25. Transcript of a Telephone Conversation Between the President's Assistant for National Security Affairs (Kissinger) and Secretary of Defense Laird1 Washington, December 9, 1969, 3:20 p.m. K said he has a problem on the oil import business. L said so do I. K said this thing has been merrily cooking along and nobody has been paying any attention to the political implications. L said he just went over this with Shillito this morning. K said he went over it with Shultz. K said the President hadn't focused on it before, but now he wants a delay. K wondered if L and the Joint Chiefs could delay it until the P has focused on it. L said sure. K said can you do that? L said sure. K said he had breakfast with Rowland Evans2 and he suggested that L is the most outstanding man in government. K said he fought with him like hell on that issue. L said on the tariff on the Middle East oil-the Arabs will think we picked them out this time to put a $1.25 tariff on. L said they will raise hell. And L said our domestic producers are all against it. K said there are two issues: tariff against quota and lowering the price of oil. L said we shouldn't put the commission on it; it should be in the White House in OEP. K said what we've got to do is get the thing screwed up enough that the P gets some breathing space. K said he would be seeing L on Thursday; he has a number of things on the NSC to discuss with L. K said he thinks L and Bill should talk 5 or 10 minutes about NATO at NSC. L said make it short, it's not that significant. K said you and I are getting together Thursday morning; there are a number of things on NSC K wanted to talk about. 1 Source: National Archives, Nixon Presidential Materials, NSC Files, Kissinger Telephone Conversation Transcripts, Box 3, Chronological Files. No classification marking. 2 Rowland Evans was a journalist and TV commentator. 26. Transcript of a Telephone Conversation Between the President's Assistant for National Security Affairs (Kissinger) and Secretary of Labor Shultz1 Washington, December 15, 1969, 10:41 a.m. S said he was calling to see if there had been any word on the oil problem. K said he doesn't see how he can make a national security objection, and that is the only thing I am competent to make. S said okay thank you very much. K said right; you have your own problem with Defense and the JCS which I understand you are dealing with. S said yes; Defense is on board; they talk like they're not, but they are. S said is it okay for me to say you have no objection on a national security basis? K said yes, with Presidential perspective. S said okay thank you. 1 Source: National Archives, Nixon Presidential Materials, NSC Files, Kissinger Telephone Conversation Transcripts, Box 3, Chronological Files. No classification marking. 27. Letter From the Deputy Secretary of Defense (Packard) to the Director of the Office of Emergency Preparedness (Lincoln)1 Dear Abe: Washington, December 15, 1969. I am enclosing a draft of a Defense Department position on the oil import matter. This draft will have some further editing before it is forwarded. I have a few personal observations I would like to make on this matter. The present problems with the oil situation, to the extent there are problems, are not a result of quotas, but rather a result of the way the quotas are administered. 1 Source: National Archives, RG 220, Records of the Cabinet Task Force on Oil Import Control, Entry 24, Box 1, Classified Documents, Confidential Letter from Packard to Lincoln. No classification marking. 2 Attached but not printed is a Defense Department response to ongoing revisions of numbered paragraphs of X-2. I see no serious objection in going to a tariff system instead of a quota system. I think, however, in making this decision we must determine whether this new arrangement will be administered to meet domestic price objectives or national security objectives. In the Defense Department we have to take the position that national security objectives must be over-riding. Beyond that the Administration should think a long time before it adopts a system that is, in effect, a Federal price control system. I believe the administration of whatever system is adopted is the key to the matter, and therefore believe that a Federal Commission should be established; that it should be chaired by the OEP; that it should have a strong representation from Defense, and that the commission should be charged with administering the system, either tariff or quota, with the following objectives in mind: A. Exploration should continue at close to the present rate so as not to allow an undue drop in domestic reserves. B. In the present environment it is crucial to avoid discrimination, or the appearance of discrimination, against the Arab countries of the Middle-East. This is crucial to the Defense position in the world because of the critical reliance by our NATO allies on Middle-East oil. Action, particularly at the present time, which might contribute to a further deterioration of the situation in the Mediterranean is more critical to Defense interests than the level of domestic reserves. It should be recognized that this is a complex industry and any change from an established system to a new system will be upsetting, and therefore transition, if it is undertaken, should be very gradual. While it is true that the level of the domestic prices will affect the reserve position, and while we can accept some reduction in the level of reserves, let me again emphasize, I do not believe it is wise to announce a specific price objective at this time. Sincerely, 3 Packard signed "Dave" above his typed signature. David Packard3 28. Memorandum From the President's Assistant for International Economic Affairs (Flanigan) to the President's President's Assistant for Domestic Affairs (Ehrlichman), and Washington, December 15, 1969. Considerable thought has been given to finding a mechanism for moving the decision on oil import quotas from the White House to the Hill. In order to make such a move a solution, or even a partial solution, to our dilemma, it must avoid the necessity of a White House recommendation. Such a recommendation would carry with it all the opprobrium of an adverse decision without bringing with it the credit that accrues with strong leadership. The current draft of the Report runs to approximately 400 pages excluding appendices. It, in turn, is based on some 100,000 pages of data submitted for the record. Based on this data, much of it conflicting, the Report reaches certain conclusions as to the current facts and, based on those conclusions, makes projections as to what the facts will be in the future. These readings of current and future facts are then used as a basis for the program which is proposed. Reasonable men can differ as to the current status of the industry, projections as to the future status of the industry, and the degree to which the national security is affected by that future status. The President could send a message to the Congress pointing out that his Task Force, on the basis of careful research and study, had reached certain conclusions on which a new program to restrict oil imports had been based. He could further state that this program would not only affect the national security, but also a great industry whose major investment decisions for ten years had been predicated on a different program. He could go on and say that because of the importance of the matter, he felt it was essential that both the Legislative and Executive branches of the government agree as to the bases on which the proposed oil import program rested. Therefore, he was requesting that a select committee of both houses of the Congress hold hearings to satisfy themselves as to the basic information and as to the judgments reached by the Task Force. The committee would be expected to review the submissions, to consider such additional information as they wished, and to probe the judgments made as to future conditions. The committee would be asked to submit its report to the President after six months, upon the receipt of 1 1 Source: National Archives, Nixon Presidential Materials, White House Special Files, Staff Member and Office Files, Egil Krogh 1969–73, Box 71, Oil Import, Policy, Depletion. Confidential. which report the President could then determine the appropriate action to be taken with regard to a new import program. The merits of the above proposal are that it forces the Congress to reach judgments regarding the national security aspects of the oil import program. If they conclude that it cannot be defended on the national security ground, it makes it clear to them that they must take action to provide other grounds. The program carefully avoids the necessity of an Administration recommendation for action until after Congress has acted. The demerit of this proposal is that it is not one of strong leadership. It is an obvious avoidance of making a hard decision and to that extent is not helpful to the President. I would appreciate your comments as to the above proposal, any suggestions you might wish to make to alter or improve it, and your position on whether or not it should be recommended to the President.2 2 In his response, Ehrlichman wrote that he agreed with Flanigan for the most part but disagreed with the suggestion that a select committee send a report after six months "since we are trying to get this decision off the President's desk. This is just an invitation to return the hot potato to him six months from now." Ehrlichman preferred that the President send the report to Congress "with the statement that he finds this to be a matter beyond the exclusive purview of the Executive and that the ball is now in the court of the Congress for action." He continued that the President might request an “interim adjustment" for one or two years with the admonition that no further temporary steps beyond that date would be taken and that Congress had "better get going and arrive at a permanent solution to the problem before the temporary measures expire." (Memorandum from Ehrlichman to Flanigan, December 31; ibid.) No response from Harlow or Haldeman was found. 29. Memorandum From Alexander M. Haig of the National Washington, December 16, 1969. SUBJECT Oil Report Peter Flanigan stopped down to register his concern on the oil report. He states that while Laird has done a good job in fuzzing up the 1 Source: National Archives, Nixon Presidential Materials, NSC Files, Box 367, Subject Files, Oil 1970. Top Secret; Sensitive. A handwritten notation by Kissinger at the top of the page reads: "I am staying out of this." |