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[Meeting with French Finance Minister Giscard D'Estaing] July 31, 1973
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[Meeting with French Finance Minister Giscard D'Estaing] July 31, 1973
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3:00 p.m., Tuesday, July 31, 1973
Meeting with French Finance Minister
Giscard d'Estaing
Reproduced at the Richard Nixon Library
DECLASSIFIED
locument has been reviewed pursuant to Executive Order 13526and has been determined to be declas
MEMORANDUM
NATIONAL SECURITY COUNCIL
SECRET/EYES ONLY
July 30, 1973
MEMORANDUM FOR MR. KISSINGER
FROM:
Helmut Sonnenfeldt
tts
SUBJECT:
Your Meeting with French Finance Minister
Giscard d'Estaing
Tuesday, July 31 - 3:00 p.m.
1. Economic Matters
You probably don't want to get into these in any detail. But here
is some material for your information, so you are prepared.
Last week Giscard emphasized to Ambassador Irwin his concern with the
current monetary situation (Tab A). See also the comments of Elysee
Secretary General Balladur (Tab B). He said that he felt U.S. political
leaders did not understand the seriousness of the political problem which
the decline of the dollar to a rate 10% below the February 12 parity was
causing the French and other European governments, e.g. the present
exchange rates could diminish competitiveness of certain European business
and will thus lead to unemployment. If unemployment and the attendant
political difficulties were thus to spread in Europe, the monetary question
would be much harder to resolve and this would have important repercussions
on defense and security issues. Resolving monetary issues would not resolve
all other issues, but failure to resolve them would exacerbate other issues.
Giscard has a point. Although limited intervention by the U.S. has taken
place, this has clearly not been enough to strengthen the dollar over the
last several weeks. The attached analysis by Chuck Cooper (Tab C) indicates
the types of difficulties which will arise if the situation continues.
You might take advantage of this opportunity to get a more detailed assess-
ment from Giscard of what he believes the effects of a continuation of this
situation would be and to have him explain in detail his suggestions for
dealing with the problem. If Giscard indicates the need for intervention,
you might raise the following questions:
SECRET/EYES ONLY
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SECRET/EYES ONLY
2
-- How much intervention might be necessary to achieve a 4 or 5%
recovery (the figures he mentioned to Irwin) in the value of the dollar
above its present value.
-- What is the risk in attempting a large-scale intervention, failing
to achieve our objective, and thereby contributing to a further lack of
confidence in both the dollar and the ability of governments to deal with the
dollar's weakness.
NOTE: A good analysis of the French view on soybean control is at Tab D.
2. Year of Europe
Since you will have to work with Jobert, you should be very cautious
about what you say to Giscard on the Year of Europe and specifically the
French problems connected with it.
You can, however, point out to Giscard that one of our motivations in
launching the initiative was to put the various economic negotiations with the
Europeans into a political context. This is why the reserved, not to say
niggling, European response has been SO baffling to us. All we were asking
of the Europeans was to give us the flexibility to appeal to higher political
values in the economic negotiations. That was the only "globalization" we
had in mind, not the simple-minded view att ributed to us of trying to
negotiate all issues in the same forum or to trade military commitments for
European economic concessions.
You should also make the point that after four years of cultivating bilateral
relations with the French we were prepared in the Year of Europe to give the
strongest support to France's leading role in Europe and to the evolution of a
European identity. In fact, we were accused by others of being too solicitous
of French concerns. But Giscard heard the President in Iceland and that was
his firmly held view.
3. Soviet Relations
You should tell Giscard that we are still studying Pompidou's ideas about
the Soviet position with respect to the international monetary system and about
the better management of agricultural sales to the East. The President hopes
shortly to reply to Pompodou's message but this is obviously a set of subjects
on which we should continue to remain in touch.
You may want to ask Giscard about his impressions regarding Soviet-French
economic relations and his view of the recent Comecon decision to deal
directly with the EC.
SECRET/EYES ONLY
Reproduced at the Richard Nixon Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526and has been determined to be declassified
URGENT
CONBIDENTIAL/FYES ONLY
7/31/73
HAK
HS
Talk With French Charge.
During a lunch today, which had been arranged
a long time ago, I managed to keep 95% of the convesration
on French policy during the American Revolution, French
administrative practices and the personality of Debre.
At the end, however, de la Gorce said he had never heard
anything from Jobert in response to the two questions you
ràised when he gave you Jobert's letter. I said we were aware
of that. De la Gorce then said that the Copenhagen meeting
seemed to have made some real progress in preparing for the
President's trip and working our some joint documents. He
said parenthetically that he and his Ambassador were pleased
about this because they had given a very positive avaluation
of your speech last April.
I said I did not want to anticipate what you might say
should you get a response to your questions to Jobert, but
I did want to poin out that the procedure decided on in
Copenhanges presented a serious problem. What
seemed to be happening was that the Europeans who had asked
us to talk bilaterally to them on substance were now telling
us that they could no longer conduct such conversations and
instead wanted to present us with a collective view which we
had had no part in formulating, even though it dealt with our
common concern S and interests.
De la Gorce said he was afraid WE would feel that way,
esepcailly since he had of course notived in Jobert's last
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message that the French were no longer willing, as theyhad
previously agreed, to let us have some language for a Declaration.
I said we had hoped to make this a collaborative and organic
intra-Western effort, as required by the problems of our times,
but now the Europeans seemed to be turning it into an
adversary negotiation. De la Gorce said that
he could understand that. Xzxaidxzkat
De la Gorce asked whether the Europeans we had talked to
favored some sort of a summit meeting of the West when the President
goes to Europe. I said that had been our impression, though all
of them had questioned whether the French were interested.
considered
I said I personally fraud it highly doubtful whether the
President would consider a European trip that remated his
itinerary of 1969 (de la Gorce was present at the meeting with
the NAC in Brussels) and that involved collective meetings
in which other heads of Government were not participating,
De la Gorce said he had heard that might be the President's
attitude. He said he persoanlly regretted what was happening
because he very much agreed with our original approach and
the reasons for it.
I said, finaliy, there seemed to be an absurd notion
in Europe that we expected this year to define every last
aspect of Atlantic relations. Obviously, what we had suggested
was a major symobolic and political act that would provide the
momentum and the political base from which to move ahead in the
period to come, both in East- West relations and in intra-
Western relations. De la Gorce said he and his Ambassador had
understood this completely and SO reported; he personally was
especially conscious of Reproduced what I at a he had been
DECLASSIFIED
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following the Tongressional debate on our troops abroad.
De la Gorce said he would report ourk talk to his
Minister.
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CONFIDENTIAL PARIS 20620
SONNENFELDT
V.I.G.
E.O. 11652: GDS
WALSH
TAGS: EFIN, FR
C
SUBJECT: CALL ON FRENCH MINISTER OF FINANCE GISCARD DIESTAING
CEA
1. DURING A CALL I MADE ON FINANCE MINISTER GISCARD D'ESTAING
X
THIS AFTERNOON, HE EMPHASIZED HI CONCERN WITH THE
CURRENT MONETARY SITUATION. HE SAID HE FELT U.S. POLITICAL
LEADERS DID NOT UNDERSTAND THE SERIOUSNESS OF THE POLITICAL
PROBLEM WHICH THE DECLINE OF THE DOLLAR TO A RATE 10 PERCENT
BELOW THE FEBRUARY 12 PARITY WAS CAUSING THE FRENCH GOVERNMENT
AND OTHER EUROPEAN GOVERNMENTS TOO. HE MENTIONED A RECENT
TALK HE HAD HAD WITH A FRENCH BUSINESSMAN WHO HAD EXPRESSED
THE FEAR HE WOULD BE UNABLE TO COMPETE IN THE U.S. MARKET AT
THE PRESENT DOLLAR/FRANC EXCHANGE RATE AND WOULD HAVE TO LET
OFF SUBSTANTIAL NUMBERS OF PEOPLE. IF UNEMPLOYMENT AND POLITICAL
CONFIDENTIAL
Reproduced at the Richard Nixon Library
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This document has been reviewed pursuant to Executive Order 13526and has been determined to be declassified
PEPARTMENT OF STATE
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PAGE 02 PARIS 20620 2720142
DIFFICULTIES WERE THUS TO SPREAD IN EUROPE, THAT WOULD MAKE
MONETARY PROBLEM VERY MUCH HARDER TO RESOLVE.
2, I QUESTIONED GISCARD AS TO WHAT ALTERNATIVE HE SAW TO
FLOATING RATES IN THE PRESENT TRANSITION PERIOD. GISCARD REPLIED
THAT THE IMPORTANT THING WAS FOR THE U.S. TO SHOW WILLINGNESS
TO SUPPORT THE DOLLAR, REPEATING THAT HE BELIEVED THE DOLLAR
WAS SUBSTANTIALLY UNDER-VALUED PERHAPS AS MUCH AS 10 PERCENT HE
SAID HE THOUGHT IT COULD, BE SUPPORTED AT THE PRESENT LEVEL
THROUGH THE USE OF SWAP FACILITIES WITHOUT GETTING INTO THE
MORE COMPLICATED PROBLEM OF CONSOLIDATION OF BALANCES. HE
FEELS OBJECTIVE SHOULD BE AT A MINIMUM TO KEEP RATE FROM
FALLING BELOW PRESENT LEVEL AND, IF POSSIBLE, TO ACHIEVE SOME
RECOVERY - SAY, BY ABOUT FOUR OR FIVE PERCENT ABOVE ITS PRESENT
VALUE, HE SAID HE WAS NOT ARGUING WE SHOULD SUPPORT THE DOLLAR
ALL THE WAY BACK UP TO THE LEVEL RESULTING FROM THE DEVALUATION.
HE FELT THE U.S. HAD MADE A MISTAKE IN TAKING A COMPLETELY
"HANDS OFF" ATTITUDE AFTER THE LAST DEVALUATION,
3, I TOOK ISSUE WITH GISCARD'S SUGGESTION THAT THE U.S.
WAS INDIFFERENT TO THE STRENGTH OF THE DOLLAR, I NOTED THAT THE
U.S. HAD MORE THAN MET THE PRESIDENT'S TARGET OF KEEPING
GOVERNMENT EXPENDITURES BELOW $250 BILLION IN FY 1973 AND
THAT THE FINAL BUDGET DEFICIT FOR FY 73 WAS $14 BILLION RATHER
THAN THE $18 BILLION. FORECAST IN JANUARY. I MENTIONED THAT
PRESIDENT NIXON HAD EXPRESSED HIS DETERMINATION TO ACHIEVE A
BALANCED BUDGET IN FY 1974. I CALLED ATTENTION TO THE STRONG
PHASE IV PROGRAM FOR DEALING WITH THE IMMEDIATE INFLATIONARY
PROBLEMS. FINALLY I POINTED TO THE SECOND QUARTER TRADE RE-
SULTS AS EVIDENCE THAT OUR EFFORTS WERE BEGINNING TO BEAR FRUIT.
GISCARD AGREED THESE WERE IMPORTANT DEVELOPMENTS,
4. IN FURTHER DISCUSSION IT BECAME CLEAR THAT GISCARD FEELS
THAT US/EUROPEAN DIFFERENCES OVER THE MONETARY SITUATION
CAN HAVE IMPORTANT REPERCUSSIONS ON OTHER ISSUES,
PARTICULARLY ON THE EC ITSELF, AND ON DEFENSE AND SECURITY
QUESTIONS. RESOLVING MONETARY PROBLEMS WOULD NOT RESOLVE
ALL OTHER ISSUES HE SAID, BUT A FAILURE TO RESOLVE THE MONETARY
PROBLEMS WOULD CERTAINLY EXACERBATE OTHER ISSUES.
5. IN PARTING GISCARD COMMENTED THAT "IN DIPLOMACY MISTRUST
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DEPARTMENT OF STATE
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PAGE 03 PARIS 20620 2720142
IS DEEP-ROOTED" AND HOPED WE COULD WORK TOGETHER TO DEAL WITH
SUCH MISTRUST BY FULL AND FRANK EXCHANGES. ACCORDINGLY WE
AGREED TO PICK UP DISCUSSION AGAIN IN SEPTEMBER.
6. IN LIGHT OF THE SERIOUSNESS OF FRENCH CONCERNS, HOWEVER,
I URGED GISCARD TO SPEAK DIRECTLY TO SECRETARY SHULTZ IN
IRWIN WASHINGTON NEXT WEEK TO EXPLORE POSSIBLE SOLUTIONS.
Richard Nixon Library
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UNITED NEW AMERICA
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SUBJECT: LUNCHEON DISCUSSION WITH SECRETARY GENERAL OF ELYSEE
COOPER
REF: PARIS 16374
1. SUMMARY. IN LUNCHEON CONVERSATION WITH ELYSEE
SECGEN BALLADUR TODAY (7/27/73) HE EMPHASIZED CONTINUED
FRENCH CONCERN AT MONETARY SITUATION AND FRENCH BELIEF
THAT ONLY SOLUTION IS FOR USG TO TAKE POLITICAL DECISION
TO DEMONSTRATE WILLINGNESS TO MORE FIRMLY SUPPORT DOLLAR.
ON LONGER RANGE PROBLEMS OF MONETARY REFORM, BALLADUR
EMPHASIZED NEED FOR AGREEMENT TO DEAL WITH NEW PHENOMENON
OF SHORT TERM SPECULATIVE CAPITAL FLOWS, BALLADUR ALSO
NOTED PRESIDENT POMPIDOU'S BELIEF THAT WORLD-WIDE WE
ARE NO LONGER IN PERIOD OF SURPLUS BUT RATHER ONE OF
PENURY FOR FOOD AND OTHER PRIMARY COMMODITIES AND THAT
REST SOLUTION WOULD BE COMMODITY AGREEMENTS PRODUCT
BY PRODUCT TOASSURE SUFFICIENT PRODUCTION, PRICE
STABILITY AND ADEQUATE SUPPLY. BALLADUR EXPLAINED
CURRENT FRENCH ATTITUDE TOWARD OPENING OF MTN WITH
NOT TO BE REPRODUCED WITH LIMITED OFFICIAL USE OF THE EXECUTIVE SECRETARY
are
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PROMOTMENT
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REFERENCE TO MESSMER REPLY TO MITTERAND, END SUMMARY
2 ᵉ I INVITED SYG OF THE ELYSEE BALLADUR TO LUNCH TODAY
TO CONTINUE THE DISCUSSION REPORTED REFTEL. BALLADUR
BEGAN BY EMPHASIZING FRENCH PREOCCUPATION WITH MONETARY
SITUATION. FRENCH FEEL PRESENT MONETARY SITUATION
POSES GRAVE RISKS FOR US/EUROPEAN RELATIONS AND FOR THE
PROCESS OF EUROPEAN CONSTRUTION, THEY WOULD LIKE TO
BE REASSURED.
3. IN RESPONSE TO MY QUESTION AS TO WHAT WE COULD DO
TO REASSURE THEM, BALLADUR SAID THE QUESTION WAS MORE
PSYCHOLOGICAL THAN TECHNICAL. HOLDERS OF DOLLARS HAD
TO BE CONVINCED OF US WILLINGNESS TO DO SOMETHING.
VARIOUS MEASURES WERE POSSIBLE, FOR INSTANCE, TWO WEEKS
AGO AT BASEL CENTRAL BANKERS HAD AGREED TO SET UP SWAP
LINES BUT US APPARENTLY HAD HARDLY USED THEM AND US
MONETARY AUTHORITIES SEEMED TO HAVE NO INTEREST IN
TAKING ACTION.
4, I OUTLINED THINGS THE
US HAD DONE AND SOME OF THE REASONS WHICH MIGHT SUGGEST
THE DOLLAR WOULD NOW IMPROVE. I CITED THE FACT OF OUR
TRADE SUPPLUSES IN THE LAST QUARTER, THE IMPLEMENTATION
OF PHASE 4 p THE AGREEMENT IN BASEL AND THE ANNOUNCEMENT
THAT WE HAD INERVENED AFTER JULY 10. BALLADUR SAID
NEVERTHELESS THE DOLLAR HAD CONTINUED TO DECLINE OVER
THE PAST MONTH, WHAT WAS AT STAKE WAS THE ECONOMIC
SOLIDARITY OF THE WEST, WHICH AS PRESIDENT NIXON HAD
SAID AT REYKJAVIK NEEDED TO BE PRESERVED PARTICULARLY
TN A PERIOD WHEN WE WERE MOVING TOWARD DETENTE.
5. I SAID WE OFTEN HEARD IN FRANCE THAT THE US SHOULD
"DO SOMETHING" TO SUPPORT THE DOLLAR, BUT THAT MY
IMPRESSION FROM TALKING WITH THOSE MORE EXPERT THAN Y
WAS THAT IT WAS DIFFICULT OPERATION AS TO SPECIFIC
ACTION AND TIMING. Y SAID WE RECOGNIZED THE SERIOUSNESS
OF FRENCH CONCERN BUT THAT NOT EVEN AMONG EUROPEAN
GOVERNMENTS WAS THERE AGREEMENT ON WHAT SHOULD BE
DONE OR WHEN IT SHOULD BE DONE. I EXPRESSED BELIEF
THAT FRENCH CONCERNS COULD BEST BE EXPLAINED TO USG
NOT TO BE REPRODUCED WITHOLIMITED OFFICIALTIUSE OF THE EXECUTIVE SECRETARY
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DS-1652
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OF
STATE
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BY HAVING MINISTER GISCARD D'ESTAING TALK ABOUT
THEM TO SECRETARY SCHULTZ NEXT WEEK WHEN THEY MEET IN
WASHINGTON.
6. BALLADUR ASKED ME WHETHER I THOUGHT THE PRESENT
FRANC/DOLLAR EXCHANGE RATE WAS REALISTIC, OR WHETHER
THE DOLLAR MIGHT CONTINUE TO GO DOWN OR COME BACK UP.
I REPLIED THAT PREDICTIONS WERE DIFFICULT, BUT THAT
OBJECTIVELY IT APPEARED THAT THE LEVEL RESULTING FROM
THE LAST DEVALUATION IN FEBRUARY WAS A MORE REALISTIC
ONE THAT THE PRESENT LEVEL.
7. REFERRING TO THE C=20 DISCUSSIONS, BALLADUR SAID
THERE WERE A NUMBER OF POINTS STILL AT ISSUE BUT THAT ON
TWO POINTS AGREEMENT SEEMED TO BE NEAR.
8. FIRST, CONTRARY TO THE SCHOOL OF THOUGHT REPRESENTED
BY GERMAN FINANCEE MINISTER SCHILLER AND MILTON
FREIDMAN, TOTAL FREEDOM OF EXCHANGE RATES CLEARLY WOULD
NOT WORK, NEITHER, OF COURSE, DO RIGID ONES. WHAT
WAS NEEDED WAS STABLE BUT ADAPTABLE OR FLEXIBLE RATES.
a. SECOND, INTERNATIONAL SPECULATION WAS A TOTALLY NEW
PHENOMENON OF OUR EPOCH. IT WAS CAUSED IN PART
BY MULTINATIONAL CORPORATIONS AND OTHER HOLDERS OF
SUBSTANTIAL PRIVATE RESERVE BALANCES. EVEN IF MEANS ARE
WORKED OUT TO STABILIZE THE USE OF PUBLIC RESERVE
BALANCES, THE FRENCH ESTIMATE THAT UP TO 250 BILLION
DOLLARS REMAINS AVAILABLE IN PRIVATE RESERVES FOR
SPECULATION. THE FRENCH FEEL WE MUST FIND A WAY TO DEAL
WITH THIS MASS OF FLOATING CAPITAL EVEN THOUGH TRADITIONAL
THEORY MAY NOT HAVE DEALT WITH THE NEW PHENOMENON.
10 I SAID I UNDERSTOOD WE HAD AGREED IN CONCEPT TO
THE FIRST POINT EVEN THOUGH AGREEMENT OF THE MECHANICS
OF HOW EXCHANGE RATE ADJUSTMENTS WOULD WORK WAS STILL
NEEDED, PARTICULARLY, AGREEMENT WAS NEEDED OFTHE RESPECTIVE
RESPONSIBILITIES OF SURPLUS AND DEFICIT COUNTRIES.
11. ON SECOND POINT, I SAID THE 200 OR 250 BILLION SEEMED AN
EXCESSIVE ESTIMATE, THAT OUR TREASURY ATTACHE ESTIMATED
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On STATE
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THER WERE SOME $90 BILLION IN US LIQUID LIABILITIES
TO FOREIGNERS OF WHICH SOME $70 BILLION WAS IN THE
HANDS OF FOREIGN OFFICIAL INSTITUTIONS AND NOT LIKELY
TO EXERT SIGNIFICANT PRESSURES ON EXCHANGE MARKETS.
THERE WERE ALSO HOWEVER, SIZEABLE EURODOLLAR HOLDINGS OUTSTANDING
TO THE ORDER OF $70 BILLION.
12. AS AN EXAMPLE OF THE SERIOUS PROBLEM WHICH THE
PRESENT MONETARY SITUATION CAUSES FOR THE EUROPEANS,
BALLADUR MENTIONED THAT THE FALL OF THE LIRE AND THE
RISE OF THE DEUTSCH MARK HAD RESULTED IN A 37PC PRICE
DIFFERENTIAL FOR AGRICULTURAL PRODUCTS BETWEEN
ITALY AND GERMANY. IF THE US REALLY CARED ABOUT EUROPE AND
THE COMMON MARKET, BALLADUR SAID, WE WOULD TRY TO DO
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SOMETHING ABOUT THIS PROBLEM. EMPHASIZING THE
POLITICAL NATURE OF THE PROBLEM, BALLADOR SAID IT WAS NOT JUST
ENOUGH FOR FINANCE MINISTERS TO TALK TO EACH OTHER,
BUT THEY MUST BE DIRECTED BY THEIR POLITICAL
SUPERIORS TO FIND A SOLUTION,
13. BALLADUR THEN EXPLAINED FRENCH POSITION ON
TRADE NEGOTIATIONS REFERRING TO PRIME MINISTER MESSMER'S
LETTER TO MITTERAND. FRANCE WOULD GO TO TOKYO
AND PARTICIPATE IN THE OPENING NEGOTIATIONS WITHOUT
MAKING MONETARY PROGRESS AND PRECONDITION, FRANCE
WOULD CONTINUE TO BEAR IN MIND, HOWEVER, THE
MONETARY SITUATION AT EACH STAGE IN THE TRADE
NEGOTIATIONS. REFERRING TO THE CURRENT DEBATE IN
GENEVA, BALLADUR NOTED THE EUROPEANS HAD REACHED
A COMMON POSITION WHICH APPEARED TO DIFFER
FROM THAT OF THE US ON THE RELATIONSHIP BEWTEEN
THE MONETARY SITUATION AND TRADE TALKS.
14. I REPLIED THAT I FULLY ACCEPTED THERE WAS
A RELATIONSHIP BETWEEN MONETARY AND TRADE
NOT TO
BE
REPRODUCED
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THE
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ISSUES AND REMINDED BALLADUR, WHICH SEEMED TO
SURPRISE HIM, THAT WHEN THE US HAD RECOMMENDED A
STUDY ON THE LINKS BETWEEN MONETARY AND TRADE ISSUES
IN THE OECD OVER A YEAR AGO, FRANCE HAD LED THE
OPPOSITION TO THE IDEA OF A LINK BETWEEN THE TWO
FIELDS. BECAUSE OF THE TIME WHICH TRADE NEGOTIATIONS
WILL TAKE, HOWEVER, I SAID WE DID NOT FEEL THE
PRESENT MONETARY SITUATION SHOULD BAR BEGINNING SERIOUS
TRADE NEGOTIATIONS. WE RECONGIZED THAT PARTICIPANTS
COULD REFUSE TO SIGN THE RESULTING AGREEMENT UNTIL
THE MONETARY SITUATION BECAME CLEARER.
15. BALLADUR OBSERVED THAT WHILE WF NOW SEEMED
TO AGREE THERE WAS A LINK BETWEEN THE TWO AREAS
WE SEEMED TO HAVE GOTTEN TO THAT POSITION FROM
QUITE DIFFERENT STARTING POINTS, THE FRENCH SAY
THAT TO NEGOTIATE ON TRADE ONE MUST KEEP IN MIND
HOW THINGS STAND ON THE MONETARY SIDE, WE SAY
THAT TO NEGOTIATE ON MONETARY REFORM WE MUST KNOW
HOW THE TRADE NEGOTIATIONS WILL COME OUT.
16, M. BALLADUR RAISED THE REMARK OF DR. KISSINGER
ABOUT EUROPE'S REGIONAL INTERESTS VERSUS THE US!S
GLOBAL INTERESTS. I SAID THAT HE MUST HAVE READ
THE CLARIFICATION THAT DR. KISSINGER WAS SPEAKING
OF WHAT APPEARED TO BE EUROPE'S PRIMARY INTEREST,
THAT WE WOULD WELCOME EUROPE TAKING A MORE GLOBAL
ROLE. I POINTED OUT THAT EUROPE'S TRADE
PROTECTIONIST POLICY WAS AN EXAMPLE, THAT EUROPE BY ITS DESIRE
TO PROTECT UNECONOMIC AND UNCOMPETITIVE SECTORS OF ITS ECONOMY,
WHETHER AGRICULTURAL OR INDISUTRIAL, WAS EXPRESSING ITS
REGIONALISM FOR POLITICAL OR OTHER REASONS. WHILE
WE RECOGNIZED THEIR NEED FOR REASONABLE PROTECTION,
WE WOULD WELCOME THEIR TAKING MORE OF A GLOBAL VIEW,
BALLADUR REPLIED THAT HE UNDERSTOOD EC TARIFFS WERE
GENERALLY LOWER THAN US TARIFFS. I REPLIED THAT
A CASE BY CASE COMPARISON WAS MORE APPROPRIATE AND
THAT AGRICULTURE ALSO WAS SPECIAL CASE IN POINT.
TO THIS BALLADUR REPLIED WITH A SMILE, "WE ARE
READY TO BUY ALL THE SOYBEANS YOU WISH TO SELL." THIS
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GAVE AN OPPORTUNITY TO REFER TO THE EMBASSYIS PRESS
RELEASE ON SOYBEANS AND TO REVIEW THE FACTS WE HAD
SET FORTH THERE.
17. PICKING UP MY REFERENCE TO THE NEED FOR GLOBAL
SOLUTIONS, BALLADUR EMPHASIZED PRESIDENT POMPIDOU'S
CONCERN THAT WE ARE NO LONGER IN A PERIOD OF SURPLUS
PRODUCTION OF FOOD AND PRIMARY PRODUCTS BUT IN A
PERIOD OF GLOBAL PENURY. IN SUCH A PERIOD THE FRENCH
FEEL PARTICULARLY THAT THE DEVELOPED COUNTRIES MUST ENTER
INTO COMMODITY AGREEMENTS, PRODUCT PRODUCT, TO ASSURE
STABILITY OF SUPPLY AND PRICE AND TO SATISFY THE NEEDS
OF THE LDC'S. BALLADUR SAID PRESIDENT POMPIDOU HAD
EXPLAINED THESE VIEWS AT SOME LENGHT TO PRESIDENT NIXON
IN REYKJAVIK. POMPIDOU BELIEVES IT IS SILLY FOR THE us
AND EUROPE TO FIGHT OVER ACCESS TO EUROPEAN MARKETS
WHEN A LARGE PART OF THE WORLD DOES NOT HAVE ENOUGH TO
EAT AND WHEN BOTH THE US AND EUROPE SHOULD BE EXPORTING
TO THE LESS DEVELOPED WORLD.
18. Y REPLIED THAT TRADITIONALLY IN THE US WE HAVE
FOUND COMMODITY AGREEMENTS NOT TO RF VFRY SUCCESSFUL
AND HAVE PREFERRED TO DEPEND ON MARKET FORCES, THE
REASONS FOR PRESENT SHORTAGES WERE LIKELY TO DISAPPEAR
AND IN FUTURE YEARS WE MIGHT FIND WE ARE AGAIN IN
SURPLUS, THAT WE SHOULD PLAN ON TARIFF STRUCTURES FOR
THE LONG TERM. BALLADUR REPLIED THAT THE COUNTRIES WHICH
HAVE TRADITIONALLY PURCHASED THESE COMMODITIES AND CAN
AFFORD THEM MIGHT BE IN SURPLUS BUT THAT THE WORLD AS
A WHOLE WAS UNLIKELY TO BE, THE FRENCH BELIEVE IT IS
IMPORTANT THEREFORE TO ESTABLISH A MECHANISM TO HELP THE
REST OF THE WORLD.
19. I SUGGESTED THAT THIS ARGUED THAT AMONG DEVELOPED
COUNTRIES WE SHOULD FAVOR PRODUCTION BY THE COUNTRY
THAT PRODUCES THE MOST ECONOMICALLY, PARTICULARLY AS
WE MUST PLAN TO GIVE AWAY PART OF THIS PRODUCTION TO
LESS DEVELOPED COUNTRIES.
20. BALLADUR AND I AGREED TO MEET AGAIN IN SEPTEMBER.
YRWIN
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4272
MEMORANDUM
SECRET
NATIONAL SECURITY COUNCIL
INFORMATION
July 30, 1973
MEMORANDUM FOR:
MR. KISSINGER
FROM:
CHARLES A. COOPER
ROBERT D. HORMATS
SUBJECT:
Foreign Policy Implications of International
Economic Situation
The present international monetary crisis, the fourth since December 1971,
has serious implications for our foreign policy. The announcement last
week of Phase IV and the acknowledgment of Federal Reserve Bank inter-
vention (still in view of many too little to do the job) strengthened the dollar
briefly, but its decline has resumed. Our inability to deal with this situation
affects foreign confidence in the United States, threatens trade and monetary
negotiations, increasingly casts the U.S. as the villain in European attempts
to curtail politically pernicious inflation, and will have serious long-term
economic and political implications.
The Monetary Crisis
The monetary crisis--in which the major continental currencies have since
February appreciated by an average of 14% vis-a-vis the dollar--reflects
not only continuing U.S. balance of payments problems and domestic
uncertainties but also a change in the psychology in the international currency
market. Multinational corporations, banks, and a number of developing and
oil-producing countries have come to believe that in the present monetary
turmoil their best interests lie in moving funds into the strongest currencies,
which they expect will appreciate in value. Doing SO protects their assets
from devaluation and provides a good chance for windfall profits. This
psychology, to the extent that it has caused a move out of dollars and into
such currencies as D marks, has become a self-fulfilling prophecy leading
to a depreciation of the dollar and an appreciation of the mark.
The Effect on Europe
The resulting monetary instability has worsened the inflation problem in such
countries as Germany, which have had to absorb massive currency inflows.
This has complicated German efforts to slow the growth of its money supply
as a means of combatting inflation. The appreciation of most European
currencies vis-a-vis the dollar has not as yet harmed their trade balances
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since most of their trade is not with the U.S., and because of lags in the
adjustment process. Also, the boom in the U.S. and most other economies
has created a continuing high demand for imports and thereby prevented any
diminution of European exports resulting from their currency appreciation.
The fact that trade has not been affected explains the lack of strong counter-
measures against what all agree is an excessive dollar depreciation.
Nevertheless, some Europeans, the French in particular, believe that the
United States has been given an unfair advantage by the low value of the
dollar.
The Effect on the U.S.
For the United States dollar depreciation has not been an unambiguous
blessing. Imports are more expensive because of devaluation, and this
contributes to U.S. domestic inflation. The price of oil imports in particular
has increased because of successful contract negotiations by producing
countries and the direct effects of devaluation. U.S. agricultural products
are now selling at bargain international prices creating a greater foreign
demand for them and thus contributed to the need for U.S. export controls.
The controls themselves have dampened U.S. balance of payments prospects
thereby intensifying downward pressure on the dollar, which in turn puts
greater pressure on U.S. domestic agricultural supplies. Controls have
also limited supplies abroad thereby contributing to inflation in many
countries and undercuts our ability to press our legitimate long-term goal
of freer access to foreign agricultural markets. On the other hand, after
adjustment, a number of U.S. products will benefit from the fact that
devaluation has increased foreign demand for our exports. Investment in
the U.S. has also become more attractive to foreigners. These factors
will help create jobs and reduce unemployment in the U.S.
Longer-Term Implications
In the longer run, the very low value of the dollar will adversely affect our
trading partners. Although their trade position has been little damaged so
far, cheaper U.S. goods and increased investment in the U.S. - - rather
than in the domestic economies of these countries will eventually create
more jobs in the U.S. and less job opportunities abroad. Other nations are
now attempting to apply restrictions to curtail domestic inflation, the result
of which would, under normal circumstances, bring about a slow-down in
their economies. Such a foreign-created loss of job opportunities during
this period could contribute to recession in their countries and cause some
of the blame therefore to be shifted to us. The problem will become more
acute as the slow-down in foreign economies becomes pronounced, but the
fear is clearly there already.
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The outgrowth of this concern by our trading partners is increased
pressure, emanating chiefly from France, for Europe to take a harder
position vis-a-vis the U.S. in trade and monitary negotiations and to
avoid "giving away" any concessions to the U.S. which in their view
will soon begin to reap the benefits of a devalued dollar.
This concern has colored relations in a number of policy areas:
In Article 24:6 negotiations the French, and others, have been extremely
reluctant to make concessions to the U.S. Although today we received
information that Jobert had indicated to a high EC official his desire of
avoiding a confrontation with the U.S. on this issue, little progress has
as yet been made toward a solution.
In discussions on trade negotiations, the French have taken the view that
negotiations should not begin until currencies have returned to their rates
agreed to by Finance Minister in February, i.e., the over-devalued
dollar appreciated by roughly 14% vis-a-vis the European. The other EC
members have overruled the French on this, but the French can be
counted on to reassert their position even more strongly if the dollar
continues to decline.
The U.S. Trade Bill, presently in the Ways and Means Committee, is
moving more slowiy than expected. This slow pace reflects in part a
reluctance by the Congress to give the President a great deal of negotiating
flexibility, but also has been influenced by the very unstable international
economic climate.
Monetary negotiations being conducted in the Committee of Twenty are
going very slowly. No basic agreement will be reached by the IMF annual
meeting in Nairobi in September. This slowness results in part from an
inability of the major nations to agree, and from the preoccupation of
many countries with the dollar's decline.
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INFO OCT-01 EUR-25 10-13 ADP-00 AGR-20 CEA-02 CIAE-00
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E.O. 11652: N/A
TAGS: EGEN, EAGR, ETRD, FR
SUBJECT: FRENCH REACTION TO SOYBEAN CONTROLS SITUATION
REF: A. STATE 1354191 B. PARIS 19464
SUMMARY: FRENCH REACTION TO THE U.S. EXPORT CONTROLS ON
SOYBEANS HAS BEEN SHARPER THAN THE FACTS OF THE SITUATION WOULD
SEEM TO JUSTIFY, AND WE BELIEVE THAT THE REAL CAUSES OF THIS
REACTION MUST BE SOUGHT ELSEWHERE.
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2. IN OUR VIEW THERE ARE FOUR MAIN EXPLANATIONS OF FRENCH
BEHAVIOR: (1) THE GOF WISHES TO MAKE POLITICAL CAPITAL WITH THE
ALL-IMPORTANT FARM CONSTITUENCY: (2) IT IS SEEKING TO EXPLOIT
THE TEMPORARY SHORTAGE OF SOYBEANS TO FURTHER THE LONG-STANDING
FRENCH OBJECTIVE OF DEVELOPING EUROPEAN SELF-SUFFICIENCY IN OIL
SEED PRODUCTION; (3) IT IS ALSO SEEKING TO USE THE SHORTAGE AS AN
ARGUMENT AGAINST LIBERALIZING AGRICULTURAL TRADE IN THE MTN;
(4) FRENCH BEHAVIOR IS A FURTHER MANIFESTATION OF POMPIDOU'S
GROWING PESSIMISM ABOUT FRANCE'S ABILITY TO ACHIEVE MAJOR
FOREIGN POLICY OBJECTIVES AND HIS CURRENT IRRITATION WITH MANY
US POLICIES,
3. THE IMPLICATIONS OF THIS ANALYSIS FOR us POLICY ARE CLEAR,
ALTHOUGH WE RECOGNIZE THE DOMESTIC SHORTAGE AND PRESSURES
WHICH GAVE RISE TO PRESENT SITUATION, THE SOONER WE CAN
RETURN TO UNRESTRICTED EXPORTS OF SOYBEANS
THE BETTER FOR OUR INTERESTS. THE ISSUE IS ONE WHICH THE FRENCH
CAN USE WITH GREAT EFFECT TO COUNTER US OBJECTIVES IN THE TRADE
NEGOTIATIONS AND THEY SEEM DETERMINED TO USE IT,
END SUMMARY.
4 , FRENCH REACTION TO US EXPORT CONTROLS ON SOYBEANS HAS
BEEN FAR SHARPER THAN THAT OF EC PARTNERS, FOR EXAMPLE,
FRENCH MINISTER OF AGRICULTURE CHIRAC AT JULY 16 EC COUNCIL
OF MINISTERS MEETING IN BRUSSELS SPOKE BITTERLY OF EC'S ABSURD
RELIANCE ON "WHIMS" OF THIRD COUNTRIES AND COMPLAINED OF us
"AGGRESSION" IN LIMITING EXPORTS OF SOYBEANS. HE THEN ATTACKED
FRENCH EC COMMISSIONER FOR DISREGARDING FRANCE'S NATIONAL
INTERESTS. THE PRESS SPEAKS REGULARLY OF A SOYBEAN WAR.
POMPIDOU REFERRED PUBLICLY TO A LETTER ADDRESSED TO PRESIDENT
NIXON ON THIS SUBJECT AND ON JULY 11 STATED AT A COUNCIL OF
MINISTERS MEETING THAT "IT WAS UNTHINKABLE TO DEPEND ON A
FOREIGN SOURCE FOR A COMMODITY IN SUCH SHORT SUPPLY,"
5, FRENCH REACTION HAS BEEN so SHARP IN FACT THAT IT INEVITABLY
RAISES QUESTIONS ABOUT GOF'S TRUE MOTIVES, THE SUSPICION
THAT THESE GO BEYOND MERE CONCERN ABOUT SOYBEAN SUPPLY
SITUATION IS STRENGTHENED BY AN ANALYSIS OF SUPPLY DATA.
6. ALTHOUGH ACCURATE INFORMATION ON THE SOYBEAN SUPPLY
SITUATION IN FRANCE IS NOT AVAILABLE, WE BELIEVE THAT FRANCE IS
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FAR LESS DEPENDENT ON US SUPPLIES THAN ITS EC PARTNERS, AND
WE DO NOT BELIEVE THAT THE SHORTFALL WILL BE SIGNIFICANT
ENOUGH TO CAUSE SERIOUS ECONOMIC DAMAGE. THIS CONCLUSION IS
SUPPORTED BY THE FOLLOWING FACTS: FIRST, COMMERCIAL COMPOUND
FEEDS (THAT EMPLOY PROTEIN MEALS) ARE GENERALLY LESS USED
BY FRENCH LIVESTOCK PRODUCERS THAN PRODUCERS IN OTHER EC
COUNTRIES. THUS, UNLESS FRENCH WERE MORE DILATORY THAN OTHER
EC COUNTRIES IN PLACING ORDERS (WHICH WE HAVE NO REASON TO
BELIEVE WAS THE CASE), THE IMPACT ON THEIR AGRICULTURE WOULD
APPEAR TO BE LESS THAN FOR OTHER EC COUNTRIES. SECOND, WE
BELIEVE THAT IMPORTS OF OTHER PROTEINS, ESPECIALLY PEANUT
MEAL, ARE ABOUT AVERAGE. THIRD, US SOYBEAN EXPORTS TO FRANCE
ARE UP SHARPLY DURING PRESENT CROP YEAR, FOR THE PERIOD
SEPTEMBER- MARCH (LATEST FIGURES) FRENCH SOYBEAN IMPORTS FROM
THE US ARE UP 25 PERCENT AND SOYBEAN MEAL UP 27 PERCENT.
FOURTH, THE FRENCH ARE MAJOR PRODUCERS OF CORN AND CEREALS
AND COULD PRESUMABLY COVER THEMSELVES -- ALBEIT AT A GREATER
COST -- FOR A TWO OR THREE-MONTH PERIOD, FINALLY, IT IS NOTABLE
THAT PRESS RELEASES PUT OUT LAST WEEK BY VARIOUS FRENCH FARM
ORGANIZATIONS, UNLIKE EARLIER STATEMENTS, SPEAK OF A WORLD
PROTEIN SHORTAGE RATHER THAN A SPECIFIC SHORTAGE IN FRANCE.
7. ALTHOUGH DIFFICULT TO DETERMINE AT THIS TIME, IT IS THUS
ENTIRELY POSSIBLE THAT FRANCE WILL SQUEAK THROUGH UNTIL NEW
CROP BECOMES AVAILABLE WITHOUT SHARP PRICE INCREASES IN THE
FOOD PRODUCTS EFFECTED. ADMITTEDLY, EVEN A MODERATELY
INFLATIONARY EFFECT WOULD BE OF CONCERN TO THE GOF GIVEN THE
FACT THAT INFLATION IS FRANCE NUMBER ONE ECONOMIC PROBLEM,
ANOTHER CAUSE OF CONCERN IS THE FACT THAT, WHILE SUPPLY
SHORTAGES DO NOT APPEAR SERIOUS, THEY ARE CONCENTRATED IN
BRITTANY, A POLITICALLY SENSITIVE, ECONOMICALLY BACKWARD
REGION. MOREOVER, THE SHORTAGE HAS UNDOUBTEDLY MADE LIFE
MORE DIFFICULT FOR FRENCH HOG AND POULTRY PRODUCERS.
8. NONETHELESS, THE SHRILLNESS OF THE FRENCH REACTION SEEMS
TO US TO BE OUT OF PROPORTION TO THE FACTS OF THE SITUATION AND
WE BELIEVE THAT THE REAL CAUSES OF THIS REACTION MUST BE
SOUGHT ELSEWHERE.
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INFO OCT-01 EUR=25 IO-13 ADP-00 AGR-20 CEA=02 CIAE-00
COME-00 DODE=00 FRB-02 H-03 INR=10 INT-08 L-03 LAB-06
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AMEMBASSY DUBLIN
AMEMBASSY THE HAGUE
AMEMBASSY LONDON
AMEMBASSY LUXEMOURG
AMEMBASSY ROME
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USMISSION GENEVA
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9, IN OUR VIEW THERE ARE FOUR MAIN EXPLANATIONS OF FRENCH
BEHAVIOR: (1) THE GOF WISHES TO MAKE POLITICAL CAPITAL WITH
THE ALL-IMPORTANT FARM CONSTITUENCY; (2) IT IS SEEKING TO EXPLOIT
THE TEMPORARY SHORTAGE OF SOYBEANS TO FURTHER THE LONG-STANDING
FRENCH OBJECTIVE OF DEVELOPING EUROPEAN SELF-SUFFICIENCY IN OIL
SEED PRODUCTION; (3) IT IS ALSO SEEKING TO USE THE SHORTAGE AS
AN ARGUMENT AGAINST LIBERALIZING AGRICULTURAL TRADE IN THE
MTN; (4) FRENCH BEHAVIOR IS A FURTHER MANIFESTATION OF
POMPIDOU'S GROWING PESSIMISM ABOUT FRANCEIS ABILITY TO
ACHIEVE MAJOR FOREIGN POLICY OBJECTIVES AND HIS CURRENT IRRITATION
WITH MANY US POLICIES,
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10. THE FARM VOTE - THE RESULTS OF LAST SPRING'S LEGISLATIVE
ELECTIONS CONVINCED THE UDR THAT THE FARM VOTE WAS ESSENTIAL
TO ITS CONTINUANCE IN POWER. IN DISTRICT AFTER DISTRICT, THE
FARM VOTE SPELLED THE DIFFERENCE BETWEEN VICTORY AND DEFEAT FOR
THE UDR CANDIDATES. AGRICULTURE MINISTER CHIRAC, WHO IS MUCH
MORE A POLITICIAN THAN AN AGRICULTURE MINISTER, HAS BEEN TAKING
AN INCREASINGLY SHARP LINE IN DEFENSE OF THE INTERESTS OF FRENCH
FARMERS IN AN EFFORT TO CONSOLIDATE RURAL SUPPORT BY CONVINCING
THE FARMERS THAT THE UDR IS THEIR ONLY TRUE FRIEND, CHIRAC'S
EMOTIONAL OUTBURSTS ON SOYBEANS IN BRUSSELS, ALTHOUGH IN PART
A REFLECTION OF THE MAN'S OWN TEMPERAMENT, ARE CLEARLY A PART
OF THIS CAMPAIGN.
11. SELF-SUFFICIENCY IN OIL SEED PRODUCTION - FOR SEVERAL YEARS
THE GOF HAS BEEN TRYING TO PUSH THE EC INTO ESTABLISHING A CAP
FOR OIL SEEDS ON THE GROUND THAT EUROPE MUST NOT BE DEPENDENT
ON EXTERNAL SOURCES FOR VITAL PROTEIN SUPPLIES. THIS OBJECTIVE
IS INSPIRED BY CONSIDERATIONS WHICH ARE CENTRAL TO IMPORTANT
FRENCH INTERESTS. IN THE FIRST PLACE, IF THE EC DID DECIDE TO
ESTABLISH A CAP FOR OIL SEEDS, THE FRENCH FOR GEOGRAPHIC AND
CLIMATIC REASONS WOULD BE THE PRINCIPAL PRODUCER. THE FRENCH
HAVE BEEN EXPERIMENTING WITH SOYBEAN PRODUCTION IN RECENT YEARS,
AND IT IS ESTIMATED THAT AT PRESENT WORLD PRICES ABOUT 100,000
HECTARES OF FRENCH FARMLAND COULD BE CONVERTED TO SOYBEANS,
IF THE WORLD PRICE WERE TO RISE HIGH ENOUGH, THIS ACREAGE COULD
BE SUBSTANTIALLY INCREASED AND, ONCE THE CAP MECHANISM WAS IN
PLACE, IT WOULD BE DIFFICULT TO CUT BACK PRODUCTION EVEN IF THE
WORLD PRICE WENT BACK DOWN, THERE IS ALSO A POLITICAL FACTOR,
GIVEN THE FRENCH DRIVE FOR "INDEPENDENCE" FROM THE us,
DEPENDENCE BY EUROPE ON THE US FOR SUPPLIES OF SUCH A VITAL
COMMODITY IS UNDOUBTEDLY IRKSOME TO THE GOF. SOME FRENCH
COMMENTATORS HAVE GONE so FAR AS TO ARGUE THAT THE US COULD
USE ITS MONOPOLY OF SOYBEAN PRODUCTION TO BLACKMAIL EUROPE.
THE CURRENT SHORTAGE ADMIRABLY SUPPORTS THE FRENCH THESIS
AND THE GOF HAS BEEN QUICK TO CAPITALIZE ON IT.
12. AGRICULTURE IN MTN a AS THE PRINCIPAL BENEFICIARY OF THE
CAP, FRANCE HAS BEEN THE MOST OUTSPOKEN OPPONENT OF THE US
OBJECTIVE OF OBTAINING SIGNIFICANT LIBERALIZATION OF THE AGRICUL-
TURAL TRADE IN THE MTN. IN SPITE OF REPEATED US ASSURANCES THAT
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WE ARE NOT TRYING TO BREAK UP THE CAP, THE FRENCH SEEM QUITE
GENUINELY TO BELIEVE THAT LIBERALIZATION OF TRADE IN AGRICULTURE
IS IRRECONCILABLE WITH PRESERVATION OF THE CAP. THE SOYBEAN
SHORTAGE HAS GIVEN THE FRENCH A GOLDEN OPPORTUNITY TO MOBILIZE
OPPOSITION WITHIN THE EC AGAINST THE us OBJECTIVE AND TO
GENERATE SUPPORT FOR THE FRENCH VIEW THAT THE OBJECTIVE OF THE
NEGOTIATIONS SHOULD NOT BE INCREASED ACCESS FOR AGRICULTURAL
EXPORTS BUT INTERNATIONAL COMMODITY AGREEMENTS DESIGNED TO
ORGANIZE WORLD MARKETS IN A SITUATION OF SERIOUS AND PROBABLY
LONG-LASTING SHORTAGE.
13. POMPIDOU'S MALAISE - THE FRENCH PRESS HAS BEEN SPEAKING
OPENLY OF PRESIDENT POMPIDOU'S PESSIMISM, HIS GROWING BELIEF
THAT EVENTS BEYOND HIS CONTROL ARE MAKING IT INCREASINGLY
DIFFICULT FOR HIM TO ACHIEVE HIS GOAL OF A EUROPE INDEPENDENT OF
THE TWO HEGEMONIES (US AND USSR) UNDER FRENCH LEADERSHIP.
WHEREVER HE TURNS, HE SEES THE us STANDING IN FRANCE'S WAY.
THE EFFECT OF THE DEPRECIATION OF THE DOLLAR ON FRENCH MONETARY
OBJECTIVES (SEE PARIS 19376), THE STUBBORN INSISTENCE OF FRANCE'S
EC PARTNERS ON PLACING THEIR TIES WITH THE US ABOVE WHAT
FRANCE CONSIDERS EUROPE'S INTERESTS, THE US-USSR RAPPROCHMENT
WITH ITS THREAT, IN FRENCH EYES, OF CONDOMINIUM ARE ALL CASES IN
POINT. THE SOYBEAN EXPORT CONTROLS ARE ONE MORE BITTER
REMINDER OF THE US POWER TO AFFECT EUROPE'S DESTINY.
14. THE IMPLICATIONS OF THIS ANALYSIS FOR US POLICY ARE CLEAR.
ALTHOUGH WE RECOGNIZE THE DOMESTIC SHORTAGE AND PRESSURES
WHICH GAVE RISE TO PRESENT SITUATION, THE SOONER WE CAN RETURN
TO UNRESTRICTED EXPORTS OF SOYBEANS, THE BETTER FOR OUR
INTERESTS, THE ISSUE IS ONE WHICH THE FRENCH CAN USE WITH
GREAT EFFECT TO COUNTER US OBJECTIVES IN THE TRADE
NEGOTIATIONS AND THEY SEEM DETERMINED TO USE IT.
DECONTROL DECEMBER 31, 19773. IRWIN
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