Foreign Relations, 1977–1980, Volume XXIII, Mexico, Cuba, and the Caribbean

180. Memorandum From the Executive Secretary of the Department of State (Tarnoff) to the President’s Assistant for National Security Affairs (Brzezinski)¹

Washington, June 25, 1977

SUBJECT

• Short-term Assistance for Jamaica

All U.S. Executive Agencies agree that Jamaica faces severe economic problems in both the short and the longer run. The longer-run problems would be addressed by a consortium under the IBRD. We have recommended that the President discuss such a consortium with Venezuelan President Perez next week.²

This memorandum addresses the short-run question. We need to decide on the elements of an immediate U.S. assistance package. The Jamaican Deputy Prime Minister will be here with a high-level team on Monday and Tuesday to negotiate with the IMF and to talk with us.³

We recommend that a short-run package include the following elements:

—$12 million in PL–480 for FY 77.

—$10 million in PL–480 for FY 78.

—$15 million in Housing Investment Guarantees.

—$15 million in development loans for FY 77.

—$10 million in Security Supporting Assistance for FY 78.

A package of this magnitude, together with assistance from the IMF, the Netherlands, Trinidad and Tobago, Venezuela, other potential donors, would help carry Jamaica through the next critical months.

An immediate question is the extent to which the package is to be contingent on Jamaica’s reaching an agreement with the IMF. Such an agreement remains the key element in any recovery program. The IMF and Jamaica have been negotiating for nearly two months.

We recommend that the package be contingent upon Jamaica’s reaching agreement with the IMF, with only one exception: we recommend that we be authorized to proceed with $8 of the $12 million in FY 77 PL–480 prior to an IMF agreement. PL–480 takes 6–8 weeks from decision to balance-of-payments impact. A decision now would provide much-needed assistance in the third quarter, but it would not be enough to deter the Jamaicans from reaching agreement with the IMF. Congress is generally unsympathetic to aid in the absence of an IMF agreement, but we think this amount of PL–480 aid can be justified at this time.

The President has a $5 million AID contingency fund which could be used to aid Jamaica. We do not recommend its use in advance of an IMF agreement. In any event, there would be a question about using the entire fund for this balance-of-payments purpose.

If approved, we would explain to the Jamaicans that the short-run package would essentially depend on Jamaica’s reaching an agreement with the IMF, and that some parts would depend on Congressional action or notification. However, we would tell them that we are going ahead with the $8 million now in the hope it will help pull them through and on the expectation that they will reach agreement with the IMF. For the longer run, we would tell the Jamaicans we are exploring the creation of a consortium and under IBRD auspices.⁴

Peter Tarnoff
Executive Secretary

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 40, Jamaica, 1/77–10/79 through Japan, 6–12/78. Confidential.
2. President Carter and Venezuelan President Carlos Andres Perez met on June 28 and June 29. During their meetings, Carter agreed to the assistance plan outlined in Tarnoff’s memorandum. (Memorandum from Pastor to Brzezinski, July 13; Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Country Chron, Box 23, Jamaica, 1977)
3. Jamaican officials met with Cooper on June 27 and discussed Jamaica’s IMF negotiations. (Telegram 160436 to Kingston, July 11; National Archives, RG 59, Central Foreign Policy File, P850091–0153)
4. In telegram 3729 from Kingston, July 13, the Embassy reported that Prime Minister Manley announced an agreement between the IMF and Jamaica. (National Archives, RG 59, Central Foreign Policy File, D770251–0434) Six days later, President Carter approved the $62 million aid package. (Memorandum from Brzezinski to Carter, July 19; Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 85, Venezuela, 1/77–12/78) The $10 million in security supporting assistance was later reconsidered. (Memorandum from Stedman to Benson, August 19; National Archives, RG 59, Central Foreign Policy File, P770144–2510)