MINUTES CABINET COUNCIL ON ECONOMIC AFFAIRS NOVEMBER 30, 1981

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R000200280011-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: May 7, 2009
• Sequence Number: 11
• Publication Date: November 30, 1981
• Content Type: REPORT

Approved For Release 2009/05/07: CIA-RDP84B00049R000200280011-3
MINUTES
CABINET COUNCIL ON ECONOMIC AFFAIRS
November 30, 1981
8:45 a.m.
Roosevelt Room
NSC Review Completed.
Attendees: The Vice President, Messrs. Regan, Haig, Baidrige,
Donovan, Block, Weidenbaum, Anderson, Porter, Harper,
Trent, Murphy, Gray, Hormats, Leland, Kudlow, Hopkins,
Cribb, Bailey, Thomas, Dederick, Baroody, Garrett,
Gribbin, Hemel, and Ms. Rozbicki.
1. Poland: Economic and Financial Situation
The Council reviewed a paper, prepared by the Departments of
State and the Treasury, on the political and economic situa-
tion in Poland. Mr. Hormats' presentation focused on the
two-fold nature of the Poles current economic problems:
labor instability and shortages of food and spare parts.
He*added that politically other countries are viewing the
Polish experiment in political liberalization with less
enthusiasm as her economic difficulties have deepened. He
also outlined briefly the dimensions of Poland's prospective
financing problems and the immediate problem of providing
adequate feed to maintain the Polish chicken industry.
Mr. Leland's presentation focused on what he termed the basic
problem - to what extent are Polish requirements for outside
assistance likely to continue in the future. He outlined the
Solidarity estimates of Polish external assistance needs in
1982, the current exposure of U.S. and foreign commercial
banks, existing cross default clauses in commercial banks'
Polish loans, the potential for providing assistance in the
form of surplus agricultural commodities, the attitude toward
additional assistance on the part of several European credi-
tor nations, and likelihood and timing of Polish membership
in the International Monetary Fund.
The discussion focused on both political and economic devel-
opments in Poland in recent months. Secretary Haig outlined
his view of the profound political implications of the Polish
experiment in liberalization, the evolution of Soviet inten-
sions and behavior toward Poland, the effect of events in
Poland on Soviet foreign policy in general, the immediate
need for approximately $100 million in food relief, likely
congressional reaction to various scenarios, and the dimen-
sions of Polish economic; assistance needs over the longer-
term.
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Cabinet Council on Economic Affairs
Minutes
November 30, 1981
Page Two
The discussion also considered the immediacy of Poland's
agricultural import needs, the appropriateness and legal-
ity of various ways of providing agricultural assistance,
the need to act in concert with our allies, the possibility
that any funds we provide will simply result in reduced
Soviet outlays, the extent of consultations with our allies
to date, the economic situations of the other major credi-
tor nations - Britain, France, and West Germany, the
amount of U.S. assistance during 1981 ($1.1 billion in
rescheduling and $700 million in CCC credits), the need to
distinguish between the short and long-term problem, the
situation with respect to private commercial banks who
have outstanding loans to Poland, and the need for fur-
ther analysis.
Decision
The Council agreed to recommend to the President that the
U.S. provide $100 million in additional emergency food aid
to Poland for FY 1982.
The'Council requested the Departments of State and Treasury
to jointly prepare additional analysis on Poland's political
and economic situation over the longer term for considera-
tion by the Council at its December 15 meeting. This
analysis should include:
1. How much external economic and financial assistance Poland
will require in 1982 and 1983 to meet its debt obligations
and to finance its projected trade.
2. Based on past performance and our best estimate of future
willingness and ability, the portion of this economic
and financial assistance to Poland we expect the Soviet
Union will provide, and what portion we expect western
nations and creditors would need to provide.
3. Our best assessment of the burden sharing arrangements
that we could gain agreement on among western nations
and creditors.
4. The likely impact on the Polish economy if this aid is
provided. The prospects for restoring a viable Polish
economy that will not require large-scale external
assistance.
5. The political and economic consequences in Poland if
Poland's official and private creditors fail to provide
the assistance needed to facilitate debt rescheduling.
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Cabinet Council on Economic Affairs
Minutes
November 30, 1981
Page Three
6. The political and economic consequences in western nations,
particularly the United States, if Poland fails to receive
the necessary financial assistance. The dangers, if any,
Poland's default on its debts would pose to the banking
system in the United States and Europe.
7. The degree assistance to Poland by foreign governments
will result in less assistance by private banks through
rescheduling.
8. The forms of aid U.S. assistance might take and to whom
it would go.
9. The economic requirements, if any, western banks and gov-
ernments can realistically impose on Poland as part of
an assistance program in order to alleviate Poland's
financial crisis over time.
10. The potential budgetary costs to the U.S. government over
the next four or five fiscal years if Poland's economic
situation remains critical and western nations agree to
meet Poland's external financial needs.
11. The extent the budgetary implications of U.S. financial
and economic assistance to Poland can be minimized by
reprogramming existing foreign aid programs already
included in the budget.
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