215. Memorandum From the Under Secretary of State for Economic Affairs (Rogers) to Secretary of State Kissinger1
U.S.–U.K. Discussions of Economic Support Plan for Rhodesia
Yesterday and this morning we had a full day and a half of talks with the British on the details of an international economic fund for support of a Rhodesian settlement. We met with Ambassador Botha of [Page 605] South Africa and the British over lunch and a working session this afternoon. Norman Aspin of the U.K. Foreign and Commonwealth Office led the discussions for the British, and Chuck Frank was present for our side during all the conversations. I sat in on a number of the sessions as did Bob Hormats of the NSC and Phil Birnbaum of AID.
The talks covered a very wide ranging and detailed agenda. Remarkable progress was made in defining the issues and problems, exchanging data and technical analysis and in developing a plan for the next diplomatic steps to organize the Fund.
The British indicated that the conference for organizing the interim government might take place in the next ten days or two weeks. They do not want to discuss the economic plan at the conference. We both recognize, however, that Smith may want to discuss it in order to provide a rationale for accepting some of the political concessions that he may have to make. He may also want to test nationalist willingness to consider such a plan. Thus, we ought to have gone as far as we can in lining up support from potential donors and in defining the basic purposes and modes of operation of the plan. We both agreed that the potential impact that the economic plan might have on the success or failure of the conference ought to be the standard against which we measure the desirability of any immediate actions on the plan. In our meeting in New York with Ivor Richard, we might discuss these issues with him.
Our tentative strategy is the following:
- First, prepare a short paper stating the purposes and functions of an international economic fund for Rhodesia. This paper could be a common basis for bilateral approaches to potential donors and, possibly, for Richard to use as he sees desirable in the conference discussions. The short paper might have some more detailed annexes that would be illustrative of the kinds of programs that the international fund might support. We have reached agreement on the major contents of such a paper. We will work on a draft this week and hope to agree on a final text in London next week.
- Second, we would communicate this text at the highest levels to potential donors, possibly at the same time mentioning some illustrative amounts that we feel might be appropriate for each donor.2
- Third, we might send a joint British-U.S. diplomatic team or bilateral envoys to major donor capitals to follow-up on the high-level communication, discuss concrete numbers, and answer questions on details.
- Fourth, we could issue a call for a donor conference to meet sometime this fall to pledge amounts and discuss draft articles for the fund.
This plan should be flexible as to timing in order to maximize its positive contribution to the success of the political conference chaired by the British.
We discussed total financial support for the international plan with the British and a formula for burden sharing amount donors. We thought that total funding in the range of $900 million to $1.3 billion would be a reasonable target, depending on the number of other donors we might attract. This amount fits in roughly with what the British estimate might be the total requirements for external assistance on concessional terms. Part of this total might be attributable capital lent by bilateral aid agencies on concessional terms. A large portion, however, would be paid in directly to the international fund. All of it would be additional aid since there is no aid presently going to Rhodesia. In addition, we would expect a large amount of private capital to flow on commercial terms to Rhodesia. Part of this might be government supported through Export-Import Bank loans and OPIC investment guarantees. Thus, total government supported capital from participants in the fund could be of the order of $2 billion. For now, however, we wish to concentrate donor attention on the concessional aid component of the fund.
A very rough and tentative donor contribution schedule was discussed (see Tab A).3 We think it may be possible to meet a major part of a U.S. contribution of $100 million per year within levels of aid for Africa already programmed for Africa for FY 78 and FY 79. The British feel that they would have to strain to get their contribution up to $40 million a year. South Africa is not on the list of primary donors. We talked, however, of the possibility of a separate bilateral agreement between South Africa and either the Zimbabwe Government or the Fund to bear part of the expense of resettling emigrants to South Africa.
The British seemed to like the idea I proposed to them that the Fund would be managed by the World Bank, using existing World Bank staff as much as possible and existing executive directors with a separate voting arrangement for purposes of the Fund. The British agreed that we should make an approach to McNamara when he returns from Manila to get his reactions to the possibility of Bank involvement.
After we conclude our meetings with the British and the South Africans, and before we take off for London, I plan to put together an in[Page 607]teragency working group to begin to bring other agencies along. I have already talked to Ed Yeo and Jim Lynn about this group.