Foreign Relations of the United States, 1981–1988, Volume XXXVIII, International Economic Development; International Debt; Foreign Assistance

106. Memorandum From the Assistant Secretary of the Treasury for International Affairs (Leland) to Secretary of the Treasury Regan¹

Washington, April 14, 1983

SUBJECT

• U.S. Participation at UNCTAD VI—Possible Approaches

Issue

Secretary Shultz will shortly be making a decision on how the U.S. should approach the UNCTAD VI Conference (Belgrade, June 6–30). We expect he will call you, Brock, and Baldrige to discuss his preferred approach.

Discussion

The sixth session of UNCTAD will be a politically important event in North-South relations this year. Typically UNCTAD is dominated by LDCs engaging in inflated rhetoric, making unrealistic demands, and attempting to encroach upon the mandate of the IMF, GATT, and World Bank. At Belgrade we expect attention to focus on monetary and financial issues, with the G–77 pushing for increased resource flows from the IMF and World Bank, debt relief, and arrangements to stabilize commodity export earnings.

For the United States, UNCTAD has little or no practical value in addressing specific economic development issues. On the other hand, U.S. participation in UNCTAD has political value in terms of our multilateral and bilateral relations with developing countries. The Belgrade Conference will allow the G–77 to air concerns in their organization about the state of the global economy and to suggest action proposals. A U.S. presence at the Conference would indicate a willingness to maintain a dialogue in a variety of international fora, and would protect U.S. interests, given that most other OECD countries are inclined, at least superficially, to be more accommodating to G–77 concerns.

Secretary Shultz is being presented with options on U.S. participation at Belgrade ranging from “non-participation” to the “cynical European tradition” (Tab A).² Under Secretary Eagleburger supports a course of “active participation,” i.e., treating UNCTAD VI as one of several vehicles for implementing an overall U.S. strategy for global recovery to be developed and pursued at the OECD Ministerial, the Williamsburg Summit, and the Bank/Fund annual meeting. Under this recommendation, the United States would actively discuss issues; and possibly introduce modest initiatives on trade, investment, and compensatory financing for commodity export shortfalls. Under Secretary Wallis, on the other hand, does not think highly of UNCTAD and believes the United States should seek to transform the organization into a U.N. specialized agency with its own budget—which would give the U.S. the option to withdraw its membership.

Treasury Response

Although the Wallis idea has a certain appeal, the thrust of the “active participation” option is basically sound. The most pragmatic choice for the United States is to treat the Conference as one event in the multifaceted process currently underway to address the economic and financial problems of developing countries and to assure sustained, non-inflationary global recovery. The U.S. delegation at Belgrade should be prepared to exchange views on the full range of issues before the Conference, work closely with our OECD partners, and seek common ground with G–77 moderates.

There are, however, two areas—protection of the specialized agencies and possible U.S. initiatives—where we have concerns. Treasury would need firm assurance from State that the United States would consider and negotiate only on issues clearly within UNCTAD’s mandate and resist any encroachment on the competence of the IMF, World Bank, and GATT.

In addition, Treasury is skeptical of U.S. initiatives in UNCTAD. They are usually designed for political pay out, tend to muddy the waters surrounding the specialized agencies, and, if “modest” in scope, don’t appeal to the G–77 and risk unacceptable modification. While we would not, prima facie, reject the possibility of proposing initiatives, it is State’s responsibility to define and present them for high-level consideration by interested U.S. agencies. Treasury would resist proposals which implied budgetary expense; conflicted with the Administration’s philosophy on trade, investment, finance, debt or commodities; or threatened the IMF/World Bank. (For example, State staff is considering a proposal for liberalizing the IMF’s CFF. We are seriously concerned that such a proposal would undermine IMF support for adjustment and erode Congressional support of the IMF legislation at a crucial time.)

RECOMMENDATION:

That, when contacted by Shultz, you seek to clarify State’s approach to UNCTAD VI, stressing our two concerns and the need for SIG/IEP review of the U.S. approach and any initiatives.³

1. Source: National Archives, RG 56, Records of the Office of the Under Secretary for Monetary Affairs, Subject Files relating to Meetings, Working Groups, Trips, Summits, and Currency Talks, 1/1/1981–12/31/1985, UD–13W105, 56–89–45, Box 2, April Chron 1983. Confidential. Sent for action. Sent through Sprinkel. A stamped notation next to Sprinkel’s name reads: “(Initialed) BWS.” A stamped notation next to Leland’s name reads: “(Signed) Marc E. Leland.”
2. Tab A, “State Options,” is attached but not printed. Tab B, “Overview of UNCTAD VI Issues” is also attached but not printed.
3. Regan did not indicate his approval or disapproval of the recommendation, nor did he check the “Other” line.