MEETING OF SENATOR EAGLETON AND REPS: SARBANES, BRADEMAS, AND ROSENTHAL WITH THE PRESS, STATE DEPARTMENT DIPLOMATIC LOBBY.

FEBRUARY 1, 1975

Q: Senator, do you want to make a statement, or can I just ask you if the Secretary made an appeal to you, through you to Congress to extend the cutoff deadline?

Senator Eagleton: Yes he did. I think we had very good, I think fruitful and forthcoming meeting on both sides where we spoke very candidly and very frankly, the Secretary representing his point of view, myself and the three Congressmen representing our point of view.

He did reexpress, as he has said on numerous occasions, his belief that a cutoff of aid to Turkey at this time would be inimicable to American foreign policy. We reiterated our position that the law as we view it is just that, it's the law. It requires that aid be cut off to a nation when they use that aid to commit an aggressive act against a neutral nation, to wit, Cyprus. The two extensions had been given in order to try to accommodate some negotiations, and that, as we viewed it, no progress -- indeed only slight progress -- had been made in these negotiations. In fact the only thing that I can point to as progress is the fact that they are meeting once or twice a week. But nothing tangible in terms of any give and take between the two parties can be pointed to. There's been nothing done with respect to the refugees being relocated back into their homes,

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nothing with respect to Nicosia Airport, nothing with
respect to Famagusta, et cetera. So it's still a bleak
picture. And our position is what it is, that we have
no alternative but to cut off aid to Turkey since that
aid has been used and is continuing to be used to occupy
the island of Cyprus.

Q: Do you think this is risky in regard to Turkey's position in the alliance? In other words, are you taking a risk or do you think there's no risk at all?

Senator Eagleton: Well it seems to me you've got to put
the risks of the failure to enforce the law and its
impact on the entire range of American foreign policy.

* interests * (unclear). Mr. Sarbanes and I were in Cyprus
and in Greece just a few days ago and we came away with
some cautious hope that there might be an improvement
that would lead to a settlement. But what has happened
over the last several days has been moving in the other
direction. We did tell the Secretary that if some
substantial progress in terms of action on the ground,
particularly with respect to meeting the humanitarian
problems of the refugees could be demonstrated, then we would
be prepared to take a look at requests for extension of time
and to be constructive about it.

Sarbanes: It ought to be understood that the
prominent American law on the fifth of each February

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requires that American military aid to Turkey be
terminated unless there can be a certification that
Turkey is in compliance with American law with respect
to giving that aid and substantial progress has been
made. I don't think that anyone really asserts that that
certification can be given. We received a report on what's
developing and I don't think it can be, even under the most
charitable of terms, given anything more than slight progress
at most.

Q: So there's no question that the aid will be cut off
as of next Wednesday?

Parenthal: There's no question about that. Tuesday.
There's one thing I would emphasize what John said. All of
us agreed with the Secy that if there is some considerable,
measurable progress on the island we would be favorably
disposed to renewal of aid. Now, how you measure what
that progress is, we would have to look very seriously.

I am because the
Q: I'm a bit confused, __ because this reference here to the
refugees -- and I thought the applicable law is the presence
on the island of American arms in Turkish hands. And I
DON'T don't understand how progress in the refugees --

Parenthal: That can be easily straightened out by any
agreement for removal and reduction of forces which would
include materiel.

Q: So it's not just refugees.

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that we unless there was truly substantial, meaningful
progress that we, as he understood our position, would
be opposed to further extensions.

Q: Sir, did the Secy argue with you that there had been no substantial progress at all?

Gageleton: Well, the Secy *acknowledged* that he was
not in a position at this time to make a certification that
substantial progress had been made.
You don't

Q: Do you expect one?

Gageleton: No, we do not.

Q: Is there a great deal of lobbying on the hill from
representatives of the military-industrial establishment?

Gageleton + Sabanes: None whatsoever.

Q: Did he discuss with you the plans he has to
meet with the Greek and Turkish Foreign Ministers?

Sabanes: Only that he plans to be meeting with them.

Q: Did he say when and where?

Gageleton: The time, date and place, I gather, was as yet
unresolved, but the fact that there might well be a meeting
was alluded to, although nothing definitive had been resolved.

Q: Did he hold that out as a reason perhaps for
you to give him an extension?

Sabanes: No. The point that we did raise after we had
been through some of the specifics of these negotiations.

The circumstances required was to recall to the Secy the
context in which we were carrying on these discussions,

namely that nearly 6 months ago plus Turkish armed forces
using arms supplied by the USG committed aggression against
a friendly country. That is in violation of the agreement
between the Govt of Turkey and the Govt of the U.S. and is
in violation of American law. We insisted that the law
be enforced.

Q: Would you say that the Secy was optimistic about making progress any time in the near future?

Sarbano: I would say that the Secy really did not -- I
would not characterize his discussions of the talks as
either optimistic or pessimistic. I think they were in the
nature of a report as to where the matter was, a statement
of what his own view and position were, which of course
we understand. That has been consistent throughout. And
of course a statement of our position, which has also been
consistent throughout.

Thank you.

The Secretary
of State

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Speech

ENERGY: THE NECESSITY OF DECISION

Address by Secretary of State Henry A.
Kissinger before the National Press Club

Ladies and Gentlemen:

I appreciate this opportunity to speak to you
on the question of energy.

The subject is timely, for this week marks an
important moment in both our national and
international response to the energy crisis.

On Wednesday, the Governing Board of the
International Energy Agency [IEA] convenes in
Paris for its monthly meeting. This organization,
which grew out of the Washington Energy Con-
ference, represents one of the major success
stories of cooperation among the industrialized
democracies in the past decade. In recent months
it has begun to mobilize and coordinate the efforts
of the industrial democracies in energy conserva-
tion, research, and development of new energy
sources. The IEA already has put in place many
of the building blocks of a coordinated energy
policy. At the forthcoming meeting, the United
States will advance comprehensive proposals for
collective action, with special emphasis on the
development of new energy sources and the prep-
aration of a consumer position for the forth-
coming dialogue with the producers.

Equally important, we are now engaged in a
vital national debate on the purposes and require-
ments of our national energy program. Critical
decisions will soon be made by the Congress-
decisions that will vitally affect other nations as
well as ourselves.

The Nature of the Challenge

The international and national dimensions of
the energy crisis are crucially linked. What
happens with respect to international energy

February 3, 1975

Washington, D.C.

Bureau of Public Affairs

Office of Media Services

policy will have a fundamental effect on the
economic health of this nation. And the interna-
tional economic and energy crisis cannot be
solved without purposeful action and leadership
by the United States. Domestic and international
programs are inextricably linked.

The energy crisis burst upon our consciousness
because of sudden, unsuspected events. But its
elements have been developing gradually for the
better part of two decades.

In 1950, the United States was virtually self-
sufficient in oil. In 1960, our reliance on foreign
oil had grown to 16 percent of our requirements.
In 1973, it had reached 35 percent. If this trend
is allowed to continue, the 1980's will see us
dependent on imported oil for fully half of our
needs. The impact on our lives will be revolu-
tionary.

This slow but inexorable march toward depen-
dency was suddenly intensified in 1973 by an oil
embargo and price increases of 400 percent in
less than a single year. These actions—largely the
result of political decisions—created an immediate
economic crisis, both in this country and around
the world. A reduction of only 10 percent of
the imported oil, lasting less than half a year,
cost Americans half a million jobs and over one
percent of national output; it added at least 5
percentage points to the price index, contributing
to our worst inflation since World War II; it set
the stage for a serious recession; and it expanded
the oil income of the OPEC nations from $23
billion in 1973 to a current annual rate of $110
billion, thereby effecting one of the greatest and
most sudden transfers of wealth in history.

PR 42

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The impact on other countries much more dependent on oil imports has been correspondingly greater. In all industrial countries economic and political difficulties that had already reached the margin of the ability of governments to manage have threatened to get out of control.

Have we learned nothing from the past year? If we permit our oil consumption to grow without restraint, the vulnerability of our economy to external disruptions will be grossly magnified. And this vulnerability will increase with every passing year. Unless strong, corrective steps are taken, a future embargo would have a devastating impact on American jobs and production. More than 10 percent of national employment and output, as well as a central element of the price structure of the American economy, would be subject to external decisions over which our national policy can have little influence.

As we learned grimly in the 1920's and 30's, profound political consequences inevitably flow from massive economic dislocations. Economic distress fuels social and political turmoil; it erodes the confidence of the people in democratic government and the confidence of nations in international harmony. It is fertile ground for conflict, both domestic and international.

> "In 1950, the United States was virtually self-sufficient in oil. In 1960, our reliance on foreign oil had grown to 16 percent of our requirements. In 1973, it had reached 35 percent."

The situation is not yet so grave, but it threatens to become so. The entire industrialized world faces at the same time a major crisis of the economy, of the body politic, and of the moral fiber. We and our partners are being tested—not only to show our technical mastery of the problems of energy, but even more importantly to show if we can act with foresight to regain control of our future.

For underlying all difficulties, and compound- ing them, is a crisis of the spirit—the despair of men and nations that they have lost control over their destiny. Forces seem loose beyond the power of government and society to manage.

In a sense we in America are fortunate that political decisions brought the energy problem to

a head before economic trends had made our vulnerability irreversible. Had we continued to drift, we would eventually have found ourselves swept up by forces much more awesome than those we face today.

As it is, the energy crisis is still soluble. Of all nations, the United States is most affected by the sudden shift from near self-sufficiency to severe dependence on imported energy. But it is also in the best position to meet the challenge. A major effort now—of conservation, of technological innovation, of international collaboration— can shape a different future for us and for the other countries of the world. A demonstration of American resolve now will have a decisive effect in leading other industrial nations to work together to reverse present trends toward dependency. Today's apparently pervasive crisis can in retrospect prove to have been the beginning of a new period of creativity and cooperation.

One of our highest national priorities must be to reduce our vulnerability to supply interruption and price manipulation. But no one country can solve the problem alone. Unless we pool our risks and fortify the international financial system, balance-of-payments crises will leave all economies exposed to financial disruption. Unless all consuming nations act in parallel to reduce energy consumption through conservation and to develop new sources of supply, the efforts of any one nation will prove futile—the price structure of oil will not be reformed and the collective economic burden will grow. And unless consumers concert their views, the dialogue with the producers will not prove fruitful.

The actions which the United States takes now are central to any hope for a global solution. The volume of our consumption, and its potential growth, is so great that a determined national conservation program is essential. Without the application of American technology and American enterprise, the rapid development of significant new supplies and alternative sources of energy will be impossible.

There is no escape. The producers may find it in their interest to ease temporarily our burdens. But the price will be greater dependence and greater agony a few years from now. Either we tackle our challenge immediately or we will confront it again and again in increasingly unfavorable circumstances in the years to come. If it is not dealt with by this Administration, an even worse crisis will be faced by the next—and with even more anguishing choices.

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History has given us a great opportunity disguised as a crisis. A determined energy policy will not only ease immediate difficulties, it will help restore the international economy, the vitality of all the major industrial democracies, and the hopes of mankind for a just and prosperous world.

## The Strategy of Energy Cooperation

We and our partners in the International Energy Agency have been, for a year, pursuing strategy in three phases:

* The first phase is to protect against emergencies. We must be prepared to deter the use of oil or petrodollars as political weapons and, if that fails, we must have put ourselves in the best possible defensive position. To do this, we have established emergency sharing programs to cope with new embargoes, and created new mechanisms to protect our financial institutions against disruption. This stage of our common strategy is well on the way to accomplishment.

* The second phase is to transform the market conditions for OPEC oil. If we act decisively to reduce our consumption of imported oil and develop alternative sources, pressure on prices will increase. Measures to achieve this objective are now before the International Energy Agency or national parliaments; we expect to reach important agreements on them before the end of March.

* Once the consumer nations have taken these essential steps to reduce their vulnerability, we will move to the third stage of our strategy—to meet with the producers to discuss an equitable price, market structure, and long-term economic relationship. Assuming the building blocks of consumer solidarity are in place, we look toward a preparatory meeting for a producer-consumer conference before the end of March.

Our actions in all these areas are interrelated. It is not possible to pick and choose; since they are mutually reinforcing, they are essential to each other. No emergency program can avail if each year the collective dependence on OPEC oil increases. New sources of energy, however vast the investment program, will be ineffective unless strict measures are taken to halt the runaway, wasteful growth in consumption. Unless the industrial nations demonstrate the political will

to act effectively in all areas, the producers will be further tempted to take advantage of our vulnerability.

In recent months we and our partners have taken important steps to implement our overall strategy. Two safety nets against emergencies have been put in place. In November, the IEA established an unprecedented plan for mutual assistance in the event of a new embargo. Each participating nation is committed to build an emergency stock of oil. In case of embargo, each nation will cut its consumption by the same percentage, and available oil will be shared. An embargo against one will become an embargo against all.

> "A major effort now—of conservations, of technological innovation, of international collaboration—can shape a different future for us and for the other countries of the world. A demonstration of American resolve now will have a decisive effect in leading other industrial nations to work together to reverse present trends toward dependency."

And in January, the major industrial nations decided to create a $25 billion solidarity fund for mutual support in financial crises—less than 2 months after it was first proposed by the United States. This mutual insurance fund will furnish loans and guarantees to those hardest hit by payments deficits, thus safeguarding the international economy against shifts, withdrawals, or cutoffs of funds by the producers.

The next steps should be to accelerate our efforts in the conservation and development of new energy sources. Action in these areas, taken collectively, will exert powerful pressures on the inflated price. No cartel is so insulated from economic conditions that its price structure is invulnerable to a transformation of the market. Because of the reduced consumption in the past year, OPEC has already shut down a fourth of its capacity, equaling 9 million barrels a day, in order to keep the price constant. New oil exploration, accelerated by the fivefold-higher price, is constantly discovering vast new reserves outside of OPEC. The $10 billion in new energy research

4

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in the United States—on the scale of the Manhattan Project and the moon-landing program—is certain to produce new breakthroughs sooner or later.

As the industrialized nations reduce consumption and increase their supply, it will become increasingly difficult for OPEC to allocate the further production cuts that will be required among its members. Even now, some OPEC members are shaving prices to keep up their revenue and their share of the market. Indeed, it is not too soon in this decade of energy shortages to plan for the possibility of energy surpluses in the 1980's.

The strategy we have been pursuing with our partners since the Washington Energy Conference has linked our domestic and international energy policies into a coherent whole. We have made remarkable progress, but much remains to be done. The question now is whether the industrialized countries have the will to sustain and reinforce these promising initiatives. Conservation and the development of new sources of energy are the next priorities on our common agenda.

## Conservation

Unconstrained consumption of cheap oil is the principal cause of the present vulnerability of the industrial countries. Neither the United States nor other consumers can possibly reduce their dependence on imports until they reverse the normal—which is to say wasteful—growth of consumption.

There is simply no substitute for conservation. Alternative energy supplies will not be available for 5 or 10 years. In the next few years conservation, and only conservation, will enable us both to absorb the present burden of high energy costs and to begin to restore the balance of consumer-producer relations.

Only a determined program of conservation can demonstrate that we and our partners have the will to resist pressures. If the industrialized nations are unwilling to make the relatively minor sacrifices involved in conservation, then the credibility of all our other efforts and defensive measures is called into the question.

Some say we face a choice between conservation and restoring economic growth. The contrary is true. Only by overcoming exorbitant international energy costs can we achieve reliable long-term growth. If we doom ourselves to 50 percent dependence on imported energy, with the

supply and price of a central element of our economy subject to external manipulation, there is no way we can be sure of restoring and sustaining our jobs and growth. These decisions will depend on foreign countries for whom our prosperity is not necessarily a compelling objective.

To be sure, conservation—by any method—will have an economic cost. The restructuring which it entails, away from production and consumption of energy-intensive goods, incurs shortrun dislocations. At a time of recession, this must concern us. Yet these costs are small compared to what will be exacted from us if we do not act. Without conservation, we will perpetuate the vulnerability of our economy and our national policy. And we will perpetuate as well the excessive international energy prices which are at the heart of the problem.

> "Some say we face a choice between conservation and restoring economic growth. The contrary is true. Only by overcoming exorbitant international energy costs can we achieve reliable long-term growth."

At present, the United States—in the midst of recession—is importing 6.7 million barrels of oil a day. When our economy returns to full capacity that figure will rise; by 1977 it will be 8 or 9 million barrels a day in the absence of conservation. Imports will continue to grow thereafter. Even with new production in Alaska and the outer continental shelf, this import gap will remain if we do not reduce consumption significantly and rapidly.

With these prospects in mind, President Ford has set the goal of saving a million barrels a day of imports by the end of this year and 2 million by 1977. That amounts to the increase in dependence that would occur as the economy expands again, in the absence of a conservation program.

Our conservation efforts will be powerfully reinforced by the actions of our IEA partners and of other interested countries such as France. Their collective oil consumption equals ours, and they are prepared to join with us in a concerted program of conservation; indeed some of them have already instituted their own conservation measures. But any one country's efforts will be

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5

nullified unless they are complemented by other consumers. This is why the United States has proposed to its IEA partners that they match our respective conservation targets. Together we can save 2 million barrels a day this year; and at least 4 million barrels in 1977.

If these goals are reached, under current economic conditions OPEC will have to reduce its production further; even when full employment returns, OPEC will have surplus capacity. More reductions will be hard to distribute on top of the existing cutbacks of 9 million barrels a day. As a result, pressures to increase production or to lower prices will build up as ambitious defense and development programs get under way. By 1977 some oil producers will have a payments deficit; competition between them for the available market will intensify. The cartel's power to impose an embargo and to use price as a weapon will be greatly diminished.

> "In short, the massive development of alternative sources by the industrial countries will confront OPEC with a choice: they can accept a significant price reduction now in return for stability over a longer period; or they can run the risk of a dramatic break in prices when the program of alternative sources begins to pay off."

But if America—the least vulnerable and most profligate consumer—will not act, neither will anyone else. Just as our action will have a multiplier effect, so will our inaction stifle the efforts of others. Instead of reducing our collective imports, we will have increased them by 2-4 million barrels a day. OPEC's ability to raise prices, which is now in question, will be restored. In exchange for a brief respite of a year or two, we will have increased the industrialized world's vulnerability to a new and crippling blow from the producers. And when that vulnerability is exposed to public view through a new embargo or further price rises, the American people will be entitled to ask why their leaders failed to take the measures they could have taken when they should have.

One embargo—and one economic crisis—should be enough to underline the implications of dependency.

## The Importance of New Supplies

Conservation measures alone, crucial as they are, cannot permanently reduce our dependence on imported oil. To eliminate dependence over the long term we must accelerate the development of alternative sources of energy. This will involve a massive and complex task. But for the country which broke the secret of fission in 5 years and landed men on the moon in 8 years, the challenge should be exciting. The Administration is prepared to invest in this enterprise on a scale commensurate with those previous pioneering efforts; we are ready as well to share the results with our IEA partners on an equitable basis.

Many of the industrialized countries are blessed with major energy reserves which have not yet been developed—North Sea oil, German coal, coal and oil deposits in the United States, and nuclear power in all countries. We have the technical skill and resources to create synthetic fuels from shale oil, tar sands, coal gasification and liquefaction. And much work has already been done on such advanced energy sources as breeder reactors, fusion, and solar power.

The cumulative effort will of necessity be gigantic. The United States alone shall seek to generate capital investments in energy of $500 billion over the next 10 years. The Federal Government will by itself invest $10 billion in research into alternative energy sources over the next 5 years, a figure likely to be doubled when private investment in research is included.

But if this effort is to succeed, we must act now to deal with two major problems—the expense of new energy sources and the varying capacities of the industrialized countries.

New energy sources will cost considerably more than we paid for energy in 1973 and can never compete with the production costs of Middle Eastern oil.

This disparity in cost poses a dilemma. If the industrial countries succeed in developing alternative sources on a large scale, the demand for OPEC oil will fall, and international prices may be sharply reduced. Inexpensive imported oil could then jeopardize the investment made in the alternative sources; the lower oil prices would also restimulate demand, starting again the cycle of rising imports, increased dependence, and vulnerability.

Thus paradoxically, in order to protect the major investments in the industrialized countries that are needed to bring the international oil prices down, we must insure that the price for

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oil on the domestic market does not fall below a
certain level.

The United States will therefore make the
following proposal to the International Energy
Agency this Wednesday:

In order to bring about adequate investment in
the development of conventional nuclear and
fossil energy sources, the major oil importing
nations should agree that they will not allow im-
ported oil to be sold domestically at prices which
would make those new sources noncompetitive.

This objective could be achieved in either of
two ways. The consumer nations could agree to
establish a common floor price for imports, to be
implemented by each country through methods
of its own choosing such as import tariffs, vari-
able levies, or quotas. Each country would thus
be free to obtain balance-of-payments and tax
benefits, without restimulating consumption, if
the international price falls below agreed levels.
Alternatively, IEA nations could establish a com-
mon IEA tariff on oil imports. Such a tariff
could be set at moderate levels and phased in
gradually as the need arises.

> "Collective actions to restore balance to the international economic structure... will contribute enormously to the likelihood of the success of the projected consumer-producer dialogue."

President Ford is seeking legislation requiring
the executive branch to use a floor price or other
appropriate measures to achieve price levels
necessary for our national self-sufficiency goals.

Intensive technical study would be needed to
determine the appropriate level at which prices
should be protected. We expect that they will
be considerably below the current world oil
prices. They must, however, be high enough to
encourage the long-range development of alterna-
tive energy sources.

These protected prices would in turn be a
point of reference for an eventual consumer-
producer agreement. To the extent that OPEC's
current high prices are caused by fear of precipi-
tate later declines, the consuming countries, in
return for an assured supply, should be prepared
to offer producers an assured price for some
definite period so long as this price is substan-

tially lower than the current price.

In short, the massive development of alterna-
tive sources by the industrial countries will con-
front OPEC with a choice: they can accept a
significant price reduction now in return for
stability over a longer period; or they can run the
risk of a dramatic break in prices when the pro-
gram of alternative sources begins to pay off.
The longer OPEC waits, the stronger our bargain-
ing position becomes.

The second problem is that the capacities of
the industrialized countries to develop new energy
sources vary widely. Some have rich untapped
deposits of fossil fuels. Some have industrial
skills and advanced technology. Some have
capital. Few have all three.

Each of these elements will be in great demand,
and ways must be found to pool them effectively.
The consumers, therefore, have an interest in
participating in each other's energy development
programs.

Therefore, the United States will propose to
the IEA this Wednesday the creation of a synthet-
ic fuels consortium within IEA. Such a body
would enable countries willing to provide technol-
ogy and capital to participate in each other's
synthetic energy projects. The United States is
committed to develop a national synthetic fuel
capacity of one million barrels a day by 1985;
other countries will establish their own programs.
These programs should be coordinated, and IEA
members should have an opportunity to share in
the results by participating in the investment.
Qualifying participants would have access to the
production of the synthetics program in propor-
tion to their investment.

In addition, the United States will propose the
creation of an energy research and development
consortium within IEA. Its primary task will be
to encourage, coordinate, and pool large-scale
national research efforts in fields—like fusion and
solar power—where the costs in capital equipment
and skilled manpower are very great, the lead
times very long, but the ultimate payoff in low-
cost energy potentially enormous.

The consortium also would intensify the
comprehensive program of information exchange
which—with respect to coal, nuclear technology,
solar energy, and fusion—has already begun within
the IEA. We are prepared to earmark a substan-
tial proportion of our own research and develop-
ment resources for cooperative efforts with other
IEA countries which are willing to contribute.
Pooling the intellectual effort of the great indus-

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trial democracies is bound to produce dramatic results.

When all these measures are implemented,
what started as crisis will have been transformed
into opportunity; the near panic of a year ago
will have been transformed into hope; vulnera-
bility will have been transformed into strength.

The Mutual Interests of Consumers and Producers

Consumer solidarity is not an end in itself.
In an interdependent world, our hopes for
prosperity and stability rest ultimately on a
cooperative long-term relationship between con-
sumers and producers.

This has always been our objective. It is
precisely because we wish that dialogue to be
substantive and constructive that we have in-
sisted that consumers first put their own house
in order. Collective actions to restore balance
to the international economic structure, and
the development in advance of common con-
sumer views on the agenda, will contribute
eromously to the likelihood of the success of
the projected consumer-producer dialogue. With-
out these measures, discussions will only find us
restating our divisions, and tempt some to seek
unilateral advantages at the expense of their
partners. The result will be confusion, demoral-
ization, and inequity, rather than a just recon-
ciliation between the two sides.

"The producers seek a better life for their peoples and a future free from dependence on a single depleting resource; the industrialized nations seek to preserve the hard-earned economic and social progress of centuries; the poorer nations seek desperately to resume their advance toward a more hopeful existence."

A conciliatory solution with the producers is
imperative for there is no rational alternative.
The destinies of all countries are linked to the
health of the world economy. The producers
seek a better life for their peoples and a future
free from dependence on a single depleting
resource; the industrialized nations seek to
preserve the hard-earned economic and social
progress of centuries; the poorer nations seek
desperately to resume their advance toward a

more hopeful existence. The legitimate claims
of producers and consumers, developed and
developing countries, can and must be recon-
ciled in a new equilibrium of interest and
mutual benefit.

We must begin from the premise that we
can neither return to past conditions nor toler-
ate present ones indefinitely. Before 1973,
market conditions were often unfair to the
producers. Today they are unbearable for the
consumers; they threaten the very fabric of the
international economic system on which, in the
last analysis, the producers are as dependent
for their well-being as the consumers.

As the consumers approach their preparatory
meeting with the producers, what are the basic
principles that should guide them?

The United States will propose the following
approach to its partners in the IEA:

First, we should explore cooperative consumer-producer action to recycle the huge financial surpluses now accumulating. The oil producers understand that these new assets—which are far greater than they can absorb—may require new management mechanisms. At the same time, the industrial nations know that the stability of the global economic structure requires the constructive participation of the producers.

Second, and closely related to this, is the need
to examine our internal investment policies. The
oil producers need productive outlets for their
revenues; the industrial democracies, while they
should welcome new investment, will want to
retain control of essential sectors of their econ-
omies. These needs can be reconciled through
discussion and agreement between consumers and
producers.

Third, we must help the producer nations find
productive use for their wealth in their own
development and to reduce their dependence on
a depleting resource. New industries can be
established, combining the technology of the
industrialized world with the energy and capital
of the producers, for their own benefit and that
of the poorer nations. The creation of fertilizer
and petrochemical plants is among the more
promising possibilities.

Fourth, the oil-producing countries and the
industrial consuming countries share a responsi-
bility to ease the plight of the poorest nations,
whose economies have been devastated by OPEC's
price increases. Technology and capital must be
combined in an international effort to assist those
most seriously affected by the current economic crisis.

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Fifth is the need to provide consumers with a secure source of supply. Another attempt to use oil as a weapon would gravely threaten the economies of the industrial nations and destroy the possibilities of consumer-producer cooperation. Oil-sharing arrangements by the consumers would blunt its impact at first, but over time an atmosphere of confrontation would be inevitable. Thus, if the producer-consumer dialogue is to be meaningful, understandings on long-term supplies are essential.

A central issue, of course, will be price. It is vital to agree on prices for the long run which will satisfy the needs of consumers and producers alike. The balance-of-payments crisis of the consumers must be eased; at the same time, the producers are entitled to know that they can count on a reasonable level of income over a period of time.

The United States is ready to begin consultations with the other major consuming nations on this agenda. We will be prepared to expand on these proposals, and will welcome the suggestions of our friends, so that we can fashion together a common and positive program.

In sum, consumers and producers are at a crossroads. We have the opportunity to forge new political and institutional relationships, or we can go our separate ways, each paying the price for our inability to take the long view. Mutual interest should bring us closer together; only selfishness can keep us apart. The American approach will be conciliatory.

The implications for the structure of world politics are profound. If we act with statesmanship we can shape a new relationship between consumer and producer, between developed and developing nations, that will mark the last quarter of the 20th century as the beginning of the first truly global, truly cooperative international community.

## The Need for United Action

The United States will soon celebrate the 200th anniversary of its independence. In those 200 years Americans have gloried in freedom, used the blessings of nature productively, and jealously guarded our right to determine our fate. In so doing, we have become the most powerful nation on earth and a symbol of hope to those who yearn for progress and value justice. Yet now we sometimes seem uncertain of our future, disturbed by our recent past, and confused as to our purpose.

But we must persevere, for we have no other

choice. Either we lead, or no one leads; either we succeed, or the world will pay for our failure.

The energy challenge is international; it can only be met by the cooperative actions of all the industrial democracies. We are far advanced with our partners toward turning a major challenge into bold creation and determined response.

But our hopes for the future rest heavily on the decisions we take on our own domestic energy program in the days and weeks ahead. Our example—for good or ill—will chart the course for more than ourselves alone. If we hesitate or delay, so will our partners. Undoing measures already instituted, without putting an alternative program in their place, will have implications far transcending the immediate debate.

> "The energy challenge is international; it can only be met by the cooperative actions of all the industrial democracies."

The United States bears world responsibility not simply from a sense of altruism or abstract devotion to the common good—although those are attributes hardly deserving of apology. We bear it, as well, because we recognize that America's jobs and prosperity—and our hopes for a better future—decisively depend upon a national effort to fashion a unified effort with our partners abroad. Together we can retain control over our affairs and build a new international structure with the producers. Apart we are hostages to fate.

A domestic program that will protect our independence; a cooperative program with other consumers; and accommodation with producers—these are the indispensable and inseparable steps toward a new equilibrium of interest and justice. No one step can succeed in the absence of the other two.

It is the glory of our nation that, when challenged, we have always stepped forward with spirit and a will to dare great things. It is now time to do so again, and in so doing to reaffirm to ourselves and to the world that this generation of Americans has the integrity of character to carry on the noble experiment that began 2 centuries ago.

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THE CHAIRMAN [William Broom, president of the National Press Club]: Thank you, Mr. Secretary.

Mr. Secretary, in November you, the Secretary of the Treasury, and Mr. Arthur Burns, the Chairman of the Federal Reserve Board, all made speeches emphasizing the imperative need to bring about a lowering of the OPEC prices of oil. Now the Administration is advocating an energy policy based upon a price even higher than the OPEC price. What happened between November and now?

SECRETARY KISSINGER: I do not think it is correct to say that the Administration's energy policy is based on an increase in price. The Administration's energy policy attempts to reduce consumption. The increase in price that is designed to reduce consumption will be rebated to the American public so that the inflationary impact will be severely minimized, if not eliminated. So we are not dealing here with an increase in price that produces a balance-of-payments drain. We are dealing with a technical measure designed to reduce consumption for the reasons that I have explained, and the increase will then be rebated in various ways to the American people.

Q: Our audience has many questions for you today, Mr. Secretary. A second one here concerns what you anticipate from our Allies. The first questioner asks-what result might you foresee if IEA nations do not all agree on some method of establishing floor prices; specifically, what results if only the U.S.A. does so. And secondly, someone wonders if you can identify or expect any European country or any consuming nation not to act in parallel in the consumer bloc.

A: The proposal about a floor price will, of course, only be formally submitted to our Allies on Wednesday. But we have had some exploratory conversations which lead us to believe that the proposal will receive a sympathetic reception. The United States is, of course, in a position to establish such a price for itself, and given the scale of its investment, it could carry out a very massive program for the development of alternative energy sources. But in order to achieve the objectives which I have described, the cooperation of all the consumers would be extremely important.

I would not want to identify-indeed, I do not know any consumers that are likely to disagree. I believe that the cooperation of the nations in IEA, as I pointed out in my speech, has been one

of the great success stories of the last decade-and-a-half. Within the space of less than a year, very major steps have been taken in the field of conservation, in the field of emergency sharing, and in the field of financial solidarity. And I have every confidence that the spirit of cooperation that has brought us to this point will hold in the months ahead.

Q: A number of questions on price. What do you estimate the protected price of oil will be? For how long will it be protected? How will the long-term protected price be affected by inflation? And based on your remarks, what do you believe is the minimum price per barrel for domestic oil that will be required to keep U.S. investments competitive?

A: Well, the precise price would have to be established first by more detailed technical studies, and then in consultation with our partners that also have an interest in the problem. However, it can be stated now that the protected price would be substantially below the existing world price. It would have to be protected for a period of time sufficient to justify the massive investment in the alternative sources that are called for.

With respect to the impact of inflation on the protected price, if a long-term price arrangement were made with the producers and if the price were pegged at a level considerably below current world prices, the United States would not exclude discussing indexing in relation to it.

Q: If the cost of oil in the United States and in the major industrial nations remains above the level of exported oil, or Communist country prices, how are U.S. or European exporters of petrochemicals going to cope with competition from Eastern European or other nations?

A: Well, this assumes that there is an unlimited capacity by the Soviet Union to expand its oil exports at lower prices; and we doubt seriously that this capacity exists.

Q: Have you had any reaction as yet from the oil-producing countries' leaders regarding President Ford's plan to impose the import levy on oil in this country? What is the possibility that the oil-producing countries will use that as a reason for a further price increase?

A: We have not had any reaction from the oil-producing countries with respect to the President's import tax. I believe also that the oil producers very clearly understand the difference between a price increase that compounds a balance-of-payments deficit and a price increase that is

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rebated to the consumers.

Q: Do you agree, Mr. Secretary, with Senator Church's proposal that the United States set up an oil-purchasing agency as one way of eliminating unnecessary competition for profits and supplies?

A: I have frankly not had an opportunity to study this proposal in great detail, and I therefore would rather withhold judgment.

Q: An enterprising member of the audience asks—can we trade U.S. wheat for Russian oil?

A: That, too, is something I would like to examine a little bit. [Laughter and applause.]

Q: We have a number of questions on other countries, particularly the Middle East, where you will be going within a very short space of time. Will it be possible to arrange a further military disengagement on the Sinai with Egypt without further progress with Syria on the Golan Heights? And secondly, will the time come when the United States will have to deal with the Palestine Liberation Organization [PLO]?

A: If I didn't believe that there was some possibility of progress in further negotiations, I would not obviously go to the Middle East. Of course any step that is taken should only be considered as an interim step toward a final peace. And all other of the nations in the Middle East will have to participate in that next step—or will have to participate not in the forthcoming step, but will have to participate in a negotiation for a final peace.

With respect to the PLO, we have stated our position repeatedly, that there is no possibility of a negotiation as long as the PLO does not recognize the existence of Israel.

Q: How do you explain shipments of American airplanes to the Middle East and to the Arab countries in view of the possibility of the renewal of an Arab embargo on oil?

A: In my press conference last week, I explained the American policy with respect to arms shipments to other countries as follows: The questions that have to be answered are whether a threat to the security of these countries exists in the minds of these countries; whether the United States considers this a realistic appraisal; whether the United States has an interest in the stability and security of the countries concerned; and finally, whether, if the United States does not supply these weapons, these countries would remain without weapons. In the case of the arms shipments to which the United States has agreed, we believe that the answer to each

question can be affirmative—and in view of the various balance-of-payments considerations that I have earlier outlined, also in our interest. But the controlling decision is not a commercial one. The controlling decision is the political one that I explained.

Q: Four or five questions on Cuba. The first one asks whether you have any comment on Senator Sparkman's recent remarks about resuming U.S. relations with Cuba and what are the chances that U.S. policy towards Cuba will change this year.

A: I'm brave but not reckless. [Laughter.]

In the spirit of partnership between the Congress and the Executive that I called for recently, I would like to say that we are examining our policy toward Cuba—that we are prepared to look at various of the measures that have been taken in the inter-American system with a view toward seeing what can be done in our Cuban relationship.

Q: Do you see any possibility, Mr. Secretary, of an opportunity for the United States to sell some goods to Cuba in the near future to help us with our balance of payments?

A: Whatever decision will be made on Cuba is not going to be dictated by economic considerations. It will grow out of our assessment in the international context, as well as our overall relationships with the Western Hemisphere.

Q: Let's switch to the Eastern Hemisphere for a moment. A member of the audience notes that Chinese leaders are reportedly dissatisfied at the pace of Sino-American rapprochement. When will the United States recognize mainland China? Will it be during President Ford's visit to China this year? And, presuming, when will we withdraw U.S. troops from Taiwan?

A: I read these accounts with great interest, but of course we can only deal with the expressions that the Chinese leaders make to American officials. And we do not have the impression that the Chinese leaders are dissatisfied with the state of Chinese-American relations. We are committed in the Shanghai communique to proceed toward the normalization of relations with the People's Republic of China. We are determined to carry out not only the letter but the spirit of the Shanghai communique; and we will base our improving relations with the People's Republic of China on these principles.

Q: Within a few days, the Prime Minister of Pakistan will be paying a visit to Washington. Is the United States ready to lift the embargo on

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arms to Pakistan when Prime Minister Bhutto is
here this week?

A: The question about Pakistan, an ally which is in the curious position of being subject to American embargo, is always before us—especially at a time when the Prime Minister of Pakistan visits the United States. No decisions have yet been made, and I doubt that any final decision will be made while Prime Minister Bhutto is here. But of course it is always a subject that is seriously examined in preparation for his visit and of course will be discussed.

Q: A pair of questions on Viet-Nam. Is the division of South Viet-Nam into Government and Viet Cong regions a feasible way to stop the fighting? Or—to put it another way—another questioner asks: Despite any agreements that have been made or will be made, do you feel there can be peace in Viet-Nam as long as North Vietnamese troops occupy any part of South Viet-Nam?

A: The United States has always been prepared, together with the Government in Saigon, to see to it that peace is maintained in South Viet-Nam along the demarcation lines that existed when the armistice agreement was signed. It is the Communist side which has consistently refused to agree to a demarcation and to deploy the international control teams by which such a demarcation would be insured.

Under the agreement in January 1973, there was no requirement for the withdrawal of the North Vietnamese troops which were then in South Viet-Nam. But there was a flat prohibition against any further increase in their numbers—or, indeed, a flat prohibition against sending any new personnel. This prohibition has been consistently violated from the very first day of the agreement. And the only security problem in South Viet-Nam is the presence of North Vietnamese military forces.

Q: Back to the Western Hemisphere. Today's *Washington Post* reported some conclusions by former Chilean Ambassador Orlando Letelier, who alleged that he had been deceived about CIA involvement with the opposition to the Allende government. In retrospect, should any of the CIA's activities have been different—do you regret the outcome?

A: I found it amazing that the front page of a leading newspaper would report a totally unsupported story by an individual who, after all, was not exactly disinterested and who told a rather

amazing tale that he had been invited to the house of a Washington columnist to receive a special message from me.

Now, it would be an interesting question—who exactly passed that message to him that he should come to the house of that columnist. That columnist does not remember such an incident; I do not remember such an incident. And while our denial was duly reported in the last paragraph of the story, one would not be able to determine that from the front page of an article that can only be designed to prove that I was telling a lie for purposes that are totally unclear by a man who has a profound interest in the problem. And I might say I find it particularly painful because I have not been uninvolved in his release from prison in Chile. [Applause.]

Q: A pair of questions here about food as it relates to the present energy crisis. One questioner wants to know if there is a plan to use food as a weapon in the strategy of the consuming nations against the oil-producing countries.

A: In my first public statement as Secretary of State, two days after I was sworn in, I proposed the convening of a World Food Conference. I did so because it seemed to me that if we were serious about our assertions that the world was interdependent and that a new world order had to be instituted based on this principle, then we had a moral and political obligation to use the resource which we have in surplus for the benefit of all of mankind. We made proposals at the World Food Conference which were designed to alleviate the chronic food shortage that exists all over the world; and we emphasized that whatever the level of American food aid, we would not be able to deal with the chronic problem by American food alone—that it was necessary to increase the productivity, especially in less developed countries, to improve the distribution, and to take other fundamental measures of agricultural reform, to which the United States will contribute.

With respect to American food aid, which is a separate problem, a very large percentage of this food aid is given for primarily humanitarian purposes. There are, of course, countries where we are conscious that this food aid also helps us politically, and we have no reason to apologize for this. But even in those countries there is a profound need for food.

We have worked closely with Senator [Hubert H.] Humphrey, with Senator [Mark O.] Hatfield—first, to produce the maximum level of food aid

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that was possible and, secondly, to allocate it in
a manner that met both the humanitarian and
other needs of this country.

Q: In that connection, Mr. Secretary, in the
final moments of drafting the budget, $178
million was apparently added to the total avail-
able for the P.L. 480 Food for Peace program.
Some people are crediting you with arguing for
the addition of that $178 million. Who is going
to receive it? How much of the total food aid
available will go to most seriously affected [MSA]
countries? Have Cambodia and South Viet-Nam
been added to the MSA list?

A: I can hardly keep up with the newspaper
reports printing the breakdown of various working
papers with respect to food aid, none more recent,
incidentally, than 2 months. I frankly don't
know the exact figure that was added in recent
weeks to the budget. But, again, if you remember—
I don't know why I assume that each of you
remember every detail of every speech I gave; I
look at my staff here and they have to open staff
meetings by rehearsing them, in spite of their
prayers. [Laughter.]

But in that speech I indicated that the United
States would support the highest possible level

of food aid. The only reason we did not announce
the level then was because of the impact on
American domestic prices and because we were
afraid that if the result of announcing a high level
of food aid would be to push up the American
domestic food prices, that then congressional
support for the food aid program might evaporate
altogether. Therefore we have consistently been
at the highest level that was compatible with our
domestic price structure.

Now that the recent crop reports have indicated
that we have adequate food supplies, we have, as
a matter of course, gone to the high levels. And
it is not the case that this was suddenly jury-
rigged in order to produce a particular effect.
With respect to the allocations required by the
Congress between the humanitarian and other
purposes, we have worked out this arrangement
with all the Senators and Congressmen who have
shown a particular interest in the problem.

To answer your specific question, Viet-Nam
and Cambodia have not been added to the MSA
list, even though, in fairness, the only reason they
are not on the MSA list of the United Nations is
because Viet-Nam is not in the United Nations.

THE CHAIRMAN: Thank you very much.

DEPARTMENT OF STATE, U.S.A.
WASHINGTON, D.C. 20520

POSTAGE AND FEES PAID
DEPARTMENT OF STATE
STA-501

PRESS
As delivered
DEPARTMENT OF STATE

[Y]

February 3, 1975

No. 42

As Prepared for Delivery

EMBARGOED UNTIL DELIVERY, SCHEDULED FOR 1:00 P.M. E.S.T. MONDAY, FEBRUARY 3, 1975. NOT TO BE PREVIOUSLY PUBLISHED, QUOTED FROM OR USED IN ANY WAY.

ADDRESS BY
THE HONORABLE HENRY A. KISSINGER
SECRETARY OF STATE
BEFORE THE NATIONAL PRESS CLUB
WASHINGTON, D.C.
FEBRUARY 3, 1975

Ladies and Gentlemen:

On Wednesday, the Governing Board of the International Energy Agency convenes in Paris for its monthly meeting. This organization, which grew out of the Washington Energy Conference, represents one of the major success stories of cooperation among the industrialized democracies in the past decade. In recent months it has begun to mobilize and coordinate the efforts of the industrial democracies in energy conservation, research and development of new energy sources. The IEA (already has) put in place many of the building blocks of a coordinated energy policy. At its forthcoming meeting, the United States will advance comprehensive proposals for collective action, with special emphasis on the development of new energy sources and the preparation of a consumer position for the forthcoming dialogue with the producers. (which I shall review here)

Equally important, we are now engaged in a vital national debate on the purposes and requirements of our national energy program. Critical decisions will soon be made by the Congress -- decisions that will vitally affect other nations as well as ourselves.

## The Nature of the Challenge

The international and national dimensions of the energy crisis are crucially linked. What happens with respect to international energy policy will have a fundamental effect on the economic health of this nation. And the international economic and energy crisis cannot be

For further information contact:

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PR #42

solved without purposeful action and leadership by the United States.
Domestic and international programs are inextricably linked.]

The energy crisis burst upon our consciousness because of sudden, un-
suspected events. But its elements have been developing gradually for
the better part of two decades.

In 1950, the United States was virtually self-sufficient in oil. In 1960, our reliance on foreign oil had grown to 16% of our total needs. In 1973, it had reached 35%. If this trend is allowed to continue, the 1980s will see us dependent on imported oil for fully half of our needs. The impact on our lives will be revolutionary.

This slow but inexorable march toward dependency was suddenly intensified in 1973 by an oil embargo and price increases of 400% in less than a single year. These actions -- largely the result of political decisions -- created an immediate economic crisis, both in this country and around the world. A reduction of only 10% of the imported oil, and lasting less than half a year, cost Americans half a million jobs and over one percent of national output; it added at least five percentage points to the price index, contributing to our worst inflation since World War II; it set the stage for a serious recession; and it expanded the oil income of the OPEC nations from $23 billion in 1973 to a current annual rate of $110 billion, thereby effecting one of the greatest and most sudden transfers of wealth in history.

Have we learned nothing from the past year? If we permit our oil consumption to grow without restraint, the vulnerability of our economy to external disruptions will be grossly magnified. And this vulnerability will increase with every passing year. Unless strong, corrective steps are taken, a future embargo would have a devastating impact on American jobs and production. More than 10% of national employment and output, as well as a central element of the price structure of the American economy, would be subject to external decisions over which our national policy can have little influence.

As we learned grimly in the 1920s and 30s, profound political consequences inevitably flow from massive economic dislocations. Economic distress fuels social and political turmoil; it erodes the confidence of the people in democratic government and the confidence of nations in international harmony. It is fertile ground for conflict, both domestic and international.

The situation is not yet so grave. [But it threatens to become so. The entire industrialized world faces at the same time a major crisis of the economy, of the body politic and of the moral fibre. We and our partners are being tested -- not only to show our technical mastery of the problems of energy, but even more importantly to show if we can act with foresight to regain control of our future.]

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PR #42

For underlying all difficulties, and compounding them, is a crisis of the spirit -- the despair of men and nations that they have lost control over their destiny. Forces seem loose beyond the power of government and society to manage.

As it is, the energy crisis is still soluble. Of all nations, the United States is most affected by the sudden shift from near self-sufficiency to severe dependence on imported energy. But it is also in the best position to meet the challenge. A major effort now -- of conservations, of technological innovation, of international collaboration -- can shape a different future for us and for the other countries of the world. A demonstration-of American resolve now will have a decisive effect in leading other industrial nations to work together to reverse present trends towards dependency. Today's apparently pervasive crisis can in retrospect prove to have been the beginning of a new period of creativity and cooperation.

One of our highest national priorities must be to reduce our vulnerability to supply interruption and price manipulation. But no one country can solve the problem alone. Unless we pool our risks and fortify the international financial system, balance of payments crises will leave all economies exposed to financial disruption. Unless all consuming nations act in parallel to reduce energy consumption through conservation and to develop new sources of supply, the efforts of any one nation will prove futile; the price structure of oil will not be reformed; and the collective economic burden will grow. And unless consumers concert their views, the dialogue with the producers will not prove fruitful.

There is no escape. The producers may find it in their interest to ease temporarily our burdens! But the price will be greater dependence and greater agony a few years from now. Either we tackle our challenge immediately or we will confront it again and again in increasingly unfavorable circumstances in the years to come. If it is not dealt with by this Administration, an even worse crisis will be faced by the next -- and with even more anguishing choices.

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PR #42

We and our partners in the International Energy Agency have been, for
a year, pursuing a strategy in three phases:

-- The first phase is to protect against emergencies. We must be prepared to deter the use of oil or petrodollars as political weapons and, if that fails, we must have put ourselves in the best possible defensive position. To do this, we have established emergency sharing programs to cope with new emergencies, and we created new mechanisms to protect our financial institutions against disruption. This stage of our common strategy is well on the way to accomplishment.

-- The second phase is to transform the market conditions for OPEC oil. If we act decisively to reduce our consumption of imported oil and develop alternative sources, pressure on prices will increase. Measures to achieve this objective are now before the International Energy Agency or national parliaments; we expect to reach important agreements on them before the end of March.

-- Once the consumer nations have taken these essential steps to reduce their vulnerability, we will move to the third stage of our strategy -- to meet with the producers to discuss an equitable price, market structure and long-term economic relationship. Assuming the building blocks of consumer solidarity are in place, we look toward a preparatory meeting for a producer-consumer conference before the end of March.

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PR #42

And in January, the major industrial nations decided to create a $25 billion solidarity fund for mutual support in financial crises -- less than two months after it was first proposed by the United States. This mutual insurance fund will furnish loans and guarantees to those hardest hit by payments deficits, thus safeguarding the international economy against shifts, withdrawals or cutoffs of funds by the producers.

The next step, *must* be to accelerate our efforts in the conservation and development of new energy sources. Action in these areas, taken collectively, will exert powerful pressures on the inflated price. No cartel is so insulated from economic conditions that its price structure is invulnerable to a transformation of the market. Because of the reduced consumption in the past year, OPEC has already shut down a fourth of its capacity, equaling nine million barrels a day, in order to keep the price constant. New oil exploration, accelerated by the fivefold higher price, is constantly discovering vast new reserves outside of OPEC. The $10 billion in new energy research in the US -- on the scale of the Manhattan Project and the moon-landing program -- is certain to produce new breakthroughs sooner or later.

As the industrialized nations reduce consumption and increase their supply, it will become increasingly difficult for OPEC to allocate the further production cuts that will be required among its members. Even now, some OPEC members are shaving prices to keep up their revenue and their share of the market. Indeed, it is not too soon in this decade of energy shortages to plan for the possibility of energy surpluses in the 1980s.

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PR #42

## Conservation

Let me now turn to more detail to the problem of conservation.

Unconstrained consumption of cheap oil is the principal cause of the present vulnerability of the industrial countries. Neither the U.S. nor other consumers can possibly reduce their dependence on imports until they reverse the normal -- which is to say wasteful -- growth of consumption.

There is simply no substitute for conservation. Alternative energy supplies will not be available for five or ten years. In the next few years conservation, and only conservation, will enable us both to absorb the present burden of high energy costs and to begin to restore the balance of consumer/producer relations.

Some say we face a choice between conservation and restoring economic growth. The contrary is true. Only by overcoming exorbitant international energy costs can we achieve reliable long-term growth. If we doom ourselves to 50% dependence on imported energy, with the supply and price of a central element of our economy subject to external manipulation, there is no way we can be sure of restoring and sustaining our jobs and growth. These decisions will depend on foreign countries for whom our prosperity is not necessarily a compelling objective.

To be sure, conservation -- by any method -- will have an economic cost. The restructuring which it entails away from production and consumption of energy-intensive goods incurs short-term dislocations. At a time of recession, this must concern us. Yet these costs are small compared to what will be exacted from us if we do not act. Without conservation, we will perpetuate the vulnerability of our economy and our national policy. And we will perpetuate as well the excessive international energy prices which are at the heart of the problem.

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PR #42

At present, the United States -- in the midst of a recession -- is importing 6.7 million barrels of oil a day. When our economy returns to full capacity that figure will rise; by 1977 it will be 8 or 9 million barrels a day in the absence of conservation. Imports will continue to grow thereafter. Even with new production in Alaska and the outer continental shelf, this import gap will remain if we do not reduce consumption significantly and rapidly.

With these prospects in mind, President Ford has set the goal of saving a million barrels a day of imports by the end of this year and two million by 1977. That amounts to the increase in dependence that would occur as the economy expands again, in the absence of a conservation program.

Our conservation efforts will be powerfully reinforced by the actions of our IEA partners and of other interested countries such as France. Their collective oil consumption equals ours, and they are prepared to join with us in a concerted program of conservation; indeed some of them have already instituted their own conservation measures. But any one country's efforts will be nullified unless they are complemented by other consumers. This is why the United States has proposed to its IEA partners that they match our respective conservation targets. Together we can save two million barrels a day this year; and at least four million barrels in 1977.

If these goals are reached, under current economic conditions OPEC will have to reduce its production further; even when full employment returns, OPEC will have a surplus capacity. More reductions will be hard to distribute on top of the existing cutbacks of 9 million barrels a day. As a result, pressures to increase production or to lower prices will build up as ambitious defense and development programs get under way. By 1977 some oil producers will have a payments deficit; competition between them for the available market will intensify. The cartel's power to impose an embargo and to use price as a weapon will be greatly diminished.

But if America -- the least vulnerable and most profligate consumer -- will not act, neither will anyone else. Just as our action will have a multiplier effect, so will our inaction stifle the efforts of others. Instead of reducing our collective imports, we will have increased them by two to four million barrels a day. OPEC's ability to raise prices [which is now is question] will be restored. In exchange for a brief respite of a year or two, we will have increased the industrialized world's vulnerability to a new and crippling blow [from the producers]. And when that vulnerability is exposed to public view through a new embargo or further price rises, the American people will be entitled to ask why their leaders failed to take the measures they could have when they should have.

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PR # 42

One embargo -- and one economic crisis -- should be enough to
underline the implications of dependency.

Now let me turn to the problem of new supplies.
Conservation measures alone, crucial as they are, cannot permanently
reduce our dependence on imported oil. To eliminate dependence
over the long term we must accelerate the development of alternative
sources of energy. This will involve a massive and complex task.
But for the country which broke the secret of fission in five years
and landed men on the moon in eight years, the challenge should
be exciting. The Administration is prepared to invest in this
enterprise on a scale commensurate with those previous pioneering
efforts; we are ready as well to share the results with our IEA
partners on an equitable basis, so regards it.

Many of the industrialized countries are blessed with major energy
reserves which have not yet been developed -- North Sea oil,
German coal, coal and oil deposits in the United States and nuclear
power in all countries. We have the technical skill and resources
to create synthetic fuels from shale oil, tarsands, coal gasification
and liquefaction. And much work has already been done on such
advanced energy sources as breeder reactors, fusion and solar power.

The cumulative effort will of necessity be gigantic. The United
States alone shall seek to generate capital investments in energy
of $500 billion over the next ten years. The federal government will
by itself invest $10 billion in research into alternative energy
sources over the next five years, a figure likely to be doubled
when private investment in research is included.

But if this effort is to succeed, we must act now to deal with
two major problems -- the expense of new energy sources and the
varying capacities of the industrialized countries.

This disparity in cost poses a dilemma. If the industrial
countries succeed in developing alternative sources on a large
scale, the demand for OPEC oil will fall, and international prices
may be sharply reduced. Inexpensive imported oil could then
jeopardize the investment made in the alternative sources; the
lower oil prices would also restimulate demand, starting again
the cycle of rising imports, increased dependence and vulnerability.

Thus paradoxically, in order to protect the major investments
in the industrialized countries that are needed to bring the
international oil prices down, we must ensure that the price for
oil on the domestic market does not fall below a certain level.

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PR # 42

In order to bring about adequate investment in the development of conventional nuclear and fossil energy sources, the major oil importing nations should agree that they will not allow imported oil to be sold domestically at prices which would make those new sources non-competitive.

This objective could be achieved in either of two ways: The consumer nations could agree to establish a common floor price for imports, to be implemented by each country through methods of its own choosing such as import tariffs, variable levies, or quotas. Each country would thus be free to obtain balance of payments and tax benefits, without restimulating consumption, if the international price falls below agreed levels. Alternatively, IEA nations could establish a common IEA tariff on oil imports. Such a tariff could be set at moderate levels and phased in gradually as the need arises.

President Ford is seeking legislation requiring the Executive Branch to use a floor price or other appropriate measures to achieve price levels necessary for our national self-sufficiency goals.

Intensive technical study would be needed to determine the appropriate level at which prices should be protected. We expect that they will be considerably below the current world oil prices. They must, however, be high enough to encourage the long-range development of alternative energy sources.

These protected prices would in turn be a point of reference for an eventual consumer-producer agreement. To the extent that OPEC's current high prices are caused by fear of precipitate later declines, the consuming countries, in return for an assured supply, should be prepared to offer producers an assured price for some definite period so long as this price is substantially lower than the current price.

In short, the massive development of alternative sources by the industrial countries will confront OPEC with a choice: they can accept a significant price reduction now in return for stability over a longer period; or they can run the risk of a dramatic break in prices when the program of alternative sources begins to pay off. [The longer OPEC waits, the stronger our bargaining position becomes.]

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PR #42

Each of these elements will be in great demand, and ways must be found to pool them effectively. [The consumers, therefore, have an interest in participating in each other's energy development programs.]

Therefore, the United States will propose to the IEA this Wednesday the creation of a synthetic fuels consortium within IEA. Such a body would enable countries willing to provide technology and capital to participate in each other's synthetic energy projects. The United States is committed to develop a national synthetic fuel capacity of one million barrels a day by 1985; other countries will establish their own programs. These programs should be coordinated, and IEA members should have an opportunity to share in the results by participating in the investment. [Qualifying participants would have access to the production of the synthetics program in proportion to their investment.]

In addition, the United States will propose the creation of an energy research and development consortium within IEA. Its primary task will be to encourage, coordinate and pool large scale national research efforts in fields -- like fusion and solar power -- where the costs in capital equipment and skilled manpower are very great, the lead times very long, but the ultimate payoff in low-cost energy potentially enormous.

The consortium also would intensify the comprehensive program of information exchange which -- with respect to coal, nuclear technology, solar energy, and fusion -- has already begun within the IEA. [We are prepared to earmark a substantial proportion of our own research and development resources for cooperative efforts with other IEA countries which are willing to contribute. Pooling the intellectual effort of the great industrial democracies is bound to produce dramatic results.]

PR #42

-11-

> When all these measures are implemented, what started as crisis will have been transformed into opportunity; the near panic of a year ago will have been transformed into hope; vulnerability will have been transformed into strength.

## The Mutual Interests of Consumers and Producers

Let me now turn to consumer-producer relations. Consumer solidarity is not an end in itself. In an interdependent world, our hopes for prosperity and stability rest ultimately on a cooperative long-term relationship between consumers and producers.

This has always been our objective. It is precisely because we wish that dialogue to be substantive and constructive that we have insisted that consumers first put their own house in order. Collective actions to restore balance to the international economic structure, and the development in advance of common consumer views on the agenda, will contribute enormously to the likelihood of the success of the projected consumer-producer dialogue. Without these measures, discussions will only find us restating our divisions, and tempt some to seek unilateral advantages at the expense of their partners. The result will be confusion, demoralization and inequity, rather than a just reconciliation between the two sides.

> A conciliatory solution with the producers is imperative for there is no rational alternative. The destinies of all countries are linked to the health of the world economy. The producers seek a better life for their peoples and a future free from dependence on a single depleting resource; the industrialized nations seek to preserve the hard-earned economic and social progress of centuries; the poorer nations seek desperately to resume their advance toward a more hopeful existence. The legitimate claims of producers and consumers, developed and developing countries, can and must be reconciled in a new equilibrium of interest and mutual benefit.

We must begin from the premise that we can neither return to past conditions nor tolerate present ones indefinitely. Before 1973, market conditions were often unfair to the producers. Today they are unbearable for the consumers; they threaten the very fabric of the international economic system on which, in the last analysis, the producers are as dependent for their well-being as the consumers.

> As the consumers approach their preparatory meeting with the producers, what are the basic principles that should guide them?

> First, we should explore cooperative consumer-producer action to recycle the huge financial surpluses now accumulating. The oil producers understand that these new assets -- which are far greater than they can absorb -- may require new management mechanisms. At the same time,

PR #42

-12-

Second, and closely related to this, is the need to examine our internal investment policies. The oil producers need productive outlets for their revenues; the industrial democracies, while they should welcome new investment, will want to retain control of essential sectors of their economies. These needs can be reconciled through discussion and agreement between consumers and producers.

Fourth, the oil producing countries and the industrial consuming countries share a responsibility to ease the plight of the poorest nations, whose economies have been devastated by OPEC's price increases.

And finally,

A central issue, of course, will be price. It is vital to agree on prices for the long run which will satisfy the needs of consumers and producers alike. The balance of payments crisis of the consumers must be eased; at the same time, the producers are entitled to know that they can count on a reasonable level of income over a period of time.

In sum, consumers and producers are at a crossroads. We have the opportunity to forge new political and institutional relationships, or we can go our separate ways, each paying the price for our inability to take the long view. Mutual interest should bring us closer together; only selfishness can keep us apart. The American approach will be conciliatory, and constructive.

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PR #42

The implications for the structure of world politics are profound. If we act with statesmanship we can shape a new relationship between consumer and producer, between developed and developing nations, that will mark the last quarter of the Twentieth Century as the beginning of the first truly global, truly cooperative international community.

## The Need for United Action

The United States will soon celebrate the 200th anniversary of its independence. In those two hundred years Americans have gloried in freedom, used the blessings of nature productively, and jealously guarded our right to determine our fate. In so doing, we have become the most powerful nation on earth and a symbol of hope to those who yearn for progress and value justice. Yet now we sometimes seem uncertain of our future, disturbed by our recent past, and confused as to our purpose.

But our hopes for the future rest heavily on the decisions we take on our own domestic energy program in the days and weeks ahead. Our example -- for good or ill -- will chart the course for more than ourselves alone. If we hesitate or delay, so will our partners. Undoing measures already instituted, without putting an alternative program in their place, will have implications far transcending the immediate debate.

The United States bears world responsibility not simply from a sense of altruism or abstract devotion to the common good -- although those are attributes hardly deserving of apology. We bear it, as well, because we recognize that America's jobs and prosperity -- and our hopes for a better future -- decisively depend upon a national effort to fashion a unified effort with our partners abroad. Together we can retain control over our affairs and build a new international structure with the producers. Apart we are hostages to fate.

A domestic program that will protect our independence; a cooperative program with other consumers; and accommodation with producers -- these are the indispensable and inseparable steps toward a new equilibrium of interest and justice. [No one step can succeed in the absence of the other two.]

Energy: The Necessity of Decision

ADDRESS BY SECRETARY KISSINGER ¹

On Wednesday, the Governing Board of
the International Energy Agency (IEA)
convenes in Paris for its monthly meeting.
This organization, which grew out of: the
Washington Energy Conference, represents
one of the major success stories of coopera-
tion among the industrialized democracies
in the past decade. In recent months it has
begun to mobilize and coordinate the efforts
of the industrial democracies in energy con-
servation, research, and development of new
energy sources. The IEA already has put in
place many of the building blocks of a co-
ordinated energy policy. At the forthcoming
meeting, the United States will advance
comprehensive proposals for collective ac-
tion, with special emphasis on the develop-
ment of new energy sources and the prepara-
tion of a consumer position for the forth-
coming dialogue with the producers.

Equally important, we are now engaged
in a vital national debate on the purposes
and requirements of our national energy
program. Critical decisions will soon be made
by the Congress, decisions that will vitally
affect other nations as well as ourselves.

on the economic health of this nation. And
the international economic and energy crisis
cannot be solved without purposeful action
and leadership by the United States. Domes-
tic and international programs are inex-
tricably linked.

The energy crisis burst upon our con-
sciousness because of sudden, unsuspected
events. But its elements have been develop-
ing gradually for the better part of two
decades.

In 1950, the United States was virtually
self-sufficient in oil. In 1960, our reliance on
foreign oil had grown to 16 percent of our
requirements. In 1973, it had reached 35
percent. If this trend is allowed to continue,
the 1980's will see us dependent on imported
oil for fully half of our needs. The impact
on our lives will be revolutionary.

This slow but inexorable march toward
dependency was suddenly intensified in 1973
by an oil embargo and price increases of 400
percent in less than a single year. These ac-
tions—largely the result of political deci-
sions—created an immediate economic crisis,
both in this country and around the
world. A reduction of only 10 percent of
the imported oil, and lasting less than half
a year, cost Americans half a million jobs
and over 1 percent of national output; it
added at least 5 percentage points to the
price index, contributing to our worst in-
flation since World War II; it set the stage
for a serious recession; and it expanded the
oil income of the OPEC [Organization of
Petroleum Exporting Countries] nations
from $23 billion in 1973 to a current annual
rate of $110 billion, thereby effecting one of
the greatest and most sudden transfers of
wealth in history.

¹ Made before the National Press Club at Washing-
ton on Feb. 3; as prepared for delivery (text from
press release 42).

February 24, 1975

237

dependent on oil imports has been corre-
spondingly greater. In all industrial coun-
tries, economic and political difficulties that
had already reached the margin of the abil-
ity of governments to manage have threat-
ened to get out of control.

Have we learned nothing from the past year? If we permit our oil consumption to grow without restraint, the vulnerability of our economy to external disruptions will be grossly magnified. And this vulnerability will increase with every passing year. Unless strong corrective steps are taken, a future embargo would have a devastating impact on American jobs and production. More than 10 percent of national employment and output, as well as a central element of the price structure of the American economy, would be subject to external decisions over which our national policy can have little influence.

As we learned grimly in the 1920's and
1930's, profound political consequences in-
evitably flow from massive economic disloca-
tions. Economic distress fuels social and
political turmoil; it erodes the confidence of
the people in democratic government and the
confidence of nations in international har-
mony. It is fertile ground for conflict, both
domestic and international.

The situation is not yet so grave. But it
threatens to become so. The entire indus-
trialized world faces at the same time a
major crisis of the economy, of the body
politic, and of the moral fiber. We and our
partners are being tested—not only to show
our technical mastery of the problems of
energy but, even more important, to show if
we can act with foresight to regain control
of our future.

For underlying all difficulties, and com-
pounding them, is a crisis of the spirit—the
despair of men and nations that they have
lost control over their destiny. Forces seem
loose beyond the power of government and
society to manage.

In a sense we in America are fortunate
that political decisions brought the energy
problem to a head before economic trends
had made our vulnerability irreversible.
Had we continued to drift, we would even-
tually have found ourselves swept up by

As it is, the energy crisis is still soluble.
Of all nations, the United States is most
affected by the sudden shift from near self-
sufficiency to severe dependence on imported
energy. But it is also in the best position to
meet the challenge. A major effort now—of
conservation, of technological innovation, of
international collaboration—can shape a
different future for us and for the other
countries of the world. A demonstration of
American resolve now will have a decisive
effect in leading other industrial nations to
work together to reverse present trends to-
ward dependency. Today's apparently per-
vasive crisis can in retrospect prove to have
been the beginning of a new period of cre-
ativity and cooperation.

One of our highest national priorities
must be to reduce our vulnerability to sup-
ply interruption and price manipulation. But
no one country can solve the problem alone.
Unless we pool our risks and fortify the
international financial system, balance-of-
payments crises will leave all economies ex-
posed to financial disruption. Unless all con-
suming nations act in parallel to reduce
energy consumption through conservation
and to develop new sources of supply, the
efforts of any one nation will prove futile,
the price structure of oil will not be re-
formed, and the collective economic burden
will grow. And unless consumers concert
their views, the dialogue with the producers
will not prove fruitful.

The actions which the United States takes
now are central to any hope for a global solu-
tion. The volume of our consumption, and its
potential growth, are so great that a deter-
mined national conservation program is es-
sential. Without the application of American
technology and American enterprise, the
rapid development of significant new sup-
plies and alternative sources of energy will
be impossible.

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Department of State Bulletin

immediately, or we will confront it again and
again in increasingly unfavorable circum-
stances in the years to come. If it is not dealt
with by this Administration, an even worse
crisis will be faced by the next—and with
even more anguishing choices.

History has given us a great opportunity
disguised as a crisis. A determined energy
policy will not only ease immediate diffi-
culties, it will help restore the international
economy, the vitality of all the major indus-
trial democracies, and the hopes of mankind
for a just and prosperous world.

We and our partners in the International
Energy Agency have been, for a year, pursu-
ing strategy in three phases:

—The first phase is to protect against emergencies. We must be prepared to deter the use of oil or petrodollars as political weapons, and if that fails, we must have put ourselves in the best possible defensive position. To do this, we have established emergency sharing programs to cope with new embargoes and created new mechanisms to protect our financial institutions against disruption. This stage of our common strategy is well on the way to accomplishment.

—The second phase is to transform the market conditions for OPEC oil. If we act decisively to reduce our consumption of imported oil and develop alternative sources, pressure on prices will increase. Measures to achieve this objective are now before the International Energy Agency or national parliaments; we expect to reach important agreements on them before the end of March.

—Once the consumer nations have taken
these essential steps to reduce their vulner-
ability, we will move to the third stage of
our strategy: to meet with the producers to
discuss an equitable price, market structure,
and long-term economic relationship. Assum-
ing the building blocks of consumer solidar-
ity are in place, we look toward a prepara-
tory meeting for a producer-consumer con-
ference before the end of March.

Our actions in all these areas are inter-
related. It is not possible to pick and choose;
since they are mutually reinforcing, they are
essential to each other. No emergency pro-
gram can avail if each year the collective
dependence on OPEC oil increases. New
sources of energy, however vast the invest-
ment program, will be ineffective unless
strict measures are taken to halt the run-
away, wasteful growth in consumption. Un-
less the industrial nations demonstrate the
political will to act effectively in all areas,
the producers will be further tempted to
take advantage of our vulnerability.

In recent months we and our partners
have taken important steps to implement
our overall strategy. Two safety nets against
emergencies have been put in place. In
November, the IEA established an unprece-
dented plan for mutual assistance in the
event of a new embargo. Each participating
nation is committed to build an emergency
stock of oil. In case of embargo, each nation
will cut its consumption by the same per-
centage, and available oil will be shared. An
embargo against one will become an embargo
against all.

And in January, the major industrial na-
tions decided to create a $25 billion solidar-
ity fund for mutual support in financial
crises—less than two months after it was
first proposed by the United States. This
mutual insurance fund will furnish loans and
guarantees to those hardest hit by payments
deficits, thus safeguarding the international
economy against shifts, withdrawals, or cut-
offs of funds by the producers.

The next steps should be to accelerate our
efforts in the conservation and development
of new energy sources. Action in these areas,
taken collectively, will exert powerful pres-
sures on the inflated price. No cartel is so
insulated from economic conditions that its
price structure is invulnerable to a trans-
formation of the market. Because of the
reduced consumption in the past year, OPEC
has already shut down a fourth of its capac-
ity, equaling 9 million barrels a day, in order
to keep the price constant. New oil explora-
tion, accelerated by the fivefold-higher price,
is constantly discovering vast new reserves

February 24, 1975

239

outside of OPEC. The $10 billion in new energy research in the United States—on the scale of the Manhattan project and the moon-landing program—is certain to produce new breakthroughs sooner or later.

## Conservation

There is simply no substitute for conservation. Alternative energy supplies will not be available for five or ten years. In the next few years conservation, and only conservation, will enable us both to absorb the present burden of high energy costs and to begin to restore the balance of consumer-producer relations.

other efforts and defensive measures is called into question.

To be sure, conservation—by any method—will have an economic cost. The restructuring away from production and consumption of energy-intensive goods which it entails incurs shortrun dislocations. At a time of recession, this must concern us. Yet these costs are small compared to what will be expected from us if we do not act. Without conservation, we will perpetuate the vulnerability of our economy and our national policy. And we will perpetuate as well the excessive international energy prices which are at the heart of the problem.

At present, the United States—in the midst of recession—is importing 6.7 million barrels of oil a day. When our economy returns to full capacity that figure will rise; by 1977, it will be 8 or 9 million barrels a day in the absence of conservation. Imports will continue to grow thereafter. Even with new production in Alaska and the outer continental shelf, this import gap will remain if we do not reduce consumption significantly and rapidly.

240

Department of State Bulletin

as France. Their collective oil consumption equals ours, and they are prepared to join with us in a concerted program of conservation; indeed, some of them have already instituted their own conservation measures. But any one country's efforts will be nullified unless they are complemented by other consumers. This is why the United States has proposed to its IEA partners that they match our respective conservation targets. Together we can save 2 million barrels a day this year and at least 4 million barrels in 1977.

If these goals are reached, under current economic conditions OPEC will have to reduce its production further; even when full employment returns, OPEC will have surplus capacity. More reductions will be hard to distribute on top of the existing cutbacks of 9 million barrels a day. As a result, pressures to increase production or to lower prices will build up as ambitious defense and development programs get underway. By 1977, some oil producers will have a payments deficit; competition between them for the available market will intensify. The cartel's power to impose an embargo and to use price as a weapon will be greatly diminished.

But if America—the least vulnerable and most profligate consumer—will not act, neither will anyone else. Just as our action will have a multiplier effect, so will our inaction stifle the efforts of others. Instead of reducing our collective imports, we will have increased them by 2-4 million barrels a day. OPEC's ability to raise prices, which is now in question, will be restored. In exchange for a brief respite of a year or two, we will have increased the industrialized world's vulnerability to a new and crippling blow from the producers. And when that vulnerability is exposed to public view through a new embargo or further price rises, the American people will be entitled to ask why their leaders failed to take the measures they could have when they should have.

Conservation measures alone, crucial as they are, cannot permanently reduce our dependence on imported oil. To eliminate dependence over the long term, we must accelerate the development of alternative sources of energy. This will involve a massive and complex task. But for the country which broke the secret of fission in five years and landed men on the moon in eight years, the challenge should be exciting. The Administration is prepared to invest in this enterprise on a scale commensurate with those previous pioneering efforts; we are ready as well to share the results with our IEA partners on an equitable basis.

Many of the industrialized countries are blessed with major energy reserves which have not yet been developed—North Sea oil, German coal, coal and oil deposits in the United States, and nuclear power in all countries. We have the technical skill and resources to create synthetic fuels from shale oil, tar sands, and coal gasification and liquefaction. And much work has already been done on such advanced energy sources as breeder reactors, fusion, and solar power.

The cumulative effort will of necessity be gigantic. The United States alone shall seek to generate capital investments in energy of $500 billion over the next 10 years. The Federal Government will by itself invest $10 billion in research into alternative energy sources over the next five years, a figure likely to be doubled when private investment in research is included.

This disparity in cost poses a dilemma. If the industrial countries succeed in developing alternative sources on a large scale, the demand for OPEC oil will fall, and inter-

February 24, 1975

241

national prices may be sharply reduced. Inexpensive imported oil could then jeopardize the investment made in the alternative sources; the lower oil prices would also stimulate demand, starting again the cycle of rising imports, increased dependence, and vulnerability.

Thus, paradoxically, in order to protect the major investments in the industrialized countries that are needed to bring the international oil prices down, we must insure that the price for oil on the domestic market does not fall below a certain level.

In order to bring about adequate investment in the development of conventional nuclear and fossil energy sources, the major oil-importing nations should agree that they will not allow imported oil to be sold domestically at prices which would make those new sources noncompetitive.

This objective could be achieved in either of two ways. The consumer nations could agree to establish a common floor price for imports, to be implemented by each country through methods of its own choosing such as import tariffs, variable levies, or quotas. Each country would thus be free to obtain balance-of-payments and tax benefits without restimulating consumption, if the international price falls below agreed levels. Alternatively, IEA nations could establish a common IEA tariff on oil imports. Such a tariff could be set at moderate levels and phased in gradually as the need arises.

In short, the massive development of alternative sources by the industrial countries will confront OPEC with a choice: they can accept a significant price reduction now in return for stability over a longer period, or they can run the risk of a dramatic break in prices when the program of alternative sources begins to pay off. The longer OPEC waits, the stronger our bargaining position becomes.

Each of these elements will be in great demand, and ways must be found to pool them effectively. The consumers therefore have an interest in participating in each other's energy development programs.

Therefore the United States will propose to the IEA this Wednesday the creation of a synthetic fuel consortium within IEA. Such a body would enable countries willing to provide technology and capital to participate in each other's synthetic energy projects. The United States is committed to develop a national synthetic fuel capacity of 1 million barrels a day by 1985; other countries will establish their own programs. These programs should be coordinated and IEA members should have an opportunity to share in the results by participating in the investment. Qualifying participants would have access to the production of the synthetics program in proportion to their investment.

242

Department of State Bulletin

The consortium also would intensify the comprehensive program of information exchange which—with respect to coal, nuclear technology, solar energy, and fusion—has already begun within the IEA. We are prepared to earmark a substantial proportion of our own research and development resources for cooperative efforts with other IEA countries which are willing to contribute. Pooling the intellectual effort of the great industrial democracies is bound to produce dramatic results.

When all these measures are implemented, what started as crisis will have been transformed into opportunity; the near-panic of a year ago will have been transformed into hope; vulnerability will have been transformed into strength.

## Mutual Interests of Consumers and Producers

This has always been our objective. It is precisely because we wish that dialogue to be substantive and constructive that we have insisted that consumers first put their own house in order. Collective actions to restore balance to the international economic structure, and the development in advance of common consumer views on the agenda, will contribute enormously to the likelihood of the success of the projected consumer-producer dialogue. Without these measures, discussions will only find us restating our divisions and tempt some to seek unilateral advantages at the expense of their partners. The result will be confusion, demoralization, and inequity, rather than a just reconciliation between the two sides.

A conciliatory solution with the producers is imperative, for there is no rational alternative. The destinies of all countries are linked to the health of the world economy.

We must begin from the premise that we can neither return to past conditions nor tolerate present ones indefinitely. Before 1973, market conditions were often unfair to the producers. Today, they are unbearable for the consumers; they threaten the very fabric of the international economic system, on which, in the last analysis, the producers are as dependent for their well-being as the consumers.

Third, we must help the producer nations find productive use for their wealth in their own development and in reducing their de-

February 24, 1975

243

(L)

pendence on a depleting resource. New industries can be established, combining the technology of the industrialized world with the energy and capital of the producers for their own benefit and that of the poorer nations. The creation of fertilizer and petrochemical plants is among the more promising possibilities.

Fourth, the oil-producing countries and the industrial consuming countries share a responsibility to ease the plight of the poorest nations, whose economies have been devastated by OPEC's price increases. Technology and capital must be combined in an international effort to assist those most seriously affected by the current economic crisis.

The United States is ready to begin consultations with the other major consuming nations on this agenda. We will be prepared to expand on these proposals and will welcome the suggestions of our friends so that we can fashion together a common and positive program.

## The Need for United Action

The United States bears world responsibility not simply from a sense of altruism or abstract devotion to the common good, although those are attributes hardly deserving of apology. We bear it, as well, because we recognize that America's jobs and pros-

244

Department of State Bulletin

perity—and our hopes for a better future—
decisively depend upon a national effort to
fashion a unified effort with our partners
abroad. Together we can retain control over
our affairs and build a new international
structure with the producers. Apart we are
hostages to fate.

A domestic program that will protect our
independence, a cooperative program with
other consumers, and accommodation with
producers—these are the indispensable and
inseparable steps toward a new equilibrium
of interest and justice. No one step can suc-
ceed in the absence of the other two.

It is the glory of our nation that when
challenged, we have always stepped forward
with spirit and a will to dare great things.
It is now time to do so again and in so doing
to reaffirm to ourselves and to the world
that this generation of Americans has the
integrity of character to carry on the noble
experiment that began two centuries ago.

QUESTIONS AND ANSWERS

The Chairman [William Broom, president, National Press Club]: Thank you, Mr. Secretary.

Secretary Kissinger: I do not think it is correct to say that the Administration's energy policy is based on an increase in price. The Administration's energy policy attempts to reduce consumption. The increase in price that is designed to reduce consumption will be rebated to the American public so that the inflationary impact will be severely minimized, if not eliminated. So we are not dealing here with an increase in price that produces a balance-of-payments drain. We are dealing with a technical measure designed

Q. Our audience has many questions for you today, Mr. Secretary. A second one here concerns what you anticipate from our allies. The first questioner asks, what result might you foresee if IEA nations do not all agree on some method of establishing floor prices; specifically, what results if only the U.S.A. does so? And secondly, someone wonders if you can identify or expect any European country or any consuming nation not to act in parallel in the consumer bloc.

Secretary Kissinger: The proposal about a floor price will of course only be formally submitted to our allies on Wednesday. But we have had some exploratory conversations which lead us to believe that the proposal will receive a sympathetic reception. The United States is of course in a position to establish such a price for itself, and given the scale of its investment, it could carry out a very massive program for the development of alternative energy sources. But in order to achieve the objectives which I have described, the cooperation of all the consumers would be extremely important.

I would not want to identify—indeed, I do
not know any consumers that are likely to
disagree. I believe that the cooperation of
the nations in IEA, as I pointed out in my
speech, has been one of the great success
stories of the last decade and a half. Within
the space of less than a year, very major
steps have been taken in the field of con-
servation, in the field of emergency sharing,
and in the field of financial solidarity. And
I have every confidence that the spirit of
cooperation that has brought us to this point
will hold in the months ahead.

Q. A number of questions on price. What do you estimate the protected price of oil will be? For how long will it be protected? How will the long-term protected price be affected by inflation? And based on your remarks, what do you believe is the minimum price per barrel for domestic oil that will be required to keep U.S. investments competitive?

February 24, 1975

245

PR #42

THE CHAIRMAN: Thank you, Mr. Secretary.

I failed to inform you in my earlier remarks
that the Ambassador of the Federal Republic of Germany
is also in the audience today.

(Applause)

Mr. Secretary, in November you, the Secretary
of the Treasury and Mr. Arthur Burns, the Chairman of the
Federal Reserve Board, all made speeches emphasizing the
imperative need to bring about a lowering of the OPEC prices
of oil. Now the Administration is advocating an energy
policy based upon a price even higher than the OPEC price.
What happened between November and now?

SECRETARY KISSINGER: I do not think it is correct
to say that the Administration's energy policy is based on
an increase in price. The Administration's energy policy
attempts to reduce consumption. The increase in price that
is designed to reduce consumption will be rebated to
the American public so that the inflationary impact will be
severely minimized, if not eliminated. So we are not
dealing here with an increase in price that produces a
balance of payments drain. We are dealing with a technical

PR #42

-16-

THE CHAIRMAN: Our audience has many questions for
you today, Mr. Secretary. A second one here concerns what you
anticipate from our Allies. The first questioner asks --
what result might you foresee if IEA nations do not all agree
on some method of establishing floor prices; specifically,
what results if only the U.S.A. does so. And secondly, someone
wonders if you can identify or expect any European country
or any consuming nation not to act in parallel in the consumer
bloc.

SECRETARY KISSINGER: The proposal about a floor
price will, of course, only be formally submitted to our Allies
on Wednesday. But we have had some exploratory conversations
which lead us to believe that the proposal will receive a
sympathetic reception. The United States is, of course,
in a position to establish such a price for itself, and
given the scale of its investment, it could carry out a very
massive program for the development of alternative energy sources
But in order to achieve the objectives which I have described,
the cooperation of all the consumers would be extremely important

PR #42

-17-

I would not want to identify -- indeed, I do not know any consumers that are likely to disagree. I believe that the cooperation of the nations in IEA, as I pointed out in my speech, has been one of the great success stories of the last decade-and-a-half. Within the space of less than a year, very major steps have been taken in the field of conservation, in the field of emergency sharing, and in the field of financial solidarity. And I have every confidence that the spirit of cooperation that has brought us to this point will hold in the months ahead.

THE CHAIRMAN: A number of questions on price.

SECRETARY KISSINGER: Well, the precise price would have to be established first by more detailed technical studies, and then in consultation with our partners that also have an interest in the problem. However, it can be stated now that the protected price would be

PR #42

-18-

THE CHAIRMAN: If the cost of oil in the United States and in the major industrial nations remains above the level of exported oil, or communist country prices, how are U.S. or European exporters of petrochemicals going to cope with competition from Eastern European or other nations?

SECRETARY KISSINGER: Well, this assumes that there is an unlimited capacity by the Soviet Union to expand its oil exports at lower prices, and we doubt seriously that this capacity exists.

THE CHAIRMAN: Have you had any reaction as yet from the oil producing countries' leaders regarding President

PR #42

-19-

What is the possibility that the oil producing
countries will use that as a reason for a further price increase?

SECRETARY KISSINGER: We have not had any reaction
from the oil producing countries with respect to the President's
import tax. I believe also that the oil producers very
clearly understand the difference between a price increase
that compounds a balance of payments deficit and a price
increase that is rebated to the consumers.

THE CHAIRMAN: Do you agree, Mr. Secretary, with
Senator Church's proposal that the United States set up
an oil purchasing agency as one way of eliminating unnecessary
competition for profits and supplies?

SECRETARY KISSINGER: I have frankly not had an
opportunity to study this proposal in great detail, and I
therefore would rather withhold judgment.

THE CHAIRMAN: An enterprising member of the audience
asks -- can we trade U.S. wheat for Russian oil?

SECRETARY KISSINGER: That, too, is something I
would like to examine a little bit. (Laughter) (Applause)

THE CHAIRMAN: We have a number of questions on
other countries, particularly the Middle East, where you will

PR #42.

-20-

Will it be possible to arrange a further military
disengagement on the Sinai with Egypt without further
progress with Syria on the Golan Heights? And secondly,
will the time come when the United States will have to deal
with the Palestine Liberation Organization?

SECRETARY KISSINGER: If I didn't believe that
there was some possibility of progress in further negotiations
I would not obviously go to the Middle East. Of course
any step that is taken should only be considered as an interim
step towards a final peace. And all other of the nations
in the Middle East will have to participate in that next
step, or will have to participate, not in the forthcoming
step, but will have to participate in a negotiation for a
final peace.

THE CHAIRMAN: How do you explain shipments of
American airplanes to the Middle East and to the Arab
countries in view of the possibility of the renewal of an

PR #42

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Arab embargo on oil?

SECRETARY KISSINGER: In my press conference last week, I explained the American policy with respect to arms shipments to other countries as follows: the questions that have to be answered are whether a threat to the security of these countries exists in the minds of these countries; whether the United States considers this a realistic appraisal; whether the United States has an interest in the stability and security of the countries concerned; and finally, whether, if the United States does not supply these weapons, these countries would remain without weapons. In the case of the arms shipments to which the United States has agreed, we believe that the answer to each question can be affirmative -- and in view of the various balance of payments considerations that I have earlier outlined, also in our interest. But the controlling decision is not a commercial one. The controlling decision is the political one that I explained.

(LO)

PR #42

-22-

THE CHAIRMAN: Four or five questions on Cuba.
The first one asks whether you have any comment on
Senator Sparkman's recent remarks about resuming U. S.
relations with Cuba and what are the chances that U. S.
policy towards Cuba will change this year.

SECRETARY KISSINGER: I'm brave but not
reckless: (Laughter.)

In the spirit of partnership between the
Congress and the Executive that I called for recently, I
would like to say that we are examining our policy towards
Cuba -- that we are prepared to look at various of the
measures that have been taken in the inter-American system
with a view towards seeing what can be done in our Cuban
relationship.

THE CHAIRMAN: Do you see any possibility, Mr.
Secretary, of an opportunity for the United States to
sell some goods to Cuba in the near future to help us
with our balance of payments?

SECRETARY KISSINGER: Whatever decision will
be made on Cuba is not going to be dictated by economic
considerations. It will grow out of our assessment,
in the international context, as well as our overall relation
ships with the Western Hemisphere.

PR #42

-23-

THE CHAIRMAN: Let's switch to the Eastern Hemisphere for a moment. A member of the audience notes that Chinese leaders are reportedly dissatisfied at the pace of Sino-American rapproachment. When will the United States recognize Mainland China? Will it be during President Ford's visit to China this year? And, presuming, when will we withdraw U. S. troops from Taiwan?

SECRETARY KISSINGER: I read these accounts with great interest, but of course we can only deal with the expressions that the Chinese leaders make to American officials. And we do not have the impression that the Chinese leaders are dissatisfied with the state of Chinese-American relations. We are committed in the Shanghai Communique to proceed towards the normalization of relations with the People's Republic of China. We are determined to carry out not only the letter but the spirit of the Shanghai Communique, and we will base our improving relations with the People's Republic of China on these principles.

THE CHAIRMAN: Within a few days, the

(L)

PR #42

-24-

Prime Minister of Pakistan will be paying a visit to Washington. Is the United States ready to lift the embargo on arms to Pakistan when Prime Minister Bhutto is here this week?

SECRETARY KISSINGER: The question about Pakistan, an ally which is in the curious position of being subject to American embargo, is always before us -- especially at a time when the Prime Minister of Pakistan visits the United States. No decisions have yet been made, and I doubt that any final decision will be made while Prime Minister Bhutto is here. But, of course, it is always a subject that is seriously examined in preparation for his visit and of course will be discussed.

THE CHAIRMAN: A pair of questions on Viet-Nam. Is the division of South Viet-Nam into Government and Viet Cong regions a feasible way to stop the fighting? Or -- to put it another way -- another questioner asks: Despite any agreements that have been made or will be made, do you feel there can be peace in Viet-Nam as long as North Vietnamese troops occupy any part of South Viet-Nam?

SECRETARY KISSINGER: The United States has always

PR #42

-25-

It is the Communist side which has consistently refused to agree to a demarcation and to deploy the international control teams by which such a demarcation would be ensured.

Under the agreement in January 1973, there was no requirement for the withdrawal of the North Vietnamese troops which were then in South Viet-Nam. But there was a flat prohibition against any further increase in their numbers -- or, indeed, a flat prohibition against sending any new personnel. This prohibition has been consistently violated from the very first day of the Agreement. And the only security problem in South Viet-Nam is the presence of North Vietnamese military forces.

PR #42

-26-

CLO

THE CHAIRMAN: Back to the Western Hemisphere.
Today's _Washington Post_ reported some conclusions by
former Chilean Ambassador Orlando Letelier, who alleged that
he had been deceived about CIA involvement with the opposition
to the Allende Government. In retrospect, should any
of the CIA's activities have been different, do you
regret the outcome?

SECRETARY KISSINGER: I found it amazing
that the front page of a leading newspaper would report
a totally unsupported story by an individual who,
after all, was not exactly disinterested and who told
a rather amazing tale that he had been invited to the
house of a Washington columnist to receive a special
message from me.

Now, it would be an interesting question --
who exactly passed that message to him that he should
come to the house of that columnist. That columnist does
not remember such an incident; I do not remember such an
incident. And while our denial was duly reported
in the last paragraph of the story, one would not be able
to determine that from the front page of an article
that can only be designed to prove that I was telling
a lie for purposes that are totally unclear by a man who

PR #42

-28-

THE CHAIRMAN: A pair of questions here about food as it relates to the present energy crisis.
One questioner wants to know if there is a plan to use food as a weapon in the strategy of the consuming nations against the oil-producing countries.

SECRETARY KISSINGER: In my first public statement as Secretary of State, two days after I was sworn in, I proposed the convening of a World Food Conference. I did so because it seemed to me that if we were serious about our assertions that the world was interdependent and that a new world order had to be instituted based on this principle, then we had a moral and political obligation to use the resource which we have in surplus for the benefit of all of mankind.
We made proposals at the World Food Conference which were designed to alleviate the chronic food shortage that exists all over the world; and we emphasized that whatever the level of American food aid, we would not be able to deal with the chronic problem by American food alone -- that it was necessary to increase the productivity, especially in less developed countries, to improve the distribution and to take other fundamental measures of agricultural reform to which the United States will contribute.

(LC)

PR #42

-29-

With respect to American food aid -- which is a separate problem -- a very large percentage of this food aid is given for primarily humanitarian purposes. There are, of course, countries where we are conscious that this food aid also helps us politically; and we have no reason to apologize for this. But even in those countries there is a profound need for food.

We have worked closely with Senator Humphrey, with Senator Hatfield -- first, to produce the maximum level of food aid that was possible; and, secondly, to allocate it in a manner that met both the humanitarian and other needs of this country.

THE CHAIRMAN: In that connection, Mr. Secretary, in the final moments of drafting the budget, 178 million dollars was apparently added to the total available for the PL 480 Food for Peace Program. Some people are crediting you with arguing for the addition of that 178 million. Who is going to receive it? How much of the total food aid available will go to most seriously affected countries? Have Cambodia and South Viet-Nam been added to the MSA list?

PR #42

-30-

SECRETARY KISSINGER: I can hardly keep up with the newspaper reports printing the breakdown of various working papers with respect to food aid -- none more recent, incidentally, than two months.

I, frankly, don't know the exact figure that was added in recent weeks to the budget. But, again, if you remember -- I don't know why I assume that each of you remember every detail of every speech I gave; I look at my staff here and they have to open staff meetings by rehearsing them, in spite of their prayers (laughter). But in that speech I indicated that the United States would support the highest possible level of food aid. The only reason we did not announce the level then was because of the impact on American domestic prices and because we were afraid that if the result of announcing a high level of food aid would be to push up the American domestic food prices, that then Congressional support for the food aid program might evaporate altogether.

Therefore, we have consistently been at the highest level that was compatible with our domestic price structure.

PR #42

-31-

Now that the recent crop reports have indicated that we have adequate food supplies, we have, as a matter of course, gone to the high levels. And it is not the case that this was suddenly jury-rigged in order to produce a particular effect. With respect to the allocations required by the Congress between the humanitarian and other purposes, we have worked out this arrangement with all the Senators and Congressmen who have shown a particular interest in the problem. To answer your specific question, Viet-Nam and Cambodia have not been added to the MSA list, even though, in fairness, the only reason they are not on the MSA list of the UN is because Viet-Nam is not in the UN.

THE CHAIRMAN: Before going to the final question, Mr. Secretary, I want to present you with a certification of appreciation for your appearance here today. It is awarded in recognition of meritorious service from correspondents of the press, radio and television in the Nation's Capital (applause) -- and with it, Mr. Secretary, a scarf for Nancy and a windbreaker for you (laughter) for those cold nights.

PR #42

-32-

(Applause.)

Your interest in American professional football is said to be exceeded only by your interest in European soccer. Our final questioner wants to know: Do you think Billy Kilmer will be traded? (Laughter and applause.)

SECRETARY KISSINGER: First of all, I would like to point out the ruthless way of diplomacy. The Embassy of the Federal Republic of Germany, knowing my intense interest in soccer, sends me the scores and the standing of the Federal Soccer League.

during periods when relations between the Federal Republic and the United States are tolerably good.

(Laughter.) I regret to say I have not received anything in recent weeks, even though I can't imagine what I have done wrong! (Laughter.)

With respect to whether I think Billy Kilmer will be traded, I'd better answer another question.

Thank you very much. (Laughter and applause.)

DEPARTMENT OF STATE

Washington, D.C. 20520

2/4/75

TO: S - Mr. Gompert

FROM: PA/ML - Edward F. Roeder

Attached is a transcript of the entire
PBS "Great Decisions" program on "The
Soviet Union Today" (produced by WGTV,
Georgia).

The Secretary's remarks appear at the
beginning and end of the program. It
will be aired by WETA (PBS, Washington)
on Sunday, February 9 at 3:00 p.m.

GREAT DECISIONS '75

402

The Soviet Union Today

Funds for Great Decisions '75 provided by the University of
Georgia Foundation.

JAMES RESTON: Obviously, the United States does business with all kinds of different nations and different systems, with monarchies, with dictatorships of the right, dictatorships of the left. You have to deal, after all, with the world as it is. You can't sit around waiting for the world to be the way you like it.

REG MURPHY: Detente is a French word which originally meant to release the cocked hammer of a rifle. It has come to mean the relaxation of tensions between nations. The goal of American foreign policy in recent years has been to relax our relationships with the Soviet Union, to ease the cocked hammer back into the safety position, if you will. I'm Reg Murphy, your host on Great Decisions. We have come to the State Department to examine the status of detente. Secretary of State Henry Kissinger is the principal shaper of detente from the American side. He has been involved in the technological and trade negotiations as well as arms limitations. And though the events unfolding daily have been confusing, there still is faith in the procedures here at the State Department.

Mr. Secretary, what's the rationale for detente?

HENRY KISSINGER: There are two aspects, one negative and one positive. On the I might call the negative side is the problem that in the nuclear age a war would have totally different implications than ever before in history. None of the superpowers can afford or has the moral right to base its policy on the threat of war against each other, because when there are tens of millions of casualties involved on both sides, the leaders would assume a responsibility not only towards their own people but towards all of humanity. So whoever is in office in Washington, and I suspect whoever is in office in Moscow, will be driven sooner or later to the realization that the threat of nuclear war must be first reduced and then eliminated. Every president in the post war period has come to this conclusion. And, therefore, from that point of view detente is not a partisan matter but is the national policy of the United States. On the positive side when two nations have this tremendous power and, moreover, control so much

2

of the world's resources, they have an obligation to contri-
bute to constructing an international system that is less un-
stable than those that historically have produced conflict.
And for these reasons we have strongly emphasized detente in
our foreign policy, and we would like to phase it in such a
way that it becomes irreversible on both sides.

**MURPHY:** Does the United States benefit primarily from a military aspect from detente?

**KISSINGER:** Well, I think all of humanity benefits from the reduction of the danger of war. We have made good progress in reducing some of the military aspects. We have one SALT agreement concluded, a limitation of Strategic arms, and we are in the process of negotiating another one. If that succeeds, as I think it will, there will be a ceiling put on nuclear weapons, strategic nuclear weapons, for the first time in the nuclear age. But, in addition, we hope that over time a relationship develops so that crises can be contained before they get out of hand through political cooperation. And, of course, while we've had a setback in the economic field and the Soviet Union found itself unable to accept the Trade Bill under the terms in which it was offered, we consider this a temporary interruption.

**MURPHY:** You said the other day that Congress would begin to consider some other kind of bill. Has that bill been formulated? And what does it attempt to do?

**KISSINGER:** Well, we have not put a bill before Congress. I would like to consult with the Congressional leaders before we go back to Congress to see whether when we go back we could ask something that has a chance of being accepted without the controversy that marked the two years of the previous debate. We are not going to do this in any spirit of recrimination because as I've repeatedly said we are serious people with serious objectives. I'd rather see how we can solve the common problem.

**MURPHY:** Is it fair to say that you feel optimistic about the future of detente, and that you believe that it will be worked out over a period of time with the full agreement of Congress?

**KISSINGER:** I believe first that any foreign policy today must have the full agreement of Congress and secondly that I'm optimistic about the long range prospects of detente and that we'll work it out with the Congress.

3

MURPHY: According to historian Theodore Draper the United States and the Soviet Union have a limited adversary relationship rather than a true detente. What we used to call the Cold War, we now call detente. It is, says Draper, in the mutual interest of the United States and the Soviet Union to avoid war and progress toward this goal may not in itself constitute genuine detente. Again, James Reston:

RESTON: Well, obviously, it's in the interest of the United States and the Soviet Union to avoid a nuclear war. That's, on the face of it, you're talking about -- you're really asking whether it's in the interest of the two countries to live or die. So, that is obvious. But it's also obvious, I think, that this is not detente in the normal sense. What we mean by detente is a study of limitation of tension. It's not only the options of war, but it is the creation by the two great nuclear powers of an atmosphere in the world which enables the normal processes of life to go on.

MURPHY: If in fact what we're calling detente is, as Mr. Reston says, not detente in the normal sense, what is?

RESTON: We have, for example, in our relations with our two great neighbors in Mexico and in Canada a perfect illustration of what is meant by detente. Here in the north we have a boundary of over 3000 miles and in the south a boundary with Mexico of roughly 2000 miles. There is a condition of mutual trust there on the part of all three countries. These boundaries are totally undefended. And in that sense you have a perfect illustration of what detente ought to be.

MURPHY: In September of last year the Senate Foreign Relations Committee held hearings on United States-Soviet relations. Testifying before that Committee Former Secretary of State Dean Rusk said, "I have just about reached the conclusion that if real progress is to be made, the approach must be wholesale rather than retail and must involve dramatic simplicity." Mr. Rusk, what did you mean by that statement?

DEAN RUSK: Well, I've invested a lot of study in various efforts at disarmament since World War One, and I think that one can see that where the negotiations get involved in great detail-- how you equate a six inch gun against an eight inch gun, how you compare one fighter plane with another, or one missie with another--that such efforts usually fail. My mind goes back to the Naval Conference of 1922 when Secretary Charles Evans Hughes cut through a lot of that detail and said, "Three, three, two: three for Britain, three for the United States, two for Japan." Now, I think that in the field of strategic missiles, we ought to try to do it very simply. I would prefer not a 24 hundred aggregate on both sides as agreed at Vladivostok, but 18 hundred, 12 hundred, get it down. I gather

4

we tried to get a lower figure, but the Soviets would not agree. But we ought to get something that is so simple that everyone can understand it, that can be reasonably verified, and will not be paralyzed by the infinite discussion of detail in a fruitless manner, month without end.

**MURPHY:** And I take it that you mean, when you say "wholesale and not retail," that you have in mind breaking apart one part of the negotiations from another. That is to say, not tying trade to military and all the linkages that are involved.

**RUSK:** That's right. The more subjects you link together in a given negotiation, the more difficult an agreement becomes. For example, in the Law of the Sea Conference at the present time we have eight or ten major subjects that are all linked together, and the prospects for agreement there are rather negative. Usually, you can get agreement a step at a time on one issue at a time: Antarctica, or the Test Ban Treaty, or a Civil Air Agreement between Moscow and Washington. Let's take these things a bit at a time, because we might be able to make some headway there; but if we put them all together in the same basket, sheer complexity will make agreement extraordinarily difficult.

**MURPHY:** Is it possible to say how the Soviets react? Had they rather react to one area at a time and not make it more complex, or do they prefer to get all of the arguments going at the same time?

**RUSK:** Well, I think we've found during the sixties that they are willing to take up one subject at a time. Despite the terrible Berlin crisis of '61-'62 and the Cuban missile crisis, nevertheless, we got the Test Ban Treaty, the Civil Air Agreement, the Non-proliferation Treaty, two Space Treaties, and the Consular Agreement between us and the Soviet Union; so, I think, we have to understand that both sides understand that we have an extraordinarily important common interest, and that is to avoid nuclear war, because that's mutually suicidal.

**MURPHY:** And any one step toward the negotiation is better than no step at all, in the sense that if we're taking a step in any one of these areas, we're not likely to go to nuclear war.

**RUSK:** Right. And we shouldn't overlook the importance of a series of small steps. Now, it wasn't a big deal when the United States agreed with the Soviets that Pan America would fly into Moscow and Aeroflot would fly into New York, but every little bit helps. And you might then begin to broaden the base of common interest and narrow the range of those issues upon which violence can occur.

5

**MURPHY:** So detente actually has to do with the one process of doing one simple thing at a time?

**RUSK:** Yes. And despite major disagreements on other issues. Remember the Berlin crisis of the early sixties and the Cuban missile crisis. We felt that we had to begin the process of probing for agreements, not despite those disagreements, but because of them. It was urgent for the two nuclear powers to try to find a way to get a meeting of the minds on something, and so we were prepared to go after little things as well as large things.

**MURPHY:** Are we then making progress in our relations with the Soviet Union? In recent weeks we have seen the rejection of the Trade Bill, Soviet emigration has been restricted even more, and tensions continue to build in the Middle East. Where are we now?

**RESTON:** Well, we're in a bit of a bind right now on the question of trade with the Soviet Union. As you know, primarily through the activity of Senator Jackson of Washington we have made an arrangement to grant to the Soviet Union equality of treatment or the so called "most favored nation" agreement with the Soviet Union. But a condition was put in there insisting that the Soviet Union agree to a certain total of emigration of its minority people, particularly Jews to Israel. Now the Soviet Union has come along and rejected the trade agreement on the ground that the condition of emigration was an interference by the United States with the Soviet Union's internal policy, so that you cannot say that for the time being that detente is making progress under the Ford Administration. But on the other hand some advantage has been gained, I suppose, by the Vladivostok Arms Agreement between the two countries. They have managed, at least, to negotiate an agreement whereby both sides limit the number of offensive nuclear weapons. This is the first time that has ever happened in the relations between the two countries, and in that sense it's a good thing.

**MURPHY:** Mr. Rusk, the Soviet rejection of the Trade Bill seems to be a set back for detente. Where do you see us going from here?

**RUSK:** Well, detente is not a condition in which all problems are solved. It's a process of trying to find agreement despite differences of view. It's my impression that the Soviets were irritated because of the rather severe limitation on the lending power of the Export Import Bank. I think they were hoping for and expecting very substantial long term loans at relatively low interest rates to help them buy high technology in this country. Now when there was so much public attention to the emigration issue, I think also they found it embarrassing to acknowledge that there was any kind of understanding of any sort on that matter, because from their

6

point of view this was an intrusion into their internal affairs.
So my guess is that on trade we will go back to square root
one and start over again.

**MURPHY:** Can we go back to where we were in 1972 and begin the
negotiation all over again in the same kind of good faith that
seemed to be available in the 1972 era?

**RUSK:** Well in trade matters I think the problem is the one
of the old Yankee Trader: whether there is a mutual advan-
tage in trade. I, myself, would hope that we would not sub-
sidize the Soviet economy with large long term loans but would
try to work out trade arrangements that would provide goods
and services coming back to us in exchange for what we send
to them. For example, I'd like to see us getting more min-
erals, perhaps energy supplies, perhaps the products of their
forests; things that we need and could use, so that our ec-
onomy benefits from the materials which they can send us.
But trade is a rather special kind of negotiation, because
it can be practical; it can be down to earth; it can be very
pragmatic: we'll send you this if you'll send us that.
But in the case of the Soviet Union, they can't send us very
much over the barriers of the old Smoot-Harley Tariff of the
1930s unless they can get "most favored nation" treatment,
that is treatment like almost all of our other trading part-
ners get, our tariff walls are so high that they can't gen-
erate the foreign exchange in the American market to be used
by them to buy things from us. So, I doubt that there will
be much expansion of trade until "most favored nations" treat-
ment can be accorded to them.

**MURPHY:** They said at the time that they broke off the 1972
agreement that we had tried to interfere in the domestic af-
fairs of the Soviet Union by talking about and imposing re-
strictions on the emigration policies that they had set for
Jews who wanted to emigrate out of the Soviet Union. Were
we, in fact, intruding on Soviet domestic policy?

**RUSK:** I suppose in a sense we were, just as they're intruding
on our domestic policy when they ask us for longterm loans
from the Export Import Bank, because we've got to generate
that money somehow. But we have to be a little careful on
this. If you look at all of the nations with whom we have
relations, only about thirty of them have domestic political
and constitutional systems that we would find congenial.
The rest of them are various forms of authoritarian regimes
or dictatorships. I don't believe that we would let the Soviet
Union condition trade on certain changes in our system; for
example that we must have eight blacks in the Senate or twelve
women in the Senate. There'd be no trade. So, as I indicat-
ed to a Senate committee not too long ago, I feel that such
conditions ought not to be imposed by legislation. They should

7

(LC]

be handled by quiet conversations under the rug, trying to
modify other people's policy, but not make them an unaccept-
able condition, because then you have an impasse which is
very hard to break through.

**MURPHY:** The man who most generally was recognized as the gen-
erator of all that discussion about what the Soviets should
do about Jews was Senator Henry Jackson from Washington.
It was said that he was intervening in all that because of
domestic political reasons and his own aspirations to the
Presidency. Is that true and is there a system by which we
can keep aspirants to the Presidency out of those negotiations?

**RUSK:** Well, I have known and liked Senator Jackson, but I'm
not close enough to him to be able to assess his motivations.
I do hope that these foreign policy matters would not be dealt
with in terms of electoral politics, because we've had a strong
tradition since World War Two of handling national defense
matters on a non-partisan basis. There is no substantial
difference between the Republican and Democratic Parties on
such issues, and I would hope that the leadership of the heavily
Democratic Congress would do all that they can on their side
to put their heads together with the President and the Secre-
tary of State to try to find a national policy on these matters,
not influenced by party politics and certainly not influenced
by 1976 politics.

**MURPHY:** It seems that Secretary Kissinger has begun now to
brief Congressmen individually and in small groups at the
State Department, trying his best to convince them that there
is a possibility of staying away from these kinds of issues
in the political races that are going to be run. First of
all, does that have a chance of being successful?

**RUSK:** I think so. You know, we have the most complicated
political system in the world. Those who are in it have to
spend an enormous amount of time just to make it work, to
keep it from freezing up like an engine without oil. A Sec-
retary of State will spend more than half of his time on the
domestic arrangements that are required to have policy before
he talks to the foreign at all. And so I think now that Mr.
Kissinger as Secretary of State, rather than the White House,
he will find that he will be spending a great deal of time
with committees and subcommittees and informal groups and
individuals both in the Senate and the House of Representa-
tives.

**MURPHY:** As a matter of procedures and the way we're going to
set priorities, is it more important that we begin to nego-
tiate in the arms area, in the SALT area, in the trade area,
in the emigration area? Where does detente have the best
chance of success at this point?

8

**RUSK:** I would think there are three examples at the moment. If I were a member of Congress and the Vladivostok Agreement came to Congress, I think that I would vote for it. But I would want to press very hard for negotiations as soon as possible to try to get that aggregate number of 2400 launching vehicles down to 1800--1000. I would like to see zero ABMs, because if you have a hundred ABMs in one of these sites that we've now agreed on, if each one of them successfully destroys an incoming missile, that still leaves 2300 launching vehicles on each side and a fraction of that will do the job. So, I'd like to see us get at that for fresh talks continuously and not put it off 'till the 1980s along the lines of the Vladivostok Agreement. I think, also, that we ought to keep in close touch with the Soviet Union about the Middle East. I believe, myself, that both Washington and Moscow have a common interest in an agreed peace in the Middle East, but I'm not sure that they perceive that. It may be that they feel an inclination to compete for influence by riding the Arab wave of hostility toward Israel and somehow driving Western interests and Western relationships out of the Middle Eastern area. So, it's a delicate and dangerous business, but I would hope that we would keep in touch with them to try to probe for possible common approaches to this very stubborn and intractable problem that exists in the Middle East. Finally, I think, there are some general international questions on which we can work together. I'm very glad, for example, that on most of the major items involved in the Law of the Sea negotiations, we and the Soviet Union are very close together. And so, in the broader forums I think we and they on occasion can work together.

**MURPHY:** To talk about the Middle East for a minute, everybody has been concerned about whether that has the potential for an arms race of its own and that it may develop that the Russians, though they were kicked out of Egypt at one point, might go back in with heavier commitments of arms again. Do you foresee that as a possibility?

**RUSK:** I think that's a real possibility. I have, myself, hoped that the outside arms suppliers could somehow put their heads together and agree upon a general level of arms in the Middle East.

**MURPHY:** A SALT for the Middle East?

**RUSK:** Yes. That kind of thing, so that we would not be in a position of competitive suppliers of arms in an unlimited arms race out there. Now we tried that during my period in the State Department, but the Soviet Union was not interested, and I had the impression that President de Gaulle wasn't very interested. But it's too dangerous a situation to allow an unlimited arms race to build up on the basis of an outside supply of weapons. I think this is a point on which interest

9

in peace and good faith could be tested very directly and specifically.

**MURPHY:** Do you feel that the Soviet leadership at the moment is interested more in peace in the Middle East than they were in the period when you were in the State Department, back in those days of the sixties?

**RUSK:** I hope I'm wrong, but I think that they are interested in a high degree of tension between Israel and its Arab neighbors, because they see in that an opportunity to undermine the presence and influence of the United States, of American interests, in the Arab world. Now there are times when they have been, I think, alarmed by the possibility of outbreak of war. I think at one point, just before the outbreak of the June of '67 war, they were trying to counsel moderation in the area. But just shortly before that, they had been stimulating the wildest rumors in the Arab world. So, I'm not sure that I have a very good feel for the basic longterm major premises of the Soviet Union in the Middle East.

**MURPHY:** And the leadership structure seems to be slightly not clear at the moment; we're not quite clear about it.

**RUSK:** Well, they have a sort of committee system, and there's a kind of inertia about committees that we all are familiar with, and so I think we can not expect the dramatic moves for good or for bad that Mr. Khrushchev was capable of and there will be a kind of glacial aspect to their policy that we need to understand better than many of us do now.

**KISSINGER:** I am certain that detente will have its ups and downs. I am certain that in each country there will be domestic opposition to it, and it will always be possible at any one moment of time to debate who gets the greater benefit. But if you look at the long term, there is no question in my mind that we will be driven to -- both sides will be driven to continue detente. And, therefore, in the long term of history I consider it to be a permanent feature. Indeed, if it isn't, there will be an intolerable risk of war.

[L.C]

PRESS
DEPARTMENT OF STATE

February 5, 1975

No. 49

GREAT DECISIONS '75

TRANSCRIPT OF INTERVIEWS WITH THE HONORABLE HENRY A. KISSINGER, SECRETARY OF STATE; DEAN RUSK, FORMER SECRETARY OF STATE; AND JAMES RESTON, NEW YORK TIMES. HOST: REG MURPHY, EDITOR, THE ATLANTA CONSTITUTION

(To be broadcast on the Public Broadcasting System beginning February 5, 1975. WETA Channel 26 will broadcast program at 3:00 p.m. February 9, 1975. Program filmed by the Georgia Center for Continuing Education, University of Georgia.)

The Soviet Union Today

MR. RESTON: Obviously, the United States does business with all kinds of different nations and different systems, with monarchies, with dictatorships of the right, dictatorships of the left. You have to deal, after all, with the world as it is. You can't sit around waiting for the world to be the way you like it.

MR. MURPHY: Detente is a French word which originally meant to release the cocked hammer of a rifle. It has come to mean the relaxation of tensions between nations. The goal of American foreign policy in recent years has been to relax our relationships with the Soviet Union, to ease the cocked hammer back into the safety position, if you will. I'm Reg Murphy, your host on Great Decisions. We have come to the State Department to examine the status of detente. Secretary of State Henry Kissinger is the principal shaper of detente from the American side. He has been involved in the technological and trade negotiations as well as arms limitations. And though the events unfolding daily have been confusing, there still is faith in the procedures here at the State Department.

SECRETARY KISSINGER: There are two aspects, one negative and one positive. On what I might call the negative side is the problem that in the nuclear age a war would have totally different implications than ever before in history. None of the super-powers can afford or has the moral right to base its policy on the threat of war against each other, because when there are tens of millions of casualties involved on both sides, the leaders would assume a responsibility not only towards their own people but towards all of humanity. So whoever is in office in Washington, and I suspect whoever is in office in Moscow, will be driven sooner or later to the realization that the threat of nuclear war must be first reduced and then eliminated. Every President in the post-war period has come to this conclusion. And, therefore, from that point of view detente is not a partisan matter but is the national policy of the United States. On the positive side, when two nations have this tremendous power and, moreover, control so much of the world's resources, they have an obligation to contribute or constructing an international system that is less

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unstable than those that historically have produced conflict. And for these reasons we have strongly emphasized detente in our foreign policy, and we would like to base it in such a way that it becomes irreversible on both sides.

**MR. MURPHY:** Does the United States benefit primarily from a military aspect from detente?

**SECRETARY KISSINGER:** Well, I think all of humanity benefits from the reduction of the danger of war. We have made good progress in reducing some of the military aspects. We have one SALT agreement concluded, a limitation of strategic arms, and we are in the process of negotiating another one. If that succeeds, as I think it will, there will be a ceiling put on nuclear weapons, strategic nuclear weapons, for the first time in the nuclear age. But, in addition, we hope that over time a relationship develops so that crises can be contained, before they get out of hand, through political cooperation. And, of course, while we've had a setback in the economic field and the Soviet Union found itself unable to accept the Trade Bill under the terms in which it was offered, we consider this a temporary interruption.

**MR. MURPHY:** You said the other day that Congress would begin to consider some other kind of bill. Has that bill been formulated? And what does it attempt to do?

**SECRETARY KISSINGER:** Well, we have not put a bill before Congress. I would like to consult with the Congressional leaders before we go back to Congress to see whether when we go back we could ask something that has a chance of being accepted without the controversy that marked the two years of the previous debate. We are not going to do this in any spirit of recrimination -- because as I've repeatedly said we are serious people with serious objectives -- but rather to see how we can solve the common problem.

**MR. MURPHY:** Is it fair to say that you feel optimistic about the future of detente, and that you believe that it will be worked out over a period of time with the full agreement of Congress?

**SECRETARY KISSINGER:** I believe first that any foreign policy today must have the full agreement of Congress and secondly that I'm optimistic about the long range prospects of detente and that we'll work it out with the Congress.

**MR. MURPHY:** According to historian Theodore Draper the United States and the Soviet Union have a limited adversary relationship rather than a true detente. What we used to call the Cold War, we now call detente. It is, says Draper, in the mutual interest of the United States and the Soviet Union to avoid war and progress toward this goal may not in itself constitute genuine detente. Again, James Reston:

**MR. RESTON:** Well, obviously, it's in the interest of the United States and the Soviet Union to avoid a nuclear war. That's on the face of it, you're talking about -- you're really asking whether it's in the interest of the two countries to live or die. So, that is obvious. But it's also obvious, I think, that this is not detente in the normal sense. What we mean by detente is a study of limitation of tension. It's not only the options of war, but it is the creation by the two great nuclear

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**MR. RUSK:** Well, I think we've found during the Sixties that they are willing to take up one subject at a time. Despite the terrible Berlin crisis of 1961-1962 and the Cuban missile crisis, nevertheless, we got the Test Ban Treaty, the Civil Air Agreement, the Non-proliferation Treaty, two space Treaties, and the Consular Agreement between us and the Soviet Union; so, I think, we have to understand that both sides understand that we have an extraordinarily important common interest, and that is to avoid nuclear war, because that's mutually suicidal.

**MR. MURPHY:** And any one step toward the negotiation is better than no step at all, in the sense that if we're taking a step in any one of these areas, we're not likely to go to nuclear war.

**MR. RUSK:** Right. And we shouldn't overlook the importance of a series of small steps. Now, it wasn't a big deal when the United States agreed with the Soviets that Pan America would fly into Moscow and Aéroflot would fly into New York, but every little bit helps. And you might then begin to broaden the base of common interest and narrow the range of those issues upon which violence can occur.

**MR. MURPHY:** So detente actually has to do with the one process of doing one simple thing at a time?

**MR. RUSK:** Yes. And despite major disagreements on other issues. Remember the Berlin crisis of the early Sixties and the Cuban missile crisis. We felt that we had to begin the process of probing for agreements, not despite those disagreements, but because of them. It was urgent for the two nuclear powers to try to find a way to get a meeting of the minds on something, and so we were prepared to go after little things as well as large things.

**MR. MURPHY:** Are we then making progress in our relations with the Soviet Union? In recent weeks we have seen the rejection of the Trade Bill, Soviet emigration has been restricted even more, and tensions continue to build in the Middle East. Where are we now?

**MR. RESTON:** Well, we're in a bit of a bind right now on the question of trade with the Soviet Union. As you know, primarily through the activity of Senator Jackson of Washington we have made an arrangement to grant to the Soviet Union equality of treatment or the so-called "most favored nation" agreement with the Soviet Union. But a condition was put in there insisting that the Soviet Union agree to a certain total of emigration of its minority people, particularly Jews to Israel. Now the Soviet Union has come along and rejected the Trade Agreement on the ground that the condition of emigration was an interference by the United States with the Soviet Union's internal policy, so that you cannot say that for the time being that detente is making progress under the Ford Administration. But on the other hand some advantage has been gained, I suppose, by the Vladivostok Arms Agreement between the two countries. They have managed, at least, to negotiate an agreement whereby both sides limit the number of offensive nuclear weapons. This is the first time that has ever happened in the relations between the two countries, and in that sense it's a good thing.

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MR. MURPHY: Mr. Rusk, the Soviet rejection of the Trade Bill seems to be a setback for detente. Where do you see us going from here?

MR. RUSK: Well, detente is not a condition in which all problems are solved. It's a process of trying to find agreement despite differences of view. It's my impression that the Soviets were irritated because of the rather severe limitation on the lending power of the Export-Import Bank. I think they were hoping for and expecting very substantial long term loans at relatively low interest rates to help them buy high technology in this country. Now when there was so much public attention to the emigration issue, I think also they found it embarrassing to acknowledge that there was any kind of understanding of any sort on that matter, because from their point of view this was an intrusion into their internal affairs. So my guess is that on trade we will go back to square root one and start over again.

MR. MURPHY: Can we go back to where we were in 1972 and begin the negotiation all over again in the same kind of good faith that seemed to be available in the 1972 era?

MR. RUSK: Well, in trade matters I think the problem is the one of the old Yankee trader: whether there is a mutual advantage in trade. I, myself, would hope that we would not subsidize the Soviet economy with large long-term loans but would try to work out trade arrangements that would provide goods and services coming back to us in exchange for what we send to them. For example, I'd like to see us getting more minerals, perhaps energy supplies, perhaps the products of their forests; things that we need and could use, so that our economy benefits from the materials which they can send us. But trade is a rather special kind of negotiation because it can be practical; it can be down to earth; it can be very pragmatic: we'll send you this if you'll send us that. But in the case of the Soviet Union, they can't send us very much over the barriers of the old Smoot-Harley Tariff of the 1930s unless they can get "most favored nation" treatment, that is treatment like almost all of our other trading partners get. Our tariff walls are so high that they can't generate the foreign exchange in the American market to be used by them to buy things from us. So, I doubt that there will be much expansion of trade until "most favored nations" treatment can be accorded to them.

MR. MURPHY: They said at the time that they broke off the 1972 agreement that we had tried to interfere in the domestic affairs of the Soviet Union by talking about and imposing restrictions on the emigration policies that they had set for Jews who wanted to emigrate out of the Soviet Union. Were we, in fact, intruding on Soviet domestic policy?

MR. RUSK: I suppose in a sense we were, just as they're intruding on our domestic policy when they ask for long-term loans from the Export-Import Bank, because we've got to generate that money somehow. But we have to be a little careful on this. If you look at all of the nations with whom we have relations, only about thirty of them have domestic political and constitutional systems that we would find congenial. The rest of them are various forms of authoritarian regimes or dictatorships. I don't believe that we would let the Soviet Union condition trade on certain changes in our system; for example, that we must have eight blacks in the Senate or twelve women in the Senate. There'd be no trade. So, as I indicated to a Senate committee not too long ago, I feel that such conditions ought not

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to be imposed by legislation. They should be handled by quiet conversations under the rug, trying to modify other people's policy, but not make them an unacceptable condition, because then you have an impasse which is very hard to break through.

**MR. MURPHY:** The man who most generally was recognized as the generator of all that discussion about what the Soviets should do about Jews was Senator Henry Jackson from Washington. It was said that he was intervening in all that because of domestic political reasons and his own aspirations to the Presidency. Is that true and is there a system by which we can keep aspirants to the Presidency out of those negotiations?

**MR. RUSK:** Well, I have known and liked Senator Jackson, but I'm not close enough to him to be able to assess his motivations. I do hope that these foreign policy matters would not be dealt with in terms of electoral politics, because we've had a strong tradition since World War II of handling national defense matters on a non-partisan basis. There is no substantial difference between the Republican and Democratic Parties on such issues, and I would hope that the leadership of the heavily Democratic Congress would do all that they can on their side to put their heads together with the President and the Secretary of State to try to find a national policy on these matters, not influenced by party politics and certainly not influenced by 1976 politics.

**MR. MURPHY:** It seems that Secretary Kissinger has begun now to brief Congressmen individually and in small groups at the State Department, trying his best to convince them that there is a possibility of staying away from these kinds of issues in the political races that are going to be run. First of all, does that have a chance of being successful?

**MR. RUSK:** I think so. You know, we have the most complicated political system in the world. Those who are in it have to spend an enormous amount of time just to make it work, to keep it from freezing up like an engine without oil. A Secretary of State will spend more than half of his time on the domestic arrangements that are required to have policy before he talks to the foreign at all. And so I think, now that Mr. Kissinger as Secretary of State, rather than the White House, he will find that he will be spending a great deal of time with committees and subcommittees and informal groups and individuals both in the Senate and the House of Representatives.

**MR. MURPHY:** As a matter of procedures and the way we're going to set priorities, is it more important that we begin to negotiate in the arms area, in the SALT area, in the trade area, in the emigration area? Where does detente have the best chance of success at this point?

**MR. RUSK:** I would think there are three examples at the moment. If I were a member of Congress and the Vladivostok Agreement came to Congress, I think that I would vote for it. But I would want to press very hard for negotiations as soon as possible to try to get that aggregate number of 2400 launching vehicles down to 1800 -- 1000. I would like to see zero ABMs, because if you have a hundred ABMs in one of these sites that we've now agreed on, if each one of them successfully destroys an incoming missile, that still leaves 2300 launching vehicles on each side and a fraction of that will do the job. So, I'd like to see us get at that for fresh talks continuously and not put it off until the 1980s along the lines of the Vladivostok Agreement. I think, also, that we ought to keep

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MR. MURPHY: To talk about the Middle East for a minute, everybody has been concerned about whether that has the potential for an arms race of its own and that it may develop that the Russians, though they were kicked out of Egypt at one point, might go back in with heavier commitments of arms again. Do you foresee that as a possibility?

MR. RUSK: I think that's a real possibility. I have, myself, hoped that the outside arms suppliers could somehow put their heads together and agree upon a general level of arms in the Middle East.

MR. MURPHY: A SALT for the Middle East?

MR. RUSK: Yes. That kind of thing, so that we would not be in a position of competitive suppliers of arms in an unlimited arms race out there. Now we tried that during my period in the State Department, but the Soviet Union was not interested, and I had the impression that President de Gaulle wasn't very interested. But it's too dangerous a situation to allow an unlimited arms race to build up on the basis of an outside apply of weapons. I think this is a point on which interest in peace and good faith could be tested very directly and specifically.

MR. MURPHY: Do you feel that the Soviet leadership at the moment is interested more in peace in the Middle East than they were in the period when you were in the State Department, back in those days of the Sixties?

MR. RUSK: I hope I'm wrong, but I think that they are interested in a high degree of tension between Israel and its Arab neighbors, because they see in that an opportunity to undermine the presence and influence of the United States, of American interests, in the Arab world. Now there are times when they have been, I think, alarmed by the possibility of outbreak of war. I think at one point, just before the outbreak of the June of '67 war, they were trying to counsel modernization in the area. But just shortly before that, they had been stimulating the wildest rumors in the Arab world. So, I'm not sure that I have a very good feel for the basic long-term major premises of the Soviet Union in the Middle East.

MR. MURPHY: And the leadership structure seems to be slightly not clear at the moment; we're not quite clear about it.

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MR. RUSK: Well, they have a sort of committee system, and there's a kind of inertia about committees that we all are familiar with, and so I think we cannot expect the dramatic moves for good or for bad that Mr. Khrushchev was capable of and there will be a kind of glacial aspect to their policy that we need to understand better than many of us do now.

SECRETARY KISSINGER: I am certain that detente will have its ups and downs. I am certain that in each country there will be domestic opposition to it, and it will always be possible at any one moment of time to debate who gets the greater benefit. But if you look at the long term, there is no question in my mind that we will be driven to -- both sides will be driven to continue detente. And, therefore, in the long term of history I consider it to be a permanent feature. Indeed, if it isn't, there will be an intolerable risk of war.

* * * * * * *

IMMEDIATE RELEASE

February 5, 1974

UNITED STATES SENATE
COMMITTEE ON FOREIGN RELATIONS

Secretary of State Henry A. Kissinger began his testimony before the Senate Foreign Relations Committee in executive session on January 29, 1974 with the following statement which the Committee decided to release with the concurrence of the Secretary. The statement as it appears in the Committee transcript has been edited by the Secretary for syntax and grammar, and there are minor deletions. The questions and answers which followed the statement are also deleted.

* * * * *

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[10]

Secretary Kissinger. Mr. Chairman, if you would permit me, before we get into the Middle East, I would like to say a few words to the Committee about a matter that was in the news-papers while I was gone and about which I made a press statement. I should like to make this statement since it concerns testimony I gave before this Committee, and because my relationships with this Committee mean a great deal to me. I wondered, therefore, whether you would let me make a short statement.

The Chairman. Certainly.

Secretary Kissinger. The subject is my relationship with David Young. If you remember, Mr. Chairman, at my confirmation hearings Senator Percy asked me the following question:

"Did you, with respect to David Young when he left your employment and was transferred to Mr. Ehrlichman, have any idea at that time or any subsequent time that he was to be requested to engage in illegal activities, burglary, conspiracy to burglarize or whatever that might be?"

I then gave a long answer explaining my relationship to David Young, the gist of which was that I did not know about the "Plumbers" by that or any other name; that my knowledge of David Young's assignment was that he was to work on the declassification of

documents. I also said, "I did not know from him or anybody else about the existence of the 'Plumbers' by this or any other name, or about his activities in connection with internal security matters."

My answer was in the context of the question that was asked. Let me now sum up my knowledge of the so-called spying activities on my staff and then you gentlemen can decide for yourselves whether my knowledge of David Young's activity constituted knowledge of internal security matters.

I repeat, I stand by every word I have said before the Committee. I did not know about the "Plumbers", I did not know that David Young's assignments included investigation of internal security matters. It was my belief that David Young was assigned to John Ehrlichman's staff to work on declassification and whatever other assignments John Ehrlichman might give him, but I did not know what these other assignments were.

I stated before the Committee, and I repeat again, that based on my recollection and on my logs, which is the only evidence I now have, I never saw David Young after he left my staff, I never telephoned David Young after he left my staff, and I never communicated by any other means with David Young after he left my staff.

I received from David Young three memoranda after he left my staff. They are dated May 11, 1972; June 15, 1972; and

August 11, 1972. Each of them dealt with declassification. I had
no other communication with David Young.

It is, of course, not precluded -- because my logs would not
show it -- that I ran into him in the halls of the White House on
some occasion, or at a cocktail party. I have no such recollection,
but I do want to leave some margin, since something of that sort
could have occurred. But I have no recollection of any meetings with
David Young until he had resigned in March of 1973 and asked me
whether I could help him find another job.

He came to me because, as I have told this Committee, I had
brought him to Washington to work for me originally.

The only other memorandum in my files dealing with David
Young is a note to me from General Haig on December 13, 1971,
which put through a routine promotion for Young. I wrote on that
note "Why are we carrying him when he is working for Ehrlichman?"
These are all the records that I have on David Young.

Now, let me turn to the matter of the alleged spying. You
gentlemen are all familiar with the Anderson stories on the India-
Pakistan War, stories in which there were very substantial leaks of
National Security Council documents in early December, 1971.

Around December 12th or 13th -- I do not have the exact date --
John Ehrlichman called me and said that he was conducting an

- 4 -

investigation into these leaks, that I was not to be told about this
investigation, and that I was not to do anything in connection with
this investigation. He also told me that as part of that investigation
he might have to investigate members of my staff and security
procedures in my office. I told him, through General Haig, that
if there was an investigation of security procedures in my office I
would not object so long as I saw a copy of the report.

They then assigned a man called John Sither, from the
Department of the Air Force, to study the security procedures
in handling classified documents in my office. Sither wrote a
report, a copy of which went to General Haig. I never read that
report because Haig told me there was nothing in it that deserved
attention.

As for the investigation of the leaks themselves, I had
assumed -- although I cannot recall if I had any basis for so assuming --
that this would be conducted by the FBI and other investigative agencies
reporting to John Ehrlichman.

The first knowledge I had of any substance in connection with
this investigation was when I was away and General Haig called me and
told me that Admiral Welander, who was in charge of the JCS Liaison
Office on my staff, had reported to General Haig that, on the basis of
internal evidence, one of the documents that had been leaked to

- 5 -

Anderson had to have come from Admiral Welander's office. General Haig asked me what he should do with that information. I told him to send Admiral Welander to John Ehrlichman because John Ehrlichman was in charge of the investigation. I heard no more for about a week. Then on December 24th John Ehrlichman asked me to come to his office where he played a portion of the tape in which Admiral Welander was interviewed by David Young about his knowledge of the allegedly stolen material. The part of the tape I heard was the new information that was developed as a result of this interview, according to which someone on the staff of the JCS liaison office was reportedly stealing documents from me and transmitting them in an unauthorized way to the office of the Chairman of the Joint Chiefs of Staff. I listened to about 15 minutes of that tape.

You have to remember, gentlemen, that at that time I paid no particular attention to the fact that David Young was conducting the interview. I assumed that he was doing it in his capacity as an Ehrlichman staff member; that he was interviewing a man I had sent to Ehrlichman's office -- a man who had volunteered the information. I frankly attached no importance whatever to the fact that David Young was conducting the interview. I did not construe from that that David Young was conducting an investigation; the "Plumbers" were

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beyond my imagination, and I was much more interested in the substance obtained from that interview than I was in who was conducting the interview of a man whom, I repeat, I had sent there, and whom I would have had interviewed by one of my staff members if I had not previously been told that Ehrlichman was in charge of the investigation, and that I was to stay out of it.

Except for that interview, I was given no other information about the investigation. I did not know that David Young had written a report until I read it in Seymour Hersh's article about two weeks ago. I have never seen the report, I have never had it described to me, nor have I seen the report that was made of this matter to Secretary Laird.

When I said that I did not know that David Young was engaged in internal security matters, what I meant to say was that I did not know that a part of his duties was to investigate internal security affairs. I could not exclude that in his capacity as a member of Ehrlichman's staff he might be given an assignment for a day that included interviewing an individual who had been sent to Ehrlichman's office. Therefore, I maintain what I have said to this Committee. No member of this Committee has asked me -- and I appreciate your courtesy in this respect -- but because our relationship

depends not only on the formal but also on the intangible, I
thought I should tell you everything that I know about this
investigation. This is the totality of my knowledge of what
David Young did.

I call your attention also to the fact that David Young
gave press conferences on March 8, 1972, and in September,
1972, in which he publicly described his duties as having
been declassification. I repeat, this was what I understood
his duty to be, plus whatever other assignments John Ehrlichman
might give him that I did not know about.

[lc]

PRESS
DEPARTMENT OF STATE

February 6, 1974

No. 41

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

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

What are we trying to do?

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

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

A2

The reason that we thought it essential that
those nations that consume and import 35 percent of the
world's energy meet first, is because they have a common
problem of a very large size, that is manageable by cooper-
ative effort only; and that will surely lead to the ruin of
everybody if it is attempted to be settled on a unilateral
basis.

What is the problem?

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

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

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

The price of energy for the less developed

A3

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

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

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

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

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

A4

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

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

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

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

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

A-5

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

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

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

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

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

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

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

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

[Applause.]

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

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

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

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

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

B-1

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

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

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

B-2

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

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

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

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

B-3

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

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

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