Foreign Relations of the United States, 1977–1980 Volume XXIV, South America; Latin America Region

308. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter¹

Washington, April 25, 1978

SUBJECT

• Letter to Peruvian President Morales Bermudez

The Peruvian economy faces an extremely serious external debt problem. President Morales Bermudez has taken a number of steps to impose a greater degree of economic stabilization, and these austerity measures have in turn created internal political problems. He has written a letter to you (Tab B)² to request your help in breaking out of this vicious cycle. He asks your support in four ways: (1) to encourage IMF flexibility; (2) to help Peru directly through the Exchange Stabilization Fund; (3) to lend our support to a prestigious institution, like the Inter-American Development Bank, to coordinate a group to restructure Peru’s debt; and (4) that you personally meet with his Foreign and Finance Ministers to talk about Peru’s desperate financial problems.³

The response (at Tab A)⁴ is responsive in some ways—though hardly all—to his requests: (1) We could in fact informally urge that the IMF act with flexibility, and Peru is aware of that, but it would not be appropriate to put that in a letter from you. (2) Treasury strongly opposes the use of the ESF to help Peru at this time. (3) Peru is currently discussing with IDB representatives the most appropriate forum to discuss debt rescheduling. (4) We have strongly hinted to the Peruvians that a meeting with you would be difficult, but that we would try to arrange meetings with Cy and with Mike Blumenthal. They appreciate the scheduling problem, but said that a few (symbolic) minutes with you were all that was necessary. Foreign Minister de la Puente has also asked our Ambassador that if he could not meet with you whether it would be possible to meet with Mrs. Carter.⁵

The letter also mentions the support we have given to Peru through AID, CCC credits, and PL–480.

State and NSC drafted the letter and cleared it with Treasury and Jim Fallows.

RECOMMENDATION:

That you sign the letter attached at Tab A.⁶

1. Source: Carter Library, National Security Affairs, Brzezinski Material, President’s Correspondence with Foreign Leaders, Box 16, Peru: President Francisco Morales Bermudez Cerutti, 5/77-6/80. Confidential. Sent for action. At the top of the page, Carter wrote: “Susan retype last p,” a reference to changes Carter made in the last paragraph of Document 309.
2. Dated April 4; attached but not printed.
3. Carter underlined the phrases “encourage IMF flexibility,” “Exchange Stabilization Fund,” “Inter-American Development Bank,” and “meet with his Foreign and Finance Ministers.”
4. Attached, printed as Document 309.
5. In the right-hand margin, Carter marked this sentence.
6. There is no indication of approval or disapproval of the recommendation. The letter was signed on April 26. At the bottom of the memorandum, Brzezinski wrote: “Cause of delay in response: We needed to know IDB reaction to Peru’s plans. Delay approved by State and us.”