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so that imported oil could be bought at lower prices
but then would be sold at the minimum price. But if we
do not do this, we may be in the position of having made
huge investments for alternate sources, which could then
be undercut by predatory pricing.

We hope that we will have an agreement on this
by December 1st.

As for the level, since this is at the moment
being negotiated, I would rather not give an answer;
but we have it down to a range that is now the subject
of negotiations.

GOVERNOR BRISCOE: Thank you.

GOVERNOR MANDEL: Governor Bond?

GOVERNOR BOND: Mr. Secretary, one of the most
obtuse and difficult concepts for the average American
to understand, I believe, is the balance-of-payments
problem. And we, I think, can explain to them the dangers
of suffering another Arab oil embargo. But how do you
explain to someone who has never been abroad what impact
the continuing and increasing outflow of dollars for
OPEC oil would have on the American consumer? How
is the American consumer likely to be affected, if we

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continue to increase our payments abroad?

SECRETARY KISSINGER: Well, the payments abroad will sooner or later have to be translated into the purchase of goods and services; and it gives leverage to the producers in two ways: One, by the end of last year they had already accumulated 75 billion dollars in foreign assets: and every dollar in increase in the price of oil adds 10 billion dollars to this in addition to the annual gross. This year it will be substantially higher than 75 billion dollars at the end of this year.

Shifting these funds around is already a source of considerable leverage. In 1973, a run on the dollar was started, I think, by a shift of three or four billion dollars. That happened normally and not as the result of a deliberate policy by any particular country. So when you have 75 billion dollars, you have a very substantial sum.

Secondly, when these holdings are converted into goods and services, they will undoubtedly contribute to the inflationary pressure, in addition to the fact that the increase in the price of energy contributes to the inflationary pressures even before these assets

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are disposed of.

So the overall impact of the constant rise
in the price of oil is to compound all inflationary
pressures in the industrialized world, and it is one of
the significant reasons for the stagnation of the economies
of the industrialized countries.

GOVERNOR MANDEL: Governor Tribbitt, Delaware.

GOVERNOR TRIBBITT: Mr. Secretary, two questions.
You couldn't or wouldn't want to limit all your questions
to the subject of energy, so the first question: When
the OPEC countries meet later this month, do you expect
them to raise the price of crude?

SECRETARY KISSINGER: I have a view on the
subject. I just do not want to be accused of having made
come true what I predict. (Laughter.)

They're certainly talking in this direction.
The United States is opposed to any further increase
in the price of oil, and we believe it is unjustified.
But many of them are talking in the direction of
increasing the price. I will keep my private expectations
to myself. (Laughter.)

GOVERNOR TRIBBITT: The other question is not related

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to energy.

Mr. Secretary, what negotiations are going on with the MIAs with respect to the Viet-Nam conflict?

SECRETARY KISSINGER: Well, I negotiated with the North Vietnamese for four years; and they have used the anguish of Americans for blackmail for all this period. First they used the prisoners; now they are using the missing in action.

At the time when they applied for membership in the United Nations, they suddenly agreed to produce three bodies -- gave us the names. When we vetoed their membership they withdrew their offer for those -- for the remains. We vetoed their membership only because we did not want to accept a double standard in the United Nations. We were prepared to let North Viet-Nam enter the United Nations if South Korea would also be admitted into the United Nations, but we did not accept the concept of selective universality where our friends are barred from the United Nations and Communist nations are admitted. So this was not directed as such against North Viet-Nam.

Nevertheless, as a result of a totally unrelated

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issue, the North Vietnamese have withdrawn their --
withdrew the offer that they had already made. We are
approaching them periodically through many channels, and
now most of the time directly.

I feel that they will use the missing in action
for their political purposes, and we do not believe
that American foreign policy should be shaped by the
holding of hostages -- and, even less, by the remains of
Americans who died in action.

GOVERNOR MANDEL: Governor Waller of Mississippi.

GOVERNOR WALLER: We all had the pleasure
of taking about six trade missions to different parts of the
world -- particularly the Orient and the Middle East in April
of this particular year. And the missions were staffed,
Mr. Secretary, with businessmen who were selling. And
I was along to help make appointments and contacts for
long-range sales, contracts on food and fiber products,
consumer goods and so forth. And from the discussion which
I had with Ambassador Helms in Tehran and other places,
it appears to us from the outside looking in that our
staffing in the foreign offices are woefully inadequate,
based upon the new trade efforts where the dollars are.

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SECRETARY KISSINGER: You mean in our
Embassies?

GOVERNOR WALLER: Yes, sir. And, also, the
fragmentation between Commerce and Agriculture and
State. And I just wondered if you were aware of this
and if any plans were underway to give us the tools
that the Japanese have, that the French have, in many
of the market places.

We believe that the staff could be as little
as 25 percent of the size and configuration needed to help
the American businessman meet the competition in
different markets.

SECRETARY KISSINGER: Well, I think you are
right that our economic representation abroad has not
always kept pace with the realities of the modern world.
We used to operate largely through one or two commercial
or economic counselors, and that view is not to be considered
to be the most promising career within the Foreign Service.

Secondly, those of you who know Washington
will agree: the various departments sometimes deal with
each other as sovereign entities, making
short-term diplomatic treaties of coexistence (laughter),

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They do not always develop the most coherent policy.

Now, we have attempted to improve the situation, and it cannot be done as rapidly as one would like. We have in Washington now, in the Economic Policy Board and elsewhere I think, the most cohesive organization for the conduct of foreign economic policy. For example, in the approach to the United Nations -- and, in fact, on the whole range of foreign economic policy -- the cooperation now, especially between the Treasury Department and the State Department, is very intimate. The Secretary of Treasury and I meet at least once a week, and our sub-ordinates meet daily.

In addition, we have staffed the economic divisions of the State Department with the ablest people that we could find. The Assistant Secretary of State for Economic Affairs, Mr. Enders, has certainly not been a shrinking violet in international negotiations; and he has been largely responsible for the energy program that I have mentioned.

In the field -- there will be a time lag before all of this can be translated into the field.

I agree with your comment; I hope that we are aware

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of it.

We are certainly trying to move in this direction, because you are right: the economic dimension of foreign policy is becoming increasingly important, and we have not in the past been organized in Washington or staffed in the field to carry it out.

GOVERNOR MANDEL: Governor Pryor, Arkansas

GOVERNOR PRYOR: Mr. Secretary, we talk a great deal about finding and exploring new ways for seeking alternative sources of energy. I talk about it in speeches and I guess all of us talk about it in speeches, and you talk about it in speeches. It sounds very good. But it's beginning, I think, to have a hollow ring, because I don't know, in fact, that we are really making a wholesale effort to seek alternative sources of energy. And from time to time we hear about developments.

For example, the University of Nebraska recently came forth with a type of fuel made from grain, I understand, and it powers an automobile much less expensively than our traditional methods. And suddenly we don't hear of those things any more.

I remember back in the late 40s we had a tougher

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automobile that came out, and it worked so well and
did so splendidly and got so many miles to a gallon of
gasoline; and, before you know it, it was off the market
-- it worked. And the reason it was off the market was because
it worked. And, really, are we doing our part; and are
we really doing any more than talking about it?

SECRETARY KISSINGER: Well, as I said in my
introductory remarks, there are people in this room
who will tell you that excessive humility in not my province.
(Laughter.) I am not an expert on the domestic energy
program.

As I understand it, we are spending over 10 billion
dollars in research, and we are encouraging investments in
alternative sources.

The difficulty is that it will take three to
five years -- or five years, really, before any substantial
results can show. And, in the interval, much of the
emphasis will have to be placed on conservation.

I am certain that other proposals will be made
in the course of this year to encourage
investment in alternative sources; but we are now at a stage
where much of it is in research and development and the result

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will not show up for two or three years.

GOVERNOR MANDEL: Governor Edwards of Louisiana.

GOVERNOR EDWARDS: Mr. Secretary, I would not presume to give you any advice on diplomatic relations, because that would be like an atheist trying to teach the Pope catechism (laughter). You are in the southern part of the United States.

I think it's important for those of us in positions of leadership to express our opinions.

I must say to you that I listened in awe and amazement at some of the statements you made about what we were going to do for the developing countries and the developed countries in the First World, the Second World, the Third World, and the Fourth World about economic stability and industrial development, employment, and what have you.

And I simply suggest to you that I hope we can do it for them a helluva lot better than we have been able to do it for ourselves, because we haven't done it in this country yet. And I think Americans and the world ought to come to grips with that reality. And I suggest -- I know you spend a lot of time in Washington and other foreign cities (laughter), but America has serious problems. And unless we

(c)

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get independent in this country insofar as
the production of energy is concerned, we're
never going to be able to help other countries --
and we're never going to be able to help ourselves. And
I would certainly like to see the American thrust
on this thing beamed toward making America the
independent country it ought to be in the field of
production and use of energy.

SECRETARY KISSINGER: Well, Governor, I do not
know exactly what you were referring to, if you refer
to these remarks here. My basic point, with respect
to energy, is that the energy crisis affects us and
it affects our principal allies. And it, therefore,
affects the security of the whole free world.

Now, we consume about 50 percent of the energy
of the world; and, therefore, it is clear -- and I agree
with you -- that we must exercise a position of leadership;
that if we do not make ourselves invulnerable, if not
independent, or substantially invulnerable to oil pressures,
nobody else can do it.

At the same time, if we do not cooperate with our
allies in Europe and Japan, their sense of impotence will be

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enhanced and their vulnerability to pressures -- not just from the producers but from their neighbors -- will also increase. And, therefore, since the cohesion of the free world must be one of our principal foreign policy objectives, we have to cooperate with them.

Now, this cooperation, in fact, does not involve any significant outlays for the United States. For example, we are trying to establish common conservation targets with them in order to multiply the efforts that we may make in conservation. We are trying to pool research and development efforts to some extent so that we can share in each other's technology.

We are not talking here about a giveaway program, because we are talking of the cooperation of countries at a substantial level of economic well-being.

As far as the developing world is concerned in energy, they are being to a considerable extent -- or to some extent, at least -- financed by the oil producers themselves, and therefore, in international forums, we have never been able to get the support of the so-called Third World on the energy question.

So what I was talking about here is primarily

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the relationship between the United States and the
industrial countries of Western Europe and Japan and not
in the form of American financial outlays but in the
form of political and economic cooperation.

The second general observation I would make is:
I agree with you that it is important for us -- crucial
for us -- to deal with our domestic problems. But I do not
believe -- and that may be a professional bias -- that
we can choose between our domestic and foreign problems.
I think we are now in a position where, if we cannot solve
both, we will not be able to solve either.

GOVERNOR MANDEL: Governor Holshouser.

GOVERNOR HOLSHOUSER: I'm working.

GOVERNOR MANDEL: Governor Boren.

GOVERNOR BOREN: Mr. Secretary, I have two inter-
related questions. The first is this: the Helsinki statements
and other recent statements appear to give only broad lip ser-
vice to the concept of doing something about freedom of
emigration out of the Soviet Union and religious freedom for
both Christians and Jews and intellectual freedom within
the Soviet Union. Are we in fact, really, trying to exert
any real leverage on this situation -- or have we really, as a

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matter of fact, decided to treat that as a matter
of internal affairs for the Soviet Union?

That's the first question.

The second question is: If we could draw a
distinction between coexistence and detente -- detente
being a somewhat more intimate, friendlier, or closer
relationship than mere coexistence -- how much can the
arguments for detente be founded strictly upon
economic justification as opposed to political justification?

SECRETARY KISSINGER: Well, "detente" is a
French word, and it means something like relaxation of
tensions. It has not, in our view, any moral significance.
And if it suggests to you anything more intimate than
coexistence, then this must be because it may have been
used too loosely in rhetoric.

Let me state what our policy is towards the
Soviet Union, and then I can get to your specific question.

We recognize that the Soviet Union is ideologically
opposed to us. Secondly, we recognize that the Soviet
Union is a superpower whose geopolitical interests are often
at variance with ours. And, therefore, we conduct the
policy of coexistence, detente, relaxation of tensions --

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whatever you want to call it -- with no illusions about the
structure of what we are dealing with.

At the same time, we recognize we are living
in a world that is different from our historical
experience. Until the end of World War II, the United
States could be secure behind two oceans; and changes in
the world balance of power had to be of an enormous magnitude
before we were affected.

For about a generation after World War II, we
had such an overwhelming military superiority that we could
overwhelm most of our problems with our resources. But
today we live in a world in which, while we are still the
single strongest factor, we are no longer predominant.

We also are in a situation of
effective nuclear parity, in which neither side will be able
to gain a decisive strategic advantage unless one side
simply quits.

Under these conditions, we have to conduct a policy
in which we try to limit or contain the power of other
countries through creating balances, backed by our military
strength around the world.

We also face the fact that under current conditions