APPENDIX 10

[The Washington Post, Mar. 8, 1975]

U.S. AGREES To Go To PARIS ENERGY MEETING

(By Jonathan C. Randal)

PARIS.-The United States agreed to principle to attend a preliminary meeting here next month which could lead to a major conference of oil consumers and producers, despite the impression that the United States had backed away from tough conditions, including a requirement that a floor price be set for oil.

Viscount Etienne Davignon, chairman of the International Energy Agency, said at a news conference that the 18-nation consumers' group had agreed on a combination of measures constituting a "safety net" to protect financing of alternative energy sources if a sudden drop in oil prices occurs.

Resolution of the developments of alternative energy sources was a U.S. precondition to attending the French initiated preliminary energy conference scheduled to start here April 7.

Davignon's refusal to spell out details of the agreement-until member governments were informed-created the impression that a wide range of national measures was involved.

Specifically ruled out by Davignon were both the common floor price concept originally proposed by U.S. Secretary of State Henry A. Kissinger last month and the U.S. Treasury's rival common exterior tariff plan.

Despite the impression of an American climbdown, Gerald L. Parsky, U.S. Assistant Secretary of the Treasury, denied "any idea of a rift" between the State Department and Treasury.

He insisted in a telephone interview that both he and Assistant Secretary of of State Thomas O. Enders believed that the two-day IEA meeting here had produced a "paper consistent with our objectives."

Observers suggested that the unusual refusal to spell out the recommended measures reflected the extremely delicate nature of compromise measures to finance alternative energy sources.

Particularly adamant in refusing to go along with the floor price were Italy and Japan, energy-poor nations which opposed any formula which appeared to favor such fossile energy-rich nations as the United States or Canada.

Parsky, defined the floor price concept as potentially allowing oil to be pegged so high that it might interfere in the orderly functioning of a free market. He said the "safety net" would tend to set the "price high enough to prevent shortterm price fluctuation, but not so high as to affect a normal market."

Observers believed that the real American soft pedaling occurred last month after the rival U.S. plans first ran into opposition at a meeting of the International Energy Agency.

Davignon denied that the agency was indulging in a tactical ploy with the Organization of Petroleum Exporting Countries, the 13-nation producers' cartel which agreed yesterday to attend the April 7 meeting here.

Davignon said the next EIA meeting would be March 20 to consider member governments' reaction to the measures on alternative energy sources and to plan policy for the April meeting.

Invited last weekend by France-not itself an IEA member-were the United States, Japan and the nine-nation European Economic Community for the industrialized oil-importing countries; Algeria, Iran, Saudi Arabia and Venezuela for the oil producers, and Brazil, India and Zaire for the developing oil importing nations.

Davignon suggested that both IEA and OPEC would be represented as observers at the April preparatory meeting which must settle controversial problems of agenda and composition if the major conference is to take place.

APPENDIX 11

ARTICLE FROM THE JOURNAL OF COMMERCE, MARCH 24, 1975, ENTITLED "WAY CLEARED FOR U.S. ROLE IN OIL SUMMIT"

(By Leo Ryan)

PARIS. The way has been cleared for United States participation at preliminary talks in Paris between oil producer and consumer nations in April, following the agreement reached here at week's end by the International Energy Agency on the principle of minimum price levels for oil imports.

IEA Chairman Etienne Davignon said that the agency had accepted an invitation from France to attend the preliminary conference as an observer. The Journal of Commerce was told on Friday by a Quai d'Orsay spokesman that France would like both the IEA and the Organization for Economic Cooperation and Development (OECD) to attend the talks "under a common banner."

The spokesman indicated that the Organization of Petroleum Exporting Countries (OPEC) and the United Nations had also been invited to attend with observer status. He added that the preliminary conference was not likely to last more than a week.

During the current visit to the Soviet Union of French Prime Minister Chirac, the Soviet authorities have reportedly expressed strong interest in taking part in the projected plenary conference in the summertime between oil producing, oil consuming and developing states.

Thomas Enders, Assistant Secretary of State for Economic Affairs and leader of the U.S. delegation at the IEA meeting, said he would recommend his government to attend the conference starting on April 7.

INVITED NATIONS

The countries invited are the United States, Japan and the European Economic Community for the consumers; Venezuela, Saudi Arabia, Iran and Algeria for the producers; and Zaire, India and Brazil for the developing nations.

The agreement thrashed through at the meeting of the IEA governing board was a variation between the common floor price and common tariff called for by Secretary of State Henry Kissinger in February.

The agency's 18 members will now begin three months of intensive study on what has been termed "a minimum common safeguard level of price." The idea is to fix minimum price levels before a July 1 self-imposed deadline to guarantee investments in the development of fossil fuels, hydroelectric and nuclear energy. Sweden abstained, though by the statutes of the agency it will be affected by the decision. The Swedish delegation had mixed feelings about the minimum price concept and the difficulties lying ahead at the application stage.

Mr. Davignon stressed that the eventual price levels will take into account differences between countries with energy resources and those without them. The agreement gives members leeway for fixing oil import price mechanismssomething they would not have had with a common tariff. They will be able to set variable tariffs, quotas or taxes on low-priced imported oil to assure that it is sold domestically at prices that will protect new energy investments.

Mr. Enders remarked that the original notion of a common floor price had been discarded because it implied fixing domestic prices as well as import prices, which was not the goal sought. It also, he added, suggested a price to be negotiated with the producers, which was not the case either.

There was never a question, affirmed Mr. Davignon, of fixing a minimum price level "before having drawn up a system which will permit us to apply and to know the first results of the dialogue between the oil consumer and producer countries."

The 18 nations agreed on new measures for cooperation in the development of hydrogen production from water and the re-use of industrial and municipal waste.

The latest agreements completed the three goals the IEA members (leading industrial nations except France) set themselves last fall. There has already been accord on conservation within two million barrels of oil a day and a $25 billion lending facility for meeting oil-related balance of payments deficits.

APPENDIX 12

ARTICLE FROM THE JOURNAL OF COMMERCE, APRIL 10, 1975, ENTITLED "IEA ROLE SPARKS CLASH AT PARIS ENERGY TALKS"

(By Leo Ryan)

PARIS. The role of the United States-inspired International Energy Agency (IEA) Wednesday ignited a major clash between the Algerian and American delegations attending the Paris preparatory energy talks.

Observers felt it was too early to tell whether the crisis would compromise the chances of success for the meeting and the eventual holding of a full conference, but the clash was certainly a sign that after two days of polite scrimmaging the meeting had entered the hard bargaining phase.

WORKING GROUP URGED

The sparks began to fly soon after the conference chairman, Louis de Guiringaud of France, suggested that a working group be set up to hold informal discussions on the agenda for the projected plenary conference next summer. This followed a fruitness morning session examining two proposals for a conference agenda.

The U.S. and the other delegations of the industrialized countries-the European Communities (EC) and Japan-supported the French chairman's proposal on the condition that the IEA should be allowed to join the working group along with observers from the Organization for Economic Cooperation and Development (OECD).

PLAN CRITICIZED

This condition drew strong criticism from the Algerian delegation, backed to varying degrees by the other oil producing and developing states at the meeting. The Algerian delegation leader, AIT Challal, charged that it "could ruin everything," and he reiterated the Algerian view about the IEA being a "confrontation organization.'

The exchange prompted the French to quickly withdraw their proposal for a working group on the agenda.

The Algerians want the agenda to be enlarged to all raw materials as well as cooperation to improve the living standards of the have-not countries. The EC has presented a counter-proposal that the full conference should give priority to oil, and related energy problems.

At the preparatory meeting called by France, the EC, Japan and the United States are representing the industrialized world, with Saudi Arabia, Iran, Algeria and Venezuela the oil producers, and India, Brazil and Zaire the developing states.

On the total number of participants envisaged for the full conference, the delegates were reportedly moving towards a consensus that there should be no more than 30, chosen on a quota basis from the industrialized states and the developing and oil-producing countries.

(185)

APPENDIX 13

[The Washington Post, Apr. 16, 1975]

PARIS MEETING COLLAPSES, ENERGY TALKS AT DEAD END

(By Bernard Kaplan)

PARIS.-The Paris talks that were to have opened the way for a major international conference on oil and energy costs later this year collapsed tonight after nine days of unavailing negotiations.

Weary delegates from nine nations and the European Economic Community gave up when they saw no prospects of agreement on the basic issue of the conference's agenda.

Although the French President of the talks, Louis de Guiringaud, spoke reassuringly of adjournment rather than a rupture, it was clear to observers that hopes for some form of understanding between the industrial, oil-consuming nations and OPEC countries are at a dead end.

There was talk here of possible retaliation by OPEC countries in the form of a new round of price increases.

The delegates could not get past the initial obstacle of the agenda: the type of conference that they were to prepare.

Instead of being the routine procedural affair that American and most European officials had anticipated, the meeting turned into a political-and sometimes emotional-confrontation between the industrial countries and the Third World, led by Algeria.

What an American spokesman described today as the "persistent difficulty" was how to find a compromise between the insistence of the United States, the Common Market and Japan that the conference must deal first with energy problems and the demands of the seven Third World nations, here that it make decisions about food and other raw materials on which the economies of the developing countries depend.

The first clear-cut sign that hope for agreement had finally evaporated came when the chief of the U.S. delegaiton, Undersecretary of State Charles Robinson, flew back to Washington this afternoon, making it clear that he would not be returning.

American delegation spokesmen insisted that Robinson's departure had no special significance. But, as Robinson left, a group of experts was meeting to try to draft a communique explaining the breakdown of the talks. They could not agree even on this and finally it was decided that no communique would be issued.

While there was a determined effort by most delegates not to be alarmist about the consequences of the failure, some French officials described the outcome as a "disaster."

There were immediate predictions here that the OPEC cartel might launch a new price offensive in retaliation. The United States was singled out by some Third World countries for "sabotoging" the negotiations.

In fact, it appears that the United States, the European Economic Communitywith the exception of the French and the Irish-and Japan maintained a united front at the meeting from start to finish.

Sources said that the British and West Germans gave especially strong support to the American position. The United States maintained that other and more suitable forums to handle the economic problems of the developing world already exist and that yielding to the Third World demands here would only jeopardize reaching any agreement on oil problems.

The Third World view was perhaps best summarized tonight by Iran's Chief Delegate, Mohammed Yeganeh.