Foreign Relations of the United States, 1977–1980, Volume III, Foreign Economic Policy

256. Memorandum From Roger Hansen of the National Security Council Staff to the President’s Deputy Assistant for National Security Affairs (Aaron)¹

Washington, February 16, 1977

SUBJECT

• Suggested Approach to the “Second Track” of the PRM–8 Process

As I interpreted the results of this morning’s meeting,² the following scenario will unfold over the coming 2–3 months:

(1) Work on the EPG track will continue as planned, and as scheduled. The only change is that I will have access to all the draft papers, will attend the Group’s meetings with Bob Hormats, and will suggest just enough reservations about the short-term nature of the work being done by the EPG (valuable as it is as a CIEC preparation exercise) to open the door to the “second track.”

(2) The “second track” will begin with the assembling of a “Study Group”³ (I don’t know what to call it, and welcome any suggestions) which I will pull together and chair. (In putting the group together I will work closely with Hormats, and will be in close enough touch with people like Nye, Lake and Maynes that the group’s membership and freedom to examine North-South problems within a broader and longer-term frame of reference should be assured. Tom Thornton will, of course, be included and closely consulted.) The Group will work to a schedule which looks about as follows:

1. Group named and officially notified of first meeting by the end of next week (Feb. 25).⁴

2. Group will meet for first time early the following week (by March 2) to discuss:

a) work of the EPG;

b) raison d’etre of this “second track” procedure;

c) what the group will attempt to accomplish, a schedule of meetings, and a target date for an “options paper” which will allow for the expression of a relevant range of views on U.S. policy regarding the conceptualization and management of “North-South” issues. In order to free the Group from the constraint of Agency clearance of views, unless you direct otherwise, I would set up the Group on the groundrule that no individual or agency positions would be identified. I don’t see any other way of moving with the speed needed to develop a paper to raise questions for PRC and Presidential consideration prior to the Summit meeting.

3. The Group would have its first substantive meeting the following week (March 7–11). The subject would be an initial draft paper prepared by me and circulated at least three days prior to the meeting. EPG papers would also be available to the Group so that it would understand the probable “starting point” for the economic aspects of North-South relations.

4. A series of weekly meetings would be held in order to identify areas of agreement and disagreement—conceptual and substantive. Papers for these meetings would be written in order to add substance to the argumentation for or against various options. By the end of the process (eight weekly meetings?) a paper should have emerged which would accomplish at minimum the following objective:

a) Alert the Administration to the weaknesses as well as the strengths of the CIEC “creeping incrementalist” approach to dealing with the Group of 77.⁵

b) Analyze the tradeoffs within the strictly economic realm itself as the U.S. deals with responses to LDC demands.⁶ Right now the Administration, having inherited CIEC from the past, is letting G–77 demands set the parameters of our response; the G–77 asks for concessions in four major areas, and we are struggling to produce modest concessions in each area without asking the prior question, to wit, shouldn’t our responses in some areas be “nothing doing,” and be quite responsive in others?

c) Analyze the degree to which a more integrated approach to policymaking vis-a-vis the LDCs is desirable and feasible. The G–77 plays “Linkage politics;” shouldn’t we? Since we face them in almost every international negotiating forum—LOS III, Environmental Conferences, Food Conferences, Population Conferences, Human Rights Conferences, etc.—shouldn’t we begin a much more integrated look at trade-offs across different issues within the so-called North-South agenda? Example: What if a U.S. (better, an OECD) commitment to reach a 0.7% GNP official aid target by 1980 could have a substantial positive influence on the spread of population control programs, agreements on regional nuclear fuel reprocessing facilities, etc.? The obvious difficulty with an integrated approach is that you may find that you don’t try it at all, or you must carry it very far. One of the major purposes of the Group’s exercise would be to attempt to analyze in some detail the potential consequences of such an approach, positive and negative.⁷

d) Address much more specifically than ever before the potential gains to general U.S. policy goals in the area of security aims (economic as well as physical); humanitarian aims (human rights, the provision of basic human needs, and the building of institutions to support these goals); ecological aims (population, pollution, resource constraints, etc.); and international institutional aims (the strengthening of existing institutions and the building of new ones—e.g., the recent International Fund for Agricultural Development funded by OECD and OPEC,⁸ with voting power divided among OECD, OPEC and the LDCs on an “equal shares” basis)—which will see that we have the appropriate institutional structure with which to manage today’s and tomorrow’s so-called “global agenda” problems (food production, nuclear proliferation, population control, etc.).⁹

David, I suddenly find that I have outlined the process I envisage and the questions which the “second track” will seek to explore for a PRC without directly responding to your immediate question: what issues would I put forward in my own initial draft paper? While they are implicit in much of the above description of the “Study Group’s” activities, let me append in outline form a brief sample of questions (or options) which would be fleshed out in first draft and grow from there (or be deleted entirely) in the course of the Study Group’s responses and the process of weekly interaction.

1. How does the U.S. presently “conceptualize” its relations with the “South?” Does it really believe there is a “South?” If the LDCs do have at least a weak unity for certain bargaining purposes, is it in the U.S. interest to encourage or discourage that unity? What is the cost/benefit analysis of continued attempts to drive a wedge between OPEC and the remaining LDCs?¹⁰

2. How much validity is there to the widely-held academic view that the growing list of “global agenda” items requires the U.S. (probably in concert with the OECD) to “accommodate” many LDC demands? The view assumes that a) problems whose solutions require the active cooperation of the LDCs are growing; and b) that “accommodation” will win that cooperation. Is either half of the equation so weak as to make the “accommodation” strategy indefensible?

3. Does the “global equity” theme sounded with increasing frequency by statesmen and academics alike survive careful scrutiny?

a) Problems with the definition of “global equity.”

b) Is it a fashion, or a secular trend in international relations which the U.S. must take seriously?

c) If it does require serious policy consideration, what is the range of relevant U.S. options in not simply responding to a problem, but perhaps taking an initiative? (Also, examination of domestic, OECD, and LDC constraints on policy initiatives in the area.)

4. The U.S. Congress, the Scandinavian countries, the World Bank, the ILO and many private but influential private sector groups (the Club of Rome, the Aspen Institute, etc.) are now pushing for a global “basic human needs” strategy to raise standards of living for McNamara’s so-called “forgotten forty percent.” Again,¹¹ is this a cyclical fad, or a secular trend of growing concern? Even George Ball,¹² who refuses to take “the South” seriously, takes this strategy seriously.

a) Is a U.S. initiative in support of such a strategy feasible or not? Is it an initiative which might engage LDCs in a far more fundamental and productive set of discussions and negotiations than five years of CIECs? Or is it an initiative which would expose the Administration to too many domestic and international dangers to warrant the effort?¹³

Finally, for each set of questions and judgments, the programmatic implications for the U.S. (domestic and international) would be spelled out. Therefore, the reader would be able to choose one option (or some combination of the options discussed) in full recognition of the alternatives (with both their costs and benefits) forgone.

To simplify things for you I’ll let you mark approve or see me below. If you choose the latter, I’ll call your office and set up a short appointment.¹⁴

1. Source: Carter Library, National Security Council, Institutional Files, Box 25, PRM–08 (1 of 3) [1]. Confidential. Sent for action.
2. Apparently a reference to the meeting referred to in footnote 1, Document 255. No memorandum of conversation was found. Hansen described the conclusions reached at the meeting in a February 17 memorandum to Thornton. (Carter Library, National Security Affairs, Staff Material, International Economics, Guy Erb File, Box 42, PRM 8: 2–4/77)
3. Aaron crossed out the word “Study” and replaced it with “PRC working.”
4. Aaron underlined the date “(Feb. 25).”
5. Aaron wrote “ok” in the margin adjacent to this section.
6. Aaron drew a line to this sentence and wrote “EPG + [illegible]” in the margin adjacent to the sentence.
7. Aaron wrote “ok” in the margin adjacent to this section.
8. The International Fund for Agricultural Development was founded in 1977.
9. Aaron twice wrote “ok” in the margin adjacent to this section, once in the upper half of the section and once in the lower half of the section.
10. Aaron wrote “ok” in the margin adjacent to this point and the one below.
11. Aaron underlined the phrase “raise standards of living for McNamara’s so-called ‘forgotten forty percent.’ Again,” and wrote “What would we [illegible]?” in the adjacent margin.
12. George Ball was Under Secretary of State for Economic Affairs from February until December 1961, and thereafter Under Secretary of State until September 1966. He was the U.S. Representative to the United Nations from June until December 1968.
13. Aaron wrote “Substance?” in the margin adjacent to this section.
14. Aaron indicated his approval of the “See Me” option, writing “Call Tues” below; presumably Tuesday, February 22.