LETTER TO WILLIAM J. CASEY FROM J. WILLIAM MIDDENDORF, II

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87M00539R000901220011-3
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 35
• Document Creation Date: December 22, 2016
• Document Release Date: November 17, 2010
• Sequence Number: 11
• Publication Date: June 6, 1985
• Content Type: LETTER

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Executive Secretary
11 June 35
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caflEN11AL
United States Department of State
Organization of American
United States Permanent Mission to the
Wi-tl-iam J-_.-Casey -
Director of Central Intelligence
Central Intelligence Agency
Washington, D.C. 20505
Dear Bill:
cnwua7 n"W'auy
Washington; D. C. 20.520
June 1, 1985
Thank you for your letter of December 7, 1984 and the
excellent paper "Economic Forces for Change in the Third World."
You also asked for my reactions and suggestions for improving
this paper. I think the paper is truly outstanding as it is and
represents an excellent overview of the major trends. Rather
than change the existing paper, it. would be my suggestion to do
a series of indepth studies on some of the sub-topics discussed
in the paper.
One topic which I feel merits urgent indepth analysis is
briefly discussed on pages 4-5 of the paper under "Slow growth
in developed country demand for imported raw materials and
tropical foodstuffs." I personally believe that we have not
seriously begun to analyze the implications of what the paper
describes as "the worldwide trend toward greater use of
synthetically-produced industrial raw materials." This trend
seems to imply continued stagnation in many traditional non-food
commodity markets which in turn has very serious implications
for long-run solutions to the Latin American debt "crisis." For
example, there are now a number of advanced prototype ceramic
engines running. Such engines, once serially produced on a
large scale, would obviously reduce iron and steel demand (as
well as oil demand, because of their inherently greater thermo-
dynamic efficiency). What we need is a study that extrapolates
the materials' trends (to the extent possible) and uses these
in a decent econometric model of the commodity markets. It is
entirely possible that such an analysis might show that a
recovery in commodity prices is far further in the future than
is presently believed.
Another section which I believe could be an important
separate study is briefly discussed on page 9 under "The
Important Elusive Elements of Economic Progress." In this
section, it is stated that "Those countries achieving rapid
economic growth, such as NIC's, tend to possess a hard-working
and well-educated labor force, as well as strong entrepreneurial
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CONFIDENTIAL
drives ...." However, the three elements of hard-work, good
education and strong entrepreneurial drives are themselves the
resu of one-overriding -factor --- the successful inculcation
from an early age of the motivation to achieve. There is a
fairly large body of research on achievement motivation, and I
recall that there was an_ AID educational_Qr o_ject _ir~-th --195Q_'_s
in India which produced a large number of India's present day
leaders in business as well as governments. The simplistic
version of what I am talking about is the Horatio Alger story.
There are simply not enough Horatio Alger stories in the LDC's,
and,those real life examples that exist do not receive the wide
dissemination they deserve. In many LDC's, the business-
economic "heroes" simply remain unsung.
A third section which I believe merits a full-scale study
is that of "Fostering the development of small-scale enter-
prises" found on page 20. What I envision is an expanded
compendium along the lines of insert 6. It should be expanded
into more of a "how to" discussion; i.e., how were the
investors located, who took the intitiative, what were the
obstacles which had to be overcome, etc. We in the OAS have a
U.S.-led initiative going on small and medium size enterprises
which is at the study stage, and I believe that a study of the
type I envision could be extremely useful in promoting this
aspect of economic development both within the OAS and else-
where.
The last section I would like to comment on is, "Helping
state enterprises to become more efficient or finding ways
to turn over their functions to the private sector" found on
page 21. As you know, this has been a central theme of my
economic work as Ambassador to the OAS. Again, a separate and
distinct study on this, I believe, could be of immense help in
accelerating achievement of this objective. In particular, we
need a study of all of the potential models for privatization
of government enterprises, on the one hand, combined with facts
on the disastrous effects of excessive state involvement in the
economy, on the other hand.
With regard to the problem of "... how we might proceed to
reorder our policies and instrumentalities to realize this
opportunity," I must admit that this is a hard nut to crack.
(In fact, trying to address that part of your letter is why it
has taken me so long to respond.) My first suggestions would
be to begin with some of the recommendations of the President's
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CONFIDENTIAL
Task Force on International Private Enterprise. (I am
including--a copy- of the--exeentive summary of the Task-Force's
Report to the President.)
You will note that one of the Task Force recommendations is
-to r e-o f-ar-t - U-.-S-.--For-eig-n-Aid Programs.--- hr-tins _connect#orr-, - I-----
recently found out that during the Carter Administration, 17%
of Aid's annual budget went in support of private sector pro-
grams and through year-end 1984, this percentage has remained
unchanged. However, one of the most important elements
necessary to change the mindset that has given us such statis-
tics is public awareness. In that connection, I am sending you
a copy of a letter I just sent to Pat Buchanan suggesting a
conference under some kind of White House umbrella that would
publicize the issues raised by the Task Force Report but also
go beyond it. I would hope that you would do your part to
support this idea if you find it has merit.
Sincerely,
J. William Middendorf, II
Ambassador
Permanent Representative
1. Executive Summary of the President's Task Force
on International Private Enterprise: Report to
the President
2. Letter to Pat Buchanan
3. Selected pictures of the "La Perla" project
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Executive Summary
The United States now faces the
challenge of leading the world to a new
era of prosperity created, in significant
part, by unleashing the dynamism of the
private sector in the Third World.
Meeting this challenge successfully is a
matter of our own long-term national
security and is the direct requirement of
a world grown more interdependent. As
they have in the past, U.S. economic
policies will continue to reflect and be
dictated by traditional humanitarian
concerns.
We believe that the United States and
developing countries share a vital in-
terest in Third World economic develop-
ment, that economic growth can best be
achieved through the development of
the private sector, and that economic
growth provides a necessary base for
long-term political stability.
Among the Task Force's general
recommendations are the following.
^ Elevate international economic
policy to a level comparable to
national security.
In the world of the twenty-first cen-
tury, the security of the United States
and of developing nations will depend in-
creasingly on how well our economies
interact. One of the critical determinants
of our security will be the degree of our
success in sharing our economic
strength with the developing world.
This will also require giving heightened
significance to international economic
policy and devising ways to share our
economic know-how with developing
countries.
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^ Establish an Economic Security
Council.
Responsibility for the formulation of
international and domestic economic
policy is fragmented, with portions scat-
tered throughout the U.S. Government.
A well-coordinated U.S. economic
policy would mean more jobs, increased
exports, and increased stability at home
and abroad. We propose the creation of
an Economic Security Council, responsi-
ble for formulating, coordinating, and in-
tegrating international and domestic
economic policies. Some of the matters
with which such a council would deal are
the debt crisis, trade and agricultural
policy, technology transfer, and foreign
assistance.
^ Expand Opportunities for Private
Enterprise.
The private sector in developing coun-
tries is hampered not only by the lack of
capital and the lack of technology and
management skills that accompany
direct investment, but also by the
absence of positive government policies
toward entrepreneurship. By urging, en-
couraging, and using our resources to
help developing countries adopt policies
that attract foreign direct investment
and by helping businesses identify in-
vestment opportunities in the Third
World, we can make a crucial contribu-
tion to the economic development of
those countries. The Task Force's
Private Enterprise Guidebook provides
specific advice on how to use U.S.
resources to attract foreign and local
investment.
^ Reorient U.S. foreign aid programs.
Perhaps the greatest paradox in our
foreign aid programs has been that while
U.S. economic success is based upon
private enterprise, we have done far too
little to help developing countries attract
private enterprise, trade, and invest-
ment. U.S. foreign assistance programs
should substantially expand their efforts
to help developing countries adopt
policies that will strengthen the oppor-
tunities for private enterprise. To the
maximum extent feasible, the U.S.
Government should not channel its
foreign assistance resources to govern-
ments, but to the private sector in
developing nations. For the mutual
benefit of the United States and
developing countries, the U.S. Govern-
ment should also integrate its foreign
assistance and trade programs and
policies to make better use of its
resources. The Task Force's action brief
on strengthening AID's private enter-
prise thrust and its Private Enterprise
Guidebook will serve as a blueprint for
this reorientation.
^ Press for Increased Trade Flows.
American firms increasingly find
themselves competing overseas with
foreign firms that are supported by their
national treasuries. Not only are U.S.
companies losing large amounts of
business to mercantilist nations that pro-
vide heavy subsidies to their firms, but
these practices distort the whole pattern
of international trade to the detriment of
the United States, developed countries,
and developing countries alike. In fact,
we believe the practice of "mixed
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credit" trade subsidies has become a
major threat to international private
enterprise. To protect U.S. firms and
the free enterprise system, we recom-
mend that the United States fight fire
with fire. Specifically, we believe that
the Administration should make suffi-
cient mixed credit resources available in
order to convince other nations that such
practices are not in anyone's "best in-
terest." This will press our foreign com-
petitors to the negotiating table and
bring an end to such predatory prac-
tices. In Part V of this report we recom-
mend that the Agency for International
Development (AID) and the Export-
Import Bank (Eximbank) blend their
resources and that, if necessary, Exim-
bank use the full extent of its authority.
This could amount to a mixed credits
program of several billion dollars.
^ Constructively use U.S.
Agricultural Abundance.
We cannot afford, financially or
morally, to idle large parts of our pro-
ductive farmland. Rather, we must
devise ways to harness our agricultural
abundance so that we can increase ex-
ports from the United States and
alleviate chronic starvation and
malnutrition in the developing world.
Food can also be used to ease the pres-
sing foreign exchange needs of Latin
American, Asian, and African nations
caught in the international debt crisis.
The U.S. Government can provide large
amounts of food to these countries on a
concessional basis to enable them to use
their limited foreign exchange to meet
other objectives. The Public Law (P.L.)
480 Program is one of the President's
most effective tools. In Part V of this
report we recommend doubling the pro-
gram. Given the current costs of farm
subsidy programs, the impact of this in-
crease would be a net reduction in the
Federal budget.
In designing a strategy to address cur-
rent crises and long-term economic
development needs, the Task Force has
been guided by the following precepts.
^ Market-oriented economies work,
excessively planned economies do not.
^ The United States has an impor-
tant role to play in leading the world
toward balanced and equitable economic
growth.
^ A free and open trading system of-
fers the greatest hope of achieving
widely shared economic growth and
prosperity. However, U.S. industry and
agriculture must be able to compete
with the terms offered by mercantilist
nations until such time as we can meet
our competitors on a level playing
field-in fair and open competition.
^ United States agricultural abun-
dance must be harnessed more effec-
tively to address the human and
development needs of the people of the
Third World.
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h aI ~,.. es~sli~ one ssnlah
May 30, 1985
Mr. Patrick J. Buchanan
Assistant to the President
& Director of Communications
The White House
SUBJECT: Conference on "The President's Task
Force on International Private
Enterprise"
Before I get into the main subject of this letter, I
would like you take a look at the enclosed pictures of
the "La Perla" project in Guatemala. The sign the
workers are holding up reads, "The militia of the farm
'La Perla' are with the national army, we want more
arms, we are searching for peace, long live Guatemala,
death to communism." "La Perla" was converted to 40%
employee stock ownership last fall and has been attacked
twice by the guerrillas. The first attack resulted in
the central building complex being overrun. Two hundred
of the workers took up arms and drove off the guerrillas
leaving dead on both sides. After.this attack, the
remaining workers petitioned the majority shareholders
for additional arms and ammunition to be financed by a
payroll deduction plan. This is clearly an example of
why the President is right in advocating expanded capital
ownership.
As you know, "The President's Task Force on
International Private Enterprise" produced an excellent
report on what is stifling private enterprise develop-
ment in less developed countries as well as list of
recommendations for changes in U.S. policies designed
to foster international private enterprise. The
recommendations (with the major exception of the
reorganization of economic decision-making within the
White House) largely echo my own views and those of the
Reagan Administration. Up to now (and unlike the Grace
Commission), this report has received very little
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publicity, and consequently, it has had virtually no
impact within the realm of U.S. foreign economic policy
Through an informal network of interested
including Frances parties
d Bruce Mazzei of AID, D, , Bill
of - CIA- and some - of- the
members of the ESOP informal working group (Norman
Bailey, Norman Kurland, et al.), we have been exploring
the idea of giving the task force report wider publicity
by means of a conference to be held, and the sooner the
better. We have heard that Professor Ted Moran of the
Georgetown University's Program in International Business
Diplomacy is interested in the idea and that Georgetown
could be persuaded to host such a conference. The fund-
ing would be provided by the private sector and Mr. John
Keeley of the National Education Corporation, who is
interested in this idea and has contacts within the
private sector which could fund such a conference.
However, to make this all happen, a high-level
symbolic political umbrella/endorsement is necessary;
namely, a letter on White House or the Vice President's
stationery suggesting that Georgetown sponsor such a
conference on the understanding that such a conference
-would be financed by private sources and (which is why)
I am writing to you, Pat, to see whether you could
support this idea and if there is White House interest.
It would be best if, within the White House, a decision
were made to assign the responsibility for such a
conference to the Office of the Vice President which
would have the effect of:
1) Defusing the frequent criticism that the
President's policies are good but his
lieutenants don't do enough to push them;
and,
2) Reinforcing the Vice President's credentials
for pushing sound economic policies.
The conference agenda should probably cover these
subjects: The President's views on U.S. policy on
international private enterprise, made known at Cancun
STAT
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and Williamsburg; recommendations of the President's
Task Force on International Private Enterprise-what
U.S. business and government can _ d o t o i_mp ne
~sr 'tttcal- -sound recommendations; U. S. experience in
helping developing countries switch from government-run
economies to private enterprise-oriented economies, thus
opening up business opportunity to local nationals-and-
Americans alike; issues raised by the U.S. Catholic
Bishops' Pastoral on the U.S. economy and on U.S.
overseas economic programs-issues such as the morality
of the profit motive and ways private enterprise can
help overcome world hunger; what developing countries
and the United States have to gain from creating a
bigger world economic pie, such as prospects for
eliminating hunger in poor countries; cutting the U.S.
trade deficit to zero, and boosting America's global
market share dramatically as. poor countries buy more
American goods and services; private property and
expanded capital ownership as critical to building
democratic, prosperous societies in developing
countries; actions required to implement the President's
pol cieesfor global economic growth, leading to a bigger
market share for U.S. business-i.e., what the Executive
Branch and Congress must do to open opportunity for U.S.
and LDC business; and Third World views and motives for
taking greater part in the global marketplace.
I am enclosing some talking points which may be of
use to you in your discussions inside the White House
and I look forward to your response as to the
feasibility of this idea.
Best regards,
J. William, Middendorf, II
Enclosures: as stated
cc: Bill Casey
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fiat is needed to get the idea moving is I letter on White
House or Vice Presidential stationery suggesting such a
conference to Georgetown on the understanding the private
sector would finance it.
It is my thinking that it would make sense to have the
White House assign the task of the letter to the Office
of the Vice President which would build up the Reagan-Bush
team image as well as reinforcing the Vice President's
credentials on these issues.
-- I wonder if you could take up this idea within your own
organization.
5/15/85
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AGENDA: FOR DISCUSSION
(PANELISTS ARE ILLUSTRATIVE)
U.S. Policy on International Private Enter rise
Purpose, Import and Follow-Through
I. U.S. Policy on International Private Enterprise
A. Presidential Policy Statements on International Private
Enterprise
-- Cancun, Williamsburg and European Policy Statements
Presenter: Sec. Shultz; Commentary: Members of
Congress; other
-- Public and Private Sector Coopezation in Alleviating
World Hunger, The White House, December 1984
Panelists: National Security Adviser; Mr. Bradley
of International Management and Development
Institute--IMDI
-- President's Speech to American Legion--1983 (Employee
Stock Ownership)
B. White House Task Force Report on Third World Hunger:
Amb. Keating, Task Force Chairman
Recommendations: including provision for public-private
sector cooperation in alleviating world hunger.
Panelists: Carol Brookins, Chairman, Subcommittee on
Food and Agriculture of the State Department's U.S.
Business Advisory Committee on Investment, Technology
and Development, formed as directed in National
Security Directive 143 issued by the President on
July 9, 1984. Other panelists: Industrialists from
Exxon, Monsanto, Ralston Purina, Pillsbury, Caltex .
(members of the Subcommittee).
C. AID Policy Paper on Private Enterprise Development
Presenteers and Panelists: Peter McPherson, Sec.
Baker, OPIC, other.
II. President's Task Force Report on International Private
Enterprise: What It Is: What It Is Not
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A. Report Highlights and Recommendations--
Panelists: Dwayne Andreas, Task Forc4 Chairman and
others
-- Rationale for a U.S. Commitment to Promote Conditions
Conducive to Private Enterprise:
Commentary: Peter Drucker, I. Kristol, Simon,
M. Novak, university authorities,
-- Proposals for an American International Finance Corp.
Panelists: U.S. business
B. Report's Gold Nuggets -- Policy Dialogue and Policy
Change
Commentary: George Ferris of Ferris and Company,
Task Force member and advisor to State and IFC.
C. Flaws in the Task Force Report?
1. Who will private enterprise enrich?
The Report seems to favor expanding private
enterprise primarily to enrich Americans.
Is this so?
Panelists: Task Force member, U.S. Catholic
Bishops' Pastoral member, others.
2. Private Enterprise and American Economic Imperialism
Would endorsing Task Force Report recommendations
give-official sanction to American business
exploitation of the Third World?
Advice and counsel from panel of U.S. and Third
World authorities.
Panelists: LDC Finance Ministers, IBRD repre-
sentative (e.g., E Berg), international bankers,
U.S. business, church, PVO, and Peace Corps
representatives.
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III. The Profit Motive and Open-Market Economic Systems
A. Prospects for Prosperity and the Geneial Welfare:
Prosperity With Profits and Open-Markets--or Without
Them?
-- Countries that have taken off with open-market and
export-oriented economies (Korea, Taiwan, other)
-- Lower taxes reap higher revenues
-- Sri Lanka: Its central economic planning road to
general welfare and switch to market systems for
prosperity.
Panelists: Rep. J. Kemp, Amb. Middendorf,
university authorities, others.
B. U.S. Catholic Bishops' Pastoral on U.S. Economic
Programs with LDCs
-- Pastoral's Objectives, Goals and Ideals: Economic
Justice and Human Dignity
-- Bishops' recommendations for U.S. economic and social
programs to alleviate poverty at home and abroad
-- Will the Bishops' Proposals Work? Will They Produce
the Size of Results Wanted? In the Time Desired?
Panelists: Key proponents and practical critics of
the Pastoral.
C. Economic.,Incentives for Individuals: Blessing or
Plague?
Prospects of Food for All through Private Enterprise
1. How Peasants in China and Zimbabwe Fare--with More Open
Markets
2. Does the U.S. Know How to Enable LDCs to Set the Stage
for Food for All through Enterprise?
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How USAID works with governments in Zimbabwe and other
private enterprise, with government6 playing donstruc
tive roles.
Panelists: Marc Winter of AID; Richard Newberg, AID
consultant; John Fischer of U.S. University,
Executive Director, Consortium for International
Development, Dr. Fischer proposes that AID field
small advisory teams to LDCs that desire to
eliminate hunger and malnutrition through public
and private sector cooperation.
3. National Food Supply Systems: A Litmus Test for How an
LDC Economy Works.
Who controls food supply and distribution, in public and
private sectors? Who reaps the benefit? The politics
of food distribution through government-controlled or
free market systems.
4. Recommendations: Business as Key to Ending Hunger.
Panelists: End Hunger Project and university
representatives.
a. U.S. Private Sector Recommendations: IMDI
Report: Recommendations of the U.S.
Business Community on Government and
Private Sector Cooperation to Alleviate
World Hunger;
b. Recommendations of the Brookins Food Sub-
committee, U.S. Business Advisory Com-
m.jttee, Department of State.
IV. Fostering Private Enterprise Policies and Growth:
Who Gains from the Bigger Economic Pie?
A. For Third World Countries: Advantages and Disadvantages
of Global Economic Growth:
Panelists: U.S. Trade Representative Office,
Treasury, IBRD, IMF, LDC Finance Ministers,
international bankers, other.
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B. For the United States: Purposes and Principles Pursued
- - thrn>>gh r1 nha 1 r'r r r mi cGro h: ---
How and why promote establishment ofa global framework
of policy, law, order and market-driven commerce (See
"Golden Book").
Panel of Norman Bailey, Rep. William H. Gray III,
I. Kristol, Sen. John Danforth, Amb. Wm. Middendorf,
others.
U.S. Interests Served When LDC People Go into Business
For Themselves
1. Prospects for LDC investors to become prosperous
by investing in domestic industry, thereby
reducing pressure for capital flight and reliev-
ing pressure on the high-value U.S. dollar.
2. Prospects for Americans to increase global market
share as LDC buyers earn dollars through
exports: By doubling the growth rate of U.S.
exports of the 1970's, U.S. trade levels would
grow by $354 billion, thereby allowing the govern-
ment to collect $142 billion more in revenue each
year.
3. Prospects for increased political security,
democratic processes and reduced terrorism in
Third World countries.
Panelists: Prof. T. Moran (Georgetown University),
John Richardson (American University) and other
authorities.
4. Lessons the USSR Can Learn from New Peasant
Prosperity in China and Zimbabwe. Accomplish-
ing national ideals through incentive economics:
risks and returns. Examining Gorbachev views
and experience with incentive economics for the
agriculture sector in the USSR.
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V. Private Property, Expanded Capital Ownership and Political
Critical to Democratic Society
The President's Task Force Report implicitly advocates
developmemt based on private property. The Seminar
will examine this proposition, using H. Con. Res. 31
as a case study. This resolution, introduced by Rep.
Barnes and Rep. Crane, urges the expanded use of
employee stock ownership plans in Central America
and the Caribbean as a means of promoting political
and economic pluralism and strengthening democratic
institutions. The resolution proposes that the
President call upon leaders of the private sector to
create and finance a private sector voluntary task
force, to be known as the Presidential Task Force on
Project Economic Justice.
Panelists: N. Kurland (Equity Expansion International),
Members of Congress, Third World authorities.
VI. Shaping and Implementing U.S. Policy on International
Private Enterprise
Roles of Branches of the U.S. Government: (See "Golden
Book", Item E).
A. Roles of the Executive Branch: Concerted Implementa-
tion of U.S. Foreign and Domestic Economic Policy
Impacting on International Private Enterprise: White
House, National Security Council, Departments of
State, Treasury, Agriculture, Commerce, Labor, U.S.
Trade Representative, Export-Imn_ort Bank, OPIC, AID,
other.
Plans for implementation of AID Policy Paper on
Private Enterprise Development (March 1985) and
Key Recommendations of President's Task Force on
International Private Enterprise:
Panelists: from U.S. Government Departments and
Agencies.
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B. Roles of the Legislative Branch:
Foreign Assistance Act Authorization sand Appropriations
Committees.
Other Congressional Committees with jurisdiction for
U.S. foreign and domestic economic policy and
programs: Finance, Ways and Means, Commerce, Bank-
ing, Agriculture, Joint Economic, other.
Panelists: from Key Congressional Committees; private
sector
VII. Third World Views on Private Enterprise Development--
Perspectives of Representatives of Developing Countries:
A. Validity of Private Enterprise Development as Element of
Economic Growth. Views on Global Economic Growth:
Prospects; Advantages and Disadvantages:
1. Can developing countries enable the people through
private business to help achieve national goals
of GNP growth, jobs and daily food?
2. Can developing countries endue local investors with
sufficient confidence in their own economy so
that they invest at home and attract investment
from abroad?
3. What will developing countries do?
B. Views on U.S. Initiatives in Private Enterprise Develop-
ment and Global Economic Growth (i.e., the "Bigger
Economic Pie")
-- What Should the United States Do and Not Do?
-- What Role and Caveats for U.S. Business?
-- Other Views and Advice.
May 1984
1183L
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c cntmi intewgence Ag ncy
1 {:
Thank you for your positive comments on our study "Economic Forces
for Change in the Third World." I agree with you that economic factors
are increasingly becoming forces for change toward the Western model of
development with major implications for future political relationships
both in the Third World and the Communist Bloc.
While I believe that a book on this important subject would be
useful, I am concerned that any perception of a CIA connection to the
book could, in some eyes, tarnish its message. In addition, most of the
information on which such a project would be based is generally avail-
able. Thus, I must decline your proposal but wish you well in pursuing
the theme.
I appreciate your interest in pursuing this topic and look forward to
a continuing exchange of ideas.
tp Sincerely,
William J. Casey
Director of Central Intelligence
CO-
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NIO/AL/DL
Distribution;
Original - Addressee
1 - DCI
1 - DDCI
L----?-~-Executive Registry
1 - C/NIC
1 - VC/NIC
1 - A/NIO/Econ
1 - NIO/AL/DL
2 - NIO/AL/DL Files
28 February 1985
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85- 669 I
25X1
Mr. William J. Casey,
Director of Central Intelligence,
Washington, D.C. 20505.
Dear ?Mr. Casey:
Feb. 11th, 1985
Ever since you sent me a copy of your special
report, "Economic Forces for Change in the Third World",
I have been studying how to exploit the opportunities
for U.S. economic power and high technology on the
global scene, for the ultimate benefit of the CIA and the
U.S. government.I have some ideas for your consideration.
I suggest the creation of a special instrument
which would expand and further promote the ideas and
information in your special report, which incidentally,
are the same in my book, "The American Opportunity."
This would be a book for general sale and distribution
in the United States, Europe, the Far East and the Third
World.
In short popularize the message that "economic
forces for change" are at work, not only in the Third
World, but throughout the world, including countries
allied to Moscow. The objective of this project would
be to educate and to influence world opinion that Leninist-
Marxism is in retreat globally because pragmatism is
replacing ideology, that ecopolitics is taking over from
geopolitics in world affairs. This transition period is
a watershed of history, to the long-term benefit of the
United States.
This book would be important and attract
attention in international political and intellectual
circles because it would have a solid core of information
not readily available to the journalist and researcher.
This information would be provided from the CIA's files,
and other sources at your command. When used some of this
information could be attributed to the CIA so as to
increase the book's credibility.
I further suggest that I write this book in
close collaboration with the CIA, which would have complete
editorial control of the manuscript from start to finish.
When completed the MS would be submitted by me -- in
capacity as an independent writer -- to a publisher, su
Macmillan, . which has published my previous books. We
would further arrange for its overseas publication in
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-2-
in Great Britain, France, Germany, Japan, etc.
To maximize the long-range political benefits
of this project I further suggest that the CIA provide
funds to promote the sale and distribution of the book.
Such promotion would involve advertising, public
relations, etc. These activities could probably be
carried out through some acceptable cover agency,
such as a privately-funded Foundation. (The Olin
Foundation, for example, headed by William Simon,
and which promotes private enterprise capitalism.)
This letter sketches out in the broadest
strokes the essentials 'of this project. If it is of
serious interest to you and your organization, the
whole subject can be readily explored at greater
length. In this, I am at your service.
In closing let me point out that this
retreat of Communist ideology in the face of advancing
free market economics will eventually be recognized
for what it portends. However, this book project
could hasten immeasurably this political development.
Best Regards
Sincerely
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1 jec 4
EXECUTIVE SECRETARIAT
ROUTING SUP
ACTION
INFO
DATE
INITIAL
1
DCI
2
DDCI
X
3
EXDIR
4
D/ICS
5
DDI
6
DDA
7
DDO
8
DDS&T
9
Chm/NIC
n
10
GC
11
IG
12
Compt
13
D/Pers
14
D/OLL
15
D/PAO
16
SA/IA
17
AO/DCI
18
C/IPD/OIS
19
dO/cCcdi
x
20
21
22
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The-Director of-Central lntelligencel
IMashington. D. C. 20505
7 December 1984
Mrs. Neal Peden
Bureau for Private Enterprise
Agency for International Development
320 - 21st Street, N. W.
Washington, D. C. 20523
Dear Neal,
Et'c Liilva Rey:-ir f 1
J84- 10261/3
and to learn that you are undertaking what shouldJbeaa very,yinterestingeanding
indeed critical job at AID. For you to understand why I think it is so important,
I am sending you a paper I had prepared to generate ideas on what can be done
on what I believe to be a historic opportunity to-bring progress to lesser
developed countries (LDCs) around the world, help solve our own economic
problems and demonstrate that Western capital, technology and managerial
skills can accomplish what Soviet military and economic assistance and statist
approaches have failed to deliver.
LDCs around the world are shifting to more pragmatic approaches to solving
their problems. They recognize that their highly centralized development
policies have been a major cause of economic stagnation. They know that the
Soviet economic system did not live up to expectations, and Communist countries
supplied only meager amounts of econmic aid and were unable to provide
significant markets for LDC goods. They see that the newly industrialized
countries (NICs) of the Far East have attained economic progress and succeeded
in coping effectively with the oil price hikes, recessions, high interest rates
and heavy debt which have so adversely affected the LDCs. They know that
prospects for large amounts of Western foreign assistance have diminished.
The fact that the NICs have succeeded without Western aid, together with LDC
need for infusions of capital, technology and skills available from the West,
creates a historic opportunity for us.
It is the lesser developed countries that can least afford the burden of
inefficient government bureaucracies and ponderous state enterprises. In many
of these countries a response is beginning to take shape. In some cases, large
"second economies" consisting of small-scale enterprises are emerging. LDC
governments are increasingly willing to contemplate and experiment with market-
oriented approaches.
This changing climate presents significant economic opportunities for the
United States:
-- To increase the promotion of small-scale enterprises within LDCs
and the acceptance and adaptation of new technologies.
-- To enlarge the flow of foreign direct investment, and to help
state enterprises become more efficient and find ways to
relinquish some functions to the private sector.
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-- To strengthen its trade, finance and investment links with LDCs
based upon a growing mutuality of economic interest.
The shift to more domestically-oriented development also will likely
limit North-South trade frictions and help quiet protectionist sentiment in
the developed world. Those additional LDCs that do become major exporters
of manufactures (including China) will be mainly selling less sophisticated
products and, as such, they will be taking away developed country markets
from the current NICs.
In order to make the most of this increasingly important evolutionary
and grass roots development process, we need to reorder economic aid programs
so that more assistance reaches the small-scale entrepreneur.
The forces at play here have security implications as well. They can
strengthen the West's position relative to that of the Soviet Union in LDCs.
Soviet domestic economic and foreign financial constraints over the next ten
years will make Moscow even less able to compete in nonmilitary sectors. At
the same time, US security interests will often coincide with opportunities
for economic support, and security assistance can reinforce the willingness
and ability of an LDC to bring in and develop capital, technology and needed
skills.
I would like your reactions and suggestions on how this paper might be
improved and how we might proceed to reorder our policies and instrumentalities
to realize on this opportunity.
Attachment:
Paper entitled "Economic Forces for Change
in the Third World," dtd 15 November 1984
. Casey
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The Director of Central Intelligence
Washington.D C 20505
The Honorable William J. Middendorf II
United States Representative to the
Organization of American States
Department of State
Room 6494
Washington, D. C. 20520
Dear Bill,
10261/2
I want to thank you for sending me that splendid speech of yours to
the OAS on the need for Reaganomics in the Third World. It was a masterful
piece of work.
I send to you a working paper I had prepared to generate ideas on what
can be done on what I believe to be a historic opportunity to bring progress
to lesser developed countries (LDCs) around the world, help solve our own
economic problems and demonstrate that Western capital, technology and
managerial skills can accomplish what Soviet military and economic assistance
and statist approaches have failed to deliver.
LDCs around the world are shifting to more pragmatic approaches to solving
their problems. They recognize that their highly centralized development
policies have been a major cause of economic stagnation. They know that the
Soviet economic system did not live up to expectations, and Communist countries
supplied only meager amounts of econmic aid and were unable to provide
significant markets for LDC goods. They see that the newly industrialized
countries (NICs) of the Far East have attained economic progress and succeeded
in coping effectively with the oil price hikes, recessions, high interest rates
and heavy debt which have so adversely affected the LDCs. They know that
prospects for large amounts of Western foreign assistance have diminished.
The fact that the NICs have succeeded without Western aid, together with LDC
need for infusions of capital, technology and skills available from the West,
creates a historic opportunity for us.
It is the lesser developed countries that can least afford the burden of
inefficient government bureaucracies and ponderous state enterprises. In many
of these countries a response is beginning to take shape. In some cases, large
"second economies" consisting of small-scale enterprises are emerging. LDC
governments are increasingly willing to contemplate and experiment with market-
oriented approaches.
This changing climate presents significant economic opportunities for the
United States:
-- To increase the promotion of small-scale enterprises within LDCs
and the acceptance and adaptation of new technologies.
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-- To enlarge the flow of foreign direct investment, and to help
state enterprises become more efficient and find ways to
relinquish some functions to the private sector.
-- To strengthen its trade, finance and investment links with LDCs
based upon a growing mutuality of economic interest.
The shift to more domestically-oriented development also will likely
limit North-South trade frictions and help quiet protectionist sentiment in
the developed world. Those additional LDCs that do become major exporters
of manufactures (including China) will be mainly selling less sophisticated
products and, as such, they will be taking away developed country markets
from the current NICs.
In order to make the most of this increasingly important evolutionary
and grass roots development process, we need to reorder economic aid programs
so that more assistance reaches the small-scale entrepreneur.
The forces at play here have security implications as well. They can
strengthen the West's position relative to that of the Soviet Union in LDCs.
Soviet domestic economic and foreign financial constraints over the next ten
years will make Moscow even less able to compete in nonmilitary sectors. At
the same time, US security interests will often coincide with opportunities
for economic support, and security assistance can reinforce the willingness
and ability of an LDC to bring in and develop capital, technology and needed
skills.
I would like your reactions and suggestions on how this paper might be
improved and how we might proceed to reorder our policies and instrumentalities
to realize this opportunity.
Yours,
William J. Casey
Attachment:
Paper entitled "Economic Forces for Change
in the Third World," dtd 15 November 1984
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The Director of Central intelligence
Washington. D. C 20505
The Honorable Alan Greenspan
120 Wall Street
New York, New York 10005
Dear Alan,
E4- 10261/1 t
I owe you an explanation of the nature and purpose of the paper I asked
you to read and sent to you yesterday. I had it prepared here in order to
generate ideas on realizing what I believe to be a historic opportunity to
bring progress to lesser developed countries (LDCs) around the world, help
solve our own economic problems and demonstrate that Western capital, technology
and managerial skills can accomplish what Soviet military and economic assistance
and statist approaches have failed to deliver.
LDCs around the world are shifting to more pragmatic approaches to solving
their problems. They recognize that their highly centralized development
policies have been a major cause of economic stagnation. They know that the
Soviet economic system did not live up to expectations, and Communist countries
supplied only meager amounts of econmic aid and were unable to provide
significant markets for LDC goods. They see that the newly industrialized
countries (NICs) of the Far East have attained economic progress and succeeded
in coping effectively with the oil price hikes, recessions, high interest rates
and heavy debt which have so adversely affected the LDCs. They know that
prospects for large amounts of Western foreign assistance have diminished.
The fact that the NICs have succeeded without Western aid, together with LDC
need for infusions of capital, technology and skills available from the West,
creates a historic opportunity for us.
It is the lesser developed countries that can least afford the burden of
inefficient government bureaucracies and ponderous state enterprises. In many
of these countries a response is beginning to take shape. In some cases, large
"second economies" consisting of small-scale enterprises are emerging. LDC
governments are increasingly willing to contemplate and experiment with market-
oriented approaches.
This changing climate presents significant economic opportunities for the
United States:
To increase the promotion of small-scale enterprises within LDCs
and the acceptance and adaptation of new technologies.
To enlarge the flow of foreign direct investment, and to help
state enterprises become more efficient and find ways to
relinquish some functions to the private sector.
To strengthen its trade, finance and investment links with LDCs
based upon a growing mutuality of economic interest.
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The shift to more domestically-oriented development also will likely
limit North-South trade frictions and help quiet protectionist sentiment in
the developed world. Those additional LDCs that do become major exporters
of manufactures (including China) will be mainly selling less sophisticated
products and, as such, they will be taking away developed country markets
from the current NICs.
In order to make the most of this increasingly important evolutionary
and grass roots development process, we need to reorder economic aid programs
so that more assistance reaches the small-scale entrepreneur.
The forces at play here have security implications as well. They can
strengthen the West's position relative to that of the Soviet Union in LDCs.
Soviet domestic economic and foreign financial constraints over the next ten
years will make Moscow even less able to compete in nonmilitary sectors. At
the same time, US security interests will often coincide with opportunities
for economic support, and security assistance can reinforce the willingness
and ability of an LDC to bring in and develop capital, technology and needed
skills.
I would like your reactions and suggestions on how this paper might be
improved and how we might proceed to reorder our policies and instrumentalities
to realize this opportunity.
Yours,
William J. Casey
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The Director of Central Intelligence
Wlashinglon. D. C. 20505
10261
7 December 1984
The Honorable Leo Cherne
Research Institute of America
589 Fifth Avenue
New York, New York 10017
Dear Leo,
I owe you an explanation of the nature and purpose of the paper I asked
you to read and sent to you yesterday. I had it prepared here in order to
generate ideas on realizing what I believe to be a historic opportunity to
bring progress to lesser developed countries (LDCs) around the world, help
solve our own economic problems and demonstrate that Western capital, technology
and managerial skills can accomplish what Soviet military and economic assistance
and statist approaches have failed to deliver.
LDCs around the world are shifting to more pragmatic approaches to solving
their problems. They recognize that their highly centralized development
policies have been a major cause of economic stagnation. They know that the
Soviet economic system did not live up to expectations, and Communist countries
supplied only meager amounts of econmic aid and were unable to provide
significant markets for LDC goods. They see that the newly industrialized
countries (NICs) of the Far East have attained economic progress and succeeded
in coping effectively with the oil price hikes, recessions, high interest rates
and heavy debt which have so adversely affected the LDCs. They know that
prospects for large amounts of Western foreign assistance have diminished.
The fact that the NICs have succeeded without Western aid, together with LDC
need for infusions of capital, technology and skills available from the West,
creates a historic opportunity for us.
It is the lesser developed countries that can least afford the burden of
inefficient government bureaucracies and ponderous state enterprises. In many
of these countries a response is beginning to take shape. In some cases, large
"second economies" consisting of small-scale enterprises are emerging. LDC
governments are increasingly willing to contemplate and experiment with market-
oriented approaches.
This changing climate presents significant economic opportunities for the
United States:
-- To increase the promotion of small-scale enterprises within LDCs
and the acceptance and adaptation of new technologies.
-- To enlarge the flow of foreign direct investment, and to help
state enterprises become more efficient and find ways to
relinquish some functions to the private sector.
-- To strengthen its trade, finance and investment links with LDCs
based upon a growing mutuality of economic interest.
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The shift to more domestically-oriented development also will likely
limit North-South trade frictions and help quiet protectionist sentiment in
the developed world. Those additional LDCs that do become major exporters
of manufactures (including China) will be mainly selling less sophisticated
products and, as such, they will be taking away developed country markets
from the current NICs.
In order to make the most of this increasingly important evolutionary
and grass roots development process, we need to reorder economic aid programs
so that more assistance reaches the small-scale entrepreneur.
The forces at play here have security implications as well. They can
strengthen the West's position relative to that of the Soviet Union in LDCs.
Soviet domestic economic and foreign financial constraints over the next ten
years will make Moscow even less able to compete in nonmilitary sectors. At
the same time, US security interests will often coincide with opportunities
for economic support, and security assistance can reinforce the willingness
and ability of an LDC to bring in and develop capital, technology and needed
skills.
I would like your reactions and suggestions on how this paper might be
improved and how we might proceed to reorder our policies and instrumentalities
to realize this opportunity.
Yours,
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ER/Jim:
The letters to Middendorf and Peden
need attachment that was sent the other
evening to Greenspan and Cherne--Economic
Forces for Change in the Third World
d td 15 Nove 984, authored by
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NIC/AG
15 November 1984
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