56. Information Memorandum From the Under Secretary of State for Economic Affairs (Rashish) to Secretary of State Haig1
SUBJECT
- U.S. Leadership in International Economic Policy
The Annual Meetings of the IMF and the World Bank group provide an excellent opportunity to take the pulse of the financial and economic leaders throughout the world.2 I have seen a wide range of representatives from both developed and developing countries—and have received from them a rather clear message that I want to pass along to you.
The message is that strong, clear and consistent U.S. leadership in the international economic sphere cannot be ignored, and, in effect, sets the parameters in which the rest of the world must operate. Our friends have greeted our new-found confidence with enthusiasm; our detractors express grudging respect. All seem relieved that we have once again accepted the leadership role—after a long period of drift in the international economy.
The President’s welcoming address was unusually substantive, and set the tone for the three “set piece” speeches that followed.3 The President’s strong endorsement of the Bretton Woods institutions was particularly welcomed after the run of distorted press play our policy review had been receiving. The Uruguayan Finance Minister Arismendi, chairman of the meetings, echoed the themes of LDC responsibility for their own policies, of private sector initiative and the importance of trade, of fiscal responsibility and monetary restraint. Tom Clausen highlighted co-financing with private lenders, the key role of private investment flows and the tough financial criteria for IDA loans, refuting the criticism that “soft” loans are wasteful. He was particularly eloquent in declaring that the world cannot afford “the luxury of inefficiency.” Jacques de Larosiere gave a ringing endorsement of the Administration determination to master inflation and revitalize the U.S. economy. All in all, it was a banner morning for our evolving [Page 162] international economic policy and more particularly our policy toward the developing countries. I might add that your sensitive speech in New York contributed substantially to making the delegates more receptive to the U.S. line.4
We are clearly moving in the right direction. Let me mention one over-riding theme which concerns our friends, and which causes a number of LDCs to hold off in accommodating to our approach. We have clearly enunciated the principles on which our policy and our actions are founded. We must now be meticulously faithful to those principles. More than any other single factor, the rest of the world is looking for consistency and constancy. If we appear to be willing to compromise principle for one or another passing advantage—those so inclined will continue to test our resolve at every turn.
Cancun was, not unexpectedly, uppermost in the minds of all my interlocutors. I made a point of describing, in general terms, the strategy we have been developing over the past few weeks. This approach was well received by both developed and developing countries.
I have a very positive feeling about the atmosphere of these meetings. If we can produce on the substance of the problems faced by the LDCs—trade restrictions, interest rates, investment policy—we can handle the differences over procedures.
- Source: Reagan Library, Douglas McMinn Files, Economic Summit Files, Mexico—Policy; NLR–369–11–37–2–8. Confidential. Drafted by Marshall Casse (E).↩
- The annual meeting of the Board of Governors of the World Bank Group and the International Monetary Fund took place in Washington from September 29 until October 2.↩
- See footnote 3, Document 53.↩
- See footnote 2, Document 47.↩