53-81 -57 CONFERENCE OF DEVELOPING COUNTRIES Dakar, 3rd to 8th February 1975 RESOLUTION EXPRESSING APPRECIATION TO THE The Conference of the Developing Countries on Raw Materials, meeting in Dakar, at the invitation of the Government of Senegal; In appreciation of the excellent facilities provided, and the efficiency of the administrative organisation of this Conference and the generous hospitality of the Senegalese people; 1. EXPRESSES ITS APPRECIATION to the Government of Senegal for its ceaseless efforts in the preparation and organisation of the Conference, which have contributed to success; 2. COMMENDS the warm hospitality and well-known universal friendship of the people of Senegal for the cordial and friendly welcome they have given to the participants at the Conference; 3. REQUESTS the chairman of the Conference to convey to the President of the Republic of Senegal, and through him to the people of Senegal, its profound gratitude. APPENDIX 8 [The Washington Post, Feb. 18, 1975] STABLE COMMODITY PRICES ARE SOUGHT (By Douglas Ramsey, Special to The Washington Post) LONDON. After more than a year of rocketing prices on raw materials, government officials and market specialists think now is the time to get on with the task of consumer-producer cooperation. When British Prime Minister Harold Wilson last week announced plans for a scheme to stabilize world commodity prices, he admitted it might be the only way to avert open hostilities with the producers who feel their gains made in 1974 will now be dragged from under them. Simultaneously, the world's developing countries were meeting in Dakar, Senegal. Out of that meeting came a plea for consumer countries to help finance stockpiles which would keep prices up, at least near 1974 levels. They were working under the pressure of an estimated 30 per cent drop in raw material prices, as well as the fear of some markets going bust unless action is taken soon. Their militancy, though growing, has not spread to overt threats of supply cutoffs; not yet, anyway. How long that sort of moderation will last, as the British leader suggested, depends entirely on new efforts to regulate markets. Both sides profess belief in the dual goal of cooperation. First, it would moderate price fluctuations and thereby guarantee minimum annual earnings on exports to the developing countries. Second, it would give consumers a guarantee of supply. The means to achieve those ends are often contradictory, at least on the basis of positions staked out in recent weeks. At the United Nations conference on trade and development in Geneva last week, the European Common Market seemed to be speaking for a majority of industrial nations. Up for grabs was a plan to stockpile 18 commodities at the expense of both producers and consumers. An EEC spokesman made it clear that Europe is willing to fork over for stocks of rice, wheat, sugar and corn, but not the rest. The United States is keeping a pretty low profile, while administration insiders hash out the procedure for abandoning their erstwhile hostility towards any and all commodity agreements in favor of something like the European stance. It came as no surprise to third worlders in Geneva that the west had strong reservations about mineral or tropical product stockpiles. The other 14 commodities cited in the UNCTAD program are, for the most part, highly volatile. They include iron ore, bauxite, alumina, copper, lead, zinc, tin, rubber, wool, and others. The developing countries' frustration, however, stems from a notso-meagre output of many such products in the industrial countries, particularly the U.S., Canada, Australia and the Soviet Union. These nations generally use up a large chunk of their own output, leaving world trade flows to the underdeveloped producers. But in some cases the rich countries could boost production tremendously, especially if world prices remain high, and try to flood the market. Hence, the poorer nations are caught in the squeeze between high prices with more competition, and low prices but insufficient income. Is there any common ground for consumer-producer cooperation? Wilson apparently thinks so, but last week he began by tackling the wrong problem. "Following OPEC, we already have CIPEC (copper producers)", he warned, "but there is talk of a phosphate-PEC, (potash-PEC, bauxite-PEC and even a banana-PEC." Yet there is a wide consensus among commodity experts in London that most, if not all, of these "mini-OPECS" cannot work. Despite a Dakar resolution calling for producer associations wherever possible, the economic facts of life are just not the same as for oil. In the case of phosphates, says one expert, Morocco virtually controls world trade even though the U.S. and U.S.S.R. produce more. Prices trebled in 1974, but have now reached a point where other types of fertilizers can be produced more cheaply. So not only is Morocco very much on its own in the market, unable to form a cartel, but it can also no longer dictate huge increases in price. Even though cartels should not be the motivating force behind industrial nations' desire to stabilize commodity markets, there are good reasons to do so. In Dakar, the developing countries pledged to set up their own stockpile fund if the UNCTAD plan did not get the consent of rich nations. Before the west decides definitely for or against the plan, it will have to take a gamble: The Dakar scheme will only work if OPEC agrees to finance it. If not, the LDC's will be whistling in the wind. For the moment, Venezuela and Algeria are leading the fight for producer solidarity. But Iran and Saudi Arabia, apparently under American pressure, are cool to the idea. The fate of this scheme might be decided earlier than the delegates at Dakar expect. Sources here say that several countries are trying to engineer a trade-off between OPEC and the other raw-material producing countries at the forthcoming oil summit conference. (The conference was called by French President Valery Giscard d'Estaing, and is expected to take place in the spring.) The developing nations may band together and support OPEC claims for an oil price indexed on western inflation, even if it means costlier fuel imports for themselves. In return, OPEC could promise one of two things: first, funds to set up strategic stockpiles on other raw materials; or second, insistence at the conference that raw material prices also be indexed, like oil, to the rising cost of manufacturers in the west. Either of these two options would be a blow to western politicians' efforts at defusing the explosive issue of commodity prices. For a number of other reasons, the west's interest now seems to live in reaching a "Modus vivendi" with the producers. Growing militancy will mean more nationalisations, higher taxes and royalties, and other changes in the status of foreign firms operating in the third world. Copper producers inside CIPEC have been unsuccessful at forging a price-hike cartel, but were all agreed from the start to nationalize their industries. The situation could be repeated elsewhere, for bauxite shortly. So far, the third world seems to be standing together on the commodity issue. But any real breakthrough in the next six months will hinge entirely on the west's agreeing on what course to take. Britain and the EEC have taken a concillatory position, saying that they "want" to help out but cannot afford it this year. Common Market officials in Brussels are talking about the 1976 UNCTAD jamboree in Nairobi to set things straight, but the producers won't wait that long. Wilson has promised his own plan for April. It is still on the drafting board, but insiders here doubt that it will go far enough to please the third world. He is expected to promise, or at least suggest, a crackdown on speculation, one of his own pet peeves. Although there is a growing consensus that speculation has been the chief culprit in extreme fluctuations of raw material prices, the producers do not think enough can be done to satisfy their claims. In fact it might just stabilize prices at a low level, in which case the countries could not even benefit from market highs they have had in the past due to speculation. So if Wilson's plan is as modest as his harshest critics fear, there is no visible rallying point for the industrialized countries. "The field is clear for Mr. Kissinger," one government economist said this week, adding, "again". Just how the U.S. Secretary of State sees the raw material price issue is unclear. Until recently, the administration was opposed to dumping commodities into the basket of Giscard's oil summit. This week, however, his deputy Thomas Enders said in London that if the third world insisted, the U.S. would go along. Kissinger, meanwhile, is in the paradoxical situation of wanting a floor price on oil (to encourage energy substitutes) but also wanting raw material prices to come down. What the developing nations are asking is a floor price, too, either via stockpiles or an indexing scheme geared to western inflation. U.S. policy could gear up to try and break up the third world lobby, which would not be hard if OPEC could get more from the U.S. than its fellow developing countries. But in the long run, American interests probably lie in getting along with raw material producers. Even so, all westerners will shun any attempt at a widespread indexation scheme which would only add to the inflationary spiral. The alternative, and perhaps the only focal point for cooperation between producers and consumers, would be in better control of world markets, including jointly financed stockpiles. APPENDIX 9 [The Washington Post, Feb. 22, 1975] CONSUMER NATIONS NEARING UNITY ON WORLD OIL TALKS (By Bernard D. Nossiter) LONDON. The major consumer nations are nearing agreement on the size and scope of a first round of talks aimed at laying down ground rules for world oil trade, it was learned today. The consumer accord will be limited to procedural matters like who attends and what is discussed at a later, global negotiating conference, according to diplomatic sources. But these officials predict there will be enough agreement to satisfy the U.S. insistence on a concerted consumer stance before any meeting with producers takes place. The consumers have tentatively decided that the preliminary meeting will take place in April in Paris. Ten delegations will take part, a list proposed by the French and Sheikh Zaki Yamani, the Saudi oil minister. It includes three consumers-the United States, Japan and the European Common Market, represented by its current president, Ireland; four producersIran, Saudi Arabia, Algeria and Venezuela; and three poor or developing nations-India, Zaire and Brazil. The French will be present as the conference host, and delegations will be led by second- or third-level officials, not ministers. This preliminary gathering is supposed to fix the agenda for a conference at a higher level this summer that will negotiate substantive policy issues. The consumers will try to limit the second round to the many problems raised by oil. They will oppose an Algerian suggestion that the next round should take up price and supply questions of other raw materials as well. The oil users are expected to urge a four-part agenda for the negotiating conference. It would cover these areas: The financial consequences of the quadrupled oil price and the big monetary surpluses that the producers are now accumulating. This would involve attempts to agree on how these surpluses should be invested and how to transfer oil dollars to deficit countries. Economic development of producer states, particularly programs to encourage industries other than oil. The special problems of poor nations who pay the greatly increased price for oil and have little chance of attracting investment financed by surplus oil earnings. Trade in oil. This is the crucial heading and is concerned with the future price and supply of oil. The consumers are a long way from agreement on positions to be taken in the second round or negotiating conference. Among other things, there are sharp differences over Secretary of State Henry A. Kissinger's proposal to fix a floor price under oil as a spur to investment in new resources. There is no concerted consumer nation policy on the development of alternative energy sources. Moreover, the consumers have agreed only in principle and not in detail on the proposed Kissinger fund under which oil users would agree to lend each other services to finance deficits. Even if the consumers do reach a common stance on the complex policy issues, an accord with producers will not be easy. Officials expect that negotiating in the second round will last for months. Nevertheless, diplomats responsible for oil affairs contend that a momentum toward agreement among consumers has been taking place. These officials point to the creation of the International Energy Agency and its accord on sharing oil in an embargo as a large forward step. Officials recognize that there is a great divergence in interest between a country like Japan or Italy, heavily dependent on foreign oil and one like the United States, still satisfying most of its energy requirements from domestic fuels. But the diplomats argue that the consumers have moved much closer together since the Washington energy conference a year ago. |