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Folder Title : Contacts with member countries: Germany - Correspondence 03

Folder 10: 1771058

ISAD(G) Reference Code: WB IBRD/IDA 03 EXC-10-4549S

Series : Contacts - Member Countries files

Sub-Fonds: Records of President RobertS . McNamara

Fonds: Records of the Office of the President

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1111 11111 1111 !II! ' I ll 177 1058

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DECLASSIFIED WJT J.f RESTRICTIC. ,TS

WBG Archives

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I I I Nitf',/-ttt''~l.L l,/,;~~~ f(1 P F: F( G:'-: Sli<:.JC't I (l~! AND l>E VLLOP~M h l

CO:NFJ DHHli\L

DA'f f.:: April l/1, 1970

ECLASS lED

DEC 0 I ('112 WBG RChJVF ..

On ApdJ 9, 1970, :Nr. A. Nocller, the Gerwan Fcden1l l·:inistor of FinAnce calJ.c•l on hr . gnapp . De was accomvanicd by Dr. Hvncmann and an inLL~rprctcL Sir Dvnis l\5cl~c-LL, Hr. Cope and Hr. Adler \·:ere.~ also present Hr . Noc:ll~r spoke in Gennc.;n; r-IJ~. Kn:lpJ- And Sir De11is :i>1 Fnglish.

Mr . 1·1ocllcr s.:-ticl that he:! bad corr:c to tall~ a],out the. IDA rcplcni~,b­m2nL . He: f;Dj_d LllCJt Lh" German GovC'r''l'C!ll hacl not yet U1l en a decision but in(1.i.c:u1 c.,~ tl,::t the suL:iu:t \·:oulc[ c:nr c bC'forc the Cabinet sl,o:clly. Ho refen.:cd to the d:isu.s~:..:.on on Il1•1 ;-;t tltc Paris mcc.<·in<~ of th-.~ EEC i\iin:ist'crs of Fin;1nce _in Fcbnt~l.Y <:"t cl s<t:i.d Llt<Jl nn,1e of the lmC Fins..Jc..: lhu:i.:::.Lcrs haC: f avoi·e.J n:p:l crd shiiiC.,Jt at Ll~c h.i !lj c>n tloJ.L-n: J eve]. J ndc-::d, the Frc·nch NinisteJ hl(1 sur~_;rr;Lcd '' f:i.gurc of onJy $L:OO m.il}j_on. 1Je added that the l'hni~tc·rs o:C l':ilWilCC h,_,J J.C:'itlic!· the authority nor Lh·~ ini..PJJt:i.O•l tv r:::ckc a dee:isJon; \lll::-.i... tooL pl<>cc \13S only an c:-:,:lJ.:tnt,r~ of vic'\·.•s , aDt' the Gcn1a11 Goveulrlc;llt \¥8:; r,lc;,l t·o llc•vc the vje,.'s of its FEC p~ntl•lJS. ( Sir Denjs , stdl ·cc;t·cnU.)' questioned \·.'hetl!c·r: he botl correct]·· unc:~u:tood I·JJ:·. HoclJo:.: ' s c..ccotJnL of tlil." 1nc.ct i .. 't~\ b~ coubc \.c hE'd been infonPcd ll1nt the Dutch Nird stc;r o f F:i11oncr. b:icl <~;.pJ ic :i i ly p ·c.l'osccl J D/, rc [iJ en i sl.: '12i!t hL the bilJ ion tlollar l evt~J , bt;:. l'lr . HocJln \!~~''rather V<'f',t'L ou the <tl'\0\llll <1nd ltm.; this ;wlt'tcr lwcl bc-~,, h·ft. Jlc confin.,~..'ti, lJOHcvc::., th<tt the Dutch bad auvocatccl rep] eni.slmcHi "on l lk· hi ~h s:i do. " )

Hr . Noclh~L- explained t.l'r: Gcnn~u' £Itt:ituc1e tmmrus forcir,n a·id at l engtl1. llc sa.i c1 tLat he had oclvocated Ll1c setting t.:p of an aiel ministry as C:!<"l.l.>' .:::s J9GO, nfteJ. a visit to Uw llniLeJ St<J tcs, m:cl in 1961 suc11 a nJ:inistry \vas aclui'!Jly e<·tabJ_idtccl . He said that in gcne1.·a J he favored mul t ilatcJal aid but it must be realized that Ccrmany was under pres~u~e i. o inncasc bi1ater;>] aid also. lie rncnUon0d in p.::1.U.cu1Dr Llwt tlte United S L.1Lcc; and F1 ance , \:j t l1 \ )Join Gcn•:'1ltJ h.:'td a frj end ship pact, \-Jere consL~ntly u rginz G~n11ally to inc-.l'C''~-'c he.- biJ.:,Loral. aiel . Tlw french \·lcre especially anxio•.t<· tlt1t. G•.•n,al'y EhOLtlc1 p1·oviclc aiel Lo fo1·mvr french terr :i tor .i es in Afrjca. /\fJ· j can offici<"] s oftcu C:Ciil!r" t o Bon;·, to request a:id at the urging of t he Fre:nch. As a rE't>u l t t l1·: net. fJ 0\1' o.L dcvclop111C'nt finance f rort Gcr,·1ai:ty lwC:: r i f;cn in 19G9 Lo 1 . tfB% uf c;.::r . Ger Po.ny had also sllo\,'11 readJnc.ss t o c oOl•C.r2.Le c l nsC'~.~~ ,. i_Ll, vtLc)· dc•J'ol. countries in th<:·. 1·eschc·duling of c1eht . I n t lLi.s comh.Ctio:t 11:. rv;cl.···r,1 to a cl•.'c.j~·ion by the Germ2n Cabinet on Harch 21 1 o Clcccrt L!t'' /1i1~: r ccommcnd.:1t ion o·, th-~ resdJc-cluling of Indonesian d ebt . (\·!hen i·b- . l~l)i1pp quc.csl ·i o~JCd h:in on Lhi;, point , 1-:-:.· . l'1oclle[ r e~.cl .:1 p assage flon: <: bricfj,,~ p:-tpc·r v::1·ic11 C'Cl!f:in,cd his pre riouf', statrniC'llt. ) ik added th~-..:t Gt:!nn.:my bf'd h:::~cn ailp:t.:c::cltC',l to n.dtJCE intcre;~t fDY1'1Cnls, 11h.i.c:l1 112<.1 ri sc•n 8~; a rc:.u]l of tll:: fll>11L.VCJ.l\t.'ltir•n. ( r,• pre~;um:-''1Y ref·~rrcd to debt s cn.rico p.:1ymc·nt~·. ) Cerr·1r'y I t''1 rf'f,l:;ecl these r·c;u.::stE j;·J princjplo but \·IJf: wi l ling to consider spc ial c2~~~.

Preside~ , t as een

Files 2 - April 14, J970

Hr . .Hoeller aJ so coJnP· ~nlccl on t!Je "myth" Lhal Gennau) \.as a rich country, str ·ssint, tll(' "J oFscs in substance" in t'·:o lost H.:Hs, and two inflations. llc referred to the high cost of foJejgn investment in Germany ancl the fact that Germ-:my \·ms fe>ll:ing brhim1 in r:1oclcrn technology, espcc.i..<•lly jn aeronaut.jcs ancl coi!.1JULcr scieucc. The need to maintain high l iving stand<1rds in Germ:my, to contrast them ''j th those of Eastern Europe and to avojcJ stri1:cs ancl social djssatisfacLiou in general, \vas another re2son for k<'"ping the burden of foreign nicl o:. Gc~rm:my dO\·;ll. In spite of this he bad C:lgrcecl at the n.ost recent budget. ~cvicl·l to exen.pt the budget of the a'Lcl mlrd~~try from the videsprcac.1 bucl~ct cuts mc.de for fiscal policy reasons.

Hr. Knapp said the B<...nl~ considered Germany one of its most important mcmbLrs. He rrent j on<.:'r.1 Gcrn.z.u as the second J Prgest source of borrm·'ed funds for tl1e JJauk, as <m important mEmber of the Bank-directed consortia and consultative groups, and a source of approximately 100 mc~bcrs of the Bank ' s professiornl staff, amnng th0m several heads and deputy heads of departments. TUJ ni11g to tl1c IDA replenishment, he c:mcl Sir Denis mentioned that , in the rrost recent diE:cussions, eit;ht countries, accounting for appro},_i­matc1y t\vo-Lhircls of J~art I contributions, had exprLssecl themselves in favor of a billion dollnr repJenisluncnt, \·Jldlc the rcmaininb countries had c>·­presscd rcserve1Uons nbout t-his 1Pvcl . Sinc:c· the Loncl m meeting, the french had :indicated Ll1at they ,,,ere com;idcring a replenishment level higher tha11 that \vhich they mentioned ei tlwr at L11e EEC meeting or in London. (It appeared that Hr. Nocller ,,!as not auarc of the ouLcome of the London l:tect:ing and inquired of Dr. Hanemann as to \!lJO h.:-~d rcprc,scntC'd Germany and especj :Jlly t he Ministry of Finance.) Hr. Knapp and Sir Denis referred to the decision of the United States to r.:1isc the proportj on of Amerj ca11 aid channel eel t hrough multilateral institutions, and the key role of GeJmany in reachin;; a decision on the level of the replenishment. l'Ir. Knapp pointed out that because of the d ifficuJ ty v.o1tich a11y country had in jnc-re<Jslng its reJ;:,tive sl1arc in the r eplenishment, Germany ' s decision on the ~ize of the replenishment Has likely t o have a tenfold impact on tltc~ amount of the total rc )lcnishment .

Hr . l'1oeller s<Jid Germony \·.JouJd not stand in thf:" \vay of a l evel of r epl2nishmcnt t hat uas ,._ acccl't<Jble to t he United States Government . I t all depended on the " conccpt " --the German \vord u sed \vas " Vorstellung "--o f the level of replC'J1h;hmcn1. \·iltic:h Hr . Brandt -v:ould receive from the Presidcni.. of tltc Uni.tcd States during his visit. lie , as Hinister of Finance, \·wuJd do cvcrythi.ng tc, carry out Hr . Braudt ' s decision , even if it meant. going ac;ai1:st the advice of the officials of his Hlni st·ry.

JHA/nn-ml /

c c : Hessrs. l'1cNamara , KnDi1P , Aldcm::reld, Rick~Lt , Cope

TO:

FROM :

SUBJECT:

INTERNAT I ONAL DEVELOPMENT I INTERNATIONAL BANK FOR I INTERNAT I ONAL F INANCE ASSOCIATION RECONSTRUCTION AND DEVE L OPMENT CORPORATION

OFFICE MEMORANDUM Files DATE: March 1, 1971

S. Aldewereld

Mr. Poullain's visit - February 26, 1971

Mr. Poullain, head of the Westdeutsche Landesbank, visited Mr. McNamara and me on Friday, February 26. During the conversation Mr . Poullain said that his organization would be in a position to resume lending to the World Bank. He was aware of the fact that we would have a public issue sometime during the second quarter of 1971 and he said that he visualized a private placement with the Westdeutsche Landesbank subsequent to this public issue. He added that despite the fact that the German Government during calendar 1971 would borrow very substantial amounts from the German capital market he had been informed by Prof. Schiller t hat the World Bank would be allowed access to the German capital market in the amount of DM 500 million during calendar 1971. The way Mr. Poullain visualized the amount of DM 500 million would be raised was that we would have four issues in Germany during 1971 namely: the proposed DM 200 million public issue to be followed by a private placement with the Westdeutsche Landesbank, then another public issue to be followed again by a private placement with the Westdeutsche Landesbank.

cc: Mr. McNamara Mr. Rotberg

SA: lev

TO:

FROM :

SUBJECT:

IN TERNA TION AL DEVE LOPMENT I IN TERNAT IONAL BANK FOR ASS OCI ATION RE CONSTRUCTION AND DE VEL OPM ENT

INTERNATIONAL FINANCE CORPORATI ON

OFFICE MEMORANDUM Mr. McNamara

S. Aldewereld ~ Visit of Mr. Poullain

DATE: February 25, 1971

On Friday, February 26, you will meet with Mr. Poullain, President of the Westdeutsche Landesbank, Dusseldorf. Mr. Poullain used to be the head of the Girozentrale in Munster. About two years ago when as a result of the merger of that institution with the Rheinische Girozentrale the Westdeutsche Landesbank was created, he became its head. Prof. Lipfert, whom you know, is one of his deputies. Mr. Poullain is a powerful man in both German banking and political circles. In addition to his Presidency of the Westdeutsche Landesbank, he is also Chairman of the Board of the Deutsche Girozentrale - Deutsche Kommunalbank in Frankfurt and Chairman of the German Savings Banks Association. I understand that he is very close to Prof. Schiller.

About a year ago when I was in Germany, Mr. Poullain invited me for a long discussion at his office in Dusseldorf. He told me that he had left the conduct of affairs with the World Bank to Prof. Lipfert because he had been heavily engaged in organizational questions resulting from the merger; but now that these matters were resolved he had decided that in the future he, rather than Prof. Lipfert, would represent the Westdeutsche Landesbank. Since then I have had discussions with Mr. Poullain on two or three occasions. In all of these he stressed that he was looking forward to a resumption of operations between his organization and the World Bank, but that liquidity difficulties made this impossible for the time being. When I was in Germany about four weeks ago Hankel told me that the Westdeutsche Landesbank still was suffering from these difficulties and that consequently he wanted us to borrow DM 200 million not from the Westdeutsche Landesbank but by way of a public issue through the Deutsche Bank.

I do not know whether Poullain's visit to you will be purely a courtesy call or whether circumstances have changed and that he might wish to talk about a borrowing operation.

·dent has se

MEMORANDUM FOR THE RECORD April 7, 19 71

From: Denis Rickett

Subject: Visit of Dr. Alex Moeller

Dr. Alex Moeller, Finance Minister of the Federal Republic of Germany, called on Mr. McNamara at 5:30p.m. on Tuesday, April 6th. Dr. Moeller was accompanied by Mr. Jekewitz, Mr. Artopoeus, and Miss Wichmann. Mr. J. Burke Knapp and Sir Denis Rickett were also present.

Mr. McNamara extended a warm welcome to Dr. Moeller, who, in reply, referred to the negotiations last summer for the Third Replenishment of IDA. It was true that there had been certain difficulties within the European Economic Community. Nevertheless he had carried out the undertaking which he had given when he was in Washington to do his utmost to make possible a settle­ment which would conform to the wishes which had been expressed to him by the United States Government and by the World Bank. This he had done to the best of his ability though he had not been completely successful. He had done this because he was convinced that support of multilateral aid was the right policy for the future and that it was important to move away from the rather one­sided views ofthe former colonial powers which, up to the First World War, had included Germany. Aid could be better directed by an organization in a central position just as Herr Eppler's Ministry was in a position to coordinate the German aid program. Herr Eppler regarded his function not as a task but as a vocation. He (Dr. Moeller) was in the position common to all Finance Ministers of having to restrict the spending activities of his colleagues.

Mr. McNamara said that the World Bank Group were extremely grateful to the German Government for the support which they had received: first, through the access which they had been given to the German capital market; secondly, for the spirit of cooperation which the German Government had shown in the negotiations for the Third Replenishment of IDA; and finally, through the acceptance by that Government of the targets enunciated in the Pearson Report. He (Mr. McNamara) believed that the willingness of the Japanese Government to lend substantial sums to the World Bank at the present time owed much to the German example.

Dr. Moeller said that a year ago, during a visit to Japan, he had dis­cussed both with the Japanese Prime Minister and with the Finance Minister the case for foreign aid. He also recalled a visit which he had paid to this country before the Presidential election in 1960. At that time he had received the impression from talking to Mr. Dillon that many people in the United States thought that the German Government was not paying sufficient attention to the needs of the Third World. It was partly for this reason that he (Dr. Moeller) had strongly supported the setting up of the Ministry for Economic Cooperation now headed by Herr Eppler.

Mr. McNamara said that it was in part due to the example of the German Government that the DAC countries were planning to increase their aid programs

- 2 -

to a substantial extent. It was estimated that the flow of official development assistance which had amounted in 1968 to $8.8 billion would, by 1975, have risen to $14.9 billion. He agreed that there was a trend towards increased multilateral aid. He hoped that Germany would follow this trend and would channel up to, say, 20 per cent of its total aid through international organizations.

Dr. Moeller said that 20 per cent was, perhaps, as high as they could go at present until existing bilateral commitments had run out. The German Govern­ment was, however, resolved to direct a much higher proportion of its aid than that through multilateral channels in the future.

Mr. McNamara said that international organizations, such as the World Bank, could help bilateral donors and recipients also in a number of ways, such as the preparation of economic reports, the formulation of development plans, the carrying out of sector studies, and the drawing up of sound projects based on pre-investment studies. He, himself, was looking forward to meeting Herr Eppler in Switzerland shortly at a further meeting called by the United Nations to consider the relation­ship between bilateral and multilateral aid.

In conclusion Dr. Moeller said that he had wished to pay this visit to Mr. McNamara partly for reasons of courtesy but also to underline his strong support for all that Herr Eppler was trying to do.

Born: 1903

DR. ALEX MlkLER

Minister of Finance Federal Republic of Germany

Education: No academic degree, but honorary degrees from University of Freiburg and Karlsruhe Technical Institute

Background: Originally a journalist. Fell out of grace with the Nazi government prior to the war and went into the insurance business. Became Managing Director of Karlsruhe Life Insurance Co.

Politics: Minister of Finance about 1969 (oldest Cabinet member) Member of Social Democratic Party since 1922 Member of Bundestag since 1961 Member of State Legislature, Stuttgart - 1946

Interests: Music and sports

Hobby: Considers himself an expert on whiskey brands, which he collects

(Comes to the Bank after a 4:30 p.m. meeting with Mr. Schweitzer.)

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O FFICE MEMORA, D M CO~FIDENTIAL

TO: ~~ . William Clar k DATE: October 4 l97l ,

F;:<0.\11: J . w. Strobl

SLJC;jECT: Schiller - some personal notes

For two days after the cldse of the discussions with Dieter Vogl, Schiller's to Schiller's personal staff in Bonn and

~C ASSIF!ED

DEC 0 4 2012 WBG ARCHIVES

A:mual Heeting I had i1our-long press spokesman, who belongs entourage wherever he goes.

During our conversations Vogl made several points which I find worth recording .

1 . The Germans will vote fo~ RSM but not for Schweitzer when nominations will have to be confir~ed n~xt .

2 . Schiller told his staff repeatedly he was pleased meeting and thinks good personal r apport >vas established . he is highly impressed by RSM and his performance .

with RS"M lunch As a technocrat

3 . Likewise, ~1rs . Schiller ap peared extremely pleased by the contact and treatment received from Hrs . RSM .

4 . Schiller ' s more than fair development contribution in his Chair:nan's address is owed largely to former ED Hanemann (in opposition to Hankel) .

5 . Schiller though personally still uninterested in development, comes away f r om thi s year's Meeting and his contacts with RSM much. more conscious of development than before .

6 . Within context , Schiller thinks German present representation in the Bank inadequat e and considers replacing it .

7 . Schiller's relations with Connally - contrary to what the press made it appear - we r e. extremely cordial . They met three times and Schiller t hinks he won a personal friend (Vogl hopes the reverse is true too) .

JWS:apz

cc: Mr. Chr i s t o f f e rs en

- 3 -

CURRICULU11 VITAE

of the Federal Minister of Economic Affairs, Prof. Karl Schiller, Pro­testant; married to Anna Maria, nee Vogt; 4 children (Barbara, Bettina, Christa, Tonio).

April 24, 1911 Born in Breslau, tre son of an engineer.

1931 1-""..a.triculated at Kiel.

1931 - 1935 Studied economics and sociology at the Universities of Kiel, Frankfurt, Berlin and Heidelberg .

1934 Examination for Diploma in Economics.

1935 Graduated as Dr. rer. pol. (Dr. Political Science).

1934 - 1935 Associate professor, University of Heidelberg.

1935 - -941 Head of research team, Institute of International Economics, YJ.el

-939 Qualified as assistant professor (Privatdozent), University of Kiel.

l9ul - 1945 Army service, =ising to 1st Lieutenant.

1944 Invited to be Assistant Professor, University of Rostock.

1945 - 1946 Visiting Professor, University of Kiel.

l9h7 ornrards - Full professor of Economics, University of Ha.TJlburg. Director of the Institute of External Trade and Overseas Econo~ic Af­fairs and of the Socio-economic Seminar of the University of F.amburg.

:.956 - 1958

Lectures on economic theory, economic policy and foreign t~ade and paynents. In particular, Schiller developed a modern anc comprehensive theory of economic policy. He combined t~9 re­sults of extended study trips overseas with his theory of economic policy to produce one of the first se_f-contained acco,Jnts in lecture form of 1The Growth Problems of the Deve_- / oping Countries. n

Rector of the University of Ha~burg . He made an import~~t contribution to the rapid expa~sion and rebuilding of the university.

1958 - 1960

1947

1963 - 1966

1946 onwards

1948 - 1953

1949 - 1953

1949 - 1957

1952

-953

- 4 -

Member of the Scientific Council. Played a decisive role in the preparation of the first major report of the Council on the expansion of scientific institutions.

From its establishment, a member of the SCientific Council of the Federal Ministe r of Economic Affairs .

Member of the Scientific Council of the Federal Minister of Economic Cooperation.

Member of the SPD (Social Democratic Party of Germany). In the same year invited by the Hamburg Senate to head an expert committee on the preparation of a program for the reconstruc­tion of the economy of Hamburg. His 111'1emorandum on the Future Economic Development of Hamburg," published in 1947, was one of the first and most comprehensive analyses of the structure of a region and laid the f01.mdations for the reconstruction of Hamburg as a~ economic center, while pointing the way to Hamburgts industrialization policy.

Senator and Chairman of the Economic and Trade Authority of the Free Hansa City of Hamburg. During this period he sought to accelerate the rebuilding of the port and the reconstruction of the shipbuilding industry and the merchant fleet, as well as to develop new methods for financing shipbuilding.

~ember of the C~rman Bundesrat, where he played a decisive role in lee;islation affecting the European Coal and Steel Co:rn.!llUU::.ty and :i.n the passage of the law against restraints on competition.

Member of the Eamburg City Council (BUrgerschaft), ~here betHeen 1954 - 1957 he was spokes:111.an on Econonic Policy for t.he .TD Group.

Presentation of ''Governing Principles of Economic Policy, 11

calling for economic policy measures to supplement the operation of the free market economy. Concept of 11Free Socialism11 •

"Guidelines for the Practical Formulation of our Economic Policy .from the Socialist standpoint. 11 This plnyed an iMportant role in the development of a new approach to econo~ic policy at the SPD party rally at DortMUnd.

Principal F~port to the SPD Congress on economic policy at Bochum Formulation of the guiding principle, "Competition as fe.r as possible: planning as far as necessary, 11 included in the 1954 Dortm~md Action Program.

- 5 -

1961 - 1965 Senator for Economic Affairs in Berlin in the critical period after the building of the Wall . Forceful SP2ping of the Berlin Aid Act, principally through intensified promotion of investment activity in the city.

1962 and 1963 Extended visits to the u.s.~.; discussions with President Kennedy and his colleagues resulting in a strengthening in the American economic commitment in Berlino

1962 - 1964 Deputy Chairman of the Committee on Economic Policy of the SPD Executive Committee at Bonn.

1964 onv1ards Chairman of this Committee; formulation of SPD 's financial and economic policy platform for the party rally at Karlsruhe .

1964 Elected mewbers of the SPD Executive Committee at Karlsruhe.

1965 Member of the Bundestag. Deputy Chairman of and Economic Spokesman for the SPD Group.

1966 Yember of the SPD steering Committee (restricted Executive Committee ) •

Decenber 1, 1966 onwards Federal Minister of Economic Affairs .

The fol~o~dng are anong his many publications:

- "Problems and Elcper:i_rents. Toward a new Economic and Social Order. Speeches and Essays, 11 Hamburg, 1953.

- "The Economist and Society. The Freedon Factor and the Socia_ Factor in Economic Policy, " Stuttgart, 1964.

- "The Berlin Economy and Ge!':T'.an Politics. Speeches and Essays, 196 1964, 11 Stuttgart, 1964.

Address: Federal l~nistry of Economic Affairs, Bonn. Telephone: 3061

Private address: Hamburg-Blankenese

MRS. Kr\RL (ETTA) SCHILLER

Wife of the German Minister of Economics and Finance .

Xrs . Schiller is an attractive blond (about 38) who married Dr. Schiller last May (his third wife).

Born Eckel

She comes from a wealthy fami-y; her father is a well-known raciiologist i~ Gerillany . Mrs . Schiller studied law and qualified as a lawyer. (During er training period she worke briefly together with Rainer Steckhan.) She tnen entered government service and became a budget officer in the Ministry of Finance in the State of North-Rhine and Westphalia in DUsseldorf .

Hrs . Schiller is sometimes nicknamed "Rote Etta" (Red Etta) because of her alleged radical-leftist sympathies--but this, German sources hasten to add, is only supposed to be understood as "a jest"--she is absolutely no "hard­liner ."

LEC

ANNEX 1

Trade and the Currency Crisis

1. Mr. Schiller's address to the Annual Meeting, like Mr. McNamara's, will, as presently drafted, express strong support for liberalizing restrictions on LDC exports. This is a theme of which Mr. Schiller has long been an advocate; he made a statement on the subject in New Delhi. He will refer to the European Community decision to take the lead among world trade powers in putting into effect last July 1 a scheme of generalized tariff preferences on imports from LDCs.

2. A major threat to trade objectives is arising in the currency crisis between the major industrialized powers. An early casualty has been the OECD effort to obtain agreement on untying aid. The U.S. import surcharge and related measures, imposed August 15 could lead to a trade war. The Canadian Prime Minister has indicated that the danger of retaliation is becoming imminent for his country. The U.S. can escalate the surcharge and impose quotas.

3. The restraint of the EC in deciding not to retaliate at present is reassuring. However pressures to retaliate are likely to grow stronger the longer the crisis lasts. They will be particularly strong if under­employment and underutilization of productive capacity spread from the U.S. to other countries.

4. As the U.S. import surcharge shows, trade restrictions tend to be applied to imports from all countries, including LDCs. But trade provides about three-quarters of the foreign exchange available to LDCs to pay for imports, to service debt, etc. It is thus a considerably more important source than aid.

5. An early solution to the currency cr1s1s is therefore vitally important to the economic development of LDCs.

6. Most of the central issues must be settled between the industrialized countries, especially those with the largest surplusses (such as Germany and Japan) and the largest deficits (the U.S.). However some issues could directly involve the LDCs. For example:

a. It might be suggested (if the IMF agrees) that a realignment of currency values between the industrialized countries provides an occasion for the adoption of more realistic rates by a large number of LDCs.

b. Any amelioration of the EC policy on agricultural imports could be of considerable importance to LDCs.

Economic Program Department September 24, 1971

ANNEX 2

FEDERAL REPUBLIC OF GERMANY - D.O.T. (mil. of US$)

1964 1965 1966 1967 1968 1969

WORLD - Exports to 16228.6 17911.3 20155.7 21762.6 24884.1 29101.5

Imports from 14709.3 17611.0 18166.1 17545.5 20295.2 25101.9

Balance 1519.3 300.3 1989.6 4217.1 4588.9 3999.6

LDCs - Exports to 2258.2 2545.4 2763.3 2867.1 3174.0 3575.0

Imports from 3002.9 3354.7 3522.1 3418.7 3886.3 4356.8

Balance -744.7 -809.3 -758.8 -551.6 -712.3 -781.8

ANNE:X 3

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SUBJECT:

INTERNATIONAL DEVELOP'I.lENT I INTERNATIONAL BANK FOR ASSOCIATION RECONSTRUCT! ON AND DEVELOPMENT I INTERNATIONAL FINANCE

CORPORATION

OFFICE MEMORANDUM CONFIDENTIAL

Mr. William Clark

J.W. Strobl

Schiller - Background summary.

Recent developments conc erning Schiller.

DATE: September 23, 1971

DECLASS IE

DEC 0 ~ 2012 \VBG ARCHIVE

1. Finance Minister Moeller's resignation last Hay resulted in one of Brandt's rare but extraprdinarily swift and effective political moves: The creation of a German super-ministry of Finance & Economy (long wanted by OppoGition leader Franz Josef Strauss).

Schiller, entrusted with the gigantic task of leading this new power structure, moved nearer to the Chancellor and has since occupied an absolute key position in every field of German politics, except Ostpolitik. (In this context, Schiller appears to have eclipsed even Vice-Chancellor, Foreign Minister and FDP coalition party leader Scheel.)

At the same time (last May) Schiller attracted world-wide attention by unilaterally floating the DMark and thus possibly ini­tiating developments which resulted in the present international monetary crisis. Since last August, both the E~r~peans and the British vindicated Schiller's policies . This has given him a strong international bargaining position in the forthcoming confror.tation, p~imarily with the Americans and then with the French.

All things considered, development - never one of Schiller's favorite subjects - was further relegated to a back seat. There is perhaps one favorable side effect. Schiller is now politically so far above Development ~'inister Eppler that the perennial feud between the two ministries over control of capital aid has been rendered practically nil. (However, there are reports that, under pressure by fellow SPD parliamentarians, Schiller may well consider 3iving up control over capi~al aid in favour of Eppler sometime before the 1973 elections.)

Meanwhile, earlier this month Schiller won an i mportant point. During the budget deliberations he succeeded in cutting Eppler dis­bursements for next year without , however, diminishing the latter's authority to increase the annual commitments by 11%. (It is only today, however, that the Bundestag budget cor,unittee will decide in Bonn, whether the 30% freeze in capital aid, imposed last May also, may be lifted, thus making a German advance contributicn to IDA possible. Schiller, on Saturday, may be able to tell.)

All in all, Germany's development contribution is declining. While in the past limited commitments hindered Eppler from dis­bursing available funcs, the pledgeci commitment increases will be

Memo to Mr. Clark - 2 - 9.23.71

less than sufficient to attain the Bonn Cabinet's Development Re ­solution target of 0.7% GNP official aid expenditure during DDII.

Moreover, it is to be feared that if and when development should regain a place in Schiller's considerations, he may prefer to have German aid contributions channeled through the EEC, in order to gain an advantage in his effort to exploit that body as a tool of his policies. Hul tilateral agencies would be the losers.

Schiller's Annual Meeting posture. 1

2. At this crucial junction in monetary history, Schiller's well-known penchant for the limelight and the recent developments, as he sees them, further enhance his hardly veiled enthusiasm over the prospect of chairing this year's Bank/Fund meeting.

Bonn officials take delight in the fact that Schiller will depart from past practices by delivering his mm address - not handed dmm to him by the Bank/Fund speech-•vriting staff. Schiller 1 s speech is ready. It is said to contain no objections regarding Bank per­formance. On the contrary, it will be complimentary, much as it was at Copenhagen last year. However, a question remains. Does Schiller understand his personal responsibility to the Governors - majority of whom come from the LDCs? Does he pay enough attention to their plight, particularly in vie'" of the Nixon measures of last Augt..st?

Schiller is well aware of numerous press speculations concerning the American presidency of the World Bank (e.g. M. Guardian, Barron's, Handelsblatt, etc.). During my Bonn visit two weeks ago I learned that one of the principal sources of the Handelsblatt article (Aug. 2) was the former German Alternate ED, Miss Hel6a Steeg (presently the head of the Economic Ministry's Sub-Division for Development Policies).

But Schiller is believed in Bonn quarters to be favorably impressed by RSM's performance as head of an expanding World Bank. He supports RSM's policies in spite of occasional =eports of personal irritations. Bonn officials believe that he was reluctant to meet RSM in the past, beca~se - being brilliant himself - he felt he was . no match for RSH in development business affairs.

President's lunch (September 25)

3. The German ED, Mr. Stedtfeld, has briefed Schiller in writing concerning Saturday's lunch (with numerous statistics attached). The briefing include following points:

General development of Bank activities; quantity - and quality-•·7ise . Capital market prospects for Bank borrowing; the need for consolidation.

Memo to Mr. Clark - 3 -

Effects of the international monetary cris·is on world­wide development. Relation bet\veen trade and aid. Bank's personnel policies. (Stedtfeld holds that there is still room at the top for Germans, but recommends

.to Schiller not to raise the point himself.)

9.23.71

One area where RSM's mind could meet with that of Keynesian Schiller is the relationship between the international monetary problems on the one hand and trade ~nd aid on the other. The forth­coming Tete-a-tete may well open up new avenues for both participants, provided they find a common £rape of reference.

Schiller loves candid talk. Reputedly arrogant \vhen con­fronting larger groups, he is believed to be quite constrained in individual meetings. Recently, Schiller received considerable criticism from both his own party and the Opporition for allegedly unstates­manlike conduct re discussions with Giscard and Connally.

Comment and recommendations

4. Schiller is knmm to be erratic and subject to personal in-fluence. His subordinates continually fear last-minute changes in his thinking and pronouncements. If RSM should succeed in impressing upon Schiller the world's development problems, he might well put the professor's i magination to work and convince hi~ of the importance of giving wider play to developoent in his opening Address.

To that end I would recommend

(1) a sustained effort to create an intimate relationship;

(2) some sort of personal hospitality to the newly-wed Mrs. Schiller, or to both Hr. and Mrs. Schiller (the latter is known as "Red Etta" in Duesseldorf).

(3) follow-up the lunch by inviting 5 to 6 handpicked German corresponde-nts for a "non-attribution" back­ground talk \·l it h RSM. This, to underline the success of the luncheon with Schiller, Hho is known to cultivate a good personal relationship with the press, being highly sensitive to good publicity on his contacts abroad.

cc: Lei£ Christoffersen

BRIEFING PAPER

ANNUAL MSETING 1971

G ER."'1ANY

l. Principal Members of Delegation

Karl Schiller (Governor, Bank) Minister for Economic Affair~

Karl Klasen (Governor, Fund) President, Deutsche Bundesbank

Otmar Emminger (Tempc~ary Alternate Gover~or, Fund) Vice President, De~tsc~e Bundesbank

2 . Aid Performc::.r.ce

CONFIDENTIAL 9/21/71

ASS IED ov 3 2012

WBG ARCHIVES

Total German development · assistance declined in 1970 b;-,r 45% to a

le1J€' l of $1,409 millis.> or 0 . 76% of GNP, as compared to $2 _, 046 millioli or

1.33% of GNP in 1969. The decline was principally dl<e to a reduction in

private portfolio investJTlent to one-fifth of its 1969 volu.'lle, the: result o7:

:::hanged capital market condit-ions. Total official flo-.,;s i~creased by about

one - third to $731 million bU •j the 11 offici3.l development assista!1ce 11 componeat

remained at the 1969 level of about $500 million. The development aid

minister (Eppler) has indicated that insufficient budgeting of aici in 1966

and 1967 has been responsible for this situation; at the same tine the 12 . 1~%

' ' gro-v;th in GNP in J 970 further i ncreased the relative drop in aid flows .

GerTi1an;,r 1-.a::: accepted the l % of G~P target but indicated that a!:-tain-

meni., will depl;!1d on the annual rate of grmvth cf the GNF .:md on th2 leve l of

- 2 -

private flows. The government has stated that it >rill also try to reach th~

0 . 70% target for official aid "as soon as possible" (see 'I'able II) . As in

the past, Germany plans to make 11 at least" 2~ of official development

assistance available to multilateral institutions .

3. Attit~de to I~

Germany advanced one - third of its contribution to the Second Re -

plenishment to assist I~ prior to formal ratification of that Replenishment,

and has made all contributions to IDA in cash. Germany has notified the

Association of its formal acceptance of its 9. 75% share ($234 million) in

the Third Replenishment and will pay in cash in three annual instal·-

lments as follows: $72 . 4 million in calendar year~ 1971 and 1972 each and

$89.3 million in 1973.

Germany has not yet responded to a request for an advance contri-

bution . The approval of Parli::J.ment will in any case 'be needed.

4. Capital Marke~ Prospects

.The Bank has raised in the past a total of about $2.9 billion

equivalent in Germany thro1.~.gh eight public issues and 54 private placements

(including rollovers) mostly 1:j t.:i the Bundesbankj ?art of these fu.'lds were

denominated in US$. Of this total , the public issues and 27 of the private

placements remain outst:.:.nding for a total ~ll~quivalent ($81

million of wnich is denominated in U~$) . In t~ German capital market a

clear dis:.inction can be made between the domestic and the foreign m'lrket:

while the dcmestic market remained Heak the foreign IM issues rece.:..ved in

general a very good reception in the market . This split has lasted all·eady

- 3 -

for some months and is probably due to the fact. that foreign holders of

foreign TIM issues are not subject to the German coupon tax and such

i nstruments are therefore a rather attractive investment for them .

The Bank's last issue came cut in May with a 7~ coupon at the

t i me ~nen Germany introduced the floating rate . In June a complete i ssue

stop was decreed by government authorities. When the issuing market opened

again in July high quality issues came out with an 8% coupon 1-1hich is still

pr evaili ng .

Mr . Aldewereld recently held discussi.ons in Frankfurt with the

Deutsche Bank and it is believed that a public issue could be floated in

October/November . So far there have not been any direct contacts with the

Economics Ministry, but this matter could be discussed with the German

delegation to the Annual Meeting .

Two addi t.ional, rather technical points you may v.rish to raise

concern first the new mortgage baQ~ lavr. The rev~sed law is still in the

legislative process. Currently IBRD bonds are not eligible invastments for

the mortgage baQ"l.,:s and the new law is more discrimino.tory, bonds of other

international i~stitutions such o.s the EIB ~nd ECSC are eligible. The

matter of. IBRD eligibility 1-1as raised about six months ago and re:::eived an

unfavorable response . It may not be too late to raise the question of I BRD

eligibility again. A t:esand concern is that the at~thori ties are plonning

to change policies governing elig:i ble investments by Insurance Companies .

This might effect future IBRD public issues and you may wish to seek

clarification of any changes pro~osed .

5. IBRD Capl tal Subscription I!!.creas~-

Germany's entitlement in the cap::.tal subssriution increQ.se amnunts

- 4 -

to $85"million and Germany has paid the l% portion in U.S . dullars.

Germany has also agreed to the release of the 9% portion ($7 . 67 million)

in convertible currency in four annual installments of ~1 . 9 milli on each .

The first relea~e was made on June l, 1971 and the remaining releases

will be made on June l, 1972, 1973 and 1974.

Office Development Assistance

- Bilateral - .Hultilateral - TOT.I\.1 - As % GNP

O~her Official - Bilateral - Multilateral - TOTAL

Total Offici=:.l - % Grant Element - As % GNP

rrivate

GERMA!JY : FLOiv OF DEVELOPMENT :fiNANCE BY CALENDAR YEAR (US $ million)

178 59

237 .31%

256 74

330 . 41%

293 105

39B" . 45%

363 30.

393 . 41%

436 25

4bO .44%

393 37

436 .38%

396 44

440 . 37%

468 60 ~ . 43%

454 100 ~ . L.l%

475 120

595-.39%

73 76 71 47 -23 39 56 25 4l 18 42 212 -3 -5 -15 2 -10 -6 -68

479 120

599 . 32%

11s 28"8' ~ ~ - 37 LiD Lib --r9 -rJ ~ 132

777 • 39%

352 618 466 435 423 471 486 547 595 544 731 896 69% b2% b9% ~ --m 77% 81%

. 49% . 76% . 53% .46% . 41% . 42% .L.O% . 45% . 44% . 35% . 39% . L.S%

- Investment & Loans 117 147 10.3 114 160 82 40 72

162 194 122 _2f

19 4 231 813 1266 495 102 363 255 236 183 - E>cport Credits

TOTAL NET DISBURSEMENTS 628 81~7 609 621 706 724 782 1141 1664 2046 1~09 167; -As % GNP .83%.1:-oii% .69% --:66% .68% .64% .65% .94% 1. 24% 1.33% . 76%. :-ffi&·

=-./ Provisional §/ DAC Estimate . Not adjusted for de factc revaluation .

Source: DAC

--- ,- -

TABLE II

GERHANY: ·BUDGE'l'ARY AID AUTHOiUZATIC!IS BY SOURCE Y

(Calendar Years} U. S. $ Millions)

Budget of t he Mini§try for Economic C -:>opera t,i on Bila t.eral Cap!. tal Assistance }!ultilateral Grants & Capital

Subscription::< Total

other ~Jdeetsd Funds ERP Speci al r'ur.d Borrowing from ~ Refinancing Credits of Ytinistry

of Finance Other Federal Budge"':.s Budgets of the "Lander"

Total

Kf'W Own Account Credits.

TOTAL OFFICIAL FmiDS ~

80 258

48 ~

20 so 52 23 11

173

559

108

667

83 256

72 411

21 so 66 26 9

172

583

·93

676

94 313

109 516

23 . so 30 43

9 155

6n

117

788

114 316

135 %

29 51

31 51 10

172

7.31

52

783

140 326

l48 m 31 55

55 64 11

216

830

137

967 1080 1179 1310 1455

!_/ Cash pa~:u:ent authorizations. 1966-70 budget figuree, (including supplerr.ental draft budget), 1971-74 mediUI!l-term financial pJan fi{;U.r!"s.

Ef Excluding Bundesbank purch<>.se s of IBRD bot,ds ar.rl notes. Total official appropriations are E:.ssunu3d to grow at the same rate oi 5 • .nc::-e;u,a a.:; too budget for the }'dnistry of ::conornic Cooper.:o.tion.

I 1 v

Em Record Removal Notice The WeorW .. ftk o.ro..

Archives & Roc:orda Man;~~goment

File Title Barcode No.

Contacts with member countries: Germany - Correspondence 03

1771058

Document Date Document Type Sep 3, 1971 Letter

Correspondents I Participants Andrew F. Oehmann, Oehmann & Pajak Law Offices to The Hon. Robe11 S. McNamara,

Subject I Title Civil tax deficiency case

Exception No(s).

01 02 03 04 05 06 [Z]? Oa 09 0 10 A-C 0 1oo 0 Prerogative to Restrict

Reason for Removal Information Provided by Member Countries or Third Parties in Confidence

Additional Comments The item(s) identified above has/have been removed in accordance with The World Bank Policy on Access to Information. This Policy can be found on the World Bank Access to Information website.

I Withdrawn by I Date Sherrine M. Thompson Dec 7, 2012

Archives 1 (May 2012)

!!lb e r 1(1 , 19 7 1

t«lV 3 0 2012

Dear 1r. Oeh::nann

On e:1alf of .. r .. LcNat:tara I olish to acknouled~-- r c~ipt of your letter to in d ted Septe!!lber 3, 1971. lr. P ullaia aeec~ no f'urt.her introduction Ler-= in tn:e 'orlo dan Grom> he as "et \d th 'r. c~;a ::~ra

.o.nd otner of our executive officer!'! on severa ... cccnsions i.1 t 1e n at ;;:nd t.le financial L1stitution wnic.1 :.te heads, tne llestdeutc 1e Lan esbank, ha indecr1 oeeu a most important: source of funds for IB.n b0r.d ii'>sues in Ge~any ..:!urin>, rect~nt ye:1rs

'1r. :c .. lllar Sl.all oe de ip:ntec to .1 t wit 1 'fr. Po llain privately uurin~ t.1e ve'"'- of Jete er l.. ..:r.fortunately it Jill not b pcssible for >lin to 1wld such a meeting away fro 1 Washin~ton because .of coMmitments here, but it could be arran5e'- for Tuesday Octooer 5 at 5 . 30 i .n .• if t.li · is convcu cnt to :tr. Poullaiu. ..:uau we ilave a response to tnis suggestior. we can then later l'iscuss its c.etails.

· tr. Andn.•w F. 0ett.'lann '~ssrs. Je1 ann ' Pajak 425 Thirteenth Street ~.w.

Washin~ton, ~.c. 20004

LEC:ak

c:.:.r.cerely,

Leif E. C~ristoffcrsen

l>ersonal 'sslst.:1:1t to he Presi t!Ut

\ I '

•J .

\ ..

.~TERNA7iONAL DEVELOPMENT iNT ERNATIONAL BANK FOR ASSOCIATION RECONSTRU CTION AN D OEVELOPo'lENT

I ·~"J C C! M I l\i G CA RL E

TE Rl'; AT I 01'""- ;: I ~-;\1\ CE COHPORi\ i I 0

RC:.;Tl\C -------- ------- ..

" "'1"·-·1 ' 1 •''"if(VI2Q .... _ .... _ ............ ~ .. v

INFO MATION HR.. RG':'D::.?'.U COPY:

DECCDE EY :

..':'·:'.=:~':ION :t-ffi . AL~;ERELD, VICE PE-'l.ESIT..!EN'T - FINANCE .

~ .... \ ~ '\! ......... ..s...u.!J • .J!2i

I A}! .REGi\ET'l'IYJ. ·,lEE:~ ~n;.::;E, BUT I SINCEP-::,y HOPE

•• 4 .... · .....

-,.JILL BE Ar OPPORTUNITY TO }:1EET YOU m · · } •• 'JO'i'H2R O ... CASIO ·J DU5.H.U T~ Ai ..... J

I:~ ~iASHIJ.\DTON . SOON AFTER J.VIY ARRIVAJ ~ I Sw.:.:.L TRY TO C0~1'ACT YOU . -- -~-------~ -----------

I C..4.~"NOT REACH YOU, PLEASE :00 NOT HE SIT. TE TO CALL ON :t<::E IN 73 l'l.ADD.:.:~ ....... __ ........

";JESP.E I SHALL STAY FROM SEP'IZN3ER 25; 'l'O SEPTENBER 28. WITH "'!JY BES':' ?3:?..: J ..... "..~

:XZGARDS AN LOOKIID FORWARD TO SEEH.\. r YOU . I P.E...V~ -N

yo· ... ·:S S "NCEB.ELY,

LO'IJ\VIG PotJLLA IN!'

i-:v:? INJ THAT YOU HAVE RECEIVED THIS LF'_,TT'3R IJ.T TilE ~1EANTTI'1E, - RE11..1UH '/JIO:· . ~ -~~ :-,·. -~· .. .,J ,J.

RSGi~R.'.:)S TO YOU A:N"D HR . ROTBERG, SINC,J::n:s:;:,y YOURS DR. RAETTIG,

~VESTDEUTSCHE LANDESBANK \} ·L'i.OZE::TRA.IE; DtlESSEL.OOP..I'

ORIG~ ':'\AL

LAW OFFICES

OEHMANN & PAJAK 42S TH I RTEENTH STREET, N . W .

WASBINGTO~D.C . 20004

AN DREW F. OE HM ANN

JO H N J PAJ A K

RO BE RT R . R E OUE

393 - 3311

Septer.nber 21, 1971

Mr. Lei£ E. Christoffersen Personal Assistant to the President International Bank for Reconstruction

and Developr.nent Washington, DC 20433

Dear Mr. Christoffersen:

NEW YORK ASSO C IATES

MANES . STURIM , ROTH & FISHER

2SO PARK AVENUE

( 2 12 ) 687 - 0900

With referenc e to your letter of Septer.nber 10, 1971, Mr. Poullain has confirr.ned by wire that October 5, at 5:30 p. r.n., in the Washington area is satisfactory for the meeting .

Sincerely,

Andrew F. Oehr.nann

AFO/ c c

I] Record Removal Notice T .. _... ..... _

Archives & Record& Management

File Title Barcode No.

Contacts w ith member countries: Germany -Correspondence 03

1771058

Document Date Document Type Oct 6, 1971 Memorandum for the Record

Correspondents I Participants

Subject I Title Meeting with Dr. Ludwig Poullain, President of Westdeutsche Landesbank on October 5, 1971

Exception No(s).

01 02 03 04 Os 06 [{]? Os 09 0 10 A-C 0 1oo 0 Prerogative to Restrict

Reason for Removal Information Provided by Member Countries or Third Parties in Confidence

Additional Comments The item(s) identified above has/have been removed in accordance with The World Bank Pol icy on Access to Information. Th is Policy can be found on the World Bank Access to Information website.

I Withdrawn by , I Date Sherrine M. Thompson Dec 7, 2012

Archives 1 (May 2012)

LUDWIG POULLAIN (Honorary Doctor's Degree, University of Munster, 1969)

Born Dec. 23, 1919 in Remscheid/W. Germany. '

Apprentice- City Saving & Loan of Remscheid 1937, successfully

advancing to examiner of Rhineland Saving Association and City

of Dusseldorf (1937-1955) promoted and appointed member of

Board City Savings Assoc. Solingen, Ger. 1955-58

1958-1964 Chairman of Board (State-Kreis) Savings Assoc.

Recrlinghausen.

1964-1968 Member of Board (Landesbank for State of Westphalia)

1966 appointed Chairman of Board

1968 appointed Chairman of Board of Rhineland Savings and

Provincial Banks of Dusseldorf

1971 elected Chairman of Board of W. German Savings and Loan Assoc.

President German S~vings Banks and Loan Assoc. since 1967

Puth1:~1~a~n~n---------------------------------------~ --· dels, Frankfurt/lit . - - Harnburc 2C •. FOTli~·1AN~. frar11:-Jos~r

D:-. m<'d ., P:-of •• Hy:;icniker u. 1'-likrouiol. - 43 Esse:1 -:Sc.•rbeck, FUrstenbergstr. 32 ( r. 5 26 87) - S. :;. ~52 {llabil.) Printdoz. u. apl. Pro~ . (1957) :-.1'?d . Ak.:>d. bzw . Univ. Du,sddcrr (Diatenco::. lnst. !. !\led . l\likro ­bi ol. u. Virol.).

uTH~{A;<;N, Kurt Dipl.-ln:; .. Fabrik~nt , Gesch~ts!. Julius 3cnclte Schne KG., Papierfabrik, Du ,;s<·l­do:--f, stv. ARsvors. Ja~enbl? rgwcrke AG. e~. u. P~plcr- u. Elebstc:f·,.,·ed:c GmbH., Linnich, Vors • . ;rbeitge"ben·erb. d. Papier­erzcug. Ind .. DGs seldo:-f, c. a. - ~ Di.Js£el ­c!or!, Reeser Str. 3 - G eb. 2 0. Jcni 1898 Dusseldorf {\'at~:-: Heir:rich P., I. Landcs­rat; l\!u:(c:-: .!\la~l~lc!e, :;eh. Schulte), v e rh. m. ElT.a, ge"b. Jagenberg, 3 S ohne - TH H:>:1r:over u. Darmstadt- S. 1923 Schulte -Ehrer:vors. VerE:inig . d. Arbeit;;eberverb. d. _Dt. Papierind. , W:.esbaden.

.i'OTONIE, Rot~rt Dr. pbl ., Pro:., Ge.Jlo;;e - 4. Dusseldorf; Ha:-olJstr. <15 (T. 1 54 91) - Geb. 2.Dez. 1869 Eerli!l (Va~er : Prof. Dr. Eenry P., L:.r:~~::;;~-=!-:;'='; ?!,:4..!.er : Lonn:: l'.Iueller). verh. s. 1937 !J'l . Olga, ~;eb. Schramm -Schulen Rerlin u. PotsJam; 1.'.U-.r. Berlin (Geol., Botanik, Chemie ). Habil. 1922 Ber­lin - Teiln. I. u. II. Weltkr. {Flal:offz.); Geolo~;e Pr. La:~c!esanst ., Berlin, u. Geol. Lar.desamt .1\'"RW, Krefeld (b. 1954 Abt. s ­leit.); Doz • . u. apl. Prof. 'fH Berlin; s. 1950 Hono::-arprof . Univ. Bonn (Kohj,enpe ­tro~:r.). Pr~F. Intern. Kom:niss. f. Kohl<!n ­p~t:-ol. (1953) u. Inte rn. Kommiss. !. 1\li­kroflora d. Palaozoikums (1958) - BV: Allg. Kohlenpetro~r .. 1924; Petrcgr . d. Olschic ­!er, 1 ~23; Synopsis d. Gat~ungeo d. Sporae dispersae, 195 6/60; PaUo!>ota n. Gesell ­scha!tz;:esch., 1952; D. fossllen Sporen im phylogenet. System, 1967 - Ehrenmitgl. Volksbd. f . l\'aturschutz, Pa:aobot . G-;s. In­diens, lntern. Org. f. Pal/i.obot .; kerr . l\lit ­g1. Soc. Royale d e s Sciences {Lilttich); 1961 Gr. BVK; 196_. Rein'lardt -Thie;;sen - ::\Ied. {Iu~ern . Kommiss . f. Kohlcnpetrol .).

POTT, Fritz Gewe~kschaftler, Vorstandsrnitgl. 1G Bcr& ­ba"' u. :!':nergie, Sochum, ARsvor~ . l\"EUE HEThlAT Gemeir.n. Wohnun;;a- u. Siedlungs­ges. ::nbH., Essen, u. a. - 463 Bochum­Stic;'}l. H~ad:nmpst.:" . 12.

POTT2I:AUM, Hugo Dr. rer. nat., L~ • ..,drat Kr . 1\!anster- 4401 Hs.ndorf/"~;.,·., Vcrn~:-nanns tr. 1 - Geb. 29. M/i.rz 1907 - Ober;,tudic·nrat. CDU.

POTTiiAST, Hans Gesch5ftsWhrer Dt. Stad tc - Heklame GmbH ., Franh!urt/:'.1., Vorsta nd smitgl. Fachverb. Pbk>tanschla f! -. Verkc!1rsmittel- u. GroG­tl~r:.hil . ..,..c.:-~~::~ . '0 -issel.C.or i .. l~ra~ i. Ji3l•~-!.s ­mi•g!. Zcn:r;.laus s ch. rl . ',\"e rb.owirt:.ch. , B.1d Godcs"berg . .'\Rsmilgl. Wc rbcrir.g Gn•b:l., Frankfurt - G Franl:!c.rt/M., Dit­mars:r. ~9 - Gcb. 13.~ept.l301 Al~ena/W.

POTTHOFF StacitJirc"-"tor- 353 i',"arbur;;f',r., Ra~h:>u'>.

POTTHOFF, Ann::!ie~ P .:-or •. Hcch~ch·•llcl-::-e:-i~ - ··163 Bochum, Farn$tr. 59 - C~~~n·.';'_ ~o. Pro~. P~d. I!ocl:sch. r:.u':lr/Abt. Esser. (Kur:stc rzieh.).

POTTHOfF, Erich Dr. rc~· . p~l. , Dipl.-Kfm .• Prof., Wirt­&chartspdifer, Vc-rstanclsmit:;l. Rr:W natio ­n> !.:sit> r ungs -Kurat. d. Dt. Vlirtschaft c. Schmnle:1b:tch-G~s .. Vorstnndsvoro;. lr:st. f. Wirt;;ch;,ftspr t'tf•or i n Dtschl. {~. V.) - 4005 Bud.!l"ich b. D 'dorf. Am Eovd 6 (T. 30 OO) - Geb. 10. J :> n. 1 Gl4. K>;ln - Obe:-realsch . u. t_:,.,iv. K/51"1 {Oipl.-Ki.-n. 193 9, Fromot. 19·ll); k:tu!n1. Le>1 r<! cbd . - l!.i34 - 35 fln~;est. Gebr. Stollwcrck AG., Ko!n, WerkstuJent, 1937-46 Asstst. Prof. Eu;:cn Schmal~"bach u. Pro!,urist Sc!'> mJ)e.,b" ch '~che Trcuhand ­-~G ., 19;G-4~ u. 1952-SC L (!it!; . Y:irt­scha(t, Niss. I:.~t. tl. Gewe:-::~~h. cbd . 1 !H9 - 5:! ~Tit~l. St~h~tret:it~.:lderv~reinil! .• DQ:;­stldorr, 4 9~i -G2 Vorsta,,dsmitbl. z~ntr:.l-

y crb. dt. Kons".Jm~c·n:l~s .. H:.~bu:-g. s .. 1963 Vorstandsmit:;l. \\'l:-ttc':la.:ts!>~r:ltung

AG .• D ' dorf . s. 1051 Lehrtati;;k . t;ruv. llambur;; (Lt>h rbeau!t r .) u. KClln (1 563 Hu:~o ­r arpror. f. PC'rsona lwesen u. 0fft1. Betrie ­be) - BV: Thcori~ "· Praxis d. soz. Be­tricbsr-oliti k; Han:Ib. d. Ges ellschaftsver ­tr!ige in Personal;;o?s. {m. Zln:zen u. Halft); D. Ka::r.pf u:n d. :lfcr.~an -M itb<: s t immung. JV!itvcr!. (Schr. Arb<>i~skr. Krahe Schmolcn­bach-G es .); Konzt: ro-, LeitU!"Ii;S -, t:nter ­neh::::>e ns - , Finar:zc r.::. (4).

POTTHOFF, Ge1lu•d Vorstantlsmitgl. Hort~n /I.G., Dilsseldorf (s. 19GB)- 4 \\'ittlae::- b. Dil~3eldorr- Geb . 2 . ~ov . 1919 Eundef\\". - Spar~::.ssenle!J re Bunde; \\'irt schaft£c:.er sch . Freibu rg/Br. (Abitur) - 1 9~0 -45 Luftwaffe (Ltn. ); s. 1945 Einzelhandel (1 95 i- S8 stv. Vorsta:-.Csmitgl. Emil Kos ter r\G . (DEF.~KA), Herford, bzw. :l!itgl. d . Ge• c"a ftsfg. Helmut Horten GmbH., D 'dorf) - Licbh.: Jag:!, Wanc!ern.

POTTHOFF, Heiruich Dr. j":- ., Vo:-sracas rr.itgl. GlUckauf -Brauc­rei AG., Gels~nkirch~n - 465 Gdseokir ­chen-Buer, Gys enbergstr. 11 ·- :dechtsanw.

rCTill0!7F, H=!::-..z Dr. oec •• I\~nisteria1direldcr a . D., MdL Nordrh. - \VPstf . {s. 1 !JGG) - 48 Biele~eld, Carl-v.-Cssi<'tzk·, -Str. 22 - Geb. 30. 1\larz 1904 Bielefeld {V~~er: Pe:er P .. Kau!m.; Mutter: •'.ugu~t e, gc":J. Sch:-Ode: r), verh. s. 1933 m . Charlotte , geb. Krause - N. Ex­terne r -Abitur 1 932 - 36 Unl-.r. Koln. Frank­furt/M., ZUrich {\Vi rt s chaft swis s.) -B. 19~6 l td. Stellungm lndcstrie, dann Ministerial­d i r. Wi r tEcho.ft:r.J r:. NRW, 19~0-52 dt. Stellv. u . Vertr. Rat d. In:ern. Ruhrbehor­de, 1952-63 :-.tit!;l. Hohe Be horde d. Europ. Gemeinschaft r. Kohle u. S tahl, ARsmao ­date u. a. SPD - BV : D. I\!ontanunio:l in d. europ. G emeinsch., 1965; V. Be satzungs ­statui z. e"rop. G~:neinsch., 1968 - 1959 Gr. BVK m . Stern u. Schulterbd., 1960 Grol3-offz. s>:reuz m. Ste rn u. Schulterbd. ital. u . lu.xcmbg. VO.

POTTHOFF, Karl Dr.-lng. {habil.), Prof. !. Werkstom .. -u::d~ d. El<::ktrotechr.ik - 7 Stuttgart, Zeppelin ­s:r. 145 {T. 63 01 13)- Geb. 16.April1904 Arnmendorf/Sa. {V.1tcr: Wilhelm P., lng.; Mutte r: Anna Dassc! orf), ve1·h. s. 1933 m. Irrnga rrl :\'agel - TH Dresden (DiJ::l. -lng.) -1934-66 :Sosch u. AEG (19~5); s. 1949 Do=. u. a pl. Prof. {1935) TH bzw. Univ. Stutt­gart - BV: 1\!<!lltc.ohnik d. :toheo W~chsel­spannun.,:~n, 1941. Db. 50 F:~.chaurs.

POTY KA, Lin, geb. Ritter Schri!'tstcllerin {P ~ .: Lin a Ritter) - 78 F rei­burg/Br., Rl5t el.;ucl:weg 53 (T. 5 43 10)­Geb. 18. :1!ai 18C3 ~:~udor!/F.ls., kath., vcrh. m. Dr. P aul P . {RA), 2 Kd. - W: D. G...afcn v . PC!:- ~P, l)ro. 1011: Pet~ !" Hagen­b:lch, Dr. 191 i; l· rn ;.h!nbri..: ic: ~nr:. Fcld, 191G; :\1:.t·tin Sch .~:•::~uer, ~- 1940, NA. 19ti2; Hart, Brud .: r, hurt:, Dr. 1953; D . Perlcnl<e tte, Jugt:~cerz. 195!; ElsassPscll i Hail.,;, R . 4 96 5. !i orsp.: Daotes IIeimweh, D. Schwerlenschwu r, D. arrne Mogd .

POULLAIN, L1:c!w ig

sternst r. 18- Ge~. 25.Dez.1B f• 6 J!;.,· ·· (Vater; Johrr ?., 1-.au!m.; Mutt~:-· . . · •. Ka hl), v e rh. '1921 m. Carla L~£~;··.·. · • (g~st. 1954) - S . 1919 vaterl. Fa.\ bel!Jer Weltkr . "• •. --

POVH, Bo~ll\ Dr. rer. nat. , o. Prof. 11. 2\litd! r e· .. I. Phys ikal. lns t. Cniv . li<!de!~c.r ,'· . HeidE berg, Quinckestr . ~6 {T. 4 3; ·. ;· Ins t.: 4 33 49) - G Eb . 20 . Au,;: . lS ~ ~ ., ; Jusos l. (Vat er: Dr. V t!kos l nv P .• \"~ ' · · w.ler; :\!utter: Olga, g eb. C ~ rh~c.' · s. 19~7 m • • -'.n"'la , g eb . Krizani~ _ s".·· · Physik {Dipl. 1955 Ljubljana) - S. 1;.-:· Ord. Ht!idelberg. Spez . Arbcits~.~ :; physik. " • · .... ~

PRACHT, Dieter-Friedheim Geschaftsfuhre r Klockoe r -Ferrorna.::<· G mbH ., Castt·op-Rau."e l - ~G3 Boct:_­Baumh ofstr . 43- Geb. S.Febr.l93:>. -.

PRACHT, Karl Dr. ::-er. pol., Syndil,;us, GeschG.f :s ~. verb . Ha lb:eug u. V~rpac:kung irr, G<·• verb. kunststorrverarb .·lnd., Indus ~r:. , .. KI.!Ils t;t orr :B:x!er.l:c!./i.,;e, Arbe!te go:n . : , Bettfede rr.lnd . . Verb. d . ·1L Scbr;n; .. · · aile Frankfurt - 6 Fr:ln}'iurt/:11., Ar•o-_: Burger- Weg 119- Get-. 17.Febr.1Jll · • Dithm. • ·

PRACHT, Karl Dr. jur., Haupt:;eschiU'ls iuhrer Dt.-!.·. ~ H3ndelska_mmer - Keu -Delhi {lndien). · P.O. B. 2o2 {T . 7 94 39) -Geb. 29.!' ·.-1912 l\'ilrnber~ - B . 1 955 IHK Pforzb .' _, (P.gf.), dann Dt.-lnd. HK, Bombay {G:.: bzw. N"eu -D elhi {!lgf.).

PRACK, Rudolf Filmschacspieler - Wien XIII. St Ossr:, . 15 {T. 82 33 66) - Geb. 2. Aug . Wien - : . 1 00 Filmrollen (wichtigste s. XI!l. u. ~ .­Ausg.); FernEehreil:e: Laodarzt Dr. · :, . - Bambi-Preis Film-Revue.

PRXNDL, L\ldwiz · Fabrikant, pers. hart. Gesellsch. Ct c:,

Pr/i.ndl KG., Strick- u. Wir !...ware~a~: .• Neuburg - 8358 Ke"burgfDor.au, Rose:• · 161-163 {T. 22 5i) - Zeitw. Vors. lr.1;. strie - u. ilanJelsg::-cmil'm Neuburg .

PRAETOR! US, Giseb, geb. llling Hausfrau, 1950-54. u. 1958 - 52 MdL 'Sf. • 1953-57 I\IdB/CDU (Ra tingen), s. XI\. I

P~AETORIUS, Wolfgang Dr. jur., St~ at;:s::-kr e tli:- - 23 Kiel, ;; ,,. . &tr. 4 - Geb. 18. Jan.1310 Schles1vi~." verh. i!"l 2. Ehe {1363) m. Gudrun, &~~­Wolken - U!!i-.r. Tilbingcn, Berlin, l\ i<'! (Rechts - u. Staat,;wiss .) . Proruot. n a· · 1938-39 Richter A -u. LG Stcttin, 1~ ): - · Syad. Pommerscher Industri~v~rein • · 1

c,bd .• 1945-46 s tadt. Oberv<>cw . s.-~t c_ komm. Stadtrat Lilb~cl: . l %ti-47 Ci. •! ;·,; sidtaL'<anzl<1i Schlcs·.v.-i!olst . Landes: <; Kiel, dann .1\mtschE:f S-:l1lc sw.-Holst .. •.· min. (1950 Min.dir., 196·! Staatssck:.~ .

PRATSCH, Kurt Techn. Ang~s~ellt ~ r !Ec~rksamt !'.er;· · ~ l\litgl. Hbg. Bilr~e:- ~ chart is. 1~57) - : . Hamburg 80. Larlenbeke r Furtwcg ~ (\ • Geb. 26. Sept. 191 9 Lie:~ ! !-,:, vcrh. - .\-· bausch . :Ucgnit.< {~littl·c :-e R.,ife); t e• :• Vcrmess ur.,;!; tcchr:i!<cr - 1933-15 Art< . Wehrd ::; t. 19-!8-51 l3urgerm. Sierksr> :•. 1951 !f. ~.tdK uuenbur6 . SPD s. 19~5 {Kreisv<. rs. n~r~')dor!).

PRXUNER, Fcrtlinand Di ;>l.-!ng., Dircktor - 54 Koblenz. : .. !c" ure ratr. ·11 - Gcb . 21.Au~.l901 3cl.c; :. :!\lfr. - U. a. Vor »-o:a -,cl s mitgl. Kc!•lt~.: ·

, Elektri:.:i l ~tsvcrk u. V e rkc !"-.1"S·!\G. \! • ._ •

schaftsf . Kraft o;•agen•tcrkehr Kobler. : C

Dr. rer. pel. h.c., Gcneraldirek~or, Vor­stand~-.ro.·s. Westd-.ut:ch·~ L r,r.c!es b:l!lk -Gtro~ entrale, MilasterfDilss<:'lciorf {s. 1959) Pt·:i s. Dt. Spar %:.sscn - u. Girovcrb •• Bonn {s. 19G7) - 41 Muns t t! r/11"., Wemh<:>fistr. 5 - GC'b. 23. Dez. 1'Jl3 Lil ttri .,;rhause:t (Rem­schcidj - At. 19 )7 {Leh rc) St:\dt. Sparkasse, R~msch ctd, 19~0J5 Hhein. Sparkassen - u. Gircv~:-h., D 'dox·: (Pr 'Hc r), 1955-58 Stact­sparka::.se ~ S olin~ en (Vor:it.:u!d.'irnit.Yl.) 1 958 - f'··~ Kr~i:i :,iJark.::;se , Rec klins17aus'~ n {Vors tandsvOI'.i.). l ~'G 4 - 58 Lc.nd·~sbank {. Wes <L - Gi,-ozen,rale, ;,lunstP.r {Vor..; t;.nrls mit;!l., 19tjG ·VC'I!" -; .). l 9~3 .:·.1 ,;! . Hh~in. Girolent~·alc u. :':·o·tinzi-llbar:k, D 'dorf (Vo:~st:md~~l ~· rs. ). A~J :~ i.:::~it.~ - u. V~r-.:. s ... ratsmoncint~ - 19 GS F.hi~er.doid\'"t" tiniv· . :'\ltic;s t~r.

' PRAGER·, Gerhard , Ho.uptabt~ilun;;s lei ~~ r Zweit •~s Dt. 'F.: ':" ·

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POULSON, Gc•)<J Kaufm .:>nn (Fa. Ge~ Poulson. Ha1r.burg). Vors. Verb. d. Dt. Dental - :\ll·d. G.("ouhan- P ., UbeL~s:ci~cr; 1-h.~tei": J\lar~Jret h•~. '

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INTERNATIONAL DEVELOPMENT I INTERNATIONAL BANK FOR ASSOCIATION RECONSTRUCTION AND DEVELOPMENT

--+€A INTERNATIONAL FINANCE

CORPORATION

OFFICE MEMORANDUM TO:Mr. Leif E. Christoffersen DATE: September 24, 1971

FROM: Treasurer's Departme~ SUBJECT: Briefing on Westdeutsche Landesbank Girozentrale (WLG)

The WLG belongs to a group of regional banking institutions in Germany which, in addition to offering the full range of banking services, fulfills special functions for the savings bank sector. These institutions called "Landesbanken" (state banks) and/or "Girozentralen" (clearing banks) are the central banks for approximately 850 German public savings banks and exercise a clearing house function between the savings banks; they also manage the liquidity reserves of the savings banks in their areas and are active in business areas which the savings banks cannot handle for practical or legal reasons (large lending operations, foreign operations, underwriting, etc.). There are 12 such regional institutions with the Deutsche Girozentrale-Deutsche Kommunalbank in the role of central banker for the group. The total deposits of this group of banks amounted to about DM 123 billion (equivalent to about $34 billion at the old parity) as of December 31, 1970.

The WLG is by far the largest regional bank in this group. Its deposits of DM 37 billion (about $10 billion equivalent) account for about one- third of the deposits of this group and the next largest Girozentrale is only about half its size. Measured by its deposits it is the largest bank in Germany followed closely by the Deutsche Bank. Among the 500 largest banks in the free world the WLG ranks in tenth place.

In the past we have placed with the WLG, in four operations, a total of DM 800 million in 1968 and 1969 (see attachment I) at a time when the strong liquidity position of the savings banks made it possible to take such placements. Since then the Federal Government, Federal Agencies and public authorities have increasingly used this method of private placements to support their public issues. This increased demand combined with a less favorable liquidity position of the banks, prevented the WLG and other banking institutions from proposing private placements to the Bank in 1970 or 1971. The prospects through calendar 1972 for such operations do not look promising.

In view of these limitations in the private placement sector the WLG through their President, Mr. Poullain, has contended that the under­writing syndicate for our public issues in Germany should be revised so as to assign a more important and adequate role to the savings banks. (See attachment II). He contends that although almost all of the Girozentralen are members of our public issue syndicate in Germany their quotas (totalling about 15% of an issue) do not reflect their actual placing power with or through the savings banks. WLG suggested that the management of the syndicate should alternate in the future between them

Pre r~ . .... ~- - "''l)n· . ·--"" "-""'"""

Mr. Leif E. Christoffersen - 2 - September 24, 1971

and the Deutsche Bank with an appropriate amendment of the individual quotas. Mr. Poullain also stressed that this view was shared by Dr. Hankel of the Economics Ministry.

These suggestions for a change in the syndicate of public issues would be of interest to the Bank primarily in two circumstances:

(1) Dissatisfaction with the present syndicate. This is not the case with our syndicate for public issues managed by the Deutsche Bank who have been able to place our issues even under difficult circumstances such as at the beginning of May 1971 at the height of a monetary crisis.

(2) A substantial increase in the size of our access to public markets in Germany. Even in this case it is not clear whether additional placing power for public issues is needed since the Deutsche Bank has demonstrated that it can place issues for us twice the size of our recent efforts. Mr. Poullain, however, has pointed to the strength of the savings bank sector in this regard. This claim is supported by the fact that the Girozentralen and savings banks, including their branches, comprise about 16,000 bank offices in Germany or more than three times the number of bank offices of the commercial bank sector. Nonetheless, we have no evidence one way or the other whether individuals who deposit their savings in savings banks are potential bond buyers.

The Economics Ministry, according to Poullain, would prefer to have public issues placed more extensively than in the past with domestic investors (about 40% or more of our German issues have in the past been placed abroad) which would be helped by giving the savings banks a stronger role in a syndicate. Thus, it is possible that the Bank might obtain support from the Girozentralen in obtaining permission for larger or more frequent issues if the Girozentralen can demonstrate that their depositors are in fact potential additional bond buyers who do not purchase bonds through the commercial banking sector. The Girozentralen have for some time been critical of the large commercial banks for their "conservatism" and this meant in political terms that they were much closer to the Socialist opposition than to the ruling CDU party. After the change in Government and the ascendancy by the Socialist party, the Girozentralen might now have a much better base to make their point with the present administration. Mr. Poullain of the WLG is purported to be a member of the German Socialist party.

In conclusion:

(1) For the present size of our public issues and the present volume of borrowings in Germany we have no reason to change our underwriting syndicate. Joint or alternating management of our public issues by the Deutsche Bank and the WLG seems unnecessary. Nor is a competing commercial banking syndicate of banks led by the WLG attractive since it would, in practice, only mean a redistribution of the same market with a slight

Mr . Leif E. Christoffersen - 3 - September 24, 1971

possible shift of emphasis towards the domestic investor -not necessarily an advantage to us.

(2) We would like to see the WLG tap new market sectors. are three possibilities; the first two seem clearly attractive :

(a) private placements with them as in the past, or

(b) through them to the savings banks themselves.

There

The third possibility is for the WLG to underwrite an issue with other savings banks and then distribute the bonds to depositors in savings institutions. The savings banks offer in many areas the only banking service available; i.e. there are no commercial banking facilities. They could therefore primarily be considered as a selling force. The attraction to the buyer is the higher yields. Up to now, the percentage of the consortium allocated to the Girozentralen was too minor to develop that market . On the other hand since many individual savers who save through savings banks have the option of buying bonds through the Deutsche Bank, it may be that they have already made the decision not to hold their savings in the form of a marketable, but less liquid asset. We should be careful that our offering to savings depositors does not tap the same funds as our public issues through commercial banks - unless we are assured that the government would permit us to increase the total volume of borrowings only on that basis . We have doubts whether the German Government would permit us to increase our borrowings if we used the WLG as underwriters for distribution to savings depositors . Recently t he Bank asked that its obligations be considered as legal investments for mortgage banks who refinance their investments by frequent and direct market offerings. We were advised that since we have access to the market for a certain amount (which may fluctuate from time to time depending on market conditions, etc.) the addition of a new vehicle or source of funds is unnecessary given our present techniques and procedures for market access.

EHRotberg:HCHittmair:mb

cc: Mr. Aldewereld

•..

.).

c,-u.e :uly l ' l 982

:?:::-·::..:-.ci~~a.l A":".o-c.:r~-c - D:Yi 400,000 ,000 ?:~ice - 98 J&~e~ - z~:y l, i960 X;:...~-::.:::-::..-cy - =::·~ 6?,GCC,COO ec:.c~ 7/l/1977- S:.

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ATTACB·iENT

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::..ntarest aate en not lass than 3 montts' notice =~tc~est ?~y~b~e - Jar.~ary :

6-- .12~b 3o~ds 1969 . G.J.e Jar:uar:r

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B. ?orcfo::o Sa:e~ to c~e Restdeu~sche ~~~~es~an~ Girozentr&le

In ad i ~o to th~ above transactions, West·eutsche :andesbank has purchasea po~tior.s of our Loa~s ir. the amou~t of D:f 15,32J,300 (~S$ equivale~t - $ 3,73-r,791) of which there remains outstanding :J. 5,457,500 ('CS$ 1,376,642) . Dl....i:J..; F'!'s 1959, 1960, a ..... :962 t:-.ey ?'-"rchas~d ouc of the 3a.k's portfolio a total of D. 9,865,800 'US$ 2,358,149) with various ~aturities up to M~rcn :s, :964 . =~ £Y's :96v a:G 1969 they pirticipa ed ir. t~e B k's loar.s tota:::..in;;; m-: 5,457,5CO ("C'S$ 1,376,642 1 vlit. maturities fro::J. jur.e 1, 1~72 co :Je~e~ber 15, 1974 .

Dear Mr . McNamara:

WOIDZING TRANSLATION OF LETTER FROM WESTDEUTSCHE UU~ESBANK DATED ~AY 7, 1971

After our meeting in January 1971 which I found very encouraging, and during which we discussed the relationship of the West Deutsche Landesbank and of the entire Gernan savings banks sector vis - a - vis the World Bank, I had the pleasure to meet Mr. Aldewereld in Dusseldorf on April 26.

He and I have talked about the placement of an issue for the World Bank after Mr . Aldewereld had discussed this same subject on the previous day Hith Ministerialdirektor Dr. Hankel.

I told Mr . Aldewereld that as in 1970 - there were also no chances for 1971 and probably even for the subsequent year to float DM issues for the World Bank in the form of private placements. The reasons for ~his are the higi capital requirements of the German Government .

The situation was different in 1968 and 1969 when a high degree of liquidity made it possible to increase the volume of such private place­~ents; nowadays the Federal Government as well as the State Governments use this approach of placing notes in the domestic market in order to ra~se funds aside from public issues . If we were to make a private 1)1a.cer:len~ for the World Ba '< this "'oulC. now :nean ;:: at "'e would have to nosor~ prac~ical:y ~he entire issue ourselves.

Ylr. ~ankel is o: the opinion tQat it wculc be advisable now if the leadership i!! tpe banking syncicate for the Ban1:<.' s public issues >;.;oulcl .o-.:t crnate in the fut::.re. T e reason -v.rhy the representative of the :'ederal GoYernment ~.;rou::_d we_cone such a change is the fact thc>.t 70 to 80% o: the :oreign D~ issues which, for exa~?le, the Deutsche Bank ~anages, are subscribed to by non-residents . This app:ies also to ~orlrl B2nk issues, while t.e issues =loatec by us are added to the port­=o:ios of individual investors and stay there; this would in particu:ar be the case for ;,·orld BD.n:< iss 'CS. It is i~portc:nt to the representa~ive o= the Econo~ics ~inistry that in particular Aorld Bank issues shou:d if :ccssib::_e be su_scribed to by Gernan investors and shot:ld not go abroc.d.

Concerning o·..1-:::- !:"e.:a~:..c::s .. i.p ~\ .. i-::h t . e ~~1o::-~C. B.?-:tk : \.Jot::C t:,.ink t .. at i-:: \\.,.ou.:..d De bene~:..cial for :,o".:h pa~~ies :_f ":,"e ":.V0 .. .J..:C. ~e.'28":(" 01.:.r ?~ev:..ot:.s

c.cti"'"ve co:J.tc..cts; o~"'""'~~~·:ri_ce -~::.e!:'e ::1i2:ht be ·-=:":.e cl .:.:-'ge~ ~~2.-:: t.,_e :::c.ce7~nt

pm,;rer o:: th0. Gen'lan savings ins':itutior.s ni;.::"-:"': 'Je loot -J::o t~e ~'!o:-ld :;::,c:-"'11.-:. I feel ve~y strn~f-Y - ~:~o fo~ idac~c3:cc: ~~~ ~"~~: r"~so~s - t~~"': ':he Geri.7'..2.n in\.,.es~o.,... s"h.o"J.ld C071~?.:"~.~"'~..:":e ~o ~,""\e f:_"'""""'~ ...,c:_.,..,. : o.!: c>"'~;r·c:o.,...,...,e."":lt ~!:"ojoc~:s

~:a. ~he Wcrld 3an~.

As fa:- es t~e rnar~e"': ~o~ rn-e~~~ :~ ic-~"~ :..~ "':~" ~"~a:-~::_ ~a?u~:ic

::..s cor..c.e!"T"'~G., ~0e mo!!opo:.:· :)0,_,_._.._ ;_,.... .. ! . ~.'fr..::_c.·'"'"'. ... -..,s "::0::.-r" c,.......,. ~, ... P .... :::-s '"'"T c:e:.-'!::-'..:_"': :.ead:..ng Ge:-..,.,.an '!"' ·".n,.:s :'.0 lo"'"":'"'- ,.-,~ .. -·_ c-~~.

: -...,c.:::.~-~"- .... l. ....... ~... u....:.: ~o,;;._ .::.. __ .J.. ~.... .. 4\;,.. _ \.....J. ...... .c 2.:...~ ir~;5 t2e Wes c De~ t sci1e ~andes be:.::~ -l--=- ....:.J .... 2 i.v-;: .... : .. 0 ~·!-..~: .... .:.. .... H .... :-.. · •. : .__-_::v ..... v~ .. ) ... ~~\rc....:~ p :.ace7;.:e~J.t:S, it would only ...)~ 2-o~,:.~a:l. ~:~\-...:: v.j-.._ ;:,·· .. cl ... :.G u.:~v ~~::._.::;::::.pste :.n ·~l1e business o: pub:· c _;.;,.s·J.L!S .. It \-JO·..l=-d u~ -~....~l.C:e.~s·c~.: .. ~c:::..-1,):.."- i£ :::1.e ::1ana~ene~t of he Deutsche. ....:.:..:-:.i: '.,.:::::-s to o0_:;.;:c;: to ~:-,:::..sot....::= a~" s .... :ce t.at they would, at the sane

respecc yot...r cec~sion in

pc::csor.a.:..iy ~~·o..-~c be h:.. 0 •• ly i·aterested to intensify our business ::cl.ations .

I would be very pleased to see you again soo~ .

Sin erely yours

(Signed) L©WIG ?OULLAIN

FO:.Ro.4 No. 57 INTE RNAT IO NAL BANK FOR REC ONSTRUCT ION AND DEVELOPMENT

(

OFFICE MEM ORANDUM TO ~ars . J . Lind DATE Hay 8, 1972

FRO M

SUB J EC T

1 .

J . \v. Strobl 'J0· Eppler visit to World Bank

WEJ.shington, Hay 18, 1972

EC AS

c 0 201 CONFIDENTIAL \VBG ARCHI\J

In Bonn la st werik on a routine contect mission I learned that Mr . Knapp had had detailed talks in the German capital recently, that Sir Denis Rickett had likewise been in .Bonn to discuss IDA proble~s , and that as a consequence of the talks held with lir . Knanp Hr . 1dapenhans is expected in Bonn this wee k . Dr. Coo~b s had also been in Bonn last week to discuss Indian debt reschedul ing problems but could not be received properly because of the political cri sis raging in Bonn . (Herr 5iss , Hankel ' s successor , had been called away by Prof . Schiller and the Econom ic Ministry asked me to convey their apologies) .

In Bonn , furth ermo re, I leDrned that the German Minister for Econo~ic Cooperation Dr . Erhar~ Ennler will ~isit World Bank

·rieadgun.rters in Hc::: h in ;:; ton on hry 1 8 as a consequence of recent talks be gun in :Son!! at his Oim i nitiat ive by J.:r . Cl ark and r.:ysel: and in order 'co continue discussions wi Lh f.lr . l~napp and Sir Denis .

Dr . Eppler will leave Bonn later this week (Nay 11) to attend the f inal stage of the UIICTAD con fere!1ce in S.::mtiago , from where he will proceed to Washington, irrespective of whe ther W-Ger~any's e astern treaties will have been ratif~ed in Bonn this \''eek or n0t ( resulting possibly in the fall of the Brandt cabinet and in early German elections . )

In the fol lovinG I propose to briefly sketch t he Bonn backgrounc~ of the I::n-.JJer visit and list the i.ssues the latter will wish to raise when in Washin3ton . These topics I have reviewed ~i~h Dr . H~no Jan ssen o~ the Dcvclopr.:ent ~inictry who is p~ eparin.=; a l·, ir.:i.str;.r briefinr; p:.=tpe r for Dr . Eppler for the occDsion of this vi sj.t . (Incidentally, E!_J ~.J ler wishes JansserJ. to beco~e the next Alternate Exequtive Direc~or for Germany in order to create a uer~anent direct and official link between hi:::: ihnistry and the Bank . )

2 . Eackcround of the viei~

Pri-r.Jarily :Ur . Eppler in \•/ashine.;ton intends

-- to int rc,d ce :.=tnd est::blish hi"'lsel_f as an !'interested 11 and active Alter~a~e Go~verno~ , n. post to which he has been appointed ct t:r..c bc ~i::nin.[ oi thiG year and v1hich he i ntends to keep anc' r.:lc.:ce as i':uch t:se of as p ossible ;

(2)

2

-- to· dinlomatically correct uossi ble mi~collCepti ons concerning the role he play s i n German developMent polit ics vis- a - vis tha t of Economics and Finance Mini ster Schiller.

Such misconce p t ions , i t is feared in the Eppler Minist ry , may have received fresh nouri shment in Santiago wher e with Schiller "Bonn set exartlple at UI conference with aic concessions to poor states" ( London Ti rr:es , April 17 , 1972 , attached) . ~-iy Eppler l'hnistry source emphasises that German concessions in San t iaco - Capital aid loans to 25 of the poorest LDCs on IDri terms , and to the rest of LDCs at a standard 2;6 interest "ri th 30 years ' maturity and 10 years ' grace - are based on an ar(luously elaborated and defended " Eppler pp,ckat:;c 11 and are really the respor:.sibili ty of E;Jpler who pushed t hese con~iti ons up to C~bir:et aprroval.

The Eppl-::r Hinistry in Ronn is qui tc ~::een for the Bank to f ully realize the divi cion of 6cvclopment responsibilities i n Bonn : Schiller stays with ca~ital aid an d a i d refinanc in g problems . But Eppler , it is stressed , is in charse of basi c capital sub ­scription to the Bank , of IDA reple~ishmcnt ond all other insti­tu tional ancl te chnic c:.l coopera.t ion. ( ·.,;i th r!.DP , for instance) .

-- to ·guictly investi ~ 2.te the 3.:--r:'-: ' < lop •·- ::--- r• •e ·.)er.sonnel nolicj cs c oncerning senior sta_ i . Bonn ~bc·th 1conc~ics anc Development ministries) ~~ye it h~s ta~en nnte of the-recent an~o i~tM2nt of a French director to the Euro:p E:r .. n Cff ice . Bc nn also n~alizes th<J.t within the next few years vice - p r6siclenti~l oositio~s will come i n for reanpo int~ents .

3. Tonics of discussion

'vJi t!1 the above backsround in mind , Enpler , \•!ho .se ~:·-:::.::;ramme is beinc; coordinated bj' t he German :C::D Lr . Str:C.tfeld , h<Js alre ady received WClrd t.hat he v1ill n:eet \~ith Er . i.cl!2r1ara and the Vice - Presidents . Here are the topics E~pler intends to bring up if eivcn the chance :

(1) The '.Io--Jd :Jc.nk ' s "cliticel i: 1 a~e jn Ge-"·-;anv , esp('cially in view of IDA . The B~rler ~inis try feels ~hat a Mcramara visit. to Gert:any , one o~ the p~incinal suuror ters of the Bank is overdue . Such a visit need not cater to the Ge~man capital market which is favorably dicposcd anyho~ , it is felt . Rather it should be arranc;-::6 to provi6e opportu:J.ir.ies for Bundestag and party pol i ti cio.ns as 'dell a e for ens aged develon ­ment institutions (such o.s the Ger~an Foru~ for Develo~oent -Policies and the Gc~u2n Four:do.tion for Lcvclopinc Coun~~ics) to throw Glances at. the men <t. the helc of the Eank , the merits of which , it is felt , need constont explaininG to the German pub2.ic nnci politicio.ns . Vice - Preside:J.ts , needless to say , arc equally welcome to certain p~blic exposure in Ger~any .

3

(2) IDA Replenishment IV (and t he possibility of having t o rene g otiate III) . Further conversation with Sir Denis .

(3) Cooperation with the Bank ' s Area and Proje cts deuartrnents . Fu rther to the recent conversation with Mr . Knapp when certain areas for intensified cooperation (Agriculture and Education ) had been sing le d out , as well as geographical areas (Algeria , Ma[hre b and E~st Africa ) wher e closer coordinat ion se emed de s i reable and practicable .

(4) SDR links to develonment . Epnler ' s earl ier atte mpt~ (through Clart and myself) to contact ~r . McN3mara on this question had been oased on a plan by the forcer Schille ~ exper t Herr Han~el who u nt il recently had been in charge of the c apital and currency department of the ~conorn i cs ' Minist ry . (The p l an was for-tying a c ertain percentage of SDR ' s to a debt rescheduling fund bene f ittinG LDCs . )

(5) EEC develo~~ect colic t~crds . A_l Ceroan Ministries concerned Forei gn A~feirs , Economics and Finences , Econo~ic Cooperation)

have fixeC:. the Ger-man posit:ion vis- a - vi.s the recent EEC Co mm issi on ' s develocment mer~orcndu~ . Developmen t di s cussio~s

are expected to be resumed in Brussels afte r the enl argement of the Cc~~un~~J by B-itci~ -Ld t~r~e ether E&ropcan count~iE~ will ahve beco~e effective .

(Re garding the German positio~ peucr which has been cleared between State Secretaries of the various ministries , see my separate mer::ora~du!:l o:C liay 8 , \! : th origin a l attached . )

Perhaps i t should be stated as a final observation and in view of the present uncertainities of 3onn ~olit ics that Bonn ' c shadow development minister Walter Lcisler- Kiep (CDU) is on rec ord for positions al~ost i dentical to those hel~ by Eppler . Kiep hac criticized Eppler only ior his inability to cor,ly with his sel~­

inspirec"i a1.,bi tious Caoinet resoluti o~1 on forcicn a i d .

c c : l·ir . J . i3ur·ke En<J."9;D Sir Denis Ri~kctt J.:r . Arthur r\.a:::·a.sz

\ "

FOI(M No. 57

TO:

FROM

SUBJECT

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

OFFICE MEMORANDUM Mr. Lars J. Lind

DATE: May 8 , 1972

J. \1 . Strobl ~ ~-( CONFIDENT IA ' ECLASSlFIED

Epnler pronosal for Ger!Ylail developmen t bond issue . DEC 0 4 2 12 WBGARCH VE

In Bonn last week I had a conversat ion with Ministerialrat Dr. Joerg Jae ckel of the Economics'~inistry who has succeeded Herr Koinzer and vJho has taken charge of World Bank affairs on behalf of the Schiller Ministry . As customary in Bonn, Jaeckel warned against direct dealings with the Epp~er Ministry and appeared distressed over Eppler ' s a ttemp t to have his own man placed with the Bank in Washinrton (see my memo concerning the Eppler visit , !1ay 8, 1972) . Jaeckel, a former' alternate ED of the Bank , in Bonn is again unde r Herr Hanem ann , a forr.1er ED . These are the salient p oints resulting from our conversation :

1. Eppler ' s proposal for a $15 million development b ond issue in Germany ( mentioned to Messrs . Kna~~ ~nd Clark) to popularize foreign a i d has be en k ille d internally by the Economic~ ~inistry .

(Pertinent ins tructions have alreacy b ee n seni to the Ge rman -ED Herr Stedtfeld.) Even in his own ministry Eppler appea r s to

have been ill- advised to interfere .with capital mar%et aspects . Officials cf b o ~l: I.J i H.isLries .::-eel tl1a.t E!Jpler should confine himself to development policy and to technical a i d . Eppler is not expect ed to press the issue furthe r whe n in Washing t on .

2. Some e:--< i tement \vas registered in Economic Hinistry circles over a DPA- report (see attachment) ex- Washington and head-line d 11 \"/orld Bank examines 'Di scriminations ' " · The report refe rs to discussions b~ ing on at presen t about the contro­versial trade preferences g ranted by t he EEC to certain LDCs .

The Bank has " no business" to deal and interfere with this question He.s Hc=tnemann ' s and Jaeckel ' s reaction , even before they hed obtained the requeste d official explanation via the ED Herr Ste~t feld .

3. Other po int8 included rearrangement of our press release service for the Bonn ministri e;B a.11d the dis tribu tion of RSM's UNCTAD speech , f or which a nu mber of reque sts had been received.

Attachr:1en t

cc: Mr . A. Karasz I

f[ t .) l rft l"· ' (

I'J ,-, , ,. I (

L t ;r.-rh ~ - :' ;: ~ £...- ' ~ ~

l (_

)

INTERNATIONA L B~NK FOR f<ECONSTRUCTION AND DEVELOPMENT

PRESS CLIPPING SHEET

FrariYSurter Allgemeine , May 4, 1972

Welthank p1·iifl ,Diskriminierung" WASHINGTON, 3. Mai (vwd). Die

Weltbank untcrsucht gegem\·i-irtig die Auswirk ungen ,d iskriminicrcnder" Zollprakti kcn bei Ausschrcitungen von Projekten. die von ihr in den Entwick­lungslandern finanziert \\'t!fdP~. Wie da s Institut mittcilt, ist diesc Aktivitat auf ProtPste dcr ar,1eriJ.:anischen Indu­strie und r-inia<'r andcrer l ndustrielan­der zuruckzufUhren. Kritik wird beson­d\!rs an den gc~en<eitigen Pr:Jfe~·enzab­kommen zwi,;chcn den Lii;1 .lcr:1 der Europaischen \VirtschaftsgC'mr·in5~haft und einifj('n Entwicklungs]ii.ndC'rn gcUbt, die zu teiner Be,·orzu~tmg der Prudukte aus der EWG fuhrten.

Fo"'w No. 57 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

OFFICE MEMORANDUM TO: Files DATE : June 26, 1972

FROM ; J. W. Strobl .: ~'F:;r; ' n-} ~)~ !)~' SUBJECT: German development position '1---' ~ -1-:ru : ) rc-· I':

/ 7 t 1 /"" ~/ Eppler visit to Washington, July 5, 1972 :. ). I I ..,_ 1---" / _, • ........,__ " .... j-.,_ ' 7 ~~

v /--,..,. .j, ,.,_.?~)} Tyt When Erhard Eppler, Bonn's Minister for Economic Cooperation, ~ /1'

s=•i•a~! meet>with the Bank's management in Washington next week, he J ~ thinks that he will be able to talk from a position of relative ~. ~~ { strength. And he thinks (perhaps erroneously) that the Bank will

~ appreciate this. ;\---L

The reasons for Eppler's optimism are these: (1) Germany's aid performance has been scrutinized and favourably commented upon by DAC (OECD), in Paris last week. (2) Bonn thin t·;; it made n fnvournble impression on LDCs at the UNCTAD conf~r~nrr in Santiago last month. (3) Finally, Eppler f£>e1r; that wi t h h i r, own joining the Bank as an Al ternnte Got vernor the more· pro r; rcGr;i ve German aid policies have become anchored in the world'r. leading development organization. In this context it may be sir,nificant that Eppler believes his views to be identical with th0 se o f Mr. McNamara.

1. The DAC comments on Germany

In their annual analysis of aid performance of the rich countries (members of OECD) DAC reported positive tendencies in Germany:

In the year under review (1971) German development credit conditions averaged running periods of 29 79 years and rrnce periods of 8,9 years at an interest rate of 2.1•4%. Germnn intentions to streamline future aid with durations of ~v years and 10 yearn grace at 2% were welcomed in Pari;;. Norcmr0r, Bonn confirmed that they intended to lower conditions to inte rest rates of 0.75% and running periods of 50 years for the 25 poorest of LDCs.

The DAC analysis showed also that Germany's performnnce in untying multilateral aid contributions was well above the average of other countries: 76% of German capital aid last year had not been tied to German deliveries. Multilateral contri-

.7)

butions reached 28~ of total German development aid. Public contributions, though only half of the 0.7% Pearson Commir;sion target, had increased to 0.34% (from 0.32% in 1970)/or DM 3,1 bilJion.

(2)

2

2. Germany at UNCTAD

At S~go the Germans were the first to come forward with precise special aid concessions to the recently identified 25 poorest nations (16 African, 8 Asian and 1 Latin American). Based on an "Eppler package" for which the German Development Minister had fought arduously at home, the Germans announced that

(1) In future Germrny will give these countries capital aid loans on IDA terms (0.75% interest, over 50 years including 10 years grace).

(2) Volume of soft aid to the poorest countries was to be increased without detriment to other developing countries.

(3) In future Bonn's official capital aid loans to the rest of developing countries would be at a standard rate of 2% with 30 years maturity including 10 years grace.

(4) The share of grants in official German aid will be increased well above the one offered by other Western countries (for example, it will be 60% higher thnn thvt o f the UK).

3· Eppler visit background

See my memorandum to Lars Lind, May 8, 1972

cc: William Clark Arthur Karasz

·--..,.

r ~· ..,, .., z, ,..

• I l

'· '

.~ '

..1'!

Mr. McNamara: July 20, 1972

Visit of West German Minister of Economics and Finance, Helmut Schmidt

The Minister is expected today at 5:30 p.m. He will most likely be accompanied by the German Ambassador, Mr. Rolf Pauls, Mr. Mommsen, Secretary of State for Finance, and Dr. Hiss, Department Chief in the Ministry of Economics (concerned with Bank and Fund affairs). Mr. Artopoeus will also be there. A sheet of biographical data on Mr. Schmidt is attached.

The visit is intended as a courtesy call to re-establish contact in the Minister's new capacity. He visited you in 1968 and you met at the conference at Marienlyst, Denmark, in 1969.

Mr. Schmidt is unlikely to be familiar with the details of the Bank's work. Among possible topics which he might raise are (according to Messrs. Aldewereld and Rickett):

1. The Bank's borrowing and lending program for 1974-78 and the share of the borrowing needs which can be met from the German market.

In this connection it would be natural to express appreciation for the access the Bank has had to the German market and the wise counsel as to market conditions and timing of issues which we have received from the Economics Ministry over a five-year period; and the hope that this may continue. Tables of borrow­ings outstanding in West Germany are attached. Future over-all borrowing plans are in your Table IIId, attached.

2. Prospects for Third and Fourth IDA Replenishments.

3. Employment of German nationals in the Bank. Numbers and percent of Germans on the Bank staff since 1968 are shown on an attached sheet.

4. Representation of China.

Mr. Schmidt has just been decorated by Mr. Laird for his work as Minister of Defense. He will have met with Secretary Schultz and Mr. Schweitzer earlier today. I will bring him over from Mr. Schweitzer's office. If you agree, Sir Denis Rickett would like to attend the meeting.

AL

seen

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

OFFICE OF" THE I"RES IDENT

INTERNATIONAL FINANCE CORPORATION

Attached is a schedule showing our outstanding funded debt in Germany as of June 30, 1972. Of the total amount of $1,754,803,724 equivalent, $744.5 million equivalent is outstanding with the Bundesbank (specified on the following page). The balance represents the bond issues through the Deutsche Bank, placements with the Westdeutsche Landesbank, Deutsche Girozentrale and Deutsche Genossenschaftskasse.

HELMUT SCHMIDT

Born 1918 in Hamburg.

1939- 45

1946-49

1949-61

1961- 65

1946-

1953- 62 and 1965-72

1965-

1969-72

Served in German Army

Economic Studies in Hamburg (under Schiller)

City State administration, Hamburg

Senator of Interior, City State of Hamburg

Member of SPD

Member of Bundestag

Floor leader for SPD

Minister of Defense

July 7'72 Minister of Economics and Finance

Minister Schmidt is short, energetic, witty and fluent in English. He is known as an excellent manager from his days as Administrator in Hamburg and Minister of Defense

July 20, 1972

D:E.Ul'SCriL i ·:A.R·: BORF0N"'ING3 OU.!.'STJ:l~.Oll.•lG

JUNE JO, 1972 (EA-ptesscd in US Currency)

4-~/2% Bonds of 1960, due 1972 (JH ~,000,000) Joan of 1969, clue 1 972-7~\

6-S/8 ~ clue 1972 (IJ:.l25 ,000 ,000) 6-3/4%' clu~ J 973 (D:·I:;O ,OJO ,000) . . .

6% Bonds of 1969, due~ 1972 - Sl (,):.n so ,000 , 000) 6% Notes of 1968 , du:; 1972 (fl:.ll30 ,000 , 000) . 8% Loan of 1971 , ciuc 1972 (j J:.l25 , 000, 000) . 6-1/8% 1\otes of 1963 , due 1973 (ll: 150,000 ,000) . 5-7/8% Notes of 19G3 , du;; 1973 (JJ.1J.28 , 0JO,OOO) 6-l/2% Notes of 1~69, due 1973 (D~U28,000,000 ) 6% Notes of 1968, due 1973 (D.,112S,OOO,O OO) . 7-7/8% Loan of 1971 , due 1973 (TXi25 ,000,000 ) 6-1/2% Notes of 1969, due 1974 (JJ: .lUO , 000 ,000) . 7-1/8% I'\otcs· o f J969, due 197~ (Feb . ) (Lr.Il2S , OOO ,000) 7-7/ 8~ 1~otcs of 1969, clue 1974 (D:·lG~ , OOO , OOO) . 5% Bonds of J 959 , due 1974 (lH10,000,000)

. 7··1/ 8% ]';otcs of 1969, due 1974 (Aug . )(lr-1130 , 000 , 000) 8-3/8 ~.~ ]';otes of J970, due 197·1 (D:•l2-17,000 , 000) 8-1/2 ~ riotes of 1970, due 1975 (U·l239 , SOD , 000) 8% Note of 1970, due 1975 (U.~l,SOO,O OO) 7-1/2% ;\otc of 1971 , due 1975 (lJ:·ilS'i' ,SCJO , 000) 7-3/4% i\otc of 1971, due 1975 (D:·ll-'12,500 , 000) . 7-1/2 % Kotc of 1971, due 1976 (IJ:.!CJ9 , SOO , OOO) 7-3/tl % 1\otc of 1971. due ] 976 m:11l57 , 500 , 000) ~-7/8 % Note of 1972 , due 1976 (1~82,500,0 00) j-7/8% Note of 1972 , due 1976 (1~1157 , 500 , 000) 8% Bonds ~f 19 70 , due 19 77 - 86 (IT·llSO,OOO,O OO) . .6-1/ t't % l\'otes of 1972 , due 1~l77 (D:•:J.SO,OOO,O CU ) . 7 -. l/2~o Bo;1ds of 1971 , due 1977- 86 l D~l20 0 ,000, 000) 6-1/2% LoJ.I1 of 19(18 , due 1977 - 82 l}X,l-lUO,OOO , 000) . 7-1/2 % Bonds of 1971, due 1977- 86 (D:,l2SO , 000 ,000) 6-3/4% Bonus of 19G8 , clue 19 73 (mU ZO , 000 ,000) 6-3/4 % Bonds o f 1972 , <iu~ 1978 - 8/ (D:,J250 ,000 ,000) 6-1/2% Bonds of 1968 , due 1980 (ftl-l OO ,O OO , OOO) 8-1/2~6 Bonds of 1970 , uuc 19SO llX·l2 00 ,O UO ,OUO) 6-1/2% Bonds of 1963 , due 1 ~84 Lir.!E,CJ ,000, OdO) 6-1/2% Bonds of 1969 , due ElS -l (i l>!l25 ,00t1, UOO ) 6% Bonds of 1969 clue 19 S-l lil:.:J.:.),O U11 ,ll llJ) 6 -1/2 % Bonds of i969 , du~ 19 8 ~ l;~ · ~50,0~9.000) 5-1/Z% Bonds oi 1965, due El~:> (ll·Lu:l , bS,) , UJJ)

Less: BonJs purc}: 'lsed

. . ..

. . .

$ 15,515,904

7, 757,952 15,515, 9011 46, 547 ,711 40,:)41,350

7,757,952 15,515, 901 39' 720,714 39' 720,714 39,720 ' 71·1

7,757, 952 40,341' 350 39,'720,7J..l 19' 860,357 12,412, 723 40, :~-11 , :-sso 76,64 8 , 565 74, 4H,275 19, 08,1 , 562 48,8751, 097 44 ' 220 , ~~26 21, 567,]06 4 8 , s 7 s , o:n 28,70!, -122 48,875, 097 46, so, 7]]

46,5 47,711 6 2 ) 06 ~~ , 6 1 s

124, 127,230 77,S79 ,S19 37' 238' 169 77,5/9,519

124,127' 230 62,063,615 46,54 7' 71] 38,789 ,760 38,789 ' 760 77,579 '519 65,068 ,42 4

$1' 764/,63' .305

Sub-Total $1,7S·1,b03 ,72 tl Y !/ Includ~..IYJ $720.5 milliorH~JJ'·the Deutsche Bundesbank. IN VII?

~ P /US 4 J4 ~,J/,pl'}. Controller ' s July 20, 1972

B-SA-1

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

BORR~INGS FROM DEUTSCHE BUNDESBANK OUTSTANDING

March 16, 1972

(In Millions) Interest

Maturity PRINCIPAL AMOUNT Rate u. s. $ IM

August 1, 1972 12 so 4-1/2%

130 6'7..

February 1, 1973 12 so 6-1/8%

128 5-7/8%

August 1, 1973 128 6% 128 6-1/2%

February 1, 1974 130 6-1/2% 128 7-l/8io

64 7-7 /8io

August 1, 1974 130 7-1/8%

247 8-3/8%

February 1, 1975 239.8 8-1/2% .. 61.5 8%

August 1, 1975 157.5 7-1/2%

142.5 7-3/4%

February 1, 1976 157.5 7-3/4%

92.5 6-7/8%

August 1, 1976 157.5 6-7/f!'!.

$ 24 .o 1/ IM 2,321.8 ·,

,..- 'tf'"\ ~ .--,-2- 6 . .s g

hi In addition, Bundesbank purchased $5,050 million of our 5.307o TWo Year Bonds of 1972, due March 15, 1974.

Treasurer's Department Securities Division March 28, 1972

t- ---

"-1 alA._ ~\, \

CONFIDENTIAL

BORROWING~ AND REPAYMENTS I ~SUES TO GOVERNMENTS

2 Yr. Central Bank Issues

Bundesbank

Bank o P Japan

Other Governments.!!_/

Tot a 1 I ssues to Governments

NON-US MARKET ISSUES Austria

Bltlglum

· France

Gtflmany

Gulf States

Italy

Japan

Kuwal t

Netherlands

&we den

Swi tlerl and

UK

Euro-lssues, etc.!_/

- Borrowings - Repayments - Net

- Borrowings - Repayments - Net

- Borrowings - Repayments - Net

- Borrowings - Repayments - Net

- Borrowings - Repayments - Net

- Borrowings - Repayments - Net

- Borrowings - Repayments - Net

- Borrowings - Repayments - Net

- Borrowings - Repayments - Net

- Borrowings - Repayments - Net

- Borrowings - Repayments - Net

- Borro,..,Tngs - Repayments - Net

- Borrowings - Repayments - Net

- Borro,or~ings

- Repayments - Net

- Borrowings - Repayments - Net

- Bo rrowings - Repayments - Net

- Borrowings - Repayments - Net

- BorrowIngs - Repayments - Net

-Borrowings - Repayments - Net

Total Non-US Market -Borrowings Issues - Repayments

- Net

TOTAL NON-US ISSUES - Borrowings - Repayments - Net

US MARKET - 5 Yr. - 25 Yr. - BorrowIngs - Repayments

Net

P~OJECTED GRO~S BORROWING- Non-US - us - Total

DEBT RETIREMENT - Non-US - us - Total

PROJECTED NET BORROWING - Non-US - us - Total

Average Cost of New Borrowt"ng!l

II I d. IBRD : BORROIIING PROGRAM THROUGH FYI980 NET OF CONTitlGENCIES AND SLIPPAGE MARGIN ($ mill ions and percentages)

Outstanding Through 6/30/71 6/30/802_/ 1961 ~/!?/1962

725 1250

419 674

63 198

1855 3010

45

350 ISO 200

II 56 553

To)

81 42

39 1587 745

8li2

10 0

157 To

72 440

226

729 2512

100

24 135

1773

42 488

72

14

202

24

1184

3040

2401

3040 2401 5liliT

239

72

481

293

6961

9971

9971 ...1lli 17466

54 18

3b

50 0

50

36 _l

33

154 10

T4li 56

4 52

64 59

5 424

94 330

20 II 839

Ti72 0

1585 ms

333 1252 2011 1585 3596

839 __lll 1172

1172 1252 2li2li

roo 100 0

23 8

Is 123 108 15

0 2

--=2

24 0

2li

0 2

--=2

23 23

0 0 I

-=1 0 5

-=s 47 33

14 170 141 29

0 100 TOO

22 ---ra-170 100 270

141 22

ill 29 78

107

1963

100 100 0

5 8

--=3 105 108 -=3

5 0

5

0 I

-=1

0 I

-=1

16 4

12 121 112 9

0 0

0 14

-=14 I 21

0 ill 112

14 m;

9 -14 -=s

1964

100 100 0

0 8

-=lr 100 108 -=lr

0 I

-=1

0 2

--=2

0 I

-=1 0 I

-=1

0 5

-=s 100 113 :n

0 0

0 19

-=19 100

0 TOO

113 __1_2 132

-13 .:.l2 -32

1965

100 100 0 198

~ 0

0 8

-=lr 298 306 -=lr

23 II

12

63 5

58

0 2

--=2

14 I

13 0 l

--=2

100 21

79 398 327 7i

0 200 200

21 ill 398 200 59S" 327

21 J1i8

71 179 250

1966

200 100 TOO

70 70

0

0 12

Tz 270 182 88

19 I

18

0 __2

-5

0 I

-=1

0 I

-=1 0 2

--=2

19 10

9 288 191 97

0 0

0 34

-=34 288

0 288 191

34 224

97 -34 b4

1967

200 100 TOO

64 64

0

0 8

-=lr 264 172 92

19 I

11!

0 5 -:s

0 2

--=2

22 I

2f 0 2

--=2

41 II

30 304 184 TID

0 425 liE

41 38ll 304 425 729

184 41

226

120 384 503

1968

225 200 25

91 91

0

32 15

17 348 306 42

14 I

13

30 5

25

II I

To 14 0

-rr; 17

I lb

0 2

--=2

86 10

7b 435 317 iT7

0 300 300 195 105 435 300 735

317 195 ffi 117 105 TIT

337 200 ill 161 161 0

15 4

IT 513 365 m

0 10

:-ro 0

16 :u;

400 5

395

42 0

Tz 0 2

--=2

19 32

:n 0 2

--=2

461 67

394 974 433 54o

0 250 250 92 ~ 974 250

1224 433 ....21 524

540 158 b9B"

F i sea 1 Years 1970 1971 1972.9.1 1973

350 225 TIS 148 148 0 200

0 200

0 4

-:Ji

698 377 TIT

0 I

-=1

37 6

3T

0 2

-=2

0 2

--=2 0 2

--=2

37 13

211 735 391 3113

0 0

0 44

:7;4

735 0

735

391 44

434 343 -44 299

375 371 337 350 38 2T 144E.1 150 144 121 0 2g

219 45 0 0

TI9 Ts 28 0 4 0

2li 0 766 566 485 471 ill 95

0 I

-=1

151 II

flio

35 0 ~

69 0

69 36 0

3b 191

29 m

375 375 0 164 122 42 250

40 TID

0 5

--=5 789 542 247

140 45

95

1974

375 371 4

183 158 25 80 80

0 0 0

0 638 609 29

0 I

-=1 15 0

Is 25

0 25

171 15 m

106 46 125 0 0 0

TOb lib" 140 25

0 0 m 25

m 25 9

lb 34b.

1 17 17

3 lli

17 I I

33 lb

18 2

lb 0 7

---:'1

202 22

T8o 968 506 lib2 200 200 1iOO

44 3Sb 968 400

T3bB" 506

44 SST 462 356 m

140 30 no 24

0 2li

758 60

b§g

1324 531

793 250 175 425

75 350

1324 425

T7li9 531

-& 793 350

TTli3

26 28

--=2 0 I

-=1

~~

32 28

4 0 I ~

254 410 77 57

m m 1043 1048 619 666

424 382 200 250 250 300 450 550 114 87 Tib lib)

I 043 I 048 450 . 550

Tli93 .!_/ 1598 6 19 666 114 ~ 733 753

424 382 336 463 7bO m

1975

450 375 75 210 185 25 153 153 0

0 0

0 813 713 IOo

0 I

-=1 15 0

15 25

0 Ts

228 II

m

137 0

ill 25 9

lb 17 3

J1i

30 4

2b 0 6

--=6

477 34

4li3 1290

747 543

250 400 m

63 5S7

1290 650

T§TiO

747 63

810 543 587

mo

Total Total Total 19 76 ~'.L91...7 7,___1:..,9~7~8- ~'~91...79i!.__,!.29~8~0 _:.1 ""96,::c4~-6~8~c..;l9~6:z.9.:_,-7~3~1~91...74:::-~78

450 500 375 450 75 50 169 169 169EI 125 0 44 159 17 159 17 0 0

28 28 28 0

0 zg 806 714 731 ill T5 122

S I 0 I I

4 9 IS IS 0 0

Is Is 2S so 0 0

2s 50 20 20

0 0 20 To 248 267

22 70 m m 25

0 25

10 15 0 24

To --=9 2SO 263

0 0 250 2b3 so 50

.if .if 17 17 19 2

--=2 Is

32 18

14 0 I

-=1

672 70

6o2 1478 801

6?7 300 500 sao 265 535

1478 800

2278 801

~ 677 535

ITi2

109 76

33 36 25

IT

877 207 670

1591 _l.2.2

792

350 550 §Do 324 m

1591 900

2li9T 799

__B!! 1123

792 576

T3bB"

550 450 TOO 198 173 2s

67 67

0 28

0 28 843 690 ill

10 I

9 15

I 14

50 I

49 50

0 50 301

94 207

25 0

2s 25 0

2s 275 II

2b9 so 10

40 34

3 3T

20 I

19 36 4

32 75

I 74

966 127 839

1809 817

992 400 600

iOoO 296 704

1809 1000 2809

817 ~ 1113

992 704 ~

600 500 TOO 222 197 2s 291 291 0

42 0

42 II 55 988

lb7

10 0

To 25

I 211

75 I

74 so

0 50 324

71 253

25 0

25 35

0 35 296 II

285 50 II

39 45 21

2li 20

0 To

36 7

29 75

I ]Ti

1066 124

9li2 2221 1112 Ti09

450 650

TTliii 366 f3!i

2221 II 00 3321

II 12

~ II 09 734

JgliJ

650 825 550 600 TOO ill 215 423 190 423 2s 0 235 235 0

42 32 0 51

42 =19 1142 1280 97S I 074

lb7 206"

10 0

To 25

I 211 121 75

70 15 sf To

50 0

50 331 93 61 20

270 73 25

0 2s so

0 50 308 II

297

100 12

88 45 II 4 8

4T 3 20

I 19

36 3

33 96

I 95

1217 164

1053 2359 II 39 mo 450 650

TTliii 291 SO§

2359 II 00 Jli59 II 39 __I9_1_ Tli30 1220 809

2029

14 0

14 53 5

liS" 0 9

--=9

246 57

TB9 1525 II 32 393

0 92S 925 311 m

1525

~ 1132 311

Tli4li

393 6 14

TiiOb

1808 1487 3IT

767 696 7T 714 40

m 43 17

2b 3332 2240 10§2

35 10

2s 69 18

5T 36

0 3b 919

96 BTI

152 0

m 207

0 207

68 _2

59

203 94

109 24 12

12

1713 239

fli7li 5047 248 1 25bb 650 875

IS25 369

TT5b S047 1525 6sfi 2481

369 28sO 2566 II 56 3722

2325 2021 304

929 810 Ti9 476 476 0 84 28

"% 3814 3335 li'79

25 5

To 75

I ]Ti

175 I

m 90

0 90

121S 212

1003 so

0 50

50 24

2b I 050

II 1039

200 46

i54 I 02 30

n 20

I

19 239 130 109

Ill 34

77

3402 495

2907

7216 3830 Dlib ISSO 2350 3900 I 035 2l!b5 7216 3900 m 3830 1035 48bs 3386 2865 illT

4.13 4.54 4.18 4.00 4.69 5.26 5.49 6.34 6.S2 7.54 8.03 7.38 7.21 7.21 7.23 7.25 7 . 27 7.25 7 . 25 7.24 s.ss 7. 33 7. 25

~/ Funded Debt outstanding at the end of FYI961, 1971 and 1980 includes exchange adjustments through FYI961 and 1971 respectively.

.!!.1 Borrowings and repayments in this column are for FYI947 through 1961; average costs of new borrowing is for FY1961 only.

E_/ A S-year issue of $19.0 mill ion placed with Deutsche Gl rozentrale for refinancing of a Bundesbank issue is shown under Bundesbank, and rolled over in FYI976.

fll Other Issues to governments are as follows: Swiss Confederation- $47m In 1957 (partia lly rolled over in 1962 and 1968); Austrian central bank - $5m In 1963 rolled over in 1968. Bank of Lib ya $28m p.a. In 1971 ond from 1976 to 1978, ond $42m p.a. in 1979 and after 1980; Saudi Arabian Monetary Agency- $15m p.a. in 1968 and 1969.

!1 Included in Euro-issues are borrowlnos through FYI961 of $64 mi II ion from -international Institutions and foreign purchasers of US dol tar issues, fully ret I red by the end of FYI962.

!1 Average cost of New Borrowing is the average weigh ted by amount and ave rage 1 i fe of the cost to the Bank of new issues. From FY1973 on, borrowing costs assumed are: 2 year 6. 35%; 4!-5 year 6. 75%; 12 year 7.15% and 25 year 7. sr;x ..

.9.! From FYI972 on, projected debt retirement includes advance purchases of sinking fund requirements.

b_/ Includes $16.6 mill ion for purchase by non­re sidents.

j_l The provisional Prcjected Gross Borrowing in FYI973, unti l the Bank 's liquidity pol icy is reviewed , Is $1047 mi 11 ion ($ 1493 mi II ion less S446 mi II ion of advance borrowing in FYI972) .

)

I ,,

p & B 3/31/72

' ' \ . ' ' ·l£;bt "rtf 2

A.L .

GERMAN PROFESSIONAL STAFF

Total

April 68 718

II 69 877

II 70 1140

" 71 1324

II 72 1503

June 30 72 1516

The German vote is 5.1% in Bank (as of June 1972)

4.3% in IDA

3.0% in IFC

German

40

46

73

88

83

®

% German

5.2

6.4

6.6

5.5 ,..---~ 6.2 -

TO:

FROM :

SUBJECT:

INTERNATIONAL DEVELOPMENT I INTERNATIONAL BANK FOR ASSOCIATION RECONSTRUCTION AND DEVELOPMENT

INTERNATIONA L F INANCE CORPORAT ION

OFFICE MEMORANDUM Mr. Robert S. McNamara DATE: September 22, 1972

William Clark ~

Heinz Portman Visit 6.30 p .m. Today

Portman wants to have a background non-attributable interview with you about the Bank partly to project a favourable image of the Bank at the time the Swiss are considering joining it. (See an account of the debate in July attached).

Portman is a good friend, and probably the single most powerful economic journalist in the German language . He has been financial editor of the Neue Zurcher Zeitung for 10 years, though he is still only 42. He wrote his thesis on the World Bank (in 1959) and has travelled widely in Africa and India. He is a regular at our Annual Meetings . His permanent correspondent was at last night's meeting .

Points he wishes to raise with you are:

(i) Maldistribution of income - how can the plea for r~ f, ;.{..,..:,- ~-.... · increased ODA be reconciled with the insistence on better M"/ /:,a _ '., L .-.I"J' income distribution when there are few if any signs that Q.._J.__ _ ; fJ.I;,

1 the elites in power in the ldc's are moving in that direction. ~

(ii) Can we not find a better measurement of development than GNP per capita, particularly in the light of the inaccuracies of statistics - even the population numbers in many countries are suspect.

~-...1-- j ,.....~ ..... ;?{ ... / ... t •J t~.... t '

(iii) How can projects in the contribute to a

J.{L~ the Bank influence ldc 's development plans and , /_/£.._ ... ( __ tJ desired social directions and how can the Bank "'"'1 J,Jrr~i better international division of labour? ~h~ ">f-'•f..t.-

-c.. ' "'?J ·t-<:. .J5C (iv) Mr. Black and Mr. Woods used to say that there were 4_.,.,..,._ . .._ /t•J< ' insufficient projects available for financing - now the ~ ~} __ Bank/IDA seems to say that there are plenty of projects but ~JJ ~~~ ~· I J

not enough funds. What has caused this change? I.,, i"f }~Lj, 'L'-4_,..;

WDClark:sf

The miseries of the development policy

Heinz Portman in this article , published by Neue Zurcher Zeitung on .,.. •• .., • ,,..,_ A

"" August 28 , 1972 , starts pointing out that since some time the disenchantment d ,

with the development aid has increaseS because of manifold failures . The

second development decade strategy was criticized from the outset and at the

UNCTAD meeting it was confirmed that there is something wrong in the system

"even advocates of the idea of rapid expansion of the western aid , like the

World Bank ' s President, Mr . McNamara, agree today that one cannot expect real

development without basic reforms in the economic and social structure of the

third world . " Income distribution is more important than per capita income

according to many .

TI1e writer points out that donor governments for long have been under c/,ls~

the impression that recipient governments are worling hard to improve the economic I'

standard and the social vell- being for all their citizens but a thorough &"lalysis

completely against accepting any reform which could diminish their pm·rer or

their possessions . Urder these circumstances, the writer confronts himself

with the question : Can foreign aid help to improve this situation?

He then quotes extensively the recent book of TIBOR MENDE , fornerly

h i gh level staff member of UCNTAD. The book "De 1 ' Aide a la Recolonisation"

describes how developing countries are formed by a small urban elite surrounded

by an ocean of rural misery. in which the elite concerns itself more with

western luxuries than in reme~ng the increasing social and political tensions .

Portman then states that the problem with foreign aid is not the amount

t • r which is channelled every year to the third world but , the absortien capacity of .

Y:.~/• ,r I

the receiving COlli"ltries and i~ willingness to implement constructive projects

which will help to the well-being of the whole population .

- 2 -

Because the western countries who provided foreign aid are afraid

to be accused of interference in internal affairs they have refrained quite

frequently from giving advice how to improve the situation . The problem is

more delicate when international organizations come into the picture . The

writer says that due to lack of such interference the countries receive the

money without leverage . The article concludes, summarizing the views from

Messrs . Mende and Schoeck ("Foreign Aid" Munich 72) that international

civil servants play an ambiguous r6l~in the aeveloping picture . He has

to live halfway between weak projects and utopian sentimentality . He lobbies

for more foreign aid from the budget of his country but is protected from the

consequences as he is working with a tax-free salary .

Summary:

The thesis of the article is reflected in its last sentence

in order to avoid further failures a reform of the development

policy should be introduced as soon as possible . This development policy

should force the COQ~tries of the third world to abandon unsound practices

and increase their self-reliance . Only in this way can a catastrophe be

avoided in the longer term. "

! 1~ ~ ~~~ ~ til t..h • ru:m-B.t;ted~ Kroh.."l, D.ir tor-G~ er.?.l, Develor~:1e:nt .tid f;:-:J~ the D.:.. \E.c:1n CQ:U'.lli.;'&iont ldth "t..bca I bs.t.l n.~·l7 t;~:o }j::;:r::-a of .; -;.foo.:U dit;~"'..!!;i').ons i..Yl ::.T.;r;sols <m Jun.e 16. :r.,.......ir~ moved t!) this pa:.t _ e:~.utJ::r irt:::':!l the L~'ieulture D:!.roetora.te~ i:.her ha ••·ox·~cd uith if:,w;hoJ.:".. :~:-·'it'.n e.~~;;soo ~ o:'l ~evaral. ~:-::tt~·a o:f -.hl.cn tu:> ~ :pm:~!J.,l:-e of E;cr ··s gcn.~al :Wta:r .;:) tli.s Bank.

Tis aa.i.d t:l· .. "' d.:J.:roi:te .... !~·,: g~noral. i~;_.t>-.:::ss.1.on c.f J)'"'l"J.Strati.~n at U1K!TF1 r..G.. , hll f.:c.:l"'· tbat. lJ:C(""'z:t had ht~.:tl a E"Jbataut:t.<l el'i'oot en pu.bll.i.o o; i::· ~ .. ., ~ ·i ~1 D.:tl··c--,::'1 - 3. p.,.""''i\ .. -.l'.d di.sa.1.t·: ~ .. i.-:.ct ioo in p::."li:>'"'""'l'lt:. ~"Y, lllin: _: ~ :·~"'lal ~iJ.i :t.u: .-~lc.c·~J:ll. c!l'Clos t:5.t n tr2::a a. a. __ ..,_ ... ·;i·.:o :r;:,o£>tu ~ o"' tho DJ~C C 'i.":. ·r.:::r.r.e:n.tiS.. 1:::1 thiri:'$ ii,. . ..;..:3 i'Ji,t.:; r ·"'~ible tJ·.:::t tl! ... A-:.1 t;::·::-'1. ..... ,, ....... ·,~,- '·r·~~ .. , •. ; ... u \.-.,,;, "-t. ·t ·'··c·> l'"!''fl- ) 1~'.ll t..:J:a ..,.,;,i·'.:...;c..,i -'l ·'.--ln,.. 0...,. ~~'\of &!.J-.1. .., ~t,; ..!_...L. .!..'W' """·- ·-~ ~ I~J . ;.··._ ..-.. .. ~ ~ \,.!,..'""",.......,~·...-..'"" ,J,.JU

t~o t: .:. .. ·:;:"~ ~ \"'""r.:~·~~ 1·: J.l1 o.~a -to :=-~~~ ~--1l £r.. ";:~ ·:i.tt~.l b~ZJ:.i..s u \.!::.! "\ c.\:::··~~ t,J" e.n:l : a.;.:!_· .. -..)t .:{J:::-.~5::.~ r:~'l~-~'n(~:-~(i;· (J)"{;.n--cnr~:.rl, r,i J..c:;);;..r, 5n £'l'""irtei;.il-s. 'fllsso eo<J.l<i 1,0t1 o.t t'~·:.·-·~-~:, b-a :: ~ :,, ··il.:L::~tiell ~.~.-~ l: .. :~~t. c,:! <''7 of' t~-..::: r~·c1'iotU.O p~t· .... 1 ~-.~ - ~~·-"\~~ t.; +-.:.,.., iYf~ r:. .... .. l ~, t~ . ~7.:..tr':·· .. ~~ .... ::.l..t.tl b~ <~:;~ .. ~,...t ·: .. !~1 t.a:·~J". :.s <J~ :. - ...... ·l ·' t"' ... ~ ,- .. ~,t -e ..t.; _..,.. .~:._ .. _,~. ': ... - .. r~ .... . ..;: ........ -r· r .~ .J ~"~'~- "'~"')*" .__ - ~~ -t ·l- .... ~ .. 1~., ~ .. "t ...... ~-~ ~-t ~? .._,.~ , .... -.,.c~ ~:; ,c....t • ...!-· ..,._ ... Y ~o; .• • ry'\,..., .. .;..;:'il.t- ... •...., .._,.1J.i.,l 1"'~'-..· ·•-+,.";'f.-\v: 41-:, . .) ~- ... • .. ;, ;,.;.:;_-""...._~V

C·!i\"-:-.::::.~ .. -:.·.~~..., ... .:vl 'U._. ..... ;~:)·, .. :l·~t-;.fl··.,-.' ,_-~,·~c ~1 .. S,. c~.ir:.r-.c::~·.r .. ~tcl~ :L~ ;~1 ~ (J~\.l·r ,_-":.~s. !Xolm tc::u: \---:.~~-:..- :~:!J.Cll £~,-;.;·:I\] t.Z~~:..t t' ;. _t .... ;:c..:_~ i. ~~ l. _. :l ~s;::c-~ }rf t:·~;;-'..;1 ··:~:. ·t.o l.'\.) .... P-'1.~" '\- • ., •. , .. ·-.lrc-r-J•, .....,, ::'-!r;·· ····~· ~-~ 'loo .;• "• ,,;..-J'-It..-.r''"' ,.,.~ ~1-~ C·.-.•-· •.• ~~·,"'t.'t;-:.c<w.-.-1......._,. ... J '"'-" ' '· .. 'IJ~ ~-i;···- . ....-,,~ ~~ -'" t'~3;'" ,. . .~, i.-::...-.·..:toV c..::. ;.;... •.;.v~ ...... ._ ~ '-J..a. u..~"-- ... ,...0

Di~(; te1 \,'v j L> mr.;;.n:: ·-t~1lly !:;O ... n-~ t,•:) ::,e i::·:;,.l,t't.~nt .

(·~ .. ~;,·.)'t...t,fli_'."' !~'" <~~:.,_""" .J.~;r"',.,._ .. {1. .... , ... 0 ~ ... ~·~= , ....... ,...~ o-- .f .. " '!)' r 7·-: t ,. ., _ _......\. ,t)~ "··-· ... -.-~-.s.-v , •:...... --... -• w.~ ...... · · ........ r ---· .... '(. __ 4,_ :..4 :.. .. ,.·. U• ,J ,.: . ..:. .,'-.1.., .J...•o .. :..i.

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TO:

FROM:

SU BJ ECT:

IN TERNAT IONAl DEVELOPME.NT I INTERNATIONAL BANK FOR ASSOCIATION RECONSTRUCTION AND DEVELOPMENT

INTE RNATIONAL FIN ANCE CORPORATION

OFFICE MEMORANDUM Files

Michael L. '(;;. ~ )~

HOffman/ 1:/r-:f/ }-Research - European Co mmuni ties

DATE: June 22, 1972

Among other matters I discussed ~vith Mr. Hans -Broder Krohn and some of his associates in the Directorate of Development of the European CoiP.i1lission in Brussels last Heek was the possible interest of the Commission in jointly sponsoring and financing research directed to problen~ of the developing countries. The reaction was distinctly ne gative.

I endeavored to explain why the Bank was giving more attention to researc~ in its mm Hork program and to support of research done elsetvhe re. · I, of course, men tioned CGIAR, to one of Hhose meetings the Commission sent an observer. I said vie ,,,ere also becoming acutely aware of the potentia] ly hibh returns from research on end-use technology for major export comrrodities of the LDC's, such as cotton and hard fibers , as well as of the huge unfilled gaps in our knm.,r l edge cf basic social and econotric conditions- e . g ., income distribution, eA~enditure patterns-and of the need for ne~v research on a whole ran ge of matte r s affecting urb an attd rural employmenl plu::.pecLs . I sc::;..d 'N'C might be looking for partners in vmrking out effective ways to start to fill some o.f those gaps .

Krohn said the attitude of the Council of 1'-linisters to Research was one of great "prc; 1ence". Research is not as yet a go \vord in Brussels . There could be no question of using FED money for research . It is all committed to the important task of building infrastructure in the associat~ci countries. These governments would not look kindly on suggestions to eli vert: FED money to research. Research of the kind to t·;hich I referred might b e: of great general benefit, but this is not the business of FED, Hhich se.cves the exclusive interests of the 18 establish2d states, and so on. As for financin g research for the i:>enefi t of the LDC 1 s out of the administrative b udget of the Commu:J.ity, the question vmuld not even be conside red.

Despite this reaction, I had a feeling that I had put a flea in their ear . Their statements on this subjecc do not jibe at ali. tvith the Commission 1 s general effort to bring about a more rational and coordina ted policy of the Conu11unity totvard the problems of the Third Horld, and they knmv it.

l

Files - 2 - June 2 2 , 19 72

I was int r igued by an i tern \..rhich I read in the Times of London on the train on my way back to the airport af ter my meeting . It states tha t Sr. Spinell i, the member of a commis sion in charge of scientific affairs, has proposed an allocation of $100 million for 3 years by the Community to support a research program on the "environmen t" and a "pilot scheme t o study the Communities' future r equirements of basic industrial materials . " I have written Krohn and asked him to send me a copy of the r elevant papers \Jhich, according to the ne\-7S dispatch, \Jere published J une 1 5. If, as I assume, Spinelli's ini tiative is ~..rell prepared it is go ing t o be rather difficult for the Co!lliiL-. .- ·.;:ion to maintain its negative a ttit ude toward support of research for the benefit of the Third World .

cc: Mr . HcNamara }tessrs. Demuth

Chene ry IS t ern William Clarke Charles Weiss

•

TO:

FROM:

SUBJECT:

''

INTERNATIONAL DEVELOPMENT I INTERNATIONAL BANK FOR ASSOC IA TION RECONSTRUCTION AND DEVELOPMENT I

INTERNATIONAL FINANCE CORPORATION

OFFICE MEMORANDUM Mr. Anders Ljungh ,tcti(ft DATE: October 20, 1972

Denis Rickett '\y'. \ ""'-" f..j l....4fJ\.J...__~

Visit of Dr. Sohn ~ .... ~ .

I understand that Prof. Dr. Sohn, State Secretary in the Ministry for Economic Cooperation of the German Federal Republic (the Eppler Ministry) will be calling on Mr. McNamara at 12:10 p.m. on Monday, October 30th.

2. I understand from Dr. Stedtfeld that this is intended largely as a courtesy visit but Dr. Sohn is known to be interested in the following questions:

1. The recent reorganization of the World Bank Group Staff. The reasons for it and the aims in view.

2. The Fourth Replenishment of IDA, particularly the Bank Group's own ideas about it.

3. Questions of unemployment and income distribution in the context of foreign aid policy. (Dr. Sohn is writing a book about develop­ment policy in which he intends to give special prominence to the two questions of unemployment and income distribution.)

4. Procedures a dopted by the World Bank Group for the hiring of consultants. Both the Bundestag and the Trade Association are anxious to see wider opportunities given to Germans. Dr. Stedtfeld has already explained to them that the hiring of consultants is usually a matter for the Borrower and that the World Bank, as such, does not intervene except,perhaps, in UNDP projects where it is the executing agency.

5. Cooperation between the Ministry and the World Bank Group in projects financed by the World Bank Group to which Germany can contribute technical assistance.

3. In addition to Mr. McNamara, Dr. Sohn will be seeing Mr. Knapp, Mr. Chenery, and myself.

4. It looks as if Dr. Sohn might be particularly interested in Mr. McNamara's views on the reorganization and on the question of income distribution. He would also be interested to hear about Mr. McNamara's forthcoming visit to the Sudan, Somalia, Zambia, and Zaire.

INTE RNAT I O~.AL DEVELOPMENT I IN TERNATIONA L BANK FOR ASS OCIAT IO RECONSTRUC TION AND D~VELO PM EN T

INTERNATI ONA L FINANCE CORPORATI ON

OFFICE MEMORANDUM CONFIDENTIAL

TO: Files DATE: October 24, 1972

.\ {Lj

11- \l 10 f ...... ., .. ~ ~u.rn FROM : John H. Adler

· SUBJECT: Conversation with Dr. K. -H. Sohn, Secretary of Economic Cooperation and Dr . J . Jansen, German Cooperation

State of Ninistry

the for

< Ministry of Economic

~

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During my stay in Bonn, where I attended a Conference on Economic Development and Social Justice, Dr . Jansen asked me and Mr. J. Strobl of the Paris Office for dinner . He confirmed the invitation for lunch which I had received from Dr. Karl-Heinz Sohn, Secretary of State of the Ministry for Economic Cooperation. He told me that Dr. Sohn would press me for an indi­cation of the amount of the 4th IDA replenishment which we had in mind, and urged me to "aim high." He also said that the German attitude toward IDA 4 would much ~epend on my ability to convince Dr. Sohn that a large IDA replenishment was essential, that Dr. Sohn and he would have. to defend the Government's request for appropriation from the Bundestag (although technically the Ministry of Economy was responsible for the request) and that Dr. Sohn and he were coming to Washington at the end of October to discuss various matters, including the IDA replenishment with Mr . McNamara and Sir Denis Rickett (and to attend to some other business). He stressed that my discussion with Dr. Sohn was a "unique opportunity" to make a case for IDA which should not be missed.

When I started to develop the argument that as a result of inflation and GNP growth alone the annual amount of the 3rd Replenishment of $870 million would have to be adjusted to approximately $1,200 million, Dr. Jansen said point blank that we should ask for $1,500 million, the amount which Pearson had recommended for 1975 . He could not conceive of an increase in Bank lending from $1,800-$1,900 million at present to $3,500 million by 1978 if such an increase were not at least matched by a proportionate increase in IDA commitments. An increase in Bank lending proportionately larger than IDA lending would be contrary to Mr . McNamara' s stated objective of providing more aid for the poorest countries.

I then developed the idea that the amount of $1,500 million recommended by Pearson would have to be now at least $1,800 million if account were taken of inflation, GNP growth of Part I countries, and the dollar devaluation.

Dr. Jansen then referred to the visit in Bonn of Mr. R. Wood, the Minister of ODA (U.K.) and Mr . Douglas Williams, Under Secretary of ODA. He said that Mr. Williams, who did most of the talking, had told Mr. Eppler that the U.K . wanted a decrease in their share of IDA, that they hoped that the

. Germans would support them, but would resist any attempts by the U.S. Govern­ment to agree to a reduction in the U.S. share and obtain an offsetting increase in t he German share. (N.B. This information is not quite in accordance wit h what we had l earned about t he discussion between Mr . Wo od and Mr . Eppler from Julian Grenfell and conversations with Mr. Williams.)

(,

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Files - 2 - October 24, 1972

I told Dr. Jansen that I could not think of any convincing argument in favor of a reduction in the U.S. share, but that the "facts of life" in the U.S. were such as to make a reduction in the U.S. share unavoidable and must be taken into account in any realistic planning of the 4th replenishment. I referred to the exchange between Senator Proxmire and Under Secretary Walker in the Senate Finance Committee where Senator Proxmire suggested a reduction to 25-30% and Mr. Walker agreed to a reduction, although without specifying its extent. I then mentioned a possibility of getting a substantial increase in the Japanese contribution and that we were thinking about the possibility of an increase from their present contribution of 6% to 12%. I added that in my opinion this presupposed also an increase in the German contribution to the same share.

Dr. Jansen questioned whether the Japanese authorities really were willing to double their contribution in view of their special interest in the Asian Development Bank, their commitment to the IDB and the expected Japanese increase in bilateral aid. He also referred to the difficulty of obtaining the very large appropriations which an increase in the German con­tributions to multilateral agencies, including the German contribution to FED, implied.

I pointed out the possibility that the budgetary appropriations could be much smaller than the German contribution to IDA's commitment authority because I did not expect any difficulties with an arrangement by which the German contribution could be spread over four, five or even more years, if it were continued to be made in cash. I also mentioned in this connection the possibility of having the 4th replenishment cover five instead of three years.

Dr. Jansen then reiterated his plea that we should make a strong case for a large IDA replenishment of at least $1,500 million. He said his Ministry felt that the Bank Group was by far the most important and the most successful development institution and enjoyed strong political support in Germany, especially in view of Mr. McNamara's "new line" on social justice. Germany would much rather see a larger IDA replenishment than a larger increase in FED which was in effect a form of budget support for the French.

When I expressed my appreciation for the strong support for IDA which his Ministry was prepared to give and inquired rather cautiously whether this position was shared by the Ministry of Economy, Dr. Jansen informed me that a

, de.cision had been made to transfer responsibility for financial assistance from the Ministry of Economy to the Ministry for Economic Cooperation. He added that this decision was assured irrespective of the outcome of the elections since in the (according to him less likely) event that the CDU were to win the elections the Hinister for Cooperation Designate, I.Jalther Leisler Kiep, was even more sure of getting responsibility transferred than Eppler in the case of an SPD coalition victory.

Files - 3 - October 24, 1972

Jansen also brought up the subject of the Link. He told me that he was responsible for following developments of the subject. When I said that as far as I knew }fr. Schleiminger, the German Executive Director in the Fund, had generally taken a negative position, he said that he and others in the German Government were convinced that the Link was inevitable. The only question which was still being discussed was the timing of a German endorse­ment of the Link. We also spoke then about the various forms which the Link might take; I mentioned specifically the idea advanced by some LDCs, which Germany appeared to have endorsed at UNCTAD, that the LDCs should obtain more SDRs ~irectly. Jansen said that Germany definitely would be opposed to that form of the Link because the additional SDRs would just be frittered away, but would strongly favor an allocation of SDRs to IDA and the regional banks --as much as possible to IDA and as little as possible to the regional banks.

Jansen also mentioned that he has been offered the position of Alternate Executive Director of Germany and would probably take on the new assignment after next year's Annual Meeting.

During the lunch with Dr. Sohn two days later (October 19); it turned out that my discussion with Dr. Jansen had been a dry run of the conversation with Dr. Sohn. I had the impression that Dr. Jansen had briefed him about our previous discussion. Dr. Sohn identified himself fully with the strong position on IDA taken by Jansen. He added a note of warning only in one respect: The share of German ODA going to international institutions had already reached 28%--8% more than the Pearson target of 20%. This, he said, may bother the officials in charge of bilateral aid, including Mr. Hahnemann.

Only one other subject was discussed during the lunch. He had returned t he night before from the DAC High Level meeting in Paris and indicated that his reaction to the proceedings there were quite negative, that the staff of DAC was a group of busybodies who had nothing to do and contributed little to the support of development. He said th~t if it had not been for the strong personality of Ambassador Martin, DAC would have ceased to function effectively. The oniy role which he could see for DAC in the future was that of coordination although even there he would prefer consultative groups to take the lead.

Dr. Sohn and.Dr. Jansen will be in Washington on October .30 and 31. In their discussions with Mr. McNam~ra and Sir Denis Rickett they may not be quite as forceful and encouraging as they were in their discussions with me if these discussions take place in the presence of Dr. Stedtfeld whom they think of as a rather cautious and conservative Ministry of Economy man.

JHA/mwm /

cc: Messrs. McNamara, Knapp, Sir Denis Rickett