DEPARTMENT OF STATE
---
OFFICE OF THE SECRETARY

December 9, 1974

HAK:

Subject: George Ball Speech to Trilateral Commission

Zbig Brzezinski has forwarded to you the preliminary text (Tab A) of what George Ball planned to tell the Trilateral Commission at its meeting last night.

Ball's planned remarks focus on the energy crisis and a MidEast settlement. He chides what he describes as your policy of "confrontation" with OPEC over oil pricing and claims that your step-by-step bilateralism in MidEast negotiations is "approaching a dead-end."

As alternatives to your policies, Ball revives and defends two pet ideas:

- His London proposal for a recycling facility in which OPEC would participate equally with the consumers on all matters. (Pages 15 & 16)

- His proposal, first broached in *Foreign Affairs* in 1969, for a joint US-Soviet effort to impose a settlement. He now argues for joint guarantees of any settlement and for joint patrolling of buffer zones. (Pages 20 & 21)

Concerning the energy crisis, Ball's preliminary text urges cooperative action by consumers as well as producers. He chastises the USG for initial inaction which encouraged European bilateralism and subsequently for our failure to act even on our current proposals re reduced consumption and diversifying energy sources. Ball favors this element of your Chicago speech and believes that over time they will themselves create market forces to lower oil prices. However, he describes as confrontationist your desire to deny OPEC participation in a recycling facility and to delay a consumer/producer dialogue on pricing until these measures have taken full effect.

Ball argues (Pages 9 & 10) that a showdown on pricing is unnecessary, that it would only serve to consolidate and further

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radicalize OPEC and that in any event the West probably cannot muster
the clout needed to compel a price rollback. Instead, he urges an
immediate consumer/producer dialogue and full OPEC participation in
any recycling facility. This, he claims, would buy time for price
reduction via market forces; it would test Arab intentions, attract
the producers' surplus cash and serve as a "sobering, responsibility-
building" experience for OPEC members.

Concerning settlement negotiations, Ball states that his views
on a joint Soviet-USG approach will be more fully explained in an
<u>Atlantic Monthly</u> article about to come to the stands. Meanwhile, he
expresses a fear of a preemptive Israeli strike and urges that we at
least sound out Moscow on cooperation.

LSI

[Y]

12/8/74

I

In approaching foreign policy we all too frequently accept glib slogans as the immutable truth and build diplomatic strategies on premises whose validity depends solely on their constant repetition. For example, it had until recently been an article of faith that the Arab nations could never achieve anything approaching unity -- or long sustain it if they ever achieved it -- and that they were quite incapable of the effective common action that the West had so brilliantly demonstrated during the past three decades.

Yet if we have learned anything from our experience with the energy crisis of the past year -- and I am not sure we have -- we had better cast aside that particular item of conventional wisdom. For, during a time when the Arab nations have displayed remarkable solidarity both within and outside of the OPEC, America, Europe and Japan have been caught in a hopeless snarl of cross purposes. Each of our nations has sought self-centered national-istic solutions for problems inherently soluble only through coordinated action, while more effort has been expended in trying to frustrate one another's tactics than in seeking an efficacious key to common action.

Some of our nations have been more self-centered than others. Gaullism still lingers as a conditioned reflex in French politics -- with Messrs. Debre and Jobert anxiously overseeing its purity -- while West Germany fears to become the paymaster of Europe. But in the indictment of recent policy, I would emphatically include the United States Government, for during the past year the chart
of official statements and speeches emanating from WASHINGTON
has fluctuated more widely than the Dow-Jones averages.

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as we had done during earlier oil crises in 1956 and 1967. The recognition that most other nations were in far worse jeopardy than ourselves came only much later and almost as an afterthought. But by then our leadership had lost much of its authority since we had left our hard-pressed allies little option but to try frenetically to make their own private bilateral deals with the OPEC nations. Later we reacted in much the same myopic way when the Arab nations' politically motivated embargo was followed by a fourfold price increase by the whole of OPEC and the problem became one of price rather than supply. Washington kept its cool to the point of insanity; there was, our officials blandly told the world, no cause for alarm. The United States could pay its import bills. Though prices had abruptly risen, they would soon start down again. The cartel would fall apart as cartels always did; the market would take care of everything.

Well, of course, the market did not function in such an obliging way. Though during the months that followed the officials continued to mouth a Macawberish optimism, it sounded increasingly hollow until finally, toward the end of September, both the President and the Secretary of State burst out with ominous growling noises at the OPEC countries, declaring that the world would not tolerate the excessive energy costs and hinting darkly that continued OPEC intransigence might trigger some form of military action.

While our leaders talked apocalyptically about oil prices, the financial situation of several of our friends and allies grew daily more precarious and the less developed countries faced desperate pressure on their already meager living standards. Still the

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American government continued to oppose any special international arrangements for recycling funds to meet emergent requirements, quite cavalierly asserting that the private banking structure could handle the problem -- a view that the banking community recognized as nonsense.

Now -- at long last -- the American Government has abruptly reversed course and has itself proposed a new international facility to assist the recycling process and, while still insisting that the producers' cartel cannot long endure, some American officials are now suggesting that, though the current high prices may not fall very much, that could, after all, be a good thing. If only we take the appropriate domestic action, continuance of such high prices should discourage consumption and encourage the development of alternative sources of energy.

Of course, the consuming nations will all have to reduce their energy consumption and the United States should be commended for its useful promotion of an International Energy Agency to concert plans for that purpose. But so far the Executive Branch has done little to bring about a reduction of America's own oil requirements except talk about it. It has acted -- or avoided action -- on the apparent assumption that hot air can replace petroleum as a source of energy -- an ingenious thesis but with little scientific support. Yet anyone who has traveled about this country is aware that Americans are ready for drastic adjustments in their way of life if assured they are necessary. We even observe the curious anomaly of Mr. Ford of Detroit vainly calling on Mr. Ford in Washington for higher gasoline taxes, when one might think it would be the other way round.

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In directing these rather mordant comments at the
American Government, let me again make clear that I do not exonerate
from blame other governments either in Europe or Japan or else-
where in North America. Nationalism has been the order of the
day and that bemedalled relic of everyone's _ancien regime_, _Sauve
Qui Peut_, has been everywhere in command. Leadership has been
conspicuous for its absence. No heroes have emerged in any of our
closely knit industrial countries to lead us toward a concerted
policy that would still take account of the special problems and
vulnerabilities of all concerned. It has been an unworthy per-
formance by the entire cast and we should all be ashamed of ourselves.

II

Although the problem produced by the shift of wealth and
power to the OPEC countries is of unprecedented magnitude and com-
plexity, I intend to speak tonight about only one limited aspect:
how we can most effectively -- and with the fewest dislocations --
help nations finance severe balance of payments difficulties stemming
from increased energy costs until such time as the world can adjust
to its new situation.

Today it is fashionable in some quarters to dismiss proposals
for recycling as an irrelevance. What is imperative is to bring
about the reduction of oil prices. But if that seems outside our
current competence, what then do we do? Continue as we have been,
paralyzed by indecision?

What, among other things, we urgently need are transitional
measures. We are faced, after all, not by a permanent disruption
of our financial and economic system but by a problem stemming from
timelags in the adjustment process. The primary reason that the four-

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fold increase in oil prices threatens disaster is not that it has
occurred but that it has occurred abruptly. Phased over five or
ten years such a drastic price change could be absorbed with only
minor dislocations. Toward the end of that period progress in the
development of alternative sources of energy would tend to exercise
a restraint on oil prices. Nations would have time to change their
habits of energy utilization, progressively adopting conservation
policies that would either reduce demand for oil or stop -- or at
least slow -- its rate of increase, while the nations of the Middle
East, together with other oil-producing areas of the world, could
increase their capacity to "absorb" revenue as they develop their
infra-structures and establish broader foundations for agricultural
and industrial expansion. Finally, the oil-producing countries could
overcome the deficiency that most inhibits them today

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[LC]

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from making intermediate and long-term investments - the lack of an adequate number of personnel trained in complex investment decisions and competent to manage capital funds of tremendous magnitude. As a new generation acquires the requisite skill in those arts the outflow of funds into investments all over the world will greatly increase.

Our problem, then, is to deal with a limited time gap while the world adjusts to high oil prices or those prices fall under the impact of reduced demand resulting from the curtailment of consumption or the increase of supply that follows the development of alternative energy sources. What compounds the difficulty - and makes the problem potentially so politically divisive - is that the burden of those prices falls unequally on individual consuming countries. A few, such as the United States, have indigenous oil production that covers the largest part of their requirements. Others, such as the United Kingdom, have such production in prospect. Still others, such as Japan, are dependent 100% on imported oil to meet a large part of their energy requirements and have no serious possibility of developing domestic sources.

Some nations, such as the Federal Republic of Germany entered this period of strain and difficulty with large financial reserves and a substantial surplus in their balance of payments. Others, such as Italy, were already suffering a deficit in their balance of payments when the increase in the cost of imported oil produced the drain that now threatens their national solvency. Finally, many less developed countries - and particularly those that do not export other commodities lately enjoying high world prices - face the desperate prospect of further impoverishment unless extraordinary help is forthcoming.

To provide nations in distress with needed funds at anything approaching prevailing commercial interest rates by no means fully meets their problem. They

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cannot afford, over a protracted period, to continue to build up
enormous external debts with the resulting cumulative burden of
carrying charges. At the end of that road is chaos -- defensive
actions of the most destructive kind, drastic restrictions on trade
and capital movements, disruptive swings in currency parities, and
ultimately moratoria and repudiations. Thus specially tailored
financing is required of a kind that cannot possibly be provided
from the private sector. The banking system has already reached the
limits of its capacity to provide credits to such countries.

III

These realities, which the United States Government for so
long ignored -- even denying they existed -- were finally acknowledged
by Secretary Kissinger in a speech on November 14, and by Secretary
of the Treasury Simon four days later. These speeches put forth
the rough outline of an American recycling proposal, or at least an
impressionistic portrayal of an imprecise idea. That idea did con-
template that the governments of Western Europe, North America and Japan
might put in place a system of mutual support through the creation of
a common facility capable of redistributing up to as much as $25 billion
in 1975, and as much again the following year. It embodied a mechanism
for recycling, at commercial interest rates, some of the funds flowing
back to the industrial world from the oil producers. Yet monies
available to the facility would apparently not be directly related to
the backflow of oil payments, nor would the oil-producing nations
participate in the scheme. The costs and burdens would be borne ex-
clusively by the oil-consuming nations.

Though the plan is described merely as a standby facility --

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a "safety net" -- to be used only when other financial sources prove inadequate, it seems likely --

if the facility is created and is used at all - that its operations will necessarily involve the participating countries in the assumption of some very bad credit risks. Thus the costs and burdens of the scheme are likely to be considerable.

The American plan is, of course, only one of a number that have been proposed. The European Economic Community has created a special facility, so far limited in amount to $3 billion - or $2 billion after the provision for interest charges - and there has been a facility established in the International Monetary Fund at the initiative of Secretary General Wittaveen, and another proposed by the Secretary General of the OECD, Mr. Van Lennep. Moreover, the Chancellor of the Exchequer of Great Britain, Denis Healy and the Chancellor of the Federal Republic Helmud Schmidt, have both made useful proposals.

I recognize that the American plan faces a number of obstacles; not only have the French indicated their intention not to participate, but they have reduced the participation of the European Economic Commission to that of a mere observer, while the Federal Republic has shown considerable reluctance to go along with a plan that may place substantial burdens on it. Finally, there is always the question of the United States Congress, which does not seem to have been consulted prior to the proposal of the plan in Secretary Kissinger's speech. I have considerable doubt whether the Congress will enthusiastically support a measure that would, in effect, make the United States and the Federal Republic the guarantors of the balance of payments of the major industrialized countries. The question the Congress will most certainly ask is why the plan does not provide

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for obtaining necessary funds directly from the oil-producing states,
or why it does not involve the oil-producing states in assuming part
of the burden.

Nevertheless, we must not lose time in a long haggle over
the exact arrangements we intend to put in place for recycling the
excess capital flowing into the oil-producing states, for we have
already lost many valuable months and unless we move promptly we
may face a collapse of the entire financial structure of the non-
Communist world that could bring about "beggar my neighbor" policies
and reduce our financial relations to chaos. I need not comment on
the impact of such a development on the political stability of
several key nations.

So I hope that, in spite of the defects of the American
plan, we get on with some serious discussion of a recycling or
guaranty mechanism that can be put in place promptly. Meanwhile,
there is no harm in considering its defects as well as its virtues.

IV.

In my view the most notable deficiency of the American scheme - and of
most of the other schemes so far proposed - is that, by their terms, the
consuming countries would assume the whole burden of recycling, while those
producing countries responsible for the creation of the problem would be offered
no role to play. Nor is the structuring of the American proposal in this
way by any means accidental. It reflects the intention to confront the oil-producing
countries rather than seek their cooperation. That is an attitude which has
shaped American policy toward all aspects of the oil problem; in fact,
a considerable part of America's diplomatic effort with its allies during the
past few months has been to try to prevent the nations of the European Economic

12/8/74

Community from meeting with oil-producing states. The American objection as stated is that such a meeting would be premature. Before any such meeting should occur, the oil-consuming nations should have formulated a fully agreed position. In the words of Secretary Kissinger, the "conditions for a constructive dialogue will have been created" only after the consuming nations "have taken some collective steps toward a durable solution - that is measures to further conservation and the development of new additional suppliers - and for our interim protection through emergency planning and financial solidarity," and, if these hurdles are finally overcome and a dialogue eventually takes place, the "main subject must inevitably be price".

One difficulty with this position is, as I have already mentioned, that the United States itself has done virtually nothing to put in place a program for "conservation and the development of new supplies", and in the absence of visible and effective American action, even our shrillest exhortations are unlikely to inspire other nations to act. So it may be a long, cold day - and I use the adjective advisedly - before the consumer nations have fully met Mr. Kissinger's preconditions and are thus in a position to begin discussions with the OPEC countries.

Such a long postponement of a serious dialogue would, in my view, be a serious error, and we should carefully scrutinize the logic that prompts this rigid position. One element, I suspect, is a tactical aversion to dealing _en masse_ with the OPEC countries, and particularly the Arab nations -- since it is feared that might tend to consolidate the cartel which the consuming nations would like to see disintegrate. In addition, there is no doubt some concern that the meeting might result in pushing the more moderate OPEC governments toward harder positions by focusing the pressure from their more activist neighbors; certainly that has been an underlying tactical assumption

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CLC

12/8/74

of the American government in shaping negotiations for a solution to
the Arab-Israeli conflict.

But the fundamental reason for not engaging the OPEC countries
in a dialogue derives from the strategy of confrontation implied in
Secretary Kissinger's remarks. What is presumably envisaged is that
after the consuming countries have reached a common agreement on
handling the financial problems resulting from capital flows and
have taken concerted action to reduce demand and increase other
sources of production, they would then be in position to sit down
with the producing countries and demand a lower oil price.

Such a conception raises many questions. If, as American
officials assert, the producers' cartel will disintegrate and oil prices
be forced down, is that not more likely to result from the silent
operation of market forces than from the give and take of a formal
negotiation? In fact, is not the prospect of confrontation more
likely to unite than fragment the cartel?

The answer depends at least in part on the extent to which oil prices reflect political, as opposed to purely commercial, considerations and that, in turn, varies from one producing state to another. Those states where the capacity to produce oil far exceeds the current capacity to absorb funds are Saudi Arabia, Kuwait and Libya. For these states which have no present need for large revenues, to the purely economic question: whether it may be more advantageous to leave oil in the ground or sell it at the current market is by no means a simple equation. No one can predict with any assurance the relative purchasing power of oil ten years from now.

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Nor can one assume that, in terms of political considerations, such states
as Saudi Arabia or Kuwait are completely free agents. They must respond to the
dynamics not only of Arab politics but of OPEC politics. Saudi Arabia may
prefer, in order to strengthen its ties with the U.S. and for other reasons, to
reduce oil prices, but it is not likely to go against the strongly held views
of more activist Arab states or of Iran - as experience has vividly demonstrated.

As an abstract idea, the concept of the consuming countries negotiating
as a solid group with the producing countries to obtain lower oil prices has
considerable appeal, but - in view of the complex currents and cross-currents
among the oil-producing nations - it would probably tend to solidify OPEC more
than fragment it. Presumably, in any such negotiation the full arsenal of
political and economic inducements would be brought into play - promises of
technical aid organized through the public sector as well as political and military
assistance - but in view of the prevailing competition between America and
individual nations of Western Europe for arms sales, I am not sure that the
consuming nations as a group could effectively utilize those inducements.

Quite understandably, Mr. Kissinger wishes to use the
West's control of the transport, refining and distribution of oil as
a major bargaining counter. But what that would involve is the
extension of a considerable degree of governmental direction over
those activities, as well as the imposition of wide-ranging controls
and restrictions which deserve the most careful consideration. A move
toward state trading on the scale that implies would certainly be a novel
venture for America; it is one that needs careful airing in the public
marketplace before we take irrevocable steps down that road.

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On balance I am inclined to think that the strategy of trying to solidify
the West and then engage in a bargain for lower oil prices is not well con-
ceived, since it would too strongly suggest a confrontation and thus tend to
strengthen the hands of the more activist states in the OPEC cartel. A more
practical course, it seems to me, would be for the consuming countries to insti-
tute as soon as possible a continuing discussion with the OPEC nations in which
we seek to enlist their cooperation with regard to the whole range of questions
created by their price actions - including the problem of recycling without
specifically seeking an adjustment of prices. Meanwhile the consuming countries
can, by taking effective measures to reduce demand and increase non-
OPEC supplies, create a market environment in which the disparities
in the situations among the various OPEC countries will operate to weaken
their common front.

Not only are we likely to defeat our own ends by the kind of confrontation
Secretary Kissinger seems to contemplate, but we cannot, it seems to me,
mobilize many effective bargaining counters other than market pressure. Re-
gardless of the talk that sometimes passes as wisdom, military threats simply
are not credible. In spite of the dark mutterings of our statesmen, automatic-
ally qualified or retracted the following day, we are not going to persuade
the OPEC countries to stop overcharging us by launching a military expedition
to the Middle East. Many things have changed since 1958 when America landed
troops on the Lebanese beaches with no opposition. Even more has happened
since 1956 when America rather sanctimoniously forced its British and French
allies to withdraw from Suez. Today there is a Soviet Black Sea fleet patrol-
ling the Mediterranean alongside America's Sixth Fleet. There are substantial
beachheads in Syria and Iraq, and, probably soon after Mr. Brezhnev completes
his forthcoming visit to Cairo, there will once more be a Soviet position in

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Egypt. Finally, we no longer live in a world of nuclear superiority but of
nuclear parity - and neither we nor the Soviets dare risk a head-on clash. Yet
I cannot believe that the Soviets would stand idly by while we expropriated
the oil wells of the Middle East. In fact we ourselves demonstrated in October
1973, by proclaiming a worldwide military alert at the mere suggestion of a
possible Soviet intervention, that any military move by one superpower in that
area would be countered by the other. So we should reconcile ourselves to the
reality that no responsible government in Washington would ever turn the oil-
producing areas of the Middle East into a nuclear Armageddon.

If no solution by force is possible, neither is any solution
by the sanctions of economic denial. Anyone who studies the limited
import requirements of the Middle East must necessarily come to that
conclusion, since there is little the area desperately needs that it
could not procure either from Eastern Europe or the Soviet Union --
or elsewhere. And, on the basis of our experience so far, I think
it doubtful the West or Japan would submit to the discipline a program
of economic sanctions would require.
an effective

I question, therefore, whether it is wise to delay a serious dialogue with
the OPEC countries until the consuming nations have taken all the steps listed in
Secretary Kissinger's speech. Certainly, at the rate America has been going,
it will be a considerable time before we have a full-blown plan of conservation
finally in place - although I would certainly hope that, when Congress returns
after the first of the year, the mood of the country will force far more drastic
and urgent action than anything the Administration has so far contemplated. Time
is wasting and the breakage from the high energy costs and massive capital flows
is beginning to accumulate.

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Not only should we promptly talk with the OPEC countries but we should, in
my view, enlist their cooperation in trying to find a common solution to the
common financial problems the world now faces as a result of their actions. It
was with this in mind that last September I proposed, in a speech in London,
a recycling scheme that differed substantially from that since put forward by
Secretaries Kissinger and Simon, and, in my view, offered substantial advantages.
Rather than continuing in the prevailing vicious atmosphere of confrontation, I
suggested that we try to create a recycling facility in which the OPEC
countries would fully participate. That many of them are seriously concerned
by the threatened damage to the world financial system seems, from the evidence,
quite clear, and we do them a great injustice by assuming a priori that,
because they are unprepared to reduce oil prices, they would be unwilling to join
a cooperative effort to find a long-term solution to the havoc such prices
are creating. A scheme for such cooperation has already been put forward by
the Shah of Iran and, from my own observations in the Middle East, I think it
likely that the OPEC nations would respond to a well considered approach.

That was the starting point for my proposal. I suggest that we invite the
OPEC countries to play a co-equal role in the design and construction of a
special financial institution which might be called the Fund or Bank for
Capital Recycling. That facility, I suggested, might be set up alongside the
Bretton Woods institutions, drawing on them for personnel at least in the
early stages. It would, however, differ from the Bretton Woods institutions -
and in that sense would be more attractive to the producing countries -
in that the institution would be owned 50% by a group of major consuming
countries and 50% by the OPEC countries, with each group sharing equally in
voting rights and management. Apart from the capital subscribed by each side
the funds for relending would be obtained by issuing forms of debt instruments

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designed especially to meet the requirements of the producing countries - debt instruments that would probably contain some provision for maintenance of value. Since the OPEC countries have suffered severe losses from currency devaluations and from the inflation in the cost of the goods they buy it seemed to me that a maintenance of value provision might appropriately be related to the changing terms of trade. Another possibility, as I now see it, is that, since the option of the OPEC countries is either to produce oil or retain it in the ground, repayment might be related to the purchasing power of a barrel of oil at the time of repayment.

In any event I foresaw the possibility that the new institution might be able to attract a reasonable proportion of the excess capital of the OPEC countries since the institution would belong to them as much as to the United States, Western Europe and Japan.

The advantages of such a scheme seemed considerable. At least it might establish that, as some contend, the OPEC countries are not interested in joining a constructive common enterprise. But if they did choose to participate - as I think probable - they would then take some share of the responsibility for the consequences of their oil price policies and might operate as some constraint on further irrational price increases.

An initiative of the kind I proposed would, as I saw it, make it more attractive for the OPEC countries to invest their revenues over and above the amounts they were able to absorb internally or to invest externally. Of course, the procedures for relending the funds would have to be carefully designed. Since one of the objectives of the enterprise would be to help less-developed countries, arrangements would have to be made for subsidizing concessionary interest rates, with the OPEC nations assuming their share of the subsidy. Beyond that the bank would endeavor to provide capital to bridge the period required for the oil-producing and oil-consuming countries to make the necessary adjustments to the new high level of energy costs, and thus ammeliorate the

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But if we are to buy that time we would do well to change our attitude and our manners. Those of us in the oil-consuming nations should stop accusing oil-producing nations of "ganging up on us" or of "holding the consuming nations to ransom". Such epithets may provide an easy means for relieving the feelings of overwrought politicians but since there is little we can do to correct the situation - and especially since we are not even doing what we can to exploit market pressures through the curtailment of consumption and the expansion of production - we might try the interesting experiment of substituting cool thought for indignation.

"What is truth on one side of the Pyrenees," wrote Blaise Pascal, "is error on the other side.", so we might try to appraise the problem as it looks from Riyahd or Kuwait or Teheran. Only on that basis, and in that spirit, might we be able to engage the OPEC countries in a common effort to resolve a common problem - the distortions produced by the massive and protracted capital flows resulting from the OPEC price decisions.

Nor should we be put off by fear that a cooperative scheme such as mine would give the OPEC countries too much control over the financial welfare of industrialized countries. It would not be the only mechanism in the field - there are already the others I have mentioned - and any attempt to politicize the decisions of the recycling bank could well be offset through other mechanisms.

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Again, there has been a feeling in some quarters that to enlist the oil-producing states in a common effort to mitigate the consequences of their price decisions would tend to be interpreted as a ratification of those decisions and thus relieve them of pressure to reduce prices. That does not seem to me to show a realistic appreciation of the situation in which we now find ourselves.

In the final analysis, it seems to me, participation in such a common enterprise might have a sobering -- indeed, an educative influence -- on the OPEC countries. Nothing is more likely to generate a sense of responsibility than the experience of responsibility.

Whatever mechanisms we may establish to mitigate the dislocations resulting from excessive capital flows, we must recognize that, over the months ahead, many nations are likely to find themselves extremely hard pressed economically. They face increased energy costs, which operate very much like an externally imposed tax draining off investment capital, serious balance of payments problems, and the prospect that worldwide inflation will force on nations deflationary policies that could result in the slowing down of economic activity, unemployment and all the maladies that come with it, including the ills of political instability.

If we are to view this near-term future realistically, we must also take account of the serious possibility of a renewed oil embargo as the result of another flaring up of shooting war in the Middle East. One need not be a pathological pessimist to recognize that this is by no means a fantasy.

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At the very outset of the American effort to promote a Middle Eastern settlement, a decision had to be made as to assumptions on which strategy should be based. One possible assumption was that the Soviet Union favored the continuance of turbulence in the Middle East, so long as that did not threaten a direct US-USSR confrontation. The second was that the Soviet Union considered *detente* so important and the dangers of a head-on collision so grave that it would prefer a stable Middle East so long as it could play a co-equal role in bringing about that stability.

If one accepted the first assumption, that the Soviet Union might seek to sabotage, or at least delay, any efforts at settlement, America should clearly try to limit Soviet influence and insulate the Kremlin from settlement discussions. But, if one assumed that the Soviets would prefer a stable Middle East provided they played a co-equal role in bringing it about, we should have promptly enlisted their help.

In embarking on his brilliant round of shuttle diplomacy Secretary Kissinger seems to have opted for the first assumption, since he quite deliberately picked a bilateral format that excluded not only the more activist Arab states but the Soviet Union as well. His tireless efforts proved successful in bringing about a military disengagement, first on the Egyptian and then on the Syrian fronts. But since the recent Arab summit conference at Rabat and Arafat's UN speech on November 13, it seems clear that Mr. Kissinger's conception of a step-by-step solution of the Arab-Israeli conflict is now approaching a dead end. The more activist Arab states are not

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prepared to see Egypt negotiate a solution of the Sinai issue that could effectively cause it to lose interest in further negotiations of other issues. They are thus insisting on linking any further bilateral discussions on the Sinai issue with at least some simultaneous discussions of the issue of the Golan Heights on which rapid progress seems extremely difficult.

Above and beyond that, however, the two principal substantive issues involved in the Arab-Israeli dispute --

Palestinians and Jerusalem -- are issues that engage the interests of all of the Arab states and are, therefore, not available for settlement in a bilateral context. This might not have been the case with the Palestinian issue had the Arab leaders been willing to agree that King Hussein could conduct the negotiations and that the resultant Palestinian state would be tied to Jordan in some juridical manner. But the decision to turn over to the Palestinian Liberation Organization (the PLO) final responsibility for a Palestinian state meant that the negotiation could take place only at the Geneva Conference where not only the more militant Arab states will be represented but where the Soviet Union acts as Co-Chairman. Under these circumstances, the strategy of bilateral negotiations has run its course, and it seems clear that no Middle East settlement of the Arab-Israeli conflict is likely to be achieved without the concurrence of the Soviet Union -- which means, in practical terms, without giving the Soviets a co-equal role in bringing about a settlement.

That we should offer such a role is a conviction I have held for sometime. In fact, in an article in *Foreign Affairs* in July 1969, I recommended that the United States enlist the coopera-

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tion of the Soviet Union in a joint effort to fill in the terms
of a settlement within the framework of Security Council Resolution
242 that was adopted in November of 1967. I went even further in
suggesting that the only possible solution of the Middle Eastern
conflict was for the two superpowers to concert their efforts and,
in effect, to "impose" a settlement on the contending parties.

I recognize that "impose" is one of those symbolic
words which should be shunned in polite diplomatic company. Even
during the palmy days of the Concert of Europe, the major powers
regularly insisted that they were not "imposing" a peace, in spite
of the presence of gunboats in the harbor. But there are occasional
situations in which passions and history so disable the contending
parties from settling their differences that a strong external
authority must be resorted to if world peace is to be preserved.
There is, I think, respectable authority for the proposition that
the Security Council has the authority to develop the terms of a
settlement; and, if they cannot impose it under the mandatory pro-
visions of that Charter, there are certainly other ways in which it
can be imposed, provided the superpowers are in accord.

I would go even further and suggest that a solution is
probably only possible if, once the terms of a settlement are agreed
between Moscow and Washington, provision is made for joint guarantees
by the superpowers, and even, perhaps, for joint patrols of the buffer
areas.

I recognize the far-reaching implications of giving the
Soviet Union such access to the Middle East, but they are already

12/8/74

there -- in Syria, Iraq, and I suspect, after the forthcoming Brezhnev visit to Cairo, in Egypt as well. And if the peace of the world is to be protected, we may have to overcome some of the constraints and inhibitions that result from a too rigid interpretation of prevailing slogans and shibboleths.

There is, of course, no assurance that the Soviet Union would be prepared to play such a constructive course. But the time has come when we should find out whether the expansive talk of the beauties and glories of _detente_ has much practical meaning. There are two acid tests of _detente_. One is, of course, the control of nuclear weapons and it is not yet clear how much, if any, the recent Vladivostock talks may have advanced that cause. Equally important, it seems to me, is the Middle East, which could well become the Balkans of the latter twentieth century, resulting in a dangerous collision between the major powers. I see, therefore, no reason why approaches should not be made to the Soviet Union to ascertain at least whether the course of action I have outlined finds any resonance in Moscow. Certainly, it could be fully justified under the pious statements that have been made at summit conferences -- the Declaration of Basic Principles between Mr. Nixon and Mr. Brezhnev in 1972, and the Agreement for the Prevention of Nuclear War they signed in Washington in 1973.

I have outlined in detail the basis for such a course of action in an article that will appear in the next few days in the _Atlantic Monthly_, and I strongly urge that such a course be promptly considered. If the negotiations are permitted to drag, the negotiating

- 23 -

12/8/74

process loses its momentum, and the Palestinian issue continues

to fester, then the probability of war seems to me grave indeed.

It is here that the oil issue and the issue of peace in the
Middle East come close together, for since last January a wholly
new element has been added by the increase in oil prices. The Arab
oil-producing states now have unlimited capital -- in fact, far more
than they can spend. At the Rabat conference they voted to grant
the front-line Arab states $2,350,000,000 for additional weapons. Thus
the Middle East is rapidly becoming the world's greatest arsenal, with
every Western European country vying to pour more arms into that
troubled area, not only to ingratiate itself with the oil producers,
but to improve its own balance of payments.

From the point of view of the Israelis, time is thus no
longer on their side. They are now, I think, fully aware that a
nation of 2-1/2 million people cannot, in the long run, prevail against
100 million Arabs amply financed and armed with the most advanced
weaponry.

If momentum toward peace is not maintained, therefore,
the Israelis will be under great pressure to launch a preemptive
strike against Syria before many months. If they wait too long --
which means if they wait even until next Fall -- the inflow of arms
into Syria -- and into Egypt, once a new deal is made with the
Soviet Union -- will threaten Israel's survival. Although a pre-
emptive strike would do nothing to solve the problem of peace --
merely exacerbating already inflamed feelings in the area -- it
might at least buy time for the Israelis, while the West renews its
efforts to find a settlement.

12/8/74

If such a preemptive strike were to occur, I doubt that it could be limited to conflict between Israel and Syria, in spite of the desire of Egypt not to engage in another war. The dynamics of Arab politics would seem to preclude it, *however* as they would seem likely to precipitate a further oil embargo, even though such major producing states as Saudi Arabia might wish to avoid turning off the oil spigot again.

These are realities of the situation. I do not wish to appear as alarmist, or even as overly pessimistic. But we would do well to face the future possibilities with a clear appreciation of what the months ahead may hold for us.

December 9, 1974

HAK:

Subject: Views of European and Japanese Speakers at
Trilateral Commission Meeting

Brzezinski has also sent us copies of remarks made by a
European and a Japan representative (Tabs A and B respectively)
at yesterday's meeting of the Trilateral Commission. Like Ball's
speech, these remarks focus on the energy problem, recycling and
the need for cooperative action.

The European (Paul Delouvrier, Chairman, Electricite de France) predictably calls for cooperative action between producers, consumers and the developing world. He argues that we cannot expect any price reductions before the 1980's and that meanwhile we should concentrate on price stability. Delouvrier stresses that agreement on the nature of the surplus revenues problem now is more important than on how technically to handle it. He also stresses that any recycling scheme consider the needs of developing countries and any interim solution must also involve the conversion of short-term funds to long-term investments.

The Japanese speaker (Ambassador Ushiba) states that Japan's basic posture is "dialogue with oil producing countries instead of confrontation." Unlike the European, he does not rule out oil price reductions but he shares Delouvrier's concern that consumers not "gang-up" against OPEC. Ushiba nevertheless welcomes the IEA and IEP, and urges French participation. In advance of an oil price settlement, Ushiba also endorses a recycling mechanism, based on existing facilities and benefiting the LDC's as well as the industrial consumers. Unlike Ball, he does not favor 50% participation in such a facility by OPEC members.

Trilateral Commission
Executive Committee

REMARKS ON THE ENERGY PROBLEM

Mr. Paul Delouvrier
Chairman, Electricite de France

delivered on
December 8, 1974

As it has long been understood between us, the ideas which
follow are the entire responsibility of their author. They do not, therefore,
seek to express the views of the European Group in the Trilateral
Commission, nor even of the French contingent within it. They are the
personal views of the author as they have evolved up till now. They
are offered as a contribution to the discussion, and they could well be
changed as a result of it.

I

1. There is no reason to expect a substantial reduction in oil prices. There is no prospect of one before the 1980's, when nuclear energy and new oilfields outside the Middle East can begin to make a massive impact on the energy balance. Even subsequently, major price reductions are unlikely, since a relatively high price will make it possible to maintain, on the one hand, the oil revenues and reserves of the producers and, on the other, the competitive capacity of oil fields which are more difficult to prospect and develop than those of the Middle East, and of substitute fuels such as tar sands, oil shale, coal gasification, geothermal or solar energy, etc.

-2-

2. However great the temptation may be to press for lower oil prices, it is more important to ensure the relative stability over a fairly long period of whatever price level has been reached. It is particularly important to guard against frequent and substantial price variations of such a basic product. Nothing could be more harmful to the conservation of energy, the opening up of new oilfields, the development of substitute fuels, or - a point which tends to be underrated - well-directed investments for the production or use of energy. No one has yet estimated how many installations predicated on cheap fuel have been abruptly rendered obsolete by the sudden rise in the price of oil.

In any case, would even a substantial reduction in oil prices which cut the balance-of-payments deficits of Europe and Japan really change the order of magnitude of the problems posed by the surpluses of the producing countries? The answer seems to be "No". These problems were beginning to emerge even before the war of October 1973. The impact of the war has been to bring into the open and to magnify the oil problem, not to create it.

3. One final point: the increase in oil prices is consonant with the need for higher raw material prices, that some nations have long since urged in international conferences, in order to help the developing countries by enhancing the value of their natural heritage.

4. The special characteristics that have made a global problem of oil are, first the size of the increase in prices, second, and more

-3-

important, its abruptness, and third, last and above all, the fact that the major beneficiaries are countries with very small populations which cannot, however much they would like to, make effective domestic use of the enormous surpluses with which they have suddenly been saddled. Had the oil wealth of the Middle East been situated in India, the problem would be transformed. Thus, the accidents of geology have distributed the wealth of the world and the responsibilities it entails in the same way, if not to the same degree, as the greater or lesser advance of countries in economic development.

5. The funds involved have reached or will soon rise above the level of $100 billion a year, and three-fifths of them will have to be used outside the producing countries.

Here is a situation without precedent on this scale. Wrong-headed solutions for dealing with it could lead mankind to major economic disasters and even severe dangers of war or wars.

## II

6. The ways and means for dealing with oil surpluses are not of primary importance so long as there is agreement on the manner in which the problem itself is posed and a political determination to tackle it in a spirit which rejects the temptations of self-centeredness, the will to dominate, or more simply the desire to get one's own back.

On the other hand, these ways and means will be counter-productive if they convey the impression that one region is ganging up against

-4-

another while ignoring a third, not to say a fourth party, that Fourth
World which, as it has been said, is the Third World short of the oil-producer

7. We are in fact dealing with a world problem which directly affects all countries. It must be approached at that level, as a crucial issue, which is new both in scale and in terms of the difficulties it raises.

As against this, if the problem is correctly defined and its lessons suitably drawn, it can and must serve the greater prosperity of the world by giving a new stimulus to the economies of the developing countries.

III

8. It follows then that there must be a clear and general assent to the aim before one defines the procedures for tackling the problem.

Just as the United States, by Marshall Aid after the Second World War, helped to reconstruct and launch the European economy, so now the oil surpluses, which cannot be used in the short-term in the producing countries, could improve the fortunes of all the developing areas, that is, of two thousand million human beings.

In postwar Europe, the national shares of Marshall aid were worked out in the international organization specifically set up to that end, the OEEC. Despite the great diversity of the developing countries, their economies and populations, the same kind of approach, even if more complicated in detail, should be initiated jointly by the oil-producing countries and the rest of the Third World.

-5-

9. As for the highly-industrialized nations, their indispensable contribution would be to provide their combined guarantees to the oil-producers on loan operations through appropriate bodies existing or yet to be created.

The heart of the matter is to keep a firm grip on the distinction that while the oil surpluses must be put to aims and uses which are clear in principle and understandable for all, the methods of implementation of what is called "recycling" must be flexible and diverse.

IV

10. The establishment of the system here proposed will inevitably take time, but the scale of the funds involved and the number of countries affected make this equally true of any of the proposals which have so far been put forward.

It will thus be necessary to establish interim machinery to prevent a worldwide economic crisis, condemning all countries to recession, with or without recurring inflation, but certainly accompanied by serious social crises associated in some cases with a revival of racist attitudes.

11. The interim solution, if it is to match the challenge, must involve the conversion of short-term funds into medium or long-term investments. This again would call for guarantees of the advanced industrial countries administered through an institution set up in such a way as to avoid financial domination by any single industrial power. It must never be

forgotten that no one can force the producing countries to convert their
surpluses out of short-term deposits and that moreover the direct
investments which they could or would wish to make will rapidly come
up against limits. The system guaranteeing a successful conversion of
✓ short-term funds into long-term investments is thus the only one that
can exorcise the grave risks inherent in the long time it must take to
establish the permanent solution I have ventured to propose.

Ambassador Nobuhiko Ushiba

Remarks on the Energy Problem

December 8, 1974

The Trilateral Commission

When Japan was jolted by the sudden impact of the oil crisis in the wake of the 1973 Middle East War, some likened the Japanese position to that of passengers in a highjacked plane. We were seriously affected by a development totally out of our control. We watched almost helplessly as this series of events took place. Such a sense of helplessness and frustration still persists and prevails among the Japanese people.

There is no doubt that the sudden price increase of oil has severely affected the Japanese economy. The degree of sense of crisis among the Japanese leadership and public alike might be beyond the comprehension of our American or probably even European friends. Our basic posture in this situation, therefore, is to seek dialogue with oil-producing countries instead of confrontation, with a hope for possible reduction of the oil price. I understand that a fairly optimistic note has been struck by some of our American friends to the effect that the present economic system can withstand such a high price of oil, and economic growth can be maintained even with the present level of price. I do not believe the Japanese in general can afford to say that the current high price of oil is a foregone conclusion and that there is no way of bringing it down. We feel that we should continue our efforts to lower the oil price by creating the objective con-

Page 2

ditions necessary. Further price increases through indexation, which will bring about further inflation and set a precedent for the pricing of other raw materials, would put an almost unbearable burden on the Japanese economy as well as on our socio-political system. The slightest hint of another outbreak of war in the Middle East brings a nightmarish shudder to the Japanese people. We are looking to American good offices in avoidance of such a calamity.

As I have already suggested, basically we seek conciliation and dialogue with the oil-producing countries. It is a mistake on the part of oil-consuming nations to gang-up against OPEC countries. Nevertheless, it is vital for the oil-consuming nations to establish good communication and coordination among ourselves for improvement of the situation. In this sense, establishment of the International Energy Agency and the International Energy Program is a most welcome development, and we do hope that it can prove to be an effective vehicle for our cooperation. I very much hope that our French friends will participate in such efforts and work with us for our mutual benefit.

Whatever efforts we will be engaged in, it will take some time before a semblance of settlement of oil crisis will be achieved. In the meantime, some recycling mechanism should be created in order to alleviate the burdens of resource-poor developing nations as well as industrialized nations suffering from acute balance-of-payments problems. I do not have any serious reservations against creation of

a new mechanism for recycling backed by sufficient international guarantees, but it seems to me that a more realistic approach would be to make effective use of existing international institutions. I have some doubts about the practicality of seeking 50% participation of the OPEC nations in establishment of a new mechanism to rescue industrialized nations afflicted by balance-of-payments problems. I believe a basic meeting of minds should precede such a high degree of collaboration with the producers. In this context, it will be essential for us, the Trilateral nations, to undertake more sincere and concerted efforts for development of the economies of the OPEC nations.

With regard to easing the serious burdens of many developing countries without oil resources, I believe that the oil-producers should carry major responsibility, although the Trilateral countries should at least maintain in the real value of their existing aid levels. The interim report of the Trilateral Task Force on Relations with Developing Countries gives us a useful suggestion in this respect.

DRAFT TALKING POINTS

TRILATERAL COMMISSION

DECEMBER 9, 1974

THE TRILATERAL COMMISSION

I am very pleased to speak at this dinner of the
Trilateral Commission, representing leaders from Japan,
Western Europe, Canada, and the United States. Your
commitment to cooperative action on economic problems
is an prototype of the kind of collaboration that is
now necessary within the industrialized free world.
And your position as leaders in your own countries can
help to lead our nations towards an ability to address
our problems together.

SUBJECT

I want to speak on how our nations can find the
strength within and among themselves to surmount their
challenges.

- 2 -

I will address not so much the specific programs --
I have spoken on these at Rome and Chicago -- as the general
problem of how to achieve common action amidst peoples
dedicated to freedom.

The challenge we face is less an economic or technical
one than a problem of how to combine our wills to assure
our common deliverance. We must be very clear that our
ability to accept a common discipline will be critical to
our survival as free and prosperous societies.

## PROBLEMS AND POLICIES

The new economic problems we face threaten the basic
fabric of our societies. Let me briefly summarize our
challenges and the policies which this nation has pro-
posed for dealing cooperatively with them:

**Energy:** The recent four-fold rise in oil prices is
causing a shift of economic power to the producers which

- 3 -

cannot continue without serious dangers to our financial
institutions, our international security, and our domestic
tranquility. We must recognize that expedients such as
recycling cannot preserve our prosperity from the conse-
quences of high prices for more than a short period. The
collapse of some, if not all, of our economies would be
inevitable, fatally weakening the economic strength which
has been a guarantee of our security for a generation.

The only possible answer is cooperative action
by the consumers in the areas of energy conservation, the
development of new resources, common protections against
the dangers of oil embargoes and recycling, and eventual
negotiation for a settlement with the producers (Chicago
speech). I am pleased that the new International Energy
Agency and the Special Financial Working Group under the
Group of Ten have made a promising start towards the
common action that is necessary.

- 4 -

**Food:** The steady expansion of demand, coupled with bad harvests and the energy crisis, has caused food needs to outrun supplies for the first time in a generation. The dangers are continually higher food prices in the developed countries and immediate famine in many developing countries. Even if many of the richer countries continue to harvest food surpluses, as is likely, the needs of the chronic deficit countries cannot be met without better distribution of food and more equitable financing of the costs. Without international action over both the short and long terms, the poorer countries will be trapped in a vicious cycle of deprivation and starvation, threatening global conflict and instability for all.

Our response must be an international program to expand food production in both developed and developing countries, improve the financing and distribution of food,

- 5 -

enhance the quality of food, and set up food reserves
to guard against the immediate threat of famine (Rome
speech). The decisions of the Rome Food Conference are
a beginning of the collaborative effort that is necessary.

**Inflation:** Higher energy and food prices, plus excessive pressures for government spending and consumption, have led to sharply accelerated inflation as well as the danger of recession in all the developed countries. If the threats of inflation and recession are not dealt with resolutely, there is a danger that the hardships and inequities they cause will lead to debilitating social conflicts in all our countries. At stake is confidence in our most basic political and economic institutions, including the mixed economies characteristic of our countries.

Our responses must include the aforementioned
energy and food policies, which will work to lower prices,

(LY)

- 6 -

and also coordination of our national economic policies.

The United States and other nations are now moving to deal with their own economic problems. But there is a serious danger that a failure to act together could cause one nation's policies to hurt the interests of others, thus bringing further inflation and economic decline upon us all.

## THE POLITICAL DANGERS

Let us be aware of the high stakes. The whole complex of our economic problems threatens:

**A transfer of power:** Our economic security could be placed in the hands of countries outside the industrialized Free World for the first time in our histories. From this would inevitably follow a transfer of political power. Our nations, who have always expressed their freedom through the exercise of their sovereignty, could

- 7 -

now find that they lack control over their own
destinies.

**Domestic turmoil:** The hardships caused by international economic forces threaten to cause political conflict, discrediting moderate governments and policies, and allowing extremist solutions of the right and left to put the future of democratic government in question.

**A denial of our liberal heritage:** The nations represented on the Commission have come to regard their international freedom and their domestic liberties as the paramount expressions of their national values. Now, the heritage of centuries is put at risk because of the impact of economic vacancies over which we have been unable to assert control.

## THE POLITICAL CHOICE IS CLEAR

Will we allow ourselves to be governed by powers and conditions outside of ourselves, or will we seize control

- 8 -

of our own destinies by an effort of resolution and
self-governance within and among ourselves.

-- If we interpret our traditional liberties as a
license for separation and passivity, our countries will
succumb to a destructive competition among themselves
for resources abroad and to paralyzing social and political
conflict at home.

-- But if we choose to express our freedom in
common action abroad and sacrifice at home, the present
crisis can bring forth a new international order in which
not only our societies but all nations will enjoy greater
security and prosperity than ever before.

-- Cooperation is a middle way between the basis
of political action which we have inherited -- the nation
state -- and the new collaborative basis of action made
necessary by the reality of global interdependence.

- 9 -

-- The salvation of the industrialized Free World
from its present crisis must lie in the discovery of a
common will by an increasingly united Western Europe, a
more globally involved Japan and Canada, and a United
States sensitized to the need for decision-making in
common.

-- We do not seek confrontation. Our own unity,
rather, should be a contribution to a new international
order which can bring about a richer and more secure
existence for all nations.

THE NEED FOR COMMONNESS IN OUR FREEDOM

The nations of the developed Free World must come
to see that their freedom is fulfilled, rather than denied,
by common enterprises to secure our safety and prosperity.

-- We have a history of finding our identity in
struggles against each other. Now, our adversary is

- 10 -

conditions of economic scarcity imposed on all of us
from outside.

-- We also have a tradition of dealing most successfully with technical and economic challenges.

Now our challenge is also a political one -- to master our disarray among ourselves and our disorder within our own societies.

-- We must learn to find our fulfillment, not simply in our freedom, but in an ability to commit our freedom to a serious collective effort to control our common destiny.

At bottom, a capacity for order and self-government should be the highest expression of our individuality:

-- At the core of our freedom must stand the capacity to govern ourselves.

-- For, in a demanding world, we must either govern ourselves or be ruled by others. No purely passive

- 11 -

freedom is possible in which we could be free without
assuming the responsibilities of self-rule.

-- The elemental choice we face is whether we will
allow ourselves to be ruled by increasingly hostile
conditions or to assume the burdens of our own liberation.

-- This is a choice we face in each of our societies,
and again in the relations among all of our societies.
The question will be whether factions pursue immediate
advantage, to the destruction of all, or whether they
combine around a common vision that can be the salvation
of all.

-- If we are serious, we will reorder our economic
priorities and our domestic policies to reduce wasteful
consumption of energy and food and devote our resources
instead to our common security viewed over the long term.
This shift in perspective is the purpose of the policies
the United States has recently advocated in these areas.

- 12 -

The paradox is that a country's or a civilization's freedom and power are inexorably rooted in its capacity for self-denial. A country which would lead others must lead itself. A country that would be respected must serve others' interests as well as its own. A civilization which would achieve fulfillment must first commit itself to the goals that will make fulfillment possible.

Historically, our economies have been among the great strengths of the industrialized free nations. To act as we must to preserve them will initially narrow our options, but it will make possible greater freedom in the future. We now respond to a necessity whose dictates are clear, but if we act resolutely we can know greater freedom in the future. Out of limitation can come possibility.

In the past, the Free World has learned that sacrifice can be the crucible for a new birth of freedom.

- 13 -

-- A generation ago, our nations combined to build the international structures which have preserved our peace and prosperity for a generation.

-- But today, we must adapt our global institutions to meet the demands of new problems which have made all nations interdependent. The challenges we face cry out for a new international order which can serve the well-being of all nations. The challenge to our countries today is to find a basis, in our own unity, for this new cooperation among nations. If we are equal to our task, we can help bring forth a new structure of common purpose which can serve the interests of all countries in our generation and for future generations in the century to come.

Let me close by stressing the personal responsibility of the people in this room.

- 14 -

-- The new collaboration will not come about by
itself. It is our responsibility, as leaders in our
own countries, to help bring it about.

-- Above all, we ourselves, or the institutions
or nations we represent, must not wait for others to
take the initiative. The meaning of leadership is to
act before the actions of others have defined our course
for us. Those who would take credit for seizing control
of our destiny must act out of loyalty to a vision of
what our common efforts can be, not out of resignation
because we believe cooperation is impossible.

-- Let us resolve together to take the decisions
that we all know are necessary, confident that others
will follow us and make possible the realization of a
more secure economic environment for us all. The outcome
can be a radically new world order in which nations will,