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ACTION EB-07
INFO OCT-01 EUR-12 ISO-00 SP-02 AID-05 NSC-05 CIEP-01
TRSE-00 SS-15 STR-04 OMB-01 CEA-01 L-03 H-02 PA-01
PRS-01 CIAE-00 COME-00 FRB-03 INR-07 NSAE-00 USIA-06
XMB-02 OPIC-03 LAB-04 SIL-01 /087 W
--------------------- 040706
R 271643Z FEB 76
FM AMEMBASSY LONDON
TO SECSTATE WASHDC 9382
LIMITED OFFICIAL USE SECTION 01 OF 02 LONDON 03091
PASS TREASURY AND FRB
E.O. 11652: N/A
TAGS: EFIN, EAID, IBRD
SUBJECT: INTERNATIONAL DEVELOPMENT ASSOCIATION FIFTH
REPLENISHMENT (IDA V) MEETING
SUMMARY: AT UNEVENTFUL SECOND MEETING OF DEPUTIES ON THE
IDA V REPLENIQHMENT HELD IN LONDON ON FEBRUARY 26, THE
MAJOR POINTS OF DISCUSSION INCLUDED THE SIZE OF IDA V,
METHOD OF PAYMENT, MAINTENANCE OF VALUE AND DEVELOPING
COUNTRIES' VOTING POWER. NO CLEAR CONSENSUS EMERGED ON
THE SIZE ISSUE WITH MOST DELEGATIONS REPEATING POSITIONS
PREVIOUSLY STATED IN PARIS. ON THE METHOD OF PAYMERT
ISSUE ALMOST ALL COUNTRIES FAVORED THREE ANNUAL INSTAL-
MENTS WITH EQUAL OBLIGATIONS FOR ALL. THE US RESERVED
ITS POSITION WHILE STRESSING IMPORTANCE TO IT OF THIS
ISSUE. EXCEPT FOR THE NETHERLANDS, NO ONE ENDORSED A
MAINTENANCE OF VALUE PROVISION IN THE AGREEMENT. THERE
WAS VIRTUALLY NO SUPPORT FOR SWEDISH PROPOSAL TO INCREASE
THE DEVELOPINE COUNTRIES' VOTING POWER BUT NO CONCLUSION
REACHED. KUWAIT WAS THE ONLY OPEC MEMBER WHICH PARTI-
CIPATED ACTIVELY IN THE DISCUSSION. THE NEXT DEPUTIES
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MEETING WAS TENTATIVELY SET FOR EARLY JUNE. END SUMMARY
1. THE SECOND MEETING OF THE DEPUTIES IN THE IDA V RE-
PLENISHMENT WAS HELD IN LONDON WITH NO UNEXPECTED RESULTS.
THE PRINCIPAL TOPIC OF DISCUSSION WAS THE APPROPRIATE
SIZE OF IDA V ON WHICH THE BANK MANAGEMENT WISHED TO REACH
AN AGREEMENT IN PRINCIPLE. WHILE MANY COUNTRIES STATED
THAT THEY FAVORED A QUOTE REAL INCREASE UNQUOTE IN IDA V
OVER IDA IV IN ADDITION TO AN ADJUSTMENT FOR INFLATION,
THERE WAS NO AGREEMENT ON HOW TO CALCULATE SUCH AN IN-
CREASE. THE LETHERLANDS, KUWAIT, THE UK AND NORWAY SUP-
PORTED THE BANK'S $9 BILLION FIGURE WITH THE REST OF
THE DONORS SUGGESTING VARIOUS FORMULAE WHICH WOULD RESULT
IN A SMALLER PEPLENISHMENT. THE CANADIANS ADVANCED THE
IDEA OF A THRESHHOLD FIGURE OF $7.4 BILLIONOVER WHICH
ANYTHING WOULD CONSTITUTE A REAL INCREASE IN IDA V OVER
IDA IV. A NUMBER OF DELEGATES STRESSED THE NEED FOR OTHER
TRADITIONAL DONORS TO MAINTAIN THEIR SHARE AS WELL AS
OBTAINING OPEC PARTICIPATION. AT THE BEGINNING OF THE
DISCUSSION CARGILL HAD COMMENTED THAT FOLLOWING HIS TALKS
WITHPOTENTIAL OPEC DONORS HE WOULD ONLY REPEAT HIS QUOTE
HOPE AND EXPECTATION THAT THEY WILL CONTRIBUTE SIGNIFI -
CANTLY UNQUOTE. THE US REPRESENTATIVE STATED OUR CONTINU-
ING SUPPMRT FOR IDA BUT NOTED THAT US IS UNABLE TO MAKE A
COMMITMENT OF SIZE OR SHARES GIVEN THE CURRENT STATUS OF
THE APPROPRIATION PROCESS FOR IDA IV. HE EXPLAINED THE
GENERAL CONGRESSIONAL DIFFICULTIES WITH MULTI-YEAR COMMIT-
MENT AND THE PARTICULAR PROBLEM WITH IDA BECAUSE OF THE
FOUR STRETCH OUT OF CONTRIBUTIONS. IN SUMMARY HE CALLED
FOR A REALISTIC TARGET SO THAT A SUCCESSFUL NEGOTIATION
DID NOT LATER TURN TO POLITICAL FAILURE.
2. CARGILL INDICATED THAT FOR THE NEXT MEETING THE BANK
STAFF WOULD PRODUCE ANOTHER PAPER ON THE SIZE OF IDA V
PROBABLY INCORPORATING THE CANADIAN CONCEPT OF A THRESH-
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ACTION EB-07
INFO OCT-01 EUR-12 ISO-00 SP-02 AID-05 NSC-05 CIEP-01
TRSE-00 SS-15 STR-04 OMB-01 CEA-01 L-03 H-02 PA-01
PRS-01 CIAE-00 COME-00 FRB-03 INR-07 NSAE-00 USIA-06
XMB-02 OPIC-03 LAB-04 SIL-01 /087 W
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FM AMEMBASSY LONDON
TO SECSTATE WASHDC 9383
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HOLD AMOUNT. HE ALSO AGREED TO PROVIDE FIGURES ON ANNUAL
DISBURSEMENTS REQUESTED BY US DELEGATE. HE EXPRESSED THE
HOPE THAT AT THE NEXT MEETING AGREEMENT ON A PRECISE
FIGURE COULD BE REACHED.
3. REGARDING METHOD OF PAYMENT -- GERMANY BEGAN THE DIS-
CUSSION BY CALLING FOR THREE ANNUAL INSTALLMENTS WITH
EQUAL LEGAL OBLIGATIONS FOR ALL. FRANCE, IRELAND,
JAPAN, AUSTRIA AND AUSTRALIA SUPPORTED THIS CONCEPT WITH
THE US AND CANADA PRESENTING THE ONLY DIFFERING OPINION.
4. IN THE MAINTENANCE OF VALUE DISCUSSION ONLY THE
NETHERLANDS SUGGESTED FURTHER STUDY OF THE IDEA. ALL
OTHER SPEAKERQ COMPLETELY REJECTED THE PROPOSAL WHICH IS
NOW AGREED TO BE DEAD ISSUE AS REGARDS IDA V.
5. THE SWEDISH DELEGATE WAS ALONE IN HIS STRONG FEELING
ON THE ADJUSTMENT OF VOTING POWERS. KUWAIT, YUGOSLAVIA,
CANADA AND CARGILL AGREED THAT THE MAJOR RESTRUCTURING
THE SWEDISH DELEGATE PROPOSED (A 50-50 SPLIT BETWEEN DE-
VELOPED AND DEVELOPING COUNTRIES' VOTING POWER) WOULD HAVE
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TO BE TAKEN UP IN THE BOARD. THE GERMAN DELEGATION PRO-
POSED AN INFORMAL DISCUSSION WITH BANK STAFF ON THIS
ISSUE AND FURTHER CALLED FOR FLEXIBILITY WHEN CONSIDERING
THE VOTING POUER OF NEW OPEC DONORS. THE US REPRESENTA-
TIVE ENDORSED THIS VIEW.
6. CARGILL SET THE NEXT MEETING FOR EARLY JUNE IN EUROPE
AT A SITE AS YET UNDETERMINED.
SPIERS
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