EMBARGOED FOR RELEASE
UNTIL 7:00 PM LOCAL TIME
(4:00 AM EST NOVEMBER 24, 1974)

NOVEMBER 24, 1974

Office of the White House Press Secretary
(Vladivostok, USSR)

JOINT US-SOVIET COMMUNIQUE

In accordance with the previously announced agreement, a working meeting between the President of the United States of America Gerald R. Ford and the General Secretary of the Central Committee of the Communist Party of the Soviet Union L. I. Brezhnev took place in the area of Vladivostok on November 23 and 24, 1974. Taking part in the talks were the Secretary of State of the United States of America and Assistant to the President for National Security Affairs, Henry A. Kissinger and Member of the Politburo of the Central Committee of the CPSU, Minister of Foreign Affairs of the USSR, A. A. Gromyko.

They discussed a broad range of questions dealing with American-Soviet relations and the current international situation.

Also taking part in the talks were:

On the American side Walter J. Stoessel, Jr., Ambassador of the USA to the USSR; Helmut Sonnenfeldt, Counselor of the Department of State; Arthur A. Hartman, Assistant Secretary of State for European Affairs; Lieutenant General Brent Scowcroft, Deputy Assistant to the President for National Security Affairs; and William Hyland, official of the Department of State.

On the Soviet side A. F. Dobrynin, Ambassador of the USSR to the USA; A. M. Aleksandrov, Assistant to the General Secretary of the Central Committee of the CPSU; and G. M. Korniyenko, Member of the Collegium of the Ministry of Foreign Affairs of the USSR.

I

The United States of America and the Soviet Union reaffirmed their determination to develop further their relations in the direction defined by the fundamental joint decisions and basic treaties and agreements concluded between the two States in recent years.

They are convinced that the course of American-Soviet relations, directed towards strengthening world peace, deepening the relaxation of international tensions and expanding mutually beneficial cooperation of states with different social systems meets the vital interests of the peoples of both States and other peoples.

Both Sides consider that based on the agreements reached between them important results have been achieved in fundamentally reshaping American-Soviet relations on the basis of peaceful coexistence and equal security. These results are a solid foundation for progress in reshaping Soviet-American relations.

(MORE)

Accordingly they intend to continue, without a loss in momentum, to expand the scale and intensity of their cooperative efforts in all spheres as set forth in the agreements they have signed so that the process of improving relations between the US and the USSR will continue without interruption and will become irreversible.

Mutual determination was expressed to carry out strictly and fully the mutual obligations undertaken by the US and the USSR in accordance with the treaties and agreements concluded between them.

## II

Special consideration was given in the course of the talks to a pivotal aspect of Soviet-American relations: measures to eliminate the threat of war and to halt the arms race.

Both sides reaffirm that the Agreements reached between the US and the USSR on the prevention of nuclear war and the limitation of strategic arms are a good beginning in the process of creating guarantees against the outbreak of nuclear conflict and war in general. They expressed their deep belief in the necessity of promoting this process and expressed their hope that other states would contribute to it as well. For their part the US and the USSR will continue to exert vigorous efforts to achieve this historic task.

A joint statement on the question of limiting strategic offensive arms is being released separately.

Both sides stressed once again the importance and necessity of a serious effort aimed at preventing the dangers connected with the spread of nuclear weapons in the world. In this connection they stressed the importance of increasing the effectiveness of the Treaty on the Non-Proliferation of Nuclear Weapons.

It was noted that, in accordance with previous agreements, initial contacts were established between representatives of the US and of the USSR on questions related to underground nuclear explosions for peaceful purposes, to measures to overcome the dangers of the use of environmental modification techniques for military purposes, as well as measures dealing with the most dangerous lethal means of chemical warfare. It was agreed to continue an active search for mutually acceptable solutions of these questions.

## III

In the course of the meeting an exchange of views was held on a number of international issues: special attention was given to negotiations already in progress in which the two Sides are participants and which are designed to remove existing sources of tension and to bring about the strengthening of international security and world peace.

(MORE)

-3-

Having reviewed the situation at the Conference on Security and Cooperation in Europe, both Sides concluded that there is a possibility for its early successful conclusion. They proceed from the assumption that the results achieved in the course of the Conference will permit its conclusion at the highest level and thus be commensurate with its importance in ensuring the peaceful future of Europe.

The USA and the USSR also attach high importance to the negotiations on mutual reduction of forces and armaments and associated measures in Central Europe. They agree to contribute actively to the search for mutually acceptable solutions on the basis of principle of undiminished security for any of the parties and the prevention of unilateral military advantages.

Having discussed the situation existing in the Eastern Mediterranean, both Sides state their firm support for the independence, sovereignty and territorial integrity of Cyprus and will make every effort in this direction. They consider that a just settlement of the Cyprus question must be based on the strict implementation of the resolutions adopted by the Security Council and the General Assembly of the United Nations regarding Cyprus.

In the course of the exchange of views on the Middle East both Sides expressed their concern with regard to the dangerous situation in that region. They reaffirmed their intention to make every effort to promote a solution of the key issues of a just and lasting peace in that area on the basis of the United Nations resolution 338, taking into account the legitimate interests of all the peoples of the area, including the Palestinian people, and respect for the right to independent existence of all states in the area.

The sides believe that the Geneva Conference should play an important part in the establishment of a just and lasting peace in the Middle East, and should resume its work as soon as possible.

## IV

The state of relations was reviewed in the field of commercial, economic, scientific and technical ties between the USA and the USSR. Both Sides confirmed the great importance which further progress in these fields would have for Soviet - American relations, and expressed their firm intention to continue the broadening and deepening of mutually advantageous cooperation.

The two Sides emphasized the special importance accorded by them to the development on a long term basis of commercial and economic cooperation, including mutually beneficial large-scale projects. They believe that such commercial and economic cooperation will serve the cause of increasing the stability of Soviet-American relations.

Both Sides noted with satisfaction the progress in the implementation of agreements and in the development of ties and cooperation between the US and the USSR in the fields of science, technology and culture. They are convinced that the continued expansion of such cooperation will benefit the peoples of both countries and will be an important contribution to the solution of world-wide scientific and technical problems.

Department of State

TELEGRAM

UNCLASSIFIED

PAGE 02 STATE 259650

SUBJECT: VC-10 HIJACKING

1. DEPARTMENT SPOKESMAN READ FOLLOWING STATEMENT TO MONDAY BRIEFING, NOVEMBER 25: QUOTE: WE DEPLORE THE DEATH OF A GERMAN CITIZEN AT THE HANDS OF THE BAND OF TERRORISTS BEFORE THE RELEASE OF THE HOSTAGES THEY HELD AT TUNIS AIRPORT. WE WELCOME THE RELEASE OF THE REMAINING HOSTAGES.

WE ARE MINDFUL OF THE AGONIZING DECISIONS WHICH HAD TO BE MADE BY THE GOVERNMENTS CONCERNED; WE NOTE IN PARTICULAR THAT THE MURDERERS OF OUR DIPLOMATS IN KHARTOUM WERE NOT RELEASED; AND WE REGRET THAT THE FINAL FORMULA INCLUDED THE RELEASE OF OTHER CRIMINALS WHO HAVE KILLED AMERICANS AND OTHERS, AND WHO HAVE TERRORIZED THE INTERNATIONAL COMMUNITY.

THE TRAGIC DEVELOPMENTS AT DUBAI AND TUNIS AIRPORTS ARE A GRAVE REMINDER TO ALL GOVERNMENTS AND PEOPLE'S THAT INNOCENT PERSONS ANYWHERE CAN BE VICTIMIZED BY TERRORISTS. IT REMAINS IMPERATIVE FOR GOVERNMENTS TO STAND TOGETHER TO PUT AN END TO SUCH BARBARIC BEHAVIOR. WE BELIEVE THE INTERNATIONAL COMMUNITY MUST MAKE CLEAR THAT NO GOVERNMENT SHOULD ALLOW THE PERPETRATORS OF THIS LATEST ATROCITY, AS WELL AS THOSE CRIMINALS RELEASED TO THEM, TO ESCAPE THE CONSEQUENCES OF THEIR CRIMINAL ACTIONS. END QUOTE.

2. EMBASSY TUNIS SHOULD PROVIDE FOREGOING TEXT TO GOT.

3. TEXT OF QUESTIONS AND ANSWERS WHICH FOLLOWED READING OF STATEMENT WILL BE PROVIDED AS SOON AS AVAILABLE. INGERSOLL

UNCLASSIFIED

THE CONGRESS

Department Reviews Main Elements of the Strategy
To Resolve the Oil Crisis

Statement by Thomas O. Enders

Assistant Secretary for Economic and Business Affairs ¹

The proposal made by Secretaries Kissinger and Simon [Secretary of the Treasury William E. Simon] for a $25 billion facility to back up capital markets over the next two years is part of a larger strategy to resolve the oil crisis. In this statement I propose to review the main elements of that strategy, situating the proposed financing facility in relation to them.

The starting point for analysis is the belief that unless the consumers take action to limit their dependence on oil imports, OPEC [Organization of Petroleum Exporting Countries] probably has the will and the capability to maintain the real price of the oil they export and the financial surplus they are earning at roughly constant levels over the next several years, and possibly indefinitely.

OPEC is earning a total income of perhaps $110 billion at the current annual rate, of which they spend for imports a little less than one-half. OPEC's import expenditures will of course rise in the future, in part because of inflation in the cost of manufactured goods they buy (but note that the current rate is only about 7 percent), in part because the new affluence and the new ambition of the producing countries will increase their spending.

But OPEC's total income will also rise. To

oil will be added a rapidly growing investment income. The volume of oil imports into the OECD [Organization for Economic Cooperation and Development] countries will increase as industrial growth resumes, perhaps at a rate of 4 or 5 percent a year.

New oil may be found at a more rapid rate, in Mexico, Peru, Malaysia, China. But with even the poor countries such as Indonesia and Nigeria disposing of unprecedented liquid assets, the cartel may retain for years the capacity to cut back production to sustain and increase prices.

Since total OPEC income has only to grow at a little more than one-half the annual rate of total OPEC spending to protect the financial surplus at the $60 billion level, we must expect that in the absence of new action by the consumers the surplus will be sustained indefinitely. OECD estimates that if real prices for oil are constant, only in 1980 will the net surplus fall to $50 billion a year, by which time OPEC will have accumulated assets of $425 billion. Any increase in the real price of oil would be additional.

Hopeful arguments have been advanced to convince us that this will not happen.

Some say that OPEC members will see the damage an annual accumulation of this magnitude will cause to the industrial economies and let the real price of oil erode through inflation. There is no question that this would be a prudent course for the producers to adopt in their own interest. But we cannot count on them to do so. Because of ideology

¹ Made before the Joint Economic Committee of the Congress on Nov. 29. The complete transcript of the hearings will be published by the committee and will be available from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402.

January 13, 1975

45

(monopoly action to raise commodity prices is a main plank of the "New Economic Order"), because of real or imagined scores to settle for past exploitation, because of the power and authority the new money gives, OPEC members are unlikely to let real prices erode if they can help it. Even if individual countries may wish to move prices downward, they are unlikely to be able to do so alone. For as a matter of practical politics, no country will be able to explain to its public why it gets less for its oil than do other OPEC members. Nor would it be a full solution simply to let prices erode by inflation; for sinking real prices would stimulate consumption again, thus slowing the absorption of the surplus. Thus, if the real price of oil were allowed to erode by one-third by the end of 1980, the cumulative OPEC surplus might fall only from $425 to about $375 billion.

Others say that OPEC will tire of accumulating surpluses and will cut back production, keeping oil in the ground as an investment rather than claims on the industrial economies. It is possible that this will happen. But if it does, the surplus will, if anything, grow; for as oil becomes scarcer, the price it commands will go up.

The important point is not to be able to make a precise forecast. There are too many variables for that. What matters is that there is a wide range of probable situations in which the OPEC financial surplus continues essentially intact for an indefinite period or falls only slowly.

What does that mean? It means that unless they act, the industrial democracies face an inexorably rising danger of financial collapse or depression, or both, over the next decade. As oil debts pile up in the industrial countries, first the weaker, then the stronger, will find their credit unacceptable and will try to balance their external accounts by restrictions on trade and on the level of economic activity. But one country's success in balancing its external accounts only will make the problem more urgent for others. For whether the industrial world runs its economies at a high level of activity or at a low level, the deficit to the oil producers will remain massive. Unless we are all willing to

take 20 percent unemployment, there is no way that deflation or restrictions can solve the problem.

But there is more. It is impossible that Europe, Japan, and America could undergo a decade of threatening financial collapse and low or no economic growth without the most shattering social and political upheavals. Already this year we have seen how inflation and no growth is embittering the political life of all the great democracies, undercutting the authority of leaders, setting class against class. And this is only the first year. It is no accident that the Soviet Union and China, securely self-sufficient in energy, with a sustained growth rate, have begun to analyze and exploit a great new crisis in capitalism.

## Possible Effect of New Production on Prices

Apart from the United States and Britain, none of the major oil importers have the possibility of becoming self-sufficient within a decade, and self-sufficiency in energy cannot be the goal of the industrial economy as a whole for the foreseeable future.

But invulnerability to cartel action to raise prices is both a possible and a necessary goal.

At present, the consuming countries import approximately 30 million barrels of oil a day, mostly from OPEC sources. But current prices of about $10 a barrel f.o.b. gulf are very attractive, and a worldwide oil boom is underway. Substantial finds of oil have been reported from Mexico, Peru, China, Malaysia; and the wave of exploration is just beginning. The owners of this new oil will understandably want to sell it at the going price, but they will also want to develop it sufficiently so that they can receive a substantial income. Together they may already represent the possibility of new production several years from now of 10 million barrels a day. And more will follow.

The impact of this prospective new production on price depends on the development of the market as a whole. OPEC members have shown that they are willing to cut back output to sustain price; Arab producers are currently working at less than three-quarters

46

Department of State Bulletin

capacity. With the enormous assets all producers are receiving, there is no doubt a margin for further cuts, even in the poorest countries. Thus, if the overall market were to increase from 30 to 40 million barrels a day over the decade, it might be possible for OPEC to accommodate the new producers and still sustain the price.

But if the market did not grow at all, the burden of adjustment on existing OPEC members would be more than they could adjust to. States now launching ambitious development programs would find that by the end of the decade they were receiving only about half the expected revenues. Negotiation of the required cutbacks in production would become more and more difficult. First, clandestine, then open, violations of production quotas would occur. Ultimately all efforts to sustain the artificial price would be abandoned.

There is no way we can know now the precise size of market at which OPEC efforts to rig prices become inviable in the face of new production. But it would clearly be wrong to start down this road with a goal that might turn out to be inadequate. To be sure they make this and any future oil cartel inviable, the goal of the consumers must be to hold their collective imports steady over the next 10 years.

## Limiting Dependence on Imported Oil

This is a demanding goal, but we now believe from the analysis in our own Project Independence report, and from the OECD's long-term energy assessment, that it can be attained.

Our Project Independence report shows that we have many options for achieving substantial self-sufficiency by 1985.

On the supply side, policies to lease the Atlantic outer continental shelf, reopen the Pacific outer continental shelf, and tap the naval petroleum reserves can significantly increase domestic oil production. The Federal Energy Administration estimates potential increases at from 4 to 8 million barrels a day, depending on the level of price.

On the demand side, energy conservation

actions can significantly reduce the rate of growth of energy utilization by 1985. Standards for more efficient new autos, incentives to reduce miles traveled, incentives for improved thermal efficiency in existing homes and offices, and minimal thermal standards for new homes and offices could all contribute. Petroleum demand could be decreased by up to 2 million barrels a day, and electricity consumption would also fall.

Also on the demand side, further savings of limited oil and gas supplies can be achieved by policies that require switching from oil and natural gas to coal or coal-fired electric power. Up to 2½ million barrels a day of oil and 2½ trillion cubic feet of natural gas might be saved by this method, although environmental restrictions and capital costs are significant constraints.

On November 14 Secretary Kissinger announced the goal of reducing U.S. oil imports from over 6 million barrels a day to 1 million barrels a day in 1985. The administration is now working to develop Project Independence policy options for decision by the President. The President expects to submit his proposals to Congress in January.

The options open to Europe and Japan to limit their dependence on imported oil are less far-reaching, but they are by no means negligible. The OECD long-term energy assessment suggests that—with proper price policies—acceleration of North Sea oil and gas, the stabilization of coal production, and a major development of nuclear power could reduce European dependence on imported energy from the present two-thirds to about 40 percent. In Japan, a program of long-term conservation combined with the expected development of nuclear power could reduce dependence from 90 to about 80 percent.

If the United States goes to substantial self-sufficiency and Europe and Japan reduce their dependence in the manner indicated above, the level of oil imports by industrial countries will be no greater in 1985 than now.

Many policy instruments are available to achieve these goals. On the demand side, this choice ranges from voluntary programs of restraint, mandatory fuel switching, price de-

January 13, 1975

47

control, taxation, and various kinds of alloca-
tion. On the supply side, energy investments
will come in at various levels of return and
risk, and countries will have to be sure that
there are adequate incentives to yield the
level of output desired. Policy instruments
available for this purpose include tax incen-
tives, long-term contracts, deficiency pay-
ments, or subsidies for given projects and
tariffs or other import protection.

All of our studies show that both demand
and output are quite responsive to effective
internal prices. Our Project Independence re-
port indicates that the United States has
many options for achieving substantial self-
sufficiency at prices lower than world prices
today but higher than internal prices in the
past, with both demand restraint and new
supplies playing an important role.

We must, however, distinguish between ef-
fective price levels insofar as they affect con-
sumers and investors, and the means by
which they are achieved. Such instruments
as price decontrol, taxes, and tariffs all have
different income and policy impacts, but they
can be used to achieve the same effective
price to the consumer. On the investment
side some instruments, such as purchase
agreements and project subsidies, would af-
fect only new investment. Others, such as
tariffs and tax incentives, could affect all in-
vestment. Each has different income and pol-
icy implications.

Each country will adopt the policy instru-
ments best suited to its own energy and fiscal
structure. However there are three potenti-
ally important areas for common action:

One is to adopt clear targets for the level
of dependence each country wishes to achieve
over the decade and national conservation
and supply policies to achieve them. These
targets and policies should then be examined
and monitored together.

Second, it may be useful for the consuming
countries to agree on the minimum level (al-
though not the policy instruments), at which
they will support new investment. This would
back up the dependence targets by creating
stable investment expectations throughout

the consuming countries; it would work to
insure an equivalence of effort.

Third, the consumers can magnify their
several investment efforts by entering joint
research and development projects in energy
and by creating a common fund to guarantee
or finance energy projects in consuming coun-
tries.

Proposed Immediate Measures by Consumers

But these fundamental actions on supply
and demand will take years to give results.
How can we bring down our jeopardy to
manageable proportions between now and
then? Four things are needed.

One is an oil safety net, to make sure that
we can act in concert, on the basis of equita-
ble sharing, to counter any new embargo di-
rected against all or any of the consuming
countries. This protection is already in place.
In Paris last week, 16 countries formally ad-
hered to the International Energy Program
(IEP), committing themselves to a far-
reaching program of preparedness for, and
solidarity in, a new embargo. The IEP cre-
ates a situation in which a restrictive act
directed against any member becomes an
act against all. It is the indispensable basis
for all future cooperation among the con-
sumers. Implementing legislation for this
program will be submitted to Congress short-
ly for its consideration.

The second is an immediate effort by con-
suming countries to conserve oil, the only
way open to them to lessen the financial
drain in the short term. Even now, after
the embargo and price increases, our studies
show that there remains a significant margin
for further savings of oil in both industry
and personal consumption that can be real-
ized without jeopardizing output or jobs.
Worldwide, that margin is probably at least
3 million barrels a day. President Ford an-
nounced a savings program of 1 million
barrels a day in October. We are monitoring
its execution carefully in order to reinforce
it if needed; and we are prepared to con-
sider increasing the program to match others

43

Department of State Bulletin

in attaining the collective target of 3 million
barrels.

The third action, within the IMF [Inter-
national Monetary Fund] framework, is to
make sure the financing needs of the develop-
ing countries can be met while waiting for
the price of oil to come down. It would be
very wrong to force the developing countries
to abandon their growth programs and goals.
We estimate at $1.5-$2 billion the gap in
1975 for which no financing has yet been
found. Concessional terms will be needed.
Secretaries Kissinger and Simon proposed
that a new fund be established for this pur-
pose, managed by the IMF and financed by
oil producers, other contributions, and per-
haps by profits from sales of IMF gold.

The final requirement is for a financial
safety net. This is needed to make sure that
no country is forced to take unwarranted re-
strictive trade or economic policy measures
as a result of the maldistribution or instabil-
ity of reflows of oil dollars and of the grow-
ing burden of oil debts.

So far private capital markets have per-
formed well in receiving and redistributing
the enormous flow of oil dollars. We believe
there is substantial further room for expan-
sion of the flows handled by private markets,
but we cannot be sure of how great that ex-
pansive capacity is. Already there are some
indications of approaching constraints. In
banking, for example, there have been no
significant additions to capital since the start
of the oil crisis. Yet the total assets and lia-
bilities built upon a given capital structure
have increased greatly. At some point it will
not be prudent for the banks to expand fur-
ther without substantial new additions to
capital, which will be difficult and costly to
raise in current market conditions.

Thus, rather than test the limits of our
present system, Secretaries Kissinger and
Simon proposed creation of a new large-scale
intergovernmental financing facility. This fa-
cility would be:

-Designed to back up, not substitute for,
the workings of private capital markets.

-Temporary, intended to enable the con-

suming countries to pursue sound economic
and trade policies while waiting for basic
energy policy decisions to take effect.

-Not an aid fund, but rather a facility
lending at commercial terms on the basis of
established criteria for appropriate economic
and energy policies pursued by the borrower.

-Structured so as to distribute risk equi-
tably among the consuming countries.

-Subject to approval by Congress.

Each of the four proposed interim actions
is important in itself; equally significant,
both analytically and politically, is their link-
age to each other and to the energy depend-
ence targets and program. No country, cer-
tainly not the United States, will want to
help another financially unless that other
country is helping itself by conserving oil
and joining a long-term effort to lessen de-
pendence. And we must adopt a clear strat-
egy to bring the price of oil down, and back
up that strategy with the appropriate policy
decisions, in order to be sure that the loans
under the proposed facility will be repaid.

Need for Concerted Consumer Action

It has often been suggested that we can
talk or pressure the oil producers into ac-
cepting a reduction in price.

Neither approach, in our judgment, is
likely to lead to more than tardy or partial
results. And there would be significant costs
to adopting them: the false security our peo-
ple would feel that we were solving the en-
ergy crisis when in reality we were only
temporizing, or the damage to the structure
of international security that might result.

Instead what Secretary Kissinger has pro-
posed is a program of action designed to
change conditions within the consuming
countries themselves. Its purpose is not to
create a position of force which can then be
imposed upon the producers but, rather, to
create conditions in which a new long-term
equilibrium between oil producers and con-
sumers can be achieved. That equilibrium
must be such that the producers receive an
appropriate price for their products while the

January 13, 1975

49

consumers can be free of the threat of em-
bargo and of artificial action to raise prices.

Achievement of this result depends criti-
cally on the solidarity of the consuming coun-
tries. Since the start of the energy crisis
there has been for each country the tempta-
tion to go it alone, try to work a special deal
with the producers, or hope that the actions
of others will end the crisis. In different ways
each of us is uncomfortable with having his
future depend so totally on others. But anal-
ysis of each country's position shows that
going it alone is not a superior option for
any consumer. Over the decade only the
United States and Britain can go to self-
sufficiency; all others will remain dependent
on imported oil. All industrial countries, es-
pecially those heavily involved in trade, will
be vulnerable to financial crisis. And if the
United States and Britain can eventually
solve the price and financial transfer prob-
lems by going self-sufficient, the only way
Europe and Japan can is by cooperating with
each other and with us. And in the meantime,
no country, including the United States, can
solve the price problem alone.

The crisis gives us no alternative to con-
certed consumer action. We believe that fi-
nancial solidarity is an essential part.

Congressional Documents
Relating to Foreign Policy

93d Congress, 2d Session

Western Investment in Communist Economies. A
Selected Survey on Economic Interdependence.
Prepared for the Subcommittee on Multinational
Corporations of the Senate Committee on Foreign
Relations. August 5, 1974. 83 pp.

Department of State, Justice, and Commerce, the Ju-
diciary, and Related Agencies Appropriation Bill,
1975. Report to accompany H.R. 15404. S. Rept.
93-1110. August 20, 1974. 53 pp.

Deep Seabed Hard Minerals Act. Report to accom-
pany S. 1134. S. Rept. 93-1116. August 21, 1974.
68 pp.

Passport Application Fees. Report to accompany H.R.
15172. S. Rept. 93-1124. 5 pp.

Report on Nutrition and the International Situation.
Prepared by the staff of the Senate Select Com-
mittee on Nutrition and Human Needs. September
1974. 57 pp.

50

THE UNITED NATIONS

U.N. Rejects Move To Change
Representation of Cambodia

Following is a statement made in the U.N.
General Assembly by U.S. Representative
John Scali on November 27, together with
the text of a resolution adopted by the
Assembly in votes on November 27 and
November 29.

STATEMENT BY AMBASSADOR SCALI

USUN press release 184 dated November 27

The issue presented to this Assembly by
the two resolutions before us is in essence
very simple. One resolution proposes nego-
tiations without preconditions for a peaceful
settlement of the tragic conflict in Cambodia.
The other demands a one-sided solution and
offers only the prospect of continued war
and more suffering by the Cambodian people.
Which of these alternatives is consistent with
the purposes for which this organization was
founded? Which of these paths does our
charter stake out as the road to justice and
accepted international law?

One resolution¹ would have the Assembly
itself decide for the Khmer people that Cam-
bodia is to be represented not by its present
government, but by an exile regime located
over 2,000 miles from Phnom Penh. It should
come as no surprise that the only nation
located anywhere near Cambodia which spon-
sors this resolution is the country in whose
capital this exiled regime happens to be
located.

The other resolution² is sponsored by 23
nations, five of whom are among Cambodia's
closest neighbors. They advocate a basic
principle spelled out in this resolution by
these opening lines: that the Khmer people

¹ U.N. doc A/L.733.

² U.N. doc. A/L.737.

Department of State Bulletin

THE UNITED NATIONS

U.N. Disengagement Observer Force
in Israel-Syria Sector Extended

Following is a statement made in the U.N.
Security Council by U.S. Representative John
Scali on November 29, together with the text
of a resolution adopted by the Council that
day.

STATEMENT BY AMBASSADOR SCALI

USUN press release 181 dated November 29

Since there are no additional members who
wish to speak, I should like to express the
views of the United States on the subject
before us.

The establishment of UNDOF six months
ago, like that of UNEF [U.N. Emergency
Force] before it, marked a major step for-
ward on the path to a lasting Middle East
peace. That this road was long and difficult,
that it would try men's patience and test
their good will, no one doubted then or
doubts now. Nevertheless what this Council
did in establishing the two Middle East peace-
keeping forces was no small thing. The U.N.
peacekeeping provides a deterrent to renewed
war after four tragic devastating conflicts.
It offers time for passions to cool and for
prudence and reason to prevail. In short,
it offers to those who would grasp it an
opportunity to move ahead toward peace.

By extending UNDOF's mandate today,
the Security Council has demonstrated anew
its awareness of the critical role this Force
plays in helping to preserve the disengage-
ment between Syrian and Israeli forces. My
government at this time wishes to pledge
anew that we will continue the search for
a just and enduring peace through negotia-
tions under Security Council Resolutions 242
and 338.

My government warmly welcomes the
Council's action today in extending the man-

date of UNDOF. The resolution we have
adopted with no dissenting votes assures the
continuing operation of UNDOF for another
six months under the same mandate in ac-
cordance with the recommendation which the
Secretary General has made in his lucid and
comprehensive report of November 27.

I have spoken already of the patience and
good will that are so indispensable to peace
in the Middle East. These qualities were
sorely needed in the recent negotiations
leading to agreement on the extension of
UNDOF. My government is pleased to have
been of assistance in this effort. May I
take this opportunity, on behalf of my gov-
ernment, to pay a sincere tribute to the
Governments of Syria and Israel for their
determination to overcome all obstacles in
the cause of peace and justice for their
peoples.

I take special pleasure in extending my
government's deep appreciation to the Secre-
tary General for his continuing efforts and
to his Headquarters staff. Their dedicated,
tireless efforts have kept UNDOF operat-
ing efficiently. Our congratulations go also
to the interim Force commander, to the
officers and men of UNDOF, and to the UNT-
SO [United Nations Truce Supervision Orga-
nization] Military Observers assigned to
UNDOF for the exemplary manner in which
they have performed their duties. I have
spoken on a number of occasions of our
admiration for these men and of our appre-
ciation for the hardships and sacrifice which
they must endure. Some of these soldiers
have given their lives so that other men,
women, and children in the Middle East
might live. We mourn in particular at this
time the brave men who have died on the
UNDOF front, and we ask the delegations
of Canada and Austria to convey our sin-
cere condolences to their bereaved families.

The Secretary General in his report and
many members of this Council in their state-
ments have emphasized the importance of
moving toward settlement of the underlying
problems of the Middle East conflict. My
government shares this sense of urgency. In
the months ahead we shall be bending every
effort to advance step by step along the road

940

Department of State Bulletin

that leads to a just and lasting peace in the
Middle East.

## TEXT OF RESOLUTION ¹

The Security Council,

Having considered the report of the Secretary-General on the United Nations Disengagement Observer Force (S/11563),

Having noted the efforts made to establish a durable and just peace in the Middle East area and the developments in the situation in the area,

Expressing concern over the prevailing state of tension in the area,

Reaffirming that the two agreements on disengagement of forces are only a step towards the implementation of Security Council resolution 338 (1973),

Decides:

(a) To call upon the parties concerned to implement immediately Security Council resolution 338 (1973);

(b) To renew the mandate of the United Nations Disengagement Observer Force for another period of six months;

(c) That the Secretary-General will submit at the end of this period a report on the developments in the situation and the measures taken to implement Security Council resolution 338 (1973).

## U.S. Gives Views on Guidelines for U.N. Peacekeeping Operations

Following is a statement made in the Special Political Committee of the U.N. General Assembly by U.S. Representative Joseph M. Segel on November 19.

USUN press release 173 dated November 19

I am pleased to present the views of the U.S. delegation to this committee as it considers the report of the Special Committee on Peacekeeping Operations.² Developments in the past year have, we believe, confirmed the importance of the special committee's work as well as the necessity to continue the

effort to agree upon guidelines for the conduct of future peacekeeping operations under the authority of the Security Council.

Secretary of State Kissinger, in addressing the 28th General Assembly, noted that "The time has come to agree on peacekeeping guidelines so that this organization can act swiftly, confidently, and effectively in future crises." Since then, the United Nations has had to deal urgently with two crises, in the Middle East and in Cyprus, requiring the launching of one new operation and the reinforcement of another.

The practical experience of these peacekeeping operations and the recognition of the need for guidelines to facilitate future peacekeeping operations have affected the work of the special committee and, in particular, its working group. We are encouraged by the working group's accomplishment in drafting alternative paragraphs which reflect the range of views on particular questions and present concrete language on which the next series of discussions can focus. It is certain that substantially more work will be necessary, but the issues have become more clearly defined and significant progress has thus been made.

One of the fundamental questions facing the special committee is the degree of generality, or of detail, to be reflected in such guidelines. My government continues to believe that the ability of the Security Council to operate flexibly during crises enhances its capability to meet the problems unique to each operation. The establishment and functioning of the U.N. Emergency Force in the Middle East demonstrates that detailed peacekeeping guidelines, agreed in advance, are not required to mount a successful operation. The U.N. Force in Cyprus, modified to meet new conditions, has provided similar lessons. These two operations, tailored as they are to conditions in each area, underscore the importance of not losing flexibility.

Clearly, the central purpose to be served by agreed guidelines is to outline the division of responsibilities between the principal U.N. organs involved in peacekeeping, especially the Security Council and the Secretary General. If peacekeeping operations are to be

¹ U.N. doc. S/RES/363 (1974); adopted by the Council on Nov. 29 by a vote of 13 to 0, with the People's Republic of China and Iraq not participating in the vote.

² U.N. doc. A/9827.

December 30, 1974

941

the Legacy of Parks program. This program, which is under the direction of the Federal Property Council, was inaugurated in March 1971 with the first cost-free transfer of $1.1 million worth of Federal property to the county of Nassau, N.Y.

The 21 properties total 2,735.66 acres and have an estimated market value of $11,017,000. According to the Federal Property Council, these 21 new properties will serve a population of approximately 4,647,600. Today's announcement brings to 482 the number of Legacy of Parks properties in all 50 States, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, and the District of Columbia.

Included in the 21 properties are one in Arkansas, California, Colorado, Delaware, Florida, Mississippi, New Mexico, Ohio, Oklahoma, Pennsylvania, Puerto Rico, Washington and Wyoming; and two in Georgia, Illinois, Maryland, and Texas.

NOTE: The announcement also included a list and description of the lands to be transferred.

# THE PRESIDENT'S NEWS CONFERENCE OF DECEMBER 2, 1974

## THE PRESIDENT'S TRIP TO JAPAN, THE REPUBLIC OF KOREA, AND THE SOVIET UNION

### OPENING STATEMENT

**THE PRESIDENT.** Good evening.

Perhaps I can anticipate some of your questions by summarizing my recent visits to Japan, the Republic of Korea, and the Soviet Union.

In Japan, we succeeded in establishing a new era of relations between our two countries. We demonstrated our continuing commitment to the independence and to the security of South Korea.

At Vladivostok we put a firm ceiling on the strategic arms race, which heretofore has eluded us since the nuclear age began. I believe this is something for which future generations will thank us.

Finally, Secretary Kissinger's mission maintained the momentum in China with the People's Republic of China.

My meetings at Vladivostok with General Secretary Brezhnev were a valuable opportunity to review Soviet-American relations and chart their future course. Although this was our original purpose, Secretary Brezhnev and I found it possible to go beyond this get-acquainted stage.

Building on the achievements of the past 3 years, we agreed that the prospects were favorable for more substantial and, may I say, very intensive negotiations on the primordial issue of a limitation of strategic arms. In the end, we agreed on the general framework for a new agreement that will last through 1985.

We agreed it is realistic to aim at completing this agreement next year. This is possible because we made major breakthroughs on two critical issues:

Number one, we agreed to put a ceiling of 2,400 each on the total number of intercontinental ballistic missiles, submarine-launched missiles, and heavy bombers.

Two, we agreed to limit the number of missiles that can be armed with multiple warheads—MIRV's. Of each side's total of 2,400, 1,320 can be so armed.

These ceilings are well below the force levels which would otherwise have been expected over the next 10 years and very substantially below the forces which would result from an all-out arms race over that same period.

What we have done is to set firm and equal limits on the strategic forces of each side, thus preventing an arms race with all its terror, instability, war-breeding tension, and economic waste.

We have, in addition, created the solid basis from which future arms reductions can be made and, hopefully, will be negotiated.

It will take more detailed negotiations to convert this agreed framework into a comprehensive accord. But we have made a long step toward peace on a basis of equality, the only basis on which an agreement was possible.

Beyond this, our improved relations with the other nations of Asia developed on this journey will continue to serve the interests of the United States and the cause of peace for months to come. Economy, energy, security, and trade relations were discussed, which will be of mutual benefit to us all.

I would like to repeat publicly my thanks and gratitude for the hospitality extended to me by all of my hosts and, through me, to the American people.

Miss Thomas [Helen Thomas, United Press International]. I am glad to respond to your question.

### QUESTIONS

Q. Mr. President, this pact permits the nuclear buildup to go ahead. Since you want to cut Government spending, how many billions of dollars will this cost the American people over the years, and also, do you think that the Russians stalled last July because they knew that Mr. Nixon was doomed in the Presidency and preferred to deal with his successor?

**THE PRESIDENT.** I would like to correct, if I might, one impression. This does not permit an agreed buildup. It puts a cap on future buildups, and it actually reduces a part of the buildup at the present time.

It is important, I should say, however, in order for us to maintain equality, which is a keystone of this program, to have an adequate amount of military expenditures. But I can say this without hesitation or qualification: If we

Volume 10—Number 49

PRESIDENTIAL DOCUMENTS: GERALD R. FORD, 1974

1515

had not had this agreement, it would have required the United States to substantially increase its military expenditures in the strategic areas.

So, we put a cap on the arms race. We actually made some reductions below present programs. It is a good agreement, and I think that the American people will buy it, because it provides for equality and it provides for a negotiated reduction in several years ahead.

Mr. Cormier [Frank Cormier, Associated Press].

Q. Mr. President, there are reports that you and Mr. Brezhnev made some progress in maybe fashioning a complementary approach to negotiations in the Middle East. More specifically, perhaps the Soviets would agree to try to persuade the PLO [Palestine Liberation Organization] to acknowledge that Israel has a right to exist, and we then might try to persuade Israel to talk to the PLO. Is there any truth to this?

THE PRESIDENT. Mr. Cormier, Mr. Brezhnev and I did discuss at some length our different views on the settlement of the Middle East. There are some differences, but they are not as major as it would appear.

We indicated that, in our judgment, it was important for continuous progress to be made, perhaps with negotiations between Israel and one or more of the other Arab nations.

We also agreed that at a certain point a Geneva conference might be the final answer. So, as we discussed our, what appeared to be different views at the outset, I think we came to an agreement that it was in the interest of the nations in the Middle East, the interest of the world at large, that both parties make a maximum effort to keep negotiations going.

We think our step-by-step approach is the right one for the time being, but we don't preclude the possibility of a Geneva conference.

Yes, sir.

Q. You say that this is going to reduce a part of the buildup. Does that mean, then, that we are going to spend less on defense next year than we are spending this year?

THE PRESIDENT. It does not mean that, because only a part of our total defense program is related to strategic arms research, development, deployment, and operations, and maintenance. We do have an obligation within the limits of 2,400 on delivery systems and 1,320 on MIRV's to keep our forces up to that level.

And I think we can, with about the same expenditure level for the next fiscal year, as at the present.

But in the other programs, in our tactical forces and other military programs, there is an inflationary cost. The military has that inflation just like you and I do, so we will probably have to increase our military budget next year just to take care of the costs of inflation.

Yes.

Q. Just to follow up, we are not quite to that ceiling yet, are we? Do you intend to stay below that ceiling, or are you going to try to reach that ceiling?

THE PRESIDENT. I intend to stay below the ceiling. That is the agreement. But we do have an obligation to stay up to that ceiling, and the budget that I will recommend will keep our strategic forces either up to or aimed at that objective.

Q. Mr. President, since it is widely believed the Soviet Union has larger rockets capable of carrying heavier payloads and being MIRVed, to a larger extent carrying more warheads, can you tell us what the relative position would be between the United States and the Soviet Union in terms of warheads if each side goes to the maximum number of 1,320 on the MIRVed limit?

THE PRESIDENT. On delivery systems, we are equal. On the MIRVing, we are equal. I think the question you are asking is throw weight. It is recognized that the Soviet Union has a heavier throw weight, but the agreement does not preclude the United States from increasing its throw weight capability.

A number of years ago, our military decided that we wanted smaller missiles that were more accurate. That has been the decision of our military.

Now, if the military decides at the present time that they want to increase the throw weight, we have that right under the agreement, and I can tell you that we have the capability to do so.

So, if there is an inequality in throw weight, it can be remedied if our military recommended and the Congress appropriates the money.

Q. Mr. President, if you find the Soviet Union leaning, then, toward getting the maximum throw weight or the maximum number of warheads on their MIRV missiles, would you then recommend that the United States accelerate and move from smaller missiles to larger ones?

THE PRESIDENT. The Soviet military guidelines were for heavier missiles, heavier throw weight. Our military took a different point of view some years ago. The Soviet Union is limited as to delivery systems and as to MIRV's within the delivery systems. They cannot go beyond those.

The agreement gives us the flexibility to move up in throw weight if we want to. It does not preclude the Soviets from increasing throw weight, but I think for good reasons they have no justification for doing so.

Yes, Mr. Sperling [Godfrey Sperling, Christian Science Monitor].

Q. Wouldn't your stated accomplishments in Russia have carried more long-range credibility if they had been put initially and then described later on in less sanguine and more modest terms?

THE PRESIDENT. Well, if I understand the question, when I came back a week ago yesterday, we did not have in writing what is called an aid memoir, which was the specific agreement in writing that General Secretary Brezhnev and I had agreed to verbally. That has now been received.

Until that had been received and we had checked it out, we felt it was wise to speak in generalities. I am giving

Volume 10—Number 49

1516

PRESIDENTIAL DOCUMENTS AND NOTES

UNITED STATES DEPARTMENT OF STATE

RANK CORRESPONDENCE

JUNE 13, 1974

to you and to the American people tonight the specific figures. They are, I think, constructive. It is a good agreement. It is an agreement—if I might repeat—that puts a cap on the arms race, it makes some reductions, and it gives us an opportunity to negotiate.

So, I don't think a week's delay in the specifics has handicapped our presentation.

Q. More specifically, what percentage of the state of progress in Russia was yours and how much was Mr. Nixon's?

**THE PRESIDENT.** Well, I don't really think I ought to get into an evaluation of that. The United States has been working on a strategic arms limitation agreement for 3 or 4 years. I think we made headway in SALT I. I think we have made a real breakthrough in SALT Two.

Q. Mr. President, I would like to get back to the cost of missiles for one moment, if we may. I understand we are now spending about $15 billion a year in strategic arms, and there is an enormous amount of missile building to be done under this agreement over the next 10 years, both in MIRV's and in throw weight. Will our costs continue at about the level they are now for the next 10 years or will it be more?

**THE PRESIDENT.** My best judgment is that our strategic arms cost will hold relatively the same. It will not be substantially expanded other than for any increase resulting from inflation.

Yes.

Q. Mr. President, under the agreement, the United States tactical nuclear weapons at the forward bases in Europe were not included. Do you expect that they will be reduced or eliminated under some future mutual balanced force reduction agreement with the Soviet Union?

**THE PRESIDENT.** One of the very significant benefits of the agreement from Vladivostok was the fact we didn't have to include in the 2,400 or the 1,320—either the delivery systems or the MIRVs—as far as the forward base systems were concerned.

I am sure you know we are involved in mutual balanced force reductions in Western Europe. When we get closer to an agreement there—and I hope we will—we are presently negotiating in Vienna in this area—it is hopeful that we can make some reductions both in numbers of military personnel between ourselves and the allies on the one side and the Warsaw Pact nations and the Soviet Union on the other, as well as any arms reductions.

Q. Beyond your hope, is that a commitment that you made to the Soviet leaders in Vladivostok?

**THE PRESIDENT.** No, we made no agreement concerning the mutual balanced force reductions. We did agree to continue negotiations.

Q. Mr. President, are you satisfied that the Soviets are carrying out the spirit and the letter of the 1972 arms limitation agreements?

**THE PRESIDENT.** We know of no violations, either on the part of the Soviet Union or by ourselves. There have

been some allegations that the Soviet Union has violated the SALT agreement. We don't think they have.

LecT

There are, however, some ambiguities. When the SALT I agreement was agreed to, there was established a standing consultative commission made up of the Soviet Union and the United States. That commission can meet twice a year to analyze any allegations as to violations of SALT I. It is our intention to call for a meeting of that group—I think in January of next year—to analyze any of the ambiguities that have been alleged. We don't think there have been any violations, but I have a responsibility to find out, and we intend to follow through under the agreed procedure of the 1972 agreements.

Q. Mr. President, since there is no limit in this agreement on throw weight and since there is no limit on multiple warheads, and since additional multiple warheads could be put on the bigger missiles, more or less ad infinitum, how can you say that this is a lid or cap on the arms race?

**THE PRESIDENT.** Well, it certainly, number one, puts a limit on the delivery systems—2,400—and as I indicated at the outset, this does result in a cutback as far as the Soviet Union is concerned.

The 1,320 limitation on MIRV's does put a lid on the planned or programmed program for ourselves as well as the Soviet Union.

Now, the throw weight problem is one that we can remedy if we want to. Our military took a different point of view some years ago when they designed our ballistic missiles, but we have that flexibility.

Now, if we decide to go to a heavier throw weight, we can add on a MIRVed missile a greater number of individual warheads. That is a choice of flexibility that we have and I think it is one of the benefits of this agreement.

Q. You wouldn't describe that as an arms race?

**THE PRESIDENT.** Well, it is an attempt, if our military wanted to achieve an equality in this particular area. We have equality on delivery systems and the right to MIRV from those delivery systems. In the other, if it is our choice, we can go up in throw weight.

Yes, Sarah [Sarah McClendon, McClendon News Service].

Q. Mr. President, I want to ask you, what about conventional weapons? We have heard from Senator Goldwater and we have heard from Admiral Zumwalt that we are very weak on conventional weapons and we need more of those, rather than the kind that you have in your agreement.

**THE PRESIDENT.** Well of course, this agreement, Sarah, was limited to strategic arms. We hope, as I indicated a moment ago, to continue our negotiations for the mutual balanced force reductions in Europe. That, of course, would have a limit on the conventional weapons.

In the meantime, I think it is of mandatory importance for the United States to maintain its conventional capa-

Volume 10—Number 49

1517

bility—the Army, the Navy, the Air Force, the Marines—
because the United States, through a responsible military
program, can maintain the peace.

If we cut back our defense in conventional weapons,
I think we will have weakened our position for the main-
tenance of peace. I don't intend to propose a budget in
that regard.

O. Mr. President, do you think that we can do both of these, then?

THE PRESIDENT. I think so.

Q. To follow up on Frank Cormier's question, did you and Mr. Brezhnev discuss some kind of a trade-off whereby Israel would deal with the PLO and the PLO would recognize Israel's right to exist as a state?

THE PRESIDENT. We didn't get into that detail. Israel has indicated that it would not negotiate with the PLO. We have no way of forcing them to do so.

The discussion between Mr. Brezhnev and myself, as far as the Middle East was concerned, was to state our position and their position, and as we discussed it, I think we came to a higher degree of agreement in that our position was understood by them and the prospects of a Geneva agreement was understood by us.

MR. CORMIER. I understand you would like to devote about half of the news conference to domestic affairs, and I think we are about at the halfway point.

THE PRESIDENT. Thank you very much, Mr. Cormier.

## THE ECONOMY

### OPENING STATEMENT

I would be glad to talk about both of them a lot longer,
but let me make a statement about the economy and then
we will have questions on that.

Before turning to domestic questions, which I am sure
will concentrate on our economic problems, I would like
to say this: We are currently facing three serious chal-
lenges—inflation, recession, and energy.

Inflation, which is a deadly long-range enemy that can-
not be ignored.

Recession, which is a serious threat that already has
hurt many, many citizens and alarms many, many more.
Hopefully, it is a shorter-range evil, but neither can be
ignored, nor will it be.

Assuring adequate energy will require our best efforts.
The energy crisis also contributes both to inflation and
to recessionary pressures.

Much of the program that I recommended to the Con-
gress and the American people on October 8 is still pend-
ing before the Congress. It was designed to meet all three
of these challenges. It was balanced to deal with an
already rampaging inflation and already anticipated re-
cessionary forces.

And make no mistake—it is imperative that we fight
both inflation and recession at the same time. The ques-
tion is one of balance and changing circumstances. At

least four measures deserve special and, I think, immedi-
ate attention by this Congress. They cannot wait until
next March or April.

I have recommended a series of budget-reducing ac-
tions totaling $4.6 billion so that the Federal Government
can set an example of fiscal restraint.

Furthermore, I urge the Congress not to add any more
spending. As you can see from this chart [indicating]
the Congress has already added, or is about to add, over
$1 billion to this year's spending, and I add, with
emphasis, against my recommendations.

Anticipating rising unemployment 2 months ago, I asked for a National Employment Assistance Act to provide useful work for those who had exhausted their unemployment benefits and others not previously covered. Action on this is essential before the present Congress adjourns.

Action is needed on the Trade Reform Act. This can
help immeasurably in fighting both recession and infla-
tion, by creating more jobs and providing more goods
as well.

The tax reform bill reported by the Committee on Ways and Means of the House provides needed tax relief for low-income citizens while taxing windfall profits of certain oil companies. I don't support every provision in this committee bill, but on balance it is a good bill and badly needed at this time.

Congress has not only ample time, but the clear obli-
gation to complete action on several vital energy pro-
posals before adjournment.

Times are nowhere near desperate enough to para-
phrase President F. D. Roosevelt's great rallying cry that
the only thing we have to fear is fear itself. Still it is a
good thing to remember. But I do want to say to my
fellow Americans that our greatest danger today is to fall
victim to the more exaggerated alarms that are being
generated about the underlying health and strength of
our economy.

We are going to take some lumps, and we are going
to take some bumps, but with the help of the Congress
and the American people, we are perfectly able to cope
with our present and foreseeable economic problems.

But action is more helpful than criticism. And every
week that the Congress delays makes the prospects a little
bleaker.

I will be glad to answer any questions.

## QUESTIONS

Q. Mr. President, many people feel that the country is ahead of the Government, that people are prepared to sacrifice if they know that everyone is going to be biting the same bullet at the same time. How does this jibe with your information?

THE PRESIDENT. I think the American people are ready to make more sacrifices than maybe the Congress

1518

[L]C

and even the executive branch, including the President, believe they will.

I have a great respect and admiration for the strength and the willingness to sacrifice of the American people. I have tried to give them a program that does require some sacrifice—a 5 percent surtax on 28 percent of the taxpayers—so we could alleviate the problems of the people in the lower income brackets.

I have made some other suggestions, but I believe the Congress, along with myself, have to give some leadership to the American people, who I believe are willing to respond. And I have tried to present a program that would call for that response.

I hope the Congress responds, and if they don't like my program, will come up with one of their own, that will equally call upon the American people to make some sacrifices.

Q. Mr. President, in the absence of an Arab oil embargo this winter, could you please give the American people some indication as to whether they can expect a gasoline shortage this winter, that is, long lines at gas stations comparable to last winter. And also, your predecessor made a firm commitment to the effect that Americans would not, under his Administration, have to pay one dollar a gallon for gasoline. Can you make that same assurance over the next 12 months?

THE PRESIDENT. In 1974 at this point, the use of gasoline has been less than the anticipated growth. In other words, we are using less now than the experts forecast we would use when they were laying out the charts as to the anticipated demand.

The net result is that we have more gasoline in storage today than we had a year ago at this time.

Now that is not enough to carry us through in case there was an oil embargo, but we are in a healthier position today than we were a year ago.

Nevertheless, it is my judgment that we have to keep the pressure on the savings of energy, including a hold-down on gasoline consumption. We are trying to reduce our importation of oil from overseas by one million barrels per day. We are making headway in that regard.

We haven't achieved it, but the net result is we don't anticipate at this point from any foreseeable circumstances, any gas rationing, nor do we foresee any serious shortage.

Yes.

Q. Mr. President, I don't believe you answered my question about can you make the same assurance that your predecessor did about gasoline not going to a dollar a gallon.

THE PRESIDENT. I don't foresee gasoline going to a dollar a gallon. It is what, 45 to 55 cents a gallon today, depending on where you buy it. I see no prospects of the cost of gasoline going up to a dollar a gallon.

Q. Mr. President, this question perhaps goes back to the earlier part of the news conference, but it has an economic impact. And that is how much will it cost to reach the ceiling which you negotiated with Mr. Brezhnev, and when do you expect that the United States will reach this ceiling?

THE PRESIDENT. As I indicated in answer to an earlier question, I think we must continue our present strategic research development, deployment, maintenance programs.

And we are going to move into the present program some additional new weapons systems—the B-1 aircraft, the Trident submarine. The net result is that costs will probably go up as we phase out some and phase in some and phase out others.

Now, the total annual cost will be relatively the same plus the cost of inflation.

Q. Is it $18 billion?

THE PRESIDENT. It is in that ballpark.

Q. And for how many years do you expect this to continue, Mr. President?

THE PRESIDENT. Until we are able to negotiate a reduction below the 2,400 delivery systems and the 1,320 MIRV systems. Yes, Frank.

Q. Although you have repeatedly said that you will not recommend a gasoline tax increase, your advisers on energy seem to be lobbying for this as if we are going to be in a very bad economic situation, very bad in regard to the drain of our assets overseas. Now, will you reconsider your objection to this?

THE PRESIDENT. I have not been persuaded that a 20-cent increase in the gas tax is the right answer. I was interested in a poll that was published today which indicated that 81 percent of the American people agree with my position.

Well, if 81 percent of the American people agree with my position, I really don't think a 20-cent-a-gallon increase in the gasoline tax will go through the Congress, even if I recommended it.

So, it is my judgment that if we have to by taxation cut down on consumption, there must be a better way to do it rather than a 20-cent-a-gallon increase in the gas tax. If 81 percent of the American people agree with me and don't agree with the various people who are advocating this, I think I am on pretty solid ground.

Q. The American Conference of Mayors has put as their number one priority the renewal and continuance of the revenue sharing program. Do you plan, in your State of the Union Message to Congress, to ask for a renewal of that program on its present basis?

THE PRESIDENT. I have indicated while I was Vice President, since I have been President, that I think the general revenue sharing program has been a good one. It is now provided from the Federal Treasury around $16 billion to State and local units of government. I had an

Volume 10—Number 49

1519

hour-plus meeting with the Domestic Council and others several days ago, and we analyzed the program. I think it ought to be extended.

I think it has produced a great deal of good at the local level as well as at the State level. Now, we are in the process of analyzing any internal changes, but overall, I think the program is good, and I want to work with the Mayors and the Governors and the county commissioners to make sure that the Congress extends this sound program.

Q. Mr. President, does the Justice Department suit to break up AT&T have your full approval, and are you satisfied as to the impact that such a breakup would have on the efficiency and cost of telephone service in the United States?

THE PRESIDENT. I was kept informed, but I don't think I should pass judgment on every antitrust suit that is contemplated by the Department of Justice.

If they think they have a case, I think they ought to take the initiative within broad guidelines that I firmly believe in personally.

Now in this case, as I understand it, it is not a suit aimed at AT&T simply because of its size. It is aimed at AT&T because of its alleged activities that result in non-competition.

Now the Antitrust Act says, in effect, that the elimination of competition is grounds for antitrust action by the Department of Justice. If that is the basis—and I understand it is—then in my opinion the Department of Justice was acting properly.

Q. Mr. President, would you continue to favor your National Employment Assistance Act even if Congress did not pass a tax program to raise the revenue necessary to pay for it?

THE PRESIDENT. I would hope the Congress would be responsible and pass legislation that would provide the revenue to pay for the Unemployment Act extension that I recommended and the public service employment program that I recommended.

I think this was a sound balance we proposed, or I recommended, that we ought to tax the wealthier people, the top 28 percent of the American people, to spread the difficulties of a recession and inflation.

I think it would be irresponsible for the Congress to add expenditures and not provide any additional revenues.

Q. Mr. President, a follow-up, please. If you can get the one without the other, would you take it?

THE PRESIDENT. Well, I will pass judgment on that when that alternative is on my desk.

Q. Mr. President?

THE PRESIDENT. Yes.

Q. Mr. President, is it wise, is it fair to concentrate much of your budget cutting recommendations on health, education, and welfare and veterans, what we might call the human fringe suffering from inflation most, while not

recommending at all any increased stringency in military weapons?

THE PRESIDENT. I don't think that is a fair challenge to my program. What I did at the time I looked at the budget was to take into consideration the reductions that the Congress had made in the defense budget, and the Congress had already cut the defense budget $2.6 billion. I recommended an additional $400 to $500 million cut, making it roughly a $3 billion total cut in the proposed expenditures of the Department of Defense.

Now, since the Defense Department had already had a sizable reduction by the Congress, I felt we had to go across the rest of the spectrum of the Federal Government to find additional reductions.

Now, what we have done was to require certain individuals, for example, who wanted food stamps to pay slightly more in order to qualify for food stamps. We called upon the Congress to slow down, in some instances, public works projects.

We tried in the $4.6 billion reduction to spread the reductions across the board, and I think if you look at what the Congress did in the first place and what we have proposed in the second, it is a fairly well balanced program.

Yes, sir.

Q. To follow up the question that is reaching but is still in the economic ballpark, if the ceiling works, will there ever be a saving, an actual saving, in expenditures for strategic weapons?

THE PRESIDENT. Very, very definitely, and that is the fundamental question that we have answered. If there had been no ceiling of 2,400 on launchers and 1,320 on MIRV's, we would have had an arms race. The Soviet Union had plans and programs, we believe, to substantially increase the number of launchers and to substantially go beyond 1,320 on the MIRV's.

And we have the capability and, I think, if there had been an arms race with the Soviet Union going higher and higher and higher, we, as a Nation, for our own security, would have been forced to do precisely the same.

So, Mr. Brezhnev and I agreed that we first had to cap the arms race, both in launchers and in MIRV's. We have done that, and I wish to compliment Mr. Brezhnev because his opening statement, if I can paraphrase it, was that he and I, his country and ours, had an obligation to not indulge in an arms race, to put a cap on the proposed expenditures in both categories.

It was a statesmanlike approach at the outset, and because he believed that, and because I believe it, I think we made substantial progress, and I strongly defend what we did.

MR. CORMIER. Thank you, Mr. President.

NOTE: President Ford's fifth news conference was held at 7:31 p.m. on Monday, December 2, 1974, in Room 450 at the Old Executive Office Building. It was broadcast live on radio and television.

AMERICAN CONFERENCE ON TRADE

*The President's Address at the Conference. December 3, 1974*

Thank you very much, Walter. Distinguished members of the Cabi-
net, public officials, dedicated American citizens, ladies and gentlemen:

It is a great privilege and a very high honor to have the opportunity of participating in this American Conference on Trade. And at the outset, let me assure you that I thank you and I congratulate you on the magnificent efforts that you have made during the day and previously, and I exhort you to continue your efforts until we are successful in the achievement of the objective that has been determined, which is in the best interest of our country.

Within the last several weeks, I traveled about half way around the world. I met leaders of Japan, Korea, and the Soviet Union, and I am here tonight to call on you, my fellow Americans, to come with me on an even greater journey, a journey that could be, without a question of a doubt, the most important in our lives, yours and mine, and will affect countless of Americans for many, many years to come.

It is, very simply put, to redefine, to reshape the role of the United
States in world trade. Those of you who are serious and cognizant, and all
of you are, about the problems we face on this globe, you know that it
is a new world out there. We are witnessing today a worldwide economic
revolution.

New, acute economic problems and concerns have moved onto the
world scene with startling swiftness. Nations—large as well as small—
are redefining their national interests. Some talks in terms of economic
bloc or area advantages. And there are those who face the increasing
threat of a simple, very stark reality—survival.

The United States and most nations face the most serious economic
cession, pose unprecedented threats in all parts of the world. They
threaten employment; they threaten income. They jeopardize interna-
tional economic cooperation. And they menace political and security re-
lationships that the United States has taken a generation to construct.

Unless we approach these problems constructively and cooperatively
with our principal trading partners, we in the world may face a crisis of
the most serious proportions.

These times call for positive, constructive American leadership. The
United States cannot afford to drift in a sea of international uncertainty
at a time when its highest economic interests call for very decisive actions.
We cannot honestly claim leadership of the free world if we do not in-
fluence—with practical policies and real purpose—greater economic
cooperation.

We must be under no illusion that we can go it alone. I think that
is why all of you are here tonight and why I am here. And that is the rea-
son the journey we undertake here must go on vigorously, effectively, and
constructively. The word must go out from here tonight to the American
people and to the people of other nations, and especially our friends in the
Congress, that America has made a very serious decision: We must pass

1524

the trade Reform Act—now. It is essentially the future of the United
States trade policy and that of the world as well. The health of our do-
mestic economy and the strength—yes, the very structure—of our inter-
national economic relations are deeply involved.

The Congress must act—and I say this with the utmost seriousness—
or its inaction will gravely affect my efforts or anybody else's efforts to turn
our economy upward. It will severely limit my ability, or the ability of
anybody else, to work for international economic cooperation abroad.

You and I know that this legislation will, in all probability, be long
delayed, possibly stymied forever, if it is not passed in the current session of
this Congress. From a very practical point of view, it means that for the
next year or more when the economic situation calls for decisive decisions,
I will serve as your President without the power to fulfill my responsibili-
ties in the crucial area of our Nation's trade.

This vital bill, the trade reform bill, has been pending before Con-
gress for nearly 2 years. Actually, no President of the United States has
had the authority to negotiate international trade matters since 1967.
International trade relations have not been really revamped since that
time. It has been 40 years, as we look back over the pages of history, since
passage of the Nation's historic and fundamental Trade Agreements Act
of 1934.

The central issue of trade reform is the close interrelationship be-
tween our domestic economy on the one hand and our economic inter-
national relations. And let us look at this important interrelationship for
just a moment.

Admittedly, the American economy is in a recession at the present
time. Inflation pressures are many. Fear of unemployment is increasing
among our people.

The highest priority of this Administration in the weeks and months
ahead, as has been said since I took office 4 months ago, will be to attack
these growing and changing economic problems. And one of the most ef-
fective ways to start is to pass the trade reform legislation in our national
self-interest. Obviously, I will need the full cooperation of the Congress.
That is essential for all 213 million Americans. I will. And I have cer-
tainly welcomed the comments by the Senate Majority Leader, Mike
Mansfield, for bipartisan cooperation. I commend the Senate Committee
on Finance and Chairman Russell Long for acting with restraint and not
attaching unrelated amendments.

The international economy faces very similar difficulties. Inflation is
a worldwide problem. Most of the economies of the industrialized world
have swung into a downward cycle, partly as a consequence of inflationary
distortions.

International cooperation is absolutely essential if the world is to con-
quer this twin illness of global recession and global inflation. We in the
United States must develop a coordinated domestic and international
approach to inflation and to recession. Trade is vital, essential, critical to
that program.

Two-way trade for America amounted to $163 billion for the first 10
months of this calendar year. Those are the latest figures. This leaves our
current trade balance at a deficit of some $2.3 billion. This is due chiefly
to the huge increase in the cost of imported oil. In the first 10 months of

Volume 10—Number 49

1525

this year, oil imports cost us $20.1 billion compared to $7.8 billion for all of 1973. Thus, without the enormous increase in oil costs, we would have a good-sized surplus this year. The United States enjoyed a $1.3 billion surplus last year. This is important to note: Our exports, for the first 10 months of this year, are running at an annual rate of 36 percent above 1973.

These exports add up to many jobs for Americans in all parts of our country and in all sectors of our society. Some three million American workers owe their livelihood to our American exports—from stevedores to aircraft machinists to white collar workers staffing American corporations.

Even the smallest of our business organizations in this country, three out of five successful American exporters have fewer than 100 employees. More than 20 percent of American farm income derives from sales abroad.

Trade—everybody in this room knows—is the bread and butter issue to workers and businesses in our communities, large, small, in all parts of our 50 States. That means farms on the one hand, business on the other, and industry as a whole.

Over the years the effect of trade on our economy has been highly favorable. The U.S. economy—consumers, workers—benefits from imports as well as exports. The explanation is relatively simple: Our total imports for the first 10 months of this year amounted to approximately $83 billion. About $37 billion of that figure were essential to American production—metals, foods, chemicals, minerals, including oil.

Many American businesses are heavily dependent on imported materials. Let me offer just a couple of specific examples of how imports help us as an industrial nation.

We are almost entirely dependent on foreign countries for such vital materials as chromium, platinum, titanium, manganese. More than 85 percent of our aluminum comes from overseas; so does most of our bauxite.

When we add the vigor from these imports to the strength of exporting, we can see the significance of trade to America's economic health. Trade adds to the income, the income of the American labor force, and to our economic preeminence in the world at large.

There will be no plus in our balance of trade this year because of the severe, high cost of importing oil. Otherwise, we could be and would be very much in the black.

Naturally, I consider the price we are paying for oil as much too high. It is raising havoc on our domestic economy. If you deduct the increased cost of oil imports, the U.S. exhibits a favorable trade balance of nearly $8 billion during the first 6 months of 1974.

Oil price increases are upsetting the entire international economic system. The adjustments, the answers must come from international bargaining, from international cooperation, and that is the top priority of this Administration.

The overall effect of our trade is highly favorable, but the Trade Reform Act makes specific provision to assist those who might be adversely affected by imports. No sectors of our economy will be left to face serious disruptions. The legislation clearly states—and I will vigorously

Volume 10—Number 49

1526

support such provisions—that we will assign workers, firms, communities adversely affected by imports.

In these very difficult times, it may be tempting for some in our great country to turn inward. Powerful forces in this country are not only thinking but actually urging an inward course on legislation, not only in the Trade Reform Act but in many other pieces of legislation. This, in my judgment, would reverse American postwar trade and other policies and would be enormously harmful to us as to the rest of the globe, our allies as well as our adversaries.

It is my strong feeling—and I say this with the deepest conviction—let us turn outward to view the complex picture of international trade. Our Nation lives and acts in the world community within a very intricate framework. It is the framework of political, security, and economic ties that binds nations everywhere together.

There are those in the world who believe that unilateral and bilateral action, promoting their own self-interest, is the quickest and the most promising solution to their problems. I categorically reject that view. We must believe, and I certainly do, that this policy can only lead to conflict, an unending series of flareups and disputes in all parts of the world.

In contrast, the United States believes, and I am committed to this policy if the Congress will urgently let me negotiate, that the only real answer is the long-range solution of total world cooperation. I seek multilateral solutions to common problems that will benefit all nations, but I need the Trade Reform Act, and I need it now, if the President of the United States is to have any voice in the international scene.

Let me spell out, if I might, some of the consequences if I do not obtain this legislation from this Congress before it adjourns.

The coming GATT international trade negotiations involving 105 members would be dealt a crippling setback. I would like the necessary legislative authority to implement my accords or any accords; therefore, it would be virtually impossible to arrive at any substantial trade agreements.

The United States international, political, military, economic commitments would be seriously undermined. This, in my opinion, would encourage unrest and would certainly encourage world instability.

But let's be even more precise, if I might. In energy, Secretaries Kissinger and Bill Simon are working diligently on international cooperation. But this cooperation cannot be one in a world involved with increasing strife in trade.

The international monetary system needs significant improvement. If we slide back into trade wars, we undermine our honest efforts to keep the international monetary system functioning effectively. Friendly trade is a must if we are to improve our market imbalances.

Trade is necessary so that developing countries can pay back various forms of outside assistance. Some of the developing nations are directly involved in our own growth. They own raw materials and other commodities in short supply, essential to our development.

The Trade Reform Act offers me sufficient negotiating authority to achieve a substantial reduction in tariff levels on a worldwide basis. It would allow me to work toward greater market access for U.S. products abroad, adding innumerable thousands of jobs in our own 50 States.

Volume 10—Number 49

1527

This means jobs for Americans. That means a healthier economy. That means Congress has a duty and an obligation to pass this legislation now.

Let me use one other fact, if I might. I can assure you from my recent experiences that the Soviets are not sitting back. They are not looking for a seat as a spectator. They want and they will get part of the action.

The Soviets are ready to trade—politically, economically—but it will take time. It will take negotiation on the one hand, some very hard bargaining on the other. We have made a good beginning politically, a breakthrough on controlling the latest generation of nuclear weapons, a breakthrough for peace. Let us make the same breakthrough for trade essential for détente and progress around the world.

In 1973, the United States achieved a trade surplus of more than $1 billion from the Soviet Union. Another $900 million surplus came from other Communist countries around the world. Trade with these nations was, therefore, a very crucial factor in our overall trade surplus of $1.7 [$1.3] billion in 1973.

The Soviets will not deal unless we work to achieve mutually beneficial economic policies, including the elimination of discrimination against their trade, and unless we are willing to provide appropriate levels of credit within the framework established by the Congress.

Let's be very clear about this. Our competitive trading partners of Western Europe and Japan are issuing credits to Communist countries with which they are now trading. Their record shows that the Soviet credit is good. The credits we issue are small compared to our Western trading partners.

The world today looks to the United States of America for leadership. We have provided this since the end of World War II. We did not provide it prior to World War II. Therefore, I would find it inexcusable, as would many Members of Congress and many Americans, if this legislation were to die as a result of delay and procrastination.

The Congress and the executive branch have cooperated more closely—and I might say at a greater length—on this bill than in any other single piece of legislation in the past 6 years. I can recount in the 4 months that I have been President a number of meetings with various Senators, various other Members of the Congress, in trying to find a reasonable, constructive compromise on how we might move this legislation forward. And I can assure you that I will personally continue these efforts in the remaining weeks of this session of the Congress.

And let me add this, if I might. And I see how many members of my Cabinet are here—three, four. They are being told tonight, and everybody in their departments, that this is the job of highest priority to get this legislation through between now and adjournment.

And I will add a P.S. If they don't get it through, they are at fault, and you are, too. [Laughter]

Well, let me just conclude with these observations and comments.

I would find it inexcusable if this legislation were to become encumbered with nonrelated or nongermane amendments. This is somewhat technical, but those of us who have struggled in the Congress for some time know precisely what it means. These would be unrelated amendments, not related to the fundamentals of trade legislation under any circumstances.

They would be amendments that had no prior consideration at all in the Senate Committee on Finance. They should be extraneous to the subject matter that has brought all of you to the Nation's Capital.

I think the time has come; it is far too serious for this important legislation to be encumbered by these nonrelated or nongermane amendments. So, as you go through the halls and into the offices on Capitol Hill, make the point strongly, effectively, that this legislation must stand on its own and should not be overwhelmed with amendments that have no relationship to trade per se.

At this critical moment in our legislative history on this legislation, I don't think we can afford the gamesmanship of nonrelated, nongermane amendments.

I see some former colleagues of mine in the House of Representatives. In the main, we were able to keep nongermane amendments out of the House version of the bill. The burden is now on the United States Senate to do exactly the same.

And let me conclude with these final observations, if I might. I happen to believe that a society is great if its people think greatly, if its people act greatly, and this is a moment for greatness in America.

The journey which we together have started here tonight has no end. For the labor we undertake will never be complete: to help build a world economy that will contribute to the health and prosperity of people everywhere throughout this globe.

Every nation must carry its share of that great burden to uplift itself on the one hand and others as we move ahead.

Every nation must reach out, out to others, to work together, to share in sweat and in sacrifice, secure in the knowledge that none will have to go it alone. This truly, as I see it, could be one of the world's finest hours. With your help, with our cooperation, and with the dedication of everybody, we can make it so.

Thank you very, very much.

NOTE: The President spoke at 8:42 p.m. in the Sheraton Hall at the Sheraton Park Hotel. The conference in support of enactment of the Trade Reform Act was sponsored by a number of business, agriculture, consumer, and civic organizations.

# Rockefeller Public Service Awards

## The President's Remarks at the Awards

Luncheon. December 4, 1974

Thank you very much, President Bowen. Mr. Rockefeller, distinguished guests, ladies and gentlemen:

At the outset, let me congratulate Mr. Rockefeller again for his generosity and support of a very, very worthwhile program.

Secondly, let me compliment Princeton University and the Woodrow Wilson School of that great university for its participation in this program.

Naturally, I am very pleased and honored to have a part in this awards program and to join in your salute to the five outstanding public servants who are being rewarded here today.

For as long as there has been government—government among men, I should say—it has been fashionable to attack bureaucracy and bureaucrats, sometimes for good and sufficient reason. And I have to confess that in the over 25 years that I served in the House of Representatives, I have, on occasion, joined in that fray, obviously, when I thought the issues and facts were right. I suspect, on occasion, they weren't, but nevertheless, if I did, I apologize.

Volume 10—Number 49

PRESIDENTIAL DOCUMENTS: CERALD R. FORD, 1974

1541

and of the plans we might put into operation in the next time, because we do really feel that your great country, five times as big—I mean in economic size—than ours, and our second biggest in terms of foreign trade, we do really feel that both our responsibilities, vis-à-vis the world's economy as a whole and the other partners in the free world economy, request from us that we try as much as one can to coordinate our economic policies as we have coordinated our defense policies, as we have coordinated our détente policies, as we tried to coordinate our policies all over the globe.

Now at this present stage, I think, in the economic field there lies a great part of our faith, not only of your people, also of ours, also of other peoples in the world.

If the economic future becomes bleak and uncertain, economic uncertainty and economic failure can lead to economic unrest not only, but also social unrest and also domestic political unrest in a number of countries, not in the first instance in the United States of America, not in the first instance in our country, but we might be infected in the course of time.

I think all my compatriots heard with great satisfaction what you said this afternoon about you would not permit an aggravation of the downward trend of the economy, which at present is characterizing all our economies.

I am not going to too much dig into that field. I only wanted—using this as an example, the economic exercise of ours as an example—to express again, sir, our gratitude for this really free and frank and candid exchange of views and to express our gratitude for the endeavor on both sides to coordinate and harmonize our policies which, in fact, does not mean that both of our parts have to exactly operate along the same lines, but means that we will have to follow complementary policies in order to achieve the same goal that we have in common.

Ladies and gentlemen, I would like you to rise and drink to the President of the United States and our charming hostess.

NOTE: The President spoke at 10 p.m. in the State Dining Room at the White House.

## Assistant to the President

Exchange of Letters Between the President and Leonard Garment Upon Mr. Garment's Resignation. December 6, 1974

December 5, 1974

Dear Len:

I have your letter of December 2 and it is with deep regret that I accept your resignation as Assistant to the President, effective December 31, 1974.

In so doing, I welcome this opportunity to express my personal appreciation for your dedicated service to the Presidency and to our Nation. In particular, I want you to know of my gratitude for your highly capable assistance and unhesitating support during the early, critically important period of transition. Yours is an exceptional record of public service and one in which you can always take great pride and personal satisfaction.

You have my admiration and warmest best wishes for every happiness and success in the years ahead.

Sincerely,

JERRY FORD

[The Honorable Leonard Garment, The White House, Washington, D.C.]

December 2, 1974

Dear Mr. President:

I herewith submit my resignation as Assistant to the President effective December 31, 1974. I do so with particular appreciation for your personal thoughtfulness to myself and other members of President Nixon's staff during the transition period.

It has been a pleasure knowing you through these years in Washington and a privilege working for you during the past few months.

You and Mrs. Ford have my warmest regards and best wishes.

Sincerely,

LEONARD GARMENT

[The President, The White House, Washington, D.C.]

## VISIT OF CHANCELLOR HELMUT SCHMIDT OF THE FEDERAL REPUBLIC OF GERMANY

Joint United States-Federal Republic of Germany Statement Issued at the Conclusion of Chancellor Schmidt's Visit. December 6, 1974

The President of the United States of America Gerald R. Ford and the Chancellor of the Federal Republic of Germany Helmut Schmidt met in Washington on December 5 and 6, 1974. They reaffirmed the relationship of friendship and trust and confidence between the United States and the Federal Republic of Germany, and they held wide-ranging talks embracing international and economic problems, security and defense

Volume 10--Number 49

1542

policymakers and current East-West discussions. Secretary of State and Assistant to the President for National Security Affairs Henry A. Kissinger and Foreign Minister Hans Dietrich Genscher participated in the discussions between the President and the Chancellor and held complementary talks. In the economic talks, the President was joined by members of his Economic Policy Board and the Chancellor was accompanied by representatives of labor and business.

The President and the Chancellor reviewed the world economic situation in depth and explored effective solutions for current economic problems. They were agreed that international energy problems, the sharp increases in world prices, the contraction of economic activities, and large-scale payments imbalance constitute a severe threat to political and social stability in many countries. A creative new effort to coordinate economic policies between the United States and the Federal Republic of Germany, together with its partners in the European Community, will be required to master these difficulties.

The United States of America and the Federal Republic of Germany recognize the responsibility which falls to them for ensuring a prosperous international economy and safeguarding world trade. In this context they attach great significance to the upcoming multilateral trade negotiations. They reaffirmed their international pledges to avoid trade and payments restrictions which adversely affect other countries.

The President and the Chancellor agreed that in current circumstances they both have a responsibility to manage their domestic economic policies so as simultaneously to strengthen output and employment and to avoid new inflationary impulses. They affirmed that both countries have a need to encourage investment, to combat rising unemployment, and to act to increase confidence in the financial and the economic outlook. They recognized that the two countries are at different points in their fight against inflation, and that policies will take that fact into account. They are determined not to permit a serious deterioration in their economies to occur. If necessary, they will step in with adequate measures to prevent it.

The United States and the Federal Republic of Germany agreed that determination and cooperation are also necessary in dealing with energy-related problems. They underlined the importance of the International Energy Agency set up within the framework of the Organization for Economic Cooperation and Development to coordinate the energy policies of the industrialized countries. They attach particular importance to measures to reduce dependence on imported energy through conservation, more economic use of energy, and opening up of alternative sources. They stressed the need for cooperation in the field of research, notably in relation to coal processing and gasification.

Despite cooperative efforts to reduce dependence on energy imports, the President and the Chancellor recognized that in the coming year there will continue to be large scale imbalances in trade among nations and a corresponding necessity for large international flows of funds. They recognized that these flows for the most part have been, and in all probability will continue to be, handled by existing private and official channels. At the same time they agreed on the necessity of close cooperation among the financial authorities to insure the continued safe and orderly functioning of financial institutions in their expanding international roles.

Volume 10—Number 49

1543

They agreed on the importance of the International Monetary Fund and other multilateral financial agencies being in a position in 1975 to provide flexible responsive financial assistance to any member nation facing international payments difficulties arising from the rapidly changing world economic situation. In addition, to insure that industrial countries which follow prudent and cooperative economic and energy policies have access to adequate financial resources in case of need, the President and the Chancellor agreed that early consideration should be given by these nations to the establishment of a supplementary financial safety net in the framework of the OECD.

The President and the Chancellor also stressed their determination to improve cooperation with the oil-producing countries. They expressed the conviction that further economic progress in the world, both in the developing and the developed countries, can only be resolved by means of world-wide cooperation.

The United States and the Federal Republic of Germany recognize the necessity of international cooperation to improve the international food situation. They will undertake prompt discussions on an international system of nationally-held grain reserves, increased global food production and substantial growth in food output in developing countries in order to prevent the recurrence of major food problems in the future. Both recognize the need for cooperation between food producers and consumers to ensure equitable adjustment to shortages and deficits.

The discussions on political questions centered on the North Atlantic Alliance, the evolution of East-West relations, and the situation in the Mediterranean and in the Near East.

The President and the Chancellor reviewed the progress of matters before the Alliance on the eve of the NATO Ministerial meeting to be convened next week in Brussels. They agreed on the continuing importance to the Allies of maintaining their political cohesion and strong defenses as the indispensable prerequisites for continued efforts to advance the process of East-West détente. Against the background of current challenges to their strength and solidarity, they reaffirmed their support for the principles of the Declaration on Atlantic Relations signed by Allied Heads of Government in June 1974.

The President and the Chancellor reiterated their resolve to contribute to the process of détente and the growth of cooperation between East and West. President Ford reviewed the SALT negotiations in the light of his talks with General Secretary Brezhnev in Vladivostok. They noted with satisfaction that it has been agreed to aim for limitations on strategic nuclear weapons on the basis of equality. The Chancellor expressed his appreciation for the progress achieved in Vladivostok which he considered most important for the pursuit of the policy of détente and safeguarding peace. President Ford and Chancellor Schmidt agreed that the understandings of Vladivostok would have a salutary effect on the overall development of East-West relations.

The two delegations also discussed the state of negotiations in Vienna on mutual and balanced force reductions in Central Europe. They confirmed their shared view that the aim of MBFR should be to arrive at a common ceiling for forces of both alliance systems.

Both sides expressed the hope that the Conference on Security and Cooperation in Europe would soon complete its initial consideration of

Volume 10—Number 49

texts dealing with all items on the agenda. It would then be possible to come into the final stage of the negotiations. They agreed that certain progress had recently been made in reaching agreement on such areas as family reunification and improved access to printed information. They noted, however, that important texts still remain to be agreed, especially with regard to the Declaration of Principles governing Relations between States.

The President and Secretary of State Kissinger reviewed the United States' efforts to contribute to progress toward the achievement of a just and lasting peace in the Middle East. Both sides emphasized the importance of the disengagement agreements and of further results in the negotiating process.

As to developments in the Eastern Mediterranean, both sides stressed the responsibility of the parties immediately concerned. They stated their readiness to encourage Greece, Turkey, and Cyprus in the search for a mutually acceptable settlement of the dispute on the basis of the independence and territorial integrity of the Republic of Cyprus.

The German side reviewed the state of the relations of the Federal Republic of Germany with the GDR and of the issue of foreign representation of West Berlin by the Federal Republic of Germany. Both sides were agreed on the importance of maintaining and developing the ties between the Federal Republic of Germany and West Berlin as well as full and complete implementation of all other parts of the Quadripartite Agreement.

The President and the Federal Chancellor reaffirmed the attachment of their Governments and peoples to the high purposes of the United Nations. They reviewed the proceedings of the current General Assembly and expressed their hope that the spirit of cooperation would prevail over divergences and divisions so that the cause of international harmony, cooperation and a sound and enduring peace would be furthered.

The President and the Chancellor agreed to remain in close touch with one another, and to consult on all matters of mutual interest as might be required in the future.

Volume 10—Number 49

PRESS
DEPARTMENT OF STATE

#42

December 7, 1974

No. 518

PRESS CONFERENCE BY
THE HONORABLE HENRY A. KISSINGER
SECRETARY OF STATE

DECEMBER 7, 1974

SECRETARY KISSINGER: First of all, my apologies for having made you come in on Saturday. I had planned to do this on Monday, but forgot that I have a Congressional appearance on Monday afternoon and Foreign Minister Allon on Monday morning.

I'd like to begin by reading a brief statement on military aid to Turkey, which I am doing on behalf of the President, as well as myself.

As you know, Congress in October enacted legislation which will cut off military assistance to Turkey on December 10th. As you are also aware, the Senate has now acted to extend the period prior to such a cut-off. It is absolutely essential, and the President and I strongly urge, that the House take similar action immediately.

To begin with, the Congressional decision to terminate

For further information contact:

PR # 518

military assistance to Turkey has not served the purpose it was designed to accomplish. Rather, it undermines the ability of the United States Government to assist in bringing about a just settlement of the tragic conflict on Cyprus.

We had made progress with the Turkish Government in the development of steps designed to make possible the initiation of negotiations.

Congressional action in October setting a terminal date for military assistance contributed substantially to the difficulties that have prevented the beginning of negotiations. Unless the Congress acts now to permit the continued flow of military assistance, further efforts by the United States to assist in resolving the crisis will be thwarted, and our ability to play a future useful role will be undermined.

The United States has made it clear that it does not approve of actions taken by Turkey on Cyprus. We have equally made clear that Turkey should display flexibility and a concern for the interests of the other parties in that dispute.

The United States will continue to do all it can to assist the parties in arriving at an equitable and

PR # 518

3

enduring resolution of the Cyprus problem. But if we are
deprived of diplomatic flexibility, there will be little
that we will be able to accomplish.

Even more important, the United States
military assistance to Turkey is not, and has never been,
granted as a favor. It has been the view of the United
States Government since 1947 that the security of Turkey
is vital to the security of the Eastern Mediterranean, to
NATO Europe, and therefore to the security of the Atlantic
Community.

These are the reasons, and these alone, that we
grant military assistance. They were compelling when we
first decided to grant such aid. They are equally compelling
today.

In 1947, our commitment to assist Greece and
Turkey marked the turning point in the building of a
security system which has contributed to Western security.
Are we now to establish a new turning point which will
mark the end of our commitment to a system which has
served the free countries so well.

The security interests of the West may be irrepara-
bly damaged unless the Congress takes immediate action to

PR # 518

4

permit military assistance to Turkey to continue.

This statement is made on behalf of the President
as well as myself.

Q Mr. Secretary, I wonder if you would care
to use this, what I assume is a first public opportunity
to answer the critics of the Vladivostok Agreement. I
had in mind especially two points. One, the argument that
the number you agreed upon in Vladivostok is too high, and
really wouldn't stop the nuclear arms race. And, second,
that the throw-weight issue, which a senior official called
a phony issue, wouldn't be phony, would be more serious
if the Soviets started MIRV-ing their large missiles.

A Let me make a few comments about the
Vladivostok Agreement.

Throughout the SALT II negotiations, our negotiators strove for the following objectives:

One, to achieve a ceiling on the number of total
delivery vehicles.

Second, to achieve a ceiling on the number of
MIRV-ed delivery vehicles.

Third, to have these ceilings equal.

Fourth, not to count forward-based systems.

PR #518

Fifth, not to count the British and French nuclear forces.

Sixth, not to give compensation to any other geographic factors.

And then we thought other technical objectives, such as the freedom to mix, which means that each side should be free to compose its strategic forces substantially according to its best judgment.

All of these objectives were achieved in the SALT II negotiations.

Now, with respect to the total numbers. The significance of the numbers is that for the first time in the nuclear age, a ceiling has been put on the strategic forces of both sides.

For the first time in the nuclear age, for a ten-year period, the arms race will not be driven by the fear of what the other side might be able to do, but only by the agreed ceilings that have been established.

This can be justly described as a major breakthrough, and its significance becomes all the more clear if one compares the numbers not with some hypothetical model that one might have in mind, but with what would have happened

PR #518

6

in the absence of this agreement.

In order to reach these numbers, the Soviet Union
will have slightly to reduce its strategic forces by some
five percent, I would guess. If this agreement had not
been reached, all our intelligence estimates agreed that
both with respect to MIRVs and with respect to total numbers
of forces that the Soviet Union would build, would be
considerably larger than those foreseen in the agreement,
giving us the problem of whether we were to match these
forces or whether we would permit a growing numerical
gap against us to arise. So it is not a fair comparison
to compare these figures with some abstract model but
only with, one, the reality of existing strategic forces,
and, second, what would, according to the best judgment
of our intelligence community, have happened in the absence
of such an agreement.

With respect to the argument that at this level
a substantial capacity for overkill exists, this would be
any
true at almost/foreseeable level, or at any level that
has been publicly suggested by any of the protagonists
in this debate.

This is a problem that is inherent in the nature
of nuclear weapons, and in the size of existing nuclear

PR #518

7

stockpiles.

So, I repeat, the significance of this agreement
is that for a ten-year period, it means that the arms
race will not be driven by the fear of each side of the
building capabilities of the other side.

Now the argument that it does not stop the
qualitative arms race. It is, of course, extremely diffi-
cult to stop qualitative changes in the best of circum-
stances, because it is very difficult to control what
one is not able to describe, which is inherent in the nature
of technological change.

However, it reduces substantially the incentive
of an unlimited qualitative arms race. The nightmare in
qualitative changes has always been the linkage of qualita-
tive change with quantity. And it is the combination of
technological improvement with increases in numbers that
has produced the various models for strategic superiority
that people were concerned about.

It is extremely difficult to conceive how, under
the provisions of this agreement, foreseeable technological
changes, if either side acts with a moderate--with even a
modicum of circumspection--can produce strategic superiority.

PR #518

And this gets to the throw-weight point and to
the adjective "phony" as applied to the throw-weight point.

It is rather difficult to be drawn into
a debate about an adjective, taken out of context from
a deep background discussion. But let me sum up my views
with respect to throw weight.

Throw-weight is, of course, one measure of
strategic power. Throw-weight is significant when it is
converted into numbers of warheads, and if these warheads
are of sufficient accuracy to threaten a definable part
of the opposing side's target system. It therefore is a
function, both of the power of the weapons and of the vul-
nerability of the targets. If one side acquires additional
throw-weight, the other side has the choice either of
increasing its throw-weight or reducing the vulnerability
of the targets.

For example, putting larger throw-weight missiles
into our holes does not reduce the vulnerability of our
silos. It increases the vulnerability of Soviet silos.

The major target system that is threatened by
increases of throw-weights are land-based silos. Over
a period of ten years, these are likely to become vulnerable

PR #518

9

on both sides, regardless of the throw-weight that either side has, simply by improvement in accuracy and improvements in yield.

Under the agreement, the United States has the ability to increase its throw-weight substantially if it is judged in our interests to do so. Even though there is a limitation on building new silos, our existing silos can accommodate missiles of a throw-weight many times larger than the one we now have. And if we increased them by the permitted 15 percent, we can increase the throw-weight even more. So there is no effective limit on the increase in our throw-weight if we decide to match the Soviet throw-weight.

We must remember, moreover, that the decision to accept the differential in throw-weight was made six years ago, or ten years ago, as a unilateral decision by the United States, and has nothing to do with this agreement.

But the major point I want to make is this: We have the possibility of increasing our throw-weight. We have also the possibility of increasing the invulnerability of our forces by reducing reliance on land-based silos,

PR #518

10

and increasing the number of our submarine-based missiles.

We will not match throw-weight simply for the abstract purpose of being equal in every category. We will take whatever measures are necessary to assure the invulnerability of our forces, and to maintain strategic equivalence. If we should determine that we need to increase our throw-weight, we will do so, and there is nothing in this agreement to constrain us from doing so. And therefore from this point of view, the throw-weight argument is an unreal issue.

Q Mr. Secretary, I am sure there may be more questions about SALT, but I can't think of them at the moment, so I would like to ask you whether --

A I am able to answer without a specific question. [Laughter.]

Q Three weeks ago, in Chicago, you made a major speech calling for international cooperation to attack the energy problem and achieve a basis of consumer solidarity.

Now, have you had any indications that this is going anywhere, that it is making an impression in Europe, and, in that connection, do you intend next week, while you are over there in Brussels, to work on this at all?

PR # 518

11

A The history of the discussion with respect to consumer solidarity since the Washington Energy Conference, has been that in fact there has always been more progress than has been generally apparent.

For example, in the interval between the Washington Energy Conference last February and October of this year, there was set up the International Energy Agency and the system of emergency sharing, which creates at least a safety net in the case of some new embargo.

Since then, I have made specific proposals on how to take the next step in conservation and financial solidarity at Chicago.

We have had preliminary explorations with other consumers on that subject, specifically with the Federal Republic and with Japan and with others. And we are optimistic that the basic objectives of my Chicago speech can be realized and will be realized.

There will be technical disagreements about the size of the fund and other matters of this kind, but I am basically optimistic that the objectives that we set ourselves will be achieved, perhaps in an undramatic fashion.

Q Mr. Secretary, to put another way the

PR # 518

same question -- why is it that the United States has not
yet announced its own program of conservation measures?

A The President, as he stated in his October
speech to the Congress, wanted to give, and intends to
give, the system of voluntary restraints a maximum oppor-
tunity to work. The President went over my Chicago speech
in great detail before I gave it. He is fully aware of
the domestic implications of the international program
we have set forth. And, based on extensive conversations
I have had with him, I am certain that the United States
will, in a measurable time, take the measures that are
indicated by our program.

Q Mr. Secretary, to return to the SALT question
again, a senior American official was quoted as saying
that the figures agreed on MIRV levels could have been
lower. What did he mean? If they could have been lower,
why were they not lower?

A There are too many senior officials speaking
on background. (Laughter)

Q I would think so, also, sir.

A I was saying that the MIRV limits resulted
substantially from American proposals and not from Soviet

PR # 518

13

proposals. Basically, the judgment of our Defense Department was that once the MIRVs went beyond the point where, over a period of time, the land-based missiles might become vulnerable, a difference of a few hundred was not decisive. And therefore we geared the MIRV limits to a minimum program that we had established as being in the interest of our own security and made the proposed number consistent with that program. No major attempt was made to see whether a hundred less would have worked.

Q Well, isn't that one of the major points in which the agreement is being criticized; namely that these differences amount to, for example, in the case of a Trident submarine, a difference of 24 missiles can involve an expenditure of over a billion dollars per submarine. Is that not the basis for the criticism by Senator Jackson, particularly, that the agreement can result in the expenditure of additional billions of dollars beyond which the United States originally planned its own program?

A That is certainly incorrect. These levels do not involve expenditures beyond the levels that the United States had planned. But what the critics would also point out is that the levels at which we would have

PR # 518

14

had to spend if the arms programs of both sides had gone
on in an unconstrained manner --the very people who had
insisted all along on numerical equality -- are now accusing
us of having too high levels of arms, at a level of equality
below the existing Soviet forces, and substantially below
the foreseeable Soviet forces. Therefore the alternative
to this agreement in an unconstrained situation, according
to the very dicta of equality would have been that we would
have had to spend considerably more than we will
have to spend under this agreement. And this agreement
does not make us spend any more than we had planned
to spend to begin with.

PR #518

15

Q I thought Secretary Schlesinger yesterday indicated that it would, sir.

A I think Secretary Schlesinger indicated yesterday that in composing our forces, some additional -- I do not believe that he meant to indicate that it required additional expenditures beyond those planned. He may have meant to indicate that it might involve additional expenditures beyond those that are now being spent.

Q Mr. Secretary, we have become so inured to catastrophe that the figures 2400 and 1320 have an almost reasonable sound. But the projection has been made that by 1985 under this agreement the United States will have about 11,000 warheads and the Soviet Union 8,000 or 9,000. What would the warhead figure have been without this agreement?

A Well, without this agreement, on the projections of Soviet forces, they could have ranged anywhere from 20,000, certainly above 11,000 even for the Soviet forces. And again, I repeat, one has to compare here what would have happened without the agreement.

Secondly, one has to analyze the significance of the fact that a ceiling exists so that now, as I

PR #518

16

said before, the arms race is not driven by the expectations
of each side or the worst fears of each side.

Thirdly, when people say one should have held out
for lower numbers, the operational significance of holding
out for lower numbers would be a substantially increased
budget for our strategic forces next year. The only way
we could plausibly have achieved lower numbers is to begin
building up our strategic forces dramatically in order to
produce an incentive to reduce numbers on the other side.
On the basis of existing trends, where the gap would be
increasing against us if we didn't increase our numbers,
the incentive to achieve ceilings would decline and not
increase. And therefore, all these propositions must be
seen in terms of the alternatives and not simply as
abstract statements of desirable objectives.

Q The projected figures I gave are ceiling
figures, but do they not also represent the inherent
and enormous overkill of which you spoke?

A The word "overkill" is a figure of speech.
If either side aims to exterminate the civilian population
of the other, then it represents overkill. If you want
strategic forces for specific military objectives, then
whether it represents overkill gets you into complicated

PR #518

17

areas of strategic analysis.

If the figure had been 200 less, this so-called
overkill problem would not have been substantially affected.

Once you have achieved a ceiling on strategic
forces and a ceiling on MIRVs, it is our judgment that
the follow-on negotiations for reductions will be a lot
easier than they will be under conditions where both sides
are still increasing their forces. Because the very
argument that I have made of why it was not decisively
different whether the level was 2400 or 2200 or for that
matter 2000 will then work in favor of the reductions.

Q Mr. Secretary, on your last trip to China,
the announcement came that President Ford would be going
there next year. And also he has mentioned that he wanted
to maintain the momentum of development of relations.
What effect will this have on our relations with the
Republic of China on Taiwan, and what effect does it
have towards establishing relations with the mainland?

A We have stated constantly, since
the signing of the Shanghai Communique that our objective
was to bring about over a period of time normalization
of relations between the People's Republic of China
and the United States. The visit of the President,

PR #518

18

following on the discussions that I have had in Peking,
will be one further step along that route. The timing,
the methods and the forms remain to be determined as
time goes on.

Q Mr. Secretary, do you believe the Trudeau-Ford
meetings last week did anything to alleviate a possible
trade war between Canada and the U.S., and could you give
us your explanation for the rather cold reception given
to Trudeau by the Administration?

A First of all, I think that the
meetings between the Prime Minister and the President
contributed substantially to the improvement of relations
between the two countries and to the dialogue between
the two countries. I read that Prime Minister Trudeau was given a
cold reception: This was certainly not our intention.
It was an unofficial visit: It was always understood to
be an informal visit. We followed the protocol that is
used for these visits. I attended all the meetings. And
the relationship between the Prime Minister and the
President was unusually cordial. And in fact, after
the formal part was over -- I don't know whether that
was announced, but the President took Trudeau to the

PR #518

19

family quarters, and the Prime Minister and the President
and the two Foreign Ministers sat around and had drinks
for another hour. So I just don't agree that it was a
cool reception. The meeting was extremely cordial. And
insofar as good personal relations between leaders
contribute to easing foreign policy decisions, I think
it made a major contribution.

Q Mr. Secretary, on the back-down on the oil,
will the U.S. retaliate in any way?

A The back-down on the oil is a
complicated problem, because it is a major domestic
issue in Canada. And I think this is an issue that Canada
and we will have an opportunity to discuss over many
months.

Q Mr. Secretary, Ambassador Scali made a
speech to the United Nations yesterday that indicates we
are taking a new tack, a new policy towards that organization
Could you expand on that, please?

A We have been disturbed by some
of the trends in the United Nations. We believe that
it is unfortunate that there is a bloc that votes
automatically, regardless of the merits of the dispute.
And we have some questions about the procedures that

PR #518

20

were adopted on various deliberations. We believe that if the United Nations is to fulfill its functions, it is essential for the debates in the General Assembly to be related at least to some extent to the merits of the dispute rather than to automatic voting patterns. And I think there must be a scrupulous observance of the charter and of the procedures. We thought it was desirable for Ambassador Scali to express our concerns.

Q Mr. Secretary, there were two rather interesting developments in the Middle East in the last couple of days. One -- Prime Minister Rabin's statement that Israel was prepared to make far-reaching territorial compromises. And a day or so before that, a story in Ha-aretz in which Rabin was said to be willing to drop Israel's previous demand for a declaration of non-belligerency from Egypt in return for demilitarization of the Sinai and creating a de facto situation. To what extent do you believe that these apparent concessions have made it easier for a new round of negotiations to begin with Egypt?

A Well, as you know, Foreign Minister Allon is coming here tomorrow. And to put minds at ease, I

PR #518

21

will be meeting him at the airport.

Foreign Minister Allon will be here tomorrow.
We will then have discussions as to what the next steps
might be.

We have felt very strongly that this phase of
Middle East diplomacy should be done with a minimum
of public declarations. And I don't believe that I
would be contributing to progress by adding my voice to
of
all/the perhaps excessive speculations that have already
been made.
We hope that progress can be achieved.

Q Mr. Secretary, this week you assured
the Senate Foreign Relations Committee that through
interested groups you would know whether the Russians
were violating certain agreements they had reached with you.

A Senate Finance Committee.

Q Right -- Finance. My accent. But at
the same time, you testified that you could only speculate
whether the decline by about 40 percent in 1974 was a
result of decisions by applicants or whether it was
affected by our administration's inability to live up to
the terms of the trade agreement. Which statement is
operative?

PR #518

22

A I said that we would know whether applicants would be restrained from applying, whether there would be harassment of applicants, whether visas would be granted in relation to the numbers of applications, through a variety of sources.

We are still operating under the old guidelines, where nobody is claiming that these three principles are being rigidly observed. So we still are reasonably confident that what I said is achievable -- that is, that we will know whether there is interference with applications.

Q But you don't know yet.

A Not that I would want to speculate publicly.

Q Mr. Secretary, you talked before about the energy problem. I would like to go back to that.

You said the United States will in the measurable period of time take certain steps. Is the administration now considering steps such as higher taxes on gasoline purchases or restrictions on gasoline purchases? Are those concrete steps you are considering? And is the measurable period of time you are talking about when the President has to address the nation at the time of

PR #518

23

the State of the Union?

A Well, I have some idea of the program the President is now considering. I think the announcement of such a program obviously has to be left to the President. I would be surprised if it were delayed much beyond the address to the Congress when it reassembles. And that this is the time period in which I think the decisions will be taken. What the specific measures are, I think I will have to leave for Presidential announcement.

Q It goes beyond volunteer efforts.

A That is my impression.

Q Mr. Secretary, on the international aspects of that, you referred earlier to your belief that the program for financial assistance to deficit countries, the $25 billion program, would be achieved ultimately despite some technical objections to the form and the size of it. Could you be more explicit, sir? Prime Minister Trudeau has expressed publicly his preference to go the IMF route. So did West German Chancellor Schmidt. And could you also tell us what your hopes are for bringing France into a degree of cooperation with the industrial nations' policy?

R #518

24

A With respect to the financial facility, the decision that the industrial nations have to make is whether they will finance their deficits at least to some extent by their own efforts, or whether they want to put themselves into a position of being completely dependent on the producers for financing those deficits. This is an essentially political decision that they have to make.

We believe that it is important for the consuming nations to create at least some financial mechanisms to take care of at least some of the most difficult problems associated with the balance of payments.

We found in the initial discussions of the emergency sharing program that many technical objections were voiced, which as the program became refined, were overcome.

I still believe that when the problem of financial solidarity is viewed in its wider perspective, as something other than a purely technical financial problem, but something having to do with the political solidarity and in some respects the domestic tranquillity of the advanced consuming nations, that the advantages of doing it initially through methods such as we proposed will become overriding.

PR #518

25

Now, with respect to France -- we have always favored French participation in the efforts that we are proposing. The French have suggested a producer conference. We are not opposed to a producer conference in principle. But it is misleading to give the impression that there is no consumer-producer dialogue going on now. The United States is engaged in an active consumer-producer dialogue through a number of commissions we have set up, such as with Saudi Arabia and Iran--through the frequent exchanges we have with Algeria. So we are engaged in a very active consumer-producer dialogue. The question we face is whether we want a consumer-producer conference in which all the consumers or most of the consumers meet most of the producers in a multilateral framework. The only advantage of a multilateral framework is if there is a degree of consumer solidarity and a degree of consumer agreement as to basic approaches. Otherwise, the producer conference will merely repeat the bilateral dialogues that are already going on.

Therefore the United States is prepared in principle to go along with a producer dialogue on a multilateral basis if it is preceded by consumer cooperation. And we are prepared to find mechanisms

PR #518

27

It is certainly soluble from our side, because we have no interest at all to exclude France, and I think it is in the common interest of both consumers and producers that we proceed by the methods that I have outlined.

Q Mr. Secretary, in connection with your opening statement on aid, the aid bill and the possible damage that would be done by the House turning down the aid bill, on the relationship with Turkey. You have said a number of times in the past that you have been on the verge of achieving a breakthrough on the Cyprus question.

Where does that stand now? Can you offer the House any hope that if they approve the Bill that at some period before the cutoff date, you will be able to achieve a breakthrough?

A Let me make two separate points:

First, military aid to Turkey is not given primarily in the context of the Cyprus question. Military aid to Turkey is part of the overall defense of the free world. It has always been considered as an essential part of NATO and given the foreseeable crises in the Eastern Mediterranean, it would seem to us axiomatic that one should not drive Turkey out of a defense relationship with the United States at this particularly crucial period.

PR #518

28

So the fundamental point we are making is that
military assistance to Turkey is not a favor we do to
Turkey. It is a reflection of a basic relationship.

Secondly, on negotiations with respect to Cyprus,
the United States has indicated on a number of occasions that
in our view, concessions should be made by Turkey -- that
we would use our influence in that direction. And we
have talked to the Greek, Cypriot and Turkish Governments
in that sense.

The Congressional action in October provided a
major setback to these efforts. The domestic crisis in
Turkey was another principal factor.

We believe that over a period of the next few
months, progress in getting negotiatons started can be
achieved. Indeed, it was my intention, well known to the partie
long before this issue came up ... and the appointments had been
made, to talk to both the Turkish and Greek Foreign
Ministers at some length, within the framework of the NATO
meeting, to see whether matters could not be moved forward.

Now I would like to emphasize that the question
of military aid to Turkey does not indicate any particular
predeliction towards Turkey -- nor does it indicate any

P. 4518

29

support for Turkey on the particular issues that are before us in Greek-Turkish negotiations, or on the Cypriot issue. It is to be seen in the context of the overall security of the West.

I do believe that progress is possible in negotiations on Cyprus, and the United States is certainly prepared to use its influence in the direction that I have indicated.

Q Mr. Secretary, last Tuesday, during your second session before the Senate Finance Committee, you were asked by Senator Byrd to confirm that Soviet action during the October war was a violation of the May 1972 U.S. - Soviet Agreement on Detente.

And you candidly admitted that Soviet action was, indeed, in violation of that Agreement.

What has happened since the last war to indicate to you that Soviet action during another war, if another war would erupt in the Middle East, would not be a violation.

A My answer -- the question was a little more specific, and my answer was more precise.

PR #518

30

The question was: If the Soviet Union encouraged other countries to participate in the war in the Middle East, that this would constitute a violation of the principles that have been established.

And I would have to say that if the Soviet Union encouraged other countries to participate, this would be considered a violation of the principles.

We are seeking to produce the maximum incentives for Soviet restraint on a global basis, including the Middle East, through a variety of measures, including of course direct conversations on the subject.

I would say that in fact the SALT Agreement ought to provide incentives for restraint if it is viewed as it should be -- as a political and not only a military decision.

What the Soviet Union will do in a specific crisis, I cannot now foretell. Our attitude, in any event is clear: We do not believe that either of the super powers should encourage a widening of any conflict that might arise.

Q Mr. Secretary, as you are aware, sir, the governments of the Middle Eastern countries and citizens

PR #518

31

of those countries are using their oil money to buy into Western industries -- most recently in Germany, and there was an unsuccessful attempt to buy into Lockheed Aircraft in this country.

Yesterday, the Secretary of Defense indicated some reservations about any third countries and their nationals buying into key American industries, particularly defense industries and particularly those which have access to classified information.

What could you tell us is the official U.S. position on this, and have we made representations to other governments?

A. No, we have not made representations to other governments, partly because we are not absolutely clear what the nature of the representation is that we ought to be making -- since on the one hand we are trying to get them to spend oil income in this country.

What we are doing, is to start a study on the implications of substantial investments, at least in the United States -- how we can keep track of them, and what the complete implications are -- or at least to identify the dangers against which we should guard. We have just

PR #518

32

begun thinking about this, and it will take us several
weeks to form a clear judgment.

Q Mr. Secretary, this morning the Venezuelan
Government announced nationalization of U.S. Steel and
Bethlehem Steel the first of the year.

Now the companies, apparently, have agreed to
the terms of the settlements, so that legalities don't
arise -- but I was wondering whether you, in general, have
any attitude toward this, and whether you foresee any
trend in Latin America along this line?

A Well I have not yet seen the precise
terms of the settlement.

It is my understanding that the expropriation
was negotiated with the companies, and my impression is
that the companies are not dissatisfied by the terms.

The U.S. position is that while we do not
recommend expropriation, and indeed, while it runs counter
to the investment of private capital, which may be one of
the best sources for the underdeveloped countries of
capital -- we do not, as a government, object to it if there
is fair compensation and due legal process. And this seems
to have been the case in Venezuela, though I want to study

PR #518

33

the precise terms.

Q Mr. Secretary, let's just get back to
your Chicago speech:

What kind of time scale do you envisage, and
when do you think, and how will you certify that the
consumers have made -- in the main -- expressed sufficient
solidarity to the producers -- and in that sense, how do you
envisage bringing France into it?

A We believe that
substantial progress towards consumer solidarity can be
made within the next three or four months. We will
know when adequate consumer solidarity has been achieved.
We have rather clear ideas. They are after all the
yardsticks that we have laid down in the Chicago
speech.

On the other hand, we won't pretend that there
is consumer solidarity when there isn't, and if there
isn't, we will continue our own consumer-producer
dialogue.

Q Well at what point -- I mean at what
point do you think France can be persuaded that she has
made the right gestures?

PR #518

34

A We are not interested in "gestures" -- we are interested in reality. And we are not looking for excuses by which to pretend that solidarity has been achieved.

There is a rather clear program -- progress towards a program -- that would enable us to proceed with a multi-lateral producer dialogue, and we think this can be settled amicably and with goodwill.

I believe that the conversations between President Ford and the French President in Martinique are going to make major progress towards this objective -- at least this is the attitude with which we will approach it.

Q At Rabat -- but before the Arafat visit to the General Assembly, where he was hailed -- President Sadat, of Egypt promised you that he would continue along with your step-by-step strategy on the Middle East.

Now that position of Egypt seems a good deal more awkward than it may have seemed at the time, and you are seeing Allon, and Mr. Brezhnev is going to Cairo in January.

Is Egypt still able to deliver on this promise, and what initiatives do you have with the Egyptians between

PR # 518

35

now and the Brezhnev visit?

A. As I have pointed out, we believe that the next phase of Middle East diplomacy will be most effective if we don't speculate about the intentions of various parties.

I have heard nothing so far to indicate that the positions that were publicly announced at the beginning of November, have changed.

Obviously, the Middle East is a volatile area in which conditions can change. I have not heard anything to this effect, nor do I have any indication that it has happened, so we just have to see what --

Q. To follow up -- when are you going to see your next Egyptian official? And where?

A. No plans exist, right now, for my seeing any Egyptian official.

Q. Mr. Secretary, Senator Jackson, in the memorandum he distributed yesterday, called on his colleagues to send back the SALT Agreement, as it stands now, on the grounds that the numbers are too high.

What would be the effect on overall political relationships with the Soviet Union, if in fact you were

PR #518

36

not able to get approval of the Agreement, if in fact it
were signed with the numbers as they are now?

A - I would say two things:

If the Senate or the Congress wants to send back
the Agreement to us with instructions to get lower numbers,
they better send with it an authorization in the Appropriat-
ions Bill for $5 to $10 billion to increase our strategic
forces. It doesn't make any sense to instruct us to get
better numbers without, at the same time, being prepared to
pay the price of the arms buildup that will be the only
possible incentive by which an Agreement for lower numbers
could be achieved

Of course, the point might then also be reached
at which 2400 would represent a reduction of the overall
forces of both sides -- and so some theoretical satisfaction
might be achieved politically.

One would have to say that the Soviet Union made
very major concessions in Vladivostock. Anybody familiar with
the negotiating record must know that the Soviet Union gave up
its position on a whole range of issues...

Now if this, too, leads to a divisive debate in
the United States, and if the pattern of the Trade Bill is

PR #518

37

repeated, I think then the Soviet Union will only be able
to conclude that a political detente with us faces
domestic difficulties of an insuperable nature in the
United States.

And therefore, I believe that the consequences
of such an action would be extremely serious on the political
level. And the consequences in terms of the arms race
would be equally serious. To refuse this Agreement without
being prepared for a massive increase in defense spending,
especially on strategic forces, would compound all the
difficulties that we confront.

Q Mr. Secretary, when you were in South Korea
with President Ford, did you discuss with President Park the
release of the political prisoners and the restoration of a
democratic government -- in view of the strong Congressional
opposition to further military aid to such a repressive
regime?

A The Presidential Press Secretary pointed
out in Korea that the subject was discussed, but it wouldn't
be appropriate to go into detail.

Q Mr. Secretary, thank you very much for your
time this morning.

[Proceedings terminated at 11:25 a.m.]

December 9, 1974

NOTICE TO THE PRESS

President Ford and Israeli Deputy Prime Minister and Foreign Minister Yigal Allon met in the Oval Office for one hour and 15 minutes. Secretary of State Kissinger, Ambassador Kenneth Keating, Lt. Gen. Brent Scowcroft were also present on the American side, and Ambassador Simcha Dinitz, Mordechai Shalev, Minister, Embassy of Israel on the Israeli side.

The occasion gave President Ford and Minister Allon an opportunity to get better acquainted. The meeting was conducted with the cordiality and friendship usual when Americans and Israelis meet. The President and Prime Minister had a full exchange of views on the situation in the Middle East.

The President stressed the importance of moving ahead on further steps in the negotiations toward a genuine peace settlement. He was assured by Minister Allon that the Israeli government shares this view. The meeting provided the chance for both sides to review possible approaches in this next stage of the negotiations.

As is normal on these occasions, the two sides also reviewed a number of bilateral matters. Both expressed satisfaction at the excellent state of relations between the United States and Israel.

# # #

December 12, 1974

State of the Union Address

The President should restate the commitment of the US to an overall peaceful settlement of the Middle East conflict based on Security Council Resolution 242 and 338 and emphasize the intent of the US to pursue all efforts toward this end (the world "progress" in describing the past year's efforts would best be low-keyed, if used at all; and there is no need to mention specific issues, such as Palestinians, or boundaries or peace agreements). He should also state our parallel commitment to improving our bilateral relations with the countries of that region.

improving our bilateral relations with the countries of that region,
agreements). He should also state our parallel commitment to
specific issues, such as Palestinian, or boundary or peace
best be low-keyed, it used at all; and there is no need to mention
world "progress" in describing the past year's efforts would
the intent of the US to pursue all efforts toward this end (the
based on Security Council Resolution 545 and 338 and emphasize
to an overall peaceful settlement of the Middle East conflict
The President should restate the commitment of the US

State of the Union Address

December 15, 1974

1555

Heretofore I have emphasized the distortions of inflation because price increases must be blunted before we can realistically expect to restore employment gains and capital investment. There are now early signals that price pressures are beginning to ease. I expect inflation will move steadily down from the intolerable double-digit level.

The facts are, conditions are changing rapidly. Only by acting in a responsible manner can we strengthen confidence and move toward recovery without destroying the accumulated anti-inflation pressures that are just now beginning to work.

I know that the Business Council can rise to this challenge, and I will tell you why. I remember a little history. You and your predecessors were a very key factor in helping the Government mobilize the economy for World War II, and what an incredible record that you wrote—in top managerial posts in Government, in industry, and in the war itself.

Gentlemen, you have to—and we need you to—mobilize again. This Administration will do its part. I will personally do my part. The country needs your full cooperation and your full support.

What is needed is to unite our entire American leadership in this effort, not to divide ourselves with self-defeating pessimism.

As a most perceptive Washington veteran news columnist recently wrote under the heading "The Calamity Howlers," he said the following, and I quote:

"Now the situation is awkward, and in the automobile towns it is alarming, but the calamity howlers are adding to the depression psychology and making things even worse than they need be.

"For example, many companies now seem to be holding back on essential purchases for fear of what might happen in 1975, and there is upward pressure on both prices and wages in the belief that President Ford will finally be forced to adopt wage and price controls. In short, many people are beginning to act on their fears, which are worse than the facts.

"Washington," he went on to say, "is a little jittery, too. Because everybody has a pain sooner or later and comes here to complain about it, the capital has a tendency to think everybody has a pain....

"So things are a little mixed up," he went on to say, "and everybody is looking for painless solutions and hoping to get back to where we were before, with cheap gas and 96 fara new models to choose from. It's not on, folks. That world is gone," he said. "We're going to have to make do and mend for a while, but this is a very strong country and it will get along if we don't talk ourselves into a mess." End quote.

As Mr. Reston rightly concluded, this is a very strong country. It started weak and disunited, but two centuries later our free economic system and our free political system are both the strongest and the most enduring in the

world. And as long as I am President I propose to keep them that way.

Thank you very much.

NOTE: The President spoke at 9:06 p.m. in the State Room at the Mayflower Hotel.

## Minority Business Development Program

*The President's Memorandum for the Heads of Executive Departments. Dated December 11, 1974. Released December 12, 1974*

### MEMORANDUM FOR

THE SECRETARY OF STATE

THE SECRETARY OF THE TREASURY

THE SECRETARY OF DEFENSE

THE ATTORNEY GENERAL

THE SECRETARY OF THE INTERIOR

THE SECRETARY OF AGRICULTURE

THE SECRETARY OF COMMERCE

THE SECRETARY OF LABOR

THE SECRETARY OF HEALTH, EDUCATION AND WELFARE

THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT

THE SECRETARY OF TRANSPORTATION

I want to stress that an important objective of my Administration will be assistance to disadvantaged minorities to further allow their participation in the economic benefits of the private enterprise system. Too little attention has been given to this objective in certain sectors of the Federal Government. I am, therefore, seeking improvements in the Government's minority business development program.

Although the Office of Minority Business Enterprise in the Department of Commerce and the Small Business Administration have had primary responsibility for minority business programs, their success to date in these efforts has been due in large measure to the support of other Federal agencies. Your strong backing of this objective is essential to a meaningful Federal effort, and I ask that you undertake a reexamination of your agency's commitment to assisting the creation of successful minority businesses and of the effectiveness of your program. Please submit a report of your findings to me by January 31, 1975.

During this difficult economic period, many minority businesses are particularly vulnerable. They need every help the Government can reasonably provide. It is especially important, therefore, that your agency look for every

Volume 10—Number 50

1554

describe. Really, you would not believe how well we all
get along when the doors are closed.

"So I asked my former colleagues how well we all could get along, and I think most of them sincerely agreed that it would be wise if we could have a sort of an informal moratorium on partisan economics, at least until the next Congress convenes in January. Could not we sort of bite our tongues when tempted to say things that might further weaken confidence in the economy and compound the confusion in many Americans' minds about their future?

I was encouraged by the meeting this morning—I thought it was wholesome, beneficial, and I think it will have an impact. But for a start let me say this: Do not believe I have made any economic decisions unless you hear those decisions from me personally. There can be only one person that makes those decisions. And when I make them, I'll announce them.

I intend to keep my experts working over the holidays translating into specifics a number of new or alternative measures to augment and update the economic package that I will place before the Congress within the next 2 months. We will meet the changing priorities in the future of our present and based on future realities.

I will have new proposals on the desks of the new Members of Congress when they convene in mid-January, if not sooner. In the few days left before this Congressional session, I assured the leaders that I would communicate, conciliate, compromise, and cooperate to the outer limits of my fundamental principles in order to assure prompt enactment of the most urgent economic measures.

Among these are long-delayed trade reform legislation as well as legislation to make sure that unemployed workers receive temporary assistance, including public service jobs and extended unemployment compensation to protect their buying power. If these measures reasonably approximate the criteria I set 2 months ago, I will support adequate dollar amounts now indicated by worsening employment statistics, especially in some industries.

Tomorrow I intend to meet with the leaders of the automotive industry—Roy Chapin of American Motors, Lee Iacocca of Ford, Tom Murphy of General Motors, Lynn Townsend of Chrysler, and Leonard Woodcock of the UAW. This will be a face-to-face discussion of the industry's very special problems, but problems that affect our economy on a very broad basis.

My door has been open, and remains open, to the responsible spokesman of any segment of our economy which has been unduly damaged by our present economic difficulty.

I will continue to press for legislation and regulatory policies providing increased incentives and assistance for industrial modernization, replacement, and expansion to assure a sound industrial base now and for future generations, so that new jobs will be created. Increased productivity lies at the heart of our free enterprise system which

made America what it is today. And I have been a firm believer in the very important ingredient all of my adult life, and I will say without any hesitation I am not going to change that conviction as President of the United States.

In short, what I am saying is quite precisely this: that insofar as I can prevent it, the fundamental rules of the economic game are not going to be changed every month or every other year in the short or the long haul. But I am also saying that insofar as I can achieve it, the programs and the policies of the Federal Government will be responsive to changed circumstances and our best available economic forecasts.

Some factors—especially fuel and food production—contribute formidably, as you well know, to our current economic problems. And when I fly to meet the President of France this weekend, I will be by no means neglecting our domestic difficulties if I improve the climate of co-operation among the fuel-consuming industrial nations by a common effort to ensure adequate food and fuel supplies at acceptable prices.

Just as all of your businesses depend upon enough energy, they also depend upon enough customers. Customers is a lovely word to you, and consumers sounds like an organized pressure group. The facts are that they are interchangeable. And consumers in America are concerned about the economy as employees and stockholders—in fact, they are one and the same people.

This Administration, I can assure you, is pledged to protect the consumer buying power, or customer purchasing power, as an essential element of sustaining and strengthening the free enterprise system. This is where the voluntary part of my economic program comes in—primarily in each individual's purposeful determination to reduce conspicuous waste and to spend wisely.

The WIN campaign—a volunteer, nonpartisan citizens' effort—is yet an unexploited success. It has my full support and it deserves yours.

I can tell you this: I have received more than 200,000 pieces of mail in support of the WIN program, by far the largest amount of favorable public response to anything that I have done since taking office.

Now personally I don't care whether WIN spells "Whip Inflation Now" or "Work Is Needed." America needs the winning spirit to surmount its present economic difficulties. Whatever the challenge, Americans like to win. If there are any among you who want me to take a 180 degree turn from inflation fighting to recessionary pump priming, they will be disappointed.

The fact of the matter is I am deeply concerned about all three domestic devils—inflation, recession, and energy. They are all part of the same economic torment that now afflicts every industrial nation. I will continue to treat this general economic ailment with a balanced program. We have not, should not, and will not concentrate exclusively on any single aspect of our complex economy. I think it is wise and I intend to concentrate on the total picture.

Volume 10—Number 50

1553

He was born on May 18, 1917, in St. Joe, Ark., and received his B.A. degree from the University of Arkansas in 1933 and his LL.B. degree from the University of Arkansas in 1941.

Mr. Henley is married and has two children. They reside in Little Rock, Ark.

## Business Council

The President's Remarks to Members of the Council
Meeting in Washington. December 11, 1974

Thank you very much, Dave, Anne, members of the Business Council, and guests:

I don't have to tell you I deeply appreciate the opportunity to meet with you tonight, as leaders of commerce and industry, to discuss some very serious economic problems that we all face.

The mutuality of our problems was never more clearly stated than when I was introduced at a business conference quite recently. The moderator said, and I quote, "The greatness of America is that anyone can grow up to be president of an auto company, president of an airline, president of a utility, or President of the United States." Then he took a long, long pause and added, "That's just one of the chances you have to take!"

Four months ago, in my first words as President, I promised my fellow citizens from time to time "a little straight talk among friends."

I hope I am among friends tonight, because we are all in the same business, trying to keep this country politically and economically stable and strong, and to bring about better lives for more and more people through the genius of our American system.

Businessmen are not the only Americans working toward these goals, but it is very certain they cannot be reached—these goals—without you.

Now for a little straight talk. The economy is in difficult straits. All the statistics, or most of them, prove that quite conclusively. We are in a recession. Production is declining and unemployment, unfortunately, is rising. We are also faced with continued high rates of inflation greater than can be tolerated over an extended period of time.

There is some good economic news, but I can concede much or most of it is bad. Nevertheless, our country is not in an economic crisis.

A crisis—in the sense of a national crisis—is something that demands immediate and drastic action. A national problem is something that demands widespread understanding and carefully deliberated solutions—cures that are not worse than the disease.

In my 25-plus years in this Capital, our economy has gone through at least five recessions—five in 25 years. And the facts are that we have recovered from every one of

them. And I predict without any hesitation that we will recover from this one also. The question is not when but how. And your question to me as President is what am I doing about it? What am I doing about it as President?

I cannot and will not promise you a sudden change for the better. There is no prospect that I can discern for instantaneous improvement in the economy. Without enumerating them, you and I know that today's difficulties stem from policies and developments of past years. The effect of policies adopted today would not be felt for months to come.

Nor do I believe that confidence in the American economy can be restored with rhetoric—mine or that of other political players or sideline sitters. I do not believe it can be restored by Federal Government activity alone. I do believe it can be restored by the effective teamwork and enlightened self-interest of all elements of our American free enterprise economy and our representative free political system.

Long-term success is not assured by short-term panaceas. There appears to be a tendency these days to focus only on the immediate needs or effects of any proposed economic remedy and not to examine its long-term effects. Speaking only for myself, I do not buy that.

Not just the President, not just the Congress, not just business or labor or consumer, but all of us must act to renew and invigorate our economy and everybody's faith in that economy.

Hopefully we will do most things right and only a few wrong things—maybe some of you have done that in business or had the same experience. But I can assure you this Government, as far as I am concerned, will do nothing deliberately wrong. But just because doing something—yes, it might perk up political opinion polls, but I think the facts are in some instances that course would be the worst course of all.

Men survive by instinct but make progress by intelligence. Perhaps we could survive by merely following our instincts now—an immediate return to wage and price controls, as some demand; immediate and mandatory gasoline rationing, as others advocate; the enactment of other compulsory programs that treat the symptoms but retard the cure.

I happen to believe that instincts must be overruled by intelligence and politics must yield to principles if we are to make reasonable economic progress that can honestly be sustained in the future, whether it is short-term or long-term. And let me say without any hesitation or qualification that is what I intend to do.

Today I met with the bipartisan leaders of the House and Senate at the White House in the Cabinet Room. The campaign is over, the voters have spoken, and the present Congress is about to adjourn. At that meeting there was a spirit of concern for the country in that representative roomful of responsible Democrats and responsible Republicans which I wish I had the eloquence to

Secretary Kissinger Holds News Conference at Brussels

Following is the transcript of a news conference held by Secretary Kissinger at Brussels on December 13 at the conclusion of the ministerial meeting of the North Atlantic Council.

Press release 530 dated December 13

Secretary Kissinger: Ladies and gentlemen, let me simply say that I thought this was a most useful, very amicable meeting. The new format of restricted sessions makes for a better dialogue and less formal statements. I recognize it also makes for more erratic briefings, since not all delegations interpret the restrictions in a similar manner; and we will sort that out by the next NATO meeting. So, for those of you who have suffered from an excessive scrupulousness by our spokesman, my apologies.

Let me take your questions.

Q. Mr. Secretary, there is a lot of confusion on this side of the Atlantic about a very important matter which bears on what you discussed here, which is—exactly what is the American policy now with regard to the price of oil? I refer, of course, to the reports on the Enders [Thomas O. Enders, Assistant Secretary for Economic and Business Affairs] statement at Yale?

Secretary Kissinger: My colleague Enders makes so many statements that when you say "at Yale" you imply that this is a very clearly circumscribed event. The American policy on the price of oil is that we believe that the present oil prices are too high and that, for the sake of the stability and progress of the world economy, it should be reduced and that this is also in the long-term interest of the producers.

In the absence of these price reductions, it is our policy that the consuming nations

should improve their cooperation in order to withstand the impact of these high prices and also to provide incentives for an ultimate reduction of prices. One of these efforts to mitigate the impact of high oil prices is to develop alternative sources of energy, and there have been some studies on whether an incentive should be created for these alternative sources of energy by creating a floor price so that if the price of oil sinks below that of the alternative sources of energy, there won't be massive economic dislocation. But at this point, this is a subject of study and consideration. It is not a governmental decision, and as I said, I think my colleague Enders was speaking in an academic environment academically.

Q. Concerning the energy problem, Mr. Secretary, do you think that there is any contradiction between the way the United States wants to start cooperation and the French way; and after your meeting with Mr. Sauvagnargues [Jean Sauvagnargues, Minister of Foreign Affairs of the French Republic], do you think that agreement can be reached on the problem between both President Ford and Giscard d'Estaing in Martinique?

Secretary Kissinger: We are approaching the meeting in Martinique with the attitude of intending to find a solution to the differences that may exist. In principle, we do not believe that there is a contradiction; in fact, we believe that consumer cooperation is the prerequisite to producer dialogue, because otherwise the consumer-producer dialogue is going to turn into a repetition on multilateral basis of the bilateral dialogues that are already going on.

So we believe that solution is possible and that the two approaches, which are not contradictory, can be reconciled; and I would

January 6, 1975

1

like to point out that at the Washington
Energy Conference last year [February
1974] the United States proposed that con-
sumer cooperation should be followed by con-
sumer-producer dialogue. In short, we are
going to Martinique with the attitude that a
solution is possible in the common interest
of all of the consumers and, ultimately, in
the common interest of both consumers and
producers.

Q. I would like to know [after] the Atlan-
tic Council, if you [feel] that there are yet
major differences to overcome in the oil
strategy, and second, if you are concerned
about the present status of the alliance in the
Mediterranean and if you ask of your allies
an extra effort in this area?

Secretary Kissinger: On oil strategy, I think there is agreement—or I had the impression that there is agreement—about the sequence of moves that should be undertaken. Whether the definition of what constitutes consumer cooperation is as yet homogeneous, I am not sure; but we will try to work that out in Martinique. We certainly do not believe that the consumers should exhaust their energy in disputes among themselves. We are going to Martinique with a positive attitude and with the intention of finding a solution to the problem of the sequence, which I think will be relatively easy, and the definition of consumer cooperation, which we believe to be possible.

With respect to the Mediterranean, this is
of course an area of concern. It was dis-
cussed in the NATO Council, and I do not
think that there were significant differences
of opinion.

Q. We heard that in the ministerial meet-
ing you mentioned to your colleagues that
you are pessimistic regarding a peaceful
settlement in the Middle East. Is it because
of the Arab-Israeli conflict, or is it because
of the oil crisis?

Secretary Kissinger: It is totally untrue. I did not express pessimism about the possibility of a peaceful settlement. My sentence structure is so complicated that my colleagues sometimes miss the end of the sentence and

concentrate on the beginning [laughter]. So I would like to make absolutely clear that I am not pessimistic about the possibility of a peaceful settlement. The United States is making a major effort to produce progress toward a peaceful settlement, and I am not at all pessimistic about it. Quite the contrary.

Q. Can you put an end to these rumors
that there is an American special army which
is training now to occupy Arab oilfields as
one of your ways to get—

Secretary Kissinger: There is no American army that is being trained to take over Arab oilfields.

Q. Do you see any hope of further politi-
cal progress in the Middle East before Brezh-
nev's visit to Cairo?

Secretary Kissinger: The United States cannot make its actions dependent on the travels of the General Secretary of the Communist Party of the Soviet Union, and therefore we will do our best to make progress as rapidly as possible. As you know, I have had talks with the Foreign Minister of Israel, and I expect to see him again in January, but we are not following a timetable which is dictated by the travels of Mr. Brezhnev nor, may I say, have we been asked by any Arab government to gear our actions to the travels of Mr. Brezhnev.

Q. I understand that the major part of the discussions held here this week dealt with questions of defense. What part of the Council time was devoted to the humanitarian problem of alleviating the suffering of 200,000 Greek Cypriot refugees who are spending the winter in tents?

Secretary Kissinger: As you know, I have spent personally a great deal of time with the Foreign Ministers of Greece and Turkey, seeing each of them several times each day with the intention of narrowing the differences and finding an acceptable basis for negotiation. I did this because ultimately the alleviation of the suffering of the refugees in Cyprus, with which the U.S. Government is profoundly concerned, can best be achieved through a political solution of the Cyprus

2

Department of State Bulletin

[LC]

problem. While I do not want to make any comments about these conversations, I am more hopeful than I was before I arrived that progress is possible and may become visible as events unfold.

In addition to this, the U.S. Government is profoundly concerned with the fate of the refugees and will in the interlude between now and a political settlement do its utmost to ease their plight. Morever, the U.S. Government is prepared to use its influence with the parties to bring about a settlement which is just and equitable.

As far as the NATO meeting itself is concerned, it was thought best not to turn it into a confrontation, and I must say the Foreign Ministers of Greece and Turkey both spoke with restraint and wisdom and in a manner which I think contributed to the hopes for a peaceful solution which we all share, and which may have been brought somewhat closer.

**Q.** Do you think that your talks with the two Ministers contributed to moderation between the two countries and that after your talks with them that the intercommunal talks in Cyprus will start soon?

**Secretary Kissinger:** I think that with respect to the intercommunal talks that any announcement with respect to that would have to come from Nicosia. And this is a matter for the two communities to decide and not for the American Secretary of State to determine or to announce. It is my impression that the talks—I don't know whether the talks contributed to an atmosphere of moderation or could build on an existing atmosphere of moderation. As I said, I am more hopeful than I was when I came here that progress can be made.

**Q.** I am a little puzzled by your expression of hope. A senior American official said earlier that very little could come out of these discussions in view of the American Congress' action to cut off aid to Turkey. Doesn't that still pertain?

**Secretary Kissinger:** That still pertains to the substance of the talks. The question concerns procedures. I believe that conditions

exist for progress and negotiations. I also believe that the actions of the American Congress, if they are maintained, will impede this progress. I have said so repeatedly.

**Q.** What are your views on the anxiety of Mr. Brezhnev for the European summit—for the summit of the European Security Conference—and the recent talks in France where France in some way endorsed the European Security Conference summit next year in Helsinki?

**Secretary Kissinger:** The United States has maintained the position, which it adopted together with its other allies, that the decision on whether there should be a summit should await the determination of the results of the second stage of the conference. This has been the American position and it remains the American position, and it is that if the results justify it we are prepared to go to a summit, and there has been no change in our position. I can't interpret the Franco-Soviet communique because it has been explained to me that there are subtleties in the French language that are untranslatable into English [laughter]. If that is so, it may be that they follow the same principles that I have just announced.

**Q.** Mr. Secretary, after your conversation with the Greek and Turkish Ministers, you are a little bit encouraged. Do you have the impression that a solution can be achieved if you could, for example, make a trip to Athens, Ankara, and Nicosia?

**Secretary Kissinger:** None of you will ever know whether I understand French or not [laughter], but it is not necessary for my answer [laughter]. I would like to repeat what I said in reply to Mr. Freed [Kenneth J. Freed, Associated Press]. Whether substantive progress can be made depends in part on certain domestic legislative issues that are yet to be resolved in the United States. I would also like to emphasize again what I have said repeatedly—that the United States supports aid for Turkey not in order to take sides in the Greek-Turkish dispute and not as a favor to Turkey, but because it believes it is essential for the security of the

January 6, 1975

3

West. Now, if I understood the question correctly—whether it involves travels to Athens, Athens, and Nicosia—we believe that the major problem is to get the talks started. And once the talks are started with the right attitude, the United States will be prepared to do what the parties request to accelerate them and to help them along. But I think we cannot determine this until the talks have been started. But I hope that progress can be made, and fairly soon.

Q. Mr. Kissinger, you speak French without subtlety. Very simply, it seems that some time ago you were very concerned about the internal Italian political situation. Are you still so concerned?

Secretary Kissinger: I do not believe that I have stated any public views on the interior situation of Italy. It is always complicated and always seems to get solved, and I think that I have so much difficulty conducting foreign policy that I don't want to get involved in the domestic politics of the country that produced Machiavelli [laughter].

Q. Mr. Secretary, you said that you were not familiar with the subtleties of the French language, but I heard yesterday that you asked Mr. Sauvagnargues for his interpretation of the paragraph of the Rambouillet communique on the European Security Conference. Mr. Sauvagnargues gave it to you. He said that it had the same meaning as the Vladivostok communique, and you said that you did not agree. Is this true?

Secretary Kissinger: I think as a matter of principle we should not begin the practice of restricted sessions by then discussing what went on in restricted session. If, as I pointed out before, the communique from Rambouillet has the same meaning as the communique in Vladivostok, then, of course, we agree with it [laughter]. If it has a different meaning, then we would obviously have that degree of disagreement with it, since only two weeks before we found another formulation better. But I am willing to accept the French statement that it has exactly the same meaning.

Q. You are the representative of the most powerful and the richest nation in the world. You therefore have an enormous influence to which is added your own well-known personal dynamism. However, a number of countries and people are concerned because your power gives you the appearance of an elephant. When an elephant turns around, he sometimes does damage—even when making a gesture of friendship. What are you doing personally, Mr. Kissinger, to see to it that the elephant retains his goodness but is not too heavy when he leans in a certain direction [laughter]?

Secretary Kissinger: I think that this is a serious question actually, and it is a problem that the United States, because of its scale, can produce consequences with the best of intentions that are out of scale for some of its allies and partners. Now, knowing the problem doesn't necessarily mean that you know how to solve it, and as I pointed out yesterday to some of my colleagues, in the economic field, for example, we are prepared to discuss with our friends our long-term intentions and to hear their views before we make any irrevocable decisions. And the best solution we have is, one, that we should be aware of the problem, and secondly, that we should have intensive consultations with our allies in more fields than has been customary to give them an opportunity to learn our views and to give us an opportunity to learn their concerns. I know the word "consultation" is one of these that produces linguistic difficulties, and we are happy to call it by some other name if it helps matters.

Q. [Can you say what you feel will be the impact of] the economic recession and high oil prices on the NATO military alliance? Either now or in the future?

Secretary Kissinger: Some of these accounts have an even greater sense of the dramatic than the officials'. The basic issue is that in the twenties and thirties the problem of the industrialized countries was depression. Gradually a theory was developed, the

4

Department of State Bulletin

#96-12/13

Let me correct something I told you, Helen, before. The President requested that Senator Goldwater come in to discuss the SALT II agreement.

The President today is accepting Ken Cole's resignation and we have an exchange of letters which is just about up to you and I think they are sort of self-explanatory in terms of Ken's reasons for leaving and the President's acceptance of that.

Q Have you a successor to announce, a replacement?

MR. NESSEN: No, we don't.

Q Is that choice being held up in order that the person selected be acceptable to Governor Rockefeller, someone that Vice President Rockefeller, when he is wholly confirmed, will be able to work with?

MR. NESSEN: I have never heard that, Jim.

Also, the President has accepted the resignation of Patrick Moynihan as Ambassador to India and he intends to nominate William B. Saxbe to be the Ambassador to India. We will have some letters on that.

The President, when I chatted with him this morning, pointed out that Mr. Saxbe has, for a long time, been extremely interested in being the Ambassador to India.

Shall I hold up until you have had a chance to look at the letters?

Q Please.

Q Ron, while they are passing those out, what about this thing with Lynn? Is he going to be available afterward for a briefing or do we have to catch him on the --

MR. NESSEN: We didn't have any plans to bring him out here, Bob.

Q Is there a discussion going to take place about housing problems or is this simply to meet the new President of this organization?

MR. NESSEN: It is to discuss the current conditions in the housing industry, Bob.

Q Can they do that in 30 minutes?

MORE

#96

#96-12/13

In December of 1971, while he was a Senator, he and Senator Church went to both India and Pakistan. The then Senator Saxbe wanted to use his good offices in an attempt to convince India and Pakistan not to go to war.

He visited India most recently in August of 1973 in connection with a trip to Bangladesh and he met with Ambassador Moynihan and Indian officials at that time, and he is a frequent visitor to the Indian Embassy here in Washington.

We don't have a successor to announce today. I think probably you will see the letters are self-explanatory.

Q What is Moynihan going to do?

MR. NESSEN: I don't know that.

Q Is Mr. Levy under consideration?

MR. NESSEN: Let me say something about the President's views on Ambassador Moynihan, if I may.

The President, in announcing the resignation of Mr. Moynihan, in accepting it, wants to express his highest regard and appreciation for the Ambassador's services, not only in India but previously as a dedicated public servant for a decade, including his period as Counselor to the President in 1969 and 1970.

Ambassador Moynihan's unusual records of achievements in both the academic and Governmental fields is. one for which we remain deeply grateful and which made him an outstanding emissary of the President in India.

His creative and thoughtful approach there has contributed in large measure to developing a mature and durable basis for the American-Indian relationship for the longer term future in support of the President's objectives.

The President remains deeply appreciative of Ambassador Moynihan's fine efforts in India helping to forge a relationship which serves the common aspirations of the world's two largest democracies.

The President wishes Ambassador Moynihan and his family the very best for the future.

Q Are we going to get any letters on that?

MR. NESSEN: Let's check on that.

The President also is accepting with sincere regret the resignation of Charles M. Lichenstein as Special Assistant to the President, effective December 31st. He has served as Dean Burch's assistant while Dean has been in the White House.

MORE

#96

and that you would be kind enough to
accompany her.

Now, people in this world of ours very
often ask themselves all sorts of questions
and, indeed, one of the things they often
wonder about, apparently, is why statesmen,
in fact, are statesmen and why they accept
to sacrifice many aspects of their existence
to the responsibilities of state.

Now, as far as you are concerned—and I
have seen this during our talks—and as far
as I am concerned, the reason, perhaps, for
which we do so is that we feel that we have,
perhaps, a contribution to make in further-
ing the affairs of the world.

Now, the fact that the responsibilities that
we have to shoulder at this particular time in
history are particularly heavy at the same
time means that our contribution will be a
significant contribution.

Now, it is clear, however, that the affairs
of mankind and the peace of the world do
not depend solely on the action or the efforts
of one country alone—however big that
country may be—but will always depend on
the combination, on the conjunction of the
efforts of several. And I now know that it
is quite clear that we will be able to work
together.

Mr. President, when the French fleet left
these waters two centuries ago for the North
American Continent, there were doubtless,
at the time of departure, great festivities
on board, and I can well imagine that my
ancestor may well have offered a toast on
that occasion which would probably have
had something to do with the wishes that
he would have expressed concerning the con-
tinent that they were about to discover and
would have expressed their hopes and their
expectations.

Now, this evening, today, the situation to
some extent is the other way around in that
it is we who are hosting you here in Marti-
nique, but the French Martinique of two
centuries ago and the French Martinique of
today, Mr. President, are deeply proud of
having here the visit today of the President
of the United States. Our friend the
President.

SECRETARY-KISSINGER'S NEWS CONFERENCE,
DECEMBER 16

Press release 533 dated December 16

Secretary Kissinger: Ladies and gentle-
men, we have distributed the communique,
which is substantially self-explanatory. Let
me make a few preliminary points.

First, as the President of the Republic
said last night in his toast, both sides ap-
proached these discussions with the attitude
not of who would get the maximum number
of concessions from the other or who would
be the victor in the negotiations—because
we don't think of each other as antagonists,
but as allies.

We looked at the outstanding problems,
especially in the field of energy and eco-
nomics, from the point of view of what was
in the mutual benefit, the benefit of Europe
and the United States, as well as the benefit
of all the interested nations around the
world. And therefore, with respect to the
energy issue, which was one of the principal
problems which was of course discussed, I
think we achieved the synthesis of the
French and American positions which took
account of the American conviction that con-
sumer cooperation was essential and the
French belief—which, as a matter of fact,
the United States has always shared—that
consumer cooperation must lead rapidly to
consumer-producer dialogue.

I would like to add that in addition to the
substance of the communique, the conversa-
tions were conducted in an atmosphere of
great cordiality and the relationship of con-
fidence that has grown up between the two
Presidents will help facilitate and guarantee
the spirit of cooperation which we believe
is one of the important results of this con-
ference.

Having attended many similar meetings
between French and American leaders, I
must say I found this atmosphere the most
positive and the one between the two leaders
and one in which as far as the United States
is concerned—the French President will un-
doubtedly speak for himself—we will con-
tinue in the exchanges that will be necessary
to implement the various aspects of the

38

Department of State Bulletin

LC

communique as well as the cooperation that
is foreseen in the communique.

Now why don't I take your questions.

Q. Mr. Secretary, can you give us a run-
down on the sequence of events that are
going to happen in these conferences con-
cerning the oil crisis? Which one takes place
first, and what happens after that?

Secretary Kissinger: As the communique
says, the steps should be taken in sequence,
and the sequence is the one described in the
communique; that is to say, there will first
be an effort of some urgency to strengthen
consumer cooperation in the field of conser-
vation, of developing alternative sources of
energy, and of setting up new mechanisms
for financial solidarity.

Based on progress among the consumers,
this will then lead to a preparatory meeting
between consumers and producers, for which
we set a target date for March 1975. Of
course it depends on the progress the con-
sumers make among themselves, but the
United States will cooperate in bringing
about the preparatory conferences and ob-
viously will not use delaying tactics.

I think there is good will on all sides. We
can make substantial progress among the
consumers, and given the urgency of the
situation, in fact, we must make substantial
progress among the consumers.

After the completion of the preparatory
discussions, we have foreseen intensive con-
sultation among the consumers to develop
common positions and common attitudes
toward the consumer-producer substantive
conference. The preparatory meeting will
deal with procedure, agenda, participants,
and will not deal with substance.

This is the sequence that the two Presi-
dents have agreed upon, and again I would
like to say that the United States has not
considered its views as incompatible with
those of France. In fact, at the Washington
Energy Conference, we proposed that the
consumer cooperation should lead to con-
sumer-producer dialogue, and therefore we
welcome the French initiative, and I think
we can work cooperatively to achieve the
common objective.

Q. Will France participate in this con-
sumer effort to strengthen solidarity?

Secretary Kissinger: It says "existing in-
stitutions and agreements." There are a
number of factors. France, of course, is
not a member of the IEA [International
Energy Agency], and we have not asked
France to be a member of the IEA. It is
my impression that France will work in
parallel to the IEA in the same direction.
For example, we have had occasion to point
out that the French conservation program
is going in the same direction as that of the
IEA and in some respects goes beyond it.

The institutions or the mechanisms for
financial solidarity we had proposed in my
speech should be taken in the Group of Ten,
in which France is of course a member; and
therefore there is no difficulty about French
participation in those.

With respect to alternative sources of
energy, it may be that they are initially
discussed in the IEA, but there is also a role
there for European institutions, so we are
not concerned with the legal structure.

It is our conviction that France will work
parallel to our efforts and we will find the
legal formula by which to implement.

Q. Mr. Secretary, doesn't that kind of
informal arrangement give France the bene-
fit of consumer organization that has al-
ready taken place without having any of
the responsibilities, for example, in oil
sharing?

Secretary Kissinger: No, it is our view
that we are concerned with the substance,
and therefore how France participates, un-
der what legal form, is not of decisive con-
cern to us.

As I pointed out, the financial institutions,
for example, are not being done in the IEA
to begin with. The conservation measures,
once they have been agreed upon, do not
really require any international party to
implement. They can be implemented on a
national basis.

I have the impression that we should stop
talking about Franco-American relations in
terms of confrontation and who is taking
advantage of whom but rather in terms of

January 13, 1975

39

practical cooperation in which the actions
of the two parties will be more important
than the legal form—and that is our atti-
tude, and it is our impression that was the
French attitude at this meeting.

Q. Mr. Secretary, could you please tell us
what progress, if any, was made relative
to your suggestion in Chicago of the $25
billion fund for the shoring up of those
economies that need it in light of the oil
shortage?

Secretary Kissinger: We found the attitude of the French President very positive to this idea, and we have the impression that France will work with us in the Group of Ten to implement this idea.

Q. How do you account for the French
change? All of a sudden you have peace,
and it is lovely. What caused this after 10
years?

Secretary Kissinger: I didn't say there
has been a French change. I described the
results of this conference, and I can only
say that both Presidents seem to me to be
convinced of the urgent problems facing
their countries and facing the industrialized
countries and, indeed, facing the whole
world.

And it was a discussion that was not con-
ducted in slogans, but in terms of the issues;
and when you confront the issues, I think
certain conclusions are more or less inevi-
table.

I would also say that the manner in which
both Presidents conducted the conversations,
which was free of dogma on both sides—

Q. Free of what?

Secretary Kissinger: D-o-g-m-a—it is a
Latin word, not German [laughter]. —con-
tributed to the result but I don't want to
claim any changes.

Q. Mr. Secretary, leaving aside the finan-
cial side in the Group of Ten, will the French
participation in the conservation side be
through the EEC [European Economic Com-
munity]; that is to say, are you contemplat-
ing here that the EEC will become an elec-
tive member of the IEA?

Secretary Kissinger: This is one possibility. It is not for the United States to prescribe how Europe should organize its energy policy. The United States would certainly have no objection and can see some advantages in a common energy policy on the part of Europe, and this in turn, of course, would permit the EEC to participate as a unit in the IEA. This is essentially up to the Europeans.

Q. Do you think it will happen?

Secretary Kissinger: Let me make a point. Obviously, the spirit of what has been agreed here in Martinique requires that France work in parallel on the same substance as the other principal consumers, and we believe that this can be done. This is one device for doing it, but we are prepared to find other consultative devices.

Q. Did you get any assurances from the
President of France that they would be will-
ing to do this at this meeting?

Secretary Kissinger: That they would be prepared to have a common European energy policy?

Q. Or that EEC would join the IEA?

Secretary Kissinger: We did not discuss the legal relationship of France to the IEA. We discussed the substantive relationship of the measures that needed to be taken; and as we pointed out, it is our view—and I think it is the common view—that certain substantive steps have to be taken in order to make the consumer-producer dialogue useful. And the United States, obviously, will know whether these steps have been taken.

Q. Mr. Secretary, will the March con-
ference be composed of nations outside the
major oil producers and also major oil con-
sumers?

Secretary Kissinger: Let me make two
points. The March date is a target date. It
is not an absolutely fixed date, but we will
work seriously to see whether it can be im-
plemented. The original proposal was that
it might be tripartite; that is, that some of
the less developed consuming countries

40

Department of State Bulletin

might also participate. The United States
is not opposed to this in principle; or to put
it positively, the United States is prepared
for this but the exact composition of either
the preparatory or the final meeting has not
yet been settled. This is one of the issues
that has to be settled.

Q. Mr. Secretary, can you give us further elaboration on the Mideast discussions? How much of the time was spent talking about the Middle East?

Secretary Kissinger: I think, in the Mid-
east discussion, the French point of view
has been publicly stated and there was a full
exchange of the respective points of view.
No conclusions were reached or announced.
This was mostly in the form of bringing
about a fuller comprehension by each side
of the views of the other.

Q. Mr. Secretary, could you point two
things out: What the gold agreement means
and, also, what was our original request for
compensation for the NATO bases?

Secretary Kissinger: What the gold agree-
ment means is this: That there has been a
fixed price for the valuation of gold which
does not reflect the market price, and it
means that each country is free to adopt
current market prices as the basis for eval-
uation and therefore show on its books a
value of gold reserves which corresponds
more nearly to the market price of gold,
which is about 3½ to 4 times larger than
the fixed price of gold and therefore reflects
more accurately the capacity of the reserves
of each country to pay for deficits.

I frankly do not remember what the orig-
inal figures were. I know the French figure
that they first offered us was substantially
below $100 million, and I am certain the
figure we asked for was substantially above;
and this seemed to us to represent a fair
compromise, but I don't remember what the
figure was that we originally asked for.

Q. What of the apparent French suspi-
cions that the United States is trying to
dominate the policies of the industrialized
world and dictating its terms?

Secretary Kissinger: I don't want to com-
ment about French suspicions that were not
expressed at the meeting. At the meeting
we discussed how to deal with concrete
issues, and we reached the results which I
have described, so that the suspicions that
I occasionally read in the French press were
not expressed by French officials, and I
therefore don't feel the need to comment on
that.

Q. On the gold question, does the agree-
ment you have reached imply also the central
banks are free now to buy and sell gold at
the market price?

Secretary Kissinger: I don't want to get
into technical questions of gold purchases.
What it means is that they can value their
gold at the market price.

Q. It does mean that?

Secretary Kissinger: It goes no further
than that.

Q. Mr. Secretary, is it the American view
that the United States will do this or is it
going to be a totally European proposition?

Secretary Kissinger: The valuation?

Q. Yes.

Secretary Kissinger: That is up to each
country.

Q. I asked about the United States. Do
you anticipate we will do it?

Secretary Kissinger: I don't have the im-
pression that we will do it in the near future.

Q. Mr. Secretary, is it the American view
that a consumer-producer conference would
have as a principal goal lower oil prices,
and do the French share that view?

Secretary Kissinger: I think everybody
agrees that lower oil prices are highly de-
sirable, and it is the American view that oil
prices should be stabilized at a lower level.
I think we all agree that regardless of what
happens to oil prices, the impact of the oil
prices on the world economy and the means
that are necessary to assure the stability of

January 13, 1975

41

the economies of the industrialized nations as well as a fair progress for the producer nations must be a subject of a consumer-producer dialogue. But the preparatory meeting is designed precisely to define the agenda as well as the procedures of such a dialogue, so it isn't possible to be conclusive about it at this moment.

Q. How is this going to be proposed to a country like Japan—consumer-producer country conference?

Secretary Kissinger: Well, as you know, we have been in the closest contact with the Government of Japan, and I had extensive conversations with the then Foreign Minister Kimura, which have been reaffirmed by the new Japanese Government. And of course the French Foreign Minister had been in Japan at about the same time that we were there. So it is my impression that what has been agreed upon here will have the support of the Government of Japan and reflect exactly the idea that the Government of Japan expressed to both of us. And it is also my view, based on conversations with the German Chancellor and with other major consuming nations in the NATO meeting in Brussels, that what was agreed to here will elicit a wide consensus.

Q. Dr. Kissinger, in elaboration on the Middle East question, does it appear that there was French acceptance of the U.S. idea of a step-by-step solution to the Arab-Israeli problem?

Secretary Kissinger: I don't want to speak for France, particularly since the President of the Republic is waiting to appear here.

My impression is that there is no French disagreement with the step-by-step approach, but having a more Cartesian upbringing than we, France may perhaps feel it more necessary than we do to define the terminal point at the outset. I don't think there is any French disagreement with the step-by-step approach, if it can be achieved.

Q. Mr. Secretary, it says in the communique that there has been accord on many questions. Could you point out the questions upon which there is disagreement?

Secretary Kissinger: I am not leaving this meeting with a spirit that there has been substantial disagreement on any question. I think "many questions" refers to the fact that in a limited amount of time only particular issues could be discussed and did not mean to imply that any issues that were discussed were left open to disagreement.

The Press: Thank you, Mr. Secretary.

## TEXT OF COMMUNIQUE, DECEMBER 16

COMMUNIQUE ISSUED FOLLOWING THE MEETINGS OF THE PRESIDENT OF THE UNITED STATES OF AMERICA AND THE PRESIDENT OF THE FRENCH REPUBLIC IN MARTINIQUE

The President of the United States, Gerald R. Ford, and the President of the French Republic, Valéry Giscard d'Estaing, met in Martinique December 14-16, 1974, to discuss current issues of mutual concern. They were joined in their discussions by the Secretary of State and Assistant to the President for National Security Affairs Henry A. Kissinger and Minister of Foreign Affairs Jean Sauvagnargues, and by Secretary of the Treasury William Simon and Minister of Finance Jean-Pierre Fourcade. The Ministers also held complementary side talks.

The meeting took place in an atmosphere of cordiality and mutual confidence. President Ford and President Giscard d'Estaing welcomed the opportunity to conduct detailed substantive discussions on the whole range of subjects of mutual concern. As traditional friends and allies, the two nations share common values and goals and the two Presidents expressed their determination to cooperate on this basis in efforts to solve common problems.

They reviewed the international situation in the economic, financial and monetary fields.

The two Presidents agreed that the Governments of the United States and of the European Community, in the name of which the French President spoke on this subject, must adopt consistent economic policies in order to be effective in avoiding unemployment while fighting inflation. In particular, they agreed on the importance of avoiding measures of a protectionist nature. And they decided to take the initiative in calling additional intergovernmental meetings should they prove necessary for achievement of the desired consistency of basic economic policies among industrial nations.

In the light of the rapid pace of change in international financial positions in the world today, the Presidents were in full agreement on the desirability of maintaining the momentum of consideration of

42

Department of State Bulletin

[LC]

closer financial cooperation both within the Inter-
national Monetary Fund and through supplementary
measures. As one specific measure to strengthen
the existing financial framework, the Presidents
agreed that it would be appropriate for any Govern-
ment which wished to do so to adopt current market
prices as the basis of valuation for its gold holdings.

The two Presidents considered in depth the energy
problem and its serious and disturbing effects on
the world economy. They recognized the importance
for the USA, the EEC and other industrialized
nations of implementing policies for the conserva-
tion of energy, the development of existing and
alternative sources of energy, and the setting up
of new mechanisms of financial solidarity. They
stressed the importance of solidarity among oil im-
porting nations on these issues.

The two Presidents also exchanged views on the
desirability of a dialogue between consumers and
producers and in that connection discussed the
proposal of the President of the French Republic of
October 24 for a conference of oil exporting and
importing countries. They agreed that it would be
desirable to convene such a meeting at the earliest
possible date. They regard it as important that all
parties concerned should be better informed of their
respective interests and concerns and that har-
monious relations should be established among them
in order to promote a healthy development of the
world economy.

The two Presidents noted that their views on
these matters are complementary and, in this con-
text, they agreed that the following interrelated
steps should be taken in sequence:

—They agreed that additional steps should be taken, within the framework of existing institutions and agreements to which they are a party, and in consultation with other interested consumers, to strengthen their cooperation. In particular, such cooperation should include programs of energy conservation, for the development of existing and alternative sources of energy and for financial solidarity.

—Based on substantial progress in the foregoing areas, the two Presidents agreed that it will be desirable to propose holding a preparatory meeting between consumers and producers to develop an agenda and procedures for a consumer/producer conference. The target date for such a preparatory meeting should be March 1975.

—The preparatory discussions will be followed
by intensive consultations among consumer countries
in order to prepare positions for the conference.

The two Presidents agreed that the actions enu-
merated above will be carried out in the most expe-
ditious manner possible and in full awareness of
the common interest in meeting this critical situa-
tion shared by the United States and France and all
other countries involved.

President Ford and President Giscard d'Estaing reviewed current developments in East-West relations. They discussed their respective meetings with General Secretary Brezhnev, and Secretary Kissinger reported on his discussions with leaders of the People's Republic of China. They exchanged views on developments in East-West negotiations, including the Conference on Security and Cooperation in Europe. They expressed their conviction that progress in easing tensions was being made.

The two Presidents exchanged views on the pres-
ent situation in the Middle East. They agreed on
the importance of early progress toward a just and
lasting peace in that area.

President Giscard d'Estaing described current
efforts by France and other members of the Euro-
pean Community to further the process of European
unity. President Ford reaffirmed the continuing
support of the United States for efforts to achieve
European unity.

The two Presidents discussed the situation in
Indochina. They noted that progress in Laos toward
reconciliation and reunification was encouraging.

The two Presidents agreed on the need for all
parties to support fully the Paris Peace Agreements
on Vietnam. Regarding Cambodia, they expressed
the hope that the contending parties would enter
into negotiations in the near future rather than
continuing the military struggle. They expressed
the hope that following Laos, Cambodia and Viet-
nam might also find their political way towards
civil peace.

The two Presidents renewed the pledges of both
Governments to continue close relations in the field
of defense as members of the Atlantic Alliance.
They agreed that the cooperation between France
and NATO is a significant factor in the security
of Europe.

They noted with satisfaction that the positive
steps in negotiations on SALT taken during the
Soviet-American meeting at Vladivostok have re-
duced the threat of a nuclear arms race. The two
Presidents explored how, as exporters of nuclear
materials and technology, their two countries could
coordinate their efforts to assure improved safe-
guards of nuclear materials.

The President of France indicated that his Govern-
ment was prepared to reach a financial settlement
in connection with the relocation of American forces
and bases committed to NATO from France to other
countries in 1967. The French offer of $100 million
in full settlement was formally accepted by Presi-
dent Ford.

The two Presidents concluded that the personal
contact and discussion in this meeting had demon-
strated accord on many questions and expressed
their determination to maintain close contact for
the purpose of broad cooperation in areas of com-
mon concern to the two countries.

January 13, 1975

43