MEMORANDUM FOR HOWARD H. BAKER AND FRANK C. CARLUCCI THE WHITE HOUSE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92T00533R000100060009-6
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 7
• Document Creation Date: December 22, 2016
• Document Release Date: October 8, 2010
• Sequence Number: 9
• Publication Date: May 19, 1987
• Content Type: MEMO

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UNDER SECRETARY OF STATE P I
WASHINGTON
FOR ECONOMIC AFFAIRS tJp M z.._.--1-1-
May 19, 1987
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MEMORANDUM FOR HOWARD H. BAKER
AND FRANK C. CARLUCCI
THE WHITE HOUSE
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SUBJECT: Substantive Preparations for Venice Economic Summit
The final preparatory meeting for the Venice Economic
Summit was held in Venice May 15-17. I was joined by
Ambassador Ridgway for the discussion of political issues and
by David Mulford and Stephen Danzansky for the economic
issues. At this meeting, as throughout the preparations for
the Venice Economic Summit, the three have provided valuable
advice and help in developing and arguing our positions.
On the political side, the President and George Shultz will
have to convince their colleagues of the need for strong
statements on East-West relations and terrorism. I have
bracketed the entire draft statement on terrorism as French
editing has removed its strength.
On economics, the challenge will be to:
write a strong political statement in support of
agricultural reform;
cement the economic policy coordination instituted by
Jim Baker at Tokyo; and
convince our Summit partners that lasting economic
growth can only be encouraged by allowing market
forces to operate freely in the domestic market.
Margaret Thatcher will not remain in Venice beyond lunch on
June 9, and she may leave at the end of the morning se?sion.
As Francois Mitterand plans to leave after the communique
reading June 10, the Italian President now plans to host a
lunch on June 10, rather than a dinner.
The ceiling in the Cini Foundation under which the Sherpas
will draft the Summit communique is inscribed "Ex glorioso
labore, sincere voluptas."
CY-e4nbAtz;..
Attachment: Report of Venice Preparatory Meeting
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CONFIDENTIAL
Report of Fourth Preparatory Meeting for
Venice Eonomic Summit
Venice, May 15-17, 1987
The fourth preparatory meeting for the Venice Economic
Summit was held in Venice May 15-17, 1987. U.S. participants
were Allen Wallis, Personal Representative, David Mulford,
Assistant Secretary of the Treasury for International Affairs,
Stephen Danzansky, Senior Director for International Economic
Affairs, NSC and Rozanne Ridgway, Assistant Secretary of State
for European Affairs.
Political issues were discussed May 15, first among
Political Directors and then among Sherpas and Political
Directors. On May 16 the Sherpas, Finance and Foreign Ministry
officials met in plenary session to discuss economic issues.
On May 17, Sherpas met alone to conclude consideration of the
thematic paper.
II . ECONOMIC ISSUES
(A) Macroeconomic Situation
There is a consensus among Summit countries on the need for
continuing close coordination of economic policy with a view to
achieving greater convergence of positive economic
performance. The conclusions reached by Finance Ministers at
the Louvre in February and during the April IMF/IBRD meetings
in Washington were reaffirmed. All agreed that the key medium
term priority is to sustain non-inflationary growth while
correcting external imbalances.
Certain European countries prefer to talk about what other
countries should do to promote growth rather than what they
might do for themselves. At the Summit, the U.S. will have to
reject this view forcefully. The U.S. has a solid record of
undertaking structural reform; the results are visible in a
dynamic, flexible economy which has created more than 12
million additional jobs in the last five years. None of our
Summit partners has followed our example to any meaningful
extent. They need to:
promote competition and deregulation to speed up
industrial adjustment;
improve functioning of labor markets through greater
mobility and adaptability;
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open internal markets;
remove capital market restrictions;
reduce the economic drag of social programs.
The objective of promoting growth should drive the economic
discussion at Venice.
(B) Agriculture
To avoid a protracted debate on agriculture, one which
risked re-opening the satisfactory consensus achieved with
great difficulty at the May 12-13 OECD Ministerial,
participants (at our suggestion) simply endorsed the OECD
conclusions. Everyone recognized the key role agriculture will
play in the Uruguay Round and a need for Heads of State and
Government to review progress at their 1988 meeting.
However, the Venice Communique cannot just note the OECD
language. We will have to try to go a step further by
preparing a concise political statement in support of
agricultural reform. The statement should identify
governments' role in creating the problems and our resolve to
carry out comprehensive reform along market principles.
(C) Trade
There is general consensus on the need to continue
resisting vigorously the increasing protectionist pressures, to
dismantle existing trade barriers and to avoid restricting
international trade further. In addition, all agreed it was
essential to improve the multilateral trading system based on
GATT rules and principles and to improve the ability of the
GATT to carry out its mandate effectively. Only the French are
reluctant (for reasons of domestic politics) to support a
mid-term ministerial meeting of the Uruguay Round Trade
Negotiating Committee.
(D) Debt and LDC's
There is general consensus that while some developing
countries have taken politically courageous steps to reform
their economies, much remains to be done. The growth-oriented
case-by-case strategy ('Baker Plan') remains the only viable
approach. This entails:
comprehensive macroeconomic and structural reforms;
increased lending by IFI's, in particular the IBRD;
adequate commercial lending in support of debtor
structural reform.
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All agreed to make a special effort, in the IMF, IBRD and Paris
Club, to ease the debt service burden of the poorest countries,
particularly in Sub-Saharan Africa.
Italy, France and the UK wish the Venice Communique to note
positively the forthcoming UNCTAD VII meeting. Pending further
consultations in Washington, the U.S. has bracketed any
reference to UNCTAD.
(E) Other Issues
- Environment: Language concerning the World Commission
on the Environment and Development (WCED) was dropped. A
reference is made in this secton to progress on nuclear
safety.
- Human Frontier: Japan plans to undertake a year-long
feasibility study. They will invite Summit scientists to
participate. Depending on the results, the proposal may be
discussed at the 1988 Summit.
- AIDS and Narcotics: It is proposed to discuss increased
international collaboration on AIDS and narcotics in an agreed
Chairman's oral statement.
Together witih the Political Directors, we reached
agreement on the major issues that will constitute the
political agenda. We made less progress on political
statements.
Political Agenda: The Political Directors developed a list
of issues to be discussed by Foreign Ministers (attached), and
specified which Minister would open the discussion. Of these,
it was agreed that at their first dinner June 8, the Heads of
Government would discuss East-West relations (including arms
control), South Africa and, time permitting, terrorism. The
leaders will also provide guidance for political statements.
The second dinner on June 9 will probably be devoted to topical
regional issues.
We expect Summit discussion of political issues to be
organized as follows:
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Heads Foreign Minister
6/8 dinners East-West relations, Regional issues
(separate) South Africa, possibly
terrorism, guidance on
political statements
6/9 morning Review possible East-West relations,
(separate) political statements terrorism
6/9 lunches Not yet decided Regional issues,
(separate) whether it will focus narcotics
on political issues
6/9 dinner Regional issues Regional issues
(combined)
East-West Statement: There was no agreement to have a
declaration on East-West relations, but no firm opposition
either. A contingency draft (attached) was prepared with a
decision deferred until the Summit. U.S. representatives, with
support from Japan and Canada, and, to a lesser extent, Italy,
pointed out the advantages of a Summit statement. France, the
UK and the FRG were reserved. Mrs. Thatcher was reportedly
concerned that Summit statements on East-West relations and
terrorism would draw attention to the absence of one on South
Africa -- which she opposed. Chancellor Kohl reportedly wanted
to avoid a repeat of Williamsburg, where President Mitterrand
was put under intense pressure to agree to a statement. The
outcome was a contingency draft statement, characterized as
"personal contribution" of the Sherpas, that could provide a
basis for possible drafting at the Summit in light of guidance
from the Heads of Government. This draft reflects an amalgam
of U.S. themes, the Japanese draft, a UK draft and an Italian
presidency draft. If there is a decision at the Summit to
issue a statement, it will require further work.
Terrorism: A crisp, concise terrorism statement that
included a reference to continued consultations among the
Summit-Seven governments was orginally drafted by a group of
six of the seven counter-terrorism representatives. The French
representative, however, was instructed not to participate in
that exercise. When the statement was reviewed by the Personal
Representatives, the French insisted on numerous changes which
diluted the force of the statement. The French take the
position that with the revision of the Bonn Declaration, the
mandate of the counter-terrorism experts has been concluded --
a position we do not accept. Although the draft (attached) was
accepted by the other six governments, the U.S. representative
put a bracket on the entire text.
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South Africa: The Canadian representative stressed Prime
Minister Mulroney's proposal for a Summit statement on South
Africa that would establish a Foreign Ministers' group to
monitor the issue. As host of this year's Francophone Summit,
the Commonwealth Summit and next year's Economic Summit,
Mulroney, the Canadian representative argued, will be one of
the "international managers" of this issue over the next twelve
months. Mulroney might propose a text, which the Canadians
have given us bilaterally, either before or at the Summit. The
UK representative asserted that Thatcher was firmly opposed.
As instructed, U.S. representatives did not press the U.S.
draft.
Other Issues: We also passed bilaterally to the Italians
language on intenational narcotics control, the Iran-Iraq war
and the spread of democracy for inclusion in the Summit
Chairman's concluding press statement.
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6S VC,I,.&a `
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A G E N D_A
cast - West
c)t Io nr w
a) Trends in Sovvietnppolicy iand in East Countries
(Herr Gensch
b) Arms control. (Secretary of State Shultz)
c) Regional issues: Afghanistan. Cambodia (Secretary of State
i)
Shultz, Minister Kuranar
Soviet policy in Asia Pacific (Foreign Minister Kuranari)
South fr ca (Foreign Minister Clark)
Middle East. (Mr. Tindemans)
Iran-Iraq (Minister Raimond or Foreign Secretary Howe)
- Central America (Herr (;enscher)
- Latin America (Foreign Minister Andreotti)
- Terrorism_ (Foreign Secretary, J. Howe)
Yr,;.,A_ Cores and the Philippines (Foreign Minister Kuranari_
united Nations (Foreign Minister Andreotti)
.nter'natio a Narcotics Control (Secretary of State Shultz)
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