Foreign Relations of the United States, 1969–1976, Volume XXXI, Foreign Economic Policy, 1973–1976

145. Memorandum From the Chairman of the Council of Economic Advisers (Greenspan) and the President’s Assistant for National Security Affairs (Scowcroft) to President Ford ¹

Washington, June 16, 1976.

SUBJECT

• Preparatory Meeting for Puerto Rico Summit

The Preparatory meeting here at the White House on Tuesday of officials from the UK, Germany, France, Italy, Japan, and Canada, under the chairmanship of George Shultz, made considerable progress in developing a Summit declaration.² Shultz worked from an American draft text, and a parallel draft submitted by the French. The meeting produced a series of declaration sections which provide a basis for further and more detailed discussion. The results are summarized below:

• —Basic agreement was reached on an introductory section (Tab I)³ putting the Summit in broader political perspective. While this section does not stress the extensive security, political, and economic interdependence among the industrial democracies as much as we would have liked, it does underline the importance of our cooperation. The French objected strongly to any implication that the Summit would undertake a discussion of anything more than specific economic problems, and succeeded in gaining support for avoiding broader language. The French also objected to the entire document being called a declaration (in which paragraphs would begin with “we …”) and argued instead for a communiqué (with paragraphs beginning with “they …”). Although Rambouillet ended with a declaration, they argued this was too “solemn” for the Puerto Rico Summit.
• —Discussion of the economic recovery and expansion section (Tab II) produced general agreement on paragraphs which emphasized the need to avoid inflation and to reduce present levels of unemployment.
• —The discussion of the monetary and financial issues section (Tab III) focused on the need for a continued effort to follow up on the agreements reached at Rambouillet and the IMF meeting last January in Jamaica, and the prerequisite of stable underlying economic and financial conditions for achievement of stable exchange markets. The US also suggested a paragraph instructing the Ministers to consider, in the context of the IMF, providing additional credit of a transitional nature to countries in extreme need. This would be tied to a program of monetary and fiscal control, designed to restore domestic stability in a reasonable period of time. Discussion of this paragraph—obviously oriented toward Italy—will be left to principals.
• —Discussion of the trade and investment section of the communiqué (Tab IV) centered primarily on European efforts to avoid language which implied that they were committed to policies not approved by the European Community. Nonetheless, the section provides some additional impetus to the multilateral trade negotiations and indicates strong resolve to avoid new protectionism. Paragraphs on investment were not discussed pending formal agreement in the OECD on that package next week.
• —Discussion of the developing countries section (Tab V) produced sharp debate between the US and French delegations. The French place great emphasis in winning political credit in the developing world, even if it means subscribing to schemes or espousing policies which do not make good economic sense. Our position is to emphasize the requirement that US assistance to the developing nations achieve constructive economic results, and to avoid supporting programs which are economically unsound. As a result, a draft was prepared which does not attempt to resolve disagreements between the two sides but which combines US, French, and British wording. To avoid an acrimonious discussion at Puerto Rico, much work will have to be done in the interim to resolve our differences with the French on this issue.
• —Concerning energy (Tab VI), a draft was prepared which combines US and French wording. No insurmountable problems appear likely here, although the French stress cooperation with producers while we stress consumer cooperation to reduce import dependence.
• —Most of the foreign officials believed there would be insufficient time at the Summit to discuss adequately the problem of redundant international institutions and wanted it deleted as a subject item. No declaration language was agreed to.

On the whole, the discussion went satisfactorily, notwithstanding a few minor skirmishes between the US and French. However, we will have to work intensively over the next week to narrow or eliminate differences with respect to:

• • Whether or not the final document is a “declaration” as opposed to a “communiqué.” We continue to strongly favor the former as a stronger document for demonstrating solidarity and giving importance to the results of the meeting.
• • Final agreement on a contingency financial package for Italy, which could be used if we find the next Italian government acceptable and if it takes the necessary measures to improve its domestic economic situation.
• • Fundamental differences in the north-south section. The foreign principals may turn out to be more supportive of our position than their representatives, so we should not at this point despair of making progress toward our objectives at Ministerial or Presidential level.
• • Language on investment, including a paragraph on bribery.
• • Reaching agreement on an energy section, which strongly emphasizes consumer cooperation as well as the dialogue with producers.
• • Deciding whether we want any discussion on redundancy in international institutions or if we merely want to raise the issue and work out declaration language which underlines the need to address the problem more vigorously in other forums.

1. Source: Ford Library, National Security Adviser, Trip Briefing Books and Cables for President Ford, Box 21, June 27–28, 1976—Puerto Rico Economic Summit, General (4). Secret. Sent for information. A stamped notation indicates Ford saw the memorandum, which he initialed.
2. The meeting was held on June 15. A June 10 memorandum from Hormats to Greenspan on a “Game Plan for the Monday and Tuesday Preparatory Meeting for Rambouillet II” is ibid., U.S. Council of Economic Advisers Records, Alan Greenspan Files, Box 39, Subject Files, Economic Summit (Puerto Rico) June 1976 (3).
3. Tabs I to VI are attached but not printed.