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

145. Memorandum From the National Intelligence Officer for Economics (Ernst) to Director of Central Intelligence Casey¹

NIC 5440–83

Washington, July 27, 1983

SUBJECT

• Policy on the LDC Debt Problem

REFERENCE

• NSDD #96, 9 June 1983²

1. During the preparation of the NSDD on the international debt problem, a split developed between Treasury and the NSC Staff on how to handle strategic planning of policy options that might require substantial modification of the current ad hoc approach. In order to accommodate Treasury’s legitimate concern that information on formal contingency planning would leak, and consequently would scare financial markets, it was agreed that a small group with representatives from the most concerned agencies would be established under the general sponsorship of the SIG–IEP, but without formal status or agenda. After a good deal of foot-dragging on Treasury’s part, the group is finally going to meet next Monday, 1 August. Representation apparently will be at about the Assistant Secretary level. Harry Rowen will receive the invitation as your representative. No formal memoranda apparently will be circulated.

2. My impression is that the group is to examine the debt problem in a broad, relatively long-term framework so that the Administration can consider how various programs (financing, trade, etc.) may need to be modified, or if necessary new programs created, to deal with major contingencies as they arise. Specific policy recommendations will continue to develop through the IG and SIG–IEP.

3. CIA clearly has an important role to play in support of this effort. The NIE on the medium term political implications of the debt crisis, which is now in train, will address some of the most critical issues which have so far been untreated in the interagency work on the debt problem.³ DDI monthly assessments on the debt problem and building block analysis of major trends affecting the debt problem, such as the response of LDC exports to OECD economic recovery, also will be useful.

Maurice C. Ernst

1. Source: Central Intelligence Agency, National Intelligence Council, Job 85–01156R: Policy, Planning, and History Records (1981–1984), Box 2, Folder 29: International Debt/Finance—1983. Confidential.
2. See Document 143.
3. National Intelligence Estimate (NIE) 3–84, The Political Repercussions of the Debt Crisis in Major LDC’s, Volume I—Key Judgments, and Volume II—The Estimate, both dated November 7, 1984, are in Central Intelligence Agency, History Staff Files.