Office of the Historian

181. Memorandum From Secretary of State Shultz to Secretary of the Treasury Baker1

Washington, February 15, 1985

Here are some comments on our Tuesday Breakfast subject matter. As I said, I think the real value of those breakfasts is their informal, bull-session nature but, at the same time, they could benefit from a little more structure.

Long-term issues that might get some attention at breakfast and then be followed by more directed work are:

1.
The reasons for the strength of the dollar, the prospects ahead, and potential actions that might be taken to do something about it. Perhaps the study you now have under way in this area needs to address what the implications are for the structure of U.S. industry if changes are not made.
2.
The strategy for handling the international debt problem has worked well, but it seems to me that this is the time to reexamine it. In particular, I think we need to explore ways to alleviate strictly “austerity” programs with measures that will encourage expansion.
3.
The objectives, the prospects and the way of handling the new trade round, as we discussed with Bill Brock and others yesterday, is a matter worth periodic discussion. There are all sorts of angles to this, as our discussion brought out. I think it is worth recognizing that most of our trade discussions over the past four years, and they have been extensive, have been on a bilateral or a U.S.-to-a-region basis.
4.
The problem of relating together foreign policy objectives in our economic programs, including U.S. foreign assistance, U.S Government credit programs, and our votes in the multilateral development banks.

An issue of immediate importance that needs attention is the management of the “debt crisis” discussions to be held in April at the Interim/Development Committees.2 We need to ensure constructive dialogue without catering to unrealistic debtor country expectations. We also need to project to the other countries a feeling for the breadth within the U.S. Government of how we approach these issues.

  1. Source: Department of State, Bureau of Economic and Business Affairs, Files of the Planning and Economic Analysis Staff, Lot 87D73: PR 2–2 Secretary’s Breakfast Items 1985. Confidential; Nodis.↩
  2. See footnote 4, Document 179.↩