24. Memorandum From Acting Secretary of the Treasury Volcker to President Nixon 1


  • Third Replenishment of the International Development Association

The meeting of donor countries last week ended as anticipated with the United Kingdom, Canada, Sweden, Netherlands, Norway, Denmark and Finland joining us in support of an annual replenishment of $1 billion for each of three years (United States share about $400 million) and France, Germany, Japan, Belgium and Australia talking about a lower amount. If agreement is to be reached on a $1 billion per annum replenishment, or something reasonably approaching it, it will be crucial that Germany and France raise their sights.

To achieve this, it will be essential that top political support for a high figure be generated in each of these countries. They both are experiencing severe budgetary pressures, and have long-range budgetary plans which probably would not allow them to take their appropriate share in a $1 billion per annum replenishment (present level is $400 million) without cutting back bilateral programs or raising internal ceilings at the expense of domestic programs.

World Bank President McNamara put in a strong pitch for a $1 billion replenishment when he saw President Pompidou on March 16. We understand that he feels there is “give” in their position. France has been talking $500 million and probably had in mind going to $600 million if pressed. It is clear that it is necessary to get beyond the Finance Ministry if French support for a higher figure is to be obtained.

Chancellor Brandt is the next key as it is clear Germany will have to raise her sights if there is to be real hope for the French to come along. Indications are that the Germans are thinking of something around $600 million (although internally their aid ministry has suggested $800 million). The size of the replenishment came up at an EEC Finance Ministers’ meeting a couple of weeks ago, at which it appeared that $500 million was the highest figure all could support. At the Deputies’ [Page 58] meeting in London last week,2 however, the Dutch supported $1 billion and the Italians indicated privately that they probably would have also, had it not been for the lower amounts favored by the Germans and French at the EEC Finance Ministers’ meeting.

Treasury Assistant Secretary Petty, who is the Deputy in these negotiations, believes that perhaps the only (and certainly the best) chance of achieving the $1 billion objective would be for you to stress the importance we see in a replenishment of this magnitude to Chancellor Brandt during your meeting with him in early April.3 Secretary Kennedy believes this judgment is correct.

Secretary Kennedy will also have an opportunity to discuss this directly with the Japanese in early April4 and with the French Finance Minister, Giscard d’Estaing, in early May.5

Paul A. Volcker
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 289, Treasury, Volume I. Confidential. Another copy of this memorandum is attached to a March 17 memorandum from Petty to Secretary Kennedy recommending it to be sent to the President to alert him to the need to generate high-level political support in France and Germany for a large IDA replenishment. Petty specifically wanted the President to take it up with Chancellor Brandt in early April. (Washington National Records Center, Department of the Treasury, Secretary’s Memos/Correspondence: FRC 56 74 A 7, Memo to the President—Jan-April 1970)
  2. Not further identified.
  3. The President met with Chancellor Brandt in Washington on April 10. In an April 10 memorandum to Kissinger on IDA replenishment, Bergsten reported that in talks with the World Bank, German Finance Minister Moeller was thinking of a lesser IDA replenishment than the United States wanted. He noted that the IDA replenishment was the first element in the administration’s new approach to focus on the multilateralization of economic assistance, so it was especially important for the President to get Brandt’s agreement. (National Archives, Nixon Presidential Materials, NSC Files, Country Files-Europe, Box 683, Germany, Volume V 4/10/40-7/31/70) In an April 14 follow-up memorandum to Kissinger, Bergsten asked if the President had raised the IDA replenishment with Brandt; on April 20 Kissinger replied: “not that I know.” (Both ibid.)
  4. Secretary Kennedy attended the Annual Meeting of the Asian Development Bank in Seoul, and called on Prime Minister Sato in Tokyo. No record of a discussion of IDA replenishment was found.
  5. Secretary Kennedy and Finance Minister Giscard d’Estaing met at Camp David May 3-5, and IDA replenishment was one of the topics they discussed. See Foreign Relations, 1969–1976, vol. III, Document 146.