244. Memorandum From the President’s Assistant for National Security Affairs (Scowcroft) to President Ford1
Secretary Simon has sent you the following message from Manila:
“In anticipation of your being asked about the United States attitude toward British financial difficulties, I wanted to bring you up to date about discussions which Arthur Burns, Bill Seidman, and I have had here in Manila with the British authorities.[Typeset Page 772]
“In June, 1976, the U.S. agreed to participate in a short-term (ending December 9, 1976) line of credit for the British in the amount of $2 billion, our share of a total of $5.3 billion. It was agreed that should the British be unable to repay any outstanding amounts, they would borrow from the IMF, on the basis of any economic program acceptable to the IMF.
“Last week, the British announced their intention to request a $3.9 billion loan from the IMF, a portion of which would be used to repay outstanding obligations under the line of credit mentioned above. The British have not begun negotiations with the IMF as to the policy conditions that would be required by the IMF and we understand that such negotiations will not begin until November.
“We believe that you should avoid any suggestion that the United States will provide any direct financial assistance to the British beyond the line of credit mentioned above. Should you be asked about this matter, I suggest you make the following points:
“1. Although the British have announced their intention to seek additional financial resources, the details of the program that would be agreed with the IMF have not yet been worked out.
“2. The conditions with respect to economic policy will be negotiated between the British and the IMF. Such negotiations are the responsibility of the IMF.
“3. We continue to believe that countries in need of balance of payments financing, as in the case of the British, should seek such financing from the IMF, the multilateral institution created for the purpose.
“4. The United States will support a British request that is based on a program that is satisfactory to the IMF.”
Summary: Scowcroft relayed a message from Simon on his discussions with UK officials concerning the pound’s declining value.
Source: Ford Library, National Security Adviser, Presidential Country Files for Europe and Canada, Box 15, United Kingdom (8). Secret. Sent for information. Simon was in Manila for the IMF and World Bank annual meetings.↩