World Resources: A Pause in the Politics of Confrontation

Denunciations and stalemate. The confrontational rhetoric of early 1975 was especially conspicuous at meetings of developing countries held at Dakar in February, at Havana in March, and at Lima in August. Similar rhetoric also marked the Second General Conference of the UN Industrial Development Organization in March. The resolutions emerging from these meetings included vehement denunciations of industrialized countries and transnational corporations as "imperialist exploiters," unqualified endorsement of the Organization of Petroleum Exporting Countries (OPEC) and other producer cartels, support for nationalization of raw materials enterprises on terms fixed unilaterally by the developing countries, and insistent demands for more liberal aid and trade policies. These fulminations were coupled with a tepid recognition that the solution of world economic problems requires cooperation between developing and developed countries.

Despite this politicized rhetoric, there were new efforts by third-world economists and technical professionals to develop an intellectual underpinning for the proposed NIEO. The NIEO proposals range from devices for improving the developing countries' "equality of opportunity" in access to international markets and finance to claims for unilateral transfers of income and assets from rich countries to poor. They are generally weak in specific content. To help remedy that weakness, an unofficial "third-world forum" was organized in Karachi under the leadership of Asian, African, and Latin American officials on the staffs of international economic institutions. In Geneva the Secretariat of the United Nations Conference on Trade and Development made progress on an "integrated program for commodities" and on the transfer of needed technologies to developing countries.

A separate but parallel debate grew out of the quadrupling of oil prices in 1973-74, with its worldwide impact on balances of payments, inflation, and developmental prospects. During 1974 the main industrialized oil importers, except for France, had formed an International Energy Agency, loosely related to the Organization for Economic Cooperation and Development (OECD) in Paris. Together with France, they sought, in early 1975, to establish an oil "producer-consumer dialogue," looking toward a negotiated reduction of oil prices and some form of financial relief for the developing countries which were most severely affected by the price increases. In April a representative group of ten—three from the OECD group, four from OPEC, and three from the oil-importing Third World—assembled in Paris to launch this dialogue. To the surprise of the OECD group, the other seven maintained a solid front, insisting that any discussion of oil be paralleled consideration of other commodities and of resource transfers for development—in effect, most of the agenda of the NEIO. The meeting broke up without agreement.

Toward accommodation. During the spring and summer, governments began to prepare for the long-scheduled Seventh Special Session of the UN General Assembly on Development and International Economic Cooperation to be held in September, and the hitherto rigid positions on both sides markedly softened. The European Community made significant concessions, abandoning the demand for reciprocal tariff preferences and instituting a scheme (labeled STA-BEX) for stabilizing earnings from a substantial list of agricultural products, plus iron ore, exported by forty-six countries formerly European colonies. Later the British government offered a global proposal for commodity market organization and price stabilization. Japan, almost totally dependent on imports for its raw materials supplies, made clear its desire for some form of accommodation on resource policies with the Third World.

On the Third World, the economic realities of 1975 weighed heavily in shifting the balance of attitudes. OPEC had maintained its cohesion on oil price levels, even though the real value of these prices was eroded by general world inflation, and the demand for oil was sharply reduced, partly in response to price increases but mainly because of the general industrial recession. Contrary to the almost-intoxicated hopes of many developing countries, it became increasingly clear by mid-1975 that the OPEC example was not likely to be successfully followed by other producer cartels. Except for bauxite and iron ore, nonoil commodity prices were sharply down from 1974 peaks, and the industrial recession was shrinking the volume of developing country exports of both raw materials and manufactured goods. Even the more prosperous oil-importing developing countries were depleting their foreign exchange reserves and finding it increasingly difficult to borrow. Negotiation with the industrialized world became attractive, perhaps even indispensable, in order to overcome these difficulties.

Within the U.S. government, meanwhile, the failure of the Paris conference in April led to a review of its strategy. As a result, when the UN Special Session opened on September 1, a new approach was expounded in a long statement from Secretary of State Kissinger. Rather than simply responding to demands from the Third World, Kissinger's September 1 message took the initiative on a wide range of proposals for cooperation between rich and poor nations to enhance developmental opportunities. In the field of resources, the proposals included an enlarged role for the International Monetary Fund (IMF) in stabilizing export earnings of developing countries; greater participation of the World Bank Group and the UN Development Program in financing minerals exploration and production, international standards of conduct for transnational enterprises and host governments; the initiation of U.S. tariff preferences for developing countries at the beginning of 1976; special attention to tariff reductions on tropical products; reduction of the "tariff escalation," which discourages upgrading of raw materials in countries of origin; and a much more sympathetic attitude toward producer-consumer commodity arrangements, including the use of buffer stocks, in order to reduce price fluctuations. Together with proposals from the European Community, Japan, and the Third World, this American initiative became the basis of a negotiated resolution approved by general consensus on September 16.

In October the Paris group of ten reconvened and rapidly agreed on the calling of a Conference on International Economic Cooperation (CIEC). The group met in mid-December with representatives from the industrialized world, OPEC, and the oil-importing Third World. The agenda called for the formation of four commissions to work in the fields of energy, raw materials, problems of development, and related financial questions. The CIEC will not be a negotiating body, but it may have the potential to serve as an informal steering group providing policy guidance for detailed negotiations in various international organizations, such as the IMF, the General Agreement on Tariffs and Trade, the UN Conference on Trade and Development, the World Food Council, and the World Bank Group.

Active negotiations in all these forums, and also in the Conference on the Law of the Seas, will be under way in 1976 and beyond. Their outcome will determine whether the climatic change in relations between industrialized and developing nations is durable or transitory. They have no prospect of achieving a full-blown "new international economic order," a concept which most indus-trialized countries regard as highly questionable. But they could bring about significant reforms which in turn could contribute to renewed dynamism in the world economy and expanded opportunities for the developing countries to secure a larger share of the overall gains. Among the likely reforms are substantial changes in conditions affecting resource production and trade.