Office of the Historian

220. Letter From the Under Secretary of State for Economic and Agricultural Affairs (Wallis) to the President and Chairman of the Export-Import Bank of the United States (Bohn)1

Washington, June 4, 1987
Dear John:

Thank you for your letter of May 29.2 I am very intrigued by your creative suggestion to use Eximbank’s guarantee authority more broadly in the debt strategy.

I agree with your thesis that Eximbank and its foreign counterparts are not being used to their fullest potential in our international debt strategy. I believe the export credit agencies do have a potentially important role to play in this arena, while still fulfilling their essential [Page 559] mandates. I am heartened that, under your leadership, Eximbank is becoming a more dynamic player in difficult markets, while still managing to remain competitive. Another area where I am convinced we could perform better—and generate additional procurement for U.S. suppliers while supporting LDC adjustment efforts—is in cofinancing with the World Bank. I would welcome your views on how Eximbank could play a more active role in this regard.

Returning to your specific proposal, as you rightly point out it would have major implications for the OECD Arrangement;3 we would need to prepare the ground very carefully with other Participants to avoid undermining the Arrangement. I hope that obstacles in this regard can be worked out successfully.

We will also need to consider the budget impact of your proposal. The President’s credit reform proposal currently before the Congress would require appropriation of estimated subsidy elements in any guarantee program. Of course, gains from longer-term Eximbank lending may compensate for the higher budgetary costs.

Again, thank you for your thought-provoking letter. I look forward to resuming this dialogue when I return from the Summit.4 We think your idea could be a positive contribution, but there remain questions to be examined.

Sincerely,

Allen Wallis5
  1. Source: Department of State, Executive Secretariat, S/S Files, 1987 Official Office Files for (E) Economic Affairs Allen Wallis, Lot 89D155: Action Memoranda, June 1987. No classification marking. A handwritten June 4 covering note by Wallis reads: “Whitehead should hear about this—he’ll be interested. Send him copies of Bohn’s letter & mine. AW.”↩
  2. Bohn’s letter is attached but not printed. Bohn proposed that the Eximbank could play a wider role in dealing with the LDC debt issue. Specifically, he raised that the Bank had a “guarantee authority of about $4 billion which we are not likely to use this year,” adding that the Bank “could use this authority to guarantee the borrowings by selected LDC-debt problem countries on a fixed rate, or floating rate, long-term (25–30 years) basis.”↩
  3. A reference to the OECD Export Credit Arrangement.↩
  4. A reference to the Venice Economic Summit, which took place June 8–10.↩
  5. Wallis signed “Allen” above his typed signature.↩