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

11. Notes of a Meeting¹

Paris, undated

PARIS PLENARY DISCUSSIONS ON NORTH/SOUTH PAPER

Gotlieb introduced the Canadian North/South paper² and urged that it be preserved in terms of its overall integrity and balance.

Armstrong suggested that the paper should be shorter and should concentrate the leaders on a few key points. He was not frightened by the idea of disagreement among the Summit countries. This should be indicated when it exists. The paper should concentrate on objectives and specifics. It needs to be realistic and hard. He recalled the context in which the study was requested and noted that all of the points were not reflected in the communique. In the objectives section more attention should be given to the constraints on OECD governments at the present time and more focus given to private flows. The section on process needs to be looked at carefully.

Kikuchi found the paper exhaustive and agreed that it needed sharpening and shortening. The paper was too much oriented to the North and too apologetic. We should say more about past performance and more about the South’s interdependence with the North. Paper should treat OPEC role realistically. It should single out the importance of rural development in the agriculture sector and the area of human resources. Automaticity is out of the question. No study of this subject is needed.

Spaak agreed that the paper should indicate disagreement when it exists.

Gotlieb indicated that the redraft which would be ready two weeks before Vancouver would show agreement and disagreement.³

Shulmann said that the paper should be distinguished from the communique. Disagreement might be flagged but we should try to achieve as broad a consensus as possible. He had no difficulties with the general thrust of the paper. Agrees that it should be shortened and that Germany could not undertake unqualified commitment to increase ODA. This commitment depends upon domestic circumstances. Also objected to the refinancing of the IMF interest subsidy account and wondered about increasing the adequacy of IMF resources. Aid through capital markets must be qualified no less than direct aid. Governments are not in a good position to undertake positive adjustment programs. Also has concerns about automaticity. Reiterated his basic agreement with the paper.

Italian Delegate noted that this was the kind of paper he had hoped for and that was needed. He agreed with the approach and recommendations in general and felt the energy and food sections needed further development.

Rashish suggested that the paper should begin with a diagnosis of problems confronting LDCs—systemic, conjunctural, financial. It is difficult to go to prescriptions without an agreed analysis. It would be useful to have a more positive and discriminating approach. The mea culpa tone is unnecessary. There is too much emphasis on political orientation. This will prejudice the outcome of the North-South dialogue.

Shulmann responded that there is a political orientation that we can’t ignore.

Rashish noted that the homogeneity such as it once was may be breaking down. To assume such unity works against a sensible approach to North-South relations.

Gotlieb said it would be misleading not to recognize that the LDCs act together. However we don’t need to emphasize the bloc approach. On the other hand, the LDCs show tenacity in this approach.

Rashish argued that we should avoid confrontation and rhetorical trap of the bloc approach. This approach leads to emphasis on politics and ideology rather than concrete problems.

Armstrong indicated that this point was made in Venice.⁴ It influenced the drafting of the Venice communique. Was it necessary to go over this ground again (the UK essentially sought to eliminate the first section of the paper dealing with analysis)?

Gotlieb said we should not overdo language that polarizes. Some LDCs, for example Brazil, want to be part of the South. It seems ludicrous but this is the way they perceive their interests. We don’t want to encourage it but we need to recognize it.

Couzens (UK) said we do not want to identify OPEC with the South. We should not treat these countries as one group.

The Italian Delegate said that the North-South debate is about the working of the market system. This is the issue for the LDCs. What is our response? If we believe the market system is working for the LDCs then we should say so. Emphasis then would be on maintaining open trade, investment, etc. with aid directed toward the poorest countries. Minor improvements might be made in markets, for example in commodities, but no major reform of the monetary system would be necessary.

Hormats indicated that we encouraged the unity of LDCs by the focus on aid issues. The LDCs split when you deal with market issues. In world with less aid the market becomes more important. In the energy area, the question is how to encourage more private capital. In the food area, there is a greater need for dealing with aid. Here too, however, there is a role for the market in food security.

Gotlieb urged that we focus on ODA for the poorest. How do we handle their debt, what about the energy supply, what about the capacity of the IMF? This is what we need to focus the leaders on.

The EC Delegate suggested that the paper was clearly pushing against the limits of consensus.⁵

1. Source: Reagan Library, Douglas McMinn Files, Economic Summit Files, Ottawa—Preparatory Meetings. No classification marking. Nau forwarded the notes to Rashish, Hormats, Schotta, and Streeb under a May 6 covering memorandum in which he wrote: “Attached are my notes from the Plenary Discussions of North/South Issues at the Paris Preparatory meeting.” (Ibid.) The Paris preparatory meeting for the Ottawa Summit took place April 22–24.
2. Not found.
3. The Vancouver preparatory meeting for the Ottawa Summit took place June 4–6.
4. A reference to the Venice Economic Summit, held in June 1980. For documentation on the Venice Economic Summit, see Foreign Relations, 1977–1980, vol. III, Foreign Economic Policy, Documents 239, 240, 243, and 247; and Foreign Relations, 1977–1980, vol. I, Foundations of Foreign Policy, Documents 145 and 147.
5. In a May 7 memorandum to Reagan on the Paris preparatory meeting, Bush reported: “The most contentious issue was the Canadian North-South paper. We do not want this issue to be polemical or overly focused on aid. The Canadian paper puts the emphasis on the responsibility of developed countries to foster development through foreign aid. We resisted that view strongly at Paris, with British and some French support. The other allies appear to be somewhere between us and the Canadians. We will continue to work for a consensus on our position.” (Reagan Library, Douglas McMinn Files, Economic Summit Files, Ottawa—Internal USG’s Preparations) Draft meeting notes from the North-South working group at the Paris meeting, which delved further into the issues and the U.S. position, are in Department of State, Bureau of Economic Affairs, Office of Economical and Agricultural Affairs Files, Official Economic Summit Files, 1975–1991, Lot 93D490: 1981 Ottawa Summit—2nd Sherpa Meeting—Paris.