Foreign Relations of the United States, 1981–1988, Volume XXXVIII, International Economic Development; International Debt; Foreign Assistance

30. Minutes of a Meeting¹

Ottawa, July 20, 1981, 3–5 p.m.

NORTH-SOUTH AND ENERGY PLENARY SESSION

Trudeau—We were asked at Venice to look into the matter of aid.² The outcome of our discussions here will be critical to the setting, the environment of our relations with developing countries. There are a number of fora where this environment will be important—Cancun, Commonwealth meeting in Melbourne, and the U.N.

Reagan—My remarks are based on our limited experience thus far in Jamaica. But the United States has had programs for Latin America which have been unsuccessful. The reason is because we lump all these countries together. Each one is a separate entity. We should target aid specifically. We should recognize the great power of the private sector. The goal is not just to feed the hungry but to teach them to feed themselves.

Suzuki—I visited ASEAN. These countries are seeking to build their economies. Here is an example of how to provide aid in a way to stimulate self-help. Our aid will be effective only where it is coupled with the will in developing countries to help themselves. The ASEAN countries are focused on the outcome of this Summit. There are many fragile aspects to their situation—political, economic and social. If we do nothing about these fragilities, it makes them vulnerable to threats from the outside. Soviet expansionism may open a new gap of vulnerability. That is why we should keep in mind their needs. Japan cannot undertake military assistance beyond its borders. But we would like to provide aid. Thailand, Zimbabwe and Jamaica are particular areas of difficulty.

Trudeau—In the communique, we have inserted answers to the questions posed at Venice; 1) we will allocate the major share of our aid to poor LDCs, 2) the Soviet Union’s contribution is meager and so on.

Spadolini—The communique must be carefully drafted. The guidelines should be minimal. I agree with President Reagan on the role of the private sector. We will work with existing institutions. Italy likes the selective approach focusing on energy, agriculture and structural adjustment with provisions for deficits on balance of payments. We need to improve the mobilization of resources internationally. I am conscious of the struggle of my country to defend economic freedom, which is directly linked to political freedom.

Thatcher—The UK gives the bulk of its bilateral aid to poor countries. Multilateral aid is less subject to our influence. It is not possible to exert influence over the World Bank. Developing countries need private capital and development flows more than ever. We need a code of practice for treatment of capital in LDCs. In trade, sometimes LDCs compete with us, for example in textiles. We should take their goods. The countries here have a good record on that score. We should not raise expectations for Cancun, such as big new funding programs.

Trudeau—Mexicans want Cancun to lay groundwork. We should explore the theoretical approach. We should not create unrealizable expectations.

Mitterrand—Perhaps we could have a brief statement from the chairman on Cancun. What are the items for the Cancun agenda? In the communique for this meeting, only benefits for LDCs are stated. We need to state what benefits we derive.

Schmidt—We must respect the dignity of each state. good thing Moslems opposed to.³ Developing countries have a responsibility themselves to help. It is also the responsibility of developed countries, Communist countries, and OPEC countries. It is ridiculous that OPEC gives more than 0.7%. OPEC has created major problems being or hung.⁴ Recycling will not help. It won’t work with the LDCs. OPEC must be told not only to recycle but to give credits or to split prices for the LDCs. Price of oil and population explosion are two major problems. Family planning is needed. Development aid is nonsense in the face of population explosion. I agree with Mitterrand on the need for a Lome solution.⁵ I want to stress the private sector. It is the only way to transfer technology and there ought to be guarantees to invest in LDCs. On Global Negotiations, there are too many people talking at once and about too many subjects. The IMF must not become a charity institution. Multilateral institutions, like the IMF, must be secured, but surplus countries like Saudi Arabia should be given a larger share of responsibility. Concerning Cancun, I am just not sure. There are too many articles, too many interviews, expectations have been raised too high.

Thorn—The North-South issue has been downgraded over the past years. We need to give a signal. The banking system should play a role. We need a greater IDA effort. US should reconsider. The European Council of Ministers asked for an energy affiliate.

Reagan—I am sorry for the delay in our IDA contribution. We will make our contribution on an installment plan. Don’t forget that the American people are enduring $270 billion worth of budget cuts over the next four years. This is necessary to get on our feet economically. If we don’t do that, we can’t help anyone else. Private sector needs assurances against expropriation. Only one quarter of the globe has been explored for energy.

Trudeau—We need to look at the communique to discuss the results of these exchanges. Global Negotiations and OPEC responsibility should be included.

1. Source: Reagan Library, Douglas McMinn Files, Economic Summit Files, Ottawa—Follow-up; NLR–369–9–29–3–9. Secret. The session took place at the Ottawa Economic Summit. Further documentation on the Ottawa Economic Summit is scheduled for publication in Foreign Relations, 1981–1988, vol. XXXVI, Trade; Monetary Policy; Industrialized Country Cooperation, 1981–1984. For press briefings and other statements, including the Declaration issued at the conclusion of the Summit, see Department of State Bulletin, August 1981, pp. 1–22.
2. See footnote 4, Document 11.
3. An unknown hand bracketed “good thing Moslems opposed to.”
4. An unknown hand bracketed “being or hung.”
5. Possibly a reference to the Lomé Convention, a trade and aid agreement between the European Economic Community and African, Caribbean, and Pacific (ACP) countries. The first agreement, Lomé I, was signed in 1975.