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

301. Minutes of a Senior Interdepartmental Group–International Economic Policy Meeting¹

Washington, November 23, 1983

[Omitted here is discussion of export credits and the debt crisis; see Document 152.]

U.S. Participation in IDA VII

Regan recalled the history of IDA VI, pointing out that the Administration had assumed responsibility for its predecessor’s generous commitment. Recent funding has been about $950 million per year. The IBRD initially spoke of an $18 billion figure for IDA VII, later reducing the number to $16 billion. This is much more than is feasible for us. Everyone is trying to pull us up from $9 billion (i.e. a $750 million annual U.S. appropriation for three years). State believes $9 billion is inadequate. If we compromised at $12 billion, we would have to get $950 million from the Congress,² the precise number we have been having trouble with. Regan went on to note that we need a position for a December 9 IBRD meeting.

On congressional attitudes, Regan noted that Hatfield, Mathias, Percy and some others say $750 million is too low. The Republican leadership, on the other hand, is negative on IDA. Leland added that leading conservatives, including Kasten and Kemp think they have a deal at $750 million. They know that is the number in the budget.

Wallis agreed that the Hill problem is real, but stressed that all other donors want a higher number. He stressed that the need for a larger replenishment is strong. Stockman elaborated on the mood in Congress, arguing that a high IDA figure gives the Democrats leverage over security assistance. Do we want them running our foreign policy?

McPherson said the reality is that we need both Republicans and Democrats to pass our foreign aid program. Compromise between security assistance levels and IDA levels is inevitable. He said he did not wish to argue for a particular number. The IBRD is doing good work. It’s on the cutting edge in Africa, using structural adjustment loans to encourage policy change.

In response to a question from Brock about IDA’s effectiveness, Wallis pointed out that we considered the overall program worthwhile. At the level of individual projects or loans, there were bound to be some that were better than others. So far as the Hill is concerned, he said that IDA is part of the price we pay for the security assistance appropriations.

Porter said his contacts at the IBRD thought the Bank could make do with $9 billion. The effect would be to fund only the best projects. He, too, mentioned commitments to individuals in Congress to a $750 million figure. Finally, he said that we have been using that number with other countries. The wise and prudent course is to stay where we are and stand by what we have said.

Regan read a letter from the U.S. IBRD Executive Director, Jim Burnham, critical of IDA and recommending a $750 million U.S. commitment (Burnham letter attached).³

Regan said we should have an NSC debate before December 9, based on a paper which would state that most SIG participants prefer $750 million.⁴ He said we could test Hill attitudes again, but that he personally doubted we could get more than $750 million. One alternative for the negotiation would be to tell the other participants that we are willing to commit to $750 million, but are willing to get more if we can. Regan said he was trying to keep faith with State on this issue. Leland squeezed in the remark that $750 million will be our number for obligation purposes. Brock said we should not mislead other donors about our possibilities.

1. Source: Department of State, Files of the Under Secretary of State for Economic Affairs, W. Allen Wallis, Chrons; Memo to the Secretary/Staff and Departmental/Other Agencies; Memos to the Files; White House Correspondence, 1987–1987, Lot 89D378: Chron File–November 1983. Secret; Sensitive. Drafted by Doris Lamb (EB).
2. According to a different set of meeting minutes, Wallis noted that “Shultz believes that a U.S. contribution on the order of $950 million would be desirable.” (Reagan Library, William Martin Files, NSC Chron File, NSC Chron 12/02/1983–12/11/1983; NLR–348–9–44–2–6)
3. Attached but not printed.
4. See Document 302.