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

345. Memorandum From the Assistant Secretary of the Treasury for International Affairs (Bergsten) to Secretary of the Treasury Miller¹

Washington, February 25, 1980

SUBJECT

• Brandt Commission Report

The Willy Brandt Commission (officially, the Independent Commission on International Development Issues), which was established to take a fresh look at development issues and North/South relations, has released its final report. The Report is wide-ranging, making some eighty recommendations on the whole spectrum of development, economic and financial issues. It was adopted unanimously by its mem-bers, including Pete Peterson and Katherine Graham.²

The Report’s main conclusion is that there is a crisis in North/South relations, and that both developed and developing countries have a mutual interest in finding ways to restructure the international economy to end the crisis. The main thrust of the recommendations is on transferring additional resources to LDCs.

A compilation of the recommendations in the Report is at Tab A.³ Major proposals include:

—an increase in industrial country concessional aid to 0.7 percent of their GNP by 1985, from 0.3 percent at present;

—an international energy package, including commitments on oil supply and price, and new investment in new energy sources;

—introduction of some form of “automatic” international taxes (e.g., on trade and tourism) to finance development;

—a doubling of the legal borrowing-to-capital ratio for the IBRD, to take place in addition to the just-negotiated General Capital Increase,⁴ to allow it to lend up to $160 billion compared with the present ceiling of $40 billion;

—consideration of creation of a World Development Fund that would fill the alleged gaps—particularly for program lending—in programs of the existing institutions (IMF, IBRD);

—an SDR/aid link;

—use of the IMF gold stock as collateral for loans to middle-income LDCs;

—an international summit meeting of 25 or so heads of government to launch the program

The Report could improve the public and Congressional climate for foreign assistance to developing countries. On the other hand—by endorsing numerous demands of the developing countries that there is no realistic expectation of meeting—the Report may create false expectations which will lead to future disappointments. Most likely, it will have little or no effect on public opinion in this country and marginal effect in a few places abroad (Germany, U.K.).

U.S. Government Reaction

We are reacting cautiously to the report, emphasizing that the U.S. Government was not involved in its preparation, that we have just received it, and that review and analysis of its many recommendations will require some time.⁵ We will have to formulate a position for preliminary discussion of the Report at the Development Committee meeting in Hamburg in late April.⁶

I will convene an interagency discussion in the NAC on the monetary and financial issues. IDCA plans to coordinate an interagency study of all the recommendations and prepare a U.S. position on the development aspects of the Report.

Background

The Brandt Commission was established in 1977 at the request of IBRD President McNamara to provide a new assessment of the possibilities for progress on North/South issues. Brandt chose 16 commissioners with a wide diversity of backgrounds and nationalities to assist him, including Peter Peterson and Katherine Graham of the United States. Other notables on the Commission include Edward Heath, Olof Palme and Eduardo Frei.⁷

1. Source: Carter Library, Anthony Solomon Collection, 1977–1980, Chronological File, Box 8, 2/14/80–2/29/80. No classification marking. Sent through Solomon. Drafted on February 19 by J. Fox (IDP) and reviewed by Leddy on February 19 and John Hartzell (IDP) and Nachmanoff (ID) on February 20.
2. Peter G. Peterson was President Nixon’s Assistant for International Economic Affairs from 1971 until 1972. Katherine Graham was the Chairman of the Board of The Washington Post Company. The book-length report of the Brandt Commission is entitled “North-South: A Programme for Survival.”
3. Tab A, attached but not printed, is an undated paper entitled “Annex I, Summary of Recommendations.”
4. Bergsten discussed the U.S. position on the IBRD General Capital Increase in a February 5 memorandum to Miller. (Carter Library, Anthony Solomon Collection, 1977–1980, Chronological File, Box 8, 2/1/80–2/14/80)
5. In his February 14 Evening Report to Carter, Vance noted that he had “had a useful meeting this morning with Willy Brandt. His report is interesting and has a number of stimulating and prodding proposals.” Vance explained to Brandt “the very real problems we face in raising our aid levels and told him 7 percent is simply not a realistic figure. Brandt probably will not press the point with you.” Carter initialed Vance’s memorandum. (Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 22, Evening Reports (State): 2/80) Carter met with Brandt on February 15 from 9:45 until 10:05 a.m. in the Oval Office. (Carter Library, Presidential Materials, President’s Daily Diary) No memorandum of conversation of this meeting was found.
6. The IMF/IBRD Development Committee met in Hamburg on April 24.
7. Edward Heath was the U.K. Prime Minister from 1970 until 1974, Olof Palme was the Swedish Prime Minister from 1969 until 1976, and Eduardo Frei was the President of Chile from 1964 until 1970.