Foreign Relations of the United States, 1969–1976, Volume E-15, Part 2, Documents on Western Europe, 1973–1976, Second, Revised Edition

256. Memorandum From the President’s Assistant for National Security Affairs (Scowcroft) to President Ford¹

Washington, December 11, 1976.

The following cable has been received from Prime Minister Callaghan:

“Dear Mr. President:

“Since writing to you yesterday, I have learned of the arrangements being made to discuss a safety net or similar facility both at Basel on Sunday/Monday and in Washington on Monday/Tuesday. I have had an opportunity this evening to discuss the matter with Henry Kissinger and it is with his encouragement that I want to put to you a critical point on timing.

“A lot of work is being put into these consultations and I am grateful for the efforts being made. I am, however, troubled because the consultations yesterday between Ed Yeo and Derek Mitchell indicate that the approach being considered in Washington may differ from that on which a great deal of work has been done by the B.I.S. in Basel. The reconciliation of two different approaches could not be achieved without damaging delay.

“Our timetable for securing Parliamentary backing for the measures which we have agreed, must be secured before the House rises for Christmas. This requires that the Cabinet gives approval on Tuesday to the statement which Denis Healey will make in the House on Wednesday, 15 December. It may well be that the best solution to the problem of the sterling balances has yet to be evolved; and different approaches to the problem could perhaps be combined in due course to achieve a good solution. But I cannot overstate how damaging it would be to our statement on Wednesday if we cannot then include a positive announcement that the United States Government together with the other governments concerned in the B.I.S. have reached agreement in principle on an arrangement for dealing with the problem of the sterling balances, broadly on the lines of the note which Denis Healey has already given to Bill Simon. I hope you will feel able to ensure that the necessary consultations take place urgently to this end. Our representatives will of course be available in Washington as requested late on Saturday for this purpose. It will be helpful if you can use your influence to ensure that we have a response from you in time for me to inform the Cabinet on Tuesday, for this arrangement is an essential part of the package.

“I am reluctant to trouble you like this, but you have been so helpful that I venture to ask you now to see that this issue, which matters so much to us, is brought to a stage where I can make a positive statement to the Cabinet on Tuesday and to the country on Wednesday.

“Warm regards,

“With best wishes,

“Jim Callaghan.”

1. Summary: Scowcroft relayed a December 10 message from Callaghan on a safety net for the UK.

   Source: Ford Library, National Security Adviser, Kissinger-Scowcroft West Wing Office Files, Box 25, UK (23). Top Secret. The memorandum is a copy without Scowcroft’s initials. An unknown hand wrote “Dec. 10, 1976” at the beginning of Callaghan’s message. In a December 12 message to Ford, Schmidt urged that the U.S. representative at the forthcoming Basel meeting be so instructed “as to enable the meeting to envisage the safety-net solution in so far as is necessary for Prime Minister Callaghan to tell the British Parliament on Wednesday about the fact that the safety-net is in the making.” Then, Schmidt continued, FRG and U.S. officials, scheduled to meet in Washington on December 15, should “be in a position to draw up the agreement on the safety-net for sterling balances,” enabling an announcement of “the principles of the safety-net in the later course of this week. One should hope that thereby any psychological danger for sterling balances can be avoided.” (Ibid., Scowcroft Daily Work Files, Box 14)