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

169. Memorandum From the Assistant Secretary of the Treasury for International Affairs (Mulford) to Secretary of the Treasury Regan¹

Washington, May 24, 1984

SUBJECT

• Debt Rescheduling Negotiations

The importance of successfully managing the various debt problems facing major LDC debtors is obvious. One serious weak point in our handling of these problems is the division of labor between State and Treasury in connection with official (Paris Club) debt-rescheduling negotiations. Treasury does all the substantive work, but State represents the USG at the negotiating table.

State’s current negotiator, Elinor Constable (the senior DAS in the Economic Bureau) is a skillful negotiator. However, she is not supported by a staff which deals with the debtor countries on a day-to-day basis. Furthermore, State is not in close touch with the other players (IMF, commercial banks, G–5 finance ministries).

It now appears that Elinor may be taking an overseas assignment this summer. Thus we are presented with another opportunity to press for having the negotiating responsibility shifted to Treasury.

To ensure that we are successful this time, I am prepared to designate a senior OASIA official, and as needed, a deputy assistant secretary, as the USG negotiator, and to provide the necessary support to back up this work. In addition, I have concluded that we must be prepared to seek White House support for this shift if Secretary Shultz continues to fight it.

RECOMMENDATION: that you seek Secretary Shultz’s concurrence to shift to Treasury responsibility for negotiating all debt-rescheduling arrangements involving USG direct and guaranteed credits. (Talking points attached.)²

1. Source: National Archives, RG 56, Records of the Office of the Secretary of the Treasury, Executive Secretariat Official Files, 1984, UD–05W13, 56–86–65, Box 47, Memo to the Sec May 84. Limited Official Use. Sent through Sprinkel.
2. The talking points are attached but not printed. Regan did not indicate his approval or disapproval of the recommendation. In a May 29 memorandum to Mulford, Hicks wrote: “Secretary Regan reviewed your May 24 memo regarding debt rescheduling negotiations, and while he agrees that the negotiating responsibility properly belongs in Treasury, he does not want to personally raise the issue with Secretary Shultz at this time. Instead, he suggests that you, Beryl Sprinkel, and Tim McNamar discuss how to approach State and/or NSC at a lower level.” (National Archives, RG 56, Records of the Office of the Secretary of the Treasury, Executive Secretariat Official Files, 1984, UD–05W13, 56–86–65, Box 47, Memo to the Sec May 84)