Foreign Relations of the United States, 1969–1976, Volume III, Foreign Economic Policy; International Monetary Policy, 1969–1972

176. Action Memorandum From the President’s Assistant for National Security Affairs (Kissinger) and the President’s Assistant for International Economic Affairs (Peterson) to President Nixon¹

Washington, September 20, 1971.

SUBJECT

• Negotiating the New Economic Policy Abroad

As the shock effect of August 15 wears off and other countries develop their negotiating strategy, defining where we want to go becomes increasingly essential. We need to:

1. Refine our objectives: what exactly do we want others to do?

2. Define our priorities: which objectives should we push hardest, and in what time frame?

3. Determine our own negotiating strategy: how do we achieve our bilateral aims vis-à-vis countries in a variety of different areas (monetary, trade, and defense) in the same time frame we are negotiating multilateral understandings?

We propose making a hard-hitting analysis of the leverage we have gained by making the dollar inconvertible and by imposing the surcharge. Relations with our allies and friends could deteriorate if we have an inadequate understanding of what we can reasonably expect to achieve by our actions.

Recommendation

That you approve establishment of a small coordinating committee, chaired by Peter Peterson and including high-level representatives from Treasury (Volcker and Petty), State (Samuels and Trezise), CEA (Solomon), OMB (Dam), and the Federal Reserve Board and NSC Staff. This group will develop and refine the options available to us in the near term, with a view to presenting them to the Quadriad augmented by Secretary Rogers, Henry Kissinger and Peter Peterson. Secretary Connally has agreed that in view of the broad range of issues involved, this kind of White House-chaired coordinating committee is necessary and desirable. Secretary Rogers, deeply concerned about the foreign policy aspects, concurs in the need for such a committee. George Shultz and Paul McCracken also agree.²

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 218, Council on International Economic Policy. Confidential. Attached to a memorandum from Peterson to Kissinger that indicated Peterson had discussed the joint memorandum with Secretary Connally, who found it acceptable. Peterson noted that Connally thought it urgent to decide what to say to the Japanese on Saturday (September 25) and at the IMF, and Peterson wanted to call a meeting on September 22 if the President approved. (Presumably Connally was referring to bilateral meetings with Japanese officials who would be in Washington for the Annual Meeting of the IMF the following week.) Peterson asked Kissinger, if he approved the joint memorandum, to “please sign it now and I will have somebody waiting outside to get it into the President’s office.” Peterson wrote at the bottom: “Sorry to bother you.”
2. There is no indication if the President approved or disapproved the recommendation, but a Coordinating Committee was soon established; see Document 179.