Foreign Relations of the United States, 1977–1980, Volume II, Human Rights and Humanitarian Affairs

150. Memorandum From Jessica Tuchman Mathews of the National Security Council Staff to the President’s Assistant for National Security Affairs (Brzezinski)¹

Washington, June 27, 1978

SUBJECT

• Human Rights and OPIC

The Problem

Although the Christopher Committee was created as an interagency group, Christopher has more and more used the Committee in a purely advisory capacity, making all the decisions himself. I have not objected to this development since it didn’t seem to me that the group was likely to do a better job than Christopher has alone, however in this case, Christopher is leaning towards a decision with which I, and most of the NSC staff, strongly disagree. The issue is an important one. The purpose of this memorandum is to acquaint you with it, and to request your intervention to prevent a bad decision.

A month or so ago, Congress added the basic Harkin language to OPIC’s authorizing legislation.² The law now requires OPIC, in consultation with the Secretary of State, to bring human rights considerations to bear on its programs, and specifically to deny insurance for investments in countries which engage in a consistent pattern of gross violations of human rights, unless: (1) the investment will directly benefit the needy; or, (2) the national security requires OPIC to support the investment.

Three weeks ago the Christopher Committee grappled for the first time with implementing the new provision.³ A lengthy discussion revealed that it is going to be extremely difficult to implement it in a sensible and consistent manner. Christopher postponed a decision, saying that he wanted to think about it. I subsequently made clear to his staff that NSC should be consulted in advance of any final decision. The key considerations are these:

—OPIC and its programs are designed to help American business: not the country in which the investment is to be made.

—In most cases, the government of the country in which the investment is to be made is not involved in the project in any way.

—An OPIC decision not to insure an investment in a particular country is often viewed as a signal that the US considers that country to be politically unstable. Thus a negative decision could lead to disinvestment, greater economic instability, growing political unrest, and a general worsening of human rights conditions.

—Since most OPIC-supported projects are designed to be profit-making, the needy people exemption is very rarely applicable.

—The legislative history of the new amendment indicates that an exception can also be made where there is an indirect benefit to the needy, but this is extremely hard to calculate. The SFRC Report suggested such factors as “the appropriateness of the products which they promote for local mass consumption, performance in the training of workers and managers, behavior with respect to social policy and wage rates”; etc., as criteria for making this judgment. Clearly, if the Committee were to try to apply such standards, we would be adopting a standard which we do not apply to business here at home. That is hard (if not impossible) to justify.

—If the Committee were to take such detailed factors into consideration, the final results, and the overall policy as perceived by everyone outside the government, would probably appear even less consistent than it now does.

The Options

As I see it, there are two options:

1. Implement the law literally. This means applying the needy people exemption—for both direct and indirect benefits—including consideration of the nature of the project, the social behavior of the company involved, its wages, training policy, etc.⁴ It also means applying the amendment to the group of 40–50 “grey area” countries which have serious human rights problems. (This is the group which has been considered by the Committee at one time or another—it substitutes for a hit list of “gross and consistent” violators.) In sum, it means implementing the amendment very much as we do the similar Congressional language limiting assistance in the IFIs.

2. Implement the law narrowly—perhaps not as Congress intended—but in the light of our own view of the wisdom of the amendment. This would mean that except in very rare instances the needy people exemption would be considered inapplicable, and the Committee would therefore not request supportive background detail from OPIC on company behavior, wages structures, etc.

It would also mean limiting application of the amendment to those projects where the government of the recipient country is involved in the project. This would immediately rule out about 80% of all OPIC programs. Unfortunately, determination of government involvement is not a yes-or-no question. After consulting with OPIC, I would suggest that the primary criterion for determining involvement be that the government be either an equity holder in the project, or that it have provided a significant portion of the financing for it. At a decidedly secondary level, a government might be considered to be involved in a project: (1) when it was to be a major beneficiary either from tax revenues or production sharing; or, (2) where the project was of extreme size or political significance for the country involved.

Finally, this approach could mean limiting application of the amendment to a smaller group (say 10–15) of the most egregious human rights violators. While this limitation would be consistent with the overall approach, it would entail major problems in agreeing on which countries are the worst offenders (after eliminating Uganda, Cambodia, Chile, etc., with which OPIC does no business). If such a group was agreed on there would always be the danger of leaks—even if nothing were put on paper.

The Decision

Christopher has very nearly settled on a final decision for Option 1, while I believe we should follow Option 2. The NSC staff also strongly favors Option 2, as does OPIC itself. You should note however that Option 2 might not be very popular on the Hill. If we were to follow this approach we should brief key members, being quite straightforward in explaining the discussions we have had, the internal contradictions in the amendment, and the difficulties and inconsistencies likely to emerge from a broader application of it. I also believe that as soon as our Congressional relations allow, we should attempt to get this amendment repealed—but not before next year.

If you agree with my suggested approach, we can proceed in one of two ways. I could draft a memorandum for your signature addressed to the Secretaries of State and Treasury (as was the original memo setting up the Christopher Committee)⁵ directing that the OPIC human rights amendment be implemented along the lines of Option 2. Or, you could chair a small meeting with State, Treasury, and OPIC that would end in the same result, but could save Christopher from feeling that he was being totally preempted. I favor the meeting—Henry Owen favors a memorandum.

Recommendation:

That you approve Option 2 as the general approach for implementing the new human rights language for OPIC.

That you direct me to set up a meeting to resolve this issue with attendees from State, Treasury and OPIC.⁶

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 28, Human Rights: 5/77–11/78. No classification marking. Sent for action. Printed from a copy that bears Inderfurth’s, Bartholomew’s, and Dodson’s initials. Brzezinski wrote on the memorandum: “W.C. will send me the text of the proposal implementation with memo (worked out with OPIC). Pl[ea]se review + let me know. ZB.” Tuchman Mathews attached the following typewritten note to the memorandum: “Zbig: In my view this is an issue of prime importance to our ability to develop a rational human rights policy for the long term. Henry Owen agrees—he wanted to write you a note on this but is out of town for the week. He agrees with the approach suggested here, as do Guy Erb (who is also on leave) and all NSC regional people who had an interest in the subject. JTM.” An earlier version of the memorandum, which Tuchman Mathews distributed to the NSC Staff on June 14, and Armacost’s June 15 response to the memorandum are in the Carter Library, National Security Affairs, Staff Material, Global Issues—Mathews Subject File, Box 10, Human Rights: Overseas Private Investment Corporation, 4/77–7/78. Christopher’s response is printed as Document 151.
2. See footnote 6, Document 139.
3. In the NSC Global Issues Cluster’s June 2 evening report, Tuchman Mathews characterized the Christopher Committee meeting that day as a “wrenching session” with regard to implementing the new OPIC legislation. (Carter Library, National Security Affairs, Staff Material, Global Issues—Oplinger/Bloomfield Subject File, Box 36, Evening Reports: 4–6/78)
4. Bartholomew underlined the phrase “social behavior of the company involved,” drew a horizontal line next to this portion of the paragraph, and wrote “absurd” in the left-hand margin.
5. Document 31.
6. Bartholomew placed a check mark in the left-hand margin next to the second recommendation and added the following handwritten comment: “Option 1 would be an unmitigated disaster—harm human rights, Admin. prerogatives etc—can’t understand Christopher. But he’s extended, so you should do it through a meeting—unless you want to try turning him around with a phone call. Reg.” Brzezinski did not indicate his preference for either option; however, according to an attached NSC Correspondence Profile, Brzezinski approved the second recommendation. (Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 28, Human Rights: 5/77–11/78)