Office of the Historian

251. Memorandum From Stephen Farrar of the National Security Council Staff to the President’s Assistant for National Security Affairs (Powell)1

Washington, October 20, 1988

SUBJECT

  • Your Breakfast with Secretary Shultz and Chairman Sprinkel, 7:30 A.M., Friday, October 21, 19882

The agenda for Friday’s breakfast includes some of the issues discussed last Friday with Secretary Brady.3 The agenda is as follows.

[Omitted here is information on Shultz’s views on the international position of the U.S. economy]

2. LDC Debt and the Role of the International Financial Institutions

As he indicated last Friday, Secretary Shultz believes that the U.S. needs to re-evaluate the role of the IMF, and with it the debt strategy.4 The IMF has evolved from its original mission as a neutral provider of short-term finance to its current role as debt ringmaster. In his view, the IMF staff produces “classroom” programs that do not work because they have little political sophistication. The result is that they merely push debt-servicing problems a year or two down the road. The U.S. compounds the problem by arm-twisting the IMF into hastily drawn programs with high priority countries (e.g., Egypt).

Sprinkel and Meltzer are likely to be much more critical of the IMF than was Secretary Brady last week.

You might note the need to coordinate an Administration position. This process could logically be triggered by the paper on the IMF that Secretary Brady said was underway in Treasury and would be done in “about a week.”

[Omitted here is information on economic issues not focused on debt.]

  1. Source: Reagan Library, Stephen Farrar Files, Chronological File, Farrar Chron October 1988; NLR–177–8–33–1–0. Confidential. Sent for information. A stamped notation on the memorandum reads: “Natl Sec Advisor has seen.”↩
  2. Minutes of an October 21 meeting have not been found. A copy of the Department of State’s October 19 briefing memorandum provided for this meeting from Larson to Shultz is in the Department of State, Executive Secretariat, S/S Files, 1988–1989 Official Office Files for (E) Economic Affairs Allen Wallis, Lot 89D154: Through Memoranda September/October 1988.↩
  3. Minutes of an IEP breakfast on October 14 have not been found. An October 13 memorandum from Farrar to Powell provided an agenda for this meeting. (Reagan Library, Stephen Farrar Files, Chronological File, Farrar Chron October 1988)↩
  4. See footnote 3, above.↩