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PR 479

with respect to what one would do in similar circumstances, in the case of
a case which has been wildly oversimplified in much of the dis-
cussion -- I think our perception of the problem would not be radically
different from what it was in 1970.

MR. BUCKLEY: Your perception would not be, I'm sure. But does that mean
that you would feel that you could share that perception with the relevant
committees of Congress and win them around -- or do you think that there
has been sea change there?

SECRETARY KISSINGER: Yes, but the sea change that has occurred in America
is not, in my view, caused by the policy that is being conducted vis-a-vis
the Soviet Union and Communist China. The sea change that has been caused
in America is an almost metaphysical revulsion against foreign involvements
that involve risks. And, in fact, the anomaly of the situation in which
we find ourselves is that, on the one hand, there is theoretical anti-
Communism; on the other hand, there is an enormous practical reluctance to
run any of the risks that would be associated with the rhetoric that many
engage in. It is one thing to have a crisis that lasts a day or two --
such as the Cambodia incident, or the Mayaguez incident -- but the real
test is to sustain a crisis over an extended period of time. And there I
would think that anything that looks to the public like a massive foreign
involvement would require the most meticulous justification before it could
be supported. This is our difficulty in the Congress. And it surfaces,
for example, with respect to the technicians that we are proposing, at the
urgent and insistent request of the parties, to send to the Sinai, in
which there is a considerable debate starting over 200 Americans in an area
where there are already --

MR. BUCKLEY: Volunteers.

SECRETARY KISSINGER: -- volunteers -- civilians, unarmed, in an area where
Sweden has over a thousand troops, Finland has nearly a thousand, Austria has
about 800, Canada has hundreds -- troops -- without any debate in their
countries that it might involve them in a war.

This is the psychological environment in which we have to conduct our foreign
policy and which has to be understood when one engages in rhetoric of
confrontation.

MR. BUCKLEY: What caused that?

SECRETARY KISSINGER: I think what has caused it is in part the experience
of Vietnam, in part the experience of Watergate, in part the disillusionment
of the 60s and 70s. But it is a fact that anyone in a responsible position
must take into account.

MR. BUCKLEY: So, therefore, you would not really differentiate my pessimism
from your own. You simply insist that those difficulties that you have
issue from a recalcitrant public.

SECRETARY KISSINGER: No, I am not that pessimistic. I believe that,
first of all, in my travels in the country, I have the sense that the public
wants to believe in its government and wants to believe that it has a sense
of direction. We are going through a period of temporary difficulty, and
I believe we have to adjust our perceptions to a new reality that has
emerged a generation after the end of World War II. We have to explain
that, at one and the same time, we may oppose countries and yet cooperate
with them for specific limited purposes -- that we have an obligation to
prevent nuclear war, and that this nevertheless does not mean that a final
moral reconciliation has taken place.

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PR 479

I believe that this can be done, depending on the willingness of the various leadership groups in this country to accept complexity.

If we insist on simplication, then we will have endless domestic civil wars between simplifiers on both sides of the debate.

**MR. BUCKLEY:** Do you find more resistance to complexity among hard-hats or among Harvard professors?

I won't tell Galbraith what you say.

**SECRETARY KISSINGER:** No. It's about equal.

**MR. BUCKLEY:** About equal. So, therefore, it is a problem. It runs right through all classes of Americans.

**SECRETARY KISSINGER:** Well, I would think that, at least, from where I sit, the public, the general public, despite all the shocks, is less cynical in this country, basically healthier, basically more vital, than in any other Western country. And, therefore, fundamentally, we are the hope of the non-Communist world. If we do not lead, there will be no leadership. And if we do not act with confidence, no one else will.

So I am not basically pessimistic about the future of this country. We tend to tear ourselves apart in our leadership groups with some of the debates that you and I have been discussing here. But structurally I think this country is still a very vital and very hopeful phenomenon.

**MR. BUCKLEY:** Did you find it difficult, when people come to you -- Congressmen, Senators, Governors, and so on -- to bring them around on points that you consider to be vital?

I think, for instance, of the difficulties that you had on the Turkish issue, which struck me as one of the few questions concerning which there is clearly a right answer and a wrong answer. Now, did you actually attempt to persuade Congressmen to permit the sale of arms to Turkey?

**SECRETARY KISSINGER:** Well, I think one of the problems with respect to Turkish aid is that I believe there is clearly a right answer, but I also believe that public opinion at large is not greatly exercised on this issue because it is too obstruse and esoteric for them, therefore, relatively small minorities that are highly organized, very vocal and very passionate, can have a major impact.

Secondly, the original vote on Turkish aid occurred at the absolute low point of Executive authority in the immediate aftermath of --

**MR. BUCKLEY:** Of the resignation of President Nixon?

**SECRETARY KISSINGER:** -- of the resignation of President Nixon and at a time when the Congressional leadership which was with us had lost control of its followers. And so I am certain that if that vote came up today the Congress would never override a Presidential veto.

At that time it overrode three Presidential vetos, really out of a desire to assert itself.

Then I think perhaps we made some mistakes initially in presenting the issue, and that pushed the whole debate in a wrong direction.

I do not think an event like the Turkish aid vote could be repeated today,

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PR 479

but it is symptomatic for what can happen in a slightly disintegrated
situation.

**MR. BUCKLEY:** Well, if it is as important as you say it is, and as important as it is in my opinion, why is there not a greater sense of alarm in Europe and in America over the whole thing?

**SECRETARY KISSINGER:** Oh, I think in Europe there is very profound alarm. The Secretary-General of NATO, for example, has invited himself to Washington -- indeed, he is meeting with the President today -- and, I repeat, he invited himself; we did not invite him -- to register -- he's a good friend of ours, I must say. I emphasize the fact that he invited himself only to indicate the alarm that he is feeling about the erosion of the relationship of Turkey to NATO, which coincides with the alarm we feel about the erosion of our relationship with Turkey under conditions that are of no help to Greece and Cyprus.

It is one of those decisions that help nobody.

**MR. BUCKLEY:** Is the United Nations less and less appropriately the chamber in which questions of this kind can be discussed?

**SECRETARY KISSINGER:** The United Nations, in its present form, has not proved suitable for dealing with the fundamental issues of peace and war. It provides a forum for the exchange of ideas. It sometimes provides a vehicle in which parties can meet conveniently. It does a useful job on certain technical problems.

I have expressed our concern about the bloc voting that is developing there, and I must say this expression of concern may have contributed to the relative moderation that has occurred at this Special Session of the General Assembly which is drawing to a close this week.

But on issues like the Cyprus issue -- or, even more, on East-West issues -- the United Nations has not proved to be the appropriate forum for their resolution.

**MR. BUCKLEY:** When you spoke rather financingly, some people thought, about its perhaps becoming an empty shell, you meant if it continued in its general irresponsibility, in its refusal to accept the credentials of various countries?

**SECRETARY KISSINGER:** If the United Nations violates its Charter in order to give expressions of political approval or disapproval to certain countries, such as the refusal to accept credentials of countries which has the practical effect of expelling them from the General Assembly -- something that is reserved to the Security Council and not to the General Assembly -- when the largest single group in the General Assembly always invariably votes as a bloc, then the processes of recent debate and pressure politics take over. Under those circumstances it will degenerate gradually into a confrontation, from which no one will benefit, and which we don't particularly have to fear -- but in which, in my view, it will become an empty shell.

Now, I have to say that the warnings we have expressed have contributed to a somewhat more moderate approach in this one two-week session. How long this will last we will have to see.

**MR. BUCKLEY:** We have only a minute or two. I'd like to ask you this, Mr. Secretary: I once said to President Nixon that one of the things that I admired hugely about Ronald Regan was that he really didn't care what The New York Times thought about him. And Nixon said, "Well, I don't care at all." (Laughter)

PR#481

America's active role in the world is not a matter of preference or a favor to others but a reflection of interdependence and a recognition of our own vital interests. Peace for us is inseparable from global tranquillity. Prosperity for us is bound up with the progress of the rest of the world.

No challenge on the contemporary agenda illustrates these propositions more dramatically than energy.

America's factories and farms, our transportation and housing, the pace of our growth and the prospects of our environment, are all centrally affected by energy. The 1973 oil embargo and price increases accelerated inflation and exacerbated recession around the world. They cost this country half a million jobs and over ten billion dollars in national production. In many industrial countries economic decline threatened political instability and our allies' vulnerability to the oil crisis had significant foreign policy effects. In the developing world, hopes for economic expansion have been shattered by the dramatic rise in the costs of basic imported goods, food and fertilizer as well as fuel. Thus the energy crisis affects not only the standard of living of Americans, but the basic conditions of international relations. It has become, inescapably, an urgent priority of national policy.

What is the energy crisis, and what must we do to resolve it?

The crisis results from two fundamental shifts in the world economy:

First, for the last quarter-century the United States and the industrial nations have become increasingly dependent upon foreign oil. The growth of our domestic energy production has not kept pace with the demand for energy that our growing economies need. In 1950, the United States was virtually self-sufficient; in 1960, we produced 93 percent of the energy and 84 percent of the oil we required; in 1974, we produced only 85 percent of our energy and 65 percent of our oil. If this trend continues, we may produce only 75 percent of our energy and 50 percent of our oil ten years from now.

Second, the growing dependence on imports has enabled the oil-exporting countries to raise oil prices some 500 percent in the past two years. As a result of the huge financial resources they have amassed they have even been able to meet a decline in demand -- primarily caused by recession -- by cutting production rather than price. Before the 1973 embargo OPEC members produced at virtually full capacity. Now they are producing at only 72 percent of capacity. In 1973 the price was about $3.00 a barrel; now it is over $12.00, and OPEC is considering additional large price increases.

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TK 101

CLO

Thus, for the first time the supply and price of energy -- a central element in the economies of all countries -- can be manipulated by nations that do not necessarily have an interest in our our well-being. And the vast financial weight the oil producers are acquiring gives them a new capacity for influencing the world monetary system and financial practices according to their own political objectives.

By the end of last year producers had already accumulated some $75 billion in foreign assets. Each new dollar added to the price of oil increases their revenue by $10 billion. This is a transfer of wealth and power unprecedented in suddenness and scale, and carries with it great political leverage.

The producers' market power will remain unchallenged so long as the United States and other consumer nations do not drastically reduce their dependence on imported oil.

To deal with this crisis our country has developed a sound and comprehensive energy strategy. It has four elements.

- **First**, we must defend ourselves against short-term dangers. This means protection against another oil embargo, against sudden shifts in the assets held by oil countries, and against the threats to development in the poorer countries buffeted by price rises.

- **Second**, we must make America invulnerable to external energy pressures over the longer term. This requires reducing our annual increase in energy consumption; massive development of new sources of energy; and stocking oil on a scale large enough to replace imports in case of a new embargo.

- **Third**, we must join our efforts with the other industrial consuming countries. Collective action on conservation and development will reinforce our individual efforts.

- **Finally**, we must forge cooperation between consumers and producers of oil. We must create conditions under which we all help shape the price of oil through the world market and we all benefit from an expanding world economy.

The four elements of our strategy are interlinked. It does no good to make plans against a new embargo, if each year the industrial countries grow more dependent on imported energy. Cooperative arrangements with other consumers will be ineffective if American vulnerability grows with every passing year. Conservation will prove a stop gap unless we act now, and massively, to develop alternative sources of energy.

PR #481

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If all these elements of our strategy are vigorously pursued, we will gradually shift the balance in the world energy market. The cartel members will have to share with each other progressively greater production cutbacks in order to maintain the price. At the same time, their need to pay for imports for consumption and development and security programs will grow. At some point OPEC will lose its exclusive ability to determine the price of oil.

## Short-Term Dangers

We have made considerable progress in carrying forward our strategy, especially with respect to near-term dangers:

Acting rapidly in the early stages of the energy crisis, the United States and 17 other industrial nations joined in the International Energy Agency for mutual assistance in the event of future oil embargoes. We agreed to build up oil stocks, to reduce consumption by the same percentage in the event of a new emergency, and to share available oil. Thus an embargo against one would be an embargo against all.

Early this year, at United States' initiative, the industrial countries agreed on a $25 billion support fund, to offset abrupt or predatory shifts of funds by OPEC, as well as balance of payments problems induced by high oil prices. The existence of this fund should enable industrial countries to resume their economic expansion without fear of financial disruption.

Also at United States' initiative, the International Monetary Fund will create a special trust fund for concessional loans to developing countries hit hardest by oil price increases.

## The Longer Term

These steps are useful. But much remains to be done, especially for our longer-term position.

First, we must intensify our effort to conserve energy in general, and imported oil in particular.

PR #481

[c]

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Second, we must initiate now the measures needed to ensure the availability of major amounts of new energy by the end of this decade and into the 1980s.

The impact of conservation measures will be immediate. We have already seen a reduction in oil consumption in response to the massive rise in prices. But, more rigorous programs are required.

New energy production from fossil fuels and from non-conventional energy resources must be energetically fostered.

Decontrol of oil prices will both promote conservation and spur domestic oil production. Further legislative action is now needed to carry out the President's program — to ensure greater supplies of natural gas, to open up our nation's vast energy reserves and to fund the development of new non-conventional sources such as synthetic, solar and geothermal energy.

Finally, to protect us from the threat of another embargo, the President has asked Congress to authorize the establishment of a strategic storage program, and provide him with stand-by authority to take rapid conservation measures in future emergencies. These proposals, too, require urgent approval.

## Collective Consumer Action

But action by the United States alone is not enough. We must proceed in parallel with other major consuming countries. For only by acting together can we end the oil producers' power to set prices unilaterally.

We and our partners in the International Energy Agency must set firm overall targets, divided equitably among us, and continue to verify each other's performance.

We must also join to accelerate production of new energy. Development costs will be enormous. We must work together to ensure that financial resources are available. We must greatly expand our joint research and development, pooling national programs. Finally, we must assure participating energy-deficient countries that they will directly benefit from the development programs.

We must assure a common basis for all industrial countries to develop alternative supplies by agreeing that none of us will permit imported oil to be sold in our economies below a certain minimum price level. This will provide incentives for investment in new energy sources. And it will protect those who invest in higher cost energy from suffering a competitive disadvantage if the oil importers engage in predatory pricing.

PR #481

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We must enable energy-deficient countries to participate in such programs in other industrial countries with some assurance that they will directly benefit from the development programs.

All these actions are part of a comprehensive package for long-term energy cooperation the IEA is developing with a deadline of December 1. We and our partners must meet this deadline. Unless consumer nations take joint action no balanced dialogue with the producers is possible.

## Relations with Producers

At the same time we will seek a new relationship with the oil-producing nations. We are natural partners, not adversaries. Consumers must have reliable access to oil supplies at reasonable prices. To invest their new oil wealth, the producers must become major participants in the global financial and economic system. And to convert their new wealth into goods, they must become major importers of our products. We are ready to cooperate with the oil producers in linking our economies on equitable terms. We are prepared to shape new constructive relationships.

But another oil price rise would severely jeopardize these hopes. It could set off a relentless sequence of action and reaction to the detriment of the entire world community. The expansion of the economies of the industrial countries would be inhibited by fears of further price rises and permanent inflation. OPEC oil exports would stagnate, leading to demands for even further price hikes. The most seriously affected victims would be the developing countries; their exports would plunge, their energy costs would soar, and their crippling debt burden would mount even higher. All nations have an interest to avoid this.

Whatever the decision of the oil producers, the United States cannot entrust its political and economic destiny to decisions made elsewhere. Congress and the Administration must cooperate in a determined energy policy so that this country will recapture control over our future. Together with our allies, we will work to reverse the conditions that have enabled oil prices to be set unilaterally. As the largest energy consumer our leadership is decisive. We will not fail our responsibility.

* * * * *

PR #481-A

1

GOVERNOR MANDEL: Thank you very much, Mr. Secretary.

As I said earlier, the Secretary has agreed -- and as he has indicated -- to answer any questions. And we'd like to get into the question-and-answer period.

Governor Busbee.

GOVERNOR BUSBEE: Mr. Secretary, I'd like to ask a question concerning two basic commodities: food and oil.

With the United States having the greatest potential of any nation, as far as production of food, and recognizing the fact that every few years Russia suffers a severe food shortage, what do you think of the possibility of some long-range trade agreement on food, grain, et cetera, from the United States and Russia on oil?

SECRETARY KISSINGER: It is true that the United States is the largest producer of surplus foods in the world. The United States has made a number of proposals to indicate how a rare commodity can be used in a responsible manner and to the benefit of everybody.

At this moment we are negotiating with the Soviet Union about a long-term agreement with respect to the sale

PR #481-A

2

of grain. We have Under Secretary Robinson in Moscow
-- he has just returned from Moscow -- with a view to
preventing the sudden incursions into our market
and to stabilize the demand.

We are also having some discussions, in
a more preliminary stage, with the Soviet Union about oil.

And so we are addressing both of these problems.

Of course, the Soviets' capacity to export oil
is limited.

GOVERNOR MANDEL: Governor Briscoe of Texas.

GOVERNOR BRISCOE: Mr. Secretary, you mentioned
a floor on the price of imported oil. Could you indicate what
you think that floor should be or when that policy might
be implemented?

SECRETARY KISSINGER: We are now negotiating with
our allies in Europe and in Japan on a floor that would be
set to protect at least the cheaper alternative sources of
energy. And this would be part of the general package
that will be concluded -- that we hope will be concluded
by December 1st.

This floor can operate in several ways. It does not
have to be a fixed price -- that is, each country
could be -- it could be set, for example, by import levies