But paralysis was exactly the European reaction. Home’s reply endorsed consumer cooperation in principle but expressed doubts about a permanent organization to achieve it. Several of our allies saw in the Kuwait decision a vindication of their course; dissociation from the United States had resulted in clearly preferential treatment.
Ending the Embargo
AT year’s end, then, the United States was virtually alone in demanding an immediate end of the embargo. Both Egypt and Saudi Arabia avoided a clear-cut answer. Both countries claimed that the embargo would be lifted as soon as an Arab consensus could be formed. Saqqaf on December 29 expressed amazement at the violence of our reaction. Sadat promised to go to Riyadh and personally urge the lifting of the embargo as soon as Sinai disengagement was achieved. Saqqaf promised on December 31 and again on January 3, 1974, that the embargo would end after an Egyptian disengagement, but he implied there might be additional conditions.
We made clear that we were not supplicants. At a press conference on January 2, 1974, I insisted that continuation of the embargo was less and less appropriate. When asked about possible American countermeasures, I confined myself to saying that no “specific measures” were planned “at this moment” — a moderately threatening formulation. On January 7, Defense Secretary Schlesinger publicly warned of the possibility of reprisals against oil producers. It produced a storm in the Arab world, where some seemed to espouse the doctrine that an assault on the economic jugular of the United States (and other industrial democracies) had to be endured in stoicism and passivity. I had not known of Schlesinger’s statement in advance; he and I met frequently to discuss strategy but had not concerted tactics on this occasion. Nevertheless, his comment was salutary, and so at my press conference of January 10 I let the threat stand, though expressing the hope that circumstances would not make its implementation necessary:
Well, as I understand Secretary Schlesinger, he was explaining theoretical situations that might arise if the squeeze became excessive. If I understand him correctly, he also pointed out that this point had not yet been reached.
After midnight, on January 11, I left for the shuttle that culminated in the Egyptian-Israeli disengagement accord. Over the next days and weeks we were treated to a flurry of bewildering messages. Midway through the negotiations, on January 13, I received an ominous signal. The latest Saudi position was that a Sinai disengagement alone would not be enough. It would in fact improve Israel’s military position by placing a demilitarized belt between it and Arab forces. “Tangible evidence” was needed that Israel would commit itself to further substantial withdrawals “without delay” and that Palestinian rights were taken into account in a settlement. We were not sure what this report represented beyond the intense pressures operating on the Saudis. For Sadat remained optimistic. In Aswan on January 14, he repeated his promise to visit Riyadh as soon as the Sinai disengagement was achieved. He was confident that he could have the embargo ended no later than January 28. I warned him that any disengagement accord would not be implemented unless the embargo was lifted.
The White House, meanwhile, was agog about the rapid progress being made on Egyptian-Israeli disengagement. My daily reports to Nixon, which mentioned Sadat’s promise to bring about an early end of the embargo, stimulated Nixon’s drive for a quick White House announcement. Thus Scowcroft warned me by cable on January 19 that Nixon wanted to announce the end of the embargo personally in Washington, in his televised State of the Union address to the Congress on January 30. Given the already powerful tergiversations of Saudi Arabia in the face of radical pressures, it was unlikely that Riyadh would permit the United States to announce what it had always insisted was an Arab decision. From Syria I cabled intemperately to Scowcroft on January 20:
There is no possible way to arrange the lifting of the oil embargo in such a way as to permit the President to make the announcement of its lifting. It should come as no surprise that we are dealing with 10 Arab countries, 6 of whom are radical.
But the event that was the subject of all this jockeying did not arise as rapidly as we had expected. Faisal had effectively given a veto to states with unsatisfied claims who had no interest in helping the United States. One such was Syria. On January 21 Hafez al-Asad demanded the use of the oil weapon on his behalf as it had been available to Egypt: The embargo should be maintained until at least a Syrian disengagement was completed.
Saudi Arabia did not wish to antagonize the United States; yet it was too vulnerable to risk isolating itself in the Arab world. Its vacillations therefore repeated themselves in ever-shorter cycles. For example, on January 20 Saqqaf informed Akins that Saudi Arabia would lift its embargo regardless of the actions of other producers; it would be announced right after a meeting of Arab oil ministers in Cairo on January 22. Yet on January 23 the King himself assured Akins that he was still seeking an Arab consensus. In the interim, Sadat sent me a pained message following his tour around the Arab world. While Cairo was trying hard, it was evident that his “brothers” were increasingly linking the end of the embargo to tangible results on Syrian disengagement. The Saudis continued to hedge. On January 27 Saqqaf still expressed the hope of a favorable reply before Nixon’s State of the Union address.
But January 30 came and went. Hints in the American media predicting a definitive announcement in Nixon’s State of the Union speech went unfulfilled. All that Nixon was able to say on television was that he understood the Arabs would soon meet to “discuss” the lifting of the embargo — not necessarily to end it. By February 3 Faisal confessed failure; the Arab consensus seemed to make progress on the Syrian front a prerequisite for an end to the embargo. We learned that Boumedienne was leaning toward an end to the embargo but Asad had remained obdurate.
We were determined not to play this game any longer. Our credibility was at risk. We insisted on the promises that had been made. And we conveyed this decision in no uncertain terms.
Nixon sent a sharp letter to Faisal asserting in effect that we had been misled. We would not accept the imposition of new conditions; we would not proceed with a Syrian disengagement if the embargo remained in effect. We even hinted that we might publish the earlier Saudi promises. This provoked Saqqaf’s cool (and not incorrect) response that he would then make it known that our request had as often been geared to Nixon’s domestic necessities as to the American national interest — underlining the humiliating position in which Watergate had placed us.
I sent harsh messages to Sadat, Asad, and Boumedienne. If the Arab producers took us seriously and if they believed what they professed — that we were indispensable to obtaining Israeli withdrawals — the shoe was now on the other foot: They, not we, had to find a way to end the embargo.
Our communications soon led to a subtle change in the tone of Arab messages. For months the Arab producers had been meeting, laying down ever more peremptory terms, secure in the knowledge that there would be no penalty. But an aroused United States caused second thoughts. There was no longer any talk of further production cutbacks — until recently the recurrent threat. If oil production was kept steady, the impact of the embargo was calculable; its major significance was to demonstrate a capability for unilateral pressure, which we were determined to resist. From this point also, no serious new political conditions were put forward. Almost all Arab communications now concerned tactics for removing the embargo.
On February 6 Faisal reiterated to Akins that he was seeking Arab (in practice Syrian) agreement to end the embargo. Next day Saqqaf was sent to Syria to propose an Arab mini-summit of Faisal, Sadat, Boumedienne, and Asad to take place in Aswan on February 12–13. Asad reluctantly agreed to a meeting but refused to go to Egypt. Whatever the venue, he could hardly have had any doubt about what would await him. His brethren would urge his acquiescence in lifting the embargo; he would be able to delay but he could not hold out indefinitely. The oil weapon would not be available to Syria in its disengagement talks.
On February 9 Asad replied
to my message, stating ambiguously that the oil question had a pan-Arab character. He complained that Syria had not yet achieved any practical results that would enable it to change its attitude. It seemed an invitation — almost a plea — for us to bring Syria into the negotiating process and to give it some pretext for changing ground. We had many reasons to want to do the same. The balance in the Arab world was subtly tilting in the direction of the moderate course.
On February 11 Sadat proposed to move the mini-summit to Algiers. It was a shrewd move. Boumedienne, in the midst of reestablishing relations with the United States, was less likely to insist on maintaining the boycott in his own capital than anywhere else. And Boumedienne, a fellow “radical,” was Syria’s closest supporter. On February 12 Boumedienne sent me a message confirming this judgment: He would work for lifting the embargo; he hoped the United States would avoid any move or statement that might disturb the atmosphere.
The Arab mini-summit came up with the face-saving formula that I should take an exploratory trip through the area in February to pave the way for a Syrian disengagement. This was easy to agree to. A month later the oil embargo was lifted. (I shall describe that trip in Chapter XXI.)
We had come through a difficult period without succumbing to pressure. With the imminent end of the embargo, we had demonstrated that we could resist the vaunted oil weapon. The panic of our allies might now subside.
But we could have no illusions; the achievement was only temporary, the success primarily tactical. The underlying market conditions remained. The economic crisis in the democracies was only beginning. The political and social consequences were only barely discernible. Still before us was the question of whether, and how, the industrial democracies could take charge again of their common destiny. This was the task to which we turned.
* * *
I. When the price of oil was at $3.00 a barrel, it was thought that shale oil would be economical at $5.00. It remained above the world oil price through most of the period.
II. OPEC’s members consisted of Saudi Arabia, Iraq, Kuwait, Iran, Venezuela, Algeria, Libya, Qatar, the United Arab Emirates, Nigeria, Gabon, Indonesia, and Ecuador.
III. Their dilemma has been described by an American scholar:
[A]s Libyan output continued to rise, the majors became increasingly concerned over whether the Persian Gulf countries would tolerate the necessary compensating reductions in their output and income. And since the majors’ production in the Middle East was some twenty times their output in Libya, what they might lose in the former area was far greater than any possible gains in the latter. Yet if they ceased production in Libya, their concessions would probably be turned over to the independents, who would only increase the volume of uncontrolled output . . .2
IV. See p. 382n.
V. The OPEC front amounted in effect to Saudi Arabia and the smaller Gulf states. Iran did not participate, claiming its oil structure did not lend itself to the participation schemes at issue; Libya pursued a separate path as, in varying degrees, did Iraq and Algeria.
XX
Energy and the Democracies
An Energy Strategy
A LONG-RANGE energy strategy required above all a united front of the industrial democracies. We were aware that our allies were reluctant to establish a common negotiating position toward the producers. Still, even strengthening those efforts that the consumers could make among themselves would greatly improve their bargaining position. Cooperation in conservation, development of alternative sources, and emergency sharing would alter market conditions and thereby the negotiating balance.
Because of all the democracies the United States was least dependent on imported oil and had the strongest economy, we thought that we were in the best position to take the lead and to advance proposals for the common good. We hoped that the reality of the present crisis would spare us the equivocations and evasions that had marked the more abstract exercise of the Year of Europe.
Despite the rebuff of previous efforts, we made yet another attempt in my Pilgrims speech delivered on December 12, 1973, in London (described in Chapter XVI). Energy cooperation, I asserted, was not a favor our allies did for us; the United States was in the best position among the industrial democracies to go it alone. Nevertheless, solitary national efforts were bound to be self-defeating. I therefore proposed an Energy Action Group of the industrial democracies — in effect, a consumer grouping to promote alternative energy sources and conservation and to negotiate with the producers:
We must bear in mind the deeper causes of the energy crisis: It is not simply a product of the Arab-Israel war; it is the inevitable consequences of the explosive growth of worldwide demand outrunning the incentives for supply. The Middle East war made a chronic crisis acute, but a crisis was coming in any event. Even when prewar production levels are resumed, the problem of matching the level of oil that the world produces to the level which it consumes will remain.
The only long-term solution is a massive effort to provide producers an incentive to increase their supply, to encourage consumers to use existing supplies more rationally, and to develop alternative energy sources.
This is a challenge which the United States could solve alone with great difficulty and that Europe cannot solve in isolation at all. We strongly prefer, and Europe requires, a common enterprise.
To this end, the United States proposes that the nations of Europe, North America, and Japan establish an Energy Action group of senior and prestigious individuals with a mandate to develop within three months an initial action program for collaboration in all areas of the energy problem. We would leave it to the members of the Nine whether they prefer to participate as the European Community.
European reaction was ambivalent. Editorial comment about the speech was largely favorable. But forthcoming noises from governments stopped well short of commitment to action. The reason was that most of them believed in energy cooperation only in a limited tactical sense: to enlist American technology to develop alternative sources of energy and in an emergency to share in our increasingly stretched supplies. But they had no stomach for a concerted diplomacy, believing that the attempt to join forces would “provoke” the producers into retaliation. Nothing could have better illustrated the demoralization — verging on abdication — of the democracies. A producers’ cartel was deemed acceptable; a consumers’ grouping was considered too risky. Producers with a combined population of some fifty million in underdeveloped economies were in effect blackmailing advanced industrial societies with a combined population of a billion, dictating not only the terms of trade but the framework of political relations.
On December 20 in Paris, French President Georges Pompidou made this explicit. France, Pompidou told me, would not run the slightest risk of an oil cutoff; it would participate in no group or policy involving any prospect of confrontation:
If we are talking about a dialogue between consumers and producers, we can discuss the modalities of such a dialogue without any problem. I could not concur, however, in establishing a consortium of consumers that would seek to impose a solution on the producers. You only rely on the Arabs for about a tenth of your consumption. We are entirely dependent upon them. We can’t afford the luxury of three or four years of worry and misery waiting for the Arabs to understand the problem. I won’t be able to accept, no matter what conditions are established, a situation which requires us to forgo Arab oil, for even a year.
But a party to a negotiation that is unable to risk its failure — the mildest form of confrontation — is reduced to choosing among varieties of appeasement. Fundamentally, most of our allies were convinced that their oil supplies were better assured by adaptation to Arab political demands than by forming a united front to resist pressures.
The only concrete action was not a response to the Pilgrims speech but another propitiation of the producers. There was the odd affair of the European Community summit meeting in Copenhagen on December 14–15, where a group of Arab foreign mi
nisters showed up allegedly “unexpectedly” to lobby for pressure on Israel. If the accounts given to us were to be believed, it must have been the first time in history that a delegation of foreign ministers appeared uninvited at the summit meeting of a continent to which they did not belong. We did not know who had engineered the “surprise” visit; we suspected Jobert, but clearly it could not have taken place without the acquiescence of most of his colleagues.
Fundamentally, our proposal for energy cooperation ran at once into the same obstacles that had thwarted our earlier effort at Atlantic cohesion. Jobert, and probably Pompidou, wanted no part of any grouping within which American influence might be decisive and whose purpose was to discourage solitary initiatives. Philosophy was reinforced by expediency. France was in the forefront of those of our allies who were exploiting the embargo to line up bilateral deals with the producers — mostly arms for oil. And it was France that acted as spearhead of the so-called European-Arab dialogue, the European alternative to our Middle East diplomacy, whose rationale — never made explicit — could only be dissociation from the United States.
Jobert wrote me on December 28, after the OPEC decision of December 17. He accepted the principle of consumer cooperation but defined it in terms that prevented any bargaining unity. And no wonder, since he was at that very moment actively promoting bilateral French oil deals with Mideast producers. Addressing me as “Mr. Secretary and dear friend,” Jobert sought playfully to pull the teeth of the Pilgrims speech: His suggestions would perhaps complicate the plan I had drawn up, he said, but might, he believed, facilitate its implementation. “Complicate” was not the right word: “scuttle” would have fitted better.
Years of Upheaval Page 132