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Second Debate: National Security Council Briefing Book (2)
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Second Debate: National Security Council Briefing Book (2)
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White House Special Files Unit Files
Ford - Carter Debates Files
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Israel
Latin America
Africa
North Atlantic Treaty Organization. (4/4/1949 - )
Arms control
Arms transfers
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Foreign aid
Foreign economic affairs
Presidential campaign, 1976
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The original documents are located in Box 2, folder "Second Debate: National Security
Council Briefing Book (2)" of the White House Special Files Unit Files at the Gerald R.
Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 2 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library
ECONOMICS
INTERNATIONAL
OIL PRICES
FORD POSITION
The United States has made it clear to the OPEC countries in
very forceful terms that we oppose any increase in oil prices, and
that we do not consider the current high level to be in the interest of
the world economy. I have been in contact with key countries to
emphasize our view that prices are already too high and that another
increase would be extremely damaging to the economies of many
countries, industrialized as well as developing.
These policies have been successful to the point where there
has been no oil price increase over the past year; an outcome due
in large part to the moderating roles of responsible OPEC states
such as Saudi Arabia.
At the same time, we are working with industrialized states in
Europe and with Japan in order to develop mutually constructive
solutions for economic issues which are troubling some of our key
OPEC friends, and thereby reduce pressures for higher oil prices.
We have as well joined with other developed countries to estab-
lish the International Energy Agency to take common action to reduce
our vulnerability to energy pressures from OPEC. Here at home I
have submitted legislation to the Congress, most of which has
regrettably not been enacted, to reduce our dependence on imported
oil. These are the key elements of my Administration's comprehensive
policy to deal with a very difficult problem.
-2-
Question: Why not use the leverage of arms supply and food to force
OPEC not to raise prices?
Response: As far as retaliation with a cut in military or food assistance,
economic warfare with certain OPEC countries to force them
to lower oil prices would not only not solve the problem but
would do further damage to the world economy. The Western
Europeans and Japan (who are far more dependent on OPEC
oil than ourselves and therefore more sensitive to the
use of confrontational measures) would suffer
greatly from any confrontation of that sort. Instead, we
are using an affirmative approach to the problem, but we
can hardly expect cooperation if the Congress constantly
criticizes and harasses Saudi Arabia and Iran, which has
been done in recent weeks.
ä
Why not use the leverage of arms supply and food to force OPEC not
to raise prices?
A:
Economic warfare by the US against OPEC countries to force
them to lower oil prices would not solve the problem. There are
many other sources of food and arms to which these countries could
turn. For instance with respect to food we would succeed only in
depriving our farmers of a good export market. Further, Western
Europe and Japan are far more dependent on OPEC oil than ourselves
and therefore would be reluctant to undertake economic warfare
measures which would be unlikely to succeed. Rather than taking
ineffective economic warfare measures, my Administration has
pursued an affirmative policy of reducing our dependence, cooperating
with other oil importers, and improving our relationship with oil-
exporting countries.
-- We have developed mechanisms with other developed country
oil consumers to share oil in the event of an embargo. And we have
also agreed on a long-term program to conserve energy and increase
production, as well as a joint effort to build national stocks.
-- Legislation to create a US domestic stockpile has been
enacted. When stockpile efforts are complete, we will have a buffer
to cushion quite a few months of OPEC cutbacks.
ä
Governor Carter has said that he would institute a total embargo
against the OPEC nations if they again embargoed oil to this country,
that he would consider this an "economic declaration of war". What
would you do if the oil producers put a new embargo into effect?
A:
We are prepared in many ways should another embargo occur. But
I don't believe there will be another embargo. My Administration
has taken major steps to develop good relations with the various
nations of the Middle East, including moderate Arab nations, as
well as Israel. We have been successful in reaching the Sinai II
agreement and in strengthening economic cooperation with these
countries. The solid prospects for continued progress in these
areas are grounds for confidence that there will not be another
embargo.
But we are also continuing to work to reduce our vulnerability
to supply interruptions. I particularly regret, however, that
Congress has failed to pass a number of measures which were
vital elements in my comprehensive energy program. However,
we now have in place a number of mechanisms which will reduce
our vulnerability to embargoes.
-- The Alaska pipeline is moving toward completion.
-- We have a well developed domestic distribution/allocation
plan which can be instituted rapidly should it be required. In late
1973, we had to start from scratch.
Domestic Oil Production and Imports
CHART II
Source: FEA
Energy Situation
Millions of Barrels Per Day
July, 1976
10
9
Domestic Oil Production
8
7
6
Total Imports
5
4
3
2
Arab OPEC Imports
1
0
1960
1970
1971
1972
1973
1974
1975
1976
1977
1978
Forecast
CHART III
U.S. Annual Payments for Petroleum Imports
Source: FEA
Billions of U.S. Dollars
Energy/Situa
July, 1976
40
835 Billion
30
$27 Billion
$26 Billion
20
GERALD 1020
10
$8 Billion
$3 Billion
0
1970
1973
1974
1975
1976
(Forecast)
SOURCE: FEA, Energy Situation, July, 1976.
ENERGY SCORECARD
PRESIDENTIAL PROPOSALS
ADDITIONAL BILLS
PROPOSALS STILL
PASSED BY CONGRESS
SIGNED INTO LAW
WAITING ENACTMENT
1. NPR PRODUCTION
1. PHASED DECONTROL OF
1. NATURAL GAS DEREGULA-
2. STRATEGIC RESERVES
OIL
TION
3. STANDBY AUTHORITIES
2. AUTO EFFICIENCY
2. NATURAL GAS EMERGENCY
4. COAL CONVERSION
STANDARDS
AUTHORITY
5. APPLIANCE LABELLING
3. COAL LOAN GUARANTEES
3. SYNTHETIC FUELS
6. BUILDING STANDARDS
4. CONSERVATION LOAN
COMMERCIALIZATION
7. WEATHERIZATION
GUARANTEES
4. INSULATION TAX CREDIT
ASSISTANCE FOR LOW
5. STATE CONSERVATION
5. ALASKAN GAS TRANSPOR-
INCOME PERSONS
PROGRAMS
TATION
8. PRICE-ANDERSON NUCLEAR
6. EXPANDED R&D PROGRAMS
6. NUCLEAR LICENSING
INSURANCE EXTENSION
7. NUCLEAR FUEL ASSURANCE
8. CLEAN AIR ACT
9. ENERGY INDEPENDENCE
AUTHORITY
10. ENERGY FACILITIES SITING
11. UTILITY TAX INCENTIVES
12. UTILITY REGULATORY
REFORM
13. OIL SPILL LIABILITY
14. URANIUM ENRICHMENT
15. IMPACT ASSISTANCE
WORLD FOOD PROBLEM
FORD POSITION
I am proud to say that the United States has a strong record of
responding positively to the world food problem, in keeping with its
long tradition of alleviating human suffering. This record reflects a
humanitarian concern by the American people and a sense of responsi-
bility which we, the richest nation in the world, feel toward those
less fortunate.
As President, I have addressed constructively the two main
aspects of the world food problem:
- - First, the immediate need for food assistance to hungry
people. Thanks to the extraordinary productivity of the American
farmer, the U.S. will be able to furnish this year about six million
tons of food assistance, almost two-thirds of the 10 million ton annual
food aid target set at the World Food Conference in Rome.
-- Second, the fundamental causes of the food problem. Through
our foreign assistance programs we are working to improve agricultural
production in poor nations, particularly those which suffer major
shortfalls in food. This is of critical importance to their prospects
for economic growth. It is, therefore, a key objective of our bilateral
and multilateral foreign assistance efforts.
-2-
We are also cooperating with other nations to coordinate our
assistance efforts and ensure that the burden is spread equitably among
potential donors -- including the oil producing nations. All of our
assistance agreements are written to encourage the recipient countries
to proceed with measures necessary to encourage food production.
NORTH-SOUTH DIALOGUE
FORD POSITION
The United States has taken a clear role of world leadership in
fashioning positive cooperation between the industrial and the developing
nations.
It is in the best moral and historical tradition of the U.S. to assist
the poorer nations to meet the pressing needs of their peoples. By
far the largest portion of our development assistance -- 75 percent --
goes to the poorest people in the poorest countries (with per capita
GNP of less than $300 per year). And 83 percent of total bilateral
development aid goes to programs -- such as food production, rural
development, and nutrition -- which focus on the basic needs of the
very poor.
The developing nations are economically important to us. They
account for over one-fourth of our exports ($39 billion out of $107
billion last year), and they provide us with important commodities.
We don't agree with all the demands of the developing countries, and
we have resisted pressure tactics. Economic confrontation is in the
interest of no country. But our record is clear: We are prepared for
cooperation on the basis of mutual respect.
*
*
*
Our record is a good one.
-- The World Food Conference in 1974 was called at U.S. initiative.
-2-
When the Conference met in Rome in November 1974, the U.S. presented
comprehensive proposals to boost food output in developing countries,
by raising productivity, better financing, and storage and distribution.
An International Fund for Agricultural Development, which holds great
promise for achieving these goals, has been created as a result of our
initiative.
-- In September 1975, Secretary Kissinger's speech to the Seventh
Special Session of the General Assembly was the most important initiative
of its kind by this country in decades. We proposed a series of measures
for international cooperation to promote development -- measures of trade,
investment, technology, and measures to safeguard developing economies
against disastrous swings in their export earnings.
-- The meeting of the International Monetary Fund (IMF) in Jamaica
in January 1976 followed through on our proposal and created a $1. 5 billion
fund to ease the financial impact on developing nations of drastic shortfalls
in export earnings.
-- In the Multilateral Trade Negotiations in Geneva, a central point
of our effort is to improve access to our markets for the poorer countries.
-- The U.S. has put into effect our own Generalized System of
Preferences to give preference to the exports of developing country products.
-3-
-- At the meeting of the United Nations Conference on Trade and
Development (UNCTAD) held in Nairobi in May of this year, Secretary
Kissinger again proposed realistic and constructive programs to deal
with the needs of the developing states and the world economy.
-- At the Conference on International Economic Cooperation (CIEC),
launched in Paris last December, the U.S. has played a leadership role
in this dialogue with the developing nations and oil exporting nations.
Key issues of energy supply, raw materials supply and price, trade
and finance are being addressed in this new forum.
So this country can be proud of our efforts to help the poorer
countries. Most of the criticism shows basic ignorance of what has
been going on. I must add that I have been disappointed that the Congress
has not fully supported our efforts -- I have in mind particularly its
failure to appropriate fully my requests for the international development
lending banks. But I am heartened by what seems to be increasing
recognition of the importance of my proposals in this area.
FOREIGN ASSISTANCE
FORD POSITION
We provide foreign aid for two major reasons. One, because
it is morally right that the U.S. -- the world's richest country -- join
with other nations in helping poor peoples to improve their lives. Two,
because it is important to our national interest to identify with, and support,
the efforts of developing nations to improve their standards of living and
to protect their security. Failure to do this would surely contribute to a
sharper confrontation between the developed and the developing nations.
There are many myths about American aid, and we often hear
them in an election year. Let's look at some facts.
One myth is that our aid does not go to those who need it. The
fact is that by far the largest portion of our development assistance goes
to the world's poorest peoples. Since 1973, the Congress and the Executive
Branch have cooperated to focus our aid directly on the low income groups.
Currently, more than 75% of our bilateral development assistance to
specific countries is going to nations with a per capita income of less
than $300 per year. Furthermore, over 80% of total bilateral development
assistance is destined for programs such as food production, rural
development, nutrition, population planning, health, and education --
which focus on the critical needs of the poor majority in the poor countries.
Looking at our multilateral assistance, which we give through the World Bank
and other international financial institutions, we find much the same story.
-2-
More than half of the funds expended by these instituions last year
went to countries with per capita incomes of less than $375. In the
case of security assistance, the main recipient with GNP per capita
of over $300 per year is Israel. Is the implication of those who
criticize our program on these grounds that we shou Id cut back on this
assistance?
Another myth is that our assistance is an international giveaway
which has no real impact. The fact is that our assistance is based on the
principle of helping people to help themselves. A Chinese proverb says
that if you give a man a fish you have given him food for a day, but if you
teach him how to fish, you have given him food for a lifetime. Our
assistance does provide direct relief for human suffering, but it is
focused on the longer-term need to help developing countries develop
the capacity for self-sustaining economic growth. While it is difficult
to see dramatic progress overnight, we have over the years helped improve
the lives of millions of people in poor nations -- providing them with
better homes, better education, better health, and better nutrition.
Others argue that we get nothing back from our economic assistance.
The fact is that it is very much in our national interest to provide foreign
aid. Politically, while recipients do not always agree with us or vote
the way we do, on every issue, our cooperative relationship in the aid
area has helped us to establish the basis for better relations in a number
-3-
of other areas of importance to us. From a security point of view,
our assistance has helped friendly nations to protect themselves. And,
many countries who were formerly recipients of aid are now growing
markets for U.S. exports and sources of important raw materials.
Every President since World War II has recognized that aid is a good
investment in a more prosperous and secure world for ourselves and
for our children.
Turning to economic security supporting assistance, which we
provide to support countries' security as well as development efforts,
the myth is that we are proping up corrupt dictators. The fact is that
in 1977 95% of the security supporting assistance I have requested will
support our effort to achieve a just and lasting peace in the Middle East.
We now have peace in this vital region, and we will continue to work
for more stability. Such assistance will remain an integral part of our
diplomatic efforts. In fact, we provide both security and development
assistance to countries around the world and with various types of
governments, some quite close in character to ours, some quite different.
Regardless of the type of government a developing country has, however,
it will still have large numbers of very poor people, who need assistance.
I can assure you that we make every effort to ensure that our aid benefits
these needy people. (Moreover, history has demonstrated that cutting off
aid is rproductive in influencing the policies of other countries.)
-4-
Although I believe we are on the right track, I am also convinced
that we can effectively provide somewhat more foreign assistance.
Congress has repeatedly failed to appropriate the funds necessary to
adequately assist many developing countries. For 1976 and 1977, Congress
has cut almost a billion dollars from my economic assistance requests, *
and these cuts have sharply reduced the flow of U.S. assistance to the
needy people of the world. ** Governor Carter has suggested that aid
levels should be increased to . 5% of GNP, which in 1976 would amount
to roughly $8 billion, $4 billion more than the amount of aid Congress
provided. While I support foreign aid, and I will continue to request what
I believe to be necessary, I believe most Americans would agree that this
would be too much, given our priorities at home.
* The Administration request for bilateral and multilateral foreign aid
was $4, 315. 5 million in 1976 and $4, 651.6 million in 1977; Congress
appropriated $3, 866. 8million and $4, 121. 4 million, respectively. Total
reduction, $978.9 million.
** U.S. official development assistance has dropped to # 26% of GNP,
from # 5% in 1960 and . 3% in 1970. It still represents almost a third of
total assistance from developed countries -- more aid than any other
country in the world.
INTERNATIONAL ECONOMICS
FORD POSITION
No one who recalls the effects of the oil embargo of 1973 can
fail to recognize that the United States has become increasingly
affected by events in the world economy. When I took office the world
was in the midst of a highly disruptive energy crisis, experiencing
rampant inflation, and in the early stages of the worst recession in the
post-war period.
Upon assuming office I consulted with leaders of the other major
industrial democracies to develop a coordinated approach to our common
problems. These consultations culminated in two international Summit
conferences - - in France last November, and in Puerto Rico this June.
At these Summits the other leaders and I achieved an unprecedented
degree of agreement and commitment to cooperation in shaping national
policies to contribute to stable growth without inflation for all. We
strengthened our common resolve to avoid harmful protectionist measures.
We also developed both a coordinated approach to reduce payments
imbalances and a cooperative effort to deal with the problems of the
developing nations.
The success of our domestic policies which led to recovery
at home has also helped restore the health of the world economy, and
this strengthened world economy has in turn resulted in greater exports
and more jobs for Americans.
Specifically:
-- In energy, under the leadership of the United States the
2
industrialized democracies came together to form the International Energy
Agency to coordinate efforts to reduce our vulnerability to supply disruptions.
We have developed a long-term program for conservation and development
of new energy sources and an energy-sharing program to safeguard against
a new crisis.
-- In the monetary area, we have undertaken a sweeping reform of
the international monetary system, eliminating the rigidities of the Bretton
Woods system and substituting more flexible arrangements tailored to the
needs of the future.
-- In the trade area, we are engaged in negotiations to reduce trade
barriers and to ensure fair and orderly rules for the international trading
system. This will help our industries, our farmers, our workers, and
our consumers.
I am proud of the record of American leadership in this area.
RELATIONS BETWEEN THE DEVELOPED
AND DEVELOPING COUNTRIES
FORD POSITION
The United States has taken a position of firm world leadership
fashioning positive cooperation between the industrial and the developing
nations. We have turned the trend of these relations away from confrontation
and into constructive discussion. We have made a major effort to find better
ways to help poorer peoples overcome the hunger, malnutrition, and diseases
which retard their development and to achieve their aspirations for a better
life.
And
We
have done this for reasons which are important to the American
people.
-- It is in the best moral and historical tradition of the US to assist
the poorer nations in economic development so they can meet the pressing
needs of their peoples.
It is in the national interest to improve relations with the developing
nations, which are economically important to us. They buy over a quarter of
our exports ($39 billion our of $107 billion last year), and they provide us with
commodities which are important to American jobs and to our standard of
living.
We do not agree with all the demands or all the actions of the
developing countries. We have resisted pressure tactics, whether economic
or political. But our record is clear: We are prepared for genuine cooperation
on the basis of mutual respect.
2
*******
My Administration's record is one of initiative and leadership.
-- We have presented comprehensive proposals to boost food
output in developing countries by improving productivity, financing, storage,
and distribution. (World Food Conference, Rome, November 1974; and
subsequently)
-- We launched this country's most comprehensive proposal ever
to improve international cooperation for economic development -- a series
of measures dealing with trade, investment, technology, and protection of
developing economies against disastrous swings in their export earnings.
(UN Seventh Special Session, New York, September 1975)
-- We led the effort to establish an IMF facility to ease the financial
impact on developing nations of drastic shortfalls in export earnings.
(IMF Meeting, Jamaica, January 1976)
-- We have instituted measures which will improve access to our
markets for exports from the poorer countries, and are discussing additional
System
measures to reduce global trade barriers. (Generalized Schedule of
Preferences, and Multilateral Trade Negotiations)
-- We are playing a leadership role in ongoing discussions between
the industrialized, developing, and oil-exporting nations, on issues of energy,
raw materials, trade, and finance. (Conference on International Economic
Cooperation (CIEC), begun in Paris, December 1975)
3
*******
This great effort to constructively work with the developing
nations in a search for ways to help them meet their development objectives
and improve the international economic system will benefit Americans and
all peoples. The American people have over the years demonstrated their
generosity to the world's poor and made a major contribution to the develop-
ment effort. I believe that Americans will continue to support efforts to
improve opportunities for economic growth in other nations. They will not,
however, support schemes which would distort the international economy.
This would not be in the interest of either the US or the developing nations.
QUESTIONABLE CORPORATE PAYMENTS
FORD POSITION
Bribery is contrary to the
economic and ethical principles which we stand for, and it is contrary to
American foreign policy interests.
The only effective way to get at this problem is through an international
agreement. In March, we proposed the drafting of such an agreement to a
committee of the UN. Our proposal has been received favorably, and an
international working group is scheduled to begin on October 11 the work
essential to the drafting of a treaty. We are also discussing this problem in
the OECD and at the Multilateral Trade Negotiations in Geneva.
As regards unilateral legislative action by the United States, I have
proposed "disclosure" legislation which would require reporting of foreign
payments. This legislation is enforceable and is based on the notion articulated
by Justic Brandeis, that "sunshine is the best disinfectant". I regret that the
Congress has not yet even had hearings on my proposed legislation.
The problem with the legislation which has passed the Senate, however,
is that, while it seems attractive, it is -- in the opinion of virtually all experts
who have examined this issue essentially unenforceable. It would require
access toforeign witnesses and foreign records which would remain beyond the
reach of US law.
2
While awaiting Congressional action -- and indeed thereafter --
we will continue to pursue the vigorous enforcement of current law through
the SEC, the IRS, and the Department of Justice. Our private enterprise
system, which has provided a higher standard of living and greater economic
security than other other, is under attack. We must renew and restore public
faith in that system and see to it that the public knows that it is a clean and
honest system. We think our initiatives are a vital step in that direction.
BERAED
COMMODITY POLICY
FORD POSITION
The supply shortages and violent price swings of 1973 and
1974 were largely a consequence of the rampant world-wide inflation
and subsequent recession. We are now working intensively with
other nations to develop policies which will insure that these
events are not repeated.
Our commodity policy is positive and constructive. It
is designed to assure us that we will have needed raw materials
at reasonable prices, and the exporting nations that they have
reasonable growth in the earnings of their commodity exports.
We do not believe that commodity agreements are an effective
way of achieving this goal. They risk actions which would increase
prices to consumers by restricting supply, and distorting patterns
of trade, investment and consumption, thus harming producers in
the long run. Just as we combat such anti-competitive practices
at home, we oppose arrangements which would arbitrarily fix
prices or restrict trade internationally.
We do, however, recognize the need to help countries to protect their
development plans against the disruption caused by volatile swings in export
2
earnings. In fact, earlier this year the other members of the IMF
accepted our proposal for expansion of the International Monetary Fund
facility which compensates developing countries suffering from shortfalls
in their overall export earnings. This facility is now in place, and has
provided substantial sums to needy developing nations.
We also recognize that the functioning of international markets
for individual commodities can be improved through international
cooperation. Thus, we have proposed:
-- The establishment of producer-consumer groups for major
commodities to facilitate better information exchange on production, trade,
and investment, to determine the root causes of problems affecting particular
commodities, and to consider remedial measures. Remedial measures
could include commodity arrangements providing for buffer stocks, where
appropriate; but our commodity experts do not believe that such arrangements
are appropriate for, or will benefit markets in, most commodities. (We
have already agreed to commodity agreements on tin (which includes a small
buffer stock) and coffee, after being ensured that consumer country interests
were protected; we have rejected one on cocoa as not providing sufficient
protection to consumer interests.)
- The active encouragement by the World Bank and other financial
institutions of needed investment in new minerals production.
-- The negotiation of supply access assurances and reductions in
trade barriers.
3
******
This is a sound approach which is consistent with our basic
philosophy of expansion of market-oriented world trade. It is vastly
superior to a policy based on artificial control of prices through organized
markets, which has repeatedly failed at home and abroad.
QUOTATIONS FROM FOREIGN LEADERS ATTENDING THE
PUERTO RICO SUMMIT
Giscard:
"When we met at Rambouillet, six months ago, it was not
clear that the world economy was committed to recovery.
Today our economic situation is quite different from
Rambouillet. In fact, most of the industrialized nations
represented at this table have experienced strong recovery,
as contrasted with the 1975 situation, and even better than
our hopes expressed at Rambouillet. 11
Schmidt:
"We all know how useful Rambouillet was. I am convinced that
it was very helpful in our efforts to achieve recovery. I sub-
scribe to what was said by President Giscard about progress
since Rambouillet. I believe we exercised cooperation in
analyzing and combating recession and in creating increasing
domestic demand instead of permitting failing world demand.
We used corresponding measures, policies which were compatible.
We also avoided restricted trade measures at the expense of one
another. And we exhibited a large measure of solidarity dealing
with balance of payments problems. 11
2
Callaghan: "We are meeting here in Puerto Rico in an atmosphere
different from Rambouillet. At Rambouillet it was a feeling
of gloom. There was no real optimism that recovery was under-
way. 11
Miki:
"When we assembled at Rambouillet in November, all of our
national economies were showing declines. Unemployment was
at high levels. Our free economies and democratic governments
were on trial. That meeting, and subsequent months, have
helped us to attain the self confidence we needed to stimulate
our economies. "
Ford:
"When we met at Rambouillet last November, the discussion
centered largely on how to assure a balanced recovery from the
deep recession of 1974-75. The US economy was on the path to
recovery at that time, but the upturn was not yet as visible.
I am pleased to note that we now meet in an improved economic
climate. In a number of countries, including my own, present
recession of levels of output have been regained
In many
respects, our success in turning the recession around reflects
the fact that we were able to refrain -- in the face of strong
political pressures -- from instituting over-stimulative measures
3
Ford:
"in our economies and from imposing restrictions on trade.
cont'd
Both these courses would have been short-sighted in nature
and would have proved counterproductive. 11
JOINT DECLARATION
DORADO BEACH HOTEL -- JUNE 28, 1976
"The interdependence of our destinies makes it necessary for
us to approach common economic problems with a sense of common purpose
and to work toward mutually consistent economic strategies through better
cooperation.
"We consider it essential to take into account the interests of
other nations. And this is most particularly true with respect to the
developing countries of the world.
"It was for these purposes that we held a broad and productive
exchange of views on a wide range of issues. This meeting provided a
welcome opportunity to improve our mutual understanding and to intensify
our cooperation in a number of areas. 11
A copy of the Puerto Rico Declaration is attached.
PRESIDENTIAL DOCUMENTS: GERALD R.1 FORD, 1976
1091
INTERNATIONAL SUMMIT CONFERENCE
IN PUERTO RICO
Text of the Joint Declaration Issued at the Conclusion of the Conference at the
Dorado Beach Hotel. June 28, 1976
The heads of state and government of Canada, France, the Federal
Republic of Germany, Italy, Japan, the United Kingdom of Great Britain
and Northern Ireland and the United States of America met at Dorado
Beach, Puerto Rico, on the 27th and 28th of June, 1976, and agreed to the
following declaration:
The interdependence of our destinies makes it necessary for us to
approach common economic problems with a sense of common purpose
and to work toward mutually consistent economic strategies through better
cooperation.
We consider it essential to take into account the interests of other
nations. And this is most particularly true with respect to the developing
countries of the world.
It was for these purposes that we held a broad and productive ex-
change of views on a wide range of issues. This meeting provided a wel-
come opportunity to improve our mutual understanding and to intensify
our cooperation in a number of areas. Those among us whose countries
are members of the European Economic Community intend to make their
efforts within its framework.
At Rambouillet, economic recovery was established as a primary
goal and it was agreed that the desired stability depends upon the under-
lying economic and financial conditions in each of our countries.
Significant progress has been achieved since Rambouillet. During
the recession there was widespread concern regarding the longer-run
vitality of our economies. These concerns have proved to be unwarranted.
Renewed confidence in the future has replaced doubts about the economic
and financial outlook. Economic recovery is well under way and in many
of our countries there has been substantial progress in combatting inflation
and reducing unemployment. This has improved the situation in those
GERALD VORD
countries where economic recovery is still relatively weak.
Our determination in recent months to avoid excessive stimulation
of our economies and new impediments to trade and capital movements
has contributed to the soundness and breadth of this recovery. As a result,
restoration of balanced growth is within our grasp. We do not intend to
lose this opportunity.
Our objective now is to manage effectively a transition to expansion
which will be sustainable, which will reduce the high level of unemploy-
ment which persists in many countries and will not jeopardize our com-
mon aim of avoiding a new wave of inflation. That will call for an increase
in productive investment and for partnership among all groups within
our societies. This will involve acceptance, in accordance with our indi-
vidual needs and circumstances, of a restoration of better balance in pub-
lic finance, as well as of disciplined measures in the fiscal area and in the
field of monetary policy and in some cases supplementary policies, includ-
ing incomes policy. The formulation of such policies, in the context of
Volume 12-Number 27
1092
PRESIDENTIAL DOCUMENTS: GERALD R. FORD, 1976
growing interdependence, is not possible without taking into account the
course of economic activity in other countries. With the right combination
of policies we believe that we can achieve our objectives of orderly and
sustained expansion, reducing unemployment and renewed progress to-
ward our common goal of climinating the problem of inflation. Sustained
economic expansion and the resultant increase in individual well-being
cannot be achieved in the context of high rates of inflation.
At the meeting last November, we resolved differences on structural
reform of the international monetary system and agreed to promote a
stable system of exchange rates which emphasized the prerequisite of
developing stable underlying economic financial conditions.
With those objectives in mind, we reached specific understandings,
which made a substantial contribution to the IMF meeting in Jamaica.
Early legislative ratification of these agreements by all concerned is desira-
ble. We agreed to improve cooperation in order to further our ability to
counter disorderly market conditions and increase our understanding of
economic problems and the corrective policies that are needed. We will
continue to build on this structure of consultations.
Since November, the relationship between the dollar and most of
the main currencies has been remarkably stable. However, some curren-
cies have suffered substantial fluctuations.
The needed stability in underlying economic and financial conditions
clearly has not yet been restored. Our commitment to deliberate, orderly
and sustained expansion, and to the indispensable companion goal of de-
feating inflation provides the basis for increased stability.
Our objective of monetary stability must not be undermined by the
strains of financing international payments imbalances. We thus recognize
the importance of each nation managing its economy and its international
monetary affairs so as to correct or avoid persistent or structural interna-
tional payments imbalances. Accordingly, each of us affirms his intention
to work toward a more stable and durable payments structure through
the application of appropriate internal and external policies.
Imbalances in world payments may continue in the period ahead.
We recognize that problems may arise for a few developed countries
which have special needs, which have not yet restored domestic economic
stability, and which face major payments deficits. We agree to continue
to cooperate with others in the appropriate bodies on further analysis of
these problems with a view to their resolution. If assistance in financing
transitory balance of payments deficits is necessary to avoid general dis-
ruptions in economic growth, then it can best be provided by multilateral
means coupled with a firm program for restoring underlying equilibrium.
In the trade area, despite the recent recession, we have been generally
successful in maintaining an open trading system. At the OECD we re-
affirmed our pledge to avoid the imposition of new trade barriers.
Countries yielding to the temptation to resort to commercial protec-
tionism would leave themselves open to a subsequent deterioration in their
competitive standing; the vigor of their economics would be affected
while at the same time chain reactions would be set in motion and the
volume of world trade would shrink, hurting all countries. Wherever
departures from the policy set forth in the recently renewed OECD trade
pledge occur, elimination of the restrictions involved is essential and
Volume 12-Number 27
PRESIDENTIAL DOCUMENTS: GERALD R. FORD, 1976
1093
urgent. Also, it is important to avoid deliberate exchange rate policies
which would creatc severe distortions in trade and lcad to a resurgence of
protectionism.
We have all set ourselves the objective of completing the Multi-
lateral Trade Negotiations by the end of 1977. We hereby reaffirm that
objective and commit ourselves to make every effort through the appro-
priate bodies to achieve it in accordance with the Tokyo Declaration.
Beyond the conclusion of the trade negotiations we recognize the
desirability of intensifying and strengthening relationships among the
major trading areas with a view to the long-term goal of a maximum
expansion of trade.
We discussed East/West economic relations. We welcomed in this
context the steady growth of East/West trade, and expressed the hope
that economic relations between East and West would develop their full
potential on a sound financial and reciprocal commercial basis. We agreed
that this process warrants our careful examination, as well as efforts on
our part to ensure that these economic ties enhance overall East/West
relationships.
We welcome the adoption, by the participating countries, of con-
verging guidelines with regard to export credits. We hope that these
guidelines will be adopted as soon as possible by as many countries as
possible.
In the pursuit of our goal of sustained expansion, the flow of capital
facilitates the efficient allocation of resources and thereby enhances our
economic well-bcing. We, therefore, agree on the importance of a liberal
climate for international investment flows. In this regard, we view as a
constructive development the declaration which was announced last week
when the OECD Council met at the Ministerial level.
In the field of energy, we intend to make efforts to develop, conserve
and use rationally the various energy resources and to assist the energy
development objectives of developing countries.
We support the aspirations of the developing nations to improve the
lives of their peoples. The role of the industrialized democracies is crucial
to the success of their efforts. Cooperation between the two groups must
be based on mutual respect, take into consideration the interests of all
parties and reject unproductive confrontation in favor of sustained and
concerted efforts to find constructive solutions to the problems of
development.
The industrialized democracies can be most successful in helping the
developing countries meet their aspirations by agreeing on, and cooperat-
ing to implement, sound solutions to their problems which enhance the
efficient operation of the international economy. Close collaboration and
better coordination are necessary among the industrialized democracies.
Our efforts must be mutually supportive, not competitive. Our efforts
for international economic cooperation must be considered as comple-
mentary to the policies of the developing countries themselves to achieve
sustainable growth and rising standards of living.
At Rambouillet, the importance of a cooperative relationship be-
tween the developed and developing nations was affirmed; particular
attention was directed to following up the results of the Seventh Special
Session of the UN General Assembly, and especially to addressing the
Volume 12-Number 27
PRESIDENTIAL DOCUMENTS: GERALD R. FORD, 1976
balance of payments problems of some developing countries. Since then,
substantial progress has been made. We welcome the constructive spirit
which prevails in the work carried out in the framework of the Confer-
ence on International Economic Cooperation, and also by the positive
results achieved in some arcas at UNCTAD IV in Nairobi. New measures
taken in the IMF have made a substantial contribution to stabilizing the
export earnings of the developing countries and to helping them finance
their deficits.
We attach the greatest importance to the dialogue between de-
veloped and developing nations in the expectation that it will achieve
concrete results in areas of mutual interest. And we reaffirm our coun-
tries' determination to participate in this process in the competent bodies,
with a political will to succeed, looking toward negotiations, in appropri-
ate cases. Our common goal is to find practical solutions which contribute
to an equitable and productive relationship among all peoples.
NOTE: Participants in the 2-day Conference were President Ford, Valéry Giscard
d'Estaing, President of the Republic of France, Pierre Elliott Trudeau, Prime Minister
of Canada, Helmut Schmidt, Chancellor of the Federal Republic of Germany, Aldo
Moro, Prime Minister of Italy, Takeo Miki, Prime Minister of Japan, and James
Callaghan, Prime Minister and First Lord of the Treasury of the United Kingdom
of Great Britain and Northern Ireland.
The text of the joint declaration was released at Dorado Beach, P.R.
International Summit Conference
conviction that they represented parallel values and the
realization that their destinies were linked together.
in Puerto Rico
With this, let us answer your specific questions.
Q. Can any of you quantify the type of assistance that
Remarks of Secretary of State Henry A. Kissinger and
is in mind for Italy?
Secretary of the Treasury William E. Simon in a
Question-and-Answer Session With Reporters at the
SECRETARY KISSINGER. There was no specific discus-
Condado Beach Convention Center in San Juan.
sion of any particular amount nor indeed of the frame-
June 28, 1976
work within which assistance can take place. There is "
general statement in this document that we would apply
SECRETARY KISSINGER. Let me say that basically the
to all circumstances in which there are persistent or tem-
purpose of this conference was to enable the leaders of
porary disequilibria and perhaps Bill can explain its
the industrial democracies, a group of nations that be-
significance better.
tween them have 60 percent of the world's GNP, to dis-
SECRETARY SIMON. Well, there is an existing agreement
cuss a number of economic issues and to discuss a num-
in the International Monetary Fund that loans can be
ber of issues where economic and political considerations
made on a supplementary basis when resources are needed
merge, such as East-West and North-South issues. They
to forestall or to cope with a temporary problem in the
discussed them in a very free and relaxed atmosphere.
international monetary system that is impairing its
It was not a question of reading prepared statements
proper functioning. And we discussed the possibility of,
at each other, but, as Prime Minister Callaghan said, there
if something like this were needed, as I believe the com-
was usually one of the leaders who introduced one of the
munique says verbatim, what type mechanism should be
issues and then there was a free and easy discussion.
brought into place for transitory financing, for balance of
We believe that on the major issues confronting these
payments purposes under very stringent economic
countries a large degree of understanding was reached
conditions?
that should help encourage the economic processes, and it
Q. May 1 ask the first Secretary-|laughter]-given
should also enable the countries represented here to work
the fact that you said WC should not expect any dramatic
together on international issues such as those that were
developments out of this, can you give us an idea of any
mentioned in the communique. But what no communique
changes that might come about as a result of this meeting
can reflect is the many conversations that took place at
or any new directions that the United States' policy might
he side, the attitude of the participants that reflected the
take?
Volume 12-Number 27
Comparative Economic Indicators for
Selected Industrial Countries
Table 1: Changes in Real Gross National Product
Country
1972/73
1973/74
1974/75
1st a 1975/
1st a 1976
United States
5.5
-1.7
-1.8
7.3
France
1
6.0
2.7
-3.0
1.62
Germany
5.1
0.4
-3.4
5.3
United Kingdom
5.5
0.7
-1.6
1.8
Japan
9.9
-1.2
2.0
6.2
Canada
6.9
2.8
0.2
5.1
¹GDP - Gross Domestic Product
24th Quarter 1974/4th Quarter 1975
Source: Department of Commerce
Table 2: Industrial Production
1967 = 100
Country
1970
1971
1972
1973
1974
1975
United States
106.6
106.8
115.2
129.8
129.3
117.8
France
120
128
135
145
148
135
Germany
133.8
136.4
141.7
151.1
148.6
138.3
United Kingdom
108.7
109.2
111.5
119.9
115.5
110. 4
Japan
151.7
155.8
167.2
193.3
187.4
167.8
Canada
115.6
121.5
130
140.7
144.5
137.6
Source: Department of Commerce
Additional Highlights
-- The trade surplus in 1975 was the largest in 25 years.
- - -During the period 1971-75 U.S. exports rose at an annual rate of 21%
compared with 6% during 1961-65 and 10% during 1966-70.
- -During 1971-75 exports increased at a faster pace than imports in
contrast to the 1961-65 and 1966-70 periods where the import growth rate
exceeded that of exports.
-- In 1975 U.S. exports of agricultural goods accounted for over 20% of
total U.S. exports. That percentage is below the 1973 figure (25%) but
substantially above the rates during the late 1960's when exports of
agricultural goods fell to less than 16% in 1969.
-- In 1975, U.S. fuel imports reached 28.9% of total U.S. imports compared
with only 7.8% in 1970.
- - As a group, non-OPEC LDCs are our biggest customers.
GERALD
Table 3: U.S. Foreign Trade by Country, Geographic Region or Political Grouping, 1965, 1970, 1975
(Billions of U.S. Dollars)
1965
1970
1975
Exports
Imports
Balance
Exports
Imports
Balance
Exports
Imports
Balance
Canada
5.7
4.9
.8
9.1
11.1
-2.0
21.8
21.7
0.1
EC
7.2
4.9
2.2
11.3
9.2
2.1
22.9
16.6
6.3
Japan
2.1
2.4
0.3
4.7
5.9
-1.2
9.6
11.3
-1.7
OPEC
1.4
1.7
-0.3
2.1
1.7
0.4
10.8
17.1
-6.3
Non-OPEC
7.6
5.5
2.1
10.9
8.8
2.2
28.5
22.2
6.3
LDCs
Communist
0.1
0.1
-
0.4
0.2
0.2
3.1
0.9
2.2
Countries*
Table 4: U.S. Exports by Country, Geographic Region or Political Grouping, 1965, 1970, 1975
(In Percentage Terms)
1965
1970
1975
Canada
21.3
21.3
20.3
EC
27.0
26.5
21.4
Japan
7.9
11.0
9.0
OPEC
5.2
4.9
10.1
Non-OPEC
28.5
25.5
26.6
LDCs
Communist
0.4
0.9
2.9
Countries*
*Soviet Union, China, Eastern Europe
Sources: Department of Commerce, Council of Economic Advisors
(
FOREIGN TRA
ATA SHEET
Table 1: U.S. Foreign Trade (1970-1975)
(Billions of Current U.S. Dollars)
Exports
Imports
Balance
1970
42.7
40.0
2.7
1971
43.5
45.6
-2.0
1972
49.2
55.6
-6.4
1973
70.8
69.5
1.3
1974
98.5
100.3
-2.3
1975
107.1
96.1
11.0
1976 (Est. )
115.
122.
-7.0
Table 2: U.S. Foreign Trade by Commodity Groups (1965, 1970 and 1975)
(Billions of Current U.S. Dollars)
EXPORTS
1965
1970
1975
Value
As % of
Value
As % of
Value
As % of
$
Total
$
Total
$
Total
Agricultural Products
6.2
23.2
7.2
16.9
21.9
20.4
Minerals and Metals
2.1
7.8
3.5
8.1
6.5
6.0
Fuels
.9
3.4
1.6
3.7
4.5
4.2
Manufactured Products
17.2
64.4
29.1
68.1
71.3
66.3
Others
.3 no
1.1
.7
1.6
3.2
3.0
IMPORTS
Agricultural Products
4.1
19.2
5.8
14.5
9.5
9.9
Minerals and Metals
4.2
19.6
5.3
13.3
8.7
9.0
Fuels
2.2
10.3
3.1
7.8
26.5
27.6
Manufactured Products
10.2
47.7
24.5
61.3
48.9
50.9
Others
. 7
3.3
1.3
3.3
2.5
2.6
Table 3: Quarterly Rate of Unemployment (lst Quarter 1974 - 2nd Quarter 1976)
(Percent of Civilian Labor Force)
Country
1974
1975
1976
I
II
III
IV
I
II
III
IV
I
II
United States
5.0
5.1
5.6
6.7
8.1
8.7
8.6
8.5
7.6
7.4
Germany
1.6
1.9
2.3
2.9
3.2
4.0
4.4
4.3
4.0
3.8
United Kingdom
2.8
2.9
3.0
3.2
3.7
4.5
4.7
6.0
6.2
6.9
Japan
1.3
1.3
1.4
1.7
1.7
1.8
1.9
2.2
2.0
NA
Canada
5.3
5.2
5.3
5.6
6.7
7.0
7.1
7.1
6.8
7.2
France
3.0
2.8
2.9
3.5
3.9
4.2
4.5
4.7
4.8
4.9
Source: Bureau of Labor Statistics
Table 4: Consumer Price Index
Annual Percentage Changes
Country
1972/73
1973/74
1974/75
2nd Q 1975/
2nd a 1976
United States
6.2
11.0
9.1
6.1
France
7.4
14.0
11.3
9.2
Germany
6.9
7.0
6.0
4.9
United Kingdom
9.1
16.2
24.1
15.9
Japan
11.8
24.4
11.8
8.9
Canada
7.5
10.9
10.8
8.6
Source: Department of Commerce
MIDDLE
EAST
MIDDLE EAST
FORD POSITION
We are involved in the Middle East negotiation because vital US
interests (moral, strategic, economic) are at stake.
-- Our commitment to the survival and security of Israel is
non-negotiable.
- - The Middle East is a strategic crossroads.
-- The 1973 embargo and oil price rise cost Americans half a
million jobs and one percent of national output, and added at
least five percentage points to the price index.
We engaged in the negotiation at the request of the parties.
The step-by-step process achieved remarkable results (Egyptian- -
Israeli disengagement agreement of January 1974; between Syria and
Israel in May 1974; Egyptian-Israeli Sinai Agreement of September 1975).
We are not wedded to one approach. It was always our expectation
that at some point the step-by-step efforts would give way to a more
comprehensive approach. Resuming the Geneva Conference might be
appropriate at some point. It will depend on what is most workable and
acceptable to all the parties.
Face to face negotiations are certainly a goal. We will seek them,
but we are willing to continue our mediating role if this is desired. All
the agreements thus far involved face-to-face talks at certain stages
before or after.
- 2 -
We will proceed in all future negotiations, as we have in the past,
in the closest consultation with Israel.
Israel's current proposal -- substantial territorial concessions,
in return for an end to the state of war -- is a proposal that should
be discussed.
The PLO is excluding itself from any negotiation as long as it
refuses to recognize Israel's right to exist as a Jewish state.
US aid to Israel from FY '76 through FY '77 totals over $4. 2 billion.
All US aid from Israel's independence (1948) through FY '75 totaled
$6.1 billion.
Prime Minister Rabin has said that Israel's relations with the US are
"at a peak, 11 and he's right.
AFRICA
FORD POSITION
-- Africans want their future determined by Africans, free of
outside interference.
-- This past year, events in Africa threatened to get out of control.
Because we failed to stop Soviet-Cuban intervention in Angola, the trend
toward radicalism and violence was sharply accelerated. Further inter-
vention and great bloodshed seemed inevitable. Guerrilla war was
underway in Rhodesia and threatening Namibia.
-- Because we alone had the trust of both sides, we were asked by many
African leaders to use our good offices to help promote peaceful solutions
while there was still time. That's why I sent Secretary Kissinger to Africa
in April, where he announced a major new US initiative, to reduce tensions
and condition the atmosphere for negotiations.
-- Our initiative was warmly welcomed by Africans of all races. We
worked closely with Britain, which has an historical and legal responsibility
for Rhodesia. We worked in close consultation with the leaders of African
nations. And Secretary Kissinger met in Europe with Vorster.
-- The United States was in a unique position to help bring about
negotiations to settle those issues. I considered it in the essential national
interest of the United States to make this effort. Only we could do it. And
we had to try, because of the enormous risks to peace if war escalated.
2
-- Our success last month is but the beginning of a process. The
peoples and races of Rhodesia and Namibia now have to work out their
own future. The American people can be proud of our African policy.
3
QUESTION:
Why did the Administration wait until so late
to show concern for Africa? You got involved
only when Angola happened.
FORD RESPONSE
We have always been deeply concerned with Africa. In the two
years of my Administration, we have made far-reaching proposals for
strengthening the world economy for the benefit of developing nations and
for world prosperity. Our major initiative for increasing food productivity
at the World Food Conference in 1974; our enormous program of assistance
to the victims of the tragic Sahelion drought, as well as countless of other
multilateral assistance efforts, amply demonstrate our readiness to help
Africans help themselves.
In Southern Africa until recently, we had been working through
Portugal, which had responsibility for those areas. It was the interference
of the Soviet Union and its clients with the governmental arrangements worked
out with the parties by the Portuguese and the subsequent Angolan conflict
which precipitated the current situation.
The effort we have just made to promote racial peace and racial
justice in Rhodesia and Namibia shows that our African policy is a success.
We will not, however, pursue a policy of meddling where we are not wanted.
4
QUESTION:
In Angola, why didn't the Administration level with the
American people at an earlier stage? Why did you side
with the Portuguese for so long and not support
independence?
FORD RESPONSE
-- We sided with two African liberation groups which represented
a clear majority of the Angolan people. They were overwhelmed by
17,000 Cuban combat troops and advisers and $400 million in Soviet arms.
-- We had the support of all the neighboring African countries, and
indeed the support of half the members of the OAU (Organization of African
Unity), for our proposal of a negotiated compromise solution. The modest
financial help we were giving could have produced such a solution.
-- Congress's action was reckless and short-sighted. The Cubans
doubled the size of their forces after the Senate vote (in December), and
the Soviets expanded their arms buildup.
-- The Congress was fully briefed, in accordance with all the new
procedures for handling covert activities. Beginning in July 1975, we
briefed eight separate committees on 24 separate occasions; more than
two dozen Senators, 150 Congressmen, and over 100 staff members
were kept informed.
v,
QUESTION:
Why are we selling arms to African countries instead
of stopping the arms race there and increasing our
economic aid?
FORD RESPONSE
-- An African nation has the same right to defend itself as any
other nation. African nations have asked us for means of defense
against massive Soviet arms in radical neighboring countries. Kenya
and Zaire, for example, are two key pro-Western moderate African
states. Kenya has a Soviet-equipped Somalia on its northern border
and has come under threat from Uganda because of its role in the
Entebbe raid; Zaire is surrounded by Soviet arms in radical hands in
Angola, Uganda, and the Congo.
LATIN
AMERICA
LATIN AMERICA
FORD POSITION
It is a curious phenomena that those demanding a more aggressive
Latin policy are the same ones complaining about our getting involved in
other countries' affairs. They can't have it both ways.
I recall that in the early 60s we pursued a very vigorous program in
which we developed paternalistic, expensive programs -- made in the USA - -
for Latin America; we threw $15 billion at Latin American problems
dictating how it would be spent, and then were surprised when it didn't
work. What it did do was engender resentment at our paternalistic approach
and disillusionment and suspicion with our ability as an international
leader.
In recent years we have altered our approach. We have learned to
listen more and to talk less. When we do talk we are dealing maturely and
realistically with matters of real concern to our southern neighbors.
Better communications have enabled us to put forward positive programs
for improving hemispheric relations. We expressed the result of this
approach last June at the OAS meeting in Santiago:
First, to give special attention to the economic concerns of Latin
America, we want to create conditions for stable exports of the
commodities that many Latin American countries depend on.
Second, to undertake detailed consultations to coordinate our economic
positions; trade cooperation can stimulate economic growth.
- 2 -
Third, to consider special arrangements, such as transfer and
development of technologies; we can make available the benefits of more
than $20 billion in research that the US sponsors.
This is a positive program and it has received significant support
in Latin America. As a result our relations with Latin America and the
Caribbean have never been better.
CHINA - TAIWAN
FORD POSITION
The long-term prospects for peace depend on a normal positive
relationship with China.
Cannot ignore nation with one quarter of world's population.
China is a major country with a major role in the world. We have no
practical choice but to deal with it.
We have already set the course for improving relations; trade
is expanding; we have exchanges of visits.
I have met with Mao and Chinese leaders; I believe we have
mutual understanding of each other's basic positions.
The goal is agreed. There is no timetable or specific formula.
It will take time to work out the problems.
All parties agree there is only one China. A solution must
be worked out -- but it is extremely important for us that this be done
peacefully.
While we are normalizing relations with Peking, we will not
abandon our commitments to Taiwan.
China knows that we want a good relationship. I believe we
can find a solution because it is in the interest of both countries and
of world peace.
Question: The Republican Party platform calls for the independence
of the people of Taiwan and maintaining American defense
commitments. Doesn't this repudiate your policy?
How can you normalize relations, without giving up the
independence of the people of Taiwan?
FORD REBUTTAL
The Republican platform deals with two issues: it
endorses the normalization of relations with China.
This is my policy, and I believe it has bipartisan support.
The second problem is the status of Taiwan. We will
not abandon the people of Taiwan, but will work for
conditions where their future will be a peaceful one.
Question: Reported that you are drawing down US personnel on
Taiwan. Isn't this going to encourage the Chinese to
believe they can simply wait, and then attack when US
goes?
FORD REBUTTAL
We have told the Chinese leaders that as tensions are
reduced in the area, we would reduce our military presence
on Taiwan, much of which was related to the conflict in
Southeast Asia. That is being done gradually. Important
point is that tensions are, in fact, being reduced. There-
fore, the chances for peaceful development of relations
are improving.
This is a good sign as far as long-term settlement.
KOREA
FORD POSITION
Korea is focal point of possible Asian conflict.
North Korea is heavily armed and pursuing dangerously aggressive
policies as we have just recently seen.
Therefore, it is essential that America be firm in the face of provo-
cation and leave no doubt of its determination to live up to its obligations
to defend Korea. This is only way to deter a new war in Asia. We proved
this in August, when we stood firm. Our troops (42, 000) are essential
to the success of this policy.
Proposal by Democrats to reduce or pull out are dangerous, because
they tempt attacks. We don't want repetition of 1950.
We have proposed a new conference with both Koreas, the United
States and China. This is the way to ease tensions. Not unilateral
withdrawals.
On human rights in Korea, our position is clear and we have made known
our disagreements to President Park. But we must remember that Korea is
by hostile powers
practically surrounded/--
North Korea, the Soviet Union and China. Its
very existence is at stake, with subversion ever present and open attack
a constant threat. We cannot withdraw our troops, cut off our military aid,
or blackmail Korean government because it does not live up to our standards,
when it faces half a million men on its borders.
- 2 -
Korea in hostile hands is a dagger pointed at the heart of
Japan. Asians will lose faith in our reliability if we fail to live up
to commitments in Korea.
NATIONAL DEFENSE
FORD POSITION
When I took office we faced a situation in which our defense budget
had been reduced for eight years. In the last year before the beginning
of the war in Vietnam, 42 percent of our budget went for national defense.
By 1974 it had dropped to only 26 percent. In 1964 we spent 28 percent
of all public spending on defense and 10 years later only 17 percent.
I was determined to reverse this disastrous trend before it did
irreparable harm to our military capabilities. In the past two years I
have fought for increases in our defense budget. Unfortunately, a year
ago the Congress cut my proposals by almost $7 billion. But this year
we were able to establish a firm increase of $11 billion.
These budgets, as well as the ones I will submit over the next four
years, are designed to insure three basic objectives:
1. Under no circumstances can we permit a shift in the strategic
balance. We must maintain the most modern missile and bomber forces.
We have them today but only by supporting major programs such as the
new Trident missile submarine, the B-1 bomber, and a new inter-
continental ballistic missile, can we be guaranteed that we will have an
adequate strategic deterrent in the 1980s.
2. We must provide our Army, Navy and Air Force with the most
modern equipment. These conventional forces are a vital American
- 2 -
contribution to peace in Europe and in Asia. They are an indispensable
deterrent to Soviet and Soviet proxy adventurism around the world.
3. We must make a major investment in research and development
for the next decade. We cannot afford to be surprised; we cannot
afford to be second best. Military technology will not stand still and
we must remain at the forefront of progress.
My policy is to provide a strong national defense as the indis-
pensable backdrop for taking every opportunity to reduce the arms
competition. The agreement I negotiated at Vladivostok will put
a ceiling on ballistic missiles and strategic bombers. When this is
achieved we can move toward reduction of these systems.
Similarly, in Central Europe, where there are 200, 000 American
troops directly facing the forces of the Warsaw Pact, we are negotiating
along with our NATO allies for a substantial reduction in the forces on
both sides.
Moreover, we have just recently concluded new treaties that will
restrain nuclear testing treaties, which I hope the Congress will approve.
So we will pursue two tracks.
1. To maintain a strong defense and
2. to negotiate reliable and fair arms control agreements to reduce
the danger that these weapons will ever have to be used.
B-1 STRATEGIC BOMBER
Issue: Should we fund and develop the B-1, the most expensive bomber
ever made?
FORD POSITION
The B-52 was built using technology of the 1940's and the early 50's.
The B-52 has already been flying over 24 years. By the earliest date a
B-1 could come into the force, they will have been flying 30 years. That
is old by any measure, and especially in view of the rapid advance of
technology.
A new strategic bomber is essential to cope with advances in
Soviet air defense systems.
Our strategic forces have rested for 30 years on the so-called
Triad -- ICBM's, submarine-launched ballistic missiles, and manned
strategic bombers.
The Triad insures our ability to survive and respond adequately
to any conceivable strategic attack on the US.
Bombers have the advantage of mobility, flexibility and recallability.
The B-1 will have a vastly improved capability to penetrate Soviet
air defenses.
We need a new strategic bomber, and postponing it only adds to
the cost.
FAT IN THE DEFENSE BUDGET
FORD POSITION
Those who would cut the Defense budget ought to sit down and
study how our defense dollars are spent.
First, it should be understood that about half the budget goes for
salaries. The size of our forces is at its lowest level since before
the Korean War. Especially at those low levels, they must be used
efficiently. That is why I have insisted on cutting support staffs and
headquarters and putting more combat forces in the field. While our
military strength is some 600, 000 men below 1964 levels, we have almost
the same number of Army brigades and almost the same number of
tactical air squadrons today that we did then. We are continuing to
look for ways to gain increased combat strength out of leaner, trimmer
units.
Over the past two years we have made significant progress in improving
the management and efficiency of the Department of Defense. I have
proposed additional economies requiring legislation which would have
saved approximately $16 billion over a five-year period. Unfortunately,
the Congress has thus far failed to act on a majority of those issues.
Nevertheless, I am pleased that the Defense Appropriations Bill, which
I signed on September 22, included some of the steps that I recommended.
While we have made progress in insuring the most efficient
utilization of each defense dollar, we must recognize that you don't
maintain modern, effective forces cheaply. We cannot meet the
challenges of the 1980's with worn out weapons of the 1950's and 1960's.
A major portion of our defense budget is dedicated to the development,
purchase, and maintenance of today's sophisticated and complex ships,
tanks, and planes. These are not items which are available off the shelf
at cut-rate prices. They are products of the skill and ingenuity of America's
scientific and industrial communities, and we can only cut so many
corners before we weaken our ability to defend ourselves should the
situation arise. This is why the defense budgets which I have submitted
over the last two years have provided for real growth in national spending
for defense for the first time in eight years. Where efficiencies can be
made, we have made them and if the Congress would do its job, we would
make some more.
It is easy to talk about "fat" and inefficiency, but it is quite another
matter to strengthen our military capabilities without cutting our forces'
muscle. I am convinced that the overall program I have recommended
provides for major economies and efficiencies within the Defense Depart-
ment. These programs have no fat.
To cut them deprives our
military of muscle which is essential to the maintenance of national
security.
LIMITED NUCLEAR WAR
QUESTION:
Governor Carter has said that any first use of nuclear
weapons, even tactical weapons, will most likely immediately
escalate into all-out strategic war. He says he has read
Soviet military theorists and claims this is the Soviet view.
He has said that nothing short of the safety and existence of
this country itself as a free nation would warrant our use of
nuclear weapons.
FORD POSITION:
NATO strategy for almost 10 years has been based on the doctrine
of "flexible response, " which means we must be prepared at every level
of possible warfare. This is the essence of a credible deterrence. Soviet
strategy is to make their forces dual-capable, that is, equipped for either
tactical nuclear war or conventional war. To rule out any use of a tactical
nuclear weapon is to go back to the strategy of "massive retaliation, 11
A President must have a choice between capitulation and all-out strategic
war. In the face of the Warsaw Pact's tactical nuclear capabilities in
Europe, NATO must maintain the capability to use these weapons if we are
to deter this kind of attack. To rule this out is to undercut NATO strategy
and renounce our commitment to come to our allies' defense. To announce
in advance that we will never use a tactical weapon is an extremely dangerous
policy. It could invite a major crisis. It would certainly cause grave
concern in NATO.
TROOPS OVERSEAS
FORD POSITION
-- We station sizeable U.S. forces in Europe and Korea to deter
aggression, and to make sure that we win if deterrence fails in either
Europe or Northeast Asia. We now have the lowest number of military
personnel deployed overseas since before the Korean War.
- - Although we are at peace, maintaining that peace depends on
our continued demonstration -- to friends and enemies -- that our resolve
is still firm. "In strength there is peace; in weakness lies the risk of
war. 11
-- To withdraw our overseas forces would seriously weaken our
deterrent and call into question our good faith among our NATO and Asian
allies.
-- Any force reductions in Europe must be tied to reciprocal Soviet
reductions.
- In Korea the North Koreans periodically threaten the peace, most
recently in August. When it happens, whether in Korea, Europe, or with
the seizure of the Mayoquez, we must be able to demonstrate firmness,
as we did.
-- Our actions reassured our Asian allies as well as our adversaries
that the U.S. remains a Pacific power and will not tolerate aggression
against our friends or Americans.
-- To pull our forces out would drastically reduce the credibility of
our diplomacy or our efforts at arms reduction. Why should the
2
Soviets negotiate for something we will give away unilaterally.
-- Our troop presence abroad openly demonstrates our national
will to honor our defense commitments to our allies. Reductions in
these deployments, untill compensated for by reductions by our adversaries
or strengthening of allied forces, can only be viewed as a weakening of
that resolve.
REBUTTAL OF CARTER
BASIC REBUTTAL OF CARTER
There are several fundamental contradictions in Mr. Carter's position
on Defense Policy.
He proposes that we withdraw troops from overseas, but that we
strengthen relations with our allies those policies are contradictory.
He proposes a fundamental review of our NATO strategy, but promises
constancy in our commitment to NATO - those policies are contradictory.
He proposes a cut of from $5 to $7 billion in the Defense budget and
considers scrapping the new B-1, but promises a strong defense posture --
those policies are contradictory.
At the same time, while proposing those cuts in defense, he says we should
be tougher on the Russians. I know Brezhnev, and he is not a man who
respects weakness.
While withdrawing from Korea, Mr. Carter wants closer relations with
Japan. Those policies are contradictory. Our alliances have never
been closer. I won't disrupt them by promising to reconsider them
every four years.
Mr. Carter says we are neglecting the poorer countries. I would simply
point out that the United States provides more assistance to developing
nations than any other country and the bulk of our aid goes to the poorest
countries. He wants to give more aid, yet the Congress last week cut
my request by $300 million. Mr. Carter's proposals for foreign aid
would add more than $3 billion to our foreign aid. Where is the money
coming from?
Mr. Carter says that we aren't facing up to the new challenges -- food,
environment what he calls the "global agenda. " Yet on each major
new issue, it is precisely the United States that has taken the lead --
in the UN Special Session (September 1975), we made and are carrying
through on 40 specific proposals on these issues.
Governor Carter says the arms trade is "unsavory."
-- But who are we supplying? Our allies and friends, Israel
and Iran, for example.
- 2 -
-- We are committed to the support of Israel, and I don't
believe the $4 billion I have provided Israel is "unsavory."
-- Military assistance to Iran began under President Truman.
At that time the aid was a gift. Now that Iran is able to pay
in cash has it become more unsavory? We are an ally of
Iran -- a major oil producer which did not participate in
the oil embargo -- a country which is bordered by the
Soviet Union and Iraq -- a country which is pivotal in
maintaining security over the vast oil resources of the
Persian Gulf.
- - It would be truly immoral to withhold aid from such a friend
while Russia massively arms its Iraqi neighbor.
Finally, Mr. Carter complains that we have no policies on the proliferation
of nuclear weapons, or export of nuclear technology.
- - He has a new formula; he advocates what we have already
achieved.
- - He proposes a moratorium on export of nuclear reprocess-
ing technology; yet, we have been negotiating with the
nuclear suppliers on these subjects for almost 18 months.
He proposes that we enter a five year moratorium on
nuclear weapons test, without saying how we could verify
it; but we have already negotiated two treaties putting a
ceiling on the size of tests, with an exchange of information
with the Soviets that allows verification and with on-site
inspection.
He proposes a World Energy Conference; the global energy
problem has been under intense analysis since the Inter-
national Energy Agency was established under US leader-
ship in 1975.
Mr. Carter's positions show a lack of understanding of how foreign policy
is really conducted. He talks about open policies, but he does not explain
how to conduct a national referendum of the middle of a crisis. John
Kennedy did not announce there were missiles in Cuba, and then ask what
he should do. He decided what the national interest was, and then asked
for support in carrying it out. When the Mayaguez was seized the American
people expected me to act and I did.
- 3 -
The American people and our allies want decisive action in a crisis,
and they want a consistent policy over the longer term. This means there
is no place for experiments and tinkering and constant reviews. Other
nations must know where we stand today, and not a year from now after
we complete a study.
The Governor complains about morality and secrecy. But what is more
moral than peace?
What is more moral than being faithful to allies?
What is more moral than helping the poorer countries?
What is more moral than nuclear arms control.
What is more moral than bringing peace to the Middle East.
What is more moral than trying to prevent bloodshed in Africa.
On openness, Mr. Carter complains about secret negotiations but then
calls for "unpublicized talks" with the Soviet Union on the Middle East.
He can't have it both ways.
J\
Every agreement I have concluded or approved has been brought into the
open and submitted to Congress as the law requires.
The American people, through our public expositions and presentations
to the Congress, have been made fully aware of our foreign policy. * I
believe that they support it.
*
Secretary Kissinger has testified before Congress 83 times over the
last 3 years.
DETENTE - HELSINKI - SONNENFELDT
Question:
Governor Carter says that when he becomes President
he will be a tough bargainer with the Soviet Union. In
return for technology, trade etc., he will ask for some-
thing in return. He says that at Helsinki you endorsed
Soviet domination of Eastern Europe and he cites the
Sonnenfeldt Doctrine as proof of this. He also claims
that he would stand up for human rights in the Soviet
Union.
Ford
Rebuttal:
As far as dealing with the Soviets is concerned,
Governor Carter seems to have a confusing, contra-
dictory idea. First, he advocates slashing the defense
budget, probably cutting out a new bomber, and review-
ing our NATO strategy. Then he says he will be a
tougher bargainer.
Now I know Brezhnev and I have dealt with him and
I believe I know the Soviet Union. We can't bully them
or blackmail them but we can only deal with them if they
respect us. And they certainly don't respect a country
whose policies indicate retreat and weakening its own
national security.
I have made major progress with the Soviets in getting
an equal bargain on strategic arms limitation. I got a
good bargain for our farmers and our consumers in our
grain agreement where the Soviets are obligated to buy
- 2 -
six to eight million tons of grain every year, providing
a stable market and eliminating the sharp price swings
which had hurt our consumers.
As far as Eastern Europe and the Helsinki Conference
is concerned, it is a deep insult to the leaders of the free
nations to distort what was done there. The Prime
Minister of Great Britain, the President of France and
the Chancellor of Germany,all of our NATO allies and His
Holiness the Pope are not such fools to sign the kind of
agreements Mr. Carter claims resulted from the Conference.
We have established certain standards of conduct -- for the
first time obtaining Soviet agreement to specific standards
of conduct -- and we intend to hold all countries who signed
responsible. That includes the Soviet Union.
I am also baffled about this talk about a Sonnenfeldt
Doctrine in Eastern Europe. You can't have it both ways.
I have visited Poland, Romania, and Yugoslavia as
President. Our relations with and support for the countries
of Eastern Europe have never been stronger. I don't see
how you can talk about conceding Soviet domination in
light of this record -- unmatched by any Democratic
President since World War II.
DEVELOPING NATIONS - GLOBAL AGENDA
Question:
Governor Carter says that you are ignoring the real
problems of the future. In particular, the growing split
between the North and South, that is between the richer
and poorer countries. He also says that you treat the
developing countries as pawns in a big power chess game
and that we are 12th in rank in giving aid. He says that
if elected, he will not tax the poor people of America to
aid the rich people of foreign countries. He says in this
light we must turn our attention toward the common pro-
blems of food, energy, environment, and trade.
Ford
Rebuttal:
Governor Carter is simply dead wrong on this issue.
First, we give more help to the developing countries than
any other nation. Second, over 70 percent of our develop-
ment assistance goes to the world's poorest countries.
Third, about half of the aid that I proposed for this year was
devoted to food, nutrition and medical assistance. One of
the problems is that the Congress consistently cuts these
programs. Once again last week the Congress slashed $600
million out of my request. As for the global agenda -- food,
environment, population, etc. , on every single issue the
United States has been in the lead. Our basic position was
set forth at great length in the September 1975 United Nations
Special Session. We proposed and are following upon forty
specific initiatives intended to meet the problems of the less
developed countries. So I believe any idea that we are ignoring
these problems is simply contradictory to the facts.
SECRECY - MORALITY
Question:
Governor Carter has charged that your foreign policy is
too secretive, that it is without moral principles and is
largely the ideas of Henry Kissinger. He advocates a
more open foreign policy which involves the American
people and he says that every successful foreign policy
-- such as the Truman Doctrine -- has been because of
the knowledge, understanding and support of the American
people.
Ford
Rebuttal:
Frankly, I do not understand what Mr. Carter
is talking about. What is more moral than peace - -
which we have today. What is more moral than being a
faithful ally. What is more moral than protecting the
American people by a strong defense.
Not one of these basic policies of the United States
is secret. In fact, they have been permanent interests
of the United States for thirty years. *
On involving the American people Mr. Carter seems
to think that every time there is an international crisis
the President should either conduct a Gallup Poll or
convene a town meeting to decide what to do.
-- In time of crisis, the President must know what to do.
-- When I ordered our forces to recover the Mayaguez,
I couldn't take a Gallup Poll to see whether it would be
approved by 51 percent.
*
It is moral to bring peace to the Middle East. It is moral to try to
prevent bloodshed in Africa. It is moral to provide aid to hundreds
of thousands of drought and disaster victims.
- 2 -
-- When I ordered reinforcements to Korea last
August, I couldn't wait weeks to see whether there
was an international consensus.
-- The President must do what is right, not what is
popular.
-- President Truman is justly praised for his major
foreign policy decisions, yet he was extremely
unpopular at the time he was making them.
I believe our policy reflects the fundamental beliefs of
the American people and I also believe that they are well
informed. All of this talk about openness and secrecy
seems to me to disguise a refusal to deal concretely with
important issues of national policy.
RELATIONS WITH MAJOR ALLIES
Question:
Governor Carter charges that we have neglected our allies
because we have concentrated on wooing the major Com-
munist powers. He advocates "trilateralism" that is a
closer coordination between the United States, Japan and
Europe. He claims you cannot achieve this because our
relations with the allies have been too unpredictable and
inconsistent.
Ford
Rebuttal:
The only answer I can give you on this vague position
is to site the record:
-- The same day I took office as President, I summoned
in the NATO Ambassadors to assure them that our policy
of firm alliance with Europe would not change. I met with
that same group only last week and detected no feeling that
we were neglecting the North Atlantic Alliances.
-- In fact, I have met with all of our major allies both
here, in Europe and the far east and with some of them
several times - - more times than any other President in
a two year period. They know me and they know that I am
the firmest supporter of closer alliances.
Look at what we have achieved:
-- On energy, we created the International Energy
Agency to coordinate our policies in case of another oil
crisis.
- 2 -
-- On the international economy, we have reached an
unprecedented degree of cooperation in shaping mutually
reinforcing national policies.
Or lets take military matters. We are working with
our allies to get better standardization of weapons. For
example, the Dutch and Belgians will help produce the
American F-16 fighter and we are developing our new tank
in coordination with the Germans.
So on every front -- political, economic and military,
our relations have never been closer and I will not under-
mine them by promising as Governor Carter does to "review"
them. This can only call into question our constancy and
reliability.
MIDDLE EAST
Question:
Governor Carter has been critical of step-by-step
diplomacy in the Middle East. He says we should
raise our sights and concentrate on a general settle-
ment.
Ford
Rebuttal:
It is easy to say we need a peace settlement in the
Middle East. This is in several United Nations resolutions,
sponsored by the United States. But how do we make
progress? That is the real issue.
Governor Carter says we should have "unpublicized"
negotiations with the Soviet Union, but at the same time,
he says that we need to prevent the growth of Soviet influence.
The Governor quite rightly says that the Palestinians
must recognize Israel's right to exist, and he advocates
reconvening the Geneva Conference. But the first issue
at Geneva is whether the Palestinians should be allowed to
participate. How would he solve that particular dilemma.
The Governor has said that Israel will have to return
to the 1967 borders, but achieving a settlement that
includes defensible borders for Israel is one of the major
issues. How would he resolve that?
In short, there is nothing of substance in the Democratic
approach. The real steps toward peace have come in the
last few years under Republican administrations.
ARMS SALES
Question:
Both Senator Mondale and Governor Carter have been
highly critical of the sharp rise in our arms sales.
Senator Mondale says we are in danger of becoming the
arsenal and Governor Carter says that we can't be the
champion of peace while we are the merchants of death.
Ford
Rebuttal:
Governor Carter is badly misleading the American
people on this issue. We have to deal with the facts and
not clever slogans. This year I proposed arms sales of
about $6 billion and 60 percent of this was for a single
program -- the sale of
F-16 fighters to Iran.
Now Iran is a good case in point. First of all, our
security assistance to Iran was begun by President Truman
in 1950. For over two decades Congress provided Iran
$2 billion in economic assistance and $1. 4 billion in military
grants and loans.
This relationship with Iran has continued under every
President -- in fact, in 1966 President Johnson agreed to
supply Iran with four squadrons of F-4 jet fighters, the
most advanced fighters in existence at the time.
Now what is happening is that Iran is beginning to
replace and expand its air defense. Naturally, they want
the best weapons they can buy. Since Iran is a friend and
- 2 -
ally of the United States and has been for over 25 years,
why should we turn them down.
Lets remember that Iran has a common border with
the Soviet Union and Iraq and the Soviet Union is a heavy
military supplier to Iraq, including fighters and bombers.
In addition, we should remember that Iran did not
participate in the oil embargo in 1974. Further, selling
arms to allies and making them more able to defend them-
selves reduces the likelihood of our becoming involved in
their defense.
So in terms of military sales we are supplying friends
like Israel and Iran and as far as I am concerned this is
clearly in our national interest.