This Copy For

NEWS CONFERENCE

#175

AT THE WHITE HOUSE
WITH RON NESSEN
AT 12:40 P.M. EDT

MARCH 28, 1975

FRIDAY

MR. NESSEN: Good afternoon.

As you know, the President attended Good Friday services at St. John's this morning at 7:25. He returned here at 7:50 and began to work in his office.

At 9:15, the President met with Vice President Rockefeller and Secretary Kissinger to hear a report from the Vice President on his trip to Saudi Arabia.

As you know, the Vice President extended U.S. condolences to the new King and to the Saudi people on the death of King Faisal. He also assured the new government of Saudi Arabia that the United States would continue its cooperation in the search for peace in the Middle East.

The Vice President, while he was there, met with President Sadat of Egypt, and reviewed with him the situation in the Middle East, as well as American-Egyptian bilateral relations. This was the first meeting between Vice President Rockefeller and President Sadat.

The Vice President delivered a verbal message from the President to Sadat, assuring the President of Egypt of the continued American commitment to peace in the Middle East.

At 11:00, the President began a meeting with his economic advisers and energy advisers. The tax cut bill was not discussed at the meeting. Those attending included the Vice President, Secretary Simon, Secretary Dunlop, Director Lynn, Bill Seidman, Alan Greenspan, Frank Zark, Don Rumsfeld, Bob Hartmann, and myself.

I left before the end of the meeting. I think there is very little there of interest to you. The initial part of the meeting was a discussion of the budget outlook. Director Lynn reported that based on where Congress seems to be heading on spending, the deficit would be about $100 billion, if those measures were approved. He said that he has been told about a meeting of Senate committee chairmen this week, at which the chairmen expressed what he called "real concern about where the total spending is leading!"

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Q Yesterday the wires reported an interview with the President and the Hearst newspapers, and they quoted the President as saying that he wished Israel had been a bit more flexible.

MR. NESSEN: Les, do you have the whole quote? Could you read me the whole quote?

Q Yes, but I don't have it here. I just wondered if he had specified in any way how much more flexible did he want Israel to be? Has he stated that at all?

MR. NESSEN: Let me make two points. One, I urge in dealing with that passage of the interview that you read the entire passage, each word of it, and not simplify in the way you have. Secondly, the President said precisely what he meant on that point, and I see no need to elaborate on it.

Q To go back to your statement on this morning's meeting, on your report on it, you said at one point that it was reported the United States would need to borrow up to $125 billion next year if all of these spending proposals went through the Congress. But, you said that they would total about $100 billion.

MR. NESSEN: The other $25 billion comes from the so-called off budget items; that is, the various agencies that borrow money, but it does not show as an official budget deficit. It is indeed government borrowing.

Q From government-backed banks and things like that?

MR. NESSEN: The various agencies -- the farmers, the Home Loan Bank Board, and that kind of thing.

Q Outside of Treasury borrowing?

MR. NESSEN: Yes.

Q If there is a trip to Palm Springs, will there be a stop at Elk Hills?

MR. NESSEN: I just don't have anything on the Palm Springs trip.

Q On this question of the $100 billion deficit and possible borrowing of $125 billion, does that take into account -- what I am getting at is whether this is a net figure after deducting for the increased revenues from economic revival. In other words, does it take into account the stimulus to the economy that a deficit of that size would be and the added revenues that would come back if the economy revives?

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Q Ron, to follow up on that same area, I believe you quoted the President and said it would be impossible to borrow that kind of money. Why would it be impossible? As a percentage of the Gross National Product, we could borrow a lot more than that, I think.

MR. NESSEN: What he meant was with the government draining out that kind of money from the economy, the government always dips first into the till and whatever is left goes for the rest. I think, to sort of complete his sentence, he meant it would be impossible to borrow that kind of money and what was left unsaid was, without seriously affecting interest rates for home buyers and the ability of business to borrow money for its expansion, and so forth.

Q The key to that is what the Federal Reserve does with the monetary policy. Did Dr. Burns have anything to say about that?

MR. NESSEN: Dr. Burns arrived somewhat late for the meeting because of other business, and did not participate in that part of the conversation.

Q Does the President still think there is an urgent need for a quick tax cut?

MR. NESSEN: Yes.

Q Does he plan to work on the tax question this afternoon?

MR. NESSEN: I believe he will be considering his decision this afternoon.

Q Ron, has the OMB completed its calculation of what it thinks the tax cut bill amounts to?

MR. NESSEN: I have not seen it if they have. I have not seen any paper on that since yesterday afternoon's meeting.

Q Ron, one of the President's aides was quoted last night, I think, on all three of the networks -- it didn't say which one -- but this anonymous aide supposedly told the President he could not be re-elected if he vetoed the tax cut bill. Are you aware that thought was communicated to the President, and if so, what was his reaction?

MR. NESSEN: It has never been communicated in my hearing.

Q Ron, will the President's speech to the joint session of Congress, when it comes about, reflect the reassessment of the American Middle East policy?

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MR. NESSEN: As I said, the President is working on the speech now. I just don't think it is possible at this early date to say what the speech will contain other than being a major statement on foreign policy.

Q Ron, will the speech cover the whole range of the U.S. foreign policy or would it zero in, let's say, on the Mid East and Indochina?

MR. NESSEN: The entire range.

Q In connection with that, then, I believe you have said -- and certainly Dr. Kissinger has said -- that there would be no point in blaming either side; at least that thought was conveyed. But, on the other hand, there are plenty of messages being sent out, including one by Dr. Kissinger, that the Israelis were stubborn and recalcitrant and that if there was to be any assessment of blame, more should go to them.

MR. NESSEN: I have not heard those remarks by Dr. Kissinger.

Q No, you hadn't, but these are the things that are coming out of backgrounders and these are the things coming out of off-the-record and deep background type of things. These are the things that are appearing in the papers as well-informed sources and that kind of thing and those kinds of references.

My question, Ron, is: Are there two different reports to the American people, the formal one, in which you maintain a factual, diplomatic front, and then the "real one," in which the real story is told. If so, what do you say?

MR. NESSEN: It seemed to me that virtually the same question was asked of the President by the Hearst interviewers. I think I just prefer to let the President stand on his own words.

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Q I appreciate that, and indeed we would go to the President's own words. That isn't my question. My question is, whether or not we have two different versions of the same thing -- one for public broadcast, discourse and the other, the so-called inside story, which are diametrically opposite. Is that our policy?

MR. NESSEN: The President's words were public, I believe. They were published in a lot of Hearst newspapers.

Q CBS carried this morning several broadcast reports quoting Defense Department analysts as saying the South Vietnamese are not suffering a shortage of ammunition and were, in fact, destroying some $80 million worth of it in their retreat. That would seem to be contrary to what we have heard from the White House stating there was a critical shortage of ammunition and fuel in South Vietnam. Would you clear that up?

MR. NESSEN: I would like to clear that up, Walt. I don't recall saying from here that there is a critical shortage of ammunition in South Vietnam. What I do recall is saying that the South Vietnamese concern for future supplies of ammunition has caused them to conserve on fuel and ammunition and that this need to conserve, because of the uncertainty of any future shipments, was sited by President Thieu as one of the reasons for his decision to pull back into an area that he considered more defensible.

Q Ron, does the President feel now that it is too late, even if he got the money now, that it would be too late to have any significant effect on developments in South Vietnam?

MR. NESSEN: No.

Q Ron, what has the President been told about the status of the U.S. consulate in Danang and can you give us his reaction?

MR. NESSEN: I don't have any reaction to give you. My understanding is that some members of the consulate have left Danang.

Q Has the President been informed of what is going on in Danang?

MR. NESSEN: As you know, he gets a daily briefing in the morning on international developments.

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Public Statements

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I have no personnel announcements, or other announcements, so I will give you a report on the bipartisan Congressional meeting.

For those of you who were not here at the end of that meeting, Senators Mansfield and Scott and Speaker Albert and Congressman Rhodes came out here to the briefing room. We will have a transcript of that available so you can catch yourselves up in case you missed what they said.

Q What is your rule of thumb on when you permit bipartisan Senators or Congressmen to come into the briefing room or when you catch them on the loose outside; when it is raining or something like that?

MR. NESSEN: I don't think there is a rule of thumb. It clearly was raining today. In the interest of dryness, I guess, I brought people in here.

Q There have been other times, too. Will it always be from now on?

MR. NESSEN: As I said, I don't think there is any general policy on it, Helen. I think you have a list of participants.

The President walked into the Cabinet Room with Dr. Kissinger, and those present stood and applauded. The President began the meeting by saying he did not intend to assign blame for the suspension of the Middle East peace talks. The President gave a short history of efforts to help Israel and Egypt to take another step toward peace.

The President said he was greatly disappointed that the talks had been suspended without agreement.

The President said that the parties involved now will assess how to proceed toward peace. The President praised Dr. Kissinger for his "skill and patience" -- using his words -- and said that everyone was grateful for his efforts.

Dr. Kissinger reviewed in some detail the course of the negotiations. He concluded that the United States will now consider how to further the cause of peace, including the possibility of negotiations at Geneva.

Q Did Kissinger say that?

MR. NESSEN: Kissinger said, "The United States will now consider how to further the cause of peace, including the possibility of negotiations at Geneva." At that point, the President announced that the United States will re-examine the Middle East situation and will keep Congress fully informed on the results of that examination.

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FOR IMMEDIATE RELEASE

MARCH 24, 1975

OFFICE OF THE WHITE HOUSE PRESS SECRETARY

THE WHITE HOUSE

PRESS CONFERENCE
OF
CARL ALBERT
SPEAKER OF THE HOUSE
MIKE MANSFIELD
SENATOR FROM THE STATE OF MONTANA
HUGH SCOTT
SENATOR FROM THE STATE OF PENNSYLVANIA
JOHN J. RHODES
REPRESENTATIVE FROM THE STATE OF ARIZONA

THE BRIEFING ROOM

9:20 A.M. EDT

MR. NESSEN: Ladies and gentlemen, we want to move along because the Congressional leaders need to go back to the Hill to work.

The President met this morning with the bipartisan Congressional leaders and members of his staff. The President gave a report on the Middle East talks and Dr. Kissinger filled in some of the details.

There was very strong bipartisan support expressed by both the Democratic and Republican leaders there this morning.

I am going to bring out the leaders so you can ask your questions of them. I am just setting the stage for what you are about to hear.

There was very strong bipartisan support expressed for Dr. Kissinger's peace mission and the dis-appointment expressed that it had not been successful.

We have with us today the Speaker of the House, Carl Albert; Democratic leader of the Senate, Senator Mansfield; Congressman Rhodes, the Republican leader of the House; and Senator Scott, the Republican leader of the Senate.

I will let them speak for themselves. I think Speaker Albert will speak first.

CONGRESSMAN ALBERT: We have just been given a complete briefing on the efforts of the Secretary of State in the Middle East. The Secretary has made what we all consider a superb effort to work toward the peaceful settlement of all issues which divide some of the countries in that area.

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I think I can say without too much fear of contradiction that in the area in which the Secretary was working, regardless of some differences that may exist among us about certain other things, that we are approaching this problem in a 100 percent bipartisan effort.

I would like for the other leaders to speak for themselves on the subject.

SENATOR SCOTT: Ladies and gentlemen, I have never seen a more unified, bipartisan, responsible approach than that we saw this morning.

There was general sympathy and awareness and approval of what the Secretary had done. There was very warm applause near the end for his report.

Israel had faced, at the beginning of these negotiations, a world demanding the return to the 1967 boundaries, a demand by practically all of the known world except the United States. The United States policy was a strategy of formulating step-by-step negotiations in consultation with all the parties and often at the initiative of various parties. The purpose was peace through the reduction of tensions.

It would appear -- and the final statement would have to come from someone else -- but it would appear that the United States' efforts will continue, perhaps in some other forum, perhaps at Geneva, but in any event, the essential thing, I think, the American people will want to know is that the Congressional leaders are bipartisan. They are responsible. And in this case, division stops at the water's edge.

CONGRESSMAN RHODES: I was encouraged very much by the feeling in the room of unity. The Secretary of State made a very frank, very open report as to his activities. He outlined them in some detail as to what he had done and reiterated the fact that the main items of negotiation on the Israeli side, of course, were consistent with the desire for a statement of non-belligerency from Egypt. In return, there would have been some giving of territory, including the two passes and the oil fields.

There were sticking points, and the negotiations did stick on one of those points. The question now is where do we go from here? I think it is very important to note that the leaders were very much in support of not only the efforts which Secretary Kissinger had made but expressed great confidence in him and in his abilities to continue to lead the foreign policy of the Nation as we go into dangerous days ahead.

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There was no feeling of despair. There is no
feeling that war is imminent. There was a feeling of great
concern as to the future of that part of the world.

Personally, I think that the two nations, the
Arab nations and the Israeli, will now, I hope, assess
the situation themselves and perhaps decide for them-
selves as to where they go from here.

It is also, of course, my personal hope that
they will decide that there are lots of things they
can do besides fighting each other.

SENATOR MANSFIELD: There is nothing much that I can add to what has already been said by the leaders of the House and the Senate.

The meeting was depressing and disappointing
because of the lack of success on the part of Secretary
Kissinger, whose efforts we fully and completely support.

We think he was moving in the right direction
trying to set up a situation as a prelude to the Geneva
Conference. It is our hope that even though there has
been a lack of success up to this time, that efforts
will continue between the two countries concerned --
Israel and Egypt -- and that the differences will be
evened out and that the danger of further difficulties
in the Middle East will be alleviated if not overcome.

It appears to me that Secretary Kissinger's
desire to achieve a first step on the Sinai was the
logical one to assume because there are other areas which
are more difficult -- the Golan Heights, Sharm El Sheikh,
and the Arab portion of Jerusalem.

It is also my understanding that there will be
a reexamination -- a reassessment -- of United States
policy in the Middle East. But I would hope that
this temporary failure would not become permanent and
that the gravity of the situation would be recognized
by all parties concerned.

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Q What do you mean by reassessment of American policy in the Middle East?

SENATOR MANSFIELD: You will have to ask the President that question, but that is a process that is underway, or will be underway shortly.

Q All of you seem to be saying that the step-by-step diplomacy is over and the next logical step is Geneva, or at least our active role is now minimized.

SENATOR MANSFIELD: Unless conditions change in the Middle East, the next step will be Geneva. That will be much more difficult than trying to achieve a settlement on the Sinai because the cast of characters will be enlarged considerably.

SENATOR SCOTT: Unless, of course, we are asked to come back by the parties with some reason for being there.

Q Gentlemen, an official traveling with Secretary Kissinger's party apparently told newsmen that contributing to the failure of lack of an agreement was the lack of action taken by Congress vis-a-vis Indochina. Apparently, the United States' word is not as strong as it used to be because we are not honoring our commitments fully in Cambodia and Vietnam. Was that mentioned this morning?

SENATOR MANSFIELD: Not at all because the one place where there is a unified support of the Administration's foreign policy is in the Middle East.

CONGRESSMAN ALBERT: May I say, I may be word quibbling, but I think what the President was driving at is that conditions may arrive at the point where we have to re-examine -- reassess is a little strong, it seems to me. I am just throwing that out.

Q Gentlemen, who gave you the feeling -- I think Congressman Rhodes mentioned this -- no feeling of despair, no feeling that war is imminent? Was that expressed by the President?

CONGRESSMAN RHODES: I think probably that was my own reaction. I don't recall those words having been uttered by anybody other than myself.

Q Do you all agree on that assessment -- the Democrat and Republican leaders?

CONGRESSMAN RHODES: I do.

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Q How about who is to blame for this? Was there any one party more to blame than the others?

SENATOR SCOTT: We were all asked to be very considerate of that risk involved, that we ought not to be assessing blame, that we ought to be considering whether there is anything which the parties can do, or the United States can do. We ought not to try to assess blame here.

SENATOR MANSFIELD: What I would again say is that Secretary Kissinger was not to blame.

SENATOR SCOTT: We were unanimous, I think it is fair to say, that Secretary Kissinger was not to blame. Articles to the contrary would not express the sentiment of this meeting.

Q Congressman Rhodes, you said there was a sticking point in your enumerated number of differences. What was that sticking point?

CONGRESSMAN RHODES: The sticking point, obviously, was that Egypt was not willing to assume a state of nonbelligerency, as such, although they were willing to make an agreement and to foreswear hostilities during the term of the agreements.

The agreement itself would have consisted of giving up of certain types of territory, which Israel wasn't willing to give up without a nonbelligerency status. That was the sticking point.

Q Gentlemen, did you only discuss the Mideast? Did you discuss any other foreign policy matters or domestic matters?

SENATOR MANSFIELD: Only the Middle East.

Q Senator Mansfield, when you mention the possibility of a reassessment in the Mideast, are you conveying the thoughts of the President and Secretary Kissinger, or were those your observations?

SENATOR MANSFIELD: I am conveying their thoughts.

Q Gentlemen, did you get any reading of whether or not the Soviets and the Egyptians may be closer together now following the failure of these talks?

CONGRESSMAN RHODES: None.

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Q Did you get any reading of what the
Soviets may do in the Mideast?

SENATOR MANSFIELD: No, except they will be
represented in Geneva.

Q Was there any feeling that Secretary
Kissinger should not have been in the Middle East that
long while Southeast Asia was going down the drain?

SENATOR MANSFIELD: None at all.

Q Senator Mansfield, could you elaborate
a little on what you said about re-examination and reassess-
ment of U.S. policy?

SENATOR MANSFIELD: I would, if I could, but you
will have to ask the President what he has in mind.

Q But it is underway?

SENATOR MANSFIELD: Yes.

Q Senator, may I follow up on my question of a
little earlier?

SENATOR SCOTT: First, the Speaker has made the
point that re-examination might be a better word than
reassessment. I would kind of go with that.

CONGRESSMAN ALBERT: I think they use both
words.

Q Senator Mansfield, do you feel that
Congressional action or inaction on Indochina could have
had any impact on the Mideast negotiations?

CONGRESSMAN ALBERT: This point was not
raised at all. I say this as one who has generally
supported the Administration in Southeast Asia, although
I think we all recognize that is an entirely different
issue. Southeast Asia is not where it was a year ago.
This is an entirely different problem. I can't see any
possible relationship between the two.

Q There is a slight conflict between Senator
Mansfield and Congressman Rhodes. Congressman Rhodes said
there was no feeling of despair, and Senator Mansfield
said that the meeting was depressing and discouraging.

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SENATOR MANSFIELD: There are different meanings between what I said and what Congressman Rhodes said. I think, if you will look in Webster's, you will find that there is that difference. (Laughter)

CONGRESSMAN RHODES: I agree with the Senator. I think you can be discouraged without being depressed.

CONGRESSMAN ALBERT: I think there is no loss of hope. I think we had better say we still have hope that the things will be worked out.

Q I address this thing to any of you. What can you do in Congress now to help the situation? What are you planning on doing?

SENATOR SCOTT: I can volunteer one thing; that is, since the leadership was well represented in that meeting by the Chairman, and ranking Members were all consulted, the President has promised that he will keep us immediately and intimately advised of any further U.S. policy decisions in this area; that our opportunity exists, as always with the leaders, to make clear to those who might express differences of opinions which might, in turn, lead to a deterioration in the Middle East through divisiveness, that we would want to discourage that and would ask everyone in Congress to be at this point extremely careful not to endanger the policy positions of the United States.

Q Senator, do you and Congressman Rhodes agree with Congressman Albert and Senator Mansfield, on their assessment that there is no connection between Indochina and the Middle East?

SENATOR SCOTT: I agree.

CONGRESSMAN RHODES: The matter was not brought up in the meeting.

Q Do you agree?

CONGRESSMAN RHODES: I think it is too speculative a question to answer.

Q Senator Mansfield, do you believe that the results of Secretary Kissinger's trip resulted in any lessening of American cooperation with either Israel or Egypt?

SENATOR MANSFIELD: The desire of the Administration is to cooperate with both countries to try and arrive at a decision affecting the Sinai. That came pretty close, but not close enough, and the result is that Secretary Kissinger had to return home at this time.

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If there is a possibility in the immediate
future that his proposals could be accepted and his
good offices could be worked out, I think that the
chances for success would still be there. That is a
very "iffy" answer because a lot depends on the immediacy
of facing up to this situation and arriving at a
decision covering the Sinai.

Q Senator Mansfield, from that podium all last
week there were a number of days where Congress was
criticized for what is happening in South Vietnam, that
Congress is to blame for that, and in Cambodia.

What is your reaction to this criticism that
Congress is to blame for much of the problem in that
part of the world?

SENATOR MANSFIELD: I think we have views and
the White House has its views, and I think they are
expressed not on a personal basis, but on the one hand
to get the Congress to act, and on the other hand
for the Congress to defend itself.

Q Is Congress to blame for this? Does it
have any responsibility there for what is happening?

SENATOR MANSFIELD: In the Middle East?

Q No, in Southeast Asia.

SENATOR MANSFIELD: No, I don't think so.
I think we are acting as far as we can; and if you are
referring to legislation concerning Southeast Asia, it
was reported out of the Foreign Relations Committee a
week ago but was not put on the calendar until after we
adjourned Saturday morning around the hour of 2:00.

Q Are you going to act on it before you go
home?

SENATOR MANSFIELD: I doubt it.

Thank you very much.

THE PRESS: Thank you, gentlemen.

END (AT 9:38 A.M. EDT)

ANNOUNCER: James R. Schlesinger, Secretary of Defense. Tonight, on WASHINGTON STRAIGHT TALK, Defense Secretary James Schlesinger is interviewed by Washington correspondent for the Baltimore Sun, Henry Trewhitt.

HENRY TREWHITT: Mr. Secretary, is what we're seeing
now in South Vietnam, an all-out offensive by the North
Vietnamese?

JAMES R. SCHLESINGER: It is becoming an all-out
offensive. It was not an all-out offensive initially. In
fact, there has been relatively little fighting. There was
major engagement around Ban Me Thuot, but by and large there
has been a collapse of much of the fore-structure of the
Vietnamese government in the north, rather than an all-out
attack.

TREWHITT: Is one to expect that this fall-back
will continua?

SCHLESINGER: I hesitate to say. I think that it
will be some time before the South Vietnamese government is
able to stabilize the situation, so we must expect some further
withdrawals.

TREWHITT: I suppose what I'm really asking is
whether South Vietnam, a truncated South Vietnam, is defensible?

SCHLESINGER: I think that the argument has been
that the South Vietnamese could survive in a stronghold,
consisting of the Saigon area and the Delta. Whether in
fact that materializes, depends on the ability of the govern-
ment to stabilize the existing military situation.

TREWHITT: Didn't the South Vietnamese lose some
of their best units, however, in the north?

SCHLESINGER: They have lost a goodly number of
their better units. What they have salvaged, in terms of
manpower, represents units that are now ill-equipped, so the
force balance which was adverse to the South Vietnamese even
at the start of this dry season offensive is now shifted far
more adversely against them.

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TREWHITT: Mr. Secretary, what happens to an army to demoralize it such as happened with the South Vietnamese army in the north?

SCHLESINGER: Well, historically, if one goes back even to the battles of ancient Rome and prior to that time, the tendency of an army when it is retreating has been to disintegrate.

And, in order to prevent this requires continued maintenance of morale, discipline, excellent training. Armies in retreat, even in Korea, if you will recall, tend to disintegrate. And a retrograde operation of the sort that President Thieu called for, after the loss of Ban Me Thuot, when he decided to withdraw from the highlands, became that kind of demoralized force.

The South Vietnamese have lacked ammunition, to a considerable extent; their men have gone into combat in recent months in order to conserve supplies, with two hand grenades rather than the ten that they previously carried. And as a result, they have lost confidence in their supply situation and the ability of the leaders to provide the necessary supplies. This has had a general impact on morale.

TREWHITT: Well, was that withdrawal a mistake, then, in the light of subsequent events?

SCHLESINGER: I think that one can say that tactically it was not well carried out. It became plain, I think, to President Thieu, that with the reduced level of support, with the logistical weaknesses, and his inability to maintain his mobility forces, that he could no longer support places like Ban Me Thuot, by quick introduction of military power. And that therefore he had to shrink all over the country. Unfortunately, the tactical execution left much to be desired.

TREWHITT: You mentioned the potential viability, or lack thereof, of South Vietnam, in reduced circumstances. Could Vietnam, with a new defense line, somewhere north northwest of Saigon, I assume, be in any way economically viable? Militarily, also, for that matter.

SCHLESINGER: Oh, I think that the viability of the country, in terms of per capita income, would be higher in that reduced area, because the wealth of the country has been in Saigon and the Delta, that much of the highlands in the north of the country has represented an economic drain.

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So from that standpoint, if the military situation
can be stabilized, I think that there is no reason for
despair.

TREWHITT: To go back to an earlier point, Mr.
Secretary -- I gather you believe the North Vietnamese will
drive very hard to continue the offensive. In other words,
they will move on Saigon?

SCHLEWINGER: Yes, indeed.

TREWHITT: In the near future?

SCHLESINGER: That depends. In the past, the North
Vietnamese have been rather slow, and have been very cautious
in bringing up supplies before they mounted an offensive.
Whether they continue to exhibit that kind of caution in the
wake of these widespread withdrawals, remains to be seen.
But I would think that there would be major action directed
toward Saigon in the next month or two.

TREWHITT: You would expect them, then, in effect,
to be testing Saigon's defenses, and to try to comprehend how
well the South Vietnamese army has been able to recover, if
it has?

SCHLESINGER: I think that that is their principal
objective at the present time, to move as rapidly as they can
before there is an opportunity to recover.

TREWHITT: Which brings us, I suppose, to a very
important question for Americans now, Mr. Secretary, and that
is, what can the United States do, what should it do, and what
courses are available to the United States to attempt to re-
trieve as much as it can from what's happening now?

SCHLESINGER: Well, I think that the detailed re-
sponse to that must await the return of General Weyand after
his fact-finding mission for the President.

I think, as a general observation, that the United
States continues to have an obligation to be helpful to the
South Vietnamese whom we have supported for so many years.
What particular forms that help takes, remains to be seen.

TREWHITT: Does the administration's request for,
I believe it's $300 million in emergency aid, have any meaning
in this present context, or are we talking about something
much larger? Do you have to put the issue before Congress
in a different way?

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SCHLESINGER: I think that the precise dimensions of an aid package remain to be seen. Just what the future bears, is, for the moment at least, somewhat cloudy. But it's plain that $300 million is not consistent with long-term survival of South Vietnam. In that respect, the sums required will probably be much larger.

TREWHITT: But in the meantime will you stay with the $300 million?

SCHLESINGER: That is the request of the administration.

TREWHITT: I should have, I suppose, begun earlier to ask what might be done in terms of the rescue mission which seems to be faltering, to say the least, in the north. Is that done with now? Is there any possibility of getting more of those refugees out?

SCHLESINGER: No, Danang has fallen to the Communists, and there is no likelihood of any further evacuation of the people in Danang. The rescue capabilities are available should they be required for the sections lying south of Danang, particularly in M.R. II.

TREWHITT: Mr. Secretary, there was word this morning that the Vietcong has suggested it might be willing to negotiate, I believe the phrase is "all issues related to Vietnam," with the government in Saigon now. Does that seem realistic or is this merely a matter of asking the South Vietnamese to hand over their sword?

SCHLESINGER: I think that it may fall under the latter heading, that these offers which are tantalizing in the face of trouble tend to disappear in times when they seem appropriate. And it has been exceedingly difficult to negotiate with the North or the Vietcong over recent years.

One must remember also that the Paris agreements have been totally violated by the North Vietnamese. I think that is obvious to all parties at the present time. They have treated these documents as a scrap of paper.

TREWHITT: Mr. Secretary, is there any reason to suggest that South Vietnam would be in a better negotiating position if President Thieu stepped down, which I think is one of the conditions of the Vietcong offer, or alleged offer?

- 5 -

SCHLESINGER: Well, I think that that is a very difficult question. I think it goes back to the tantallizing nature of the offer expressed before. There is no reason, and certainly the United States government would not involve itself in such pressures on President Thieu. That is a matter for the Vietnamese to decide, and they have a Constitutional framework.

TREWHITT: Do you know of any move in Saigon other than that mentioned by former Premier Nguyen Cao Ky for the resignation of President Thieu?

SCHLESINGER: I think that there is always discussion of discontent in circumstances of this sort, but there's been no serious move.

TREWHITT: And you see in the present circumstances then, no prospect of President Thieu's resignation?

SCHLESINGER: I think that is unlikely.

TREWHITT: We'll move just a little bit west. Cambodia has fallen out of the news in the last several days, and I wonder what the prospects are now of Phnom Penh's survival.

SCHLESINGER: Well, once again the survival of Phnom Penh depends upon two questions: first, additional funding so that they have ammunition. The ammunition supplies are of course short; in several weeks there will be no further airlift, unless we get additional appropriations from the Congress.

And the fact that Cambodian forces are in a position in which they keep looking over their shoulders and wondering whether there will be an ammunition issue in a few weeks hence, is having a detrimental effect on the morale of the Cambodian forces. And they're beginning to lose some of their aggressiveness.

TREWHITT: Mr. Secretary, are you suggesting that it is the Congress's fault that Indo-China is coming unraveled on us now?

SCHLESINGER: I have always tried to avoid that kind of question. The other day I was asked that, and I said, no, and it was reported the other way. What I try to do is to avoid these recriminations. I think that we've got to deal with the facts, and the facts in particular with regard to South Vietnam is that the drastic cuts in funding and FY '75

- 6 -

budget clearly pushed South Vietnam closer to the edge of the
cliff. And I don't know what to do about that at this stage
of the game; that's water over the dam. But I think that in
historical retrospect we must understand that if we cut
funding request by 60% or more, that the effect of this cannot
be beneficial.

**TREWHITT:** Appropos of the discussion of President Thieu's resignation, which you don't seem to think is in the cards for the moment -- Lon Nol now is preparing to leave Cambodia, and we have heard, of course, a great deal of discussion from critics to the effect that his resignation might lead to negotiations between the Khmer Rouge and the government in Phnom Penh. Do you think that's likely?

**SCHLESINGER:** If Lon Nol does indeed leave, I would be hopeful that that would materialize. Nonetheless on the basis of all the activities of the Khmer Rouge today, it does not strike me as probable.

**TREWHITT:** I'm going to put that to you in strategic terms...as a matter of fact, I think if you were handling strategy for the Khmer Rouge, would you be inclined to negotiate at the present moment?

**SCHLESINGER:** Unless I saw that the Cambodians would be continued to be stocked with ammunition rather than a situation in which all would automatically fall into their hands, I would be dis-inclined to negotiate.

If they can see the continuation of the government for an extended period of time, then indeed they may discover that the cost to them of continuing to attack the government position in the cities are too great and that they would prefer to achieve their results by diplomatic solution.

**TREWHITT:** Mr. Secretary, continuing our westward movement here, let's leap to the Middle East for a moment. Everyone knows that the most recent peace mission of Secretary Kissinger in the Middle East failed.

He was unable to negotiate a second stage disengagement between the Egyptians and the Israelis. The consensus arising from that seem to be that everyone now is doomed or consigned or fated to go to Geneva for the larger peace conference. Now does that seem inevitable to you?

7

- 7 -

7

**SCHLESINGER:** I think it is very close to inevitable. I think that all parties are inclined to go to Geneva, and then I would expect the Geneva Conference to resume some time at the close of the spring or early summer.

**TREWHITT:** Have we made overtures to the Soviet Union about reconvening the Geneva Conference already?

**SCHLESINGER:** I have not had the latest information, but until a day or two ago, we had not.

**TREWHITT:** Well, we're talking about May or June. Then?

**SCHLESINGER:** That would remain to be seen. I think that it would be a later date rather than immediately reconvening the Conference.

**TREWHITT:** Does the situation appear to be stable for the interim?

**SCHLESINGER:** The military situation does appear to be stable. Of course tension has risen as a result of the non-success of the diplomatic ventures of the United States.

**TREWHITT:** President Sadat of Egypt took what seemed to me to be a surprising step, perhaps even conciliatory in extending the mandate of the United Nations forces for three months, and announcing, of course, the plans to reopen the Suez Canal, barring Israeli shipping, of course. What effect will this gesture have on the political and military situation in the meantime, do you think?

**SCHLESINGER:** Well, I think that it will have something of a stabilizing effect. I think that the ending of the mandate would of course rapidly have raised the tensions, so we're quite satisfied to see the extension.

**TREWHITT:** The Secretary of State mentioned the other day, to my knowledge, the first time anyone has so flatly guaranteed the survival of Israel; I suppose it's been implied for a long time. Does that mean, as you understand it, that the United States is prepared to take whatever measures are necessary to guarantee the survival of Israel?

**SCHLESINGER:** I think that we have a re-assessment of American policy toward the Middle East, and that is an issue that would have to be dealt with.

- 8 -

I think that what the Secretary did say was that the survival of Israel remains an objective of American policy, a commitment of American policy. But the precise measures to achieve that objective were not specified.

TREWHITT: Do you believe, as some members of the administration do, that Israel should have been more flexible in these most recent negotiations?

SCHLESINGER: Well, I'm not in a position to say... I think that the failure of these negotiations, of course, are having a detrimental effect on Israel, as it does on the general situation in the Middle East.

But I'm not in a position to, since I did not know the details of the negotiation, to assess any responsibilities.

TREWHITT: Mr. Secretary, let me put a question to you as a strategist. If you were handling strategy for the Israelis, would you withdraw from the Golan Heights and yield military control of the West Bank territory in the Middle East, without a complete transformation of Arab political attitudes toward Israel, more specifically, a guarantee or a recognition on the part of the Arabs that Israel has a right to survive?

SCHLESINGER: That is, of course, a very difficult question, and I suspect if I were in the position that you suggest, that I would be inclined to resist withdrawal. On the other hand, I think that is necessary to recognize that some suitable adjustments must be made and what precisely those adjustments must depend on the judgment of the Israelis as well as the others.

TREWHITT: We would be prepared, I take it from everything you have said and other members of the administration have said, to at least endure another Arab oil boycott in the interest of maintaining stability.

SCHLESINGER: We would not, I think, expect readily to tolerate such a renewed boycott.

TREWHITT: What could we do about it?

SCHLESINGER: That would remain to be seen, but I think that the reaction of the United States might be far more severe this time than last time.

TREWHITT: Are we back to the discussion that we had for such a long period of possible intervention in those circumstances?

- 9 -

SCHLESINGER: That is, of course, a tricky question. I think that the point that was made about that intervention is that it is a remote possibility. On the other hand, I think that we would have to react under the circumstances.

But all of these matters depend upon the outcome of the re-assessment of our whole strategy towards the Middle East, which is now underway.

TREWHITT: Mr. Secretary, let's turn to some more general questions, if we might, about the United States' position now.

Some members of the administration have cited the developments in Southeast Asia, the difficulties in our relations with Turkey and the Greece-Turkey problem in isolation, developments in Portugal, the movement leftward there, the stalemate in the Middle East, at least a failure of American diplomacy there, as having serious strategic consequences to the United States. Is our credibility suffering generally in that context?

SCHLESINGER: I think that there has been a loss of the awe which the United States has held for so many years, and some of these difficulties would not have arisen if the American prestige were at its peak of some decades ago.

I think that there is some loss of credibility, some reduction of credibility generally. But I would stress that the credibility problems are primarily localized, as in Southeast Asia, where the United States is precluded by law from engaging in combat activities.

One cannot generalize from that specific locale all over the world in the same degree. No doubt there is a general effect, though.

TREWHITT: You're not putting all these pieces into a single mosaic then, in the sense of a general decline of American strategic capability?

SCHLESINGER: I think that we must recognize that we're going through one of the most difficult periods in our foreign policy, probably the most difficult period since the post-war period, 1947, 1948, 1949, when Eastern Europe was engulfed by the Soviet Union and Western Europe was quite shakey. This has been the most difficult period in terms of the unsettling of the framework of international politics.

- 10 -

TREWHITT: I suppose one looks in determining the absolutely fundamental interests of the United States to Western Europe and of course to American relations with the other great, great powers. Have you seen any indications yet in the behavior of Western Europe that they have come to doubt the credibility of the United States regarding its defense commitment to them?

SCHLESINGER: I think that they have expressed some concern about the general character of U.S. policy in the recent past. I do not believe that they are seriously concerned about the United States' commitments to NATO.

The fact of the matter is that U.S. forces continue to be deployed in Germany, the United States remains wholly committed to NATO, and I think it is recognized that in the event of any attack against Western Europe, that the United States will use the full weight of its military power as necessary.

TREWHITT: Is the greater danger, however, and wouldn't the Europeans be inclined to see that danger more in perspective of erosion rather than an attack on Western Europe, which no one seems to expect?

SCHLESINGER: I think that there is some concern about erosion of public support rather than the character of our foreign policy, I think the poll indications that the American public is less interested in supporting the other nations if they happen to be attacked, is a source of generalized concern to them.

TREWHITT: Now the Soviet Union reacts, of course, to all these developments, is terribly important...

SCHLESINGER: ...with delight.

TREWHITT: With delight, obviously. Are they inclined, do you think, to attempt to exploit what they might conceive to be American weakness?

SCHLESINGER: Well, I would hesitate to discuss any particular country, but as a generalization, I think that with the difficulties that we have faced in these past months, and with the lack of consensus and cohesion about our foreign policy, that we are tempting somebody to test us.

TREWHITT: How might that test come? You say that Europeans probably are convinced of America's commitment to NATO, I would suggest to you that probably the Soviet Union would be too. Would you agree with that?

= 11 =

SCHLESINGER: Oh, I believe that the Soviet Union is convinced of that commitment, and that it is not in the interest of the Soviets to test it in any event. But there are other parts of the world in which probing could take place.

TREWHITT: Which is what I was leading to....how would that kind of probe be undertaken, would you think?

SCHLESINGER: Well, I would prefer on that kind of question to withhold any suggestions,

TREWHITT: Might it be in the Middle East, do you think?

SCHLESINGER: Of course the Middle East today is somewhat akin to the Balkans before World War I. It is a tender box. And one is concerned, it is an area in which the tendency to play with the tensions and strains for marginal advantages is very great, and therefore the situation is explosive, or potentially explosive.

TREWHITT: Do you think the Soviet Union might be inclined to test the United States in that area?

SCHLESINGER: I think that one must recognize that there was a severe test of the United States in 1973 so that the Soviets by no means feel debarred from that. I think that the Soviet inclination would be to go to Geneva and see what political capital can be made out of that diplomatic setting.

TREWHITT: How would you expect the Soviet Union to behave at Geneva?

SCHLESINGER: I would expect that the Soviet Union will be inclined to support the more radical demands directed against the state of Israel.

TREWHITT: Are we looking forward simply to a propaganda conflict there?

SCHLESINGER: That is the danger in the re-convening of the Geneva Conference, that it could turn into a shouting match. And that is one of the reasons that American diplomacy has been exercised privately and among small groups, that it has permitted a quiet discussion of the problems. When we convene a larger group, the tendency will be for the discussions to be far less productive.

- 12 -

[L.C]

TREWHITT: Which I suppose is the reason for an earlier question, and that is, if there is any possibility of coming back to bilateral negotiations, negotiations through a smaller form simply because of the risk that might grow out of Geneva?

SCHLESINGER: Well, I think that it's premature to raise that question at this time. There is always that possibility, but I think that the next stage will be at Geneva. Whether circumstances then develop in which the parties might call for smaller group negotiations in which the United States plays a special role, remains to be seen.

I think more generally that the United States has made a very honest effort at negotiations in the Middle East to serve as the honest broker, and that these negotiations have not been successful. I think that many of the parties will look back nostalgically at these negotiations later on.

TREWHITT: Because of the propaganda level, the decibel level that will come out of them?

SCHLESINGER: I think that they will see that these negotiations tended to be far more productive than what will come next.

TREWHITT: Mr. Secretary, although you're a bit withdrawn on the subject, some members of the administration seem to feel that Israel should have been more flexible in the most recent round of negotiations.

Are we going to withhold or delay action on Israeli requests for additional military supplies as perhaps a means of using our own discreet political pressure in this area?

SCHLESINGER: I think that during this period of re-assessment that the United States will be reluctant to enter into new commitments in the Middle East until we have a firmer grasp of where the United States wishes to go.

I should emphasize, however, that the United States has during the course of the fall-winter committed itself to a very substantial shipment of military equipment to Israel, that that equipment was to be delivered by April 1st, and it is virtually all there.

TREWHITT: Do you think the Israelis are satisfied with that prospect?

- 13 -

SCHLESINGER: I think that the Israeli's of course have wanted to enter into a much longer term commitment with regard to the security of supply, and such a matter will have to wait.

TREWHITT: Mr. Secretary, as a final question, how serious is the Soviet spread of naval power into the Mediterranean, to the general United States position there?

SCHLESINGER: Well, I think that it is serious in the Mediterranean, but far more serious potentially is the extension of that power into the Indian Ocean, where for the first time one will have military power, Naval power, astride the lifeline of oil supplies to Western Europe, to Japan, and to the United States to a lesser extent.

TREWHITT: Mr. Secretary, I'm sorry to interrupt. We're out of time. Thank you very much for being here this evening.

SCHLESINGER: It was a pleasure to be here.

ANNOUNCER: Washington Straight Talk. From Washington, NPACT has brought you Defense Secretary James R. Schlesinger, with Henry Trewhitt, Washington Correspondent for the Baltimore Sun.

Next week on Washington Straight Talk, F.B.I. Director, Clarence Kelly, will be interviewed by NPACT Correspondent, Jim Lehrer.

Production funding provided by Public Television stations, the Ford Foundation and the Corporation for Public Broadcasting.

GWETA. This has been a production of NPACT, a division of

an item of conflict from the inter-America-
agenda.

—We are dealing with the Panama Canal issue.

—We are talking seriously with other gov-
ernments of the region, both in the OAS and
bilaterally, about the expansion of trade and
accelerated development of technology ap-
propriate to the region's needs.

—And we are leading no crusade. We are not taking over the region's problems for ourselves. Specifically, we do not consider that we can resolve Latin America's present balance-of-payments problems with massive unilateral official resource transfers. But we are proposing to increase our development assistance. And we are, however, demonstrating our concern and our willingness to consider how we can play a part in the search for practical solutions to these and other problems.

But how? Our effort must not be something the United States does to Latin America or something by the United States for the Latin Americans. We and the nations of Latin America can and must cooperate. Our success in the cooperative effort to speed growth and spread the sense of equity and justice in the hemisphere will be measured by the extent to which we can work effectively together.

Congressional Documents
Relating to Foreign Policy

94th Congress, 2d Session

Human Rights in Iran. Hearings before the Subcommit-
tee on International Organizations of the House
Committee on International Relations. August
3-September 8, 1976. 87 pp.

East German Claims Program. Report of the Senate Committee on Foreign Relations to accompany S. 3621. S. Rept. 94-1188. August 30, 1976. 21 pp.

Military Sales to Turkey. Communication from the President of the United States transmitting his determination that the sale of certain defense articles and services to Turkey are necessary to enable her to fulfill her obligations as a member of NATO. H. Doc. 94-590. August 30, 1976. 5 pp.

U.S.-Egypt Joint Working Group
on Technology Meets at Washington

Joint Statement

Press release 566 dated November 22

The fifth meeting of the U.S.-Egypt Joint Working Group on Technology, Research and Development was held in Washington, D.C., November 18-19, 1976. The Joint Working Group was established in June 1974 to encourage a broad program of scientific and technological cooperation for peaceful purposes and mutual benefit, advance the state of science and raise the level of technology in both countries, and strengthen the bonds of friendship between the American and Egyptian people. The last meeting was held in Cairo in February 1976.

Ambassador Frederick Irving, Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs, served as U.S. cochairman; Dr. Hassan M. Ismail, President Emeritus of Cairo University, served as Egyptian cochairman.

The Joint Working Group noted with satisfaction encouraging progress in ongoing cooperative programs in the fields of instrumentation technology, science and technology information systems, science policy and research management, building materials and technology, water management and treatment, and Lake Nasser-Nile River environmental studies.

The Joint Working Group provided for broadening and expanding future scientific and technological cooperation between the two countries by encouraging exchanges and joint research in the fields of science and technology; agriculture; environment, ecology, and energy; and standards and applied technology.

The Joint Working Group considered prom-
ising new activities within this framework,
including multidisciplinary research of the
Red Sea marine environment, baseline en-
vironmental investigations and econometric
modeling of the Suez Canal, studies of en-
dangered wildlife species in Egypt related to

754

Department of State Bulletin

endangered U.S. species, Cairo traffic studies, telecommunications research, and educational programs in applied technology.

The Joint Working Group agreed to hold its sixth regular meeting in Cairo in November 1977. It expressed its appreciation for the strong technical participation in the meeting by officials and scientists of both countries who are planning ahead together to achieve increasing benefits from scientific and technological cooperation.

INTERNATIONAL ORGANIZATIONS
AND CONFERENCES

United States Calls for Support
for UNRWA

Following is a statement on agenda item 53, "United Nations Relief and Works Agency for Palestine Refugees in the Near East" (UNRWA), made in the Special Political Committee of the U.N. General Assembly by U.S. Representative Pearl Bailey on November 2.

USUN press release 138 dated November 2

Twenty-seven years ago the General Assembly created the United Nations Relief and Works Agency and tasked it with one of the most complicated and difficult humanitarian missions undertaken in modern times. Despite the fact that it is a temporary organization, created to fulfill what was expected to be a temporary mission, UNRWA has had to cope with problems and needs which have persisted and indeed grown year by year. Recently we have witnessed a renewal of fighting and bloodshed in the Middle East, this time in Lebanon, in which many innocent Palestinian noncombatants have shared the immense human tragedy and physical disruption suffered by the Lebanese people. As long as the underlying political problem related to the Palestinian refugees

persists, the United Nations must continue to assure that UNRWA remains strong and responsive to their needs.

The United States is proud that it played an important role in the creation of UNRWA. We have over the years expressed our support for its mission and confidence in its operation through contributions which have totaled some $675 million.

Our overriding objective in the Middle East, however, is to help bring about the political conditions which will permit the eventual disappearance of UNRWA within the context of a just and lasting peace in the area and permit all Palestinians to lead meaningful and fruitful lives. We are committed to determined efforts to assure that this goal does not elude us or recede indefinitely into the future. In the meantime, there is no practical alternative, in either political or humanitarian terms, to maintaining the essential services which UNRWA has so effectively delivered to Palestinian refugees over the years.

We would like to pay tribute here to the tireless and dedicated service of UNRWA's distinguished Commissioner General, Sir John Rennie. There are few assignments in the area of international civil service more demanding of managerial skill and patient diplomacy. The uncertainties and frustrations attendant on UNRWA's dependence on voluntary contributions has magnified the already onerous burdens we have placed on him and on his most capable staff. Sir John deserves both our profound gratitude and our pledges of continued and increased support for the organization he serves.

The Commissioner General has stated in graphic terms the precarious financial position which UNRWA faces in the year ahead. Contributions to UNRWA this past year have not kept pace with the rapid rise in the cost of UNRWA's operations. This has been due principally to a combination of global inflation and special conditions in UNRWA's service area, including the hostilities in Lebanon. During the past year UNRWA services have been reduced in a desperate effort to cope with the serious shortfall in con-

December 27, 1976

755

tributions in relation to program expendi-
tures. We believe further reductions cannot
be made without cutting dangerously into
UNRWA's basic services. We would be par-
ticularly loath to see this organization com-
pelled to reduce those educational and health
programs on which rest the hope of future
generations.

Mr. Chairman, I must in all candor observe
that the record of international support for
UNRWA has been quite uneven. Many gov-
ernments have made consistently generous
contributions, while others clearly do not
provide support commensurate to their
means or in some cases do not contribute at
all. I am pleased to observe that there have,
however, recently been some notable and
generous contributions from governments
which have not previously contributed in
substantial amounts. We commend these con-
tributors, appeal to others to follow their
example, and pledge that the United States,
for its part, will not be tempted by the
generosity of others to slacken its traditional
support of this vital humanitarian enter-
prise.¹

In closing, Mr. Chairman, the U.S. delega-
tion introduces draft resolution A/SPC/31/
L.2 in recognition of the critical financial
situation described by Commissioner General
Sir John Rennie. We urge support of this
resolution, but far more important, we urge
all member states of the United Nations to
support the indispensable activities of
UNRWA through increased financial contri-
butions.²

¹ On Oct. 20, in a meeting of the Working Group on the Financing of UNRWA, Miss Bailey announced an additional U.S. pledge of $6 million, making a total U.S. contribution of $38.7 million for 1976. For her statement in the working group, see USUN press release 120 dated Oct. 20. On Nov. 24, in a meeting of the Ad Hoc Committee of the General Assembly for the Announcement of Voluntary Contributions to UNRWA, U.S. Representative Albert W. Sherer, Jr., announced the U.S. pledge of $26.7 million for 1977. For his statement in the ad hoc committee, see USUN press release 163 dated Nov. 24.

² The U.S. draft resolution calling upon all govern-
ments "to make the most generous efforts possible to
meet the anticipated needs" of UNRWA was adopted by
the committee on Nov. 5 by a vote of 96 to 0, with 1
abstention, and by the Assembly on Nov. 23 by a vote
of 115 to 0, with 2 abstentions (A/RES/31/15A).

United States Reaffirms Support
of UNHCR Programs

Following is a statement made in Commit-
tee III (Social, Humanitarian and Cultural)
of the U.N. General Assembly by U.S. Rep-
resentative Jean Picker on November 15.

USUN press release 149 dated November 15

It is a pleasure to comment on the High
Commissioner's program and to review the
accomplishments of his office over the past
year as outlined in the excellent and com-
prehensive report we are now reviewing.¹
We congratulate the High Commissioner on
his most worthy efforts and commend him for
this useful report. We have read it with
great care and with the attention it deserves.

On the other hand we must observe with a
high degree of sadness that the work of the
High Commissioner is not diminishing.
Rather, the scope and complexity of his ac-
tivities have increased. There are, unfortu-
nately, new refugee situations and increased
demands upon this office, and the prospects
for the future offer little solace. As we ap-
proach the end of this busy year for the High
Commissioner and his staff, we must ac-
knowledge that there are still many unre-
solved refugee problems to be faced in the year
ahead. We will want to comment in a moment
on some of them. More than ever there is a
clear need for continued support of the High
Commissioner's program. We join others in
urging that there be full financing of the
High Commissioner's program through in-
creased contributions from the traditional
donors and fuller participation by others.
There is a need to widen significantly the
base of support for the High Commissioner's
activities.

We were indeed fortunate to have had a
visit to Washington by the High Commis-
sioner a few weeks ago. The work of the
High Commissioner was featured on United
Nations Day on October 24. During the
course of the High Commissioner's visit we
had an opportunity to review his program in

¹ U.N. doc. A/31/12, report of the U.N. High Commissioner for Refugees (UNHCR).

756

Department of State Bulletin

some detail and to gain a better understanding of his future needs.

We are encouraged that the High Commissioner continues to devote priority attention to the question of international legal protection for refugees. Critical areas where such protection is so badly needed have come to light in recent months, and we are assured that the High Commissioner is making a special effort in each case. It is equally satisfying to note that the Executive Committee of the U.N. High Commissioner's program has seen the wisdom of establishing, in the formal sense, a subcommittee concerned exclusively with matters involving legal protection. The United States looks forward to participating in the work of the subcommittee when it meets in Geneva next year. We welcome this development as a means of focusing further attention on this important subject.

We are pleased to note also that two additional governments have decided to accede to the Convention on Refugees and that three governments have joined the ranks of those who have agreed to accede to the protocol. This represents further progress, but there are still substantial areas of the world where such accessions are sadly lacking.

Progress has also been made on the draft convention on territorial asylum, and the plenipotentiaries will meet in January. This represents another step forward. The United States has always supported the concept of a realistic convention on territorial asylum, one to which all governments could accede. We will continue to work toward this end in the spirit that has always governed our attitude toward refugee problems.

The attachment of the United States to the principle of asylum and no forced repatriation is well known. Our views on this subject have been enunciated over and over again. It is therefore particularly distressing to learn from the High Commissioner's report that there are still instances where these principles were either violated or ignored. It is unthinkable that acts of terrorism were undertaken against refugees in certain areas. We condemn terrorist activities against anyone in any form. Refugees are particularly vulnerable. At the same time we must agree

with the High Commissioner that refugees who engage in such activities against governments which have granted them sanctuary, by virtue of such acts automatically disqualify themselves for assistance under the High Commissioner's programs.

In considering the question of legal protection for refugees there is one area that deserves our special attention, and we commend the High Commissioner for bringing it into sharp focus. The High Commissioner has made a special appeal that every humanitarian consideration be given to those refugees afloat in small boats in the South China Sea. In many cases their lives are in great peril. Many are in need of rescue at sea. Unfortunately there have been instances where such rescue was not performed. There is also the critical need for places or points of safe haven and first asylum. These, too, have in some cases been denied. And finally, there is a need for governments to come forward and to offer permanent resettlement opportunities. In this connection the United States has informed the High Commissioner that it is willing to accept, for permanent resettlement, up to 100 of these boat cases per month, with the understanding that other governments will accept their fair share. The High Commissioner has agreed to provide the leadership for this international effort, and we are pleased to be able to do our share. We have already received over 145,000 Indochinese refugees in the United States, of whom 1,240 were boat cases accepted in 1976.

Tribute must be paid to the High Commissioner for the effective way in which he has carried out his regular worldwide Material Assistance Program. This program should continue to enjoy a very high priority. We note that this activity has increased over the level of previous years, with the greatest emphasis placed on refugee needs in Africa and Latin America. We share the view of the High Commissioner that these are the areas where the need is now the greatest. That is not to suggest in any way that the High Commissioner has not paid due attention to refugee needs elsewhere. The problems of refugees in Europe, Asia, and the Middle

December 27, 1976

757

East are still with us, and the High Commissioner continues to focus his attention on them with efficiency and in a realistic way. An important aspect of these activities is the concern that the High Commissioner has shown for the problem of family reunification. We very much support this objective of giving the tragedy of separated families in the refugee community priority attention.

The demands on the High Commissioner to exercise his good-offices function have, regrettably, also increased over the past year. Large groups of dislocated persons in Cyprus and refugees in Africa and Indochina have created new challenges. We are most appreciative and commend the High Commissioner for his leadership in these difficult areas. There will be a continued need to support these programs for next year. The High Commissioner has identified the targets. He needs all of our help in meeting them. I can assure you that he has the full support of the United States.

TREATY INFORMATION

U.S. and Romania Sign Agreement
on Economic Cooperation

Press release 568 dated November 24

U.S. Secretary of Commerce Elliot L. Richardson and Romanian Deputy Prime Minister Ion Patan, Cochairmen of the U.S.-Romanian Joint Economic Commission, signed a 10-year agreement on economic, industrial, and technical cooperation on November 21, 1976. The agreement was signed at the third session of the Commission in Bucharest. It reaffirms U.S. and Romanian support for the expansion of their economic relations.

The agreement sets forth general guidelines for long-term arrangements between firms and enterprises of the two countries. It protects investors against expropriation or impairment of their contractual rights by government action and contains measures for improving business facilities and the provision of commercial information. It includes an annex designed to facilitate the establishment of U.S.-Romanian joint ventures and other forms of business cooperation on terms familiar to the U.S. business community.

The long-term cooperation agreement is intended to supplement, and not to replace, the U.S.-Romanian Trade Agreement, concluded with congressional approval in August 1975. Romania acquired most-favored-nation treatment under the trade agreement, which remains subject to periodic review by Congress according to the requirements of the Trade Act.

U.S., Mexico Sign Fishery Agreement;
Set Provisional Maritime Boundaries

Press release 573 dated November 26

The Government of the United States of America and the Government of Mexico on November 26 signed an agreement on fisheries. The agreement was signed by Ambassador Joseph John Jova for the United States and Foreign Secretary Alfonso García Robles for Mexico.

The agreement establishes the principles and procedures under which fishing for certain living resources within 200 miles of Mexico may be conducted by vessels of the United States. Mexico and the United States have both recently passed legislation establishing jurisdiction over fisheries within 200 miles from their respective coasts.

The agreement signed on November 26 is intended to promote cooperation in the effective conservation, optimum utilization, and management by Mexico of coastal fisheries resources within 200 miles of Mexico's coast. At the same time, the agreement provides reasonable terms of access for U.S. fishermen to these resources which U.S. fishermen have habitually fished.

At the same time as the signing of the fisheries agreement between the United

758

Department of State Bulletin

FOR IMMEDIATE RELEASE

January 7, 1977

Office of the White House Press Secretary

THE WHITE HOUSE

TO THE CONGRESS OF THE UNITED STATES:

Three years have now passed since the Arab oil embargo
demonstrated that the Nation had become overly dependent on
other countries for our energy supplies. We have made
progress in dealing with our energy problems but much more
must be done if we are to achieve our objective of assuring
an adequate and secure supply of energy at reasonable
prices.

Action by the Congress is vitally important in the
coming year on a number of matters affecting energy supply
and demand. The outcome of that action will affect the
Nation's security, economic strength and role in world
affairs. Decisions made during this critical period will
affect the health, welfare, quality of life and freedom
of choice of our people for years to come.

A new Congress and change in Administration provide
an appropriate occasion to review our energy situation, to
summarize and share the knowledge that has been gained from
analysis and debate over the past two years, and to outline
the remaining need for action.

I am pleased that we have made a good start towards a
comprehensive national energy policy; that we have taken
major steps forward on programs to conserve energy, increase
domestic energy production, develop strategic petroleum
reserves, and develop new technology; and that our imports
are less today than they would have been had we not begun
taking the steps I outlined in my State of the Union address
two years ago.

But our imports are higher today than they were three
years ago, and we have not yet as a Nation faced up to many
of the hard decisions and choices that are necessary before
we can achieve our energy objectives.

The lack of better progress is regrettable but I believe
the reasons for it are quite clear:

-- First, the real nature of the Nation's energy problem
and the implications of leaving it unresolved are not
fully understood or appreciated by many people.

-- Second, many of those who recognize the problem and the implications of not solving it have looked for easy solutions. This has led often to proposals which:

- promise far more than can be delivered; or

- expand significantly the role of the Federal
  Government.

We are now beginning to recognize more clearly the
dangers of a greatly expanded Federal role in energy. We

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also now realize that other "easy" answers are turning out
to be impractical, ineffective, or oversold.

## FUNDAMENTAL ISSUES AND CHOICES

The decisions which must be made are difficult and the implications of the choices are far reaching. Thus, the Congress and the public should have the best possible understanding of the fundamental issues and choices that are involved in my proposals and in the proposals that will be forthcoming from the new Administration and Congress. There are five matters that deserve special attention:

- The high cost to the Nation of delay in solving our energy problem.

- The illusions and false hopes that are involved in some of the "easy" answers that have been proposed.

- The dangers of expanding the Federal role in energy.

- The need to recognize the interdependence of the U.S. and other consumer nations in energy matters.

- The necessity of facing up to the hard choices that must be made in order to achieve a balance among our Nation's security, energy, economic, consumer price, and environmental objectives.

## HIGH COST OF DELAY IN SOLVING OUR ENERGY PROBLEM

A better understanding of our energy problem and the high cost of delay in solving it should help restore the sense of urgency that was lost when the embargo ended, the gasoline lines disappeared, and an adequate supply of most forms of energy became available -- though at higher prices.

### Our Energy Problem

The principal energy problem now facing the United States is our excessive and growing dependence on imported oil from a relatively few foreign nations that own the majority of world oil reserves and have the ability to control world oil prices and production. We are also faced with a problem of shortages of natural gas in some areas. This problem will become more serious this winter if unusually cold weather continues and will grow each year as production and interstate sales decline -- resulting in job losses and economic dislocation.

Our situation is the result of several factors. For example, our economy and style of life -- neither of which can be altered quickly -- have been built upon cheap and abundant energy. Low prices, resulting from government regulations and policies, and heightened environmental concerns encouraged excessive reliance on oil and natural gas, rather than coal which we have in plentiful supply. This led to wasteful and inefficient uses of oil and gas.

Our domestic production of oil and natural gas peaked in the early 1970's and has been declining steadily as cheap, easily developed reserves have dwindled. In the early 1930's, oil and natural gas from Alaska and the Outer Continental Shelf -- our last frontiers -- will help offset the decline

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in production from on-shore areas. But, overall, domestic oil and gas production will again decline precipitously unless higher prices are available to cover the costs of developing resources which are not now economically feasible to produce.

Meanwhile, our energy demands are increasing to meet the needs of a growing economy. We are not expanding the use of coal and nuclear energy fast enough as substitutes for oil and gas, where this is possible, or to meet growing energy requirements. Instead we have turned to imports, and imports will continue to grow as we face declining production and depletion of oil and gas reserves.

## The Costs of Dependence

The real price paid for our growing dependence on imported oil is our vulnerability to significant economic and social disruption from the interruption of oil imports. Apart from the inconvenience experienced by millions of people, the 1973-74 embargo and the resulting higher prices caused a loss of about 500,000 jobs and approximately $20 billion in our Gross National Product. The sudden four-fold increase in OPEC oil prices contributed significantly to inflation. Since 1974 our dependence on imports, particularly from Arab nations, has grown by a million barrels per day, so that an interruption of supply today would be even more disruptive of our economy than the 1973-74 embargo.

Another cost of energy dependence is the outflow of U.S. dollars to pay for imported oil, totalling about $34 billion in 1976 or $160 for each American, eleven times that in 1972.

Still another cost is the limitation on our freedom of action in international affairs due to our vulnerability to the threat of another interruption.

## Realistic Energy Goals

In my first State of the Union Message two years ago, I outlined a comprehensive energy program for the Nation with goals of:

- Halting our growing dependence on imported oil.

- Attaining energy independence by 1985 by achieving invulnerability to disruptions caused by oil embargoes, by reducing oil imports to between 3 and 5 million barrels per day with an accompanying ability to offset any supply interruption with stored petroleum reserves and emergency standby measures.

- Mobilizing our technological capability and resources to supply a significant share of the free world's energy needs beyond 1985.

These goals do not mean that we should seek to eliminate all energy imports, because generally it will be in the Nation's best interest to continue importing energy when it can be obtained at lower cost -- as long as we have the ability to withstand interruptions of supply from insecure sources.

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The goals **do** mean that we should reduce and then eliminate our vulnerability. In the longer term, we should better use our resources and technological capability to regain our ability to assure the reasonableness of energy prices.

Whether the date I set for achieving energy independence and the level of imports I proposed are realistic has been the subject of considerable debate. I believe the goals could be attained if the Congress approved the critical legislation I proposed, but that is not the major point. The essential point now is that we recognize that our excessive dependence and vulnerability are costly and that it is in the Nation's best interest to solve the problem as soon as possible.

## AVOIDING ILLUSIONS

A number of well-intentioned proposals have been advanced for dealing with our energy problems which, when evaluated, are found to have far less potential or merit than is claimed by their proponents. Four such proposals warrant special attention: advanced energy technologies, energy conservation in lieu of increased production, abandoning nuclear fission energy or coal, and oil company divestiture. All four are likely to receive Congressional consideration this year.

## Contribution of Advanced Technologies

There are repeated claims that fusion, solar or geothermal energy, or some other advanced technology, will soon provide a virtually risk-free answer to our energy needs. Such claims warrant and have been given very careful consideration because new technological developments have helped us solve many problems in the past.

There are three common myths about fusion, solar and geothermal energy:

- That major contributions to our energy supplies can be expected soon from these sources.

- That there are no serious economic, safety, technological or environmental problems to be overcome before these technologies are available for widespread use.

- That the remaining problems can be quickly resolved by greatly increasing Federal funding for R&D.

The facts are that major economic, safety and environmental problems must be solved and major technological breakthroughs are needed before these emerging technologies will be available for widespread commercial use.

Practical and economic applications are already available in the case of energy from geothermal steam. However, geothermal steam resources are geographically limited, and major technical, environmental and economic hurdles must be overcome before other sources of geothermal energy will be available for practical application.

Heating with solar energy is expected to become economically competitive soon in some areas with electrical heating by electricity -- but not by oil and gas. Costs will have to be reduced substantially before solar heating and cooling systems will be competitive for widespread use. Major breakthroughs are needed before fusion and solar energy will

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produce economical electric power. Costs must be reduced
and problems of safety and environmental impact must be
solved.

Advanced technologies cannot contribute significantly
to our energy supply in the near or mid-term. Even with
intensive efforts to achieve necessary breakthroughs, solar,
geothermal and fusion energy are expected to provide no more
than one percent of our total energy supplies by 1985 and no
more than five-seven percent by the year 2000. Until these
advanced technologies are available and are acceptable from
the standpoint of cost, safety and environmental impact, we
must rely on resources and technologies which are available.

Federal funding for the development of advanced tech-
nologies has been increased substantially over the past two
years in my budgets -- to the point where Congressional add-
ons above my requests generally cannot be used productively.
When major breakthroughs are required, the necessary ingredients
are ideas and time. Large funding increases are likely to be
wasteful and often merely contribute to overly optimistic
expectations.

Energy Conservation in Lieu of Production

There are some who believe that our energy needs for a
growing population and expanding economy and workforce can be
satisfied by eliminating wasteful and inefficient uses of
energy. They point out correctly that the ready availability
of cheap energy in the past tended to encourage uses of energy
which now are wasteful.

There is no question but that energy conservation can
and must contribute to the solution of our energy problems.
In many cases it will be cheaper, more efficient, and involve
less environmental impact, to reduce energy waste than it
will be to produce a comparable amount of new energy. We
have begun major efforts in energy conservation, and progress
is being made in reducing growth in energy consumption. How-
ever, it takes time to achieve results from energy conservation
because energy-intensive plants and equipment and consumer
products (such as automobiles and appliances) will only be
replaced gradually as they wear out.

Growth in our energy demands simply cannot be eliminated
without severe economic impact. We must have both energy
conservation and sharply increased energy production if we
are to meet the needs for energy in a growing economy. To
rely solely on energy conservation would soon mean a lower
standard of living for all, and insufficient energy to keep
people employed in productive and meaningful work.

Abandoning Coal Energy or Nuclear Fission

Some believe that we should not continue or expand the
use of coal and others have the same view about nuclear
energy. But a careful look indicates that we do not have
a choice between increasing the use of coal or nuclear
energy. Instead, we must increase the use of both coal and
nuclear energy until more acceptable alternate energy sources
are available. Even with strong efforts to conserve energy,
and increased efforts to produce domestic oil and natural
gas, we must increase the use of both coal and nuclear energy
if we are to meet the demands for energy for a growing economy.
The only alternative is to increase our growing dependence on
imported oil.

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One example will illustrate the point: Nuclear energy now provides about nine percent of our electrical requirements. If this nuclear energy were not available and we substituted imported oil, our imports would increase by about one million barrels of oil per day. If we were to substitute coal for existing nuclear energy, additional annual production of 100 million tons would be required.

## Divestiture

Some suggest that our energy problem would be relieved by divestiture of the major oil companies -- either by barring investments in other energy sources (horizontal divestiture) or by barring integrated operations whereby one company engages in production, refining, and marketing activities (vertical divestiture). They claim that divestiture would increase competition and thereby reduce petroleum prices and lead to a more intensive pursuit of alternative domestic energy resources and alternative energy technologies.

Experience has demonstrated important advantages from vertical integration in commercial and industrial activities in terms of efficiency of operation. Vertical divestiture may merely mean that petroleum products pass through the hands of more middle men -- resulting in higher consumer costs. Horizontal integration has helped make private capital and managerial talent available to develop other alternative energy resources which will be used to supplement our declining oil and natural gas resources.

Proponents of divestiture have yet to present concrete evidence that divestiture would either increase domestic energy production or provide cheaper and more secure energy supplies. Such evidence should be required and weighed carefully along with the evidence against divestiture before the Congress acts.

## DANGERS OF EXPANDING THE FEDERAL ROLE IN ENERGY

Much of the dispute over energy legislation has resulted from differing views as to the appropriate role of the Federal Government.

The primary responsibility for providing the Nation's energy needs has been and should continue to rest with the private sector. The amount and forms of energy that are produced and used depend upon literally millions of decisions reached daily by individuals and organizations throughout the country. Since energy is such a pervasive component of our economy and our daily lives, special care must be taken to assure that Federal actions affecting energy -- including changes in the Federal role -- will help solve the problem rather than make it worse or cause new problems.

The Congress should give particular attention to the growing concern throughout the country about the size and cost of Government, the extent of Government intrusion in individuals' activities, and the burden of regulations which restrict freedom of choice. Unfortunately, the people who develop Government rules and regulations often do not understand adequately the conditions they are regulating nor appreciate fully the impact of their decisions on the millions of people who are affected.

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The question of the proper role of the Federal Government in energy has become important in the case of:

- Controls over decisions that would normally be made in the marketplace.

- Mandatory conservation measures.

- Resource exploration and energy production.

- Energy research, development and demonstration.

## Government Controls or Marketplace Decisions

Many legislative proposals will involve the question of whether there should be greater reliance on decisions made in the marketplace or upon regulations, standards and controls developed by the Federal Government.

Recent experience has again demonstrated that Federal price and allocation controls on energy ultimately work against the best interests of consumers because they reduce incentives to produce new supplies, they reduce competition and they reduce freedom of choice. For example, Federal price controls on natural gas have been a major factor leading to declining production and to wasteful and inefficient use of this resource. Also, controls on crude oil have contributed to a decline in production.

Federal price and allocation controls inevitably mean that the Government must employ people to develop, issue and revise regulations; to sit in judgment on requests for exceptions when the regulations do not fit real world circumstances; and to enforce the regulations. Federal controls mean that millions of decisions by producers, distributors, wholesalers, retailers and consumers must conform with Government-developed regulations -- even when the people directly involved know that another course of action makes more sense and would still be in the national interest.

The principal alternative to Federal regulation and controls is to allow prices and allocation of energy supplies to be determined in the marketplace -- with decisions made by individuals most directly affected. In some cases, avoiding or eliminating price controls can mean somewhat higher consumer prices in the short run. But the higher prices help stimulate new production and cut down on wastefulness. Market decisions are also made faster and more efficiently, and often result in cheaper prices than if the government made the decision. For example, the higher prices that will result from removing price controls from new natural gas would be less costly for consumers than the expense of switching to higher priced alternative fuels.

## Mandatory Conservation Measures

Most of the problems resulting from Federal price controls also result from Federal attempts to dictate specific actions by individuals to conserve energy. The prospect of higher energy prices already is stimulating major efforts by individuals and organizations throughout the country to use existing products and develop new means to reduce wasteful and inefficient uses of energy. Such voluntary action by consumers is far preferable to mandatory measures selected and enforced by a larger and more obtrusive Government.

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## Resource Exploration and Energy Production

The Congress will again be faced with the question of whether the Federal Government should be directly involved in energy resources exploration, development, production and refining activities.

Some argue that such activities can be performed better by the Federal Government, that it is necessary to have a Government "standard" to evaluate private industry performance and prices, or that subsidized Government performance is necessary to hold down consumer prices. Others argue that the Government should itself explore Federal lands to better ascertain the value of lands that it leases for the production of energy resources.

In fact, the Federal Government can seldom perform these functions faster, more efficiently or at lower cost than private industry. There is no convincing evidence that the competitive leasing system now used does not provide a fair return and adequately protect the public interest.

Despite this, proposals undoubtedly will continue to surface which would expand the size and role of the Federal Government to include exploration, production and related activities. Accordingly, the best course of action will be to insist upon hard facts to support the proposal and close scrutiny of each measure to see whether the advantages outweigh the disadvantages.

## Energy Research, Development and Demonstration

Still other questions before the Congress involve the Federal role and funding for developing, demonstrating and promoting the use of new technologies for energy production and conservation.

I believe that Federal funding is necessary and appropriate for the development of new energy technologies which show promise of providing a significant and economical way of producing or conserving energy -- but only when such technologies would not be developed by the private sector. During the past two years, I have requested major increases in funding for energy R&D to carry out this policy.

However, continued vigilance is needed to prevent the use of Federal funds to duplicate or displace funds which industry would otherwise spend, and to insure that the Federal Government does not fund efforts which industry has rejected for lack of merit.

In addition, new energy technologies must find acceptance and application in the private sector -- unlike the situation in military and space exploration programs where the Federal Government is the only customer. This presents a special challenge because those responsible for managing Federal funds for energy R&D often are not in a good position to determine which technologies are likely to meet success in the private sector.

The Federal Government is not well equipped to carry out commercialization, marketing, promotional and technical assistance for particular energy technologies, products and services. Such activities should be left to private industry.

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At present, the Federal activities that would contribute most to the resolution of our energy problem are:

- Adopting changes in laws, policies and programs that will lead to a framework within which individuals and organizations outside the Federal Government can make efficient, effective and equitable decisions about energy. Laws and policies which discourage energy production or energy conservation should be modified.

- Providing carefully targeted support for energy R&D.

- Providing incentives and assistance where necessary -- such as tax relief -- in order to encourage energy conservation and aid low-income people in adjusting to higher energy prices which are necessary to generate new, adequate supplies.

## INTERDEPENDENCE OF THE U.S. AND OTHER CONSUMER NATIONS

The 1973-74 embargo, and the impact of sharply increased prices for OPEC oil, demonstrated clearly that the interests of the United States are tied closely to those of other nations which are net importers of energy. Events in the last three years have demonstrated further that the economies of all nations are interrelated and that no nation can be truly economically independent in the world today. Many of our allies, and particularly the developing countries, do not have major undeveloped energy resources and therefore are even more dependent upon imported energy than is the United States.

Much progress has been made in strengthening energy cooperation among the industrialized nations through the International Energy Agency. Together we have coordinated efforts to reduce our collective vulnerability by establishing a long-term program for conservation and development of new energy sources, and an energy-sharing program to safeguard against supply interruptions. It is in the best interests of the United States to continue to work with and assist other energy-consuming countries in meeting their energy needs -- by reinforcing their conservation efforts, accelerating development of conventional and new energy sources, and encouraging the application of practical new energy technologies.

Such efforts will help to achieve our objective over the long term of a better equilibrium between energy supply and demand in the world, so that no one group of nations will be able to impose its will on others. Unless we are willing to cooperate with others, and provide adequate assistance in this area, continued dependence by many nations on a few countries for energy supplies will remain a major source of world political instability, uncertainty, and economic hardship.

At the same time, of course, we must continue our efforts to strengthen relations between oil-importing and exporting nations, recognizing that cooperation is important to the future well-being of both.

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ACHIEVING BALANCE AMONG CONFLICTING OBJECTIVES

In recent years, we have been faced more and more with
the dilemma that actions taken to achieve one important
objective conflict with efforts to achieve other objectives.
For example, we learned that tough standards and deadlines
applied in the early 1970's to reduce pollution from auto-
mobiles and improve air quality resulted in lower gasoline
mileage and higher gasoline consumption, poorer vehicle
performance and higher consumer costs.

Conflicting objectives are becoming more and more
apparent as we recognize that the easy solutions are illusions
and that there are major dangers in expanding the Federal
role. The Nation must, therefore, face up to the task of
achieving a balance among conflicting objectives involving
energy.

Low Consumer Prices vs. Adequate and Secure Energy Supplies

The reality that must be faced which appears to cause
the most difficulty for elected officials is the inevitability
of higher energy prices. Energy prices, particularly for
consumers, will increase in the future principally because
prices in the past have been held artificially low through
Government controls, because cheaper domestic energy resources
are being depleted, because past energy prices have not re-
flected the costs of environmental protection, and because
foreign nations are charging more for the energy that they
export. There simply are no cheap energy alternatives.
Higher prices will continue to be a major factor in obtaining
adequate and secure energy supplies.

This difficulty is compounded for elected officials
because it takes a long time in energy matters for our actions
to show results -- a condition that is not readily accepted
in a Nation that prefers quick results. The prospect of
higher prices will provide the incentive for increased energy
production but it then takes up to five years, for example,
to bring a new off-shore oil well into production and up to
ten years to bring a new nuclear electric generating plant
on line.

Environment vs. Energy

An equally difficult problem is that of finding the best
possible balance between our energy and environmental objec-
tives. Our environmental objectives are also important in
protecting health and welfare, improving our quality of life,
and preserving natural resources for future generations. On
the other hand, an adequate energy supply is essential to our
objectives for a strong economy, national defense and role in
world affairs, and in achieving a better life for all.

The conflict between energy and environmental objectives will require attention when the Congress considers amendments to the Clean Air Act, changes in laws governing the development of Federally-owned energy resources, improvements in the processes for siting and approving energy facilities, and controls on domestic energy production activities such as the surface mining of coal.

More specifically, air quality requirements forced shifts
away from the use of domestic coal to the use of oil and
natural gas which are now in short supply. Some air quality

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requirements -- particularly emission standards set by states -- are far tighter than necessary to meet standards which have been set to protect human health.

Efforts are now underway to reverse this trend but it is clear that increased production and utilization of domestic coal in the short term requires either billion dollar investments in controversial control equipment or some relaxation of existing air quality requirements. Most such requirements were set before we were aware of our energy problems, and often without sufficient regard to energy or consumer price impact. They often prevent substitution of coal resources for oil and gas and prevent construction of new coal producing and burning facilities.

As another example, concerns about environmental protection and reclamation requirements for surface mining activities led to legislation -- twice vetoed -- which would have imposed unnecessarily rigid requirements, cut domestic coal production and employment and led to even greater reliance on imported oil. Under these bills, Federal regulations and enforcement activities -- which would contribute to a larger more cumbersome Federal Government -- would have supplanted State laws and enforcement activities which are now in place and which require reclamation as a condition of mining.

## Limiting Growth

The concept of limiting growth and development is an important ingredient in some efforts to halt increased domestic energy production or to develop and use newer energy technologies. Limits on growth and development may be necessary in particular areas, but I oppose strongly the concept of limiting growth as an objective in itself. For the Nation, I continue to believe that our best hope for increasing the standard of living and quality of life for all our people is to expand and strengthen our economy and, in this way, create meaningful and productive jobs for all who are willing and able to work. The energy policies and goals that I have advocated do not require limiting our economic growth below historic rates.

## Eliminating Risk

In some cases, attempts to increase domestic energy production -- particularly from nuclear energy and coal and oil and gas resources from Outer Continental Shelf -- are met with demands that virtually all safety and environmental risks be eliminated.

There should be no disagreement that major efforts are necessary to protect human health and the environment. For example, strong efforts have already been made in the case of nuclear energy and an excellent record of safety and minimum environmental impact has been achieved. However, it must be recognized that there is no practical way of completely eliminating all risks. Further, each additional precaution adds cost in terms of reduced supplies or higher prices. Risk levels that have already been achieved in many energy producing activities are often far lower than those readily accepted in other human activities.

Because different Committees of Congress have responsibility for competing objectives, it is especially difficult to achieve a satisfactory balance among our national objectives in new legislation. This will be a continuing problem in the new Congress and I can only urge that each measure affecting

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energy supply and demand, which also involves other objectives, be evaluated carefully to assure that the resulting costs, risks and benefits are truly in the national interest.

## THE NEED FOR SUBSTANTIVE LEGISLATION AFFECTING ENERGY

We have made significant progress over the past two years toward establishing the framework of law and policies that are needed to permit decisions and actions that will help solve our energy problem.

Nine of the proposals that I submitted have been enacted into law. However, there remains a long list of requirements for early Congressional action.

### Highest Priority

Because of the large number of legislative proposals that need action, I want to make clear that I believe highest priority should be given to measures which:

- Remove Federal price regulation from new natural gas supplies. This action is crucial to increasing domestic production and reducing wasteful and inefficient uses.

- Revise domestic crude oil price controls to allow greater flexibility in establishing a pricing formula that will encourage increased domestic production and assist in phasing out controls. This action is needed to overcome problems in the current law and to reduce market distortions that have resulted.

- Make clear our determination to expand capacity in the United States, principally through the efforts of private industry, to enrich uranium needed to provide fuel for nuclear power plants. This action is necessary to permit increased use of nuclear power in the U.S. and to assure other nations that we will be a reliable supplier of uranium enrichment services -- a step that is critical to our nuclear non-proliferation objectives.

- Amend the Clean Air Act to:

- Change the statutory requirements for meeting auto emission standards so that there can be a better balance among our environmental quality, energy, economic and consumer price objectives.

- Provide flexibility in meeting national air quality standards applicable to power plants and major industrial facilities so that the use of coal can be continued and expanded, and so that new energy-producing facilities can be constructed in selected areas that have not yet attained national air quality standards.

- Remove the requirement imposed by the courts for preventing significant deterioration of air quality in areas already meeting air quality standards -- until information is available on the impact of such actions and informed decisions can be made.

### Other Important Proposals

In addition to the above select list, favorable action is needed from the Congress on legislation in all the following areas:

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-- **Natural Gas**

- Temporary emergency legislation to allow pipelines and high priority users to obtain intrastate gas at unregulated prices for limited periods -- to help cope with shortages and curtailments.

-- **Oil**

- Authorization for the President to impose fees and taxes as standby emergency measures to reduce energy consumption in the event of another embargo -- to avoid the inefficiencies and burdens of mandatory conservation measures in such emergencies.

- An Oil Spill Liability Act -- to establish a comprehensive system of liability and compensation for oil spill damage and removal costs.

- Authorization for private competitive exploration and development of the National Petroleum Reserve in Alaska.

-- **Coal**

- Extension of the authority to require utilities and other major fuel-burning installations to convert from oil and gas to coal.

- Changes in provisions of the Coal Leasing Amendments Act of 1976 which unnecessarily delay or restrict leasing and development of coal on Federal lands.

- Authority for the use of eminent domain in the construction of coal slurry pipelines and authority for the Secretary of the Interior to issue certificates of public convenience and necessary to expedite slurry pipeline construction.

-- **Nuclear Energy**

- Authority for the Energy Research and Development Administration to enter into cooperative agreements with firms wishing to finance, build, own and operate uranium enrichment plants -- to assure the availability of required capacity and avoid the need for billions of dollars in Federal outlays when the private sector can provide the financing.

- Authority to increase the price for uranium enrichment services performed in Government-owned plants -- to assure a fair return to the taxpayers for their investment, to price services more nearly comparable to their private sector value, and to end the unjustified subsidy by taxpayers to both foreign and domestic customers.

- Criteria for the control of nuclear exports which is necessary to round out the comprehensive non-proliferation, export control, reprocessing evaluation and waste management program I outlined in my October 28, 1976, statement on nuclear policy.

- Reform the nuclear facilities licensing process by providing for early site review and approval and encouraging standardization of nuclear facility design.

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-- **Building Energy Facilities**

- Establishment of an Energy Independence Authority (EIA), a new government corporation, to assist private sector financing of new energy facilities.

- Legislation to encourage states to develop comprehensive and coordinated processes to expedite review and approval of energy facilities siting applications, and to assure the availability of sites.

-- **Energy Conservation**

- Tax credit for homeowners to provide up to $150 for purchasing and installing insulation in existing residences.

- Reform of rate setting practices applicable to public utilities -- to expedite consideration of proposed rate changes and assure that rates reflect full costs of generating and transmitting power.

## 1978 BUDGET REQUESTS

My 1978 Budget which will soon be forwarded to the Congress will include major new funding to:

-- Continue and expand our extensive program of energy research and development in cooperation with private industry which is directed toward new technologies for conserving energy and for producing energy from fossil, nuclear, solar and geothermal sources.

-- Implement the Early Storage Program as part of the Strategic Petroleum reserves which will provide up to 500 million barrels of oil for use in emergency situations such as an embargo.

-- Implement my comprehensive nuclear policy statement issued on October 28, 1976.

-- Continue ERDA's development program on the liquid metal fast breeder reactor -- to resolve any remaining environmental, safety and safeguards questions -- so that this technology will be available to bridge the gap until advanced technologies can make their contribution to our energy needs.

-- Provide increased operating funds for other Federal energy activities.

I urge the Congress to approve these funding requests.

## REORGANIZATION OF FEDERAL ENERGY ACTIVITIES

Under the provisions of the Energy Conservation and Production Act of August 1976, I am called upon to make recommendations to the Congress with respect to the re-organization of Federal energy and natural resource activities. At my direction, a major study of alternatives had already been undertaken in May 1976 under the leadership of the Energy Resources Council and the Office of Management and Budget.

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I have reviewed the findings and recommendations from
the study. Within the next few days, I will forward my
recommendations to the Congress.

TIME TO ACT

The Nation has waited far too long for completion of a
sound and effective national energy policy. In many cases,
the issues are complex and controversial, the decisions are
tough to make -- particularly because the right decisions
will be unpopular in the short run. The costs of continued
energy dependence are far too great for further delay.

The Congress can act. It is a matter of organizing
itself to make the tough decisions and choices and moving
ahead with the task. I urge the Congress to weigh the
alternatives carefully and proceed promptly.

GERALD R. FORD

THE WHITE HOUSE,

January 7, 1977.

###

Q John, have you received a request for the extradition of Mr. Gelbard, who was the Argentine Economic Minister?

A Francois, extradition matters are investigative procedures, and normally we cannot or we do not discuss their status, so I am not in a position to be able to tell you anything about it.

Q Is that it?

Q I do have one thing before you go, just in reference to something that came up yesterday on the story yesterday about A-4 aircraft and India. We have noted that there is confusion in some reporting about this, so I would just like to repeat our position on it.

We do not have under consideration the sale of A-4 aircraft to India -- do not have it under consideration.

Sometime ago, the McDonnell Douglas company expressed an interest in providing unclassified data on that plane to India and to Pakistan to enable it to make a presentation, and we approved that request on the understanding that it did not imply in any way a U. S. Government decision to approve any sales of the aircraft.

4

In that connection, the U. S. Government
has not received a request either from India or from
Pakistan about the A-4 and no review is under way with
regard to a possible sale.

That is all I have.

Q John, but do you admit that talks
are going on between McDonnell and India -- conversations
are going on?

A I think you ought to ask McDonnell that.
I said we gave them permission to assemble some data to
make a presentation; but for anything beyond that, Francois,
you would have to go to McDonnell Douglas.

Q Do they need permission to present
unclassified data?

A I said that we approved a request. They
expressed an interest in providing some unclassified data,
and we approved the request.

Q Yes, but if it's unclassified, why did
they need permission? Technically speaking, did they have
to even tell you about it in the first place?

A I do not really know, Henry. I think I am
just going to stay with what I have.

Q Well, it's an important point though.

[LC]

5

Does an armaments manufacturer have to get any clearance
from the Government if it wants to present
unclassified data to some foreign government? What
difference does that make --

A Well, I don't know whether --

Q -- just reading *Aviation Week* magazine,
finding out what the airplane's got.

A I don't know whether it's permission
we are talking about. We gave them our approval of the
idea. I think they got in touch with us to let us know
this is what they wanted to do.

Q Were they just getting in touch with you as
a matter of courtesy then?

A Henry, I would have to look into that
to clarify that for you.

Q Could you look into it -- whether there's
any sort of limitation on a manufacturer presenting
unclassified armaments data to a foreign government?
We have these reports of Northrop turning up in Tehran
without the U. S. Government or the Embassy there even
knowing they were there until suddenly they've convinced
the Shah he should build some new warplanes. So why does

B 1

Q Yes, what is the State Department position regarding any U.S. companies that might participate in the Arab boycott?

A I think the President issued some directives sometime ago, Peter, on that. I would have to go back and get them for you. I would rather not try to cite them from memory here. But the general effect was that American companies should not participate in a boycott imposed by the Arabs, and that certain information would have to be reported--I think it was to the Commerce Department -- and that this information could be made public.

You might want to check the Department of Commerce on that, rather than here, but I would be happy to look into it for you --

Q Yes, I would like --

A -- and refresh your memory -- and mine.

Q That's -- I am asking to have my memory refreshed.

A I think that is the general thrust of the President's directives. I think they were almost a year ago.

Q Well that is my problem. I am wondering whether that directive was issued prior to the law passed

B 2

by Congress -- the anti-boycott legislation.

A I believe it was.

Q Well then I am interested in asking also --
if you can take this question, if you can't answer it now:

Does the State Department believe the Anti-
Boycott Legislation and the anti-boycott law, should be
obeyed?

A I think the Department of State believes
that any law enacted by the Congress should be adhered
to, of course.

Q Excuse me, in that context, California
within the last two months has passed a law exacting
penalties on businesses which involve themselves in the
Arab boycott -- I believe that is the first such law.

Has the State Department taken a position on
such state legislation?

A On penalties?

Q Yes.

A Federal penalties, you mean?

Q State penalties.

A Oh, no, I am not aware that we have
taken a position on state-imposed penalties.

B 3

Q Are you aware of whether or not other states have enacted such legislation?

A I think -- and I am just doing this from memory -- I believe that there have been a couple of other states that have considered this. Whether they have actually gone to the point of enacting something, I do not know.

But you could easily find that out from the Department of Commerce.

Q Thank you.

A -- And Peter, I should have added to your question --

Q Yes.

A -- about whether we believe the law should be obeyed.

Q O.K.

A My answer stands, but I should add that I believe we did have some views on the legislation that was passed -- which, again, I would be happy to dig out for you if you would like to see that.

Q Yes, I would like that.

A But I didn't want to leave that as an unqualified answer -- that is why I am going back to it.

B 4

Q John, does the State Department have a view on what type of military force would be permissible or desirable in Southern Lebanon -- whether it be a Syrian regular force, or part of Pan Arab force, or Palestinian force, or a Lebanese army force?

A Ken, I think we have to stand on what was said on that. Let me just repeat the following points -- I don't know whether you want me to repeat them, but I will:

We are in contact with the governments concerned.

We are not going to get into the substance of those contacts, on what we believe.

And I just do not have anything to add to what we have said before and I do comment on the various proposals being publicly noted.

Q Do you have any information on the reported clashes this morning between Leftist -- [Inaudible.]

A Can't hear you, I am sorry.

Q Do you have any information on the reported clashes in Southern Lebanon between Leftists and Rightist forces?

A I do not.

FOR IMMEDIATE RELEASE

DECEMBER 17, 1976

THE WHITE HOUSE
STATEMENT BY THE PRESIDENT

We deeply regret OPEC's decision to raise, once again, the price of oil. We very much appreciate the efforts of those OPEC members, particularly Saudi Arabia and the United Arab Emirates, whose sense of international responsibility and concern for the adverse impact of an oil price increase on the world economy led them to advocate restraint and to refuse to go along with the increase proposed by the others. Unfortunately, however, the majority of OPEC members, citing artificial economic justifications and ignoring the destructive consequences of their actions, chose to take a course which can only be termed irresponsible.

The United States has joined with many other nations in an international effort to improve the quality and degree of global cooperation. The prosperous world which we and other nations seek, in the interest of developed and developing nations alike, depends on a sense of shared responsibility. This requires that nations avoid actions which harm one another. It requires that every country understand that, in an interdependent world, shortsighted actions, however seemingly attractive in the near-term, can have long-term consequences detrimental to its prosperity and to that of all other countries. It requires a common commitment to the well-being of all peoples, and special sensitivity to the plight of the world's poorest societies. The decision of the OPEC majority clearly does not meet such standards of international responsibility.

For our part this latest price increase can only serve as a sharp reminder for all Americans of the need to take urgent action to strengthen our conservation efforts and develop new sources of energy in order to reduce our dependence. And it must serve as a reminder to all oil-consuming nations of the need to work closely together to reduce our reliance on imported oil and our vulnerability to arbitrary OPEC decisions.

###

2

MR. FUNSETH: Welcome, Larry.

MR. COLLINS: Thank you.

Q Are questions in order, Bob, or do you have announcements?

In view of the French Foreign Ministry's rejection as an inadmissible appreciation of acts of French justice, I am wondering, do you believe that John Trattner's statement of dismay was really strong enough? And in this connection, I would ask you, Bob, does the sight of a ten-year old parading with a sign, "Daoud killed my father" merely dismay you and the Secretary, rather than evoking disgust or contempt or even outrage, at what is rightly believed to be the French contribution to piracy and mass murder?

A Taking the last question first, the fact of the matter is I think the Secretary, when asked in New York the other day, did say that it was an outrage. And John here, as Acting Spokesman, had expressed our dismay. And when our Chargé was at the Quai d'Orsay yesterday, he reiterated the U.S. Government's dismay at the release of Daoud.

Q Could I follow that up, Bob? As an experienced Foreign Service Officer, what do you feel

will be the effect of the President-elect telling the
American people he is deeply disturbed -- quote, quote --
by the release of Daoud, and then immediately saying
that he will not discuss this with Giscard on the phone?

A As an experienced Foreign Service Officer,
I would not presume to speculate on the effect of the state-
ments by the President-elect of the United States. (Laughter)

Q Do you have any direct comment on the
French Government's protest to the American Government's
protest? Where does this leave you?

A As I said, when the Director for American
Affairs at the French Foreign Ministry informed our
Charge that the French Government felt that our statement
was an inadmissible commentary on the procedure of French
justice, Mr. Gammon reiterated the U. S. Government's dismay
at Mr. Daoud's release.

Q Is that where the thing ends, do you
think, or is there any more formalistic response that
the State Department will make?

A We are not saying anything more, no.
Our position is clear.

Q On the same area, does

4

the State Department have any view on the French decision
to sell Egypt 200 Mirage jet fighters?

A I do not think we will have any comment.
However, I think we will be studying the implications of
such an arms sale.

Q Have U.S. authorities now discussed with
Israel the re-exporting of certain American military
equipment from Israel, to wit, jet engines to Honduras?

A As I have indicated a few days ago, when
this subject first came up, we have been discussing
reports of such transfers with the Israeli Government,
and we are awaiting their reply. And until we have had it,
I am not able to comment on any specific reports.

Q Bob, on the question of the Mirages,
would the sale of 200 such planes affect the balance
in the Middle East, the arms balance, in the American
view?

A I think that is one of the implications
we would be studying.

Q On the other point, the discussions with
Israel, how many countries, or how many areas do those
discussions cover?

5

A I am not able to answer that question.

Q It is more than one arms transfer you are talking about

A We have indicated previously that there were reports, more than one.

Q Why can't you say how many countries are involved?

A We have had some reports and we have looked into them. And we have had some discussions with Israel on it, and we just feel it would not be appropriate for us to go into any details or any further specifics until we have a reply from the Israelis.

Q Just so we are clear on this, if you want to put it on background or whatever, what is the sequence? Supposing you do find that American law has been violated. Hypothetically, what happens then? Is it automatic or is it a matter of discretion and judgment by the American Administration, or what?

A On the record or on background, I wouldn't want to speculate.

Q I am not asking you to speculate, I am asking you what the sequence in law is.

[Lc]

6

A I think that is hypothetical, and I really would not want to speculate. We are getting into a hypothetical situation.

Q It is not hypothetical.

Q There must be something written into the law which says what happens if it is violated. We have had trouble with the Turks and others. We have cut them off because of what the law says. What does the law say in this case?

A Again, first you are assuming that something has been violated, and I think it would really not be appropriate for me to speculate until --

Q Can you get us a reading on what the law says about a violation in this kind of a situation, please?

A I will check into it.

Q Bob, I wonder if you could refresh my memory. Several years ago, as I understand it, the Israelis purchased a number of Mirage or Mystery jets, something like 50 of them, from France, and France, after they had been paid, refused to deliver them. Am I correct, or do you remember?

A I would have to check on that. What is the question?

[c]

7

Q Well, I was just going to wonder if the
Israelis were somehow able to take 50 of these 200, as
they did the fishing boats, Norwegian fishing boats,
would we, as the State Department, regard this as a
violation of international law or a collection of debt?

A You mean if there was a military transaction
between Israel and France?

Q There was.

A You mean, if there was another one. Is
that your question?

Q No, no. I mean, if the Israelis -- as
I understand it, correct me if I am wrong -- the Israelis
paid for 50 of these jets, and the de Gaulle Government
refused to deliver them, and even sent them a bill for
storage.

Now, if the Israelis were somehow able to take
50 of these jets destined for Egypt as delivery on the
payment that they have already made, would we look on
this as a violation of international law?

A I really still don't understand the purport
of your question.

Q They bought and paid for 50 jets. The

8

[lc]

French cheated and did not deliver the jets. There are
200 destined for Egypt. If the Israelis, saying we
have been withheld 50 of our jets that we paid for, have
been withheld, and they take, somehow -- are able to take
the 50 jets somehow, like they took the fishing boats --
would we look on this as a violation of international
law or would we look on this as justifiable collection
of what was due?

A I think you had better speak to the
Israelis about that hypothetical option that you are
suggesting.

Q Okay.

Q What is the status of the request for the
sale of American C-130's to Egypt, and does this prospective
Mirage deal have any bearing on it?

A I would have to check on that question.
I do not know the answer.

Q Also is it accurate that the CBU 72's,
the big gas bomber, whatever, the aerosol bomb, and the
forward-looking infrared, will not be subject to letters
of approval by the operative committees of Congress?

A First, the details on such a transfer of

9

military equipment are still being worked out. They
have not been completed. And we do not really expect
that negotiations on the letters of offer with Israel
concerning these transfers will be completed during
this Administration.

Therefore, the question of informing the appro-
priate committees of Congress, if required by the nature
of the transfer when it is ultimately decided, just does
not arise at this time. So it is premature.

Q Well, let me go at it a different way.

There is a report that the two contracts are
going to be split up into separate components, each of
which will be less than the statutory $25 million, and
therefore will not be subject to Congressional approval
or disapproval. Is that indeed the case?

A I am aware of that news report.

But it is my understanding -- what I have been advised --
and my response to that particular report -- is that
the details of these transfers have not been worked out,
and are unlikely to be worked out before the 20th of
January.

Q That really doesn't deal with the substance,

10

which is, namely, have they been worked out to the extent
that they are complete --

A They are not complete.

Q -- well, to the extent that they have pro-
gressed, let's say. Are they progressing on the premise
that they will be at a level which will make it unnecessary
to present the proposal to Congress?

A All I can tell you, Murrey, is, I have
been told that (a) the details have not been worked out,
and (b), we do not expect the negotiations on the detailed
letters of offer to be completed under the term of this
Administration.

So, obviously, action on Congressional advice,
or even requirements in the first instance -- and even if it
is not required -- whether it would be informal consultation
is a question which the new Administration will have to
address.

Q Is the possibility of splitting the sales
into two contracts one of the details being discussed?

A I do not have any feeling that the way
it is worked out is designed to arrange it in such a way
that Congress does not have to be informed, whether formally

11

or informally. The details of the letters of offer
will be based on the requirements of the transaction.

Q Bob, could you give us some of the back-
ground behind the dinner tonight involving Mr. Habib and
the French Ambassador?

A No, I cannot, but I will check into it.

Q Do you have any information --

A I did not know he was having
dinner with him. And if he is, I assume it is a social oc-
casion, but I will check with Mr. Habib.

Yes, sir.

Q Do you have any information on a report
by the Czech News Agency about the defection of a U.S.
citizen in Czechoslovakia?

A On BACKGROUND, we have seen those reports,
but we have no confirmation. But let me get back to
you after the briefing. I will check on it right
after the briefing. END BACKGROUND

Q Thank you, Bob.

A Thank you.

[The briefing was terminated at 1:00 p.m.]

FOR IMMEDIATE RELEASE

JANUARY 12, 1977

THE WHITE HOUSE

STATE OF THE UNION ADDRESS
OF
PRESIDENT GERALD R. FORD
TO A JOINT SESSION OF THE CONGRESS

THE HOUSE CHAMBER

9:10 P.M. EST

Mr. Speaker, Mr. Vice President, Members of the 95th Congress and distinguished guests:

In accordance with the Constitution, I come before you once again to report on the State of the Union.

This report will be my last -- maybe.

But for the Union, it is only the first of such reports in our Third Century of Independence, the close of which none of us will ever see. We can be confident, however, that 100 years from now a freely elected President will come before a freely elected Congress chosen to renew our great Republic's pledge to Government of the people, by the people, for the people.

For my part, I pray the Third Century we are beginning will bring to all Americans, our children and their children's children, a greater measure of individual equality, opportunity and justice, a greater abundance of spiritual and material blessings, and a higher quality of life, liberty and the pursuit of happiness.

The State of the Union is a measurement of the many elements of which it is composed -- a political union of diverse states, an economic union of varying interests, an intellectual union of common convictions and a moral union of immutable ideals.

Taken in sum, I can report that the State of the Union is good. There is room for improvement as always, but today we have a more perfect union than when my stewardship began.

As a people, we discovered that our Bicentennial was much more than a celebration of the past; it became a joyous reaffirmation of all that it means to be Americans, a confirmation before all the world of the vitality and durability of our free institutions.

I am proud to have been privileged to preside over the affairs of our Federal Government during these eventful years when we proved, as I said in my first words upon assuming office, that "our Constitution works; our Great Republic is a Government of laws and not of men; here, the people rule."

The people have spoken; they have chosen a new President and a new Congress to work their will; I congratulate you -- particularly the new members -- as sincerely as I did

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President-elect Carter. In a few days, it will be his duty to outline for you his priorities and legislative recommendations. Tonight, I will not infringe on that responsibility, but rather wish him the very best in all that is good for our country.

During the period of my own service in this Capitol and in the White House I can recall many orderly transitions of governmental responsibility -- of problems as well as of position, of burdens as well as of power. The genius of the American system is that we do this so naturally and so normally; there are no soldiers marching in the streets except in the Inaugural Parade; no public demonstrations except for some of the dancers at the Inaugural Ball; the opposition party doesn't go underground but goes on functioning vigorously in the Congress and the country; and our vigilant press goes right on probing and publishing our faults and follies, confirming the wisdom of the framers of the first amendment.

Because the transfer of authority in our form of government affects the state of the union, and of the world, I am happy to report to you that the current transition is proceeding very well. I was determined that it should; I wanted the new President to get off on an easier start than I had.

When I became President on August 9, 1974, our Nation was deeply divided and tormented. In rapid succession, the Vice President and the President had resigned in disgrace. We were still struggling with the after-effects of a long, unpopular and bloody war in Southeast Asia. The economy was unstable and racing toward the worst recession in 40 years. People were losing jobs. The cost of living was soaring. The Congress and the Chief Executive were at loggerheads. The integrity of our Constitutional process and other institutions was being questioned.

For more than 15 years, domestic spending had soared as Federal programs multiplied and the expense escalated annually. During the same period, our national security needs were steadily shortchanged.

In the grave situation which prevailed in August, 1974, our will to maintain our international leadership was in doubt.

I asked for your prayers, and went to work.

In January 1975, I reported to the Congress that the state of the union was not good. I proposed urgent action to improve the economy and to achieve energy independence in ten years. I reassured America's allies and sought to reduce the danger of confrontation with potential adversaries. I pledged a new direction for America.

Nineteen seventy-five was a year of difficult decisions, but Americans responded with realism, common sense and self-discipline.

By January 1976, we were headed in a new direction, which I hold to be the right direction for a free society. It was guided by the belief that successful problem-solving requires more than Federal action alone; that it involves a full partnership among all branches and levels of government, and public

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policies which nurture and promote the creative energies of private enterprises, institutions and individual citizens.

A year ago, I reported that the state of the union was better -- in many ways a lot better -- but still not good enough.

Common sense told me to stick to the steady course we were on, to continue to restrain the inflationary growth of government, to reduce taxes as well as spending, to return local decisions to local officials, to provide for long-range sufficiency in energy and national security needs. I resisted the immense pressures of an election year to open the floodgates of Federal money and the temptation to promise more than I could deliver. I told it as it was to the American people and demonstrated to the world that, in our spirited political competition, as in this chamber, Americans can disagree without being disagreeable.

Now, after 30 months as your President I can say that while we still have a way to go, I am proud of the long way we have come together.

I am proud of the part I have had in rebuilding confidence in the Presidency, confidence in our free system and confidence in our future. Once again, Americans believe in themselves, in their leaders, and in the promise that tomorrow holds for their children.

I am proud that today America is at peace. None of our sons are fighting and dying in battle anywhere in the world. And the chance for peace among all nations is improved by our determination to honor our vital commitments in defense of peace and freedom.

I am proud that the United States has strong defenses, strong alliances and a sound and courageous foreign policy.

-- Our alliances with major partners, the great industrial democracies of Western Europe, Japan, and Canada, have never been more solid. Consultations on mutual security, defense and East-West relations have grown closer. Collaboration has branched out into new fields, such as energy, economic policy and relations with the Third World.

We have used many avenues for cooperation, including summit meetings held among major allied countries. The friendship of the democracies is deeper, warmer and more effective than at any time in 30 years.

-- We are maintaining stability in the strategic nuclear balance, and pushing back the spectre of nuclear war. A decisive step forward was taken in the Vladivostok Accord which I negotiated with General Secretary Brezhnev -- joint recognition that an equal ceiling should be placed on the number of strategic weapons on each side.

With resolve and wisdom on the part of both nations, a good agreement is well within reach this year.

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-- The framework for peace in the Middle East has been built. Hopes for future progress in the Middle East were stirred by the historic agreements we reached and the trust and confidence that we formed.

-- Thanks to American leadership, the prospects for peace in the Middle East are brighter than they have been in three decades. The Arab states and Israel continue to look to us to lead them from confrontation and war to a new era of accommodation and peace. We have no alternative but to persevere -- and I am sure we will. The opportunities for a final settlement are great, and the price of failure is a return to the bloodshed and hatred that for too long have brought tragedy to all of the peoples of this area, and repeatedly edged the world to the brink of war.

-- Our relationship with the People's Republic of China is proving its importance and its durability. We are finding more and more common ground between our two countries on basic questions of international affairs.

In my two trips to Asia as President, we have re-affirmed America's continuing vital interest in the peace and security of Asia and the Pacific Basin, established a new partnership with Japan, confirmed our dedication to the security of Korea, and reinforced our ties with the free nations of Southeast Asia.

-- An historic dialogue has begun between industrial nations and the developing nations. Most proposals on the table are the initiatives of the United States, including those on food, energy, technology, trade, investment and commodities. We are well launched on this process of shaping positive and reliable economic relations between rich nations and poor nations over the long-term.

-- We have made progress in trade negotiations and avoided protectionism during recession. We strengthened the international monetary system. During the past two years the free world's most important economic powers have already brought about important changes that serve both developed and developing economies. The momentum already achieved must be nurtured and strengthened, for the prosperity of the rich and poor depends upon it.

-- In Latin America, our relations have taken on a new maturity and a sense of common enterprise.

-- In Africa, the quest for peace, racial justice and economic progress is at a crucial point. The United States, in close cooperation with the United Kingdom, is actively engaged in this historic process. Will change come about by warfare and chaos and foreign intervention? Or will it come about by negotiated and fair solutions, ensuring majority rule, minority rights and economic advance? America is committed to the side of peace and justice, and to the principle that Africa should shape its own future free of outside intervention.

-- American leadership has helped to stimulate new international efforts to stem the proliferation of nuclear

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weapons and to shape a comprehensive treaty governing the use
of oceans.

I am gratified by these accomplishments. They
constitute a record of broad success for America, and for the
peace and prosperity of all mankind. This Administration
leaves to its successor a world in better condition than we
found. We leave, as well, a solid foundation for progress on
a range of issues that are vital to the well being of America.

What has been achieved in the field of foreign affairs,
and what can be accomplished by the new administration, demon-
strate the genius of Americans working together for the common
good. It is this, our remarkable ability to work together,
that has made us a unique nation. It is Congress, the President,
and the people striving for a better world.

I know all patriotic Americans want this Nation's
foreign policy to succeed.

I urge members of my party in this Congress to give
the new President loyal support in this area.

I express the hope that this new Congress will re-
examine its constitutional role in international affairs.

The exclusive right to declare war, the duty to advise
and consent on the part of the Senate, and the power of the
purse on the part of the House, are ample authority for the
legislative branch and should be jealously guarded.

But because we may have been too careless of these
powers in the past does not justify congressional intrusion
into, or obstruction of, the proper exercise of Presidential
responsibilities now or in the future. There can be only
one Commander-in-Chief. In these times crises cannot be
managed and wars cannot be waged by committee. Nor can peace
be pursued solely by parliamentary debate. To the ears of the
world, the President speaks for the Nation. While he is, of
course, ultimately accountable to the Congress, the courts and
the people, he and his emissaries must not be handicapped in
advance in their relations with foreign governments as has
sometimes happened in the past.

At home, I am encouraged by the Nation's recovery
from the recession and our steady return to sound economic
growth. It is now continuing after the recent period of
uncertainty, which is part of the price we pay for free elections.

Our most pressing need today and the future is more
jobs -- productive, permanent jobs created by a thriving
economy.

We must revise our tax system both to ease the burden
of heavy taxation and to encourage the investment necessary
for the creation of productive jobs for all Americans who want
to work. Earlier this month I proposed a permanent income tax
reduction of ten billion dollars below current levels including
raising the personal exemption from $750 to $1,000. I also

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