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

326. Memorandum From the Under Secretary of State for Economic Affairs (Cooper) to Secretary of State Vance¹

Washington, January 9, 1979

Our Meeting on Common Fund Wednesday, January 10, 1979²

I thought it might be helpful to provide you with a summary of the current status of our negotiations with the G–77, the major issues separating Group B and the G–77, and our plans for dealing with key countries in the G–77.

At the November negotiating session,³ Group B put forward a comprehensive proposal that fully met our commitment to Asean Ministers last summer.⁴ The proposal provided for direct contributions to the first window and a limited second window based on voluntary contributions. Members of the Group of 77, while indicating in private some areas of flexibility, were not able to respond formally to the Group B proposal or to table a paper of their own. This immobility allowed them to protect their basic position while apparently pocketing the concessions we have already made. It also raises questions about how much substantive progress was really made. (Widjojo, the Asean spokesman on the Common Fund at the US-Asean Ministerial last August, has suggested the need for “greater flexibility” by the U.S., even though we have met all the conditions they expressed there.)

We still must get from the G–77 solid agreements on:

—the nature and function of the first window, to insure that it will not be another resource transfer mechanism;

—the scope of the second window’s functions, to insure that it does not duplicate the activities of the IFI’s, and the voluntary character of contributions;

—a clear separation between the first and second window; and

—specific guidelines for voting and decision making so that country voting weights will accord with country financial interests in the Fund.

As agreement in principle on these major items falls into place, we will be better positioned to negotiate on the dollar values associated with each window.

The reports from the Jamaican Summit were positive, but somewhat unclear on important details.⁵ The Canadians, for example, indicated that there seemed to be movement by LDC representatives toward our position on the nature and function of the first window and some recognition of the need for separating the first and second window. Perez Guerrero, however, told Ambassador Luers in Venezuela that he thought a consensus emerged to transfer a portion of the funding from the first window to the second and that the U.S. would go beyond its position on the scope of activities for the second window.⁶ (Perez Guerrero also expressed appreciation for the forthcoming position the U.S. showed in Geneva in November.) Some clarification of these points should emerge at the OECD Executive Committee meeting next week.⁷

Regional meetings of G–77 countries have now begun in preparation for the G–77 meeting at Arusha, February 6–16, when the G–77 will set their position for the next round of negotiations and for UNCTAD V. We have already dispatched a message to selected Asian countries, who are caucusing through the middle of next week, and will do so with other regional groupings of G–77 countries prior to their caucuses.

African countries, who view success in the Common Fund in terms of a broadly mandated and well-funded second window, will be key to a successful negotiation. Yet, there are major problems in dealing with the Africans. First, they are poorly organized; there are no two or three individuals who can speak for the African countries as a group. Second, many African countries do not understand the issues, and outside of their Geneva representatives who frequently act on their own authority, attach great importance to the negotiation but cannot address the vital details. Third, we have little leverage that we can exert. We can point out to the Africans that we can do more through the African Development Bank to meet their needs on some of their concepts of second window activities than we can through a Common Fund, and that the Bank’s ability to do so will increase significantly as the U.S. and other non-regional countries subscribe to the shares of the Bank. Cameroon Finance Minister Yondo will be here later in January. He is capable and is respected in African financial circles, so that will provide a useful occasion for detailed discussion.⁸ We should not, however, delude ourselves into thinking that this linkage alone will do the trick.

What may be necessary is a well-coordinated political approach by Foreign Ministers of selected developed countries with their counterparts in Africa. If in the course of our meeting you concur, I can initiate this at the OECD Executive Committee meeting next week.

1. Source: National Archives, RG 59, Office of the Secretariat Staff, Records of the Under Secretary of State for Economic Affairs, Richard N. Cooper, 1977–1980, Lot 81D134, Box 4, UN—Common Fund. Limited Official Use.
2. No memorandum of conversation of this meeting was found.
3. Negotiations on the Common Fund took place in Geneva November 14–30, 1978. Telegram 18440 from Geneva, December 1, 1978, summarized the status of the negotiations at the end of the session. (National Archives, RG 59, Central Foreign Policy File, D780496–0210)
4. See footnote 5, Document 314.
5. A undated memorandum summarizing the proceedings of the December 28–29 summit at Runaway Bay, Jamaica, is in the Carter Library, National Security Affairs, Brzezinski Material, Trip File, Box 16, President, Guadeloupe, 1 /4–6/79: NSC Briefing Book [III]. Erb and Hormats commented on the summit in a January 4 memorandum to Brzezinski. (Carter Library, National Security Affairs, Brzezinski Material, Trip File, Box 16, President, Guadeloupe, 1/4–6/79: SITTO 1–34) See also footnote 3, Document 324.
6. Telegram 122 from Caracas, January 5, reported on Luers’ January 3 discussion with Pérez Guerrero. (National Archives, RG 59, Central Foreign Policy File, D790007–0926)
7. The OECD Executive Committee met in Paris on January 17. Telegram 2196 from USOECD Paris, January 22, reported on the discussion of North-South issues. (National Archives, RG 59, Central Foreign Policy File, D790032–0724)
8. A memorandum of conversation of Cooper’s January 26 meeting with Yondo, during which they discussed the Common Fund and financial and monetary issues, is in the National Archives, RG 59, Office of the Secretariat Staff, Records of the Under Secretary of State for Economic Affairs, Richard N. Cooper, 1977–1980, Lot 81D134, Box 5, Memorandum of Conversation, Jan–June ‘79.