Foreign Relations of the United States, 1977–1980, Volume II, Human Rights and Humanitarian Affairs

202. Memorandum From the Assistant Secretary of the Treasury for International Affairs (Bergsten) to Secretary of the Treasury Miller¹

Washington, June 25, 1980

SUBJECT

• U.S. Human Rights Policy and the Multilateral Development Banks

During your conversation with Congressman Wilson last week, the issue of U.S. human rights policy in the MDBs came up. The following provides background information on the key practices and issues related to that subject.

Legislative Requirement

Authorizing legislation passed in 1977 requires U.S. Executive Directors in the MDBs to oppose loans to countries whose governments engage in “a consistent pattern of gross violations of internationally recognized human rights” unless the assistance is directed specifically to programs which serve basic human needs.

The Interagency Group on Human Rights and Foreign Assistance

To provide a thorough high level assessment of possible human rights policy actions, the Administration established in 1977 the Interagency Group on Human Rights and Foreign Assistance. This group, frequently termed the “Christopher Group” since it is chaired by the Deputy Secretary of State, includes representatives of the Departments of State, Treasury, Defense, and Agriculture, the National Security Council, the Agency for International Development, the Export-Import Bank, and other agencies when appropriate.

The Interagency Group reviews all proposed MDB, AID, OPIC, Exim, etc., projects and programs. It examines the human rights situation and trends in a recipient country, previous U.S. efforts to improve the situation (including actions in the bilateral assistance relationship if one exists), the likely effectiveness of various possible actions in improving human rights situation and the nature of the assistance under review (e.g., to what extent it meets basic human needs). The Group then recommends a U.S. voting position to Treasury given our responsibility for instructing the U.S. Executive Directors to the MDBs.

Treasury’s Role in the Interagency Group

The Interagency Group relies primarily on the State Department’s judgment as to whether or not the government of an MDB recipient is engaged in a consistent pattern of gross violation of human rights.

The Treasury Department has three major goals in the subsequent Interagency deliberations:

—to insure that the MDB vote is not used as an “easy option” and in isolation of a broader USG approach to a given human rights situation. (Treasury would, for example, resist using the MDB vote if comparable actions were not being taken in our bilateral relationship with the affected country.)

—to insure that the criteria and considerations used for determining whether or not a project meets “basic human needs” (BHN) are economically sound. (In general USAID and the Human Rights Bureau at State advocate a rather narrow BHN definition, while Treasury and the Economic Bureau at State advocate a more flexible approach which takes into account each country’s unique economic, cultural and social circumstances. At the present time, the Interagency Group is operating on unofficial BHN criteria which are very close to the Treasury approach.)

—to maintain to the maximum extent possible the integrity of the MDBs as effective social and economic development institutions, and insure that there is a basic consistency in the application of our human rights policies to bank operations.

Differences between the Departments of State and Treasury on an individual MDB loan are usually resolved prior to Deputy Secretary Christopher’s formal recommendation to Treasury. There have, however, been a few instances where we have disagreed on the Deputy Secretary’s position on whether or not a specific project met basic human needs—and, in such cases, we have always prevailed. There have been no such cases for a long time, however; none since you came to Treasury, in fact. (I came close to bringing to you the Chile loan raised by Congressman Wilson, but did not because of the egregiousness of their behavior in the Letelier case.)²

U.S. Voting

In the period since January 1, 1977, the United States has opposed—through “no” votes or abstentions—more than 90 MDB loans to 16 countries³ where we considered the human rights situation severe. Our general policy has been to support MDB projects for countries with human rights problems if the project serves the basic human needs of the people in the recipient country. This avoids penalizing the poor people of countries whose governments follow repressive practices, and reflects the fact that we consider human rights to include basic social and economic rights such as adequate food, housing, clothing, education and health care.

U.S. decisions to oppose MDB loans on the basis of human rights considerations are taken only after a thorough examination of the current human rights situation and trends in a recipient country. In the past six months, we have opposed loans for Argentina, Chile, Laos, the Philippines, Uruguay, and Yemen (PDR). U.S. opposition to upcoming MDB loans to Korea is also likely given the deteriorating human rights situation in that country.

The U.S. has veto power over projects only in the FSO (IDB). In other MDBs, our opposition to specific project proposals would have to be accompanied by that of several other members before a proposal would be formally denied. Some other countries have also had human rights concerns and joined us in opposing specific MDB projects. We have not formally “voted down” a loan on human rights grounds. On several occasions, however, we have influenced the MDBs and the recipient country to restructure a project so that it meets BHN. The fact that the U.S. intended to oppose a loan project has also been responsible for loans being delayed or indefinitely deferred.

In situations where the U.S. has opposed MDB loans on the basis of human rights considerations, we have been joined by one or more donors in 10 IDB votes involving four countries (Argentina, Chile, Paraguay, and Uruguay), and in 2 IBRD votes involving Chile.

Note: The United States continues to consult widely with other governments to explain in detail our views on human rights and basic human needs and our position that the MDBs are appropriate and effective instruments for furthering these objectives. Achieving an international consensus on human rights will, however, be a long and difficult process.

The Issue of an MDB Charter Amendment in Human Rights

In 1978, Congressman C.W. Bill Young (Fla.) proposed an amendment to the FY 1979 Foreign Assistance Appropriations (Sec. 611 of Public Law 95–481) instructing the U.S. Governor to propose and seek adoption of an amendment to the charters of the multilateral development banks, which would specifically provide that human rights should be taken into account in loan decisions. In informal discussions with other members we have sought support for the adoption of such an amendment. The reactions of other countries to our initiative were negative. Adoption of amendments to the charters of the MDB’s requires from 75–85% of the votes. Because of the high percentage of affirmative votes required, we believe that it unlikely such an amendment would attract sufficient support for passage. Moreover, other countries pointed out that if such an amendment were defeated, it would undermine our argument that the MDB charters already allow consideration of human rights performance in bank discussions.

The recently passed Authorization Bill for the regional banks⁴ also directs the U.S. Governor of the banks to consult with the other governors concerning the adoption of an amendment to the articles of agreement to establish human rights standards for assistance.

1. Source: Department of the Treasury, Office of the Secretary, Executive Secretariat, 1980 Files, 56–83–05. No classification marking.
2. See Document 157.

3. Afghanistan	Chile	Guinea	Philippines
   Argentina	El Salvador	Korea	Uruguay
   Benin	Ethiopia	Laos	Vietnam
   Central African Empire	Guatemala	Paraguay	Yemen (PDR)

   [Footnote in the original.]
4. Presumable reference to H.R. 3829, which Representative Henry Gonzales (D–Texas) introduced in the House on May 1, 1979. The bill passed the House on March 6, 1980; however, the passage was vacated and S. 662, introduced in the Senate by Church on March 14, 1979, was passed in lieu. The President signed P.L. 96–259 (94 Stat. 429–434) into law on June 3, 1980.