238. Telegram From the Embassy in France to the Department of State1
Paris, July 31, 1972, 1716Z.
14620. Subject: IMF Report on International Monetary Reform. Pass Treasury for Secretary Shultz.
- The Director of the French Treasury has asked us to transmit a personal letter from Finance Minister Giscard d’Estaing to Secretary Shultz regarding the report of the IMF Executive Board on International Monetary Reform. An Embassy translation of letter follows. French text being forwarded by air pouch to Treasury/OASIA.2
- “Dear Mr. Secretary. The Executive Board of the International Monetary Fund is now completing the report it was asked to prepare on reform of the international monetary system. This is the culmination of a lengthy project begun last spring on the basis of a text which, in accordance with normal procedures, the Fund staff prepared. The initial text has been substantially modified during numerous discussions of the Executive Board, in which the Directors designated by the United States and France played an active part.
- No one considers the result of this work completely satisfactory. It could not be otherwise considering the difficulty of the subject and the varying conceptions of the member countries. Moreover, we are still [Page 645] beginning the process of study and reconciliation of ideas to be undertaken by the Group of Twenty, the organ we have created specifically for this purpose.
- I note, however, that the imperfections of the report, particularly the fact that it poses numerous problems without resolving them and does not exclude a priori and feasible reform of the international monetary system, make it nearly acceptable to everyone. In certain respects, this preserves the possibility of a subsequent agreement on the modalities of reform.
- I am informed that, at the end of last week, the Executive Director nominated by the United States proposed to introduce numerous additions to each of the five chapters of the report, on which the Board had virtually reached agreement. These belated proposals, which very naturally reflected the views of your government, jeopardized the equilibrium which until then had been preserved among conflicting views. For this reason, they threatened the whole project. In any case, the French Executive Director could not approve a report which included both the present text and the numerous paragraphs proposed by your Executive Director.
- I understand, of course, that it is completely normal for the United States to take a position on international monetary reform. In fact, I would say it is desirable for your colleagues to be better informed on this point than they have been until now. But, insertions in the document being discussed at the Fund are not the appropriate means to do so and, in my view, these insertions have been introduced at a time when they cannot validly be considered.
- In addition, I fear that difficulties at this stage would be badly interpreted by the general public and thus would risk compromising recent efforts undertaken on various sides to bring more order to exchange markets. Neither would they represent an encouraging introduction to the work of the Group of Twenty.
- I strongly hope that you will give the present message all the importance it merits and that you will reconsider the means at your disposal to make your positions on international monetary problems known. Let me add that I am looking forward to meeting you in Washington at the end of September under circumstances which will allow us to lay out and discuss these problems at a suitable level within reasonable bounds. Sincerely yours, Valery Giscard d’Estaing.”