TNAG-1257-FCO40-1590-Third-countries-and-the-future-of-Hong-Kong-1983 — Page 87

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'NORTH/SOUTH DIALOGUE MAKING IT WORK' WERE COMMISSIONED BY

HEADS OF GOVERNMENT IN 1981. THE THIRD, 'TOWARDS A NEW BRETTON WOODS', WAS COMMISSIONED BY THE 1982 COMMONWEALTH FINANCE MINISTERS MEETING. WE EXPECT DISCUSSION AT CHOGM TO FOCUS ON THE

NEW BRETTON WOODS REPORT.

(II) DESPITE ITS RADICAL-SOUNDING TITLE, A GOOD DEAL OF THE

DETAILED ANALYSIS IN THE COMMONWEALTH REPORT 'TOWARDS A NEW BRETTON WOODS' IS SENSIBLE, AND IS BASED UPON THE PRINCIPLE OF ADAPTING THE PRESENT INTERNATIONAL FINANCIAL INSTITUTIONS. THE

DESIRABILITY OF SUSTAINED NON-INFLATIONARY GROWTH, ENCOURAGING

DIRECT PRIVATE INVESTMENT, GIVING PRIORITY IN AID FLOWS TO THE POOREST, ENHANCED COORDINATION OF MACRO-ECONOMIC POLICIES AND

RESISTANCE TO PROTECTIONISM ARE ALL IDEAS WHICH WE CAN SUPPORT.

WE SHALL WANT TO DRAW ATTENTION TO THESE POSITIVE ASPECTS.

(III) AT THE SAME TIME WE HAVE STRONG RESERVATIONS ON

PRACTICAL GROUNDS ABOUT THE USEFULNESS OF AN INTERNATIONAL

MONETARY CONFERENCE, WHICH IS THE CENTRAL ELEMENT IN THE BRETTON

WOODS REPORT. SUCH A CONFERENCE COULD UNDERMINE CONFIDENCE IN

THE PRESENT INSTITUTIONS. IN OUR VIEW THE MOST EFFECTIVE WAY OF

COPING WITH THE PRESENT STRAINS ON THE INTERNATIONAL FINANCIAL

SYSTEM IS TO CONTINUE TO SUPPORT EXISTING FINANCIAL INSTITUTIONS

BY GIVING THEM ADEQUATE RESOURCES, AND ENCOURAGING THEM TO ADAPT

THEIR PROCEDURES IN THE LIGHT OF CHANGING CIRCUMSTANCES, RATHER

THAN TRYING TO SET UP NEW BODIES. WE SHOULD CONTINUE WITH THE

PRESENT COMBINATION OF ACTION BY THE GOVERNMENTS OF

INDUSTRIALISED COUNTRIES, PRIVATE BANKS AND INTERNATIONAL

FINANCIAL INSTITUTIONS TO PROVIDE SUPPORT TO DEVELOPING

COUNTRIES, AND OF ACTION BY THE GOVERNMENTS OF DEVELOPING

COUNTRIES IN ADOPTING THE NECESSARY ADJUSTMENT MEASURES. IT WAS

AGREED AT WILLIAMSBURG THAT MINISTERS OF FINANCE, IN CONSULTATION

WITH THE MANAGING DIRECTOR OF THE IMF, WOULD DEFINE THE

CONDITIONS FOR IMPROVING THE INTERNATIONAL MONETARY SYSTEM AND

CONSIDER THE PART WHICH MIGHT, IN DUE COURSE, BE PLAYED IN THIS

PROCESS BY A HIGH LEVEL INTERNATIONAL MONETARY CONFERENCE. WE

STAND FIRMLY BY THE WILLIAMSBURG FORMULA, AND WE COULD NOT (NOT)

ACCEPT ANY REFERENCE IN THE COMMUNIQUE WHICH APPEARED TO PREJUDGE

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CONFIDENTIAL