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

73. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter¹

Washington, November 9, 1977

SUBJECT

• “Year of the Economy”

You were wise to make 1977 the Year of Energy—both because the issue is important and because it is useful to order an administration’s activities around a central theme and “subordinate other business to it,” as Churchill once said. From a foreign policy standpoint, it would make sense to make 1978 the Year of the Economy—for two reasons:

1. Economic Issues Are Now Central: In the industrial world stagflation may not pose as dramatic a danger as the Great Depression did in the 1930’s, but it could eventually do as much to weaken moderate political forces in Europe and Japan, and thus to unhinge the existing international order. In the poorer developing countries, stagnation poses a serious long-term threat.

2. There is good potential for progress in meeting these problems in 1978. The single most important factor is the health of the US economy, and others can spell out the opportunities for action on this front. But there is a promising foreign agenda, whose fulfillment would promote US and world recovery:

—concluding an MTN agreement;²

—reforming our bilateral aid programs, which is a lot more important now than spending more money on these programs;³

—setting up the new IMF $10 billion lending facility, which is already in trouble on the Hill; progressing toward agreement on new IMF quotas; and getting agreement on a general increase in the resources of the World Bank;⁴

—pushing for increased production abroad of commodities in short supply—notably energy and food—and trying to set up an international system of national grain resources;⁵

—concerting with other oil-importing countries on measures to reduce energy consumption and thus restrain oil price increases;⁶

—concerting with Japan and Western Europe about the industrial countries’ macro-economic policies, and with Japan about a package of measures to reduce its external surplus.⁷

Each of these measures is already in train. With Presidential leadership and a little luck, most of them could be brought to a successful conclusion next year. Taken together with the measures on the domestic front that others will propose to you, they would make the “Year of the Economy” one of substantial achievement.

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Subject Chron File, Box 121, Trade: 1977. Confidential. Sent for information. Carter wrote at the top of the page: “Stu. C.” Brzezinski also initialed the memorandum.
2. Carter underlined the phrase “MTN agreement.”
3. Carter underlined the words “reforming” and “aid programs.”
4. Carter underlined the phrase “IMF $10 billion.”
5. Carter underlined the phrases “increased production abroad” and “energy and food.”
6. Carter underlined the phrase “reduce energy consumption.”
7. Carter underlined the phrases “Japan and Western Europe,” “macro-economic policies,” “Japan,” and “external surplus.”