203. Memorandum From the Deputy Secretary of State (Whitehead) to the Acting Assistant Secretary of State for African Affairs (Wisner)1
I’ve finally found the time to read Henry Breck’s interesting paper on how to get rid of the African debt problem.2 I have great respect for Henry, another veteran Wall Street hand, but I don’t agree with his conclusion which is to declare a blanket moratorium on all the debt. Any such move would assure that no private sector money would be invested in Africa for many years. It would relegate Africa to the bread line for the next generation.
There is no easy answer to the African debt problem, but I am convinced of one thing—that each country is different. Countries with democratic governments which have free economies and encourage private investment do in fact do better than those with centrist policies. A blanket moratorium sweeps them all under, good performers and poor performers both. It’s like a farmer with a leaky barn deciding to burn it down rather than fix the roof.
I’m for the Whitehead Muddle-Through Policy, which considers each country separately, adjusting as necessary, cajoling difficult decisions, and lets the banks do the negotiating rather than the government.
Having said all this, I think Henry Breck would be a splendid addition to the government, if he could be persuaded to come. It would seem logical to me that he could help David Mulford with African or Latin American debt negotiation or maybe work at IMF.3 I’ll be glad to see him if you want me to.
- Source: Department of State, Executive Secretariat, S/S–I Records, Files of the Deputy Secretary of State (D), Lot 95D334: Debt. Confidential.↩
- The undated paper, “Sub-Saharan Debt—A View from the Right,” is attached but not printed. The paper was sent under a February 12 memorandum from Wisner to Whitehead.↩
- An unknown hand drew an arrow in the left-hand margin next to this sentence.↩
- Whitehead initialed “JCW” above his typed signature.↩