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

379. Memorandum From the Assistant Secretary of the Treasury for Legislative Affairs (Harman) to Secretary of the Treasury Baker¹

Washington, August 5, 1987

SUBJECT

• Status of MDB Authorization Legislation

Action Forcing Event

Chairman St Germain wants to see greater Administration and Republican visibility in support of the MDB authorizations before he allows a full Committee markup. It is important that we honor the authorization process for as long as possible in order to avoid objections to placing the legislation in the Continuing Resolution.

Background

In recent years MDB replenishments have been authorized through annual Continuing Resolutions rather than regular order. We expect that to be the outcome this year as well.

Nevertheless, we must go through the motions of supporting the normal Congressional authorization process in case a) the Authorization Committees actually want to take a bill to the floor, or b) they acknowledge their own inability to produce legislation and thereby indicate they will not object to the Appropriation Committees using the C.R. as the vehicle for authorizing as well as funding the MDBs.

The Senate Foreign Relations Committee has reported out a bill (S.1274) that provides authorization for U.S. participation in IDA VIII, the Asian Development Fund (ADF), the African Development Bank (AFDB), and approval of the Inter-American Development Bank (IDB) capital merger. Authorization to join MIGA and to approve changing the IBRD Articles (to lower the Articles veto threshold) is not in the Senate bill. We do not believe the Committee will take the Foreign Aid Authorization bill to the floor, and do not expect them to object to the C.R. approach with the Senate Appropriations Committee.

The House Banking Subcommittee on International Development Institutions and Finance (chaired by Walter Fauntroy) has reported out a bill (H.R. 2403) by a 10–2 vote that authorizes all of the Administration’s MDB requests. St Germain, who has never been an MDB fan, is showboating and has probably been trying to position himself to deal with you on issues of interest to him in exchange for his scheduling an MDB markup.

St Germain and his staff say they will not schedule a markup due to:

a) lack of Administration interest in legislation (i.e., Secretary Baker has not called me on this); and

b) lack of Republican support to the MDBs (wants to see a Floor Whip count of Republicans).

He is also saying he will object to providing the MDB authorization requests through the C.R. approach.

On substance, St Germain has no basis to argue lack of Administration interest in the MDBs, and a House Floor Count of Republicans is not necessary for him to schedule a Full Committee markup. We will deliver Republicans in Full Committee, just as we did in Subcommittee.

St Germain’s resistance to holding a markup may lessen as outside issues such as FSLIC and housing progress. Nevertheless, it is now appropriate to increase the visibility of Administration support for the MDBs.

Attached at Tab A is a letter from you to St Germain that indicates the MDBs are one of your top priorities and asks him to schedule a markup early in September.² In addition, we also recommend the following to indicate visible and strong Administration support:

○ A Presidential letter to all members of Congress shortly after their summer recess indicating strong support for IDA and the MDBs generally. It could be argued that the timing for such a letter, on the eve of the President’s speech to the Bank/Fund annual meetings, is propitious.³

○ A meeting between you and Chalmers Wylie and other Republican members of the Banking Committee, not only to demonstrate support for IDA, but to urge them to stand firm on keeping MIGA in the bill without “killer” conditions.

Depending on how this issue progresses, you may want to consider later a meeting with House Republicans. The above action suggests at least one meeting and two letters. We believe that this level of involvement is appropriate, and necessary to demonstrate Administration support for the institutions and create pressure for the authorization and appropriation process to progress.

Recommendations:

That you sign the attached letter urging a markup and authorize sending a copy to all members of the House Banking Committee.⁴

That you approve our efforts to generate a Presidential letter in order to show broad Administration interest in these authorizations.

That you agree to a meeting with Chalmers Wylie and other Republicans on the House Banking Committee at an appropriate time in September, if necessary.

1. Source: Washington National Records Center, RG 56, Executive Secretariat, Congressional Files, 1987, 56–90–29, Box 39, Memos to the Secretary, International Affairs, July–Aug ’87. No classification marking. Sent for action. David Malpass initialed for Harman.
2. The August 5 letter is attached but not printed.
3. In a September 18 memorandum to Howard Baker, Baker wrote that he believed it would be worthwhile for Reagan to send a letter to members of Congress requesting support for funding the MDBs and the U.S. share of the replenishment of IDA VIII. A copy of this memorandum is in the Washington National Records Center, RG 56, Executive Secretariat, Congressional Files, 1987, 56–90–29, Box 33, White House Folder (September) ’87. A draft of the letter is attached to the memorandum. Reagan addressed the joint meeting of the IMF and World Bank Boards of Governors on September 29. For the text of his address, see Public Papers: Reagan, 1987, Book II, pp. 1089–1094.
4. Baker initialed his approval of this and the subsequent recommendations. See footnotes 2 and 3, above. Zoellick’s August 5 handwritten note below the recommendations reads: “The Secretary suggested that David Mulford handle the last function, if possible. RBZ.”