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

138. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter¹

Washington, June 23, 1978

SUBJECT

• Our Summit Goals

1. The main purpose of US participation in the Summit is to strike a three-way deal, which will involve:

a. the US pledging action to limit oil imports² and control inflation;

b. the Germans and Japanese pledging additional measures to stimulate domestic demand;³

c. all Summiteers agreeing to freer trade policies⁴—which will be especially difficult for the British and the French.

Thus each head of government would pledge actions that are in his country’s interest, but that would be politically difficult unless done as part of a package that included concessions from other countries. I won’t elaborate further on this concept, since you are familiar with the steps that we are taking to try to give shape to it.

2. In addition to this package of immediate measures, our object at the Summit is to tackle two longer-term structural problems: energy production and conservation (other than US imports), and North-South relations.⁵

3. On energy, I hope the Summit can agree on actions—coordinated research and development, increased investment, etc.—to reduce energy consumption and increase energy production in the industrial world. An international sub-group (on which DOE is represented) is spelling out details, which we will submit to you shortly.⁶

4. On North-South relations, the two key issues are aid and trade. It is through these means that the vast majority of resources move from the industrial world to LDCs, and it is by improving these means the industrial countries can act most effectively to enlarge that flow. On aid, we propose that the Summit call for differing measures to meet the needs of middle-income and poorer developing countries:

—The middle-income countries need more private investment, hard loans, and technological collaboration (such as our intended new Foundation for International Technological Cooperation).⁷

—The poor countries need growing concessional aid, including generous replenishment of IDA—the World Bank’s soft-loan window.

We also propose that the Summit call for more assistance to help non-OPEC developing countries produce or conserve energy, with the World Bank being asked to play a financial, advisory, and coordinating role. The Canadians are suggesting that the Summit countries establish a special fund to receive voluntary contributions for grant aid for energy exploration in LDCs.

On trade, the heads of government should direct their MTN negotiators to ensure that LDCs share fully in post-Summit MTN negotiations, and that LDC concerns are fully taken into account in these negotiations. Lowering trade barriers would be the most effective means of increasing LDC export earnings.

The Summit should also encourage commodity agreements, which will help to stabilize these earnings.

These Summit actions on aid and trade will be directly responsive to LDC concerns. If we are able to arrange effective follow-up, which will not be easy in the present mood of the Congress, they can make a large contribution to the welfare of the roughly billion human beings who live in desperate poverty in the Third World.

The Common Fund⁸ poses more difficult problems. The gap between LDC and industrial country attitudes will be difficult to bridge, except over a prolonged period of negotiation. This issue is of more symbolic than economic importance to LDCs, but must be addressed.

5. Conclusion. If the Summit can agree on the package described in paragraph 1 and address the longer-term problems set forth in paragraphs 3 and 4, it will be seen to have contributed significantly to a healthier world economy.

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Subject Chron File, Box 111, President’s Europe Trip: 6/23–30/78. Confidential. Sent for information. Carter initialed “C” at the top of the page. Brzezinski wrote on the memorandum: “Concur—this summarizes the strategy on which we are basing our preparations. ZB.”
2. Carter underlined the phrase “to limit oil imports.”
3. Carter underlined the phrase “stimulate domestic demand.”
4. Carter underlined the phrase “freer trade policies.”
5. Carter underlined the phrases “energy production and conservation” and “North-South relations.”
6. A July 7 memorandum from Vance, Blumenthal, Schultze, Brzezinski, and Owen to Carter entitled “Energy and the Summit” is printed in Foreign Relations, 1969–1976, vol. XXXVII, Energy Crisis, 1974–1980, Document 156.
7. See Document 311.
8. See footnote 5, Document 24.