158. Memorandum From the Deputy Legal Adviser of the Department of State (Aldrich) to the Under Secretary of State (Irwin)1

NSSM 131—Issues for SRG Meeting

The response to NSSM 1312 did not include statements of agency preferences among the options, principally because most agencies had not yet made their decisions. Whether agencies will state their preferences at the Senior Review Group Meeting or by separate memorandum, I do not know. My understanding is that you decided at the briefing last Wednesday that the Department of State prefers Option 3C among the basic options (although coupled with a stronger public statement) and Option 2 among the multilateral voting options.

On the basis of my conversations with staff members of the key agencies, I would expect Treasury to support Option 1, with a fall-back to Option 3A and perhaps a further fall-back to 3B. Commerce will probably favor either Option 1 or 2 (we have retained Option 2—Hickenlooper—in the paper primarily because Commerce likes it) with a fall-back to 3A and perhaps to 3B. Commerce will also emphasize the importance of the United States not denying benefits in cases where the affected U.S. business does not want it (see the footnote on page 14). Defense is tending toward 3B, but no firm decision has yet been made.

Officially stated agency positions are as follows: OPIC prefers Option 3B. The Export-Import Bank prefers 3C. AID prefers Option 4, with a fall-back to 3C. All agencies that have commented prefer Option 2 of the multilateral voting options. Treasury at the staff level believes there should be no multilateral voting options and that our policy should be the same for both bilateral and multilateral benefits.

Aside from the preferences on the options, the most important issue is the composition and powers of the coordinating mechanism. The possibilities are discussed on pages 11 and 12 of the response of [Page 417]the NSSM. I would expect some agencies to support the CIEP Operations Group but Treasury will probably fight hard for the NAC or perhaps a new group chaired by the CIEP staff. I understand the NSC staff now tends to favor the CIEP Review Group.

From our point of view a most important issue is mentioned briefly on page 32 of the response in the description of Option 2 of the multilateral voting options, where it says that negative votes or abstentions in the international financial institutions as responses to expropriations should require the concurrence of the Secretaries of State and of the Treasury. I would expect Treasury to take issue with that conclusion and argue that such votes should be normal responses to expropriations and therefore not questions of unusual sensitivity.

It may be useful to point out that the area of agreement among the agencies is quite substantial, as described on pages 11 and 12 of the response. A public statement of policy, consultations with other developed countries, the strengthening of international mechanisms for dealing with expropriations, and a new U.S. coordinating mechanism are all important actions, and they are agreed, at least in general terms.

  1. Source: National Archives, RG 59, S/S Files: Lot 80 D 212, NSSM 131. Confidential. Drafted by Aldrich on August 3; cleared in draft by Eaton (S/PC) and Weintraub (E). The SRG meeting was held on August 4 and a resulting NSDM was issued on October 8 ( Document 169). Irwin, Samuels, Weintraub, and Aldrich attended the SRG meeting for the State Department.
  2. NSSM 131 is Document 155. The response is Document 157.