1. Memorandum From the President’s Assistant for National Security
Affairs (Allen) to Secretary of
the Treasury Regan1
Washington, February 16, 1981
SUBJECT
- The Ottawa Economic Summit (U)
I have spoken briefly with Al
Haig about the Ottawa Economic Summit in July.2 It is essential that we
begin now to reorient the agenda of the Ottawa Economic Summit (July
19–21) so as to assure that the President will be able to advance his
own strategic objectives there. We will know better how to proceed after
Mike Rashish and his
delegation have participated in the preparatory meeting in London next
week.3 I suggest that we
meet shortly thereafter with Ed
Meese and Murray
Weidenbaum, prior to seeking the President’s views.
(C)
The present intention of Prime Minister Trudeau—encouraged by former President Carter—to focus this Summit on
North/South issues and pledges of increased development aid is out of
line with our priorities. In order to change this focus in time to
permit thorough preparatory negotiations, we need to put forward new
concepts and proposals, starting next week.4 (C)
I know that Mike and his team share this viewpoint and have initiated a
broad canvassing of ideas. I also have asked my staff for conceptual
papers on key topics. Three preliminary drafts are attached:
- 1.
- Strategy for International Energy
Cooperation (Tab A)—defines a broader framework for
discussing energy issues, with greater emphasis on energy
security.5 It suggests possible
trade-offs between our commitments on nuclear energy and
European/Japanese commitments on oil
[Page 2]
stockpile coordination and between our
commitments toward defense of the Persian Gulf oil sources and
their support of US diplomacy on
Arab–Israeli issues. (C)
- 2.
- Strategy for East/West Trade and Technology
Cooperation (Tab B)—seeks to capitalize on contingency
planning for Poland to generate greater commitments among the
Allies to consider the requirements of strategic and economic
security in trade with the East, in particular, the need to
protect against vulnerability that results from excessive levels
of dependence on Soviet resources (e.g., natural gas from
Siberia) or markets.6 (C)
- 3.
- Strategy for Relations With Developing
Countries (Tab C)—seeks to shift the emphasis of past
Summits and the Carter
Administration from multilateral aid initiatives to coordinated
bilateral initiatives which gives the Summit countries more
direct credit for aid (something the British and French strongly
desire) and will be more in line with the emphasis of our own
foreign aid budget on bilateral programs. (C)
Other subjects will need to be developed: macroeconomic policy
harmonization, monetary coordination, trade policy, etc. Traditionally,
the Chairman of the US Council of
Economic Advisers has taken the lead in developing a joint position
paper on macroeconomic issues. (C)
I believe President Reagan will
want to use this annual meeting of the main industrial allies to concert
broad political and security strategies that bear on our common economic
interests. I have been encouraged by a review of the history of economic
summitry (briefly summarized at Tab D) to believe that this evolution of
the summit process is feasible and would be welcomed by most of the
other heads of government.7 (C)
Tab C
Paper Prepared in the National Security Council8
Washington, February 5, 1981
OVERALL STRATEGY FOR RELATIONS WITH DEVELOPING
COUNTRIES
1. Conceptual
Framework
US relations with developing
countries occur at several levels:
- —
- The base of these relations is bilateral security and economic
relations with key countries in the developing world. These
relations
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are the most
important means of defending and expressing American values:
political democracy, economic entrepreneurship and
individual human rights.
- —
- A more inclusive level is US
responses to change in the developing
world. Change creates new stakes for US security and economic interests. Thus the
United States has a political
interest in ensuring both that change occurs in a manner
consistent with our values (hence a strong US opposition in terrorism) and
that it results in governments and societies that are not
hostile to fundamental US
values.
- —
- The peak of US relations
with developing countries is cooperation through global and regional institutions and
rules. This cooperation seeks to include developing
countries in a healthy world economy, adapting rules to
benefit these countries (e.g., GSP) and imposing mutual
obligations on them (e.g., urging
membership in GATT). It
supports development objectives and institutions (e.g., the Multilateral banks) and
addresses common global issues (food, energy, population,
etc.); it embraces a pluralism of social mores and customs
(e.g., recognizing the rich and
historic culture of Islam); and it acknowledges the need to
enhance the participation and role of developing countries
in post-war international institutions.
The North/South nomenclature does more to confuse than illuminate
these various levels of US relations
with developing countries. Indeed, it tends to focus attention on
issues at the peak of US relations
with developing countries, which have been defined primarily by
spokesmen for the LDC bloc, rather
than at the base of these relations which involve US security and economic interests. It
diverts attention from support of basic US security, economic and political interests, and it
distorts our foreign aid budget so that is increasingly
unsustainable in the Congress.
By concentrating policy and resources now on building a strong
bilateral base of security and economic ties with key countries of
the developing world, we will be in a better position later to
justify Congressional support for multilateral cooperation to
address global problems.
In recent years, the base has been seriously eroded. US bilateral aid programs cannot work
with many of the developing countries that are most critical for
US security and economic
interests. Meanwhile, multilateral institutions are being attacked
increasingly by radical forces in the third world and risk losing
their greater acceptability and legitimacy, which have made them
preferred instruments of aid over the past decade.
2. New Policy
Directions
The formulation of US policy toward
developing countries must be grounded in the new domestic and
foreign policy directions of the Reagan Administration. These include:
- —
- overriding priority for enhancing national security and
strengthening the national economy;
- —
- restraint on the foreign aid budget with priority given to
bilateral accounts that offer flexible resources to
implement new directions in US foreign policy (e.g.,
in Central America and Middle East);
- —
- cultivating special ties with key developing countries
(often the more advanced developing countries), utilizing
small aid programs and bilateral commodities to promote much
larger flows of private trade and investment (e.g., expanding the Trade and
Development Program),
- —
- coordinating bilateral foreign assistance with
industrialized country allies as alternative to new
multilateral institutions;
- —
- as the base of US
relations with developing countries is rebuilt, continuing
support for multilateral development institutions and
programs;
- —
- positive expression of US
values and interests in all international institutions,
negotiations, and economic arrangements;
3. Action Events
A. Rebuilding the base of US
relations with developing countries:
- a.
- restructuring the foreign aid program;
- (1)
- budget revisions—February 1–15;
- (2)
- FY–82 budget
submissions—February 17;
- (3)
- reorganization of IDCA/AID—April–June;
- (4)
- rationalizing legislation restrictions on foreign
assistance—FY–83
budget preparations.
- b.
- follow-up on key bilateral visits:
- (1)
- Jamaica;9
- (2)
- South Korea;10
- (3)
- Others.
- c.
- identifying key countries for intensified relations
B. Advancing US values and interests
in international institutions and global political discussions:
- a.
- North/South Summit-Planning Group
Meeting (March 13–15)11
Action: Explore prior to March 1 with
Canada, Austria and Germany the feasibility of inducing the
co-sponsors (Austria and Mexico) of the proposed North/South
Summit meeting, tentatively scheduled for Mexico City in
mid-June, to fix the procedures of the meeting so that risks
of President Reagan’s attendance would be minimal and the
prospect of realistic, constructive discussion is enhanced;
if this is not assured, advise key allies that the United
States will not participate and request that they
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either decline to
attend or, at least, insist on postponing the meeting until
after the Ottawa Summit when they would concert with us the
substantive positions they intend to take at Mexico
City. - b.
- PLO
Observer in World Bank IMF Annual Meeting (March 1 and
following)
Action: Seek
extension of the March 1 deadline for the World Bank and
IMF Boards of
Directors’ reports to their Governors on how to resolve the
postponed issue of seating PLO observers; resist any urgency to find
compromise solution until US
Middle East policy is set; determine future policy on this
issue in the context of our overall Middle East
policy. - c.
- UN
Global Negotiations—(May–June)
Action: Coordinate with British and
Germans to forestall Global Negotiations at least until
after Ottawa Summit and opportunity for new Administration
to influence perceptions and agenda of allied countries on
developing country issues; seek wider adherence by
industrial countries to the position that Global
Negotiations should be rejected so long as the G–77 insists that policies
adopted there bind the specialized international agencies
such as IMF and IBRD.
C. Reshaping the agenda of global economic discussions.
- a.
- London Preparatory Meeting for Ottawa
Summit—February 17–18)12
Generally, discourage Canadian emphasis on global
institutions and issues, and seek solutions to key
development problems primarily through coordinated bilateral
action.
Specifically, with
regard to the North/South portion of the Summit: - (1)
- energy—idea of a consortium
of Summit countries coordinating bilateral energy
programs with World Bank participation, as possible
substitute for converting World Bank program into a
new affiliate.
- (2)
- technical assistance,
particularly manpower training—idea of coordinated
bilateral action among donors, including
multilateral institutions, to enhance and improve
technical collaboration on key problems among
industrialized and developing countries (perhaps
asking Canadian IDRC to take lead on designing modes
of R&D collaboration).
- (3)
- food—idea of coordinated
bilateral action among allies to enhance food
production and food security in poor countries
starting with fresh approach to the international
grain reserve scheme at IWC meetings in March and June
(below).
- (4)
- external
imbalances—consideration of coordinated
bilateral action in support of IMF emergency borrowing
to assist LDCs with acute payments problems.
- b.
- International Wheat Council (IWC) (March 3–6 and
June)
- (1)
- consult with IWC
staff and EC
Commission and seek simplified approach to goal of
international emergency wheat reserve;
- (2)
- convey to Trudeau our intention to get this
issue on the Summit agenda, if necessary to overcome
Canadian Wheat Board’s continuing opposition to a
food security system for food-short nations.
- c.
- All Occasions
Maintain the
GATT/MTN gains and further open international markets to
competition, subject to limited exceptions; offer to
negotiate further trade concessions to those developing
nations that offer reciprocal advantages in trade or other
fields to the United States. Specifically, in negotiating extension of the
Multifiber Agreement (textile import restraints), seek to
maintain the present level of LDC access to US textile markets and negotiate with allies to
enlarge LDC access to more
protected OECD
markets.
