[Page 991]

312. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter 1

SUBJECT

  • Letter from Prime Minister Callaghan

Prime Minister Callaghan has written you a letter (Tab B), replying to your letter of July 7, which transmitted a statement of US North-South policies and our points of agreement and disagreement with the developing countries.2 Callaghan thanks you for the paper, encloses his officials’ comments, comments on the broad consensus between our two countries, and mentions two issues where there may be a difference of approach: LDC indebtedness, and the Common Fund. On these issues he recognizes our constraints and urges us to be as flexible as possible in light of these constraints. Attached is a draft reply (Tab A)3 that should meet his concerns.

On LDC indebtedness, the reply says that we will continue to play a positive role in international discussions, and indicates that much depends on what happens to pending legislation.

On the Common Fund, the reply indicates that we will participate constructively in negotiations, while consulting actively with the Congress. This is consistent with the Summit commitment: “We agreed to pursue actively the negotiations on a Common Fund to a successful conclusion . . .”4 Church and Javits have recently indicated their opposition to (and their belief that there is no chance of securing Congressional approval for) a Common Fund involving a direct US contribu[Page 992]tion.5 With both the Chairman and Ranking Minority Member of the Foreign Relations Committee opposed, the chances of securing ratification of a Common Fund treaty would be dim. But we can participate usefully in international discussion and negotiations about this issue while seeing whether we can, through Congressional consultations, alter attitudes on the Hill. In light of these consultations, we can then make firm decisions.

I have cleared the attached reply with State (Dick Cooper, who is working on a memo for you about the Common Fund pursuant to your breakfast discussion today),6 Treasury (Fred Bergsten), and Jim Fallows’ office.

RECOMMENDATION

That you sign the letter to Prime Minister Callaghan at Tab A.7

  1. Source: Carter Library, National Security Affairs, Brzezinski Material, President’s Correspondence with Foreign Leaders File, Box 20, United Kingdom: Prime Minister James Callaghan, 6–9/78. No classification marking. Sent for action.
  2. Tab B, attached but not printed, includes an August 3 letter from Callaghan to Carter and a U.K. paper commenting on the eight U.S. papers on North-South issues. See Document 307.
  3. Tab A, attached but not printed, is a copy of the signed August 15 letter from Carter to Callaghan.
  4. See footnote 5, Document 148.
  5. Owen reported on a conversation with Javits in an August 8 memorandum to Carter. Javits had “said that neither he nor Senator Church believed there was any chance of the Congress approving a Common Fund. They thought the Congress would support individual commodity agreements, and perhaps some arrangement for transfer of funds among such agreements, but not a Common Fund to which there would be a direct US contribution. He stressed that as Chairman and Ranking Minority Member of the Foreign Relations Committee their views as to what the Congress would accept should be taken seriously. He made clear that he and Senator Church shared the attitude they attributed to the Congress.” (National Archives, RG 56, Office of the Under Secretary of the Treasury for Monetary Affairs, Subject Files of Anthony Solomon, 1977–1980, Box 1, Common Fund)
  6. Carter held a breakfast meeting on August 11 with Vance, Brown, Brzezinski, and Jordan in the Cabinet Room from 7:34 until 9 a.m. (Carter Library, Presidential Materials, President’s Daily Diary) No memorandum of conversation was found. An August 10 briefing memorandum on the Common Fund prepared by Lake for Vance for the meeting is in the National Archives, RG 59, Office of the Secretariat Staff, Official Working Papers of S/P Director Anthony Lake, 1977–January 1981, Lot 82D298, Box 4, S/P-Lake Papers—8/1–8/15/78.
  7. Brzezinski wrote beneath the recommendation: “Concur. ZB.” A separate handwritten notation reads: “signed 8–15–78.”