339. Memorandum From David Wigg of the National Security Council Staff to the President’s Assistant for National Security Affairs (McFarlane)1
SUBJECT
- The Common Fund Agreement
At the conclusion of the July 31, 1985 Economic Policy Council meeting, the Secretary of the Treasury asked that each member of the Council be polled regarding their preferred option for addressing the question of whether the U.S. should ratify the Common Fund.2
During its discussions of the issue, the Council developed three options:
Option 1: Ratify the Common Fund Agreement.
Option 2: Publicly reject ratifying the Common Fund Agreement
Option 3: Continue our current policy of publicly leaving the possibility of the U.S. ratifying the Common Fund Agreement open.
Background
Per my July 31 memo to you, (Tab I)3 STR believes it is time to move decisively on this issue as we are under diplomatic pressure to ratify the Agreement. At present, ratifications have reached the point where U.S. ratification (15.7 percent share of direct contributions—$74 million, of which $25 million initially paid in) would bring the Fund into force. Ratification by the United States would complete the two-thirds threshold and sufficient ratifications to reach the required 90 would follow in the wake of U.S. ratification. West Germany is expected to announce its ratification soon. Among other major countries, only the Soviet Union has not ratified; it may do so soon; if other communist countries also ratify, the Common Fund could enter into force without the United States.
The reasons for U.S. objections, however, have not been altered. The commodity agreements that could potentially join (cocoa, natural rubber and tin) are not currently eligible to do so, and will require significant modifications before becoming eligible.
[Page 825]Interagency State of Play
From the EPC discussions, (Tab II),4 it was clear that a number of agencies favored the rejection option in order to remove diplomatic pressure on us to sign on. Secretary Shultz supported the “no change” option, which I also argued for on the reasoning that while the issue is “live” the possibility exists for some sort of diplomatic or political tradeoffs with the proponents. The counterargument was that with no action, later rejection would appear disingenuous, particularly by developing nations. Since it was unanimously agreed that we will not ratify the agreement, I am persuaded that we should go ahead and make a declaration to that effect, before the Soviets can develop anti-U.S. propaganda capitalizing on our intransigence on the issue.
Jack Matlock, Gaston Sigur, Howard Teicher, Jackie Tillman and Phil Ringdahl concur.
RECOMMENDATION
That the NSC vote to have the U.S. declare its intention not to ratify the Common Fund Agreement (Option 2).5
- Source: Reagan Library, David Wigg Files, Chronological File, August 1985. No classification marking. Sent for action.↩
- See Document 337.↩
- Attached but not printed.↩
- Attached; printed as Document 337.↩
- McFarlane initialed the “Approve” option.↩