Foreign Relations of the United States, 1969–1976, Volume III, Foreign Economic Policy; International Monetary Policy, 1969–1972

243. Information Memorandum From Robert Hormats of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)¹

Washington, October 3, 1972.

SUBJECT

• World Press Reaction to the President’s and Shultz’ IMF Speeches

World press reactions to President Nixon’s speech and the proposals for monetary reform outlined by Secretary Shultz at the annual IMF/IBRD meeting have been mixed but generally positive.² (State and USIA summaries are attached at Tab A.)³ European comment was generally favorable while a more negative tone came from Japan, Australia, and the developing countries. The Japanese felt that there was an anti-Japanese tone to the emphasis on the need for adjustment by surplus countries, enforced by sanctions if necessary, while the developing countries have stressed the lack of attention to their problems in the two speeches.

There was a widespread feeling of relief that the United States had decided to resume a position of leadership in monetary affairs. Most commentators felt that the United States’ proposals provided a basis upon which serious negotiations could begin, even if they disagreed with specific portions of the proposals. Several reports credited the American initiatives with giving the IMF meeting a sense of direction which had previously been missing. A recurring theme was that the President’s and Secretary Shultz’ speeches reflected increased American confidence based on improvements in American economic performance and our diplomatic initiatives with the USSR and the PRC. Some reports noted that the speeches had firmly defended American interests, while abandoning the extremes of the “Texas approach”.

European commentators generally felt that the Shultz proposals were basically constructive and welcomed the evidence that the U.S. is willing to move forward in monetary reform. The initial French reaction was negative or neutral, but after the speech of Minister of Finance Giscard d’Estaing, French commentary became more optimistic. The French felt that the generally conciliatory Giscard speech had sidetracked the gold price issue, while Shultz had opened the door toward dollar convertibility. There was speculation in the press that the atmosphere of cooperation is the result of a recent Kissinger-Pompidou agreement.⁴

The Canadian press generally felt that the American proposals provided a framework for negotiating monetary reform, while reacting with concern to Shultz’s call for “more stringent” standards for countries that float their currencies (as Canada is now doing).

The Japanese appear to view the Shultz proposals as threatening. Several press comments referred to the anti-Japanese tone of the speech and worried that it was an effort to set the stage for unilateral imposition of import surcharges on Japanese products or for increased pressure for yen revaluation. There was some worry that the Europeans may now support these efforts (a Newsweek story quoting a top U.S. official at the meetings “as saying the U.S., Britain, and West Germany planned to force a revaluation of the Japanese yen” will fuel these fears). The Japanese press felt that the Shultz proposals represented an effort to make the surplus nations bear the adjustment burden, although many Japanese commentators called for increased Japanese government action to reduce that nation’s trade surplus. The Australian press echoed the Japanese press in worrying about being the target of rules against surplus countries, while calling the Shultz speech “demanding but reasonable”.

The developing countries, while generally welcoming the U.S. decision to move forward on monetary reform, were disappointed by the lack of attention to development problems in either speech. This omission, coupled with Chilean attacks on the U.S. for blocking IBRD lending to Chile and the general lack of progress on the question of a link between Special Drawing Rights and development, seemed to some LDC’s to confirm their fears that the U.S. is not greatly interested in the problems of the developing countries.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 306, IBRD/IMF. Limited Official Use.
2. President Nixon addressed the opening session of the Annual Meeting of the Fund and Bank Boards on September 25. See Public Papers of the Presidents of the United States: Richard M. Nixon, 1972, pp. 907-911. The President made a strong linkage between trade negotiations and monetary reform and said Secretary Shultz would outline proposals on the latter, “which represent the best thinking of my top economic advisers,” during his speech later in the meeting. Secretary Shultz addressed the Annual Meeting on September 26; see Document 242.
3. Not printed.
4. Not further identified. The point was made in a September 30 “Foreign Reactions” report from the Executive Secretary of the Department of State to Kissinger: “There is speculation in the press that the ‘atmosphere of cooperation’ is the result of a recent Kissinger-Pompidou agreement. The newspaper France-Soir stated that the success of U.S. diplomacy and economic policy in the last year allowed the U.S. to be conciliatory while guarding the essential elements of U.S. demands.” The report is included in Tab A.