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

294. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter ¹

Washington, February 10, 1978

SUBJECT

• A Letter to Jamaican Prime Minister Manley

Prime Minister Manley wrote you a provocative letter on the North-South dialogue which was sent on December 22, but received on January 10.² Because of the complexity of the issues raised by Manley and the differences within the government on appropriate ways to respond, I recommended that you send an interim response to Manley, expressing your appreciation for his gifts to you and informing him that you would send a more detailed response shortly. The interim letter was sent on January 25, 1978.³ The more detailed response is at Tab A.

In his letter at Tab B, Manley described what he considers to be the core issues of the North-South dialogue: commodity price stabilization; preventing the erosion of the purchasing power (through exports) of the developing countries and including energy pricing; and massive resource transfers. He also suggests that we address the debt problem and take Perez’ proposal (to transfer the increase in the price of petroleum to the needy countries) seriously.⁴ Finally, he expresses hope that you will respond positively and that a “genuine dialogue” between our countries can begin.

In your letter, you note that Dick Cooper will be inviting Manley’s representative to Washington to discuss these and other issues. The rest of your letter responds in a fairly positive and always candid way to the points Manley raised.

RECOMMENDATION:

That you sign the letter attached at Tab A.⁵

Jim Fallows and the State Department have cleared the text of the letter.

Tab A

Letter From President Carter to Jamaican Prime Minister Manley ⁶

Washington, February 13, 1978

Dear Mr. Prime Minister:

Thank you very much for your thoughtful letter of December 22. I was glad to learn of your views on economic relations among developed and developing countries.

The issues you highlighted—commodities, debt, energy, and the transfer of resources—are all important. As you know, my Administration is eager to cooperate with other nations for global economic development, and I greatly value our close working relationship in these endeavors. I understand that Under Secretary Cooper will invite Sir Egerton Richardson, your Special Adviser, to Washington to discuss these North-South issues as well as bilateral concerns. We know that new efforts are needed to solve worldwide economic problems, and we hope that the new United Nations General Assembly Ad Hoc Committee of the Whole will help us in that search.

Let me reaffirm the United States’ commitment to strengthening the international system for commodity trading. We will continue to search for sound, effective ways to deal with the problems of individual commodities within the framework of the UNCTAD Integrated Program. On the Common Fund, I regret that the negotiations have not progressed as rapidly as we both have wished. At the November negotiating conference, the industrialized countries proposed a formula for an effective Common Fund, which we hope will provide a basis for fruitful negotiations when they resume.

We believe that a Common Fund should support commodity arrangements between producers and consumers that are designed to stabilize prices around their long-term market trends. In our view, a general expansion of world trade would do more than anything else to improve the overall export earnings of developing countries. We are working toward this goal in the Geneva trade negotiations and encourage your leadership.

As you note, energy prices concern both of us greatly. We should examine all aspects of this issue—for instance, the relationship between oil price increases and debt. The fivefold increase in oil prices since 1973 created balance of payments problems for both our countries, as they did around the world. These increases have slowed the pace of development. We are concerned about the debt issue and are discussing it in appropriate forums, such as UNCTAD and the IBRD/IMF Development Committee.

I agree with you that increased transfers to developing countries are necessary. At the Conference on International Economic Cooperation, the United States and other countries pledged to increase their development assistance substantially. My Administration will carry out its commitment as we seek appropriation of additional development assistance from the Congress in coming years.

My Administration will appeal to the Congress to continue its support for US participation in the international financial institutions. We will join in a general capital increase of the World Bank. We are determined to support substantial replenishments of Inter-American and the Caribbean Development Banks. We expect to win Congressional approval of the United States’ participation in the IMF’s new Supplementary Finance Facility.⁷ It is important to recognize, however, that there are limits to the amount of assistance which the US and other developed countries can provide. As you note in your letter, additional economic assistance must be provided by oil-producing countries as well as traditional donors.

We must remember that much of the external capital the developing world receives comes from the private sector—and that their share is likely to increase. Therefore, it is in our interests to ensure that measures are not taken which would discourage these flows. At your request, I have instructed the Commerce and State Departments to cooperate with your government to do an analysis and a report of the investment climate of Jamaica, offering suggestions on how it could be improved.

Sincerely,

Jimmy Carter

1. Source: Carter Library, National Security Affairs, Brzezinski Material, President’s Correspondence with Foreign Leaders File, Box 10, Jamaica: Prime Minister Michael Norman Manley, 5/77–12/78. Confidential. Sent for action.
2. In his December 22, 1977, letter to Carter, attached at Tab B but not printed, Manley noted his desire to follow up on the discussion of North-South economic issues that he had had with Carter during his recent visit to Washington. A memorandum of conversation of a December 16, 1977, meeting between Carter and Manley is in the Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 36, Memcons: President: 11–12/77.
3. Carter’s January 25 letter to Manley is in the Carter Library, National Security Affairs, Brzezinski Material, President’s Correspondence with Foreign Leaders File, Box 10, Jamaica: Prime Minister Michael Norman Manley, 5/77–12/78. In a January 23 memorandum to Brzezinski, Erb noted that his and Pastor’s efforts to secure a draft reply to Manley’s letter to Carter from the Departments of State and the Treasury had produced “only a preliminary draft and a request from Dick Cooper for time to prepare a more constructive and substantive letter. The Manley letter goes to the heart of the North-South policy issue which you and I have discussed. We can use the letter to foster a constructive overall response to North-South issues.” Noting that it would take time to prepare “an adequate reply,” Erb and Pastor recommended the dispatch of an interim reply to Manley. (Ibid.)
4. On December 20, 1977, during an OPEC Summit in Caracas, Pérez suggested that the profits from an increase in oil prices of between 5 to 8 percent be given to debt-ridden less developed countries. (Juan de Onis, “But It Asks a ’78 Meeting to Consider Rise Tied to Aiding Poorer Nations,” The New York Times, December 21, 1977, p. 71) The Embassy in Caracas reported: “Pres Perez’s proposal to increase assistance to the third world apparently fell on deaf ears, in part possibly due to his over enthusiastic efforts to promote it among the assembled OPEC Ministers.” (Telegram 12394 from Caracas, December 22, 1977; National Archives, RG 59, Central Foreign Policy File, D770479–0764)
5. Carter indicated his approval of the recommendation.
6. No classification marking.
7. Meeting in Paris in August 1977, representatives of selected IMF member states agreed to the establishment of the supplementary financing facility known as the Witteveen Facility. Later that same month, the IMF Executive Board formally established the facility. See Document 50 and de Vries, The International Monetary Fund, 1972–1978: Cooperation on Trial, vol. I: Narrative and Analysis, pp. 549–554.