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

40. Action Memorandum From the Assistant Secretary of State for Economic and Business Affairs (Katz) to the Deputy Secretary of State (Christopher)¹

Washington, May 2, 1977

Procedure for Implementing Human Rights Policy in the International Financial Institutions (IFIs)

Issue for Decision

The existing inter-agency procedure for reviewing individual IFI loan proposals does not provide adequate lead time to implement a consistent coherent human rights policy in the IFIs. In our judgment a new procedure is required. I recommend you write Mike Blumenthal expressing concern about the present procedure and suggesting a new one be established.

Background/Analysis

The National Advisory Council on the international monetary and financial policies (NAC) reviews each IFI loan proposal from an economic policy perspective before the Secretary of the Treasury provides instructions to the Executive Director. This review occurs approximately one week before formal Board action although informal Board discussions may take place a day or two after the review. As we saw in the case of the recent export credit to Brazil, this review often occurs too late for us to give thorough inter-agency consideration to human rights aspects of the proposal. In addition, it is far too late for us to influence the progress of the loan in the Institution if we have reason to do so on human rights grounds.

The problem of a timely review of IFI loans from a human rights perspective is becoming increasingly acute. The President has written Senator Humphrey expressing support for the position that we should use our voice and vote in the IFI to attempt to influence human rights in developing countries.² Over the next 60 days, the World Bank Board of Directors will consider over 100 loan proposals, many of which have human rights implications. Therefore, we need a mechanism for systematic reviewing of these proposals at an early stage.

In our view, what is needed today is a new inter-agency mechanism which would review individual IFI loan proposals well in advance of the time they are submitted to the Board of Directors for approval. We are now working with Treasury to devise a system to ensure that we receive timely notification of all pending loan proposals. The NSC Human Rights Working Group which you chair would in our view be an appropriate vehicle for reaching decision within the U.S. Government on the human rights aspect of IFI loans.

As part of the new procedure, we would suggest a Subgroup of your Working Group, chaired by the Department at the Office Director level. This Subgroup would have responsibility for examining each loan proposal to see if an inter-agency consensus exists that there are no human rights grounds for delaying or opposing the proposal. If such a consensus could not be reached, the Subgroup would refer the proposals to your Working Group for decision. We in EB would be happy to chair this Subgroup should you so decide. We follow the IFIs closely and have a strong institutional link with the Treasury Department. Further, we have no particular bias with regard to human rights situations in any particular country.

In addition to this procedure, we clearly need a series of country strategy papers which will enable us to examine individual IFI loans in context of our overall human rights policy, vis-à-vis that country, and in the light of other measures we may be taking to promote human rights.

Recommendations:

1. That you sign the attached letter to Treasury Secretary Blumenthal.³

2. That you establish a Subgroup of your Human Rights Working Group which would have the responsibility of examining individual IFI loan proposals.⁴

1. Source: Department of State, Central Foreign Policy File, P770108–1972. Limited Official Use. Drafted by Winder. Handwritten notations on the first page of the memorandum read: “OBE” and “6/28.”
2. See footnote 8, Document 35.
3. There is no indication as to whether Christopher approved or disapproved this recommendation. Not found attached. An undated and unsigned draft letter from Christopher to Blumenthal is in the National Archives, RG 59, Central Foreign Policy File, P770108–1975.
4. There is no indication as to whether Christopher approved or disapproved this recommendation.