Foreign Relations of the United States, 1969–1976, Volume E-15, Part 2, Documents on Western Europe, 1973–1976, Second, Revised Edition

94. Memorandum of Conversation¹

Paris, June 22, 1976, 8:15–9:30 a.m.

SUBJECT

• Breakfast with European Community Officials

PARTICIPANTS

• European Economic Community

  • President Ortoli
  • Vice President Soames
  • Director General Hijzen

• U.S.

  • Secretary of State Kissinger
  • Secretary of Treasury Simon
  • Under Secretary of State Rogers
  • Assistant Secretary of Treasury Parsky
  • Counselor Sonnenfeldt
  • Assistant Secretary of State Hartman

Soames: When we talked at Spaak’s house in Washington you indicated that you were worried about the situation in Yugoslavia.

The Secretary: Some of our people believe that the Yugoslavs are behaving outrageously but I am concerned about what happens after Tito. Of course, they can be particularly obnoxious in places like the UN but I want to moderate the degree of public debate so that there will never be any question of a plausible American response if there should be pressure on Yugoslavia from the Soviets after Tito dies. If we are always in a public brawl it will be difficult to get the kind of public support we need. Kardelj is ill so there are many uncertainties and I am profoundly worried about what the Soviets might try.

Soames: I will be seeing them soon and I too am worried. I will be dealing with Smole.

Parsky: We have to think about keeping up a relationship so that there is not this negative perception.

Soames: We in the Community are their main market and, therefore, we have an obligation to do more for them.

The Secretary: What do you think of the Italian election? My understanding is that the Christian Democrats will be able to form a minority government but the question is can they really begin to reform themselves. I am not sure what the arithmetic is.

Soames: I am afraid that now that they have barely won, they will not feel under the whip. It would be a pity if they allowed themselves the luxury to go on the way they have been going.

The Secretary: Public opinion on this subject seems to be dominated by the intellectual left who control the media. These writers, and they are not only the ones in the universities, have been very aggressive. What it amounts to is a reluctance to use power and it might even be a new form of isolationism. They just use human rights as an excuse.

Soames: There are many charges in Europe about what is going on in Uruguay and Argentina.

The Secretary: And if they start applying their standards there surely they will begin attacking Brazil tomorrow.

Ortoli: It is difficult to see how the Italians are going to be able to make a real change in their situation.

The Secretary: I think that the arithmetic is probably worse than it was previously.

Soames: I am worried about the Trade Act and where we are headed.

Simon: I don’t think you should be worried. We have not applied any escape clauses and we have attempted to clean up all the back cases. There were only eight examples where we have done anything.

The Secretary: A lot of pressure that we have been under has been due to two factors—first, the recession and, second, new Congressional assertiveness. After November I think we will have an easier time. I don’t think that the Trade Act is the cause but we have a fairly good record. We resisted the pressures on shoes. We had to do a little bit on steel but in that case both Treasury and State opposed the action.

Soames: I see a great danger over the next period. Next year we are going to have great difficulty in deciding how to deal with agriculture in the MTN. Your agricultural exports have increased considerably but they have shifted from wheat to soybeans. In fact, they are double what they used to be. If you take on the Common Agricultural Policy (CAP), we will get nowhere. There will be pressure from within the EC to become even more protectionist. I must emphasize to you how sensitive an issue this is, particularly here in France.

Simon: If what you are saying is that there will be no concessions in agriculture, I think it will be very difficult to reach a conclusion in the MTN.

The Secretary: Perhaps you can add to my education. Isn’t there a global shortage of agricultural products—why should we be getting into a fight about this?

Simon: Our efficiency is very much greater than the Europeans and we must show that we are lowering existing barriers. If we cannot show some progress, the Senate Finance Committee will not let us conclude the negotiations.

Ortoli: And something else you all ought to remember is that there are French elections in 1978 just at the time we will be concluding the MTN and it will be extremely difficult for any French Government to agree to agricultural liberalization when the farmers will probably be expressing their unhappiness about the present situation.

Parsky: We have already made proposals to deal with each sector.

Soames: I don’t think I have seen those.

The Secretary: If this is a major problem, then I think we should look at the issues. Bill Simon and I will get together and review where we stand and then be back in touch with you.

Soames: We don’t want to be in the position of producing a surplus. We are now having some success in lowering our milk surplus. But we have a much bigger problem in the future.

Rogers: In 1976 we showed our liberalism. In 1977 it will be your turn in the EC.

Soames: We both should be good boys and not make the situation worse.

Parsky: We certainly don’t want to create new barriers in 1977—we want to show that we can reduce them.

Simon: There were many things we could have done this year but we resisted the pressures.

Soames: I think we got through this year pretty well although Italy still remains a difficulty. But if you make a major assault on the CAP I would be very worried about whether we could complete the trade negotiations.

The Secretary: We will have a close look at this and then be back in touch with you. I understand you wanted to have a word about human rights. The situation in Chile is that some progress is being made but that they have been through a very difficult period. In any case, it is not like Eastern Europe. I don’t think you succeed in these matters by public pressures and threats.

Soames: There are some people in Europe who would like us to close our office in Santiago.

Rogers: I think that would be a mistake. Even the OAS continues to deal with them but public lectures and pressures will not work.

Ortoli: I have the impression that our relations are much better now. People understand that the economic problems are the most serious ones. The political and defense issues are being dealt with in a much better fashion and I think you have noticed that the French position is gradually changing.

The Secretary: Yes, I think our basic relations are much better. You are right. The defense issue is not a big one. There are French internal issues and, of course, we have a big problem with Italy.

Ortoli: The key questions in Italy are the economic ones and we must see if we can try and help the new government. I just hope that the Christian Democrats get some better people.

The Secretary: What do you think of Andreotti?

Ortoli: I think he is not bad. He has been Prime Minister before and he was not as involved with some of the old men in the party as others.

The Secretary: There is a dilemma here between the need for reform and austerity and how one goes about cutting public expenditure by two or three billion dollars. Only if you get some internal policies that make sense will capital begin to flow. It is very hard to see what personality could dominate that situation. Fanfani could have done it in his day but he is now out of things. If the Communists get into the government there is certain to be an effect elsewhere in Europe and particularly in France.

Ortoli: You are exactly right on that and that is why it is important that things go well in Italy.

The Secretary: If Italy were out in the Indian Ocean we wouldn’t care very much about this problem and we wouldn’t mind if there were Communists in the government but this is a NATO ally and the situation there is being closely watched by people in Spain, France and elsewhere.

Ortoli: What we have to do is to help first with achieving reform without the Communists. We need reform and good management and good men.

The Secretary: You are right. There is no sense unless the Christian Democrats are able to produce reform but the question is who can do it. The arithmetic is very difficult without the small parties. In effect the Christian Democrats would have to form a minority government and then the question would be who is keeping them in power.

Ortoli: It is going to take time to form a government because there is no majority.

The Secretary: The election results were not all that bad. Close to 60 percent of the people voted for non-Communist and non-Fascist parties. It would be better if some of the smaller parties and the Socialists would join with the Christian Democrats now and really pursue a program of reform but that does not look likely. It is a pity that the democratic majority cannot stick together. As long as the economic difficulties are present, it will be hard to achieve confidence. If there could be a reform program in place which excludes the Communists, then there will be a chance to improve the situation at the next election. If the Communists are anywhere associated with power, they will achieve a legitimacy like the Socialists did in Germany when they joined the coalition and this will be of great help to them. I don’t see why the 60 percent anti-Communist vote cannot be turned into a workable majority.

Ortoli: But the basic problem is how to get Christian Democrats to reform their structure and bring in some younger people.

The Secretary: We didn’t really have a full discussion of this at Puerto Rico but it was pretty clear what the other leaders thought.

Ortoli: We must be ready to help but it has to be without the Communists. Giscard does not want them in and it would be suicide for Schmidt.

The Secretary: Yes, it would be a disaster if the Communists came in. If we were to give two or three billion dollars to a reform that was supported by the Communists we would have no moral position left and I am sure the French favor the same thing.

Ortoli: You are right and I am sure Schmidt agrees.

The Secretary: Getting back to agriculture for a moment, I am not optimistic but I think what we ought to do is decide what is reasonable. Bill and I will discuss this and see if we can come up with some ideas which will not be a governmental position but just something to discuss with you.

Simon: We have got to find a way to get over this impasse. If we don’t, the Senate Finance Committee will lead us back to a protectionist position late in 1977 or 1978.

The Secretary: Let’s have a look at the problem without taking official government positions. We don’t want a confrontation and an increase in protectionist pressures.

Ortoli: With the elections coming up in France in 1978 the majority will need the vote of the farmers and, therefore, we must be very careful how we approach this problem.

The Secretary: We want to avoid a confrontation but Bill and I will look at the problem and see if we can come up with some ideas to discuss very privately with you in preparation for the more formal talks which will have to take place later this year and next year.

1. Summary: Ortoli, Soames, Kissinger, Simon, and other EC and U.S. officials discussed issues in U.S.-European relations.

   Source: National Archives, RG 59, Central Policy Files, P820118–1347. Secret; Nodis. Drafted by Hartman; and approved by Collums in S. The meeting took place in the U.S. Ambassador’s residence.