Foreign Relations of the United States, 1969–1976, Volume IV, Foreign Assistance, International Development, Trade Policies, 1969–1972

160. Memorandum From the Executive Vice President of the Overseas Private Investment Corporation (Salzman) to the President’s Assistant for National Security Affairs (Kissinger)¹

Washington, August 4, 1971.

SUBJECT

• OPIC Views on Response to NSSM-131

As the USG agency whose function is the encouragement and protection of U.S. private investment in less-developed countries, OPIC offers the following recommendations on NSSM-131:²

1. The paramount objective should be to establish a mechanism to enable the U.S. Government to act as a coherent entity, promptly and with full consideration of all factors, in both the deterrence and resolution of expropriation cases. If the right mechanism for determining and executing policy is established, there is less need for finely drawn, advance determination by the President of a fixed policy line for dealing with the great variety of trends and events which will arise.

2. We applaud the Secretary of State’s initiative in establishing an office, insulated from parochial geographic biases, that will deal solely with investment protection problems and an interagency working group chaired by the Deputy Under Secretary of State for Economic Affairs.³ In our view, the latter group should report to a higher level interagency body centered in the White House and be assured of prompt consideration and decisions on its recommendations as to both bilateral and multilateral assistance. OPIC should be a member of both of these interagency organs.

3. If such an interagency mechanism is established, OPIC’s preferences among the options presented in the subject paper are:

Option 3(A) under “Basic Options for United States Policy”, revised as follows:

3 (as stated) Suboption (A): Pending the determination, the U.S. coordinating mechanism would make an urgent examination to decide what measures would be appropriate in the interim; during this interim period the USG would quietly defer making substantial new commitments. A general statement would be made now announcing a regular U.S. procedure of urgently reviewing each expropriation case as it arises with a view to determining U.S. assistance policy toward the expropriating country.

Option 2 under “Options with Respect to USG Action in International Financial Institutions in the Event of Proposed Loans to Expropriating Governments”, supplemented by the following:

Announce now, as part of the public statement to be made under Basic U.S. Policy Option 3, U.S. support for firmly upholding the traditional World Bank policy quoted on page 28 above, and seek similar expressions by other major contributors to the Bank.

In addition to the four “Additional Studies Required” on pp. 12–13, there should be a study by the Samuels’ Working Group to establish better conceptual benchmarks for determining what constitutes “adequate” compensation for an expropriation, i.e., what we mean in today’s real world when we declare a policy of insisting upon “prompt, adequate and effective compensation”.

Herbert Salzman ⁴

1. Source: Washington National Records Center, Department of the Treasury, Files of Under Secretary Volcker: FRC 56 79 A 15, NAC. Confidential. Copies were sent to Samuels, Hannah, and Volcker.
2. Salzman’s remarks are directed at the NSSM 131 response, Document 157.
3. On July 26 Rogers sent Connally a letter regarding the problems created by the rising tide of economic nationalism in developing countries and the need more expeditiously to respond to individual cases of actual or possible expropriation. Rogers said he had designated Deputy Under Secretary Samuels to be in charge of “developing and implementing the United States response to potential and actual expropriation problems” and that Samuels would be supported in this task by a new Office of Investment Affairs, which was being established in the Bureau of Economic Affairs. Rogers invited Connally to designate an appropriate Treasury official to work with Samuels to coordinate policy within the government, with industry, and with the Embassies abroad pending a more formal interagency mechanism growing out of the NSSM 131 exercise. Rogers indicated he had also advised the President of these actions. (Washington National Records Center, Department of the Treasury, Files of Under Secretary Volcker: FRC 56 79 A 15, NAC)
4. Printed from a copy that bears this typed signature.