SENIOR INTERDEPARTMENTAL GROUP-INTERNATIONAL ECONOMIC POLICY MARCH 17, 1983 3:00 P.M. ROOSEVELT ROOM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85M00364R000400590002-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: November 30, 2010
• Sequence Number: 2
• Publication Date: March 17, 1983
• Content Type: REPORT

EC
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SENIOR INTERDEPARTMENTAL GROUP-INTERNATIONAL ECONOMIC POLICY
March 17, 1983
3:00 p.m.
Roosevelt Room
Treasury CIA
Secretary Regan Henry Rowen
Marc Leland
State USTR
Richard McCormack John E. Ray
Dennis Lamb William Triplett
Defense OMB
Richard Perle Alton Keel
Stephen Bryen
CEA
Agriculture Martin Feldstein
Richard Lyng
Allan Tracy OPD
Edwin L. Harper
Commerce Roger Porter
Secretary Baldrige
Lionel Olmer NSC
Norman Bailey, Executive Secretary
Justice Roger Robinson
Michael Shepherd William Martin
Korean Cotton
The Chairman asked Deputy Secretary Lyng to introduce the
subject of extending blended credit to the Koreans for purchases
of U.S. cotton. The direct costs to the USG for the $10 million
interest-free credit for 30 months would be $1.7-1.9 million,
but the direct benefits would be considerably more. In addition,
the United States would be able to maintain its traditional share
of the market (90-95 percent) which is being challenged by
several developing country producers.
Opponents of the sale argued that this would be a
contradictory and untimely gesture given our free market and
trade approach. In addition, it would help block out sales by
other developing countries who we have told to depend on trade,
not aid for economic growth. After discussion, the SIG-IEP,
by a vote of eight to two, decided the cotton credit should
not be granted.
Declassify on: OADR
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Polish Debt
Marc Leland reviewed the status of Polish debt. Private
banks and Poland have agreed to reschedule the 1982 debt. While
banks are receiving only a small portion of what is due them,
some European countries are beginning to believe that partial
payment is better than receiving nothing. We are likely to run
into considerable pressure from the Europeans to seek an agree-
ment to reschedule 1982 Polish debt.
However, Polish funds are limited. It is not clear that
governments would receive significant amounts. On the other
hand, it would get us nowhere to declare Poland in default.
This standstill situation is likely to continue for some time.
Dick McCormack reported that the political situation in
Poland remains grim and that Secretary Shultz is willing to try
to negotiate quietly with the Poles to see if something can be
worked out. The Chairman concluded by saying that Treasury,
State and the CIA should form a working group to study this
problem further. He also welcomed any attempts by Secretary
Shultz to see if he could make progress with the Poles.
Exchange Stabilization Fund
Secretary Regan then asked the group's guidance on the use
of the Exchange Stabilization Fund (ESF). The ESF was originally
created to help moderate fluctuations in the currency exchange
market after the United States went off the gold standard. It
was created to maintain stability in the international markets
and the Secretary has recently used it to provide bridge loans
to Mexico and Brazil with assurances of adequate collateral and
payback schemes. More recently, we have loan requests in from
Chile and Peru for $400 million and $170 million, respectively.
This has made Congress somewhat nervous, partly because
they have no control over the $12 billion fund.
The Secretary of the Treasury has no other fund to assist
countries who, in fact, may have great needs (i.e., nations
who need a bridge loan to keep them afloat until IMF funds can
be supplied).
On balance, Secretary Regan was wary of using the ESF for
these purposes, but he was interested in hearing the views of
the SIG-IEP.
Most comments were supportive of using the ESF to provide
short-term financing for needy countries, although they
recognized the Secretary's concern as to where you draw the
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line. Some noted that you need to see the light at the end of
the tunnel before providing a loan. Roger Robinson suggested
that the protection of Treasury's prerogatives and flexibility
in administering the ESF might be best served by staying within
existing precedents for use of the ESF. He stated that he
understood this to mean that ESF loans should be fully
collateralized and that a source of payback be identified within
the prescribed six-month period.
Marc Leland noted that this issue would be more thoroughly
addressed in the NSSD on international debt which will be
completed by April 15. The analysis and conclusions will be
drawn from the four working groups currently sutdying different
parts of the issue.
Export Administration Act
The NSC will review the three remaining issues regarding
the Administration's legislation stance for the Export Adminis-
tration Act renewal. These include the subjects of contract
sanctity and import controls.
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