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July 30, 1974 - Nixon, William Simon
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1552737
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July 30, 1974 - Nixon, William Simon
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collections
Memoranda of Conversations (Nixon and Ford Administrations)
Nixon Administration Memoranda of Conversations
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Italy
Portugal
Spain
Israel
Kuwait
Saudi Arabia
Iran
Great Britain
Egypt
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1974-07-30
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1974
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1974-07-30
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7
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1974
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File scanned from the National Security Adviser's Memoranda of Conversation Collection at the Gerald R. Ford Presidential Library
MEMORANDUM
THE WHITE HOUSE
SECRET/NODIS/XGDS
WASHINGTON
DECLASSIFIED
E.O. 12958, Sec. 3.5 ear 8/22/04
Treasury apt
MEMORANDUM OF CONVERSATION
By
State Dept. Guidelines; state review 3/9/04
dal , NARA, Date 4/12/07
PARTICIPANTS:
President Nixon
William Simon, Secretary of the Treasury
Kenneth Rush, Assistant to the President
Brent Scowcroft, Deputy Assistant to the
President for National Security Affairs
DATE & TIME:
Tuesday, July 30, 1974
3:00 p.m.
PLACE:
The Oval Office
President: Since you were away we worked on a new speech.
Rush: There has been good comment on it.
President: What the hell, we had to say it. We couldn't say we would
lower taxes, we wouldn't wring out the economy with a tax increase --
today anyway. We'll have to take a hard look at the budget. We don't
want 8-9 percent.
Simon: It isn't in the cards. It would be a Christmas tree.
President: How long were you gone?
Simon: 11 days.
President: How was it received.
Simon: Outstandingly. Even where I shouldn't have been, I was -- Kuwait.
President: But they still will raise the oil prices.
Simon: I am not so sure. I met with Henry before and again today.
Yamani gave us an Arabian party. He still has clout with the King. The
King gave him 10 million riyals. The Arabs are acting like nouveaux riches.
CLASSIFIED BY HEnRY A. KissinGER
EXEMPT FROM GENERAL DECLASCIFICATION
SECRET/NODIS/XGDS
SCHEDULE OF EXECUTIVE ORDER 11652
EXEMPTION CATEGORY 5 (8) (1,3)
AUTOMATICALLY DECLASSIFIED ON Imp. to det,
SEGRET/NODIS/XGDS
- 2 -
President: They are going basically for education, aren't they? They
still need everything, but they are most concerned with personalities.
Simon: In Egypt they expected a financial messiah. At first there was
disappointment, but then they understood. Sadat said to tell you he had
made a decision about the Soviet Union: "I am going with you. " I tried
to steer clear of foreign policy.
President: Sadat said he was betting on the U.S. and not on the Soviet
Union.
Simon: Absolutely. But he said there would be a gap during the transition.
Saudi Arabia will help, but it doesn't want to bear the whole burden.
President: Tell Kissinger to take a hard line with Allon. They get no
blank check. Israeli security won't depend on a bit of sand. It depends
upon (1) the restraint we can put on their potential enemies (and we can
do that only if we squeeze Israel a bit) and (2) our guarantee to Israel. If
there is another war, aid will be cut off and everyone will oppose Israel.
Scowcroft: The Hill is talking about an increase for Israel and cuts for
Egypt.
President: You ought to talk to them and point out the realities.
Simon: I gave your hard line to Israel. But I am not sure they believe we
will really cut them back. I think Keating is getting the message through.
In my meeting with Schmidt he is very concerned with overall stability.
The oil prices are a problem everywhere. Faisal says he has gone as far
as he can without our help. The Shah is threatening to cut production.
President: He is our good friend, but he is playing a hard game on oil.
Simon: Faisal asks our help with the Shah. There is an internal fight in
Saudi Arabia between those who want price cuts and those who wish to keep
production up. Faisal really wants our help with the Shah.
In discussions with other Ministers I said Saudi Arabia has probably 150
years of production left, whereas Iran has only 15 years. Maybe Iran
will build its industry and then when the oil runs out, they can take you
and get the oil back.
SECRET/NODIS/XGDS
SEGRET/NODIS/XGDS
- 3 -
President: We have to see what we can do. I will have to meet and talk
with the Shah.
Simon: The Shah has us. No one will confront him. The producer nations
are locking in the consumers and keeping them away from us. Schmidt said:
"If the prices don't move down, I have to move against the companies and
deal with the producers myself. " This issue will ultimately require strong
action by the United States.
President: Like what? This should be developed. We need discussion with
you, Ken, Henry and Brent. Keep it small.
Simon: It is a terrible problem. I was not thinking so much of energy as
of balance of payments. I am worried about production cuts. Thank
heavens I went to Kuwait. I played pingpong.
President: Who is the real leader? Sadat?
Simon: Yes. But there is something wrong with their thinking about wanting
more and more without putting their house in order.
President: We want to go all out for Egypt. Push hard for all we can get.
You didn't go to Syria?
Simon: No.
President: Asad is impressive.
Simon: The least impressive were the Saudis. The Kuwaitis have maybe
more potential than Egypt.
President: Tell me about Europe. He is worried about the banks.
Simon: He is overboard on that. Maybe the misfortune of the Herzbank(?)
did some good; it evidences the situation.
With Giscard and Schmidt at the top, we have greater friendliness.
President: France will be better with Giscard.
Simon: We are making progress with them on gold. If it works out I would
like to jump the gun on granting gold sales.
SEGRET/NODIS/XGDS
STRALE FORD LIBRART
SECRET/NODIS/XGDS
- 4 -
President: Tell me about the Brits.
Simon: This government is more friendly than the last. I spent a lot of
time with Healey.
President: Healey is a strong good friend.
Simon: I made an unscheduled stop in Italy on the plea of Volpe. Italy has
severe but self-made problems.
President: Italy has no government. Rumor is a decent guy and he's trying --
but the Latins are unstructured without a dictator. Right now the great
nations of the West must be united politically -- the lack of stability in the
world sets everything loose.
In retrospect, Churchill was right about the southern tier. The same with
Callipoli. (Discussion of World War I -- Verdun, the Spring 1918 offensive.)
All of it could have been avoided had Gallipoli succeeded. Look at today.
Portugal -- Spinola is good but the Communists are the only organized force.
Franco is dying and who knows? Spain has a good bureaucracy. Europe
must give up its fastidiousness and bring Spain back into Europe. If Spain
goes, Italy goes. In Yugoslavia -- when Tito goes, the Soviets will make
some kind of move. Greece and Turkey are so important because they are
the rest of the southern tier. That is why going to Italy is important.
Simon: We will have to aid Italy before too long. I talked to Arthur Burns
about a swap line. He is opposed, but I'll get it. Even if the new fiscal
measures take, they will have problems.
President: We wouldn't trade places with any of them, even Germany. We
will ride it out.
This inflation -- except for the wage push we will make it. Arthur
shouldn't wait too long on a restrictive policy because the country wouldn't
stand for it and we'd have $10 billion spent for unemployment.
What do our opponents want?
Simon: They never get specific.
President: I have vetoed $35 billion of bills in five years. We will play a
tough line. No spending for a special interest -- it is not good if it raises
prices for the people.
is. FORD
SECRET/NODIS/XGDS
SEGRET/NODIS/XGDS
- 5 -
Is Burns keeping things too tight.
Simon: No, I think he is right.
President: A lot of people -- Dave Packard -- want to loosen some.
Rush: It would be bad psychology. People would think the Fed had given
up.
President: We have a long-term, not a short-term strategy.
Simon: Two things will happen. We will get Arab investment in the U.S.
Treasury certainly. Kuwait will also and Indonesia is. They know we have
the best credit and they can invest with us directly and not drive the market
price up. Buying gold will be deflationary.
President: Should we move it up?
Simon: In September I will talk again to the Europeans. We ought to
get something for it from the Europeans.
President: I appreciate your leadership at Treasury. I know you and Roy
have difficulties -- blown out of proportion. I have talked with Roy -- there
is credit for all and if we lose, we all burn. You and Ken are good spokes-
men. Roy has good insight. You and Roy sit down and talk it over and
decide to work together. You are all good men and we must work together.
How high will unemployment go?
BERALO FORD
SEGRET/NODIS/XGDS
P/Sinon / Rush
2
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DECLASSIFIED Trend Ltr
E.O. 12958, SEC. 3.5 8/22/06
NSC MEMO, 11/24/98, STATE DEPT. GUIDELINES State 3/9/04 Review
GERALD R FORD
BY
HR NARA, DATE 5/9/07
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GERALD a FORD
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103440 8 FORD LIBRARY