192. Memorandum From the Deputy Secretary of State (Robinson) to the Under Secretary of State for Political Affairs (Habib)1
SUBJECT
- State–Treasury Relations
I have reflected further on two aspects of my memorandum of December 24 on this subject2 and offer the following additional suggestions:
Interagency Coordination Mechanism:
My basic point in that memo—the growing congruence of international and domestic policy and of foreign policy and economic policy—is fundamental to the question of Departmental and interagency organization. With that in mind, I suggested the possibility of a revitalized Council on International Economic Policy (CIEP) for neutral coordination of economic policy. I felt that this would protect against Treasury (and/or NSC) domination of economic policy and resolve the problem of an uncoordinated Special Trade Representative (STR); however, I also indicated that this was not a likely possibility.
After further thought I now believe that consideration should be given to a further option which may be more viable given the an [Page 649] nounced cast of characters in the economic field. This would call for reconstituting the EPB under the leadership of the Chairman of the CEA, with standing committees chaired by State, Treasury, Commerce, Energy, STR, etc., as appropriate. This would work so long as the CEA was headed by a broad-guage, action-oriented chairman, as seems to be the prospect with Schultze.3 He would need a senior CEA associate strong in international economic affairs and a small augmentation of the CEA staff.
CEA chairmanship of EPB would minimize the risk of dilution of State’s control of foreign policy, as compared with the other options. This risk is particularly high if EPB is given a broadened role and Treasury (Blumenthal)4 is in the chair. Not being an operating agency, CEA would be less likely than Treasury to exploit this power base to invade State’s rightful place in the conduct of international economic relations. CEA chairmanship also would be most consistent with the concept of Presidential control.
State Department Organization
More important than interagency mechanisms are the people who hold the key positions in the participating departments/agencies. State’s ability to maintain a leading role in economic policy-making and policy-execution—indeed, effective U.S. leadership in international arenas—depends on the personal equation. The Secretary of State and his key associates, employing the great resources of this department, can work successfully with a less than ideal interagency coordination system. Even with the best interagency system, the Secretary needs an economic policy team with the kinds of capacities I outlined on the final page of my December 24 memorandum.
I left unstated in that memorandum the point that the Under Secretary for Economic Affairs, while only one of several members of the Secretary’s economic team, is critical to the Department’s influence and performance. He must be able to lead on three fronts:
—in directing (not just coordinating) for the Secretary this department’s work on major economic issues;
—in advocating and defending State’s positions in interagency bodies, particularly with senior Treasury and White House officers; and
—in conducting major international negotiations and consultations.
[Page 650]These requirements suggest criteria for selecting the man to fill this position; they also bear on his relationship with the Assistant Secretary for Economic and Business Affairs.
- Source: National Archives, RG 59, Records of Deputy Secretary of State Charles W. Robinson, 1976–1977, Entry 5176, Box 4, D—Chron, December 1976 and January 1977. Confidential.↩
- Document 191.↩
- Charles L. Schultze was nominated by President-elect Carter on December 16 to be the Chairman of the Council of Economic Advisers.↩
- W. Michael Blumenthal was nominated by President-elect Carter on December 14 to be the Secretary of the Treasury.↩