INTERAGENCY GROUP ON INTERNATIONAL ECONOMIC POLICY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85-01156R000200260008-0
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: September 7, 2010
• Sequence Number: 8
• Publication Date: September 25, 1984
• Content Type: MEMO

Declassified in Part - Sanitized Copy Approved for Release 2012/04/16: CIA-RDP85-01156R000200260008-0
EXECUTIVE SECRETARIAT
ROUTING SLIP
 ~PPBAS$1;] TED
(With Confi Attachment)
MEMORANDUM FOR OVP
STATE
DEFENSE
AGRICULTURE
COMMERCE
OMB
CIA
USTR
NSC
OPD
CEA
FED
AID
EXIMBANK
Executive Registry
84. 8065/1
- MR. G. PHILIP HUGHES
- MR. CHARLES HILL
- COL. R. J. AFFOURTIT
- MR. RAYMOND LETT
- MRS. HELEN ROBBINS
- MR. ALTON G. KEEL
- MR. DENNIS WHITFIELD
- MR. ROBERT KIMMITT
- MR. LEHMAN LI
- MR. WILLIAM A. NISKANEN
- MR. EDWIN M. TRUMAN
- MR. MARK L. EDELMAN
- MR. WILLIAM H. DRAPER, III
Subject Interagency Group on International Economic
Policy (IG-IEP)
Attached are the minutes of the IG-IEP meeting held on
September 6, 1984.
Christopher'Hicks
Executive Secretary and
Executive Assistant to the Secretary
UNC LA~,$SF
(With rwerrt! ential Attachment)
 Declassified in Part - Sanitized Copy Approved for Release 2012/04/16: CIA-RDP85-01156R000200260008-0
..vi. r i UL" a inr+
Summary Minutes of the IG - International Debt Meeting
on September 6, 1984 at the Treasury Department
1. Argentina: Negotiations with the IMF and the Banks
These minutes are organized by discussion topic, summarizing agency
view points and indicate where decisions were taken. David Mulford
presided. Because he had to leave early, James Conrow replaced him
in the chair.
2. Treasury (Mulford) opened the meeting by describing the
Argentina/IMF and private bank negotiations and the calendar of
events and deadlines that were relevant to both. A Fund team was
currently in Buenos Aires resuming negotiations on a letter of
intent. Some progress was being made but details were not available.
There was some hope but no certainty that agreement could be reached
this month. Finance Minister Grinspun and President Alfonsin
would be in the United States for the Fund/Bank annual meeting and
the U.N. General Assembly, respectively, and their presence could
facilitate an agreement.
The banks were meeting with Argentina on the September 15th
deadline for the repayment of a $750 million bridge loan. At the
end of the month, Argentina would have to pay almost one billion
dollars to be current on its interest to the banks. It was highly
unlikely that sufficient interest could be paid without new credit
which would be difficult to arrange on such short notice. The
important point was the degree of progress Argentina could achieve
before the bank regulators (ICERC) met at the end of October.
The proper timing in dealing with this problem was extremely
important. In the next few weeks, we will have a better idea of
Argentina's position. There will be opportunities to consult with
other governments during the annual meetings (Sept. 22-27) and he
(Mulford) would be talking informally to some members of the debt
deputies group whom he expected to meet in the course of his trip
to Europe concerning the new Treasury security issue targeted on
the foreign market. Depending on how the problem develops, we
may want a SIG meeting in mid- or late-October.
Agriculture (Goldfield) asked about Alfonsin's ability to
make a,decision on the letter of intent. State (McCormack)
thought he was still in charge but that his power had peaked a
few months ago and that his opponents - the Peronists and the
military was stirring once again. CIA (Ernst) felt he had the
domestic strength to make a decision. Treasury said that it
might be more a question of will, but that the pressures for a
deal fairly soon were building up. Accelerating inflation and
accumulating arrearages were getting stronger. We should allow
them to work for awhile before we try to intervene more actively.
NSC (Robinson) agreed with Treasury's analysis but reserved on the
timing of another SIG. He thought we might have to have an earlier
meeting.
 Declassified in Part - Sanitized Copy Approved for Release 2012/04/16: CIA-RDP85-01156R000200260008-0
CONFIDENTIAL
State suggested that part of the Argentina problem was the
ineffectiveness of the Minister of Finance Grinspun. Treasury
replied that that had to be judged from the point of view of his
objectives. A case could be made that he was very effective in
delaying a decision without, so far, doing Argentina very serious
harm.
The Fed (Truman) was asked what would be the impact of
Argentine non-payment of interest on the U.S. banking system.
He replied that the failure to wipe out interest arrears, which
were now twice as large as at the end of the second quarter, could
be absorbed without serious damage to the balance sheets of U.S.
banks. A dangerous situation could arise if another major debtor,
such as Brazil, did the same thing.
3. The Timing of the Next Meeting
Agriculture, supported by Commerce and NSC, thought another
session before the IMF/IBRD meeting would be useful to update the
group on developments in Argentina and the results of the Cartagena
group conference in Mar del Plata, Argentina on Sept. 13-14.
Treasury (Mulford) agreed and suggested sometime in the week of
Sept. 17th.
Treasury (Conrow) pointed out that the details of the Mexican
government/private bank restructuring were described in the paper
that had been circulated. This is an important event because it
is the first private bank multi-year rescheduling since the debt
crisis began. Governments will not be rescheduling their credits
to Mexico. Our position is that we are prepared to consider a
Paris Club for a Mexican rescheduling when our criteria are met,
i.e., that the country has performed well in the past and is ex-
pected to in the future but has a level of amortization, which by
impeding development threatens debt service. Mexico was eligible
but the problem was that some of the banks want to make government
rescheduling a condition for the private bank agreement. We did
not want to be in the position of having the private banks decide
when governments should participate. In the brief discussion that
ensued, State noted that apart from the rescheduling, the general
situation was not very good. Mexico's policy, for example, toward
foreign private investment, for example, was still one of imposing
barriers in many areas. CIA was skeptical of the growth projection.
Commerce noted that it had done a study of the trade effects of
Mexico's adjustment on the United States and gave the Chairman the
executive summary.
5. Venezuela
There was no discussion of the Venezuelan neogtiations.