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

208. Information Memorandum From the Assistant Secretary of State for Economic and Business Affairs (McMinn) and the Director of the Policy Planning Staff (Solomon) to Secretary of State Shultz¹

Washington, October 24, 1986

SUBJECT

• The International Economy for the Next Two Years: An Integrated Approach

EB and S/P have developed the following three part strategy for advancing the President’s international economic policy objectives for the next two years. In general, our proposed strategy is a continuation and strengthening of our current policies. These recommendations follow-up on the August Policy Planning Staff exercise identifying priority foreign policy initiatives for the last two years of the Reagan Administration.²

[Omitted here are Element I and Element II.]

ELEMENT III: Improve the international financial picture through continued vigorous implementation of our debt and development strategy.

Recommended Administration actions:

This is an area where continuity is the watch word. Our existing debt policy is a good one. We must bear in mind that what we do concerning protectionism, U.S. domestic reform, and encouraging the FRG, Japan and other lenders to provide more capital to developing countries offer the best hope for additional resource flows to LDCs.

1. We should be firm in selling our current debt policy in all available international fora, such as UNCTAD VII³ and the fall meeting of the Economic Commission for Latin America and the Caribbean (ECLAC).⁴

2. We should continue to encourage increased IMF/World Bank cooperation and coordination.

3. While the Administration should not take a lead role in advocating creative financing measures, we should focus on:

— removing unnecessary regulation or other impediments to sound financing processes and

— avoiding proposals which would set unacceptable precedents in areas such as U.S. domestic agricultural loans.

1. Source: Department of State, Executive Secretariat, S/S Files, 1986 Official Office Files, Action/Briefing/Information/Through Memoranda,/Chron Files/Memoranda to the Secretary Handled by (E) Economic Affairs Allen Wallis, Lot 89D156: Through Memoranda, October 1986. No classification marking. Drafted by Sandra O’Leary (S/P) and Fredi Bove (EB); cleared by Kauzlarich. Sent through Wallis. Wallis wrote at the top of the memorandum: “Item 4 (p. 3) requires careful, cautious thought. Was discussed at length in [illegible] SIG–IESE [SIG–IEP?] with McFarlane strongest advocate. Has real possibilities but real dangers. AW.” The full text of the memorandum is scheduled for publication in Foreign Relations, 1981–1988, vol. XXXVII, Trade; Monetary Policy; Industrialized Country Cooperation, 1985–1988.
2. Not found.
3. UNCTAD VII was scheduled to take place from July 8 to August 3, 1987, in Geneva.
4. Presumably a reference to the 19th session of the ECLAC Committee of the Whole, scheduled to take place from August 13 to 14, 1987, in New York.