Office of the Historian

345. Letter From the Deputy Secretary of State (Whitehead) to Secretary of the Treasury Baker1

Washington, September 16, 1985
Dear Jim:

I have always been an enthusiastic supporter of the World Bank. It is generally perceived around the world as a U.S. institution, headquartered in Washington and with a U.S. Chairman. With its ability to leverage its capitalization and with our relatively small equity participation, we get a very big “bang for our bucks” from our periodic capital contributions.

Last week I had lunch with Tom Clausen, Ernie Stern and Moeen Qureshi at the Bank. They expressed their mutual concern at the lack of enthusiastic support from the Administration and particularly at our lack of enthusiasm for IDA support and Bank capital increases.

As you know, Don Regan was never very enthusiastic about the Bank. I understand that last year in his speech at the Bank meetings he said something to the effect that the U.S. was not convinced that the Bank needed more capital.2 Tom feels that this statement, whether or not it was accurate, indicated a negative attitude which is hurting the U.S. image within the Bank and in broader international circles.

I promised Tom that I would urge you to include a more positive statement in your speech in Seoul this year.3 While I don’t believe you can say that the U.S. believes that the Bank needs more capital now, I do believe you can say that “the Administration will support an increase in the Bank’s capital when the time comes that it is needed.”4 This is not a real commitment because it leaves in your hands the determination of need, but it is a statement that would be most [Page 846] constructive in terms of morale at the Bank and image around the world.

I hope I’m not butting into something that’s none of my business.

With warm regards,

Sincerely,

John C. Whitehead5
  1. Source: National Archives, RG 56, Official Files of the Executive Secretariat, 1985, UD–11W, 56–88–79, Box 65, Classified Document Receipt, Sept ’85. Confidential; Personal; Eyes Only.↩
  2. Regan addressed the Interim Committee of the International Monetary Fund on September 22, 1984. See Hobart Rowen, “U.S. Interest Rates on Way Down, Regan Predicts to IMF Panel,” September 23, 1984, Washington Post, p. 20.↩
  3. Baker delivered a speech on October 8 at the annual meeting of the Boards of Governors of the World Bank Group and the International Monetary Fund in Seoul. He announced the Baker Plan in the speech. See Document 192. For further documentation on the Baker Plan, see the International Debt compilation of this volume.↩
  4. Baker highlighted this sentence and placed a checkmark in the right margin.↩
  5. Whitehead signed “John” above his typed signature.↩