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

89. Memorandum From the United States Special Negotiator for Economic Matters (Meissner) to the Assistant Secretary of State for Economic and Business Affairs (Hormats)¹

Washington, May 18, 1982

SUBJECT

• Versailles: Proposal to trade global negotiations for something we want, e.g. East Bloc credits

We are getting increasing pressure in the Sherpa process to move our position on global negotiations (GNs). George Shultz in his report to the President also records our isolation on this issue.²

The Secretary presently has an action memo from EB and IO that recommends the tactical move of tabling a new U.S. draft in New York just prior to the Summit.³ The draft is optically different from the amended text we tabled in December but substantively without real change. We had hoped this would allow us to hold our position while protecting the President from criticism.

After the Sherpa meeting of May 15–16 I do not believe this will be adequate.⁴ I therefore would like to propose a bolder move. We should accept at the summit the launching of global negotiations in exchange for two concrete gains: (1) unqualified protection of the specialized agencies GNs and (2) something we want at Versailles, e.g. multilateral action to officially support export credits to the USSR or a favorable decision on the Yamal pipeline.

On the issue of unqualified protection of the specialized agencies, the language proposed in your memo to the Secretary (attached) is adequate. I have noted in the attachment the other minor changes necessary in our draft language to launch globals.⁵ I think it is necessary at the summit for all seven to agree on language. French and German views on protection are different from ours. We must have our language.

On the issue of something we want at Versailles, there are a number of points. First, as you know, the consultations on credits that paralleled the Sherpa meeting did not go well. The French were particularly obstinate insisting that their bilateral arrangement with the USSR would not allow them to join any consensus. Parenthetically, they will not show us their bilateral agreement so we cannot verify their position. Secondly, it is the French who want GNs and want a north/south initiative of importance at the Summit. The Germans also share this view and are starting to push Schmidt’s old idea of a global foreign exchange earnings stabilization scheme for LDC commodity exports. The French like this idea because of their penchant for a more centrally run world economy. We are definitely not for it. Thirdly, the linkage between GNs and export credits, the pipeline, or something comparable would achieve a real economic gain for the U.S. while trading a procedural item at the UN there is no real guarantee that GNs will go anywhere. Fourth, the linkage between GNs and something we want may help us in the U.S. bureaucracy. Treasury will be exceedingly difficult to sell on GNs but has a deep commitment on limiting credits to the USSR.⁶ The linkage might make GNs more palatable to them. Fifth, as Henry Nau points out, Treasury and USTR are likely to argue that we do not need to give on GNs because after Versailles the issue will fade away.

We must be prepared for a French attempt to negotiate a wide open GNs in an attempt to kill our linkage to something else. Hopefully cool heads will prevail.

If you believe this linkage would be of merit, we can rework the action memo to the Secretary to reflect two prongs of this strategy which the President and White House Group could consider. The first prong is what the action memo now recommends: The submission of a new US draft in New York prior to Versailles which would reflect no substantive change in the U.S. position. At Versailles we could always fall back on this draft and protect the President by insisting that the ball is not in our court. The second prong would be to take to Versailles a willingness to launch GNs by amending our draft provided that:

(A) All seven support the amended U.S. draft to include unqualified protection for the specialized agencies, and

(B) Some agreement is reached on credits to the USSR, the pipeline, or something of similar concern to the US.

Attached is the draft resolution on GNs presented by the G–77 on March 31 and the U.S. response which your action memo to the Secretary proposes be submitted in New York prior to Versailles.⁷ The memo already proposes one minor phrase (the words bracketed in paragraph 5) which we would add only in the course of negotiations, i.e. which the text we table in New York would not contain. To give our Versailles delegation the authority actually to accept the launching of GNs, there need to be only two additional amendments—as shown on the attached text in handwriting.

I have discussed the thrust of this memorandum with Gordon Streeb and Henry Nau. They agree in principle. I shall present the idea to Jose Sorzano in New York tomorrow.

1. Source: Reagan Library, Douglas McMinn Files, Subject Files, Global Negotiations; NLR–369–3–28–3–6. Secret.
2. In a May 14 memorandum to Reagan, Shultz reported on his meetings with principals planning to attend the Versailles Summit, which Shultz conducted during a trip to Europe on Reagan’s behalf. Shultz summarized that the “so-called North-South area is almost universally seen as one where the U.S. is on a different wave length from the rest. But everyone agrees that UN sponsored talks must not be allowed to infringe on the jurisdiction, integrity, and governance of existing international economic institutions (IMF, GATT, World Bank, etc.).” The leaders Shultz spoke with believed the U.S. should go along with Global Negotiations under UN sponsorship, but did not want to argue with Reagan about the issue at the Summit. (Reagan Library, Stephen Danzansky Files, Summit File, Toronto Summit 1982–1987; NLR–733–17–1–1–7) The memorandum is scheduled for publication in Foreign Relations, 1981–1988, vol. XXXVI, Trade; Monetary Policy; Industrialized Country Cooperation, 1981–1984. Shultz presented the memorandum and reported on his trip in a meeting with Reagan on May 15 in the Cabinet Room. The memorandum of conversation of this meeting is also scheduled for publication in Foreign Relations, 1981–1988, vol. XXXVI, Trade; Monetary Policy; Industrialized Country Cooperation, 1981–1984.
3. A copy of the May 11 memorandum from Johnston and Streeb to Haig is in the Department of State, Central Foreign Policy File, P820078–0070. The memorandum is marked “OBE per Hormats 5/20.”
4. In a May 18 memorandum to Clark, Nau summarized the May 15–16 preparatory meeting for the Versailles Summit and reported that it did not go well. He wrote that the French and Canadians “lambasted the U.S.” for not supporting the G–77 text on Global Negotiations and for not meeting its commitment to IDA VI funding. (Reagan Library, Executive Secretariat, NSC Trip File, President’s Trip to Versailles Economic Summit June 4–6, 1982; NLR–755–14–11–2–4)
5. The memorandum is not attached. See footnote 7, below.
6. In a May 5 memorandum from Leland to Regan, Leland wrote that Treasury and USTR had “strong reservations” about the Department of State proposal that the NSC approve the tabling of a new U.S. text of a Global Negotiations resolution to counter the G–77 text introduced on March 31. Leland indicated that the Treasury Department had “suggested another approach to State and NSC: the President should use the Summit to explain how the G–77 text ignores fundamental issues—despite his personal efforts at Cancun and subsequently by putting his personal stamp on alternative GN resolution language last December—and concede that the differences are irreconcilable. We would try to position ourselves to spread the ‘blame’ for GNs’ failure all around.” (National Archives, RG 56, Records of the Office of the Secretary of the Treasury, Subject (Official) Files, 1982, UD–10D26, 56–84–25, Box 30, Memo International Affairs, May June 82)
7. The “G–77 Text of March 31, 1982” and “Proposed U.S. Response” paper are attached on one sheet of paper but not printed.