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

306. Memorandum of Conversation¹

Panama City, June 17, 1978, 8:45–9:35 a.m.

SUBJECT

• Summary of Second Multilateral Meeting in Panama

PARTICIPANTS

• President Jimmy Carter
• Andrew Young, U.S. Representative to the U.N.
• Dr. Zbigniew Brzezinski, Assistant to the President for National Security Affairs
• Warren Christopher, Deputy Secretary of State
• Terence Todman, Assistant Secretary of State
• Robert A. Pastor, NSC Staff Member (note taker)
• President Carlos Andres Perez, Venezuela
• Simon Consalvi Bottaro, Minister of Foreign Affairs for Venezuela
• President Alfonso Lopez Michelsen, Colombia
• Virgilio Barco, Colombian Ambassador to the U.S.
• Prime Minister Michael Manley, Jamaica
• P.J. Patterson, Minister of Foreign Affairs, Foreign Trade and Tourism for Jamaica
• Omar Torrijos, Chief of Government, Panama
• Nicolas Gonzalez Revilla, Minister of Foreign Relations for Panama
• Rafael Angel Calderon Fournier, Minister of Foreign Relations for Costa Rica
• (Other members of other governments’ delegations attended but are not identified.)

Prime Minister Manley opened the second session by referring to the frustration he felt on the primordial issue of the North-South dialogue. There has been no practical results yet from the Paris meeting.² In trying to understand the causes of the failure, he said that he attributed it to the interaction of two groups—the industrialized countries and the oil-producing countries—who saw the North-South dialogue as merely a way to bargain with each other. The industrialized countries were saying that if they could receive fair prices for oil, then they could consider large transfers of resources. The oil-producing countries said that if international institutions could be reformed, then they would consider transfer of resources, provided also that there were greater resources transferred from the industrialized countries.

To summarize, Manley said that the developing world got “caught in the door, and the result is a terrible crisis”. The overall effect is a serious slowing down of the world economy, but what is painful for the industrialized countries is disastrous to the developing world.

Manley suggested that we pause to look at the non-oil-producing developing world. As the tendency grows toward protectionism, there is a hesitancy on the part of important industrialized countries to reach the point of practical action in the North-South dialogue.

There are many developed countries, Manley said, that are finally beginning to realize the deleterious impact on their economies of the inability of developing countries to expand their own economies. Industrialized countries are beginning to learn that they cannot sell if the developing countries cannot buy.

Manley suggested a practical solution to this problem in a comprehensive context. Fundamentally, the need is to effect the terms of trade. This has four components: First, the Common Fund is the first practical attempt to look at this problem in structural terms. Energy must also be included. Secondly, transfer of resources. Thirdly, reform of multilateral institutions, particularly the International Monetary Fund. Fourth, debt.

If we could arrive at a simultaneous response to each of these four elements that would mean important progress in the North-South dialogue.

Jamaica had been working on two areas. First it had been trying to move its own approach from one of generalities into one of practical solutions. There has been some progress. Secondly, internationally, it had done some work recently among the Commonwealth countries within the context of the trade negotiations in Geneva, and it believes that has been effective. At the same time, Jamaica has been using its strategic position in the Non-Aligned Movement to press socialist countries to be more forthcoming on North-South issues since they just cannot ignore them any more.

Manley urged President Carter to look at two sets of negotiations: First, the Bonn Summit in July,³ where he urged President Carter to make sure that the leaders at the Summit will not exclude agricultural products from the trade negotiations. Also, he asked that he use the Bonn Summit for helping push forward the UNCTAD negotiations, which will begin in mid-September. He stressed the importance of the UNCTAD negotiations in achieving structural reform with regard to commodity trade.

President Carter said that Manley had addressed the problems of North-South relations in a very profound way. There is no doubt, he said, that “I, as well as other leaders of the industrialized countries, have not given adequate attention to the developing world. I have not.” But as a person who deeply cares about this issue, I will try. But at the same time, the developing countries could help. In the multilateral trade negotiations, Colombia and Venezuela could play a much more active role than they are playing right now. The problems of agriculture are not really with the U.S., but with the European community. Your voices could be very constructive.

The Non-Aligned Movement could be much more helpful if it were much more independent than it is right now. The U.S. feels that it is being captured more and more by the Cubans. By no stretch of the imagination can Cuba realistically be considered a non-aligned country. If the Non-Aligned Movement is to keep its independence and its objectiveness, then it must consider which path it will take in the future.

At the last summit in London,⁴ President Carter said, there was a constructive feeling on our part as well as on the part of the Federal Republic of Germany, but the developing countries have since rejected anything but a total compliance with their own demands. There needs to be a phased implementation of an overall plan based on principles that we all agree to. He suggested that this be done in the new Committee of the Whole of the United Nations.

The President then said that his own conclusion is that he should work much more with leaders like Prime Minister Manley and President Perez and others to sketch out points of agreement as well as points of disagreement. It is only by doing this that he could see clearly what steps the developed countries need to take. Only then could he use his own position as a leader with the industrialized countries and also to the OPEC nations—particularly the wealthy ones, like Venezuela. He said that he would use his influence with both groups to see that these steps are taken. He said that it is necessary to take advantage of the goodwill on both sides and leave aside the radical rhetoric that sometimes is used in the Group of 77. It is this rhetoric which the U.S. Congress and the American people hear. We feel that our contributions to the World Bank and to the Inter-American Development Bank are neither understood nor appreciated by the developing countries. There is a need in the U.S. for some recognition of our contributions. This would be extremely helpful to the U.S. Congress. Excessive rhetoric or demands by the developing countries makes it more difficult to discuss these issues in the Congress.

The President then suggested that we follow up this meeting, and he pledged that he would take a more active role and have an analysis drafted of the points of agreement as well as the points of disagreement. This memo would go to the Bonn Summit with specific recommendations on positions which the industrialized countries should take at the September UNCTAD meeting.

The President then asked for Prime Minister Manley’s analysis and those of the others of whether the United States and other industrialized countries should channel their financial contributions through the multilateral development banks or through other means.

The President said that the United States is trying to sustain its growth as a way of helping the world economy and the developing countries. He said that the United States and other industrialized countries are bringing the leading and more prosperous developing countries—including OPEC—into more important roles in international institutions, such as the World Bank. He alluded to the U.S. friendship with Saudi Arabia and Iran as helpful in this regard. He said that they now want to participate more actively in these organizations. A second objective of his economic program is to reduce inflation. He said the Germans are particularly concerned about this, but that we are making progress.

With regard to energy, he said that the United States is almost the largest energy producer as well as consumer in the world. For a long period, the producer interests in the United States have had the political power in Congress. It is therefore difficult to develop an overall energy policy, but he was hopeful that it would be done.

In summary, the President said that he would try to make a clear presentation at Bonn and that he would be responsible for not only the presentation, but ultimately for the implementation of the new positions. Furthermore, he will make sure that the September UNCTAD meetings will have our complete participation and constructive leadership. At the same time, however, he asked that the Group of 77 moderate their rhetoric and put the discussions onto a more constructive plane. He believes that we have finally reached a point where we can make progress.

In closing, the President reaffirmed his hope that the governments who are present at this meeting would take a strong role in the multilateral trade negotiations, in the GATT, and in the Non-Aligned Movement because their leadership in some ways is much more effective than what the United States can do. The President said that he has not been in office very long, but he has begun to see the problems which Prime Minister Manley described as very profound. Americans are a very generous people and they would like to be helpful. As for himself, the President said that he will take a more responsible and active role in these North-South issues from then on.

President Perez then expressed his absolute solidarity with Prime Minister Manley’s words. Since President Carter was elected, we have been hearing from the U.S. a voice of sincerity and a will to contribute to these actions which we have not heard before. It is true that the tone is not always appropriate in our rhetoric, but often times other considerations play a part in this. At the same time, however, Perez believes that we have reached a grave situation. On the one hand, the industrialized countries appear to be becoming preoccupied with East-West problems and have begun to ignore North-South issues, which are more profound. If this continues, the President is likely to hear screams instead of rhetoric. President Perez said that he fears that we will move backward, and he said that he hopes that President Carter will stimulate his advisors instead of quieting them.

President Carter responded by saying that he would like to have someone representing himself take an outline of what he intends to propose in Bonn. After consulting with Deputy Secretary Christopher, he said that probably would be Dick Cooper.

Prime Minister Manley confirmed that the first documents would be coming from the United States.

Then President Carter said that we would try to get a document to the Jamaicans as early as we can so that we have time to discuss this issue before the Summit. He very much valued Prime Minister Manley’s comments on this document and repeated that he wanted to present the points of agreement, the points of disagreement, and within the latter, our position and the G–77 position. He said that he wanted Prime Minister Manley to correct our interpretation of the G–77 position if that was warranted.

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 36, Memcons: President: 6–7/78. Confidential. The meeting took place in the El Panama Hotel. Carter was in Panama City June 16–17 to sign the protocol confirming the exchange of documents ratifying the Panama Canal Treaties. The memorandum of conversation of the first multilateral meeting, held the evening of June 16, is ibid.
2. See Document 265.
3. The Bonn G–7 Summit took place July 16–17. See Documents 145–148.
4. The London G–7 Summit took place May 7–8, 1977. See Documents 27 and 28.