INTERNATIONAL PRIVATE ENTERPRISE: WHEN WILL THE REAGAN REVOLUTION BEGIN?

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00759R000100100004-2
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: December 6, 2010
• Sequence Number: 4
• Publication Date: July 25, 1985
• Content Type: MISC

Approved For Release 2010/12/06: CIA-RD 87T00759R000100100004-2
THE DIRECTOR OF
CENTRAL INTELLIGENCE
National Intelligence Council
26 July 1985
NOTE FOR: Director of Central Intelligence
FROM: David B. Low
NIO/Econ
Attached are the talking points prepared
by Ambassador Keating which he mentioned to
you yesterday. They are derived mostly from
the previous paper, but they add a bit more
emphasis on the relationship to US security
interests.
Attachment:
As Stated
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Amb--sador Robert B. Keating
25 , ly 1985
INTERNATIONAL PRIVATE ENTERPRISE:
WHEN WILL THE REAGAN REVOLUTION BEGIN?
Talking Points
THE SETTING
1. The President at Cancun in 1981 articulated a positive program of action
for economic development which emphasized the need to encourage LDC growth
through the private sector. The President's program, however, remains
unfulfilled for the Administration's strategy and mechanisms for carrying
out the goals are flawed.
2. Changing economic circumstances in the Third World have created a new
context for political and economic relations and new opportunities to
enhance US security interests. Many Third World leaders now recognize that
rigid Marxist-socialist models will not yield economic and industrial growth.
They are increasingly concerned with the "politics of economics" and not
the "politics of socialism," and look to market-oriented approaches to
rebuild shattered economies. Moreover, the Soviets are not able to offer
much in the way of economic assistance, and Soviet economic and financial
constraints over the next 10 years will make Moscow even less able to
compete in non-military sectors.
THE CHALLENGE
3. The growing American economy and its private sector is an irresistable
example impelling change in the economies of both the industrial and Third
World countries. If we are able to take advantage of the economic forces
for change in the Third World, then the West's position relative to the
Soviet Union would be strengthened. In specific countries, US security
interests will often coincide with opportunities for economic support of
private sector enterprise and can be mutually reinforcing.
THE OBSTACLES
4. Our private enterprise, not government direction, created the economic
system which provides the resources we transfer to LDCs. Yet our economic
assistance generally ignores our own model of growth. Virtually all US
aid moves from US bureaucracy to foreign bureaucracy before any of it has
the opportunity to move to the private sector. Significant change in the
private sector cannot be leveraged primarily on the back of governmental
institutions.
5. AID, as currently structured, is not the solution. In fact, it is part of
the problem. Present developmental assistance efforts show little positive
correlation with private sector growth. AID's understanding of the private
sector is limited, and its resource transfers to LDC governments may support
short-term political stability but often they retard long-term growth of
private enterprise.
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THE PROPOSALS FOR CHANGE
6. The Peterson Commission in 1972, the Reagan Transition Team in 1980-81,
the Carlucci Commission of 1982, a portion of the President's Task Force'
on International Private Enterprise in 1984, and others, have concluded
that AID is the wrong institution to carry out the private sector mandate.
These groups have proposed that resources be transferred from AID to an
environment which understands the private sector (e.g., an expanded OPIC
or a US International Development Bank). Unless the Administration is
prepared to do this, the President's Cancun goals will not be fulfilled.
(AID's legislation and institutional orientation reflect the dominance
of the humanitarian aspect of development assistance, and it seems
reasonable that AID should continue to be predominantly a humanitarian
institution.)
7. In order to implement an Administration commitment to change, the
President can:
a. Appoint a new head of the International Development Corporation
Agency (IDCA) which was established by Reorganization Plan No. 2
of 1979 to be a focal point for international issues affecting US
relations with developing countries. This already established
position would offer the opportunity to implement the President's
Cancun goals, to develop strategies and modalities for stimulating
private enterprise in the Third World, and to support more effectively
US private sector investments in LDCs. (The AID Director is currently
Acting Director of IDCA.)
b. Appoint a special assistant to the President for International Private
Enterprise. This would be an alternative choice which would allow
attainment of the goals expressed in Option 1.
c. Appoint a new director of AID who would blunt the current policy drift
which is counter to many of the president's private sector objectives.
The new director, however, would be confronted with a staff that does
not understand the private sector and bureaucratic inertia or resistance
to change would consume a great deal of time.
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