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

377. Information Memorandum From the Acting Assistant Secretary of State for Economic and Business Affairs (Lamb) to the Under Secretary of State for Economic and Agricultural Affairs (Wallis)¹

Washington, March 19, 1987

SUBJECT

• Secretary Baker’s Testimony Before the Obey Foreign Operations Subcommittee, March 17

Jim Baker spent 2½ hours on St. Patrick’s Day testifying before Congressman Obey’s Foreign Operations Subcommittee. In attendance were Congressmen McHugh, Lewis, Porter and Gray. The meeting was cordial although some tough issues surfaced.

[Omitted here is discussion of FMS debt.]

The Baker Plan²

Responding to suggestions that the Plan was a bank bailout, Secretary Baker emphasized that the Baker Plan was on track. In only 18 months substantial progress had been made, particularly in four areas: economic reforms, conditional lending, commercial bank lending, and debt restructuring.

The MDBs

Secretary Baker argued strongly for full IDA, IFC, and MIGA funding in FY–88. The Administration, Baker said, would oppose any legislation which aimed at discouraging MDBs from lending for production of surplus commodities (H.R.308) as detrimental to the MDBs. He noted the US has been successful in heading off these loans already. Obey emphasized that unless the Supplemental proposal was deficit neutral, it would have no chance of passing. For that reason he agreed to fund IDA and the African Development Bank and Fund arrears (offset by EXIM cuts) but could not fund the IFC arrears.

1. Source: Department of State, Executive Secretariat, S/S Files, 1987 Official Office Files for (E) Economic Affairs Allen Wallis, Lot 89D155: Briefing/Information Memoranda March 1987. Unclassified.
2. See footnote 3, Document 345.