Foreign Relations of the United States, 1977–1980, Volume III, Foreign Economic Policy

115. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter¹

Washington, March 14, 1978

SUBJECT

• Message from Callaghan

At Tab B is an incoming message from Prime Minister Callaghan, concerning his talks with Chancellor Schmidt this past weekend.² He reports the Chancellor as pessimistic on economic prospects, and that he “sees no prospect of agreement between us on the way through the problem of low growth and high unemployment.” Schmidt also suggests that the swap-line between us and the British be activated, on a token basis, in order to promote confidence.

Specifically, Callaghan:

—asks whether officials of our two countries should talk about the swap proposal;

—asks to see you—mainly or wholly tete-a-tete—on March 23, for as long as possible and extending through lunch;

—suggests discussion of a British package of ideas for collective action at the 7-Nation Summit, to restore confidence, generate growth and develop world trade. Each nation, in different ways, would take steps on commitments to growth, the maintenance of world trade, currency stability, the long-term use of capital surpluses, and conservation of energy.

—is willing to send you a paper on these ideas, which might form the basis of the British contribution to the March 31 meeting to prepare the Summit.

At Tab A is a draft message of reply.³ It has been cleared in substance with Scheduling, Treasury, and Henry Owen.

RECOMMENDATION:

1. That you approve the message to Prime Minister Callaghan at Tab A.⁴

2. Do you want us to ask whether Mrs. Carter would like to invite Mrs. Callaghan to lunch on March 23?⁵

1. Source: Carter Library, National Security Affairs, Brzezinski Material, President’s Correspondence with Foreign Leaders File, Box 20, United Kingdom: Prime Minister James Callaghan, 2/77–5/78. Secret. Outside the System. Sent for action. The date is handwritten.
2. Tab B, attached but not printed, is a March 13 message from Callaghan to Carter.
3. Tab A, attached but not printed, is an undated message from Carter to Callaghan, at the end of which Carter wrote “ok.” In the message, Carter agreed that “a package of collective action would be in everyone’s interest” and suggested “low-key” discussion of a U.S.–U.K. swap (which Carter characterized as problematic) and a multilateral swap. Carter accepted Callaghan’s suggestion that they meet on March 23, agreeing “that we cannot sit back and let the free world economies drift downwards” and adding his “hope that the agreement that the U.S. and German governments worked out over the weekend will be an effective start on common action.” Carter indicated that in the meantime, he “would very much welcome” a British paper on the economic situation. On March 16, Callaghan sent Carter a proposal entitled “International Action on Growth, Currency, Stability, Energy and Other Matters.” (Letter from Callaghan to Carter, March 16; Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Country Chron File, Box 15, Great Britain: 8/77–3/78)
4. Carter did not indicate his preference with respect to this recommendation, but see footnote 3 above.
5. Carter indicated his approval of this recommendation, writing “but leave it up to her.” Beneath this, Brzezinski wrote: “R[ick] I[nderfurth]—check with Mrs. Carter.”