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

41. Memorandum From the Acting Deputy Assistant Secretary of State for International Economic and Social Affairs (Streeb) to the U.S. Special Negotiator for Economic Matters (Meissner) and Henry Nau of the National Security Council Staff¹

Washington, September 3, 1981

SUBJECT

• Observations on Next Steps on Global Negotiations

The following are some observations on the general question of the U.S. position on Global Negotiations—whether or not we should return to the preparatory process and whether we should propose specific initiatives either to introduce into the GN or as a separate and alternative approach.

As you know, I have since the start had a very negative attitude toward GNs as I felt we would inevitably become bogged down in a process whose outcome was unpredictable and in which our allies would consistently make compromises with the G–77 unacceptable to us. In the end, the political costs would be even higher than if we had not engaged in the process in the first place. (I understand this to still be the Treasury view.) Likewise, I was one of the last holdouts arguing that, for much the same reasons, it was better for us not to get involved in the Cancun process. However, since much has changed in the meantime and we have agreed to go ahead with Cancun, I have tried to take a fresh look at the situation, particularly in light of the various papers that you have prepared. Since I was not following the GN issue on a day-to-day basis this last year but rather on a more general level, I was quite surprised, looking back through IO’s files, at the mass of memos in which the same arguments were repeated over and over on the pros and cons of GNs. In trying to put some thoughts down on the subject, I certainly approach it with a strong sense of deja vu.

I hesitate to even mention our concerns with GNs since these are all familiar arguments, but in order to comment on the options, I would like to mention very briefly several of our principal concerns.

1. Objectives and guidance. The degree of specificity of the objectives and guidance was never resolved. The G–77 obviously wanted to structure them in such a way that the negotiations in the separate fora would be directed toward specific targets which were all old favorites of the G–77. We, on the other hand, did not want the conference to specify objectives and guidance in a way which prejudged the outcome, confining them rather to general problems of development which could then be elaborated in the individual agencies. A review of the last version of the agenda reveals a mixture of issues where ongoing work needs no new push (commodities), those basically calling for new resources which we are not about to accept (new resources for energy development), and those just outright unacceptable (terms and conditions for the use of IMF resources). We were not, of course, the only ones with problems with this agenda although we had accepted much of it with the greatest difficulties in the monetary/financial area.

Returning to GNs would in the first instance require addressing the issue of the nature of Phase One.² At a minimum, we would have to make absolutely clear to the G–77 that we would insist on our previous position that the conference itself simply identify problem areas and not become the first stage of negotiations by attempting to specify the measures for consideration in negotiations in the specialized fora,³ e.g. action to assist the LLDCs “through the allocation of adequate resources to this end” or accelerating industrialization “through the restructuring of world industry.”

2. Phase III—The Package Agreement.⁴ Even more difficult is how to resolve the problem of whether the conference can renegotiate the results of the work in the individual fora in Phase Three. So long as the opportunity for negotiation is held open, most difficult issues will not be resolved during the negotiations in Phase Two—the G–77 always prefers to pass difficult issues on to a higher body rather than compromise at a lower level. We had seen Phase Three as merely an opportunity to put a seal of approval on the work in the individual fora signaling that all governments were committed to all aspects of the separate negotiations. (Bob Hormats has alluded to this in his paper to the Secretary where he suggests Phase Three would be “imparting an international political flavor to the results.”) Any decision to re-enter the GN process would thus also have to include a clear indication that we stood firm on our position that the conference could do nothing which would in any way prejudice or casts doubts upon the competence, mandate and powers of specialized agencies.⁵

In sum, as far as GNs are concerned, nothing has really changed all that much. We may want to broaden the agenda and employ different procedures (discussed below), but our principles will, if anything, be more vigorously defended than ever.

Footnotes: In the discussion of the GN background, I would differ with the comments on page 3 of Henry’s revisions to the Meissner draft.⁶ We did not enter the GN process because we thought the preparatory process would drag out so long that we would never get agreement. The decision to push ahead was based both on political grounds and the thought that such discussions of development issues could in fact be very educational and potentially end up with desirable results.⁷ Souring on the GNs began only when it was apparent that the G–77 was hell bent on turning the GA into the institution to implement the NIEO, to reserve final negotiations to the body where they have the majority and when it was apparent they would not broaden the agenda to include issues close to our heart or, if accepted, insist on prejudicial wording of them.

I think we should not overplay the idea that the GNs would imply the creation of a new institution.⁸ The G–77 can, of course, be expected to try to create some mechanism (institution) for monitoring the results of the negotiations if ever concluded.⁹ But we should have support in arguing that between the specialized fora (especially UNCTAD) and the Second Committee, there is sufficient institutional structure for any follow-on.

Comment on the Options¹⁰

After Cancun: For now I think we can set the idea of a Cancun follow-on to the side. As has been suggested, a Cancun follow-on could easily fit in with the GNs as a forum for taking stock or giving new impetus where things have bogged down;¹¹ or it could be seen as an alternative if the GNs never get off the ground. But I do not see it as an alternative to GNs that we should propose at the outset.¹² While I agree with the advantages you cite for repeating such consultations every several years, it is highly doubtful that it could play a useful role in isolation from an active global dialogue underway in one forum or another. True, it can be argued that discussions in the UNGA, IMF, UNCTAD, etc. are themselves a global dialogue for which the Cancun-22 could serve as an “overview” body. But I still feel this is a last resort.

Other Options: Therefore, I prefer to concentrate on two options: namely, the “don’t do anything option” and the “return to Global Negotiations” option.¹³

Turning down GNs, as pointed out in the Treasury memos, has two key advantages: (1) it reduces the risk of paying an even higher political price further down the road when we will inevitably find ourselves at odds in almost every forum on one or two favorite issues of the G–77; and (2) work is currently proceeding in each of the specialized agencies, perhaps at the pace and limits of what we are prepared to accept. In fact, our focus for the moment is on reorienting some of these programs in the UN agencies to meet our objectives, and it is doubtful that any negotiations in and of themselves can further that process. The first of these advantages has its counterpart disadvantage. The immediate and enduring political impact on our relations with both developed and developing countries may be underestimated. The difficulty with this argument is that it is so hard to quantify. How does turning down GNs stack up against the impact of our position on such political issues as southern Africa, Israel, and El Salvador? There is genuine concern around here that our isolation for the moment on several key political issues combined with our position in the LOS, NRSE, LLDC conferences, our views on budgets and voluntary contributions to various agencies, and turning down GNs would find us with little leverage to garner support on many issues in the UN system ranging from sensitive political matters to the placement of American citizens in senior positions.¹⁴ We have noted several instances recently in New York where we were out voted with many representatives suggesting privately that they were simply fed up with the U.S. attitude. (We were not reelected to the ECOSOC Statistical Committee. ECOSOC supported, against our strong opposition, a move to request release of Abu Eain, a Palestinian terrorist on trial in the United States. We were unable for the moment to stop the Group of 24 from recommending inscribing Puerto Rico on the agenda.) I would not want to exaggerate the linkage since one could make a good argument that this is just a manifestation of the time honored desire to get at the guy on the top. Nevertheless, I do feel that we have to be cautious about focussing too much on the bilateral while ignoring the multilateral fallout.

Returning to the GNs. In light of my comments in the first section and recognizing the political fallout from not accepting the GN process, we should look at the conditions under which we will return. Answering that question requires an appraisal of our chances of reopening the procedures and agenda since it is inconceivable to me that we will simply pick up with the last version of the von Wechmar texts. (Incidentally, many in the G–77 are just as unhappy with the compromises their representatives made and are eager, obviously for different reasons, to reopen the texts.) This boils down to defining what we want on procedures and agenda and beginning to try to sell our position—if we run up against a stone wall, we may just as well give up now. Certainly every attempt we make will be received initially with skepticism. We will be portrayed as either trying to introduce new elements designed to guarantee a breakdown or staking out a nonnegotiable position along our previous lines. To overcome this, we need a program which will direct the approach the President takes at Cancun so that by the end of the summit he can judge the willingness of the developing countries to break out of what Bob has described as their “mind set.”

The first and most important issue is the agenda. If we are comfortable with the topics and the terms under which they are remanded to the individual agencies, we may find it easier to find a compromise on the role of the conference. One option we had always held in reserve was to go to a more general agenda with more detailed issues and measures left to the individual fora.¹⁵ In a sense, the conference would be doing little more than giving high-level approval to ongoing discussions, but that shouldn’t concern us and we would hopefully ensure that our issues were given equal treatment.

As to the agenda itself, I think we are agreed that our main thrust will be to ensure that the agenda is expanded in such a way that it is not dealing exclusively with government to government transfer of resources, but also covers the environment for development,¹⁶ to include domestic policies and the openness to the private sector, and some recognition of differentiation. This is what the President can probe at Cancun without even giving a signal one way or the other on the GN. He can determine how receptive the G–77 is to getting away from the NIEO, broadening the area for discussion and dealing seriously with the substance rather than the politics of developing countries’ problems.

Comment on Initiatives

Another variant on the above options is to launch new initiatives in lieu of GNs. The approach taken in the latest draft of the speech on relations with developing countries, i.e., starting the process at the regional level, is an excellent idea and enjoys wide support in the Department including IO. One could even build into it a global review after a series of meetings had been held at the regional level.¹⁷ While some issues such as access to external finance, transfer of technology, and trade barriers may be more global than regional, most problems are country- or regional-specific. The difficulties in selling this approach are obvious. It will signal the end of the NIEO for the G–77.¹⁸ Rather than dealing with the international economic order, it seeks to deal with individual problems; rather than enabling the G–77 to use their one-country one-vote advantage in the UN to gain new clout on economic issues, it keeps them fragmented; rather than lead to recognition of bloc unity, it can be seen as the first step towards further division opening the door to graduation.

Where I Come Out

1. I reluctantly conclude that a rejection of some new form of global dialogue is politically unacceptable and that a follow-on to Cancun itself is insufficient. Therefore, our main interest is in broadening the scope of the dialogue and making it more realistic.¹⁹ As I suggested above, this should be the President’s main objective at Cancun.

2. We should conduct at least some of the discussions at the sub-regional level. We should be prepared to agree that some of the issues are global—fortunately, for these, we tend to have existing global institutions such as the IMF and GATT.²⁰ Receptivity to this concept can be tested through the LDC speech as presently drafted or, if not given, through consultations in New York and Paris-OECD.²¹

3. If the President is satisfied that the developing countries are serious and are prepared to accept a global dialogue on our terms and if the reaction to our regional approach is not totally negative, then we should agree to return to the process at the UNGA.²²

4. Since it is difficult to agree on an agenda with the full membership of the Second Committee or the COW, we could use the Cancun-22 as a working group of the Second Committee and commission it to prepare an agenda to submit to the full body.²³ In this stage, we would determine whether there are some broad issues which should be dealt with principally on a global basis. No special conference is required for this. The UNGA can hold a special session whenever the 22 are prepared to submit the agenda for approval.²⁴ If necessary, we could accept a special conference for cosmetics.

5. At a specified future date, the Second Committee (or the conference) would review the work at the regional levels and determine whether further action is required in any of the specialized agencies or by the UN itself.

6. Finally, the UNGA (or conference) would give its approval to the results which it could cast in the form of a resolution and, hence, a package. Under UN procedures, nothing precludes the G–77 from reopening anything it wants to. This just would not be preordained in the procedures.

This approach, which incorporates many of Chuck’s ideas as I understand them, may be so complex that it is foredoomed to failure. Virtually every element involves far more flexibility from the developing countries than they have ever demonstrated before. It also implies a willingness by the United States to open up discussion on some issues we don’t like and ultimately to follow through on measures even if they involve new funding. Nevertheless, this scenario at least gets us back into the process and provides an opportunity to share the blame for failure if other countries are unprepared to make compromises. At a minimum, it should be good for another 3–4 years; perhaps in that time our budgetary situation will have improved and the developing countries will have come to realize that they cannot just rely on ideological concepts as a way to overcome their development problems. Fat chance.

1. Source: Reagan Library, Douglas McMinn Files, Subject Files, Global Negotiations; NLR–369–3–23–2–2. Confidential.
2. Most likely a reference to the UN General Assembly process, which follows five cycles: debate, negotiation, decision, implementation, and reporting. “Phase One” likely refers to the debate cycle.
3. Nau underlined “would have to make absolutely clear to the G–77 that we would insist on our previous position that the conference itself simply identify problem areas and not become the first stage of negotiations by attempting to specify the measures for consideration in negotiations in the specialized fora.”
4. See footnote 2, above.
5. Nau underlined “conference could do nothing which would in any way prejudice or casts doubts upon the competence, mandate and powers of specialized agencies.”
6. Not found.
7. Nau underlined this sentence.
8. Nau underlined “creation of a new institution.”
9. Nau underlined “some mechanism.”
10. A reference to the options paper on Global Negotiations. See Document 42.
11. Nau underlined “follow-on could easily fit in with the GNs as a forum for taking stock or giving new impetus where things have bogged down.”
12. Nau underlined “do not see it as an alternative to GNs that we should propose at the outset.”
13. Nau underlined “‘don’t do anything option’ and the ‘return to Global Negotiations’ option” and wrote: “kind of tilts it, doesn’t it?” in the right-hand margin next to the sentence.
14. Nau underlined this sentence and highlighted it in the right-hand margin.
15. Nau underlined “to go to a more general agenda with more detailed issues and measures left to the individual fora.”
16. Nau underlined “also covers the environment for development.”
17. Nau underlined “it a global review after a series of meetings had been held at the regional level.”
18. Nau underlined “It will signal the end of the NIEO for the G–77.”
19. Nau underlined “in broadening the scope of the dialogue and making it more realistic.”
20. Nau highlighted this sentence, wrote “sub.-reg?” in the right-hand margin next to it, and underlined “issues are global.”
21. We shouldn’t overlook the possibility of using the Second Committee as a vehicle to test receptivity to our ideas on issues and procedure. The IMF/IBRD meeting can also be exploited for this purpose. [Footnote is in the original.]
22. Nau circled “on our terms,” wrote: “which means SAs?” in the left-hand margin next to this point, and underlined “we should agree to return to the process at the UNGA.”
23. Nau underlined “commission it to prepare an agenda to submit to the full body.”
24. Nau highlighted this sentence in the right-hand margin.