100. Editorial Note
The Nixon administration had agreed in April 1970 to contribute $1 billion over 3 years ($100 million in 1971, and $450 million each of the following two years) to replenish the funds of the Inter-American Development Bank (IDB). Regarding this decision, see Document 25. The administration submitted legislation to authorize the $1 billion in 1970, but this was cut to $100 million. The administration requested the appropriation of the initial $100 million authorized by Congress, but in May 1971 Congress reduced the appropriation to $50 million.
After Congress passed legislation authorizing the remaining $900 million in March 1972, the administration requested $450 million for the second installment. The Senate approved the full amount, but the House approved only one-half of it. When conferees were unable to reach agreement on the 1973 Foreign Aid Authorization bill, the Appropriations Committee passed a Continuing Resolution (to expire on February 28, 1973), which limited payments to the IDB’s Fund for Special Operations (FSO) to $225 million. The IDB proposed that members make commitments to a replenishment resolution by December 31, 1972, and that the first two installments ($550 million for the United States) be made by that date. By late 1972 it was reported that funds for the FSO would run out by the end of 1972 without further payment by the United States. A summary of these developments, as well as possible options that would allow the United States to meet its commitments to the IDB, is in a memorandum from Under Secretary of the Treasury Charls Walker to Secretary of the Treasury Shultz, November 22, 1972. (Washington National Records Center, Department of the Treasury, Files of Under Secretary Volcker: FRC 56 79 A 15, Inter-American Development Bank) An earlier report is in a memorandum from Hormats to Haig, October 10. (National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 333, IADB)
Secretary Shultz discussed these problems with Ortiz Mena, IDB President, on November 28. At the conclusion of their frank discussion, Shultz commented that “the efforts of the Treasury and the Bank staffs should be aimed at finding the means to minimize and dampen any adverse psychological reactions to a postponement by the U.S. of the replenishment. He recognized that there was a cost in terms presented by Mr. Ortiz Mena, but that the Bank should continue to operate, recognizing that the U.S. had $275 million available. Final U.S. action would be based on the completion of the Congressional process.” (Memorandum of conversation; Washington National Records Center, Department of the Treasury, Files of Under Secretary Volcker: FRC 56 79 A 15, Inter-American Development Bank)[Page 242]
Following Congressional consultations by Treasury officials in mid-December 1972, Gene A. Knorr in the Treasury Department recommended that Shultz call Congressman Passman and tell him that the President wanted to adhere to the $1 billion IDB replenishment and that the administration would agree to the replenishment resolution, subject to appropriations, and pay in $162.5 million of the available $275 million. Knorr further proposed that after talking to Passman, Shultz or Volcker should discuss the matter with Chairman Mahon on December 18 or 19 for transmittal of the U.S. position to the meeting of the IDB Executive Directors on December 21. (Memorandum from Knorr to Shultz, December 18; ibid.) These additional Congressional consultations apparently took place, but no record of them has been found. On December 20 Shultz signed a letter to President Ortiz Mena informing him of the U.S. payment into a special account at the Federal Reserve Bank of New York of $275 million for the IDB. He assured him of his best efforts to obtain the additional appropriations. (Ibid.)
No further decisions on IDB replenishment were made during 1972.