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FRENCH/US AGREEMENT (Framework for Monetary and Trade Settlement) [3 of 3]
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FRENCH/US AGREEMENT (Framework for Monetary and Trade Settlement) [3 of 3]
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Henry A. Kissinger's (HAK) Office Files
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MEMORANDUM OF CONVERSATION
Subject: Meeting between Mr. Pompidou and Dr. Kissinger, Azores
Date and Time: 14 December 1971; 0830
Present: President Pompidou
Dr. Kissinger
Mr. Andronikof
Major General Walters
Dr. Kissinger opened the conversation by thanking President Pompidou
for the arrangements for him to have breakfast with him.
President Pompidou said he had spoken to Secretary of the Treasury
Connolly and after that he believed Mr. Connolly had spoken to Dr.
Kissinger. He had found someone who had firm ideas. He had said
that the U.S. would defend the dollar after devaluation. As one knew
this was like going to confession. The U.S. had the firm purpose of
defending the dollar after a deal had been made but not the means and
did not seem disposed such means as it had.
Dr. Kissinger said he understood what President Pompidou was saying.
After talking to him he had spoken to the President and the President's
view is that when we speak of defending the dollar, as he understood it,
we are talking about what happens in the new monetary system. The
President believes that as long as there is the expression on our part
that is what President Pompidou described as defending the dollar, but
President Pompidou seemed to feel that there were others. Leaving
aside the present balances, the way to defend is to buy when it falls.
President Pompidou said that this was so. He drew on his experience
with the French Franc. When the franc lost value, no one in the world,
no central bank kept francs and the French had to give hard currency
to bolster it (dollars). When the French found that they had exhausted
their special drawing rights at the International Monetary Fund, their
reserves and loans, all of which were insufficient, then they devalued.
Afterwards, with the French franc at a correct level Central Banks
still did not keep French Francs and if there were too many and we
had a negative balance of payments the French had to give foreign
currencies. This applied to the U.K. as well as to France. This is
the process which he thought would be applied to the devaluation of the.
dollar. He understood that present dollar balances would not be
included as they Reproduced at py felt we were
thinking of something else. DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
Dr. Kissinger said that his impression after talking to Secretary
Connolly is that the Secretary feels if the exchange alignment is
correct then we will be prepared to operate the system, if what we
had already talked about was not enough. Secretary Connolly preferred
to delay the final commitment until the final settlement of the new
international system. Dr. Kissinger said he would read what we were
prepared to do as part of a general package on margins and rates. This
was the formulation:
"Discussions will promptly be undertaken in the appropriate forums to
resolve the longer term issues of the International Monetary Reform.
Attention should be directed to appropriate means and division of
responsibilities for defending established exchange rates; the proper
role of gold, reserve currencies and special drawing rights in the
operation of the system; the volume of liquidity and reexamination of
permissible margins in established exchange rates and other means
of establishing suitable flexibility in exchange rates. It is recognized
that the decision in each of these areas will be interdependent." That
was Secretary Connolly's formulation.
President Pompidou said he understood it but it was difficult for him.
Dr. Kissinger said that the President's view was that one way of
proceeding would be the following: If President Pompidou thought it
was reasonable, he and President Nixon could agree today on the
approach to both the interim and long-term solution. They both, France
and the U.S., could support that position in the negotiations in the
following week. President Nixon and President Pompidou could agree
to a certain devaluation of the dollar. If President Pompidou desired
margins and a restart of the Trade Negotiations as well as the clause
which we had given him, we could then support the definition of the
exact rates between the French Franc and the German Mark which
President Pompidou had indicated he desired on the previous day.
Alternatively, the Presidents could turn the matter over to the Finance
Ministers for discussion the following week. The President believed
that he and President Pompidou approached the discussion in a broader
spirit.
President Pompidou said it was difficult for him to react immediately
on the first point, that is, the clause Dr. Kissinger had read. The rest
he understood. If he had correctly understood what Dr. Kissinger said,
2
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
there would first be a realignment of currencies, a certain devaluation
of the dollar to be discussed and a reevaluation in fact of all of the other
currencies in relation to the dollar. In that phase which was interim we
should set certain margins.
Dr. Kissinger said that we were ready to do so.
President Pompidou said that if the U.S. maintained its formula, it
would undertake to defend the rate without defining the defense.
Dr. Kissinger said that since he was honest he could not say that he
was sure that Secretary Connolly's definition was the same as
President Pompidou's. There was a difference in the way Texans
bargained.
President Pompidou said he was not a Texan. President Nixon had
told him on the previous day that he could not go further. Having had
the Congress already vote a certain devaluation, he could not say that
he would hold it or he would be in a difficult political position. As he
was not a Texan, he would say that having had Congress vote a rate of
gold and the dollar and whatever was said, he did not see how the
President of the U.S. could come back to get another vote because he
could not defend the dollar.
Dr. Kissinger said that he was not a good negotiator because he would
tell President Pompidou what he really thought. Three months ago
Secretary Train argued with equal vehemence for convertibility. Dr.
Kissinger believed, as did the President, that the realities of the new
situation will bring what President Pompidou had described. In fact,
one argument advanced by Secretary Connolly as to why he is so tough
is that it is so much harder for the U.S. to change the rate than it is
for others.
President Pompidou said that in regard to the statement Dr. Kissinger
had read he could not give agreement. He would have Giscard d'Estaing
speak to Secretary Connolly. He did want to make two or three observa-
tions. In the statement he could not accept the absence of any mention
of fixed parities and perhaps the problem of the substance of the role
of reserve currencies. He had thought that in the last few months that
the U.S. Government had admitted that in the new monetary system,
at least in the final settlement, in reality that no currency should have
this theoretical privilege. The reserve role of the dollar is actually a
burden. Rather in parts of special drawing rights there is something
similar for the reserves of Central Banks, including gold. The Central
Banks agree to keep a certain percentage of currencies. This is not
a privilege. They would be considered reserve instruments. President
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
Pompidou said he wished to stress the matter of flexibility of currency
rates. This was a very serious matter involving the whole concept of the
role of margins. If it means that in the light of the evolving situation
with its ups and downs that margins make living possible, he would
agree. If it means that margins are a means of perpetuating revaluations
and devaluations, with no fixed parities and flexible rates, then he could
not agree.
Dr. Kissinger said the whole idea was based on fixed parities, otherwise
it would make no sense.
President Pompidou said that referring to what Dr. Kissinger had
said about the new parities, he wished to emphasize the French point
of view. No European currency would follow the dollar. He would pass
over the Benelux. He was concerned that the DM should be 6 percent
over the franc. Seven percent was too much. Five percent not enough.
The French had made precise calculations just as we had done with
Canada, with whom we did half our trade.
Dr. Kissinger said that Secretary Connolly had told him that according
to his information, Schiller said 3 or 4 percent and Brandt said 5 percent
would be negotiable.
President Pompidou said 5 percent would be the absolute minimum.
Schiller was a Texan. He was more stubborn than Brandt. To move to
the question of the dollar rate and margins, the French position was for the
narrowest margins possible. The trend was towards wide margins. We
could not return to 1 and the trend was towards 3.
Dr. Kissinger said that Secretary Connolly asked him to say that this
was not unsurmountable.
President Pompidou said that 2 would be acceptable. He knew that the
Germans were for 3. Brandt said that was too much. The Gilstra
report explains how with 3 two currencies could not be reserve. It
would be an encouragement to speculation. Suppose movement capital
believed that the dollar would move down 3 points and the DM up 3 points.
Dr. Kissinger said that he had talked to Secretary Connolly about
margins. He would prefer to wait on this until the end of the meeting.
He would be prepared to handle this if we settled the other matters.
The President was prepared to split the difference between 2 and 2 1/2.
4
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DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
President Pompidou asked what we should say if the Ministers agree.
Dr. Kissinger said that we had not settled the matter of devaluation.
President Pompidou said he would prefer to speak in terms of the price
of gold, 5 percent to 7 percent, even if this is what the public is told.
For the Congress it appeared it would be $37 per ounce. The French
preferred 37.50. He believed that we could go to $38 an ounce. It
would not be hard.
Dr. Kissinger said that what was really meant was a percentage.
President Pompidou said he felt it should be $38.00 an ounce.
Dr. Kissinger said that we would not raiseour voices on that.
President Pompidou said to the U.K. and Italy it would be 8 percent.
Dr. Kissinger, to speak with the same frankness, it was Secretary
Connolly's view that he must never accept less than 10 or 9 percent
devaluation in fact. But what President Pompidou and President Nixon
decided would go. What did President Pompidou have to say.
President Pompidou said that above all they must not unleash
speculation. How far could they go in the statement.
Dr. Kissinger said that it should be a general statement, that they had
requested the Finance Ministers to look into the matter. If questions were
asked about their meeting (President Pompidou and Dr. Kissinger), they
should say that they had been discussing the Agenda.
President Pompidou agreed and said that they should leave for the
meetings at the Junta Geral.
5
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
MEMORANDUM OF CONVERSATION
Subject: Meeting at Junta Geral, Angra do Heroismo, Terceira, Azores
Date and Time: 15 December 1971; 0900
Present:
The President
President Pompidou
Dr. Kissinger
Mr. Andronikof
Major General Walters
The President opened the conversation by saying he believed that the
Portuguese had done an outstanding job as hosts.
President Pompidou agreed fully with the President.
The President then said that the key items they had been discussing
were monetary. He had thought about it overnight and he knew that
Dr. Kissinger had talked to President Pompidou earlier that morning,
that it was his belief that these matters were as much a political as an
economic issue in both countries. This was important in both countries.
Since the basic decisions would be made by political leaders, it was the
two Presidents who would ultimately make them. Rather than engage
in haggling between the two Finance Ministers it would be better if
they came up with recommendations that the two Presidents could live
with in a political way. For that reason he felt that it would be useful
to have presented this morning in a frank discussion what he could do
in a political way. He would let Dr. Kissinger sum up the morning's
discussions. His Finance Minister John Connally was a very tough
guy, and he said that we ought to have a revaluation of 12 percent.
That is what he should say as Finance Minister. But the reality was
what President Pompidou had pointed out he could not live with. He
(The President) had to make the basic decision to devalue in the spirit
of their discussions. He could make the final decision and was prepared
to do so if they could agree.
President Pompidou said he could.
Dr. Kissinger then said he would sum up his impressions. The first
point which had never been mentioned was that it was self evident that
the surcharge and associated restrictions would be lifted.
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
The President then asked whether they had mentioned controls and
Dr. Kissinger said he would have to reserve on that. As a second
point we would propose to Congress a certain devaluation in terms
of gold. He had told President Pompidou that our figure was 10
percent. President Pompidou had in all frankness told him what he
could do in terms of his own studies and in terms of what he thought
other countries might accept. This was to raise the price of gold
from $35 an ounce to $38. This was an 8.6 percent increase.
The President commented that this was much less than we wanted and
Dr. Kissinger said it was much less.
Dr. Kissinger said that Secretary Connally felt that the devaluation
should be of at least 10 percent in relation to France.
President Pompidou said that if the differential was greater than he
had mentioned, then the U.K. and the lira would have to devalue.
The French felt strongly that the relationship between the pound, the
lira and the franc should remain.
The President then said that if President Pompidou really felt that
was the maximum figure he would agree. He had not heard the question
of margins discussed but it was his strong view that as political leaders
they had to do what was possible. There was no sense in talking about
a deal which would disturb the U. K., Italy or others. If it was
unacceptable to them, then it would have to be a basis of 8. 6 percent.
Dr. Kissinger said that it depended on the package.
President Pompidou said that $38 an ounce was then maximum. They
could not unstick from the pound and the lira. This he could not accept.
To change the parity between the franc and the pound and lira would
represent an immediate financial loss for the Bank of France on the
order of $300 million if the dollar were devalued and the price of gold
were not changed since the French franc would not move in relation to
Gold. The Bank of France would lose 300 million dollars in 24 hours.
The President said that this was educating him and President Pompidou
said that the President had experience in this matter. The President
said he was learning.
2
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
Dr. Kissinger said that the next part related to the proposal of which
President Pompidou had been advised yesterday. After discussion of
the ultimate differential between the franc and the mark, which the
French felt should be 7 percent, Schiller 3 or 4 percent and Brandt
5 percent, the latter had said that the difference was negotiable.
President Pompidou said that Chancellor Brandt had spoken of 5 percent.
He himself had mentioned 7 percent and Brandt had indicated that the
difference between them was negotiable.
The President said that Connally had indicated that he felt 7 percent
would be impossible for Brandt.
President Pompidou said that Schiller's figure was much lower.
Schiller believed that the DM could accept a further revaluation and
that the German economy was sufficiently strong. German business
had screamed and Schiller would like to make the German business
community happy. For him the matter was more political than it was
financial.
The President then asked President Pompidou what rate of differential
he would accept. President Pompidou said that he would fight for 6 and
under no circumstances would he go below 5.
The President then asked how this would be arranged with the Germans --
bilaterally ?
President Pompidou said that on his return to France he would give
general indications to their partners in the community. He could not
give them the impression that he and the President had fixed the rates
and that they must accept them. They could not set the relationship
between the dollar, the European Community currencies and the yen.
The French would say to the U.K. that in margin to their discussions
with us on the rate of the dollar they believed that there was a maximum
figure beyond which they could not go. If the British devalued, then the
French would too.
Dr. Kissinger said that to return for a minute to the Indo-Pak problem,
the Security Council was discussing the matter.
The President said that we were doing what we
could in the Security Council to save West Pakistan.
3
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
Dr. Kissinger said that there had been a veto in the Security
Council the previous evening and we were now trying to find a
formula on which all could agree.
The President said that Foreign Minister Schumann had said that
the French would go along and be helpful on finding a formula.
Dr. Kissinger said that he did not expect anything to be forthcoming
in the next 1 1/2 hours but that messages might come in during the
night.
The President then said that to return to monetary matters he wondered
whether there was not a misunderstanding. President Pompidou had
said he would fight for 6 percent and would not go under 5 percent.
Dr. Kissinger said that he had told President Pompidou after talking
to Secretary Connally that we would have no objection to a greater
differential if they could get the Germans to agree. President
Pompidou had pointed out after the summary that they must find
appropriate words to convey their decisions and not give the impression
that there was nothing left to negotiate.
President Pompidou said that this was right.
The President said that they must not lose time.
President Pompidou said that they might bring in the Ministers of
Finance and the President said that they were there for that.
President Pompidou then said that he had told Finance Minister
Giscard d'Estaing not to argue over figures but to seek a general
formula. They should create an atmosphere and see what could be
agreed without creating speculation during the afternoon. If there
were leaks they would have to close the stock markets at once.
Things were still at the old parity and such leaks could enable
speculations to make a 7 or 8 percent profit.
Dr. Kissinger said that the next point related to margins. The
French could accept up to 2 percent. Our figure was 3 percent.
Secretary Connally had told him he could go to 2 1/2 percent and
they could put the difference up to the two Presidents.
4
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
The President said he would bow on the 2 1/2 percent figure. The
French figure was higher. He would give 75 percent.
President Pompidou then said that he must in honesty advise the
President that the French would ask the European community for a
slight reduction in this margin. It was now 1 percent for the
European community. He would ask for the same for the Community
currencies. That would leave the dollar its margin but they would
attempt to tighten the Community currencies. A considerable
broadening of margins would impede progress towards a margin
between Community currencies but that was not for tomorrow.
Dr. Kissinger said that the next point related to the future system
which would be one of great complexity. President Pompidou had
made some comments on its operation.
The President said that this was a matter of great complexity. He had
been impressed by President Pompidou's analysis as had Dr. Kissinger.
He could only say that no one could read the future but he hoped they
could find language on which they could agree. At a later time they
could find the best answer. President Pompidou might have the best
answer. He did not know. We were aiming towards the same goal,
that is, stability of the monetary system. We must move towards a
more stable system.
President Pompidou said that as far as he was concerned the whole
matter was far more political than it was monetary. There was some
problem with respect to the role of the dollar and other currencies.
Previously, the dollar had all of the power and bore all of the burdens.
The U.S. could not bear all of the burdens and the other countries
could not accept it having all of the power. Some suggested the
creation of a European currency and its weight would surpass that of
the dollar. The Europeans were moving towards a European currency
but a capitulation between Europe and the U.S. would be bad. He
personally believed that it was much more normal to seek an
international forum such as the IMF with a notion of reserve and
liquidity rather than to try and recast the dollar and create a European
currency. This would waste time and create a monetary war.
5
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
The President said that he wished to say in total confidence because
this involved his own advisers, Dr. Burns, the Chairman of the Federal
Reserve, The Treasury, George Shultz and the Bureau of the Budget.
He had discussed the issue with them at length. He wished to say in
confidence that he did not have a frozen position on these matters.
He wished to find the right language that would give the necessary
flexibility for the right solution.
Dr. Kissinger said that there was one other point and this was the
matter of trade. Our proposal was that the French Government
support a mandate to the European Community to enter into negotiations
to resolve pending short term issues.
The President said that he felt that in terms of President vis-a-vis
President this was not really a big problem. To us it was a difficult
political issue, even if symbolical, since we give up the surcharge.
That is why Secretary Connally has such a firm position on the
problem. We know that it is also a problem for the Community. The
political forces in our country felt strongly that we should make some
progress in this area, that is, on the trade front. This was the problem.
We did not need anything specific but progress could be very helpful.
President Pompidou said that the European Community had adopted a
draft statement that once monetary measures had been taken they were
ready for trade discussions of a general nature or sort of "Nixon Round"
but on the other hand what they had adopted was not a mandate. The
matter should be referred to the permanent representatives for study
of the special problems of an immediate nature on general points and on
the matter of reciprocity. It would sum up the requirements of each
side and point out existing difficulties on both sides in moving towards
the freest possible trade. To speak of more immediate matters which
Secretary Connally and Eberle had brought up, he could tell the
President in confidence that citrus products did not create any real
difficulty for the French. This would create some problems with Italy,
Morocco and Israel but the French themselves did not mind. On
tobacco they must find a formula, but this was more of a German than
a French problem. It would mean an increase in the price of tobacco.
All of these could be discussed now. What could not be discussed in the
immediate future was the production of cereals, except for soft wheat.
The European Community was not an exporter. It was an active importer
from Canada. The European Community produced only 60 percent of its
requirements. There were two inconveniences. It would raise the price
6
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
of cereals for the Germans and the French were not seeking to raise
the price of cereals. A German revaluation would make this even more
difficult for the Germans. It would be politically impossible. Everyone
else would be obliged to raise the price of their cereals. If the leaders
were to give to the European farmers the impression that they were
tampering with European agriculture, it would create an impossible
political position.
The President said that after they got back home he would like to get
President Pompidou's thoughts as to the state of play. It would be
helpful if we could work together.
Dr. Kissinger said that this would be important since the Soviets did
not fully understand what we wanted to do. He had talked to Secretary
Connally the previous evening on the matter of trade. It was too
complex a matter for the two Presidents to enter into details. If they
could agree there that the President of France would agree to a
mandate for the European Community to try and get this issue settled
between Eberle and the European Community, neither President would
have to go into the details.
President Pompidou said that he did not think that there would be too
much difficulty. Remembering what had been said at Brussels, it
would all be part of a package. Nothing would enter into effect until
after the vote in Congress on the price of gold. That would be the
last item in the package.
Dr. Kissinger said that this was of course so.
The President said such a mandate would help him with the vote in
Congress on the price of gold. He could guarantee it.
Dr. Kissinger said that the Trade Negotiations would not go into effect
until after the vote in Congress on the price of gold and President
Pompidou agreed with a nod.
The President said that President Pompidou probably wondered what
he could do with Congress on the matter of the price of gold in view of the
fact that there was a majority of Democrats in both Houses. As a matter
of fact, a coalition of responsible Democrats and Republicans would
support this policy. But some agreement on trade matters would make
this move more quickly.
7
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
President Pompidou said that he understood that if the 10 agreed
the following weekend on a system of parities and the structure
of a future monetary system,
the President would immediately
ask for a vote of the Congress as the negotiations continue. The
U.S. would not subordinate one to the other. This was very
important.
The President said that Congress adjourned that day and returned
on January 18 but he could get the procedures started in the
Congressional committees. An agreement the following weekend
by the group of 10 would set in train action on gold even before the
end of the work of the group of 10. The President would call in the
Congressional leaders. They could get the Finance Ministers in to
work out the language.
President Pompidou agreed that they could call in the Finance Ministers.
He said that they would have the trade discussions with Eberle and the
European Commission. He could not imagine a conversation in which
they would have the doors opened every two hours for the U.S. experts
and the U.S. Senators to be called in. The Community could not vote
on trade negotiations under permanent pressure. Once they had
undertaken a commitment they would carry it out loyally but without
pressure of either side on the other. One side could not say that if
the other would not agree on tobacco then they would go back to $37
an ounce, or Europe would be disarmed.
Dr. Kissinger said that we did not want to use the price of gold for
blackmail.
President Pompidou said that he could tell us very frankly that (and
this was very favorable to the U.S.) they were ready as French and
Europeans to discuss with the U.S. and Canada world grain market
organization. The President expressed his satisfaction at this.
President Pompidou said that it was absurd for the U.S. to subsidize
farmers to sell wheat cheaply to the USSR and Chinese.
The President said that this was a good point and we would follow it
up. Before they called in the Ministers there was one political point
which he was sure the President understood, that revaluation was
unfortunately more important than trade. Congress did not understand
monetary matters.
8
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
President Pompidou said he had a Parliament that did not give a damn
about monetary matters. The U.S. had a system where it was
possible for a Republican President to govern with a Democratic
Congress. If he in France were to have a hostile majority in both
houses this would lead to a grave crisis. The French had a more
fragile constitution. It was only 13 years old.
The President then said that we had noted a buildup of North Vietnamese
Forces along the DMZ and in Laos and Cambodia. We would in the next
few days take action against this. We had hoped and still hoped that the
North Vietnamese would be prepared to negotiate seriously.
President Pompidou replied that he felt that they would reply to an
approach. They had told him so.
The President then said that Secretary Connally was an excellent man
for his job. He worked very well in our system and used his experts
skillfully. He understood that many decisions could not be made on a
purely economic basis but had to take political considerations into
account. President Pompidou agreed with this.
The President said that he would make a further statement on the
withdrawal of U.S. Forces in Vietnam announcing a higher rate of
withdrawal. The critical problem now remaining was not the ability
of the South Vietnamese to carry on but the question of the Prisoners
of War.
He would not withdraw all of our forces while they still held American
prisoners.
President Pompidou nodded noncommittally.
It was then agreed by both Presidents that the Foreign and Finance
Ministers be brought in. This discussion is covered in a separate
Memorandum.
9
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
MEMORANDUM OF CONVERSATION
Subject: Meeting at Junta Geral, Angra do Heroismo, Terceira, Azores
Date and Time: 15 December 1971; 0900
Present:
The President
President Pompidou
Dr. Kissinger
Mr. Andronikof
Major General Walters
The President opened the conversation by saying he believed that the
Portuguese had done an outstanding job as hosts.
President Pompidou agreed fully with the President.
The President then said that the key items they had been discussing
were monetary. He had thought about it overnight and he knew that
Dr. Kissinger had talked to President Pompidou earlier that morning,
that it was his belief that these matters were as much a political as an
economic issue in both countries. This was important in both countries.
Since the basic decisions would be made by political leaders, it was the
two Presidents who would ultimately make them. Rather than engage
in haggling between the two Finance Ministers it would be better if
they came up with recommendations that the two Presidents could live
with in a political way. For that reason he felt that it would be useful
to have presented this morning in a frank discussion what he could do
in a political way. He would let Dr. Kissinger sum up the morning's
discussions. His Finance Minister John Connally was a very tough
guy, and he said that we ought to have a revaluation of 12 percent.
That is what he should say as Finance Minister. But the reality was
what President Pompidou had pointed out he could not live with. He
(The President) had to make the basic decision to devalue in the spirit
of their discussions. He could make the final decision and was prepared
to do so if they could agree.
President Pompidou said he could.
Dr. Kissinger then said he would sum up his impressions. The first
point which had never been mentioned was that it was self evident that
the surcharge and associated restrictions would be lifted.
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DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
The President then asked whether they had mentioned controls and
Dr. Kissinger said he would have to reserve on that. As a second
point we would propose to Congress a certain devaluation in terms
of gold. He had told President Pompidou that our figure was 10
percent. President Pompidou had in all frankness told him what he
could do in terms of his own studies and in terms of what he thought
other countries might accept. This was to raise the price of gold
from $35 an ounce to $38. This was an 8.6 percent increase.
The President commented that this was much less than we wanted and
Dr. Kissinger said it was much less.
Dr. Kissinger said that Secretary Connally felt that the devaluation
should be of at least 10 percent in relation to France.
President Pompidou said that if the differential was greater than he
had mentioned, then the U.K. and the lira would have to devalue.
The French felt strongly that the relationship between the pound, the
lira and the franc should remain.
The President then said that if President Pompidou really felt that
was the maximum figure he would agree. He had not heard the question
of margins discussed but it was his strong view that as political leaders
they had to do what was possible. There was no sense in talking about
a deal which would disturb the U.K., Italy or others. If it was
unacceptable to them, then it would have to be a basis of 8.6 percent.
Dr. Kissinger said that it depended on the package.
President Pompidou said that $38 an ounce was then maximum. They
could not unstick from the pound and the lira. This he could not accept.
To change the parity between the franc and the pound and lira would
represent an immediate financial loss for the Bank of France on the
order of $300 million if the dollar were devalued and the price of gold
were not changed since the French franc would not move in relation to
Gold. The Bank of France would lose 300 million dollars in 24 hours.
The President said that this was educating him and President Pompidou
said that the President had experience in this matter. The President
said he was learning.
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Dr. Kissinger said that the next part related to the proposal of which
President Pompidou had been advised yesterday. After discussion of
the ultimate differential between the franc and the mark, which the
French felt should be 7 percent, Schiller 3 or 4 percent and Brandt
5 percent, the latter had said that the difference was negotiable.
President Pompidou said that Chancellor Brandt had spoken of 5 percent.
He himself had mentioned 7 percent and Brandt had indicated that the
difference between them was negotiable.
The President said that Connally had indicated that he felt 7 percent
would be impossible for Brandt.
President Pompidou said that Schiller's figure was much lower.
Schiller believed that the DM could accept a further revaluation and
that the German economy was sufficiently strong. German business
had screamed and Schiller would like to make the German business
community happy. For him the matter was more political than it was
financial.
The President then asked President Pompidou what rate of differential
he would accept. President Pompidou said that he would fight for 6 and
under no circumstances would he go below 5.
The President then asked how this would be arranged with the Germans
bilaterally
President Pompidou said that on his return to France he would give
general indications to their partners in the community. He could not
give them the impression that he and the President had fixed the rates
and that they must accept them. They could not set the relationship
between the dollar, the European Community currencies and the yen.
The French would say to the U.K. that in margin to their discussions
with us on the rate of the dollar they believed that there was a maximum
figure beyond which they could not go. If the British devalued, then the
French would too.
Dr. Kissinger said that to return for a minute to the Indo-Pak problem,
the Security Council was discussing the matter.
The President said that we were doing what we
could in the Security Council to save West Pakistan.
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This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
Dr. Kissinger said that there had been a veto in the Security
Council the previous evening and we were now trying to find a
formula on which all could agree.
The President said that Foreign Minister Schumann had said that
the French would go along and be helpful on finding a formula.
Dr. Kissinger said that he did not expect anything to be forthcoming
in the next 1 1/2 hours but that messages might come in during the
night.
The President then said that to return to monetary matters he wondered
whether there was not a misunderstanding. President Pompidou had
said he would fight for 6 percent and would not go under 5 percent.
Dr. Kissinger said that he had told President Pompidou after talking
to Secretary Connally that we would have no objection to a greater
differential if they could get the Germans to agree. President
Pompidou had pointed out after the summary that they must find
appropriate words to convey their decisions and not give the impression
that there was nothing left to negotiate.
President Pompidou said that this was right.
The President said that they must not lose time.
President Pompidou said that they might bring in the Ministers of
Finance and the President said that they were there for that.
President Pompidou then said that he had told Finance Minister
Giscard d'Estaing not to argue over figures but to seek a general
formula. They should create an atmosphere and see what could be
agreed without creating speculation during the afternoon. If there
were leaks they would have to close the stock markets at once.
Things were still at the old parity and such leaks could enable
speculations to make a 7 or 8 percent profit.
Dr. Kissinger said that the next point related to margins. The
French could accept up to 2 percent. Our figure was 3 percent.
Secretary Connally had told him he could go to 2 1/2 percent and
they could put the difference up to the two Presidents.
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This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
The President said he would bow on the 2 1/2 percent figure. The
French figure was higher. He would give 75 percent.
President Pompidou then said that he must in honesty advise the
President that the French would ask the European community for a
slight reduction in this margin. It was now 1 percent for the
European community. He would ask for the same for the Community
currencies. That would leave the dollar its margin but they would
attempt to tighten the Community currencies. A considerable
broadening of margins would impede progress towards a margin
between Community currencies but that was not for tomorrow.
Dr. Kissinger said that the next point related to the future system
which would be one of great complexity. President Pompidou had
made some comments on its operation.
The President said that this was a matter of great complexity. He had
been impressed by President Pompidou's analysis as had Dr. Kissinger.
He could only say that no one could read the future but he hoped they
could find language on which they could agree. At a later time they
could find the best answer. President Pompidou might have the best
answer. He did not know. We were aiming towards the same goal,
that is, stability of the monetary system. We must move towards a
more stable system.
President Pompidou said that as far as he was concerned the whole
matter was far more political than it was monetary. There was some
problem with respect to the role of the dollar and other currencies.
Previously, the dollar had all of the power and bore all of the burdens.
The U.S. could not bear all of the burdens and the other countries
could not accept it having all of the power. Some suggested the
creation of a European currency and its weight would surpass that of
the dollar. The Europeans were moving towards a European currency
but a capitulation between Europe and the U.S. would be bad. He
personally believed that it was much more normal to seek an
international forum such as the IMF with a notion of reserve and
liquidity rather than to try and recast the dollar and create a European
currency. This would waste time and create a monetary war.
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This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
The President said that he wished to say in total confidence because
this involved his own advisers, Dr. Burns, the Chairman of the Federal
Reserve, The Treasury, George Shultz and the Bureau of the Budget.
He had discussed the issue with them at length. He wished to say in
confidence that he did not have a frozen position on these matters.
He wished to find the right language that would give the necessary
flexibility for the right solution.
Dr. Kissinger said that there was one other point and this was the
matter of trade. Our proposal was that the French Government
support a mandate to the European Community to enter into negotiations
to resolve pending short term issues.
The President said that he felt that in terms of President vis-a-vis
President this was not really a big problem. To us it was a difficult
political issue, even if symbolical, since we give up the surcharge.
That is why Secretary Connally has such a firm position on the
problem. We know that it is also a problem for the Community. The
political forces in our country felt strongly that we should make some
progress in this area, that is, on the trade front. This was the problem.
We did not need anything specific but progress could be very helpful.
President Pompidou said that the European Community had adopted a
draft statement that once monetary measures had been taken they were
ready for trade discussions of a general nature or sort of "Nixon Round"
but on the other hand what they had adopted was not a mandate. The
matter should be referred to the permanent representatives for study
of the special problems of an immediate nature on general points and on
the matter of reciprocity. It would sum up the requirements of each
side and point out existing difficulties on both sides in moving towards
the freest possible trade. To speak of more immediate matters which
Secretary Connally and Eberle had brought up, he could tell the
President in confidence that citrus products did not create any real
difficulty for the French. This would create some problems with Italy,
Morocco and Israel but the French themselves did not mind. On
tobacco they must find a formula, but this was more of a German than
a French problem. It would mean an increase in the price of tobacco.
All of these could be discussed now. What could not be discussed in the
immediate future was the production of cereals, except for soft wheat.
The European Community was not an exporter. It was an active importer
from Canada. The European Community produced only 60 percent of its
requirements. There were two inconveniences. It would raise the price
6
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of cereals for the Germans and the French were not seeking to raise
the price of cereals. A German revaluation would make this even more
difficult for the Germans. It would be politically impossible. Everyone
else would be obliged to raise the price of their cereals. If the leaders
were to give to the European farmers the impression that they were
tampering with European agriculture, it would create an impossible
political position.
The President said that after they got back home he would like to get
President Pompidou's thoughts as to the state of play. It would be
helpful if we could work together.
Dr. Kissinger said that this would be important since the Soviets did
not fully understand what we wanted to do. He had talked to Secretary
Connally the previous evening on the matter of trade. It was too
complex a matter for the two Presidents to enter into details. If they
could agree there that the President of France would agree to a
mandate for the European Community to try and get this issue settled
between Eberle and the European Community, neither President would
have to go into the details.
President Pompidou said that he did not think that there would be too
much difficulty. Remembering what had been said at Brussels, it
would all be part of a package. Nothing would enter into effect until
after the vote in Congress on the price of gold. That would be the
last item in the package.
Dr. Kissinger said that this was of course so.
The President said such a mandate would help him with the vote in
Congress on the price of gold. He could guarantee it.
Dr. Kissinger said that the Trade Negotiations would not go into effect
until after the vote in Congress on the price of gold and President
Pompidou agreed with a nod.
The President said that President Pompidou probably wondered what
he could do with Congress on the matter of the price of gold in view of the
fact that there was a majority of Democrats in both Houses. As a matter
of fact, a coalition of responsible Democrats and Republicans would
support this policy. But some agreement on trade matters would make
this move more quickly.
7
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This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
President Pompidou said that he understood that if the 10 agreed
the following weekend on a system of parities and the structure
of a future monetary system,
the President would immediately
ask for a vote of the Congress as the negotiations continue. The
U.S. would not subordinate one to the other. This was very
important.
The President said that Congress adjourned that day and returned
on January 18 but he could get the procedures started in the
Congressional committees. An agreement the following weekend
by the group of 10 would set in train action on gold even before the
end of the work of the group of 10. The President would call in the
Congressional leaders. They could get the Finance Ministers in to
work out the language.
President Pompidou agreed that they could call in the Finance Ministers.
He said that they would have the trade discussions with Eberle and the
European Commission. He could not imagine a conversation in which
they would have the doors opened every two hours for the U.S. experts
and the U.S. Senators to be called in. The Community could not vote
on trade negotiations under permanent pressure. Once they had
undertaken a commitment they would carry it out loyally but without
pressure of either side on the other. One side could not say that if
the other would not agree on tobacco then they would go back to $37
an ounce, or Europe would be disarmed.
Dr. Kissinger said that we did not want to use the price of gold for
blackmail.
President Pompidou said that he could tell us very frankly that (and
this was very favorable to the U.S.) they were ready as French and
Europeans to discuss with the U.S. and Canada world grain market
organization. The President expressed his satisfaction at this.
President Pompidou said that it was absurd for the U.S. to subsidize
farmers to sell wheat cheaply to the USSR and Chinese.
The President said that this was a good point and we would follow it
up. Before they called in the Ministers there was one political point
which he was sure the President understood, that revaluation was
unfortunately more important than trade. Congress did not understand
monetary matters.
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President Pompidou said he had a Parliament that did not give a damn
about monetary matters. The U.S. had a system where it was
possible for a Republican President to govern with a Democratic
Congress. If he in France were to have a hostile majority in both
houses this would lead to a grave crisis. The French had a more
fragile constitution. It was only 13 years old.
The President then said that we had noted a buildup of North Vietnamese
Forces along the DMZ and in Laos and Cambodia. We would in the next
few days take action against this. We had hoped and still hoped that the
North Vietnamese would be prepared to negotiate seriously.
President Pompidou replied that he felt that they would reply to an
approach. They had told him so.
The President then said that Secretary Connally was an excellent man
for his job. He worked very well in our system and used his experts
skillfully. He understood that many decisions could not be made on a
purely economic basis but had to take political considerations into
account. President Pompidou agreed with this.
The President said that he would make a further statement on the
withdrawal of U.S. Forces in Vietnam announcing a higher rate of
withdrawal. The critical problem now remaining was not the ability
of the South Vietnamese to carry on but the question of the Prisoners
of War.
He would not withdraw all of our forces while they still held American
prisoners.
President Pompidou nodded noncommittally.
It was then agreed by both Presidents that the Foreign and Finance
Ministers be brought in. This discussion is covered in a separate
Memorandum.
9
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DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
MEMORANDUM OF CONVERSATION
Subject: Meeting at Junta Geral, Angra do Heroismo, Terceira, Azores
Date and Time: 15 December 1971; 1400
Present: The President
President Pompidou
Secretary Rogers
Secretary Connally
Foreign Minister Schuman
Finance Minister Giscard d'Estaing
Mr. Andronikof
Maj Gen Walters
Secretary Connally opened the general discussion by saying that the
first point commits the U.S. to remove the surcharge and related
tax laws. The Job Development Credit is automatically removed.
President Pompidou commented that this was a free gift for the
Germans and the Japanese.
Secretary Conally replied that it was a gift to all.
Minister Giscard d'Estaing said he understood that this would be
simultaneous with the establishment of the new parities.
Secretary Conally said we would agree to remove the surcharge when
there had been agreement on realignment among the group of 10. The
second point commits the President to submit to Congress in suitable
fashion a devaluation of the dollar in terms of gold of 10 percent.
Giscard said that 10 percent was too high. He suggested that the
price of gold be established at $38 on ounce or 8.6 percent. The
Secretary really felt we ought to have 10 percent. We had analyzed
with our computers French trade with other nations and did not feel
that it would suffer any deterioration at this rate.
Minister Giscard said he was for $37.5 an ounce.
The President said that he had discussed this with Secretary Connally
whose arguments were persuasive. He thought that it was vital that
an agreement be reached if at all possible and this might require that
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
some give on one issue and others on other issues. He was prepared
in this case to go to $38 an ounce. He did not like to overrule the
Secretary of the Treasury.
Secretary Connally said that the President was the boss.
Secretary Connally then said that the next point was that we had said
that we anticipated that the DM be revalued by 4 or 5 percent. The
French say 6 percent. We said 4 or 5 and would go to 5 or 6. We
would ask the Japanese to revalue from 8 to 10 percent.
Minister Giscard said we should demand 10 percent.
Secretary Connally said we would agree to try 10 percent, try 11 percent
but it would be very difficult.
The President said jokingly that the only people harder than the
Japanese were the French.
President Pompidou smilingly shook his head as though to say, "no".
Secretary Connally then said that we wanted a 3 percent revaluation,
the French 2. 25.
Giscard said they must maintain parity with the pound and the lira.
The President said that all agreed on this.
Secretary Connally then said that on the 5th point they had changed the
language.
Minister Giscard then said that/the on delicate problem of the rate of
devaluation of the U.S. dollar there arose the problem of convertibility
during an intermediate period. He was not asking the U.S. to assure
commitment in the interim period but did not exclude that the U.S.
might contribute during the interim period to the use of reserve
instruments to maintain the stability of the system.
The President said he could ask Secretary Connally if the difficulty
was with this language or convertibility.
President Pompidou said that he understood the U.S. prudence in not
affirming the convertibility of the dollar would be assured by all means.
The dollar balances aside, he was convinced that the President of the
United States, if he had devalued the dollar, could not go back a year
later and ask for another devaluation because he had to support the
parities.
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
Secretary Connally said that we would obviously go back to the fixed
exchange rate within the system. Once back in the firm exchange
system we would be locked in this exercise.
President Pompidou said that this would have no impact on the heart
of Schiller or Heath.
The President said that he would ask whether President Pompidou
would agree with the general terms of the draft given to Giscard.
President Pompidou said that there was give and take. We should be
prepared to ask the Japanese for a 10 percent revaluation and to ask
Congress for the devaluation, that is, the increase in the price of
gold.
Secretary Rogers said he was certain that Congress would follow the
President's lead. The rogue Democrats would go along.
President Pompidou then asked whether in spite of the trade and other
difficulties the U.S. was really favorable to the European Community.
President Nixon said we shouldn't be in favor of it but we are. He
had favored the European community as anyone knew long before he
had become President. He had spoken of it while he was Vice
President and as he saw it, it was basically a political and economic
matter. The economy of the European Community would, frankly, be
highly competitive and detrimental to some U.S. business interests.
Politically a united Europe, the united economies of the European
countries would create a strong free world force that would be beneficial
to us in the long run and would be helpful in moving towards a world of
peace.
President Pompidou said that this was true for relations with the
Alliance and between Europe and the U.S. as well as vis-a-vis the
East. If Western Europe does not move towards cohesion, there will
be a race between European States to curry favor with the Soviets.
France favored detente and entente with East for reasons of peace
and did not want to see the European States racing one another for
Soviet favor. This would damage the cohesion of Western Europe and
the Alliance and relations with the U.S. The Soviets hope detente will
lead to an early departure of the U.S. from Europe. He had no advice
to give the U.S.
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The President said that to be candid, U.S. firms were encountering
tough competition and feared a protectionist bloc against them.
President Pompidou said that this would not occur and that the Europeans
were quite willing to talk to U.S. businessmen.
President Pompidou said that the French had a problem with the
franc area states and in fact with most of the underdeveloped areas.
These are all being cultivated by the U.S., Western Europe and the Soviets.
We should avoid a situation where the competition between the Western
countries would force them into the arms of the Chinese or Soviets. It
should be a major concern to avoid polarization outside of the Western
world.
Foreign Minister Schumann said that the text of the European Community
Treaty includes a paragraph covering relations with the underdeveloped
world.
The President asked what was the future of Black Africa. This was a
big question.
President Pompidou said that Francophone Africa had 30 million
inhabitants. The most satisfactory measures are those which
contribute to development. The African countries which are in the
best shape are those who have reasonable leaders. These are still
close to France. In the Anglophone countries the situation is
different. There were two countries which were really important.
These were Nigeria and Zaire. His impression was that Mobutu's
country has great possibilities for responsible development. Nigeria
is the largest country in Africa in population. He was less familiar
with it. Perhaps Foreign Minister knew it better. It had chosen not
to associate with the European Economic Community. He did not know
how to interpret this. Either as a proof of strength, of British influence
or a desire to remain completely independent vis-a-vis Western Europe.
In general, black Africa had the advantage of not being overpopulated.
It had no immediate neighbors ready to invade it. He was not a
pessimist. The area of perhaps greater concern was East Africa.
Tanzania, the situation of the Portuguese -- Mozambique. There was
contradicting information on this. There was the possibility of Chinese
penetration. The Chinese showed great interest in black Africa. For
the present the French did not feel pessimistic but the situation
required vigilance and sacrifices. Even though Nigeria was not a
"progressive" country, it had good relations with the USSR.
4
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This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
Secretary Rogers said that he had travelled in Africa a great deal and
had been greatly impressed by the nations that had formerly been
French. They were generally in better condition than the others and
the French had better relations with them. They had a bright future
if they could get together in the years ahead. Especially in the light
of the Chinese influence in Tanzania and other areas.
5
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
MEMORANDUM OF CONVERSATION
Subject: Meeting at Junta Geral, Angra do Heroismo, Terceira, Azores
Date and Time: 15 December 1971; 1400
Present: The President
President Pompidou
Secretary Rogers
Secretary Connally
Foreign Minister Schuman
Finance Minister Giscard d'Estaing
Mr. Andronikof
Maj Gen Walters
Secretary Connally opened the general discussion by saying that the
first point commits the U.S. to remove the surcharge and related
tax laws. The Job Development Credit is automatically removed.
President Pompidou commented that this was a free gift for the
Germans and the Japanese.
Secretary Conally replied that it was a gift to all.
Minister Giscard d'Estaing said he understood that this would be
simultaneous with the establishment of the new parities.
Secretary Conally said we would agree to remove the surcharge when
there had been agreement on realignment among the group of 10. The
second point commits the President to submit to Congress in suitable
fashion a devaluation of the dollar in terms of gold of 10 percent.
Giscard said that 10 percent was too high. He suggested that the
price of gold be established at $38 on ounce or 8.6 percent. The
Secretary really felt we ought to have 10 percent. We had analyzed
with our computers French trade with other nations and did not feel
that it would suffer any deterioration at this rate.
Minister Giscard said he was for $37.5 an ounce.
The President said that he had discussed this with Secretary Connally
whose arguments were persuasive. He thought that it was vital that
an agreement be reached if at all possible and this might require that
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
some give on one issue and others on other issues. He was prepared
in this case to go to $38 an ounce. He did not like to overrule the
Secretary of the Treasury.
Secretary Connally said that the President was the boss.
Secretary Connally then said that the next point was that we had said
that we anticipated that the DM be revalued by 4 or 5 percent. The
French say 6 percent. We said 4 or 5 and would go to 5 or 6. We
would ask the Japanese to revalue from 8 to 10 percent.
Minister Giscard said we should demand 10 percent.
Secretary Connally said we would agree to try 10 percent, try 11 percent
but it would be very difficult.
The President said jokingly that the only people harder than the
Japanese were the French.
President Pompidou smilingly shook his head as though to say, "no".
Secretary Connally then said that we wanted a 3 percent revaluation,
the French 2. 25.
Giscard said they must maintain parity with the pound and the lira.
The President said that all agreed on this.
Secretary Connally then said that on the 5th point they had changed the
language.
Minister Giscard then said that/the on delicate problem of the rate of
devaluation of the U.S. dollar there arose the problem of convertibility
during an intermediate period. He was not asking the U.S. to assure
commitment in the interim period but did not exclude that the U.S.
might contribute during the interim period to the use of reserve
instruments to maintain the stability of the system.
The President said he could ask Secretary Connally if the difficulty
was with this language or convertibility.
President Pompidou said that he understood the U.S. prudence in not
affirming the convertibility of the dollar would be assured by all means.
The dollar balances aside, he was convinced that the President of the
United States, if he had devalued the dollar, could not go back a year
later and ask for another devaluation because he had to support the
parities.
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
Secretary Connally said that we would obviously go back to the fixed
exchange rate within the system. Once back in the firm exchange
system we would be locked in this exercise.
President Pompidou said that this would have no impact on the heart
of Schiller or Heath.
The President said that he would ask whether President Pompidou
would agree with the general terms of the draft given to Giscard.
President Pompidou said that there was give and take. We should be
prepared to ask the Japanese for a 10 percent revaluation and to ask
Congress for the devaluation, that is, the increase in the price of
gold.
Secretary Rogers said he was certain that Congress would follow the
President's lead. The rogue Democrats would go along.
President Pompidou then asked whether in spite of the trade and other
difficulties the U.S. was really favorable to the European Community.
President Nixon said we shouldn't be in favor of it but we are. He
had favored the European community as anyone knew long before he
had become President. He had spoken of it while he was Vice
President and as he saw it, it was basically a political and economic
matter. The economy of the European Community would, frankly, be
highly competitive and detrimental to some U.S. business interests.
Politically a united Europe, the united economies of the European
countries would create a strong free world force that would be beneficial
to us in the long run and would be helpful in moving towards a world of
peace.
President Pompidou said that this was true for relations with the
Alliance and between Europe and the U.S. as well as vis-a-vis the
East. If Western Europe does not move towards cohesion, there will
be a race between European States to curry favor with the Soviets.
France favored detente and entente with East for reasons of peace
and did not want to see the European States racing one another for
Soviet favor. This would damage the cohesion of Western Europe and
the Alliance and relations with the U.S. The Soviets hope detente will
lead to an early departure of the U.S. from Europe. He had no advice
to give the U.S.
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This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
The President said that to be candid, U.S. firms were encountering
tough competition and feared a protectionist bloc against them.
President Pompidou said that this would not occur and that the Europeans
were quite willing to talk to U.S. businessmen.
President Pompidou said that the French had a problem with the
franc area states and in fact with most of the underdeveloped areas.
These are all being cultivated by the U.S., Western Europe and the Soviets.
We should avoid a situation where the competition between the Western
countries would force them into the arms of the Chinese or Soviets. It
should be a major concern to avoid polarization outside of the Western
world.
Foreign Minister Schumann said that the text of the European Community
Treaty includes a paragraph covering relations with the underdeveloped
world.
The President asked what was the future of Black Africa. This was a
big question.
President Pompidou said that Francophone Africa had 30 million
inhabitants. The most satisfactory measures are those which
contribute to development. The African countries which are in the
best shape are those who have reasonable leaders. These are still
close to France. In the Anglophone countries the situation is
different. There were two countries which were really important.
These were Nigeria and Zaire. His impression was that Mobutu's
country has great possibilities for responsible development. Nigeria
is the largest country in Africa in population. He was less familiar
with it. Perhaps Foreign Minister knew it better. It had chosen not
to associate with the European Economic Community. He did not know
how to interpret this. Either as a proof of strength, of British influence
or a desire to remain completely independent vis-a-vis Western Europe.
In general, black Africa had the advantage of not being overpopulated.
It had no immediate neighbors ready to invade it. He was not a
pessimist. The area of perhaps greater concern was East Africa.
Tanzania, the situation of the Portuguese -- Mozambique. There was
contradicting information on this. There was the possibility of Chinese
penetration. The Chinese showed great interest in black Africa. For
the present the French did not feel pessimistic but the situation
required vigilance and sacrifices. Even though Nigeria was not a
"progressive" country, it had good relations with the USSR.
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DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified
Secretary Rogers said that he had travelled in Africa a great deal and
had been greatly impressed by the nations that had formerly been
French. They were generally in better condition than the others and
the French had better relations with them. They had a bright future
if they could get together in the years ahead. Especially in the light
of the Chinese influence in Tanzania and other areas.
5
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED
This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified