the United States is concerned, the difficulties that existed in the last few days, which are inseparable from any conclave of free nations, do not affect the relationship in the Atlantic Alliance, and indeed will probably have strengthened it.

Within the European Community, I believe the various countries should speak for themselves. But certainly there were many expressions that the work of the European Community must go on. And of course the United States has always strongly supported European economic and political unity and continues to support it.

Q Mr. Secretary, the French seem to have thought -- it may not have been the intent -- but one of the possible objections to an ad hoc machinery to deal with this problem will be an American supremacy and possibly American policies impinging upon Europe. What arguments were you able to use against this suspicion, and do you think there is any justification for it?

A I have tried to explain that a properly conceived solution to this problem cannot be either American or British or French or Japanese or any national solution.

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9

We are, as I said in my opening speech, in a better position to deal with the problem on a national basis. Nevertheless, if we deal with the problem on a purely national basis the end result will be a loss of -- a blow to the world economy, and a blow to the structure of international relations from which, in the medium term, we would suffer severely ourselves.

Therefore, it is not in our interests nor is it our intention to establish a particular American point of view with respect to the energy problem, nor do I know exactly what a purely American point of view with respect to the energy problem would be.

Throughout the conference, our position was not to turn this into an issue between the United States and France. And through most of the meetings, the chief arguments were between France and the other European countries, rather than between France and the United States. And insofar as our point of view prevailed, it was because we presented arguments which we believed to be in the general interest.

I want to repeat again. We do not consider ourselves in a confrontation with France. I have read rather extreme

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10

articles in the European press about a divorce between
the United States and France. This is absolutely not
the American point of view, and it is not the basis on
which to build future relationships.

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11

Q Mr. Secretary, what justification is there for Mr. Jobert's statement, on this podium, that France came here expecting to talk about energy and instead found themselves in a political meeting?

A I, of course, did not have the privilege of listening to my friend Jobert, who has a tendency to express himself in very Cartesian and sometimes extremely precise language. If political issues were raised at the meeting, it was due to the difficulty that for a while the European Community attempted to take a common position, and then in its inability to reach a common position, had to decide whether to operate as a group of individual nations.

As far as the United States is concerned, our declarations are a matter of public record, and we did not introduce any political elements, except, of course, when Foreign Ministers meet that in itself is a political event. So I cannot agree with my colleague and friend Michel Jobert.

Q Mr. Secretary, to follow a previous question, if the problem is global and it can only be solved internationally, why did you feel you had to have a separate energy conference rather than working through existing

PR #50.

12

international organizations?

A There's no existing international organization that is dealing with the energy problem on the comprehensive basis that we have put before the conference. There are bits and pieces of it that are dealt with in particular organizations. We have specifically affirmed our readiness, and the conference has affirmed its readiness to cooperate with those institutions that are now working on the problem, and indeed to use them for the analyses and studies that are foreseen as a result of this conference.

This particular group of nations invited here represented the high level Energy Group of the OECD. This, in turn, was composed of the nations that represent 85 percent of the energy imports in the world. To this group was added the members of the European Community who are not members of the high level Energy Committee. And, therefore, probably the percentage figure I gave to you is, in fact, by a few percentage points higher.

It seemed to us important that the consuming nations first understand the nature of the problem and the range of possible remedies before there is a general conference with the producers. And this was the logic behind the conference.

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13

Q Mr. Secretary, what do the results of this conference mean in terms of the future of lower prices around the world?

A That is, of course, not easy to predict. The results of this conference, if they are followed up in the spirit in which the conference was concluded, should enable the consumers to get a much better understanding of what they are facing, and it should enable them to come to a conference with the producers with the ability to put before the producers their best judgment of the long term interests of both consumers and producers. I think there's a general agreement that prices for oil were too low prior to September 1973. I think there is also a general agreement among the nations represented here, and also in the Committee of Twenty that met in January, that prices now are too high. Now, what a fair price is, of course, has to take into account the needs of both consumers and producers. The needs of the producers are for a source of long term income; and the need of the consumers is a source of assured supply.

The technical studies that were prepared with great meticulousness by the American Delegation, and which, in a preliminary form at least, seemed to be accepted by

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14

most of the delegates here, though they will have to be looked at further, would seem to indicate that it is possible to arrive at a definition of fairness that takes into account both of these interests. That would be lower than the existing prices but considerably higher than September prices.

How this will be arrived at we will have to leave to the evolution of the machinery foreseen here and future conferences.

Q Mr. Secretary, I wonder if you could spell out for us what in your opinion are the most concrete accomplishments of this conference; and also will you concede that there are any disappointments?

A The conference achieved in terms of machinery and in terms of definition of the objective substantially what we had thought in our preliminary deliberations should be achieved. In this sense we consider it a success. The chief results were that there was an agreed analysis of the problem, and in paragraphs 9 through 17 a series of concrete measures or directions that require exploration -- all of them together with the establishment of machinery of how to implement it.

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15

There was a pervasive conviction that purely
national efforts were not adequate, that therefore the
efforts of all the nations represented here had to be
concerted.

At the same time, of course, a great deal
depends now whether the spirit reflected in this communique
can be sustained in the follow-on work. The United States
will make a major effort both in contributing to the work
of the follow-on groups as well as in implementing the
offers that were made in the various speeches to give
concrete content to what has been accomplished.

I could not list a major disappointment because
it substantially reflects our conception.

Q Mr. Secretary, when will the Coordinating
Group meet, where will it meet, is there a Chairman Pro Tem,
and who will represent the United States in the Coordinating
Group?

A We will probably take the initiative in
convening the Coordinating Group. We are open minded
about its location. And we believe that once the
Coordinating Group has been convened it should establish
its own internal organization. In other words, we do not

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16

insist on the chairmanship of this coordinating group.

We believe that it should meet as soon as
possible which is commensurate with the importance of
the problem. And the United States will be, in all
probability, represented by Under Secretary Donaldson
and Mr. Simon, and other officials that may be needed,
depending on the subject matter.

Q Mr. Secretary, did you or your colleagues
during the session produce further details about the
United States plan for sharing either conventional energy
or nuclear energy beyond the outline given in the seven
points?

A The United States was prepared to present
to the conference in greater detail elaborations of each
of the seven points that was made. As it turned out, a
great deal of the time of the conference had to be spent
on the procedural issues and on the negotiations leading
to the communique. The United States, however, will be
prepared to make concrete proposals in the follow-on
groups in all of the areas in which it did not have an
opportunity to follow on here.

We did make concrete proposals on financial
mechanisms and a rather detailed analysis of the substance

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17

of the issue. But we had foreseen that some working
groups might be established already while the conference
met here. While they met, they did not have the time to
report back to the conference due to the amount of energy
that had to be expended on the commune.

Q What subjects were represented? And will
other information be made public now that they have been
presented to the conference?

A We haven't made a decision on this, but
in principle I see no objection to it.

Q Mr. Secretary, what does it mean that
France will not accept the follow-up procedures? Will
France, nevertheless, participate in the subsequent
conferences? And will France participate in any of the
working groups?

A My impression is that France will certainly
participate in the consumer or producer meetings. France
did not express itself, in my hearing at least, to what
its attitude will be about participation in the working
groups. I think that is a question that can be more
appropriately answered by France.

I believe, however, that as time goes on that
it will be seen by all the countries concerned that this

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18

is not a political issue but an issue of world stability
and world cooperation.

Q Mr. Secretary, what is your reaction --

A I can't see anybody behind the light.

Q What is your reaction concerning the events
concerning Solzhenitsyn?

A Can we save questions on matters not
connected with energy? I'll take this later.

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19

Q Mr. Secretary, could you give us your reaction to the cancellation of the Tripoli meeting and whether or not you now feel that perhaps your hopes about an early end to the oil boycott might be premature?

A I don't know whether the Tripoli meeting was cancelled or postponed and, therefore, I don't want to express any views on its significance. Our statements were based on the best judgments, based on the best information we then had available; and events will have to determine whether these expectations will materialize.

Q Mr. Secretary, you spoke in your earlier remarks to the conference, and Mr. Scheel did also, about the need for codes of conduct to govern the bilateral agreements that various countries are making with the producer countries; but there's no mention of this in the communique. I was wondering whether you could give us your opinion about where these bilateral agreements stand now and what determination was made by the conference on the wisdom of having them or not.

A Well, again, I want to stress that to us this is not an issue of principle; this is an issue of our analysis of the situation. Obviously, most of world

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20

trade flows in bilateral channels; and we are not opposed
to the fact that deals will be made on a bilateral
basis. In fact, it is inevitable that many of the
arrangements will be made on a bilateral basis. What
we believe is going to be disastrous for the world economy
is if bilateral deals are made unconstrained by any
general rules of conduct, because we believe that this
will either stabilize prices at too high a level or bid
prices up even higher and in general create a relation-
ship among the major consuming nations of economic
warfare -- which inevitably will affect, in time, their
political relationship.

Within such a framework and in the long term, the
producers will also suffer from the weakening of the
world economy, which will be the inevitable result of
such types of activity.

We, therefore, believe that this is an issue
that is still before the nations that were at this con-
ference; and it can be discussed in the coordinating
committee as one of the goals that consumers will reach.

Q Mr. Secretary, are you still holding
to your previous deadline of May 1st for conclusion of the

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21

consumer conference?

A Our belief is that this is a reasonable deadline, but I think one can form a better judgment on that after the coordinating group has begun its work.

Q Mr. Secretary, I presume that according to paragraph 15 of the communique the United States Government will answer in the affirmative to the special meeting of the General Assembly of the United Nations. If this special meeting takes place, don't you see some possible contradictions between the future work of the organization created by this special meeting of the United Nations and the coordinating group?

A Well, our view has been that a meeting between consumers and producers, to be effective, requires very careful preparation on the part of the consumers and, for that matter, between consumers and producers, before they actually meet. We do not believe that a United Nations meeting will serve that particular purpose. A United Nations meeting will be useful, can make a contribution to expressing the general attitudes of the participating nations and to clarify particular points

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(c)

of view. We do not believe that it will solve the
particular problems to which this conference was
addressed or to which the follow-on activities of
this conference are addressed.

Q Thank you.

Q Mr. Secretary, the question has been raised whether, had this conference been better prepared, had one taken more time with it, some of the problems that arose would not have arisen. What is your feeling about that?

A We believe that this conference was extremely carefully prepared over a period of six weeks. The agenda items were distributed many weeks in advance. The Ambassadors of the countries concerned, and the governments of the countries concerned, were carefully briefed. Several governments had been in touch with us through senior officials. And, as it turned out, we did not have an opportunity to present even a fraction of the work that had been done on our side to the work of the conference.

I believe that the disagreements that arose at this conference were due to certain differences of

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23

philosophic perspective about the purposes of the
conference, which I believe were eased to some extent
through the conference. But preparation was not the
issue.

Sometimes there are disagreements not because
people do not understand each other but because they
understand each other only too well.

(Laughter.)

Q Mr. Secretary, may we move on to that
second phase? Solzhenitsyn?

A Let's say I'll take two more questions
on energy and then we'll move on to the next phase.

Q Mr. Secretary --

A Yes.

Q -- what is your reaction to European plans
for increasing negotiations with the Arab countries
en bloc?

A We have no objection to the Europeans
negotiating as a unit. We have a general view about
bilateral arrangements that do not follow general rules
of conduct, but these two objectives can be reconciled.
And, secondly, of course, we have a general interest -- as

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24

does Europe -- in political contacts that may occur
that may contribute, or not, to the evolution of peace
in the Middle East.

I'll take one more question -- yes --
on energy.

Q Mr. Secretary, keeping in mind the
points which we agreed upon at this conference --
such as sharing of resources and technology -- what
would be the effect or the impact on the United States'
acceptance of something in the area of the Charter of
Economic Rights and Duties.

A You mean the Mexican charter?

Q Yes. Considering that you have agreed
upon so many points which are in the area.

A I'm going to be in Mexico in two weeks
and I'm going to save my answer for that occasion.
But the United States expressed its views on President
Echeverria's idea on the Charter of Economic Rights
and Duties in my speech at the General Assembly. Our
view is that the concept is useful and that we are
prepared to cooperate with elaborating a charter that
spells out the rights and obligations of all countries --

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25

of developed, as well as developing countries -- so we
find the concept useful, and we will have to see now
what can be negotiated in the forums that are open.
And there is a negotiation on it going on now in
Geneva.

Now, on Solzhenitsyn: The United States has
always looked with sympathy and great appreciation at
the expression of freedom of thought in all societies.
We have regretted some of the manifestations that
interrupt this. We do not know enough about the
specific circumstances of the departure of Mr.
Solzhenitsyn. And the only problem that we have seen
here is the extent to which our human, moral and
intellectual concern for Solzhenitsyn and people
of similar convictions should affect the day-to-day
conduct of our foreign policy.

In any event, we are delighted that Solzhenitsyn
is not in some of the difficulties that were feared
yesterday.

Q To follow that up, Mr. Secretary, would
Mr. Solzhenitsyn be welcome in the United States if he
sought to reside here?

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A He would certainly be welcome to reside in the United States if he desired.

Q How would this affect detente?

A Our constant view has been that the necessity for detente, as we conceive it, does not reflect approbation of the Soviet domestic structure. The necessity of detente is produced by the unacceptability of general nuclear war under present conditions. The accumulation of nuclear arms has to be constrained, if mankind is not to destroy itself.

This is a question that will be before humanity, under all circumstances, and before American governments, as long as the accumulation of nuclear arms continues. So the United States will pursue a policy to reduce the dangers of war, to increase the possibilities of peace, and to limit the danger of nuclear conflict.

Q Sir, do you think Mr. Solzhenitsyn is really better off today than he was yesterday, with his wife still in the Soviet Union?

A I cannot judge to what extent his wife will be kept in the Soviet Union, and I don't think

[LC]

NEWS

BUREAU OF PUBLIC AFFAIRS

RELEASE

Press Conference:

SECRETARY KISSINGER DISCUSSES
WASHINGTON ENERGY CONFERENCE

Press conference by Secretary of State Henry A. Kissinger in the West Auditorium of the Department of State at the conclusion of the Washington Conference on Energy, February 13, 1974.

February 13, 1974
FOR IMMEDIATE RELEASE

To this supply shortage was added at the end of December the serious problem of the rapid escalation of prices.

The United States holds the view that the problem that has been produced by these two phenomena -- the demand, at least for a while, out-running supply, and the rapid increase of prices -- can be solved only on a global basis and by multilateral action.

PR 50/11

- 2 -

During the conference, Mr. Simon presented an analysis in which he at-
tempted to show, and demonstrated, I think quite conclusively, that a barrel
of oil at a certain price -- which would then be invested at compound in-
terest over a ten-year period -- that that price would have to more than
double if production were to be withheld and the same income were to be
achieved ten years from now.

And if that analysis is correct, then I believe that a well-prepared
meeting of consumers and producers can establish a framework of analysis
in which a discussion about the nature of a fair price can take place in a
much less emotional and in a much more balanced atmosphere.

Now, as you know, from the briefings that went on throughout the con-
ference, there was some debate about the nature of follow-up machinery and how
one should prepare for a meeting of consumers and producers, the desirability
of which everyone accepted. The conference, with one negative vote, agreed
on the establishment of a follow-up machinery that would correlate the efforts
already going on in international institutions, that would establish *ad hoc*
working groups that might be needed, and that would direct preparations of a
conference of consumer and producer countries, if necessary, with a prior
meeting of consumer countries to review the work that is going on in these
various bodies.

So, we believe that a cooperative framework for dealing with the energy
crisis has been established. We are grateful for the cooperation of the
participants, and we believe that what has been established is a recognition
not only of the importance of dealing with this particular problem on a
cooperative basis, but that maybe a contribution has been made to a general
attitude of dealing with world problems cooperatively.

A Whether another meeting of consumer nations should be held will be
determined through the work of the coordinating group that has been set up
as a result of this meeting. This coordinating group, which will be com-
posed of senior foreign office officials, and other senior officials, will,
first of all, attempt to give focus to the work that is going on in existing
institutions -- OECD, World Bank, IMF, and similar institutions. It will
establish, as I pointed out, *ad hoc* working groups that may be necessary to
undertake tasks for which there are at present no suitable bodies.

I don't think we can decide, until this working group has been in ex-
istence for some weeks, whether another meeting of consumer nations, per-
haps including those from less-developed countries, is necessary to assess
the work of the coordinating group, or whether the work of the coordinating
group is in itself a sufficient basis to go to a consumer-producer conference.

Our view about a consumer-producer conference is that it will be pro-
ductive only to the extent that there is careful, detailed preparation. We
are not dogmatic about the need for another Ministerial conference. We do
believe very strongly that there is a need for follow-on work, and that
need has been recognized by the conference that met here.

- 3 -

Q Mr. Secretary, did French opposition at the conference here run deeper than you had originally expected, and what effects do you believe the divisions that occurred here, within the European Common Market, will have on the future of the Atlantic Alliance and on your desire to reach some declarations with the European Community?

The fact that there are some differences of view between us and France on how this Atlantic relationship should be strengthened should not obscure the central importance we attach to it, nor our recognition that friendship with all European countries, including with France, is essential for the security of all of the nations of the Atlantic Alliance.

Q Mr. Secretary, the French seem to have thought -- it may not have been the intent -- but one of the possible objections to an *ad hoc* machinery to deal with this problem will be an American supremacy and possibly American policies impinging upon Europe. What arguments were you able to use against this suspicion, and do you think there is any justification for it?

- 4 -

A I have tried to explain that a properly conceived solution to this problem cannot be either American or British or French or Japanese or any national solution. We are, as I said in my opening speech, in a better position to deal with the problem on a national basis. Nevertheless, if we deal with the problem on a purely national basis the end result will be a loss of -- a blow to the world economy, and a blow to the structure of international relations from which, in the medium term, we would suffer severely ourselves.

I want to repeat again. We do not consider ourselves in a confrontation with France. I have read rather extreme articles in the European press about a divorce between the United States and France. This is absolutely not the American point of view, and it is not the basis on which to build future relationships.

Q Mr. Secretary, to follow a previous question, if the problem is global and it can only be solved internationally, why did you feel you had to have a separate energy conference rather than working through existing international organizations?

- 5 -

A That is, of course, not easy to predict. The results of this conference, if they are followed up in the spirit in which the conference was concluded, should enable the consumers to get a much better understanding of what they are facing, and it should enable them to come to a conference with the producers with the ability to put before the producers their best judgment of the long-term interests of both consumers and producers. I think there's a general agreement that prices for oil were too low prior to September 1973. I think there is also a general agreement among the nations represented here, and also in the Committee of Twenty that met in January, that prices now are too high. Now, what a fair price is, of course, has to take into account the needs of both consumers and producers. The needs of the producers are for a source of long-term income; and the need of the consumers is a source of assured supply.

The technical studies that were prepared with great meticulousness by the American Delegation, and which, in a preliminary form at least, seemed to be accepted by most of the delegates here, though they will have to be looked at further, would seem to indicate that it is possible to arrive at a definition of fairness that takes into account both of these interests. That would be lower than the existing prices but considerably higher than September prices.

- 6 -

A We will probably take the initiative in convening the Coordinating
Group. We are open minded about its location. And we believe that once the
Coordinating Group has been convened it should establish its own internal organ-
ization. In other words, we do not insist on the chairmanship of this coordi-
nating group.

A The United States was prepared to present to the conference in greater
detail elaborations of each of the seven points that was made. As it turned
out, a great deal of the time of the conference had to be spent on the pro-
cedural issues and on the negotiations leading to the communique. The United
States, however, will be prepared to make concrete proposals in the follow-on
groups in all of the areas in which it did not have an opportunity to follow
on here.

We did make concrete proposals on financial mechanisms and a rather de-
tailed analysis of the substance of the issue. But we had foreseen that some
working groups might be established already while the conference met here.
While they met, they did not have the time to report back to conference due
to the amount of energy that had to be expended on the communique.

A We haven't made a decision on this, but in principle I see no ob-
jection to it.

Q Mr. Secretary, what does it mean that France will not accept the
follow-up procedures? Will France, nevertheless, participate in the sub-
sequent conferences? And will France participate in any of the working groups?

A My impression is that France will certainly participate in the consumer
or producer meetings. France did not express itself, in my hearing at least, as
to what its attitude will be about participation in the working groups. I
think that is a question that can be more appropriately answered by France.

I believe, however, that as time goes on that it will be seen by all the
countries concerned that this is not a political issue but an issue of world
stability and world cooperation.

- 7 -

A Well, again, I want to stress that to us this is not an issue of principle; this is an issue of our analysis of the situation. Obviously, most of world trade flows in bilateral channels; and we are not opposed to the fact that deals will be made on a bilateral basis. In fact, it is inevitable that many of the arrangements will be made on a bilateral basis. What we believe is going to be disastrous for the world economy is if bilateral deals are made unconstrained by any general rules of conduct, because we believe that this will either stabilize prices at too high a level or bid prices up even higher and in general create a relationship among the major consuming nations of economic warfare -- which inevitably will affect, in time, their political relationship.

We, therefore, believe that this is an issue that is still before the nations that were at this conference; and it can be discussed in the coordinating committee as one of the goals that consumers will reach.

Q Mr. Secretary, are you still holding to your previous deadline of May 1st for conclusion of the consumer conference?

- 8 -

useful, can make a contribution to expressing the general attitudes of the participating nations and to clarify particular points of view. We do not believe that it will solve the particular problems to which this conference was addressed or to which the follow-on activities of this conference are addressed.

Q Thank you.

I believe that the disagreements that arose at this conference were due to certain differences of philosophic perspective about the purposes of the conference, which I believe were eased to some extent through the conference. But preparation was not the issue.

[Laughter.]

Q Mr. Secretary --

A Yes.

Q -- what is your reaction to European plans for increasing negotiation with the Arab countries en bloc?

A We have no objection to the Europeans negotiating as a unit. We have a general view about bilateral arrangements that do not follow general rules of conduct, but these two objectives can be reconciled. And, secondly, of course, we have a general interest -- as does Europe -- in political contacts that may occur, that may contribute, or not, to the evolution of peace in the Middle East.

Q Mr. Secretary, keeping in mind the points which we agreed upon at this conference -- such as sharing of resources and technology -- what would be the effect or the impact on the United States' acceptance of something in the area of the Charter of Economic Rights and Duties?

- 9 -

A I'm going to be in Mexico in two weeks and I'm going to save my answer for that occasion. But the United States expressed its views on President Echeverria's idea on the Charter of Economic Rights and Duties in my speech at the General Assembly. Our view is that the concept is useful and that we are prepared to cooperate with elaborating a charter that spells out the rights and obligations of all countries -- of developed, as well as developing countries -- so we find the concept useful, and we will have to see now what can be negotiated in the forums that are open. And there is a negotiation on it going on now in Geneva.

Now, on Solzhenitsyn: The United States has always looked with sympathy and great appreciation at the expression of freedom of thought in all societies. We have regretted some of the manifestations that interrupt this. We do not know enough about the specific circumstances of the departure of Mr. Solzhenitsyn. And the only problem that we have seen here is the extent to which our human, moral, and intellectual concern for Solzhenitsyn and people of similar convictions should affect the day-to-day conduct of our foreign policy.

A I cannot judge to what extent his wife will be kept in the Soviet Union, and I don't think it would be helpful to make a final judgment until all the circumstances can be more clearly seen.

Q Thank you, Mr. Secretary.

(Whereupon, at 4:17 p.m., the press conference was concluded.)

- 10 -

WASHINGTON ENERGY CONFERENCE

COMMUNIQUE

February 13, 1974

## Summary Statement

1. Foreign Ministers of Belgium, Canada, Denmark, France, the Federal Republic of Germany, Ireland, Italy, Japan, Luxembourg, The Netherlands, Norway, the United Kingdom, the United States met in Washington from February 11 to 13, 1974. The European Community was represented as such by the President of the Council and the President of the Commission. Finance Ministers, Ministers with responsibility for Energy Affairs, Economic Affairs and Science and Technology Affairs also took part in the meeting. The Secretary General of the OECD also participated in the meeting. The Ministers examined the international energy situation and its implications and charted a course of actions to meet this challenge which requires constructive and comprehensive solutions. To this end they agreed on specific steps to provide for effective international cooperation. The Ministers affirmed that solutions to the world's energy problem should be sought in consultation with producer countries and other consumers.

## Analysis of the Situation

2. They noted that during the past three decades progress in improving productivity and standards of living was greatly facilitated by the ready availability of increasing supplies of energy at fairly stable prices. They recognized that the problem of meeting growing demand existed before the current situation and the needs of the world economy for increased energy supplies require positive long-term solutions.

3. They concluded that the current energy situation results from an intensification of these underlying factors and from political developments.

4. They reviewed the problems created by the large rise in oil prices and agreed with the serious concern expressed by the International Monetary Fund's Committee of Twenty at its recent Rome meeting over the abrupt and significant changes in prospect for the world balance of payments structure.

5. They agreed that present petroleum prices presented the structure of world trade and finance with an unprecedented situation. They recognized that none of the consuming countries could hope to insulate itself from these developments, or expect to deal with the payments impact of oil prices by the adoption of monetary or trade measures alone. In their view, the present situation, if continued, could lead to a serious deterioration in income and employment, intensify inflationary pressures, and endanger the welfare of nations. They believed that financial measures by themselves will not be able to deal with the strains of the current situation.

6. They expressed their particular concern about the consequences of the situation for the developing countries and recognized the need for efforts by the entire international community to resolve this problem. At current oil prices the additional energy costs for developing countries will cause a serious setback to the prospect for economic development of these countries.

7. General Conclusions. They affirmed, that, in the pursuit of national policies, whether in the trade, monetary or energy fields, efforts should be made to harmonize the interests of each country on the one hand and the maintenance of the world economic system on the other. Concerted international cooperation between all the countries concerned including oil producing countries could help to accelerate an improvement in the supply and demand situation, ameliorate the adverse economic consequences of the existing situation and lay the groundwork for a more equitable and stable international energy relationship.

- 11 -

8. They felt that these considerations taken as a whole made it essential that there should be a substantial increase of international cooperation in all fields. Each participant in the Conference stated its firm intention to do its utmost to contribute to such an aim, in close cooperation both with the other consumer countries and with the producer countries.

9. They concurred in the need for a comprehensive action program to deal with all facets of the world energy situation by cooperative measures. In so doing they will build on the work of the OECD. They recognized that they may wish to invite, as appropriate, other countries to join with them in these efforts. Such an action program of international cooperation would include, as appropriate, the sharing of means and efforts, while concerting national policies, in such areas as:

-- The conservation of energy and restraint of demand.

-- A system of allocating oil supplies in times of emergency and severe shortages.

-- The acceleration of development of additional energy sources so as to diversify energy supplies.

-- The acceleration of energy research and development programs through international cooperative efforts.*

10. With respect to monetary and economic questions, they decided to intensify their cooperation and to give impetus to the work being undertaken in the IMF, the World Bank and the OECD on the economic and monetary consequences of the current energy situation, in particular to deal with balance of payments disequilibria. They agreed that:

-- In dealing with the balance of payments impact of oil prices they stressed the importance of avoiding competitive depreciation and the escalation of restrictions on trade and payments or disruptive actions in external borrowing.**

-- While financial cooperation can only partially alleviate the problems which have recently arisen for the international economic system, they will intensify work on short-term financial measures and possible longer-term mechanisms to reinforce existing official and market credit facilities.**

-- They will pursue domestic economic policies which will reduce as much as possible the difficulties resulting from the current energy cost levels.**

-- They will make strenuous efforts to maintain and enlarge the flow of development aid bilaterally and through multilateral institutions, on the basis of international solidarity embracing all countries with appropriate resources.

11. Further, they have agreed to accelerate wherever practicable their own national programs of new energy sources and technology which will help the overall world-wide supply and demand situation.

12. They agreed to examine in detail the role of international oil companies.

13. They stressed the continued importance of maintaining and improving the natural environment as part of developing energy sources and agreed to make this an important goal of their activity.

14. They further agreed that there was need to develop a cooperative multilateral relationship with producing countries, and other consuming countries that takes into account the long-term interests of all. They are ready to exchange technical information with these countries on the problem of stabilizing energy supplies with regard to quantity and prices.

*France does not accept point 9.

**In point 10, France does not accept paragraphs cited with asterisks.

- 12 -

15. They welcomed the initiatives in the UN to deal with the larger issues of energy and primary products at a world-wide level and in particular for a special session of the UN General Assembly.

Establishment of Follow-on Machinery

16. They agreed to establish a coordinating group headed by senior officials to direct and to coordinate the development of the actions referred to above. The coordinating group shall decide how best to organize its work. It should:

-- monitor and give focus to the tasks that might be addressed in existing organizations;

-- establish such _ad hoc_ working groups as may be necessary to undertake tasks for which there are presently no suitable bodies;

-- direct preparations of a conference of consumer and producer countries which will be held at the earliest possible opportunity and which, if necessary, will be preceded by a further meeting of consumer countries.*

17. They agreed that the preparations for such meetings should involve consultations with developing countries and other consumer and producer countries.*

*France does not accept points 16 & 17.*

INTERVIEW OF
THE HONORABLE HENRY A. KISSINGER
SECRETARY OF STATE
BY MANUEL BECERRA ACOSTA,
ASSISTANT DIRECTOR, EXCELSIOR

JOHN QUINCY ADAMS ROOM

FEBRUARY 19, 1974

Q Do you think, Mr. Secretary, that the world order is going to continue the way it has been -- in a way, run by the great powers?

A Well, it isn't today really run by the great powers. In some of their military problems it may be run by the great powers. In many political decisions it isn't run by the great powers; and in many economic conditions and situations it isn't run at all by the great powers -- if you think what the oil producing countries are doing to the industrialized countries.

So I think, in any event, that other countries are going to come up and that the present great powers will decline in relative influence.

Q What role is going to be played by Latin America in the Third World in this new scheme of things?

A Well, Latin America is in a very special position because on the one hand, it is related to the United States, and on the other hand it is related to the Third World -- so it can perform a very useful function as a bridge between some of the new countries and some of the older, industrialized countries.

2

Our view, of course, is that we should
strengthen the community in the Western Hemisphere
without impairing the possibility of a Latin America
to play its own specific role -- and I think Latin
America can be a good example, and a moderating influence
and an inspiration to many parts of the Third World.

Q Would that be the way of development?

A The way of development, the way of
political evolution, and the way of dealing with great
powers, -- about which you have fewer complexes than
some of the other countries.

Q Considering the fact that there are so
many poor countries in Asia, Africa and also in Latin
America, do you think that there will be a political
unity among all those countries?

A Probably not, because they are divided by
many different political conceptions -- but there will
always be unit sympathy.

Q I see.

I have read your book with the Third World, and
your --

A That's more than I can say.

3

Q -- and pointing out the way the great powers could maintain --

A -- I wrote it, but I never read things of mine after they are printed --

I cannot, frankly, I cannot bear reading what I have written. It's a curious thing -- I write about twenty drafts, but then I don't look at it anymore.

Q What do the great powers do to maintain peace in the world?

A What can the great powers do? They have to show military restraint. They must not use their military strength to achieve their objectives. They have to come to some understanding about political objectives -- and they must try to settle disputes on the basis of justice rather than on the basis of force.

Q I feel that the military, generally, and the economic power are obstacles that stand in the way to peace. How can there be peace unless there is disarmament on the one hand, and economic justice on the other?

4

A Well of course, as you know, I strongly -- I'm a strong advocate of disarmament. I was instrumental in the Strategic Arms Limitation Agreement in 1972, and we are working out now a similar agreement for 1974, when the President goes to Moscow.

Economic justice, we are in favor of.

I think the recent events have shown that it applies on both sides -- it should apply to the weak as well as to the strong.

Q There is one point that I do want to stress, that as long as the big and powerful countries are not doing anything very substantial to help the poor masses of the world, I don't think that there can be effective peace -- at least in the immediate future.

A Well I think one should separate the two problems:

One is, I don't think the threat of war is produced by the poor people.

Q Oh, I see.

A The threat of war is usually produced by the rich people because the poor people can't afford armaments.

5

But I don't think there can be a sense of
justice unless the rich countries help the poor
countries.

Now in this country, we are making a big effort
to see that we can maintain the levels of economic aid
but we have a major domestic problem because in the
light of all the things that have happened, our Congress
is getting very reluctant to pass legislation, and this,
frankly, is why I am taking such a large Congressional
Delegation to Mexico.

Q Yes.

A To make sure if we agree on something, the
Congress will vote on it.

Q But aren't the poor masses sort of a
threat to the rich countries, considering what you have
said about the production of wealth?

A We must help the poor masses -- not because
they are a threat, but because it's the right thing to do.

Q Because it's the right thing to do --
but not a duty.

A It is a duty, a moral duty --

Q In order to get the peace.

Q No, It is a moral duty. I won't relate

6

it so much to the question of peace, but it's a duty,
anyway.

Q You don't -- there are advantages prevailing in Asia -- particularly in Peking. Isn't that some sort of a threat to world peace?

Q Not, probably, [for] the Soviets.

A What is going on in China?

Q The ideology prevailing in China, does it constitute some sort of a potential threat to peace?

A Well so far, China has been very restrained as far as their policy in recent years, and we have a good relationship with the Peoples Republic --

Q But now, China is beginning to open out and go out into the world and establishing embassies throughout the world -- including Latin America.

A I think Latin American can take care of itself.

Q But the -- the peace of --

A Well, as long as China continues the foreign policy it is now conducting, it is not a threat to the peace. We don't know what could happen in five years.

Q Yes.

7

A I must, unfortunately, leave here.

Q Just one more question, if you please.

What can Latin America expect from the
United States?

A Well, I am going down to put before my
colleagues, a serious program of the new relationship
between Latin America and the United States.

I won't promise anything that we can't deliver, and I cannot
-- there are some areas in which I cannot be too specific
but in which I will indicate in which direction we can
go -- and I think what you -- the major thing I can tell
you is: I am going to Mexico in order to see
whether we can get a new relationship that will last
for many years.

Q At present the unfortunate
aspect of Latin America is that in the continent of
America, these United States, facing on the south -- facing
--

A Well, I don't think we should look at it as
a confrontation between Latin America and the United States
I think we should deal together, with those problems
where we agree -- and where we disagree, to
deal with them as well as possible, to try to solve them
-- but I don't look on it as a confrontation between

PRESS
DEPARTMENT OF STATE

February 21, 1974

No. 60

STATEMENT BY
THE HONORABLE HENRY A. KISSINGER
SECRETARY OF STATE
UPON ARRIVAL IN MEXICO CITY, MEXICO
FEBRUARY 20, 1974

Mr. Foreign Minister, Ladies and Gentlemen:

President Nixon has sent me here, accompanied by a distinguished Congressional delegation, to express the concern of the United States for a new start in the western hemisphere relationship. We intend to listen to our colleagues from the western hemisphere with understanding and respect. We intend to respond with honesty and friendship. We plan to implement whatever we agree upon with great care.

The nations of the western hemisphere have always had a vision of a community based on decency and justice, but they have not always reached their vision. We are assembled here to make a new start in this direction, and we are hopeful because we have come here in a new spirit. We are assembled here also because of a new imperative, the interdependence of nations.

To the peoples of the Americas I bring the friendship and dedication of the United States, and to the people of Mexico, where I have spent so many happy hours, I would like to express our gratitude for arranging this meeting and for making this meeting possible. To my friend, the Foreign Minister of Mexico, I would like to say that it is always a great joy to have an opportunity to exchange ideas with him and with your President.

Thank you very much.

* * * * *

Apartado Postal No. 88 Bis, México, D.F.

WORDS BY SECRETARY OF STATE HENRY A. KISSINGER UPON HIS ARRIVAL AT THE INTERNATIONAL AIRPORT, MEXICO CITY, FEBRUARY 20th, FOR HIS PARTICIPATION IN THE FOREIGN MINISTERS' CONFERENCE BEING HELD AT THE SECRETARIA DE RELACIONES EXTERIORES, TLATELOLCO,D.F.

His words follow:

Mr. Foreign Minister, ladies and gentlemen:

President Nixon has sent me here, accompanied by a distinguished congressional delegation, to express the concern of the United States for a new start in the Western Hemisphere relationship. We intend to listen to our colleagues from the Western Hemisphere with understanding and respect. We intend to respond with honesty and friendship. We plan to implement whatever we agree upon with great care.

The nations of the Western Hemisphere have always had a vision of a community based on decency and justice, but they have not always reached their vision. We are assembled here to make a new start in this direction, and we are hopeful because we have come here in a new spirit, and we are assembled here also because of a new imperative, the interdependence of nations.

To the peoples of the Americas I bring the friendship and dedication of the United States, and to the people of Mexico, where I have spent so many happy hours, I would like to express the gratitude for arranging this meeting and for making this meeting possible. And to my friend, the Foreign Minister of Mexico, I would like to say that it is always a great joy to have an opportunity to exchange ideas with him and with your President. Thank you very much.

PRESS
DEPARTMENT OF STATE

February 21, 1974

No. 62

AS PREPARED
FOR DELIVERY

ADDRESS BY
THE HONORABLE HENRY A. KISSINGER
SECRETARY OF STATE
TO THE
CONFERENCE OF TLATELOLCO
MEXICO CITY, FEBRUARY 21, 1974

Mr. President, distinguished colleagues and friends.

We owe our host country and its leaders a profound debt of gratitude for sponsoring this meeting. Personally, I have spent many happy days in this great country. And I have had the privilege of the advice, wisdom and on occasion the tenacious opposition of your President and Foreign Minister. I look forward to an equally frank, friendly, intense but constructive dialogue at this conference.

On a plaque in Mexico's imposing Museum of Anthropology are etched phrases which carry special meaning for this occasion:

"Nations find courage and confidence to face the future looking to the greatness of their past. Mexican, seek yourself in the mirror of this greatness. Stranger, confirm here the unity of human destiny. Civilizations pass; but we will always reflect the glory of the struggle to build them."

We assemble in the splendid shadows of history's monuments. They remind us of what can be achieved by inspiration and of what can be lost when peoples miss their opportunity. We in the Americas now have a great opportunity to vindicate our old dream of building a new world of justice and peace, to assure the well-being of our peoples -- and to leave what we achieve as a monument to our striving.

Our common impulse in meeting here is to fulfill the promise of America as the continent which beckoned men to fulfill what was best in them. Our common reality is the recognition of our diversity. Our common determination is to derive strength from that diversity. Our common task is to forge our historical and geographical links into shared purpose and endeavor.

In this spirit the United States offered a new dialogue last October.

In this spirit the countries of the Americas responded in Bogota last November.

We meet here as equals -- representatives of our individual modes of life, but united by one aspiration -- to build a new community.

PR #62

-2-

We have an historic foundation on which to build. We live in a world that gives our enterprise a special meaning and urgency.

On behalf of President Nixon, I commit the United States to undertake this venture with dedication and energy.

## The U.S. Commitment

One concern has dominated all others as I have met privately with some of my colleagues in this room. Does the United States really care? Is this another exercise of high-sounding declarations followed by long periods of neglect? What is new in this dialogue?

These questions -- not unrelated to historical experience -- define our task. On behalf of my colleagues and myself let me stress that we are here to give effect to a new attitude and to help shape a new policy. The presence of so many distinguished leaders from the United States Congress underlines the depth of the United States concern for its neighbors and the determination of our government to implement our agreements through a partnership between the executive and legislative branches.

The time has come to infuse the Western Hemisphere relationships with a new spirit. In the nineteenth and early twentieth centuries, the United States declared what those outside this hemisphere should not do within it. In the 1930's we stipulated what the United States would not do. Later we were prone to set standards for the political, economic and social structures of our sister republics.

Today we meet on the basis of your agenda and our common needs. We agree with one of my distinguished colleagues who said on arrival that the time had come to meet as brothers, not as sons. Today -- together -- we can begin giving expression to our common aspirations and start shaping our common future.

In my view, our fundamental task at this meeting -- more important even than the specifics of our agenda -- is to set a common direction and infuse our efforts with new purpose. Let us therefore avoid both condescension and confrontation. If the United States is not to presume to supply all the answers, neither should it be asked to bear all the responsibilities. Let us together bring about a new commitment to the inter-American community. Let us use the specific issues we discuss here as a road map for the future.

Let us not be satisfied with proclamations but chart a program of work worthy of the challenge before us.

Let us create a new spirit in our relations -- the spirit of Tlatelolco.

## An Interdependent World

A century ago a U.S. President described to the Congress the difficulties facing the country: "It is a condition which confronts us -- not a theory."

PR #62

-3-

The condition we confront today is a world where interdependence is a fact, not a choice.

The products of man's technical genius -- weapons of incalculable power, a global economic system, instantaneous communications, a technology that consumes finite resources at an ever expanding rate -- have compressed this planet and multiplied our mutual dependence. The problems of peace, of justice, of human dignity, of hunger and inflation and pollution, of the scarcity of physical materials and the surplus of spiritual despair, cannot be resolved on a national basis. All are now caught up in the tides of world events -- consumers and producers, the affluent and the poor, the free and the oppressed, the mighty and the weak.

The world and this hemisphere can respond in one of two ways.

There is the path of autarchy. Each nation can try to exploit its particular advantages in resources and skills, and bargain bilaterally for what it needs. Each nation can try to look after itself and shrug its shoulders at the plight of those less well endowed.

But hisotry tells us that this leads to ever more vicious competition, the waste of resources, the stunting of technological advance, and -- most fundamentally -- growing political tensions which unravel the fabric of global stability. If we take this route, we and our children will pay a terrible price.

Or we can take the path of collaboration. Nations can recognize that only in working with others can they most effectively work for themselves. A cooperative world reflects the imperatives of technical and economic necessity, but above all the sweep of human aspirations.

The United States is pledged to this second course. We believe that we of the Americas should undertake it together. This hemisphere is a reflection of mankind.

Its diversity reflects the diversity of the globe. It knows the afflictions and frustrations of the impoverished. At the same time, many of its members are leaders among modernizing societies. Much has been done to overcome high mortality rates, widespread illiteracy, and grinding poverty. This hemisphere uniquely includes the perceptions of the post-industrial societies, of those who are only beginning to sample the benefits of modernization and of those who are in mid-passage.

The Americas reach out to other constellations as well. The nations of Latin America and the Caribbean share much of the stirrings of the third world. The United States is engaged in the maintenance of peace on a global basis. Pursuing our separate ways narrowly, we could drift apart towards different poles. Working together, we can reinforce our well-being and strengthen the prospects for global cooperation.

So let us begin here in this hemisphere. If we, here in this room, fail to grasp the consequences of interdependence, if we cannot make the multiplicity of our ties a source of unity and strength, then the prospects for success elsewhere are dim indeed. The world community which we seek to build should have a Western Hemisphere community as one of its central pillars.

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President Echeverría foresaw the gathering force of interdependence in 1972 when he set forth his charter of the economic rights and duties of states as a guide for the conduct of relations among countries at different levels of economic development. Last September before the United Nations General Assembly I endorsed that concept. At first, some were concerned because they saw the charter as a set of unilateral demands; it has since become clear that it is a farsighted concept of mutual obligations. In the emerging world of interdependence, the weak as well as the strong have responsibilities, and the world's interest is each nation's interest.

We can start by making the concept of the charter a reality in the Western Hemisphere.

## The United States View Of The American Community

The United States will do its full part to see that our enterprise succeeds. We can make a major contribution, but it would be in nobody's interest if we raised impossible expectations, leaving our peoples frustrated and our community empty.

We will promise only what we can deliver. We will make what we can deliver count.

I have carefully studied the agenda for this meeting you prepared in Bogota. I will respond in detail to its specifics in our private sessions. But I will say here that I have come to a greater understanding of the deeply felt motivations behind the phrases.

You are concerned:

- that the United States has put aside its special commitment to the hemisphere;

- that we will allow old issues to go unresolved while new ones are created;

- that we seek not community but dominance;

- that our relationship does not adequately contribute to human welfare in the hemisphere, that it is often irrelevant to your needs and an obstacle to their fulfillment.

In response let me outline the direction the United States proposes to its friends in rededicating itself to a new era of Western Hemisphere relationships. I look forward to hearing your own views so that together we can make the Western Hemisphere community a reality.

The United States will do its utmost to settle outstanding differences. During the past year, the United States and Mexico solved the long-standing Colorado River salinity dispute. Two weeks ago Panama and the United States -- taking account of the advice of their partners at Bogota -- signed a document that foreshadows a new relationship. And just 48 hours ago, Peru and the United States settled a dispute over compensation for the exercise of Peru's sovereign right to nationalize property for public purposes.

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The United States is prepared to work with the other nations of this
hemisphere on methods to eliminate new disputes or to mitigate their
effect.

Some of our most troublesome problems have arisen over differences concern-
ing the respective rights and obligations of private United States firms
operating in foreign countries, and the countries which host them. These
differences are based largely on differing conceptions of state sovereignty
and state responsibility.

On the one hand, in keeping with the Calvo doctrine, most nations of this
hemisphere affirm that a foreign investor has no right to invoke the
protection of his home government. On the other hand, the United States
has held that nations have the right to espouse the cause of their
investors if they believe they have been unfairly treated. This convic-
tion is reflected in the legislative provisions of the Gonzales and
Hickenlooper amendments.

Realistically, we must admit that these two elements cannot be easily or
quickly reconciled. But the United States is prepared to begin a process
to this end and to mitigate their effects. Even before a final resolution
of the philosophical and legal issues, we are ready to explore means by
which disputes can be removed from the forefront of our inter-governmental
relations.

In our private meetings I shall make specific proposals to establish agreed
machinery which might narrow the scope of disputes. For example, we might
consider the establishment of a working group to examine various procedures
for fact finding, conciliation, or the settlement of disputes. Other
approaches are possible, and I shall welcome the views of my colleagues.
Let me affirm here that a procedure acceptable to all the parties would
remove these disputes as factors in United States Government decisions
respecting assistance relationships with host countries. We would be
prepared to discuss with our Congress appropriate modifications of our
legislation.

But we cannot achieve our goals simply by remedying specific grievances,
or even by creating mechanisms that will eliminate the sources of disputes.
A special community can only emerge if we infuse it with life and sub-
stance.

We must renew our political commitment to a Western Hemisphere system.
Thomas Macaulay once observed, "It is not the machinery we employ but the
spirit we are of that binds men together." We are here because we recog-
nize the need for cooperation. Yet we can only cooperate if our people
truly believe that we are united by common purposes and a sense of common
destiny.

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The United States will be guided by these principles:

- We will not impose our political preferences;

- We will not intervene in the domestic affairs of others;

- We will seek a free association of proud peoples.

In this way, the Western Hemisphere community can make its voice and interests felt in the world.

We realize that United States global interests sometimes lead to actions that have a major effect on our sister republics. We understand, too, that there is no wholly satisfactory solution to this problem.

However, to contribute to the sense of community we all seek, the United States commits itself to close and constant consultation with its hemispheric associates on political and economic issues of common interest -- particularly when these issues vitally affect the interests of our partners in the Western Hemisphere.

In my view, the best way to coordinate policies is to make a systematic attempt to shape the future. I therefore recommend that today's meeting be considered the first of a series. The Foreign Ministers assembled here should meet periodically for an informal review of the international situation and of common hemispheric problems. In the interval between our meetings, the heads of our planning staffs or senior officials with similar responsibilities should meet on a regular basis to assess progress on a common agenda. The principle of consultation on matters affecting each other's interests should be applied to the fullest extent possible.

Specifically:

- The United States is prepared to consult and adjust its positions on the basis of reciprocity, in the multilateral trade negotiations.

- The United States also recognizes a fundamental congruity of interests among the countries of the hemisphere in global monetary matters. We favor a strong voice for Latin America in the management of a new monetary system -- just as we favor its effective participation in the reform of this system.

- The United States is ready to undertake prior consultation in other international negotiations such as the Law of the Sea Conference, the World Food Conference and the World Population Conference.

The Western Hemisphere community should promote a decent life for all its citizens.

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No community is worthy of its name that does not actively foster the
dignity and prosperity of its peoples. The United States as the richest
and most powerful country in the hemisphere recognizes a special obligation in this regard.

Let me sketch here the program which President Nixon has authorized and
which I shall discuss in greater detail with my colleagues this afternoon.

-- First, in trade. During the period of great economic uncertainty arising from the energy situation, it is essential that nations behave cooperatively and not take protective or restrictive action. I pledge to you today that the United States will do its utmost to avoid placing any new limitations on access by Latin America to its domestic market.

In the same spirit we renew our commitment to the system of
generalized tariff preferences. We shall strongly support this
legislation. Once it is enacted, we will consult closely with
you on how it can be most beneficial to your needs.

-- Second, in science and technology. We want to improve our private and governmental efforts to make available needed technology, suited to varying stages of development in such vital areas as education, housing and agriculture. Private enterprise is the most effective carrier of technology across national borders. But government, while not a substitute, can usefully appraise the overall needs and spur progress. The United States therefore recommends that we establish an inter-American commission on technology. It should be composed of leading scientists and experts from all the Americas and report to governments on the basis of regular meetings.

-- Third, in energy. This hemisphere, linking oil-producing and oil-consuming countries, is uniquely situated for cooperative solutions of this problem. The United States is prepared to share research for the development of energy sources. We will encourage the Inter-American Development Bank to adapt its lending and fund-raising activities to cushion the current strains. We are also prepared to explore ways of financing oil deficits, including the removal of remaining institutional impediments to your access to United States capital markets.

-- Fourth, in development assistance. The United States Government in its Executive Branch is committed to maintain our aid levels, despite rising energy costs. On the other hand, the development problem can no longer be resolved simply by accelerating official assistance. We need a comprehensive review and recommendations on how all flows of capital and technology -- whether from concessional assistance, world capital markets or export credits -- can contribute most effectively to hemispheric needs. I recommend charging the inter-American body with these tasks.

-- Fifth, in reshaping the inter-American system. We must identify and preserve those aspects of the Rio Treaty and the Organization of American States which have shielded the hemisphere from outside

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conflict and helped preserve regional peace.

Some form of institutional structure for peace and cooperation is clearly necessary. However, we must reinforce the formal structure of the OAS by modernizing its institutions and agreeing on the principles of inter-American relations. The United States is prepared to cooperate in creative adjustments to meet new conditions.

## Next Steps

A Spanish poet once wrote: "Traveler, there is no path; paths are made by walking."

This is our most immediate need. We are not here to write a communique but to chart a course. Our success will be measured by whether we in fact start a journey. I suggest we move ahead in three ways:

- First, let us make clear to our peoples that we do have a common destiny and a modern framework for effective cooperation.

- Second, let us agree on an agenda for the Americas, a course of actions that will give substance to our consensus and inspiration to our peoples.

- Third, let us define a program to bring that agenda to life.

Mr. President, my distinguished colleagues, four centuries ago totally alien cultures met for the first time near here. We are moving towards a world whose demands upon us are nearly as alien to our experience as were the Spaniards and the Aztecs to each other.

Today, if we are to meet the unprecedented challenge of an interdependent world, we will also have to summon courage, faith, and dedication. The United States believes we can build a world worthy of the best in us in concert with our friends and neighbors. We want future generations to say that in 1974, in Mexico, the nations of the Western Hemisphere took a new road and proclaimed that in the Americas and the world they have a common destiny.

* * * * * *

SPEECH BY THE SECRETARY OF STATE
OF THE UNITED STATES OF AMERICA

HENRY A. KISSINGER

AT THE CONFERENCE OF TLATELOLCO
MEXICO CITY, MEXICO

FEBRUARY 21, 1974

"Nations find courage and confidence to face the future
by looking to the greatness of their past. Mexican,
seek yourself in the mirror of this greatness. Stranger,
confirm here the unity of human destiny. Civilizations
pass; but men will always reflect the glory of the
struggle to build them."

We assemble in the splendid shadows of history's monuments.
They remind us of what can be achieved by inspiration and of
what can be lost when peoples miss their opportunity. We in the
Americas now have a great opportunity to vindicate our old dream
of building a new world of justice and peace, to assure the
well-being of our peoples --and to leave what we achieve as a
monument to our striving.

Our common impulse in meeting here is to fulfill the promise
of America as the continent which beckoned men to fulfill what was
best in them. Our common reality is the recognition of our
diversity. Our common task is to forge our historical and
geographical links into shared purpose and endeavor.

We have an historic foundation on which to build; we live in
a world that gives our enterprise a special meaning and urgency.

## The U.S. Commitment

of our government to implement our agreements through a partnership
between the Executive and Legislative branches.

In my view, our fundamental task at this meeting -- more important even than the specifics of our agenda -- is to set a common direction and infuse our efforts with new purpose. Let us therefore avoid both condescension and confrontation. If the United States is not to presume to supply all the answers, neither should it be asked to bear all the responsibilities. Let us together bring about a new commitment to the inter-American community. Let us use the specific issues we discuss here as a road-map for the future.

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## An Interdependent World

The world and this Hemisphere can respond in one of two ways.

But history tells us that this leads to ever more vicious competition, the waste of resources, the stunting of technological advance, and -- most fundamentally -- growing political tensions which unravel the fabric of global stability. If we take this route, we and our children will pay a terrible price.

- 5 -

The United States is pledged to this second course. We believe that we of the Americas should undertake it together. This Hemisphere is a reflection of mankind. Its diversity reflects the diversity of the globe. It knows the afflictions and frustrations of the impoverished. At the same time, many of its members are leaders among modernizing societies. Much has been done to overcome high mortality rates, widespread illiteracy, and grinding poverty. This Hemisphere uniquely includes the perceptions of the post-industrial societies, of those who are only beginning to sample the benefits of modernization and of those who are in mid-passage.

The Americas reach out to other constellations as well. The nations of Latin America and the Caribbean share much of the stirrings of the Third World. The United States is engaged in the maintenance of peace on a global basis. Pursuing our separate ways narrowly, we could drift apart towards different poles. Working together, we can reinforce our well-being and strengthen the prospects for global cooperation.

So let us begin here in this Hemisphere. If we, here in this room, fail to grasp the consequences of interdependence, if we cannot make the multiplicity of our ties a source of unity and strength, then the prospects for success elsewhere are dim indeed. The world community which we seek to build should have a Western Hemisphere community as one of its central pillars.

- 6 -

President Echeverría foresaw the gathering force of interdependence in 1972 when he set forth his Charter of the Economic Rights and Duties of States as a guide for the conduct of relations among countries at different levels of economic development. Last September before the United Nations General Assembly I endorsed that concept. At first, some were concerned because they saw the Charter as a set of unilateral demands; it has since become clear that it is a farsighted concept of mutual obligations. In the emerging world of interdependence, the weak as well as the strong have responsibilities, and the world's interest is each nation's interest.

We can start by making the concept of the Charter a reality in the Western Hemisphere.

## The United States View of the American Community

- 7 -

You are concerned:

-- that the United States has put aside its special commitment to the Hemisphere;

-- that we will allow old issues to go unresolved while new ones are created;

-- that we seek not community but dominance;

-- that our relationship does not adequately contribute to human welfare in the hemisphere, that it is often irrelevant to your needs and an obstacle to their fulfillment.

In response let me outline the direction the United States proposes to its friends in rededicating itself to a new era of Western Hemisphere relationships. I look forward to hearing your own views so that together we can make the Western Hemisphere Community a reality.