150. Memorandum From Norman Bailey and Roger Robinson of the National Security Council Staff to the President’s Assistant for National Security Affairs (McFarlane)1
SUBJECT
- International Debt Crisis
On September 14, Marty Feldstein and I accompanied Judge Clark to see the President. Roger was in attendance as he went up on a separate subject. The President agreed that the seriousness of the international debt situation from the financial, economic and security standpoints justified the establishment of a small, Cabinet-level group [Page 388] to monitor the situation and formulate contingency plans. I formulated an NSDD to this effect, coordinated with Marty (Tab I).2
About two weeks later, Judge Clark met with Don Regan who basically said that no such group was necessary. The Judge withdrew the proposal.
On October 7, the Judge called Norm into his office and showed him the message from the chief of Figueiredo’s civil household sent through Henry Kissinger (we do not have a copy of the sensitive document) predicting imminent social and political chaos and pleading for immediate help.3 We were tasked to prepare an emergency action plan for Brazil and a contingency plan for a debt crisis in general by noon, October 8. (You have these papers.)4 We were specifically instructed not to discuss this matter with anyone in preparing the package.
When the papers were completed, they were sent to Treasury. Unfortunately, there may have been some confusion at Treasury concerning why this emergency package was generated, and our papers were sent back with detailed criticisms of both efforts as being unnecessary, alarmist and unworkable. (You have copies of Treasury’s replies.) In the meantime, Regan sent a memo to the President on the IMF/IBRD meetings in Washington September 27–30 in which he said that the Brazilian situation had improved greatly (you have seen this).5
In subsequent discussions with Marty Feldstein and relevant CIA analysts, they disputed Treasury’s critique of our work and basically supported the viability of our proposed approach had this been an actual emergency which required immediate confidence-building measures. That is where we stand now. For your reference we have attached the following reports and papers:
Tabs II, III and IV: Recent CIA reports on the debt crisis.6
Tabs V and VI: Recent speeches by both of us. Norman’s is an excerpt from a speech given at the European Forum Conference in Alpbach, Austria, August 31, 1983; Roger’s was a classified presentation before 300 CIA analysts at Langley.7
[Page 389]Tab VII: For general background, the debt presentation given to the President on June 16.8
We continue to believe the NSDD represents the President’s wishes and should have been sent to him for signature whether Don Regan objected or not. We believe that the debt crisis is a clear and present threat to the national security, and we believe it is not being properly addressed. Further, it is our view that it will not be managed properly until there are personnel changes at Treasury.
- Source: Reagan Library, Executive Secretariat, NSC National Security Decision Directives (NSDD), NSSD 84 [Safeguarding National Security Information]; NLR–751–5–32–1–6. Secret. Sent for urgent information. A stamped notation on the memorandum reads: “RCM Has Seen.” Another stamped notation on the memorandum reads: “Noted.”↩
- Tab I is not attached. A copy of the draft NSDD establishing an oversight group on international debt is in the Reagan Library, Norman Bailey Files, Chronological File, Chron 09/15/1983–09/19/1983.↩
- An unknown hand wrote “Attached Tab A” in the right-hand margin. Tab A is not attached.↩
- An unknown hand drew a line from the word “papers” to the margin below the paragraph and wrote “Tab B.” Tab B is not attached.↩
- See Document 300.↩
- Tabs II, III, and IV are not attached.↩
- Tabs V and VI are not attached.↩
- Tab VII is not attached.↩