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The Haves and the Have Nots

As the world has proceeded from the “oil crisis” of 1973-1974 to the confrontation between the beneficiaries and the victims of the existing international order, which is the overriding issue looming up in 1976, it has become obvious—if it was not obvious before—that we stand at a watershed in world history. What is at issue is the validity, or at least the acceptability to the majority of the world’s inhabitants, of the economic system which has dominated the world since the great outward thrust of the industrialized West a century ago.

But if the issue is straightforward enough in absolute terms, it is a good deal less straightforward in practice. Anyone can see why the Third World countries, with 70 percent of the world’s population, reject a system which awards 70 percent of the world’s income to the other 30 percent of its inhabitants. The real question is whether their proposals for a “new international economic order” are viable, and whether they have the strength and resolution to carry these proposals through.

No one supposes that the rich nations are simply going to capitulate to the demands of the poor nations, but no one supposes, either, that the views and interests of the poor nations can simply be ignored, as they were ignored in 1944 and 1945 when the present economic system was put together. On the other hand, those who reject the whole idea of a “new international economic order” as utopian and impracticable have still to show how it is possible to make concessions to the developing countries sufficient to satisfy their demands, and yet maintain the existing system intact.

It is hardly necessary to add that there are other complications, too. The Third World is certainly not a single homogeneous bloc, but neither are the advanced industrial nations. Though the developing countries have held together so far a great deal better than many observers predicted, it is still too early to say that they will succeed in maintaining their solidarity; but the same is true of the rich Western countries, whose interests conflict at least as sharply as those of the poor.

It is not merely a question of defections and the breakdown of existing alignments. There is also the possibility of the formation of new fronts, or new economic blocs, cutting across the present dividing lines. Furthermore, no assessment which leaves out the Soviet Union and the other socialist countries is likely to get us very far. The role of the communist countries is hard to define, but it cannot simply be ignored. As a writer who is not a Marxist recently pointed out, Moscow may turn out in many respects to be the best bet for Asians, and there is a “real possibility” that China may emerge as “one of the great bridging nations between the industrialized and non-industrialized worlds.”1

All these are considerations which any realistic assessment of the current situation must take into account. It is far too easy to assume that the demise of one international order will automatically be followed by the rise of another, and that “those who resist change” (as the spokesman for one underdeveloped country recently proclaimed) will be “swept away by the relentless march of events.”2 That, alas, is not my interpretation of history. The tenacity of the old order should not be underestimated.

But even if those who resist change are eventually swept away, there is still the question whether the outcome will be a “new international order” or a new international anarchy, to say nothing of the alarms and tensions we shall experience during the interval. As the Indonesian diplomat Soedjatmoko once observed, there is no “automaticity” about the emergence of a new international system, and nothing could be more deceptive than to suppose that the changes apparently under way at present are more than stages down an uncharted road.3

I

Signs of change had been visible—for those who wanted to see them—ever since the first meeting of the United Nations Conference on Trade and Development (UNCTAD I) in 1964. The first three UNCTADs, it is true, were more a portent than a threat. The dissatisfaction of the Third World was obvious, but so was its inability to do anything about it except grumble. The two events that changed the situation were the oil crisis of October 1973 and the formation of a common front between OPEC and the other developing countries at Algiers in March 1975.

To begin with, the short-term effects of the sudden, sharp rise in the price of oil got much more attention than the long-term consequences. In retrospect, the long-term consequences were far more important. The adverse effects predicted for the Western economies were greatly exaggerated; the Western countries quickly learned to live with expensive oil, and almost to like it. The long-term implications of the OPEC action were far more significant. This (as one shrewd observer put it) was “the first time since Vasco da Gama” that the “peripheral countries” had wrested mastery over “a crucial area” of economic policy from the “center countries” of the industrialized world.4 The question thereafter was whether it would be the last.

What is certain is that, by the summer of 1975, the threat was sufficiently acute to force the Western countries to revise their tactics. There is no need to trace once again the stages in the evolution of Kissinger’s policy.5 The simple fact is that the industrial nations were faced, or thought they might at any moment be faced, by the possibility of a revolt of the underprivileged, which threatened at least to limit their access to the raw materials upon which their manufactures depended.

Though oil and food, the questions which had loomed largest in 1973 and 1974, still remained important as weapons in the global confrontation lying ahead, the key issues were now commodities and commodity agreements, the operation of the international monetary system, and the assertion by the developing countries of the right to control their own resources and their own economic development, without hindrance from the West.

These were the dominant issues when the Seventh Special Session of the United Nations assembled in New York last September. It looked at first as though they would produce a head-on collision between the Third World and the industrial nations. In the end confrontation was avoided, though the issue hung in the balance until the very last moment. The reason—or at least one operative reason—was that the rich countries, instead of seeking a showdown with the Third World, chose to concentrate their efforts on “bringing order into world raw material markets, not to mention ensuring their own raw material supplies.”6 That they did so “out of a spirit of self-interest rather than charity” is not particularly surprising or particularly important.

When the special session adjourned on September 16, both sides claimed to have achieved most of what they set out to do. In fact, the West, particularly the United States, appeared to have got the better of the bargain.7 On paper at least, the poor nations accepted the dilution of most of their more radical propositions. In particular, their demand for a “new international economic order”—the demand Kissinger had so vehemently denounced in his Kansas City speech the preceding May—was side-stepped and ignored in the final resolution.

They also retreated on specific points, such as “indexation,” or the tying of the price of raw materials to the price of manufactures, a proposal viewed with horror in the West as likely to lead to steep increases in manufacturing costs. “We broke the back of indexation!” an exultant Moynihan exclaimed. But if the developing countries got less than they had bargained for, so also did the West. In particular, the final resolution specifically avoided the question on which the industrialized countries set greatest store: namely, guarantees of stable commodity supplies. In spite of verbal compromises, in short, no one gave anything away in substance.

The truth is that the special session marked a beginning, not an end; and though the world heaved a sigh of relief when the meeting passed without an open breach, it is still far too soon to say that the danger of confrontation has passed. A conflict postponed, the old adage has it, is often a conflict avoided; but while this may be true provided both sides are operating within a given framework of ideas, what if they are not?

II

The Seventh Special Session is the obvious place to begin any assessment of the current situation, and anyone who takes the trouble to read through the long, tediously repetitive documentation will soon be forced to ask whether, in spite of the present lull, the aims and interests of the industrialized countries and those of the developing countries are ultimately reconcilable.

Analysis of the documentation must, it is true, be undertaken with caution. The real work of the session was done behind locked doors, and little is known in detail about what went on. What we have are the set speeches, most of them addressed to the gallery or prepared in advance with the object of scoring debating points. We should certainly be foolish to take them all at face value. Nevertheless they enable us to pinpoint the main arguments and to perceive both the short-term tactics and the long-term objectives of the different groups and parties.8

It was the Jamaican representative who put the central issue in a nutshell. “The developing nations,” Mr. Thompson said, “seek not a new deal, but a new order.” What the United States and most of the other industrialized countries proposed was a new deal. They offered, in the words of the Washington Post correspondent, “the patching up of the existing system to compensate the poor for the disadvantages they suffer under it.”

On the face of it, the American proposals appeared to recognize the validity of some at least of the Third World complaints. Kissinger and Moynihan agreed that “the methods of development assistance of the 1950s and 1960s are no longer adequate,” and accepted the Third World view that fluctuations of commodity prices and export earnings “can make a mockery of development plans.” But when they descended from generalities to practical measures, the American proposals, as set out in the US position paper and elaborated in Kissinger’s speech, soon dispelled any notion of a meeting of minds.

Granted that the old methods were inadequate, the practical question was what to put in their place. With official aid down from the target figure of 0.7 percent of gross national product to a beggarly 0.3 percent (0.2 percent in the case of the United States), the developing countries proposed, instead of voluntary transfers, dependent on the fluctuating political will of the rich nations, a system of international financing from such sources as royalties from sea-bed mining and a tax on nonrenewable materials. Kissinger’s reply was to direct them to “the vast pool of private resources” (in other words to the Eurodollar market), although everyone knew, as William E. Gibson of the Chase Manhattan Bank was quick to observe, that the likelihood of “private capital flows” on any appreciable scale was minimal.9

  1. 1

    Douglas Evans, The Politics of Trade (Halstead Press, 1974), pp. 47, 78.

  2. 2

    United Nations, A/PV. 2335, p. 72.

  3. 3

    Soedjatmoko, “Reflections on Non-alignment,” in Beyond Dependency: The Developing World Speaks Out, edited by Guy F. Erb and V. Kallab (Overseas Development Council, 1975), p. 30.

  4. 4

    What Now? The 1975 Dag Hammarskjöld Report on Development and International Cooperation (Uppsala, 1975), p. 6.

  5. 5

    I commented upon the early stages in The New York Review of Books, August 7, 1975, pp. 27-30, and do not need to repeat what was said there.

  6. 6

    Sunday Times (London), September 7, 1975, p. 56.

  7. 7

    For the following summary, see the assessments in the Sunday Times, September 7, 1975, The Washington Post, September 17, 1975, and The New York Times, September 19, 1975, where the quoted statements will be found.

  8. 8

    The verbatim reports of the Seventh Special Session are contained in the United Nations documents A/PV. 2326-2349. Specific citations would be immensely cumbersome and will only exceptionally be made.

  9. 9

    The New York Times, September 19, 1975.

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