CAPITAL FLOWS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00759R000100190020-5
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: May 18, 2010
• Sequence Number: 20
• Publication Date: May 7, 1984
• Content Type: MEMO

Sanitized Copy Approved for Release 2010/05/18: CIA-RDP87T00759R000100190020-5
CONFIDENTIAL
The Director of Central Intelligence
Washington, D.C. 20505
National Intelligence Council NIC #02699-84
7 May 1984
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
VIA: Chairman, National Intelligence Council
FROM: Maurice C. Ernst
National Intelligence Officer for Economics
SUBJECT: Capital Flows
REFERENCE: DCI Memo dated 1 May 1984, same subject
Attached for your signature is a response to Ken Dam on the kind of
work the Agency does on capital flows.
Maurice C. Ernst
Attachment:
As stated
6oNCUR:-
e a
All portions Confidential
Sanitized Copy Approved for Release 2010/05/18: CIA-RDP87T00759R000100190020-5
 Sanitized Copy Approved for Release 2010/05/18: CIA-RDP87T00759R000100190020-5
CONFIDENTIAL
NIC #02699-84
7 May 1984
SUBJECT: Capital Flows
DCI/NIC/NIO/Econ/M.Ernst:bha(7 May 84)
Dist:
Orig - DCI
1
- DDCI
1
- ExDir
1
- DCI/SA/IA
1
- ER
1
- DDI Reg
1
- C/NIC
1
- VC/NIC (HM)
2
- NIO/Econ
CONFIDENTIAL
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 Sanitized Copy Approved for Release 2010/05/18: CIA-RDP87T00759R000100190020-5
CONFIDENTIAL
The Director of Central intelligence
The Honorable Kenneth W. Dam
Deputy Secretary of State
Washington, D.C. 20520
You asked me at our luncheon what kind of work the Agency does on
international capital flows. CIA's principal work on capital flows is
along the following lines:
o As part of the analysis of the balance of payments of foreign
countries. In this connection we pay particular attention to
the Communist countries and major LDCs, such as Brazil and
Mexico.
o As an aspect of our global analysis of the international debt
problem. This analysis involves assessments of the causes,
consequences, and reactions to the debt problem from the point
of view of the debtor countries, of creditors' views, including
governments and banks, and of the economic interactions between
the debt-ridden LDCs and the international economy
o As a basis for systematic monitoring and analysis of OPEC
assets, including their volume, location, currency composition,
and liquidity.
o Occasionally, as part of general assessments of global economic
trends, especially in the OECD countries.
CIA has little specialized expertise and consequently does not often
produce studies on world capital markets, leaving this topic primarily to
Treasury and the Federal Reserve.
With respect to the Commerce study you handed me on US-EC capital
flows, we find it a straightforward analysis based on US balance of
payments statistics. The issue it addresses, however--the belief by some
CONFIDENTIAL
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 Sanitized Copy Approved for Release 2010/05/18: CIA-RDP87T00759R000100190020-5
LUNIIUtNIIAL
West European leaders that capital flows from Europe to the US are
seriously inhibiting recovery of European investments--is largely a straw
man, designed to pander to a socialist audience, rather than a widely
held view, even among high-level socialist party officials. The
Europeans have been highly critical of high US interest rates but are
well aware that the large net inflow of capital into the US, with little
of this coming from Western Europe, is a counterpart to a large US
current account deficit from which Europe is benefiting. Indeed, as the
US economic recovery has picked up steam, bringing with it a large
increase in imports, European criticism of US policies has been muted
considerably. Now the Europeans are beginning to worry more about a
possible large depreciation of the dollar than by continued overvaluation
supported by capital inflows.
Yours,
/5,
William J. Casey
Sanitized Copy Approved for Release 2010/05/18: CIA-RDP87T00759R000100190020-5