NORTH-SOUTH DIALOGUE

HARMONY OR ACRIMONY?

Despite press emphasis on the "acrimony" during the resumed North-South Dialogue (CIEC) in Paris, the Conference of 19 developing and 8 industrial nations1 was, for the most part, characterized by harmony, and, with the exception of the presentations of a few delegations, an absence of the usual new international economic order rhetoric. The ministerial conference can be judged a success simply by the fact that it took place and successfully launched the four commissions on Energy, Raw Materials, Development, and Financeand that the normal rhetoric was toned down-an indication that many of the participants are desirous of initiating a constructive dialogue.

Conclusion of the CIEC ministerial meeting was delayed by an Algerian proposal that the guidelines for the commissions should be made more specific. The 19 developing nations were not unanimously in favor of this proposal; many seemed to support it only reluctantly. The compromise agreement-that the cochairmen will meet on January 26 to discuss the agenda-should be interpreted as a victory for the moderates who are concerned that the dialogue and the work of the commissions commence without demanding that the discussion and outcome be prejudged.

There were indications that the issue of enlargement of CIECincreasing the representation of the developing nations might be raised during the ministerial conference. The fact that it was not is another indication of the real desire of many participants to avoid acrimony and to establish a rhetoric-free dialogue.

Of the numerous issues raised by the new international economic order and the Sixth and Seventh Special Sessions of the United Nations, those that can be dealt with now and on which there are possible actions and compromises on specific proposals are before various international institutions: monetary and aid issues are before the IMF/World Bank and the regional lending institutions; trade issues are before the GATT; UNCTAD is working on a code of conduct for technology transfers; the U.N. is considering the establishment of an international center and bank for technology; consideration is being given to the establishment of an International Energy Institute and an International Industrialization Institute: an International Fund for Agricultural Development (IFAD) is being established to focus assistance in agricultural production; several specific commodity agreements have recently been signed.

1 Industrial nations: Australia, Canada, EEC. Japan, Spain, Sweden, Switzerland, and the United States; Developing nations: Algeria, Argentina, Brazil, Cameroon, Egypt, India, Indonesia, Iran, Iraq, Jamaica, Mexico, Nigeria, Pakistan, Peru, Saudi Arabia, Venezuela, Yugoslavia, Zaire and Zambia.

2 See appendix II, p. 10.

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The hard issues regarding the restructuring of the international economic system-those on which there is least agreement-indexation, energy, raw materials-are before the CIEC commissions. The one area regarding raw materials in which a concrete proposal has been made expanding the compensatory financing mechanism of the IMF in order to ease balance-of-payments problems due to the decline in export revenues-falls within the broader issue of stabilization of all export earnings and is being acted upon in the IMF/ World Bank forum. The espousal of the concepts of indexation and of an integrated commodity program to protect the price of raw materials has been utilized to publicize and draw attention to the problems of many developing nations in raw materials but has not entailed any explanation of how the concepts could be put into effect. To a large extent, the developing nations either (1) are not sure where their interests lie in regard to raw materials, because most are both exporters and importers, or (2) favor protecting raw material and energy prices but have no specific proposals for how this could be done.

LIKELY DIRECTION OF CIEC

Depending on the point of view of the particular country, CIEC can be viewed as an undertaking aimed at energy, at raw materials, at development, or at restructuring the international economic system. At least initially, the United States viewed the producer-consumer dialogue as an energy conference. The continued priority the United States places on energy is demonstrated by its demand to cochair the Energy Commission. The primary U.S. goal on energy has been to seek a reduction in the price of petroleum. However, (1) the United States and the other industrial nations have learned to live with $12/ barrel oil, and (2) there is general agreement that if there is to be a reduction in the price of oil, it will come from the play of economic and market forces, not from political concessions by the OPEC nations. For their part, the OPEC nations are seeking protection from inflation for their petroleum- and investment-generated income. To date, this has been done within the confines of OPEC. No one has devised a process for indexing petroleum within a broader arrangement and it is unlikely the industrial oil consumers would consent if such a scheme were put forward. Therefore, it would seem unlikely that any concrete proposals or actions on energy will result from CIEC.

If the United States sees CIEC as mainly an energy conference, then a failure to attain any of its energy goals would make it unlikely that the United States would grant concessions in any of the other areas. However, there are indications that the United States now views CIEC in its broader context. This is crucial for the developing nations, as they see the United States as the kingpin to any significant action-as the only nation with a veto.

Some interpret the U.S. interest in participating in CIEC as aimed at separating the OPEC nations from the other developing nations. If this is the case, it will be accomplished, not by attacking OPEC directly, but through being forthcoming on the problems faced by the developing nations and engaging in a full and open dialogue of where the interests of various nations really lie.

The main benefit of CIEC would seem to be derived from the establishment of a real dialogue on the most controversial issues. To the extent the hard issues are confronted in the CIEC commissions, they can be kept out of the consideration of less intractable issues and thereby prevented from hindering progress elsewhere. The tone set at CIEC will affect the tone in other forums. The second major benefit from CIEC will be educative-to shed light on the problems facing countries and to move the discussion beyond the rhetorical level to the consideration of specific problems and solutions.

COMMISSIONS

As for the purposes to be served by the four commissions, the Energy Commission, like the CIEC in general, can hope mainly to establish a dialogue on energy and bring a better understanding of one another's problems. It can serve to provide a clear elucidation of the setbacks which high oil prices have brought to economic conditions within industrial nations and to the prospects for development of Third and Fourth World nations-and thereby to international economic stability and to the economic interests of all nations-and to the concern of petroleum-exporting nations for protecting the earning power of their one source of export revenues.

The Raw Materials Commission can serve a similar goal: in particular, it can help enlighten both sides to the problems involving particularly commodities and possibly lead to the signing of commodity agreements covering individual commodities outside the CIEČ

structure.

It is uncertain the direction in which the Development Commission will go. It was created at the urging of the developing nations. It would be the commission that would discuss food issues and broad developmental strategy, and could delve into issues before the other commissions, even into energy resource and raw materials development in the developing countries.

The industrial nations would like to focus the Finance Commission on the financial aspects of issues before the other three commissions, while the developing nations hope to direct it toward a consideration of the international monetary and financial system. It is likely that the dialogue will include the broader picture, and the Commission could be particularly useful in considering and developing ways to bring the OPEC nations with a major stake in the international financial system into the formal and informal consultative mechanisms of international decision-making. However, the industrial nations are unlikely to make significant concessions in this area, such as granting the developing nations as a whole a larger voice in international monetary decision-making. (The OPEC vote is to be raised from 5 percent to 10 percent in the IMF, but this is being done in return for an increase in OPEC's financial participation in the IMF and is not seen by some developing nations as an increase in the voice of the developing nations as a whole.)

DECISIONS OF CIEC 3

The ministerial conference confirmed the cochairmen of CIECAllan J. MacEachen (Secretary of State for External Affairs of

2 See appendix II, p. 10.

Canada) and Manuel Perez-Guerrero (Minister for International Economic Affairs of Venezuela).

Each Commission is composed of 15 nations; 5 industrial and 10 developing.

Energy Commission.-United States and Saudi Arabia (cochairmen), and Algeria, Brazil, Canada, Egypt, EEC, India, Iran, Iraq, Jamaica, Japan, Switzerland, Venezuela, and Zaire.

Raw Materials Commission.-Japan and Peru (cochairmen), and Argentina, Australia, Cameroon, EEC, Indonesia, Mexico, Nigeria, Spain, United States, Venezuela, Yugoslavia, Zaire, and Zambia.

Development Commission.-EEC and Algeria (cochairmen), and Argentina, Cameroon, Canada, India, Jamaica, Japan, Nigeria, Pakistan, Peru, Sweden, United States, Yugoslavia and Zaire.

Finance Commission.-EEC and Iran (cochairmen) and Brazil, Egypt, India, Indonesia, Iraq, Japan, Mexico, Pakistan, Saudia Arabia, Sweden, Switzerland, United States, and Zambia.

International organizations concerned with the matters being discussed can be invited to participate in the discussions of a commission but will not have a vote. Decisions will be made by consensus-determined when there is no objection. It is thought that each commission will meet for a period of 3 to 5 days every 4 to 6 weeks.

The cochairmen will meet on January 26, 1976, to consider the agenda of the various commissions. The commissions will commence meeting on February 11, 1976. A second ministerial meeting will take place in about 12 months.