Foreign Relations of the United States, 1969–1976, Volume XXXI, Foreign Economic Policy, 1973–1976

304. Memorandum From the Deputy Secretary of State (Robinson) to Secretary of State Kissinger¹

Washington, June 2, 1976.

SUBJECT

• UNCTAD IV Follow-Up

Summary

In many respects the U.S. achieved its objectives at Nairobi with acceptable resolutions on commodities, technology transfer, and the debt issue. We failed by a narrow margin to gain acceptance of our IRB proposal due largely to the disruptive tactics of the Socialist bloc supported by the Black African nations which were protesting against their exclusion from the Restricted Negotiating Group. I had a commitment for support of IRB from the six G–77 representatives in the Restricted Negotiating Group. Their failure to abide by this commitment gives us considerable negotiating leverage in the preparatory meetings which will precede the negotiation of either the common fund² or individual commodity agreements.

We must develop a coherent plan for dealing with this problem in multilateral fora and in our bilateral relationships. From an intelligent and consistent implementation of this plan we can

• —encourage the adoption of the International Resource Bank, and
• —more effectively prevent an unworkable solution to commodity buffer stock financing.

All in all I believe that we achieved reasonable success in our efforts at Nairobi and certainly we avoided the alternative of a complete breakdown in the North-South dialogue which would have included CIEC. However, this memorandum outlines a proposed tactical plan for completing our success by gaining acceptance of the IRB. With your approval of this outline we will develop a more definitive program.

Background

Those results of UNCTAD IV which are of the greatest significance to the U.S. include four basic issues: commodities (commodity agreements and the common fund), the debt problem, technology transfer, and the IRB. The process by which we resolved these issues was reported in detail in daily cables from Nairobi; the conclusions reached on each of these issues are outlined below:

1. The integrated commodity program involving commodity agreements and the common fund.

On my arrival on Wednesday morning, May 26,³ I found the UNCTAD IV meeting in complete disarray, due largely to the inability of Group B (developed) nations to achieve a unified position on the common fund. Largely as a result of U.S. efforts we finally negotiated a proposed resolution which provided for tentative steps toward the common fund and individual commodity agreements. However, in these negotiations I insisted that all negotiations on commodities or a common fund be preceded by a series of preliminary meetings for prior consideration of the objectives and modalities. Furthermore, I insisted upon wording which allowed any nation to decide whether or not it could support the agreed objective and modalities, and thus, whether or not it would elect to participate in the subsequent negotiation. I was even able to gain G–77 acceptance of a statement in the resolution that there were differences of views as to such objectives and modalities. Therefore, I believe that this solution did not in any way conflict with basic U.S. principles. At the same time we prevented what otherwise would have been a complete collapse of the conference. This could have been disastrous in terms of future relationships between industrialized and developing nations but would also have destroyed the political gains you have achieved as a result of your special efforts in this area during the past year.

2. Debt Issue. The resolution of the confrontation over the common fund combined with Conference schedule pressure, resulted in an agreement on LDC debt problems which was far less forthcoming than we had anticipated and was well within our negotiating authority. We avoided a program for establishing specific “guidelines” for dealing with debt and preserved the principle of a case-by-case approach. I believe this to be a most favorable result, particularly given the determination of the LDCs to achieve a more meaningful concession.

3. Transfer of Technology. Your opening speech at Nairobi was highly significant in diffusing this critical issue. Your complete analysis of the problems in accelerating technology transfer and your outline of a combination of solutions guided the negotiation of the resolution dealing with these issues. Many of your proposals were incorporated in negotiations which lacked the confrontational atmosphere that prevailed in other areas. We have to view this as a successful outcome.

4. International Resources Bank. We regret our inability to gain majority support for your proposed International Resources Bank (IRB).⁴ This resulted from a combination of factors none of which involved the substance of this proposal:

• —To be disruptive, the 14 member Socialist bloc attacked the Bank as an industrialized nation plot to continue the exploitation of the poor.
• —For a combination of reasons we hadn’t explained the IRB proposal to the G–77 which gave some an excuse for abstaining.
• —The revolt of the Black African Group against the Secretary General and the G–77 leadership because of their exclusion from the Restricted Negotiating Group was the key factor in swinging the vote against the IRB. The last minute crisis and the factors which brought about this unfortunate result were detailed in my cables reporting on conclusion of the conference, attached at Tabs A and B.⁵

Recommended Action

I believe that we must express publicly the view that the resolutions achieved at Nairobi with regard to commodities, debt and technology transfer represent a victory of common sense in the North-South dialogue and avoided a major breakdown of the North-South dialogue. At the same time we must bring increasing pressure on the G–77 with the objective of gaining support for the IRB concept. We should attack this problem in a coherent and consistent way in our public statements, our bilateral contacts and in multilateral fora, also eventually through our participation in the preparatory meetings prior to negotiation for the common fund and commodity agreements. These are discussed below:

1. Public Statements: We should develop a complete statement of our position with regard to UNCTAD IV with particular reference to the IRB which will be used consistently by all members of the Administration. This will require further analysis and interagency consultation but I believe that it should include these basic elements:

• —Great progress was achieved at Nairobi towards mutual solutions to the acknowledged problems of commodities including buffer stock financing, LDC debt and the challenge of technology transfer.
• —We regret the rejection of the U.S. proposal for an IRB which was intended as an innovative step designed to meet our mutual needs for more rational development of global resources assuring the LDCs of an equitable share of the benefits.
• —As additional resources will be developed to meet the world’s expanding needs the basic question is whether such developments will take place in the developed or in the developing world. It is clear that without resolving the problems to which IRB is directed, the 60% of the world’s resources now provided by the industrialized nations will increase at the expense of the developing nations, further compounding their current economic problems.
• —We view a program aimed at encouraging rational investment for resource development as an essential element in a comprehensive commodity program. For this reason, we feel that it is highly unlikely that we will be able to agree to the objective and modalities for a central buffer stock financing mechanism during the preliminary meetings unless there is at the same time a consideration of the objective and modalities for an IRB. Without this no comprehensive commodity program can succeed.

2. Bilateral Contacts. In our bilateral contacts we should maintain a consistent position based on individual nation voting on the IRB resolution. The breakdown of this vote is outlined at Tab C.⁶ With regard to the NO votes I believe that we should treat the 14 Socialist bloc countries as appropriate for their clearly disruptive efforts at Nairobi. The 14 Black African nations voting against the resolution could be dealt with somewhat more gently given

• —the confusion that existed in the final stage at Nairobi;
• —their intramural problems with the G–77 leadership;
• —our failure to properly inform them regarding the IRB during the previous month.

However, we should make very clear that our economic relationships could be adversely affected by their continued opposition to the IRB concept.

For the balance of the NO votes—Algeria, Libya, Iraq, Fiji and Guyana, we should take a tougher position and might consider applying in some way further restrictions on our already limited economic relationships if they refuse to change their position.

For those abstaining we should be somewhat less aggressive in our reaction but we should proceed with more or less subtle pressure to encourage their support. For those voting YES on the resolution over and beyond the 20 Group B votes, we should go out of our way to express appreciation. Except for Israel, these were all in Latin America which holds some hope for driving an opening wedge in this hemisphere on the IRB issue.

3. Multilateral fora. It is clear that we failed to achieve all of our objectives at Nairobi because we were not sufficiently adept at the parliamentary diplomacy required in fora of this nature. UNCTAD IV had more than the normal problems because:

• —It is structured more for confrontation than for resolution of issues.
• —Its parliamentary procedures are somewhat obscure.
• —The Group B format created more problems than it resolved, and
• —The issues were so complex and broad ranging that it was difficult to undertake the normal maneuvering with bilateral trade offs between issues.

Nonetheless, we could have achieved a good deal more at Nairobi if we had been better equipped for effective parliamentary diplomacy and I urge that in future multilateral fora involving the G–77 we give serious thought to forming our delegation with this need in mind. With regard to specific multilateral fora scheduled for the near future I suggest the following:

A. OAS Ministerial—June 8–11. In your OAS meeting at Santiago, we have an opportunity to make our first significant response to the IRB challenge. I believe that your speech should contain expressions of regret at the IRB rejection at Nairobi with a more detailed outline of the benefits which such a proposal could provide developing nations such as those in Latin America.⁷ We should indicate our intent to push forward with this concept as an essential element in a comprehensive commodity program and without which any central buffer stock financing facility would be unworkable.

It would be a major breakthrough if one or more Latin American countries could propose the idea of an Interamerican Conference to consider a comprehensive commodity approach including the IRB. I believe that this should receive our enthusiastic support and could be an important first step in arousing a competitive interest on the part of the African and Southeast Asian members of the G–77.

In your bilateral conversations at the OAS you should express appreciation to those countries who voted in favor of the IRB in spite of pressure from the G–77 organization. These are shown at Tab C. I feel that a strong protest should be made to Silveira of Brazil⁸ and Escovar of Venezuela.⁹ These two countries were represented in the Restricted Negotiating Group and they supported the commitment to gain overall G–77 support for the IRB in exchange for U.S. acceptance of the commodity resolution. They will argue that their leadership role was threatened by the revolt of the Black African Group, but nonetheless, we must make it clear that we view their abstention as an act of bad faith which greatly weakens any commitment we might have for participation in the preliminary meeting for discussion of the common fund.

B. CIEC—June 8–15. Our delegation at the next CIEC meeting in Paris should be given specific instructions to meet with the five developed country representatives on the Raw Materials Commission to develop a plan for initiating discussion of the IRB in that Commission. As all OECD members supported the IRB proposal without qualification I would anticipate their full support in this effort. We should develop a specific tactical plan for our representatives prior to their departure for Paris.

C. OECD Ministerial—June 21–23. In your speech at the OECD Ministerial June 21, you should express our regrets at the failure of UNCTAD IV to support the IRB.¹⁰ You should also provide the detail of this proposal contained in your Nairobi speech but appeal to the OECD members to join with us in developing a more definitive plan which we can all support without reservation.

We will be limited in what can be accomplished in the way of a unified threat to tie the IRB to our position on the common fund as Sixteen OECD members joined in a resolution at Nairobi committing without qualification to the common fund resolution. The UK made its own generally positive statement, and France although inclined to make such a statement remained silent only in deference to the U.S. However, I urge that you discuss this with Genscher (FRG) and Miyazawa (Japan) if there is an opportunity.

D. Rambouillet II—June 27–28. The issues raised at Nairobi should be a major subject for discussion at Rambouillet II.¹¹ This will undoubtedly lead to a discussion of the lack of unity between the OECD nations with regard to the common fund. The only unity which did evolve out of Nairobi was the U.S. initiated Joint Working Group which included the FRG, UK, France, Japan and the U.S. In spite of our differences in political evaluation of the resolution on commodities we are not far apart in our views on the substance of the matter. I believe that we should continue to hold together this group, which includes in addition to myself, Hans Friderichs, Minister for Economics and Egon Bahr, Minister for Economic Cooperation of the FRG; Frank Judd, Parliamentary Secretary, Ministry of Overseas Economic Development of the UK; State Secretary for Foreign Affairs Jean Francois-Poncet of France; and Ambassador Yoshino of Japan.¹² Because of the importance of the commodities–IRB issue and the short time before commencement of the Preparatory Meetings for the common fund, probably in the fourth quarter of this year, I urge an effort to reconvene this group at Puerto Rico as a working group on North-South issues. (We may have to include Canada although their views differ markedly as reflected in their joining in the positive statement of the Sixteen Group B nations giving unqualified support to the common fund.) This would help in preserving the momentum initiated at Nairobi in our efforts to develop a unified position. Failure to achieve this objective will leave the U.S. (and perhaps the FRG) completely isolated in the preparatory meetings for both the common fund and the commodity agreements.

E. LOS—August 2–September 17. The LOS negotiations contain many of the same elements inherent in the UNCTAD IV conference. We must recognize the need for more effective parliamentary diplomacy at meetings of this kind or the U.S. will lose out to the more sophisticated and effective approach employed by the G–77 and Socialist Bloc. We must have more sensitivity to and emphasis on the political factors without downgrading our capacity to deal with the technical issues. Unless we provide this kind of strength in our multilateral conference delegations we risk a serious deterioration in the U.S. leadership role which is essential for success.

The foregoing is proposed as an outline for a tactical plan responding to the IRB challenge. I would like to discuss this with you and once we have your approval will proceed with the development of a more definitive proposal.

1. Source: Library of Congress, Manuscript Division, Kissinger Papers, Box CL 431, Subject File, United Nations, Conference on Trade and Development IV, Nairobi, Kenya, May–June 1976. Confidential.
2. The Common Fund was an LDC proposal for a $3 billion fund to finance a buffer stock program geared toward smoothing out primary commodity price fluctuations.
3. In telegram Secto 13095 from Bonn, May 23, after informing Robinson of a conversation he had had that day with West German officials on the status of the commodities issue at UNCTAD, Kissinger wrote: “In view of the level of representation of other countries and the danger of severe criticism if there should be hitches at Nairobi in final days, I believe that you must return to Nairobi immediately to head our delegation.” (National Archives, RG 59, Central Foreign Policy Files)
4. At a June 1 Department of State staff meeting, Kissinger reviewed UNCTAD’s rejection of the IRB proposal and discussed future IRB strategy. He also held forth at length on “the UNCTAD debacle,” characterizing it as “a disgrace for the Department.” (Ibid., Transcripts of Secretary of State Kissinger’s Staff Meetings, 1973–1977, Entry 5177, Box 10, Secretary’s Staff Meeting, June 1, 1976)
5. Attached but not printed.
6. Attached but not printed.
7. From June 7 to 9, Kissinger was in Santiago, Chile, where he attended a meeting of the OAS General Assembly. For the text of his June 9 statement before the Assembly on development in which he discussed the Nairobi UNCTAD meeting, see Department of State Bulletin, July 5, 1976, pp. 5–10.
8. Antonio Azeredo da Silveira was the Foreign Minister of Brazil.
9. Ramon Escovar Salom was the Foreign Minister of Venezuela.
10. See footnote 6, Document 140.
11. The second economic summit was held in Puerto Rico June 27–28; see Documents 148 and 149.
12. Bunroku Yoshino.