Office of the Historian

160. Briefing Memorandum From the Chairman of the Policy Planning Council (Bosworth) to Secretary of State Shultz1

Washington, March 31, 1984

SUBJECT

  • Your Breakfast With Bud McFarlane and Don Regan on International Debt Management, Monday, April 2

I agree with EB’s main point: that Treasury-State collaboration on debt problems is an adequate bureaucratic approach and a new coordination process through the NSC is not necessary.2 It would also be useful to have a Treasury-State assessment of what adjustments in our debt strategy may be needed in the medium term.

In terms of actual operation of Treasury-State cooperation on debt we do need more consideration from Don Regan and Treasury on three points. [Page 410]

1.
We are, with reason, more worried than Treasury about some of the second-tier LDCs (Peru, Chile, the Philippines, Nigeria, Morocco), whose collapse would not threaten the international financial system—Regan’s main concern—but would cause major foreign policy problems.
2.
We believe that some increase in World Bank non-project lending to these countries offers the best chance of avoiding serious problems. (S/P and EB are working on a specific proposal for you, which involves Bank policy decisions, not new appropriations: Regan will be skeptical.)
3.
As EB points out, Treasury has not shared much information on what happens in the meetings of the G–5’s “debt deputies.”

All of these problems can be fixed with Regan and Treasury giving more recognition to our legitimate special concerns within the existing structure of Treasury-State collaboration.

In addition, I think we have an internal communication problem that sometimes weakens our role vis a vis Treasury. E, EB and the Regional Assistant Secretaries all have an interest in any specific debt case. Treasury tends to go to whichever might give the desired response in any specific case.

Therefore, if all three do not coordinate quickly or have a common understanding of your views, we are going to undercut ourselves. I am not in the best position to judge our performance here, but I sense that our working effectively internally is at present at least as important as our liaison with Treasury.

  1. Source: Department of State, Executive Secretariat, S/P Records, Memoranda/Correspondence From the Director of the Policy Planning Staff to the Secretary and Other Seventh Floor Principals. Lot 89D149: March 16–31, 1984. Confidential; Super Sensitive. Drafted by Paul Boeker (S/P) on March 30. A stamped notation reading “GPS” appears on the memorandum, indicating Shultz saw it.↩
  2. See Document 158.↩