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

17. Telegram From the Embassy in Belgium to the Department of State¹

7033.

Brussels, May 22, 1981, 1922Z

SUBJECT

• U.S./EC Consultations—North/South.

1. In relatively brief discussion, EC (Denman, Loeff) expressed understanding for U.S. need to review policy toward the developing world and asked for clarification of administration emphasis on bilateral aid and private enterprise. On Global Negotiations, Loeff admitted that EC shares some of the same doubts as the U.S. about the efficiency and likely outcome of Global Negotiations, but it believes that political dimension of the negotiations should be given more weight. While the EC agrees with the U.S. observation that there is a wide diversity of interests among developing countries, we must also realize that these countries act in concert and that they attach considerable political importance to the global umbrella which the negotiations provide. If we hope to obtain their support on other issues (such as Afghanistan) it may be useful to address positively their interest in Global Negotiations.

2. Under Secretary Rashish explained the purpose of the U.S. policy review and affirmed continued U.S. interest and concern with the problems of the developing world. He pointed out that the 1982 U.S. AID budget had increased by 18 percent in nominal terms over the previous year. Rashish said that U.S. emphasis on bilateral aid does not mean U.S. will ignore multilateral institutions, which will continue to play an important role in the development process. He noted that the administration had scrupulously included funds in the budget to meet all U.S. commitments to the international financial institutions. On question of a World Bank energy affiliate, Rashish pointed out that the U.S. supports increased emphasis on energy investment in developing countries and that the issue involves the institutional framework for channeling such investment. Commission (Meyer-DGVIII) said EC favors energy affiliate because it represents a way to bring OPEC to accept some responsibility for energy development in non-OPEC LDCs. Denman summed up by saying that EC sees a role for the private sector in LDC development but it is necessary to have an official umbrella in order to encourage private projects to serve development needs. He was heartened that U.S. was not going to leave everything to the market.

Lamb

1. Source: Department of State, Central Foreign Policy File, Electronic Telegrams, D810244–0607. Confidential. Sent for information to all EC Capitals and USUN.