153. Memorandum From Charles Tyson, Roger Robinson, and William Martin of the National Security Council Staff to the President’s Assistant for National Security Affairs (McFarlane)1
SUBJECT
- Priority Issues for International Economics Directorate and Special Projects
[Omitted here are issues unrelated to debt.]
International Debt Crisis
Issue: To effectively monitor forty-seven IMF adjustment programs and manage US coordination and participation in short and medium term funding packages designed to meet the critical funding gaps of these developing countries during their various adjustment periods and to preserve political stability.
Discussion: The debt crisis represents one of the principal areas of vulnerability for the President. Its dimensions are huge, involving approximately 47 countries and $350 billion in loan obligations which cannot be met according to their original repayment schedules (about one-third of IMF member countries). As the debt crisis has prompted the implementation of economic austerity programs in virtually all of these countries, a delicate balance must be struck between economic discipline and political stability. Major US foreign policy and security interests are at stake as well as important US export markets, jobs, and the overall solvency of our banking system. For the past two years, we have pressed for greater recognition by Treasury of the severity of this crisis and argued for more systematic creative thinking about the problem (as opposed to ad hoc, stop-gap measures). Although it is understood that each of these countries requires a “tailor made” approach, there are common features which lend themselves to policy guidelines.
Process: Subsequent to a meeting with Marty Feldstein and the President on September 14, the President mandated the establishment of an Oversight Group for the debt crisis composed of relevant Cabinet members, you and Paul Volcker.2 More than one attempt to implement the formation of such a group was frustrated by Treasury. As a result, there is no senior level contingency planning going on today that addresses the foreign policy and security dimensions of the crisis. The [Page 396] debt problem is frequently raised in the SIG–IEP but this involves primarily reporting. We recommend you meet with Secretary Regan and make a “fresh start” concerning the formation of such a group which will, in turn, stimulate this needed creative thinking and planning.
[Omitted here are issues unrelated to debt.]
- Source: Reagan Library, William Martin Files, NSC Chron File, NSC Chron 12/02/1983–12/11/1983; NLR–348–9–44–3–5. Secret. Sent for information.↩
- See Document 150.↩