INTERNATIONAL ISSUES MONTHLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00912A002300010016-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 32
• Document Creation Date: December 20, 2016
• Document Release Date: May 23, 2006
• Sequence Number: 16
• Publication Date: March 29, 1978
• Content Type: REPORT

National Secret
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pAssessment 25X1
Center
International Issues
Monthly Review
State Dept. review
Secret
completed RP March /978
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INTERNATIONAL ISSUES MONTHLY REVIEW
29 March 1978
ENERGY/TRADE
ENERGY, ECONOMIC RECOVERY, AND OECD
TRADE TENSIONS . . . . . . . . . . . . . . . . .
OECD efforts to promote economic recovery and
trade liberalization must not only contend with
the immediate dislocations produced by high en-
ergy costs, but must also take into account the
longer term, structural economic and political
effects of these costs on industrial states.
Failure to assimilate these wider effects could
lead to a gap between trade policy and energy
policy to the detriment of both.
DISARMAMENT
DISARMAMENT MACHINERY: ISSUES AND PROSPECTS
FOR CHANGE . . . . . . . . . . . . . . . . . . . 8
One of the most contentious subjects to be dis-
cussed at the forthcoming UN General Assembly
Special Session on Disarmament (SSOD) is the re-
shaping of international machinery for disarma-
ment negotiations. This article discusses the
principal positions on the issue and the likely
responses of France and China to any reforms
adopted at the SSOD.
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NORTH-SOUTH RELATIONS
LAW OF THE SEA: THE NORTH-SOUTH CONFRONTATION
OVER SEABED MINING . . . . . . . . . . . . . . 17
The highly controversial issue of mining the
deep seabed remains a principal obstacle to con-
cluding a comprehensive Law of the Sea Treaty.
To many LDCs the issue reflects their demands
for increased wealth and power under a "New
International Economic Order." It appears
doubtful that the industrialized and develop-
ing countries will reach an accommodation at
this seventh session of LOS negotiations.
GUYANA IN THE NORTH-SOUTH DIALOGUE . . . . . . . . . 22
Guyana's position on multilateral economic and
political issues in the North-South dialogue
reflects Prime Minister Burnham's pragmatic re-
sponse to domestic and international pressures,
including his assessment of the benefits of mod-
eration for Guyana's relations with the US.
This publication is prepared by the International Issues Division, Office of Regional
and Political Analysis, with occasional contributions from other offices within the
National Foreign Assessment Center. The views presented are the best judgments of
individual analysts who are aware that many of the issues they discuss are subject to
alternative interpretation. Comments and queries are welcome. They should be
directed to the authors of the individual articles.
29 March 1978
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Energy, Economic Recovery, and OECD Trade Tensions
This article addresses the relationship between the
energy problems of the OECD nations and the intensifica-
tion--both actual and potential--of trade tensions among
them.* It has two main purposes: to identify several
areas in which energy problems create or aggravate pres-
sures for protectionism and other trade barriers in the
industrial countries; and to suggest that differing
energy experiences, perceptions, and priorities within
the OECD are a basic obstacle to agreement on joint ef-
forts to spur recovery from the persistent economic slow-
down of recent years. The main theme is that policies
to promote continued trade liberalization must not only
contend with the immediate dislocations produced by high
energy costs, but must also take into account the longer
term, structural economic and political effects of these
costs on industrial states. Failure to assimilate these
wider effects could lead to a gap between trade policy and
energy policy to the detriment of both.**
Post-1973 energy problems have adversely affected
the climate for continued trade liberalization among the
industrial countries at three levels:
-- First, Balance of payments pressures have
been severely worsened by the greatly
""The present ana ys2s zs no
rio of the energy supply and demand balance over the next
several years. It does, however, assume that the general
trend is likely to be unfavorable from the standpoint of
consumers.--that prices will remain constant or increase
in real terms, and that poZiticaZly significant perceptions
of energy vulnerability will persist for most consuming
countries.
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increased oil import bills of consuming
nations. Incentives to expand exports
to offset these bills or to adopt trade
restrictions to relieve pressure on
weakened currencies have increased ac-
cordingly.
Second, problems of slow growth and high
unemployment have been aggravated, and
in part induced, by the rise in energy
costs. By contributing to the prolonged
cyclical downturn in OECD economies and
by accelerating the decline of certain
weakened sectors (e.g., textiles and
steel) in some countries, these high
costs have given a double impetus to
the introduction of trade restrictions
to protect jobs.
Finally, concern about supply security and
efforts to reduce political and economic
vulnerabilities associated with energy
dependence have created pressures for
"energy mercantilism" among the OECD
countries. Responses to such pressures,
ranging from greater intervention in
domestic markets to attempts to form
special relationships with producers,
would make more difficult the preserva-
tion of an open, nondiscriminatory in-
ternational trade order.
Payments Problems
International efforts to mitigate these effects--
and thus alleviate the threat of competitive, beggar-
thy-neighbor adjustments to higher energy costs--have
had mixed success. In the immediate aftermath of the
1973-74 oil crisis, international attention focused
largely on balance of payments problems and the recy-
cling of the OPEC petrodollar surplus to avoid unmanage-
able strains on the international monetary system.*
'Avoidance of competitive, unilateral consumer initia-
tives vis-a-vis oil producers was also a high priority,
especially of US policy, during this early period.
29 March 1978
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While the worst fears in this area have not materialized--
largely due to the adaptive functioning of the unofficial
financial markets--severe payments imbalances among the
OECD countries remain. Persistent large surpluses in
Japan and West Germany, the large American deficit, and
continuing balance of payments pressures in France and
several of the smaller OECD countries attest to the in-
adequacy of existing mechanisms (such as floating ex-
change rates and unofficial recycling) to handle oil pay-
ments smoothly.
These imbalances have exacerbated trade tensions in
several respects. The large Japanese surplus has inspired
protectionist pressures in the US and Western Europe,
while the rapid decline of the dollar provokes charges
of unfair US competition in Western Europe and Japan..
Concern about deficits and inflation in France, Italy,
and elsewhere has inspired austerity policies that aggra-
vate unemployment and thus make trade liberalization
politically more difficult.
In these circumstances, renewed attention has been
given to official governmental cooperation to deal with
payments problems--for example, the proposal to create
a special IMF facility or "safety net" for immediate
balance of payments assistance to deficit countries..
More importantly, however, the focus of international
concern and debate has shifted to the more general eco-
nomic ills, whether cyclical or structural, of the OECD
countries, and in particular their lagging growth.
Energy and Recovery
The OECD economic debate has recently been polarized
between US espousal of greater economic expansion and
West German resistance to this strategy. The expansion-
ary view emphasizes the responsibility of the stronger
economies to spur general recovery and reduce their sur-
pluses by increasing their demand for imports. Economic
expansion is implicitly seen as the best means of avert-
ing a growing cycle of protectionism. The counterargu-
ment emphasizes the dangers of inflation if the pace of
recovery is pushed and points to a lack of discipline
in the deficit countries (and the US oil deficit in
particular) as the main cause of imbalances and lagging
recovery.
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In part this is a classic economic debate along
Keynesian-monetarist lines, reflecting the longstanding
orientations of the protagonists. In addition, however,
one can perceive in the more conservative position a re-
assessment of the viability of the rapid economic growth
enjoyed in the 1950s and 1960s and of the traditional
policy instruments for stimulating such growth. This re-
assessment owes much to the energy crisis and is widely
shared among OECD governments of different economic pre-
dispositions.
The "Catch-22" of economic recovery--whereby renewed
growth brings increased energy consumption and oil im-
ports, placing upward pressure on oil prices and setting
in motion a new round of inflation and recession--looms
large in the background of current OECD controversies on
economic policy.* While no country actually prefers re-
cession as a means of keeping down energy consumption,
the reality of this trade-off has probably been incorpor-
ated into the economic psychology (and in some cases
planning) of the other OECD countries to a greater ex-
tent than in the US. As a result, the resistance to a
straightforward policy of economic expansion is broader
and more deeply rooted than it would otherwise be.
Japanese economic planning, for example, is strongly
influenced by pessimistic assumptions about the future
availability and price of energy and other raw materials.
A fundamental shift in the pattern of economic activity,
moving away from energy intensive industries, and a re-
duction in the growth rate to about half that achieved
in the 1960s are envisaged. This plan, as the IMF has
reported, "is based mainly on the belief that increased
international instability, centered on the oil crisis
and increased 'resources nationalism' will create supply
'IIn a narrowly balanced market for OPEC oil, small in-
creases in demand could exert considerable upward pres-
sure on prices. World demand for OPEC oil in the early
1980s would be affected by about 1.5 million barrels a
day by a variation of 1 percent in the annual growth
rate of energy demand. According to some recent projec-
tions, this would be more than enough to convert a small
measure of surplus capacity to a serious "notional gap"
between supply and demand.
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constraints for the economy.* Similarly, France has con-
sciously placed inflation and the trade deficit ahead of
unemployment and slow growth as economic dangers to be
overcome and has established a financial ceiling on oil
imports that symbolizes these priorities. Other coun-
tries, though less dramatically, demonstrate a similar
sensitivity to the energy-growth dilemma.
This phenomenon clearly is a major impediment to
coordinated action to alleviate protectionist pressures
by conventional expansionary means. Moreover, it suggests
that the US and its OECD partners are in some respects
talking past each other in current economic policy dis-
cussions. As in the case of nuclear proliferation policy,
resistance to US economic approaches is partly rooted in
a conviction that these approaches betray a failure to
take seriously the energy problem--and the risks it en-
tails for societies more vulnerable than the US. Thus,
while West Germany's constant reminders about the US oil
deficit are in part a self-serving response to US pres-
sure for expansion, they also represent a genuine concern
about the implications of American oil imports that is
universally shared among the OECD countries. Similarly,
the relatively robust US growth rate is sometimes per-
ceived less as a sign of virtue to be emulated than as a
sign of the US refusal to accept (and ability to avoid)
difficult sacrifices and trade-offs.
Economic Nationalism and Energy Security
High energy costs and oil import bills, then, doubly
darken the atmosphere for trade liberalization--they
directly create balance of payments and employment con-
straints, and they indirectly create incentives for growth-
restraining policies aimed in part at reduced energy
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I IJapan expects to import about 6 m2 zon
arre s per any of oil in 1980, which at current prices
would cost about $30 billion dollars annuaZZy. A 20
percent increase in the real price of oil over the next
three years would raise this biZZ by about $6 billion--
roughly the size of Japan's expected 1978 current account
surplus.
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consumption. and dependence. More generally, it can be
anticipated that energy costs and insecurities will in-
spire a whole range of "mercantilist" domestic and for-
eign practices that could cumulatively add significantly
to existing strains on the liberal world trade framework.
In the domestic sphere, energy constraints and at-
tempts to cope with them are likely to favor statist
trends (on the French or Japanese model), encouraging an
expansion of the government role in economic management
and market regulation. Implementation of industrial re-
structuring or of ambitious energy conservation or pro-
duction programs may expand the scope of nontariff
barriers to trade by giving rise to numerous new subsidies,
standards, and regulations. Competitive distortions
could also be increased by regional policies. For exam-
ple, the crisis in Western Europe's refining industry
has recently given new impetus to proposals for greater
central regulation of EC oil markets that could poten-
tially discriminate against non-European firms.
At the same time, energy supply concerns may create
pressures for qovernment-sponsored preferential arrange-
ments (bilateral or multilateral) between consumers and
producers. While hopes for assurances of favored treat-
ment by producers have thus far been unfulfilled, the
incentive on the part of consumers to offer special in-
ducements to key energy suppliers--such as access to
markets, arms transfers, high technology exports, or var-
ious political sidepayments--remains potent. This would
be all the more true in the context of a tighter world
market or a new politically inspired supply crisis.
Producer states, on the other hand, though unlikely to
surrender their freedom of action on price and supply
policy, clearly have an interest in maintaining a certain
ambiguity regarding their susceptibility to such induce-
ments.
The implication of these problems for OECD efforts
to resist growing protectionism is that the multilevel
effects of energy constraints must be fully integrated
into trade liberalization strategies. Both the immediate
financial impact and the deeper, longer range structural
adjustments implicit in post-1973 energy realities are
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basic (rather than external complicating factors) to the
trade equation. Trade strategies that are, implicitly
or explicitly, incompatible with these adjustments are
likely to be precarious, in large part because they will
not be widely perceived as legitimate or fair. Workable
bargains in the trade field may have to be based on cal-
ibrations of strength and weakness and of security and
vulnerability that include energy factors--including the
pivotal role of US policies and practices in overall
OECD en r security--as well as more conventional in-
dices.
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Disarmament Machinery: Issues and Prospects for Change
One of the most contentious subjects to be discussed
at the forthcoming UN General Assembly Special Session
on Disarmament (SSOD) is the reshaping of the interna-
tional machinery for disarmament negotiations. Reform
of the institutions has become a disarmament issue in
its own right, the resolution of which will do much to
determine the influence of each group of states on sub-
stantive disarmament matters. The session of the SSOD
Preparatory Committee held in January and February cata-
logued the disagreements on the machinery question with-
out resolving them. Several of these disagreements prob-
ably will continue through the final Preparatory Commit-
tee session in April and into the SSOD itself. This
article describes the principal positions on these issues,
the reforms each group of states would be Likely to accept,
and the probable response to reform of the major countries
that have hitherto refrained from participation in dis-
armament negotiations.
A wholesale restructuring of existing machinery is
unlikely to emerge from the SSOD. Although some fresh
ideas about machinery have been offered in the preliminary
discussions, most proposals, and the opposition to them,
reflect Longstanding positions and well-rehearsed argu-
ments. The SSOD itself is an alternative to reform in
the sense that it was sponsored by nonaligned govern-
ments that realized they had Little prospect of greatly
increasing their voice in more restrictive disarmament
forums.
Nevertheless, the need to produce a document on
machinery will stimulate decisions that would not be
taken in the absence of a special session. In the months
following the SSOD, disarmament institutions will receive
added attention as they are relied upon to achieve, or
monitor, progress toward the substantive disarmament
goals adopted by the General Assembly. And the issue of
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institutional change has been made even more timely by
recent indications that France will end its Long boycott
of disarmament negotiations.
Although there are significant differences, the
lines of disagreement on the reform of disarmament ma-
chinery generally reflect those of the North-South dia-
logue on economic questions. In each, LDCs seek changes
to, and a larger role in, a structure that was erected
by the industrial countries and that the LDCs perceive
as operating to their own disadvantage.
The Soviet Bloc
The staunchest supporter of the existing machinery
is the Soviet Union. Its position is shaped by a desire
to hold important negotiations in as restricted a circle
as possible. This implies a continuation of the MBFR
talks as the principal forum for discussions of European
arms control measures. It also means continued reliance
on the 31-nation Conference of the Committee on Disarma-
ment (CCD) to address a comprehensive test ban, control
of chemical weapons, and other global disarmament issues.
Although LDCs now constitute half the membership of the
CCD, the feature attractive to the Soviets is its organi-
zation and composition along political--not geographi-
cal--lines, as reflected in the US-USSR cochairmanship.
In addition to its support for these restricted forums,
the Soviet: Union will probably continue its perennial
call for a World Disarmament Conference (WDC). This
enables it to display its bona fides as a proponent of an
all-inclusive disarmament forum while not having to worry
much--given the unfriendly Chinese and US attitudes
toward its WDC proposal--about the result.
The USSR has several reasons for firmly supporting
the present structure of the CCD and MBFR. This struc-
ture tends to equate disarmament negotiations in general
with NATO - Warsaw Pact negotiations. It recognizes the
USSR as one of only two superpowers and legitimates the
resolution of important issues in bilateral dealings
with the United States. And it places its East European
allies on an equal footing with the United States' NATO
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allies. As a result, the Soviets are unlikely to acqui-
esce in any major revision of CCD membership, particu-
larly if it appears aimed at instituting the geographically
balanced representation found in UN bodies. It will also
stoutly resist making the CCD subordinate to the General
Assembly or any other part of the UN. The one issue of
CCD reform on which Moscow is showing some flexibility
is the possible replacement of the permanent US-USSR
cochairmanship. Given the widespread support (especially
among LDCs) for rotating the chair, the Soviets may con-
clude that their continued insistence on retaining the
cochairmanship would cost them more diplomatic points
than it would be worth. Nevertheless, Moscow will be
slow in offering concessions. In the meantime, it will
seek to resolve the matter the same way it prefers to
resolve any disarmament issue--first in private discus-
sions with the United States, and only afterward in a
wider forum.
The West
The industrial democracies generally favor a con-
tinuation of existing disarmament institutions, but are
more amenable to modifications of machinery than the
Soviets. The support for reform that exists within the
Western group has three sources. The first is a perceived
need to accept, if not preempt, LDC demands on nonessen-
tial points and thereby prevent a confrontation that
would spill over into other parts of the SSOD agenda.
The second is a desire to make whatever changes are needed
to coax France and China into full participation in dis-
armament negotiations. Finally, there is a genuine belief
among some Westerners--and not just the French--that the
present machinery is unrepresentative and overly dominated
by the US and the USSR.
So far, these motivations have been too weak to gen-
erate support for anything more than minor changes. The
paper on machinery introduced at the fourth session of
the SSOD Preparatory Committee by seven Western govern-
ments (Australia, Canada, Denmark, West Germany, New
Zealand, Norway, and the United Kingdom) continues
existing machinery as much as it would change it. On
the one hand, it calls for a limited expansion of the
CCD, a limited rotation of its membership, observer
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status for nonmembers, and an undefined strengthening of
its link with the UN. On the other hand, it confirms
the CCD's character as a small negotiating body, leaves
the cochairmanship untouched, and explicity acknowledges
that some issues are better dealt with on a bilateral. or
regional basis than through multilateral processes.
The absence of US support for major alterations has
helped to discourage some Western allies from proposing
greater change. But regardless of US attitudes, there is
enough division within the Western group to prevent the
formation of a consensus in favor of more ambitious or
specific reforms. For one thing, the group includes both
members and nonmembers of the present CCD. Of the non-
members, some (e.g., Australia) could hope to win a seat
with a small expansion of the permanent membership;
others (e.g., Turkey) probably could participate only on
a rotational basis. Any talk of rotation reveals similar
conflicts of interest among the present members. Some
of these (e.g., the Netherlands) would probably be re-
duced to rotatees unless all of the present members were
given permanent seats. Others (e.g., West Germany) might
keep their seats even if the permanent membership were
somewhat more limited but, unlike the United Kingdom,
would lose them if the permanent membership duplicated
that of the Security Council.
The positions of most Western governments are sub-
ject to unpredictable change because they depend heavily
on expectations of what will prove to be acceptable to
the LDCs and France. A rise or decline in LDC obstinacy
on machinery issues--which will no doubt be affected by
the extent to which the LDCs are satisfied on other
issues on the SSOD agenda--will probably stimulate quick
shifts in Western thinking. As for the French (whose
views are discussed below), any softening in their con-
ditions for entering the disarmament process will force
some other Western governments to reveal the extent of
their reservations about existing machinery. If placat-
ing Paris were removed as a rationale for favoring re-
forms, governments that had used that rationale would
have either to find another one or drop their proposals
for change.
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The LDCs
The Third World exhibits some divisions of its own
on machinery issues. It has wavered between two broad
approaches to the goal of bolstering the LDC voice in
disarmament institutions. One is to increase the CCD's
representativeness, accessibility, and responsiveness
sufficiently to substantially augment LDC influence in
that body. The other is to make minor changes in the
CCD while relying upon some other forum as the principal
place to record LDC views. The second approach is em-
bodied in India's proposal--since embraced by the non-
aligned contact group at the fourth session of the SSOD
Preparatory Committee--to establish a body modeled on
the Economic and Social Council that would be separate
from the CCD and would serve as the main deliberative
forum for disarmament matters.
Such differences of opinion as do exist among the
LDCs partly reflect a division between CCD members and
nonmembers that parallels the division within the West-
ern group. It also is caused by varying degrees of
recognition of the practical need for a small body that
can negotiate and not just debate. Finally, there are
differences in estimates of what the North will accept
or can be pushed into granting. To the extent that the
latter reason is important, it suggests that LDC posi-
tions, like Western positions, are subject to consider-
able change between now and the end of the SSOD. More
specifically, the extent of support for a new delibera-
tive body is likely to vary inversely with apparent
Western and Soviet flexibility on reform in the CCD.
Despite individual differences, however, LDCs are
united in their desire to somehow increase their voice
in the disarmament process and to affirm a major role
for the UN General Assembly. They have sufficient moti-
vation to maintain a hard line on these core demands
even if they do not use the machinery issue as a lever
to win their way on other matters. It is possible that
on some of these issues--which are procedural, after
all--the LDCs may rely upon their voting strength to in-
sert language into the SSOD documents that is openly
opposed by one or more of the major powers.
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The Outlook for Consensus
The eventual fate of most proposals concerning all-
inclusive deliberative forums is already fairly clear.
The WDC has become too much of a pet Soviet project to
be acceptable to the Chinese. Lacking the support of
both China and the US, it loses as well the support of
most other governments outside the Soviet bloc, which
believe a WDC could succeed only with the full participa-
tion of all nuclear powers. The UN Disarmament Commis-
sion, a body that includes all UN members but which has
fallen into disuse since 1965, is too discredited for
very many members to favor its reactivation. Instead
of a WDC or the old UNDC, two other forums will probably
be relied upon to afford all states the opportunity to
join future disarmament debates. One is the First Com-
mittee of the General Assembly, with its responsibilities
redefined to include only disarmament and security mat-
ters. (Such a redefinition would be little more than a
confirmation of the status quo.) The other is a second
special session of the General Assembly (and perhaps;
subsequent special sessions), with SSOD II to be held
sometime between 1981 and 1983. A second SSOD now has
a precedent, as well as the advantage of automatically
including all UN members without any of them having to
make a positive act of accession to membership of a new
body.
It is less clear what consensus, if any, will emerge
regarding the more restrictive disarmament forums. The
strongest bet is that, even if the Indian proposal for
a new deliberative committee were accepted, the LDCs
would not settle for a continuation of the present CCD
without at least cosmetic reforms. Moreover, since a
decision to rely on future SSODs and the First Committee
as large deliberative bodies would involve so little de-
parture from the status quo, it would increase the pres-
sure to show results on reform of the smaller forum.
Under these circumstances, two demands likely to be the
irreducible minimum of the LDCS are replacement of the
CCD cochairmanship and some strengthening of the link
between the CCD and the UN. Proposals for the latter
have been vague, and any additional ties are apt to
make little practical difference. The experience of the
Outer Space Committee demonstrates that designation of
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the CCD as a UN body need not prevent it from operating
by consensus, as it does now, rather than by majority
vote, which would allow the LDCs to hold sway by force
of numbers. Any remaining disagreements at the SSOD re-
garding membership or procedures of the CCD will probably
be sloughed off by calling on the CCD to reform itself--
legally the most attractive alternative anyway, since
the CCD is not presently a creature of the General Assembly.
The Nonparticipants: France and China
A continuing theme in discussions of disarmament
machinery is the need to induce France and China to enter
disarmament negotiations. Because a major restructuring
of the negotiating forums seems unlikely, their entry
will depend more on changes in their own attitudes than
on changes in the institutions they have found objection-
able.
Of the two, the prospects for France's participation
are by far the brighter since President Giscard's January
disarmament initiative. The initiative was intended
partly to increase the electoral appeal of the Center-
Right coalition and partly to lay the groundwork for an
accommodation with the left on disarmament matters in
the event it won at the polls. But it also had origins
unrelated to the elections--in particular, a recognition
that France cannot be strategically self-sufficient and
that many aspects of the Soviet-American disarmament
dialogue bear heavily on French security.
The principal result of this reformulation of
thought is that Paris now perceives a need for French
participation in some multilateral negotiating forums
even if its previous demands for a complete overhaul of
the CCD are not met. Successive elaborations of Giscard's
proposals describe a negotiating body that sounds more
and more like the CCD without the cochairmanship and
with a new name. French diplomats have acknowledged
that a new body could actually have much the same mem-
bership as the CCD and have declared themselves to be
flexible on other details. Even before the elections,
the French demand to replace the CCD had become less of
a genuine issue in its own right than a vehicle for
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France to enter disarmament negotiations through the
back door and a rationalization for past nonparticipa-
tion.
Prospects for an early French entry into European
arms control negotiations are less bright. The MBFR
talks embody, even more than the CCD, an organization
based on superpower-dominated blocs that successive con-
servative governments in Paris have disliked. Accord-
ingly, the Giscard proposal is for a broader forum to
include the 35 states of the Conference on Security and
Cooperation in Europe (CSCE). This is one area in which
the present government's view on disarmament negotiations
still differs substantially from those of the leftist
parties, which have called for French participation in
the MBFR talks. Given the low level of support elsewhere
in the West for disarmament negotiations in a CSCE for-
mat (and the meager results of the recently concluded
Belgrade conference have probably lowered it even fur-
ther), it appears that a further evolution in French
thinking will be required before France becomes a par-
ticipant in the European disarmament dialogue.
Whereas France is moving toward at least partial
participation in disarmament negotiations, China is not.
Peking has made some approving responses to France's
explanations of its disarmament initiative, which is
unsurprising since any criticism of superpower dominance
meshes with its own views. But at the same time, it has
shown no inclination to budge from its frequently stated
preconditions for substantive disarmament negotiations.
It is not likely to do so soon, because China simply
does not have the same incentives as France to encourage
effective arms control in the foreseeable future. It
intends to build up its nuclear force and to maintain its
large conventional forces, and none of the arms control
agreements in sight (e.g., a comprehensive test ban)
would, in Peking's view, do more to enhance China's
security. Therefore, Peking will stay away from re-
stricted negotiating forums, including the CCD and any
body that replaces it. Not expecting to receive security
benefits from any agreements that could be written -there,
it will derive propaganda benefits by staying out and
castigating the institutions themselves. At the same
time, China will use the deliberative forums of the SSOD,
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future special sessions, and the First Committee to con-
tinue its criticism of the defense and disarmament policies
of the US and USSR.
The Machinery Issue in the Future
The reform of disarmament machinery as a disarma-
ment issue in its own right is unlikely to disappear
soon. The document on machinery that will emerge from
the SSOD will leave many states unsatisfied. Any re-
ferral of CCD reform to the CCD itself will mean that
the issue will continue to be discussed at Geneva. And
French entry into the negotiating forums will be pre-
ceded by further interchanges concerning procedural de-
tails. How intense the entire issue becomes will be
affected in large part by the amount of progress on sub-
stantive disarmament matters. The less progress, the
more criticism will be leveled at the institutions.
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Law of the Sea: The North-South Confrontation Over
Seabed Mining
When the Law of the Sea Conference resumes its
deliberations on 28 March, the highly contentious deep
seabed mining issue will be the principal obstacle to
reaching a comprehensive oceans treaty. Prospects
for agreement during this round are poor. The develop-
ing countries continue to exploit their Leverage over
issues of importance to major maritime powers to se-
cure far-reaching concessions on the seabeds issue.
They consider these concessions essential not only be
cause many of them are interested in the specific issues
at hand, but because control over seabed resources
symbolizes their demands for increased wealth and power
under a New International Economic Order. Predictions
that failure at this session will lead to a collapse
of the Law of the sea negotiations, however, may be
overstated.
At the last law of the sea negotiating session,
which ended in July 1977, progress toward an acceptable
draft -treaty was made in several areas:
Safeguarding traditional high seas freedom
of navigation and overflight within the
200-nautical mile "exclusive economic zone,
where coastal states have sovereign rights
over resources.
-- Allowing transit through international straits.,
-- Facilitating scientific research.
Dealing with environmental questions.
-- Providing for compulsory dispute settlement.
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Deliberations on the establishment of an international
system for deep seabed mining beyond national juris-
dictional limits also appeared to be making progress,
but broke down late in the session. Paul Engo of
Cameroon, chairman of the committee responsible for
seabed mining, unilaterally altered a delicately
balanced text that had been reached in broad, open
negotiations. His insertions resulted in a text
"fundamentally unacceptable" to the US and other de-
veloped countries. The intersessional discussions to
resolve the seabeds issue have been intensive, but
there has been little substantive progress.
At one level, the deliberations over the deep
seabed mining issue involve agreeing on an orderly
and equitable set of rules governing the exploitation
of mineral nodules--rich in manganese, cobalt, nickel,
and copper--that lie on the sea floor at depths of two
to three miles.
The less developed countries, which lack the
requisite technology and resources to exploit the
nodules, nevertheless insist on securing certain
guarantees that they will benefit from future exploi-
tation. They base their demands on the principle that
seabed resources are the "common heritage of mankind"--a
concept endorsed by almost all nations. The LDCs have
backed up their demands by linking their agreement on
issues important to the major industrial maritime
powers--freedom of navigation, transit rights through
straits, scientific research--to agreement on an Inter-
national Seabed Authority that would have complete con-
trol over seabed resources and in which they would have
major influence. The authority, which would be linked
to the United Nations, would have its own mining capa-
bility and would establish rules and conditions
governing exploration and exploitation by the state
and private mining concerns.
The industrialized nations have accepted in prin-
ciple the establishment of such an authority, but they
want it to be a weak institution, with only minimal
control over mining operations. They agree with the
need to provide some form of revenue sharing with the
developing countries, but reject a "one nation - one
vote" decisionmaking body as too favorable to the LDCs.
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Private firms in the US and several other indus-
trialized countries are eager to begin mining, but are
holding off until the legal ramifications of such
activity are settled, even though the present legal
regime of the high seas would probably permit exploita-
tion.
At another level, the deep seabeds issue reflects
the contradictory desires of the LDCs for increased
wealth and control over international institutions,
and of the industrialized countries for an acceptable
and orderly outcome of a new oceans regime and of
international relations generally.
The political importance attached to the seabed
mining issue can be seen in how LDC demands concerning
the International Seabed Authority reflect LDC demands
in other forums.
The developing countries want to accomplish a
transfer of resources from the developed countries.
In forums such as the UN Conference on Trade and De-
velopment (UNCTAD) and the Multilateral Trade Negotia-
tions, they have demanded various forms of debt relief
and debt rescheduling and preferential tariffs for
LDC exports. In the case of seabed mining, the LDCs
want the International Seabed Authority to mine and
sell seabed metals, with the earnings then distributed
among the developing countries. Since the authority
would control all mining operations, the LDCs would
succeed in reducing the benefits the developed states
and private firms would gain from these ocean resources,
transferring profits instead to the less developed
countries.
The developing world views technology transfer as
essential to its economic development; many LDC spokes-
men assert that advanced technology is a "right" that
should be provided by industrial countries and multi-
national corporations at little or no cost. Discussions
related to the transfer of technology are going on in
such forums as the preparatory meetings for the UN Con-
ference on Science and Technology for Development*
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and negotiations to develop a legally binding code of
conduct for technology transfer. In pursuing technology
transfer, the LDCs envision the seabed authority re-
ceiving mining and processing technology from developed
countries and private enterprise in return for permis-
sion to exploit mine sites. They also want to assign
to the authority a role in regulating scientific re-
search in the international areas of the oceans. In-
volvement in seabed mining would provide experience
for LDCs in controlling a high technology, multinational
endeavor.
Through UNCTAD the LDCs have sought to influence
commodity prices and assure the steady growth of export
earnings. Individual agreements on single commodities
have functioned intermittently, but with limited suc-
cess. Most recently, the LDCs have sought to establish
a "common fund" to provide price stabilization through
buffer stocks, and including a "second window" to
finance such activities as export diversification and
infrastructure improvement. LDC mineral producers*
in particular fear that the influx of seabed minerals
will compete with the products of their own land-based
mines, hold prices down, and cause a reduction in their
foreign exchange earnings. The seabed authority would
provide the LDCs some control over commodity prices
and protect export earnings by establishing production
controls and by participating in future commodity
agreements involving minerals found on the sea floor,
thereby affecting global prices of land-based minerals.
The developing countries also insist on financial com-
pensation for countries adversely affected by competi-
tion from seabed minerals.
Outlook for the Law of the Sea Conference
There appears little hope for accommodation on the
seabed mining issue at this session. Compromises of-
fered by the industrialized countries during five pre-
vious negotiating sessions have been rejected by the
LDCs.
Therefore, the likelihood that this session will
succeed in drafting a comprehensive oceans treaty
*Zaire, Zambia, Peru, Chile, Brazil, Colombia, Guyana,
Gabon, Cuba, Indonesia.
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remains very much in doubt. In addition to the sub-
stantive issues discussed above, at least two major
procedural. issues could delay negotiations. Conference
President Amerasinghe has been recalled by the Sri
Lankan Government. The proposal that Amerasinghe con-
tinue as president in a personal capacity has been
endorsed by all but the Latin American group. The
Latins question the legality of a president with no
official credentials. In addition, proposed changes
in conference procedures will be discussed. The next
session may be a plenary meeting in order to give the
chairman of the conference an increased role in pre-
paring the final texts and reducing the influence of
committee chairmen, especially their ability to alter
texts unilaterally.
Predictions that failure at this session will lead
to a collapse of the negotiations may be overstated.
The wide range of LDC interests and a growing sense
of pragmatism that is pervading North-South relations
generally suggest that further slow progress in future
sessions is more likely. For the industrialized and
developing countries alike failure might be too high
a price. For the LDCs it would signify a defeat for
their demands for a New International Economic Order
in the one forum where their leverage is strongest.
For the industrialized states it would represent a
setback in their efforts to establish an orderly oceans
regime and could presage--if not directly cause--a re-
surgence of confrontation with the LDCs in a variet
of other international forums. F7 r
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Guyana in the North-South Dialogue
This article is one of a series that examines the
political and economic factors influencing the behavior
of selected LDCs in the North-South Dialogue.* On the
one hand, Guyana's chronic economic deficiencies, the
self-styled socialist policies of Prime Minister Forbes
Burnham, and his quest for influence in LDC caucuses
(the Group of 77 and the Nonaligned Movement) promote
rhetorical support for far-reaching changes in the in-
ternational order and a commitment to LDC solidarity in
dealing with the industrial states. on the other hand,
the need for immediate external assistance to cope with
mounting domestic problems shapes Burnham's preferences
for nonconfrontational tactics in the North-South arena
and his occasional criticisms of radical LDC proposals.
So long as Burnham believes assistance from the indus-
trial states and international financial institutions
will be forthcoming, he is likely to stick both to his
pragmatic tactics in multilateral forums and to his will-
ingness to delay the building of socialism in Guyana in
order to attract foreign private investment and public
aid.
Domestic Dilemmas
Persistent economic and political pressures have
had a sobering effect on Prime Minister Forbes Burnham's
plans to transform Guyana into his version of a socialist
state. The country's bleak economic picture is marked
by an unemployment rate above 20 percent, lagging pro-
duction in key sectors, and falling prices on the world
market for bauxite, sugar, and rice, which together ac-
count for 80 percent of Guyana's foreign exchange earn-
ings. The deteriorating economy has led to a consider-
able rise in political tension as the opposition East
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Indian - based Marxist party has intensified its long
struggle to force Burnham to form a coalition government.*
The long strike by the opposition-controlled labor
union in the state-owned sugar industry ended with Burnham
apparently making few concessions, but the effect of the
strike will be a further drop in foreign exchange earn-
ings and wages. The opposition will continue to exploit
the resulting decreased public confidence in Burnham to
stir up discontented political groups and religious or-
ganizations to attack the government for its mismanagement
of the economy and discriminatory social practices.
Over the past year, senior Guyanese officials have
emphasized that despite Guyana's socialist orientation
and its nationalization of the bauxite and sugar indus-
tries, it sincerely wants to attract foreign private in-
vestment in areas such as forestry, energy, and infras-
tructure development. Burnham's inability to secure a
$100 million loan from the US last year fostered a more
positive attitude toward seeking help from international
financial institutions. Guyana has already begun to in-
stitute austerity measures in the expectation that it
will have to meet rigorous International Monetary Fund
eligibility requirements for budgetary assistance and has
also requested special consideration for development
assistance from the World Bank.
International Adjustments
Burnham last year made pragmatic adjustments in his
posture toward the US, principally because of Guyana's
inability to secure substantial financial assistance
from Cuba and the USSR, countries with which.he has cul-
tivated close relations. Although the opposition is
critical of Burnham's new approach to the US in light
*Burnham's ruling party and the opposition appeal to
their supporters primarily on racial and ethnic, rather
than ideological grounds. The political and economic
tensions and discontents in Guyana are complicated by
the racial split in which Burnham's power base, the
Afro-Guyanese population, has virtually excluded the
majority Indo-Guyanese from political power.
29 March 1978
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of his previous charges that the US was trying to "desta-
bilize" Guyana, he publicly declared that his country's
"nonaligned" foreign policy justified developing good
relations with the West as well as with Communist states.
Underlying Burnham's attempt to cope with Guyana's
economic problems is an outlook that stresses pragmatic
accommodation with forces outside of his control. Guyana's
objective in North-South arenas is to raise prices of its
major exports to help counterbalance the increasing costs
of goods it imports from the industrial countries.
Burnham's support of the Group of 77 program for re-
structuring the international economy is tempered by his
belief that only through negotiation can the developed
countries be convinced of the correctness of these ob-
jectives. Especially because of Guyana's worsening eco-
nomic straits, Burnham would probably join in any softening
of G-77 demands on some controversial issues, such as the
common fund, as an incentive for the industrial countries
to be more generous with long-term commitments to promote
LDC economic development.
Guyana has tried to increase its influence in LDC
circles by embracing various proposals for unified action
on the part of the LDCs. The Action Program for Economic
Cooperation among Developing Countries--an organization
sponsored by the nonaligned movement to promote the for-
mation of non-oil raw materials by third world commodity
producers--is sited in Georgetown. Burnham favors the
establishment of raw materials cartels to enhance LDC
bargaining strength and preserve foreign exchange earnings
against inflation. He also uses the vehicle of solidarity
to counter perceived slights against his country. Re-
cently, in reaction to the unsympathetic international
response to Guyana's petitions for financial help, the
Foreign Minister indicated that his country may join
with those LDCs that want their international debts
canceled. Guyana would probably benefit from the Group
of 77 debt relief proposal through its arrangements to
consolidate private debts and extend the repayment period
of loans. Burnham may also be trying to dramatize the
country's financial plight as it begins negotiating an
acceptable stabilization program with the IMF and to
nudge the US into interceding with international financial
agencies on Guyana's behalf. Guyana additionally played
a prominent role during the recent UNCTAD-sponsored talks
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between the LDCs and the Soviet-dominated Council for
Mutual Economic Assistance on trade concessions for the
developing countries. Guyana's leading role at the talks
was partly an outgrowth of Burnham's frustration over
footdragging by CEMA on Guyana's application for formal
association with that organization.
Burnham's attempts to combine support for LDC ob-
jectives in North-South relations with pursuit of Guyanese
national interests have sometimes strained the country's
solidarity with other LDCs. During the 1976 nonaligned
countries' meetings, for instance, Guyana participated
in efforts to persuade the OPEC members of the nonaligned
movement to grant assistance to those LDCs adversely
affected by high oil bills, despite the potentially
divisive effect of this issue. Additionally, at the first
session of the 1977 International Sugar Conference, Guyana
declined to support a resolution by Cuba that condemned
the US position on sugar export quotas and price levels.
At the nonaligned meetings in 1976 and 1977, Guyana also
refused to join Cuba in submitting a resolution calling
for Puerto Rican independence.* The Foreign Minister
later said that Burnham expected these actions would in-
fluence the US to give Guyanese sugar special access to
US markets.
Burnham's deep apprehension over US cultural and
economic dominance in the Caribbean and suspicion about
US willingness to assist in Guyana's development would
be reinforced by a lack of progress in negotiations be-
tween the LDCs and industrial countries over debt
relief and development assistance. In LDC caucuses over
'These attempts to assert Guyana's autonomy from Cuban
influence are in part a reaction to Havana's past role
in supporting the East Indian opposition in Guyana. Never-
theless, Burnham has a warm, personal friendship with
Castro, and continued party and government Links with
Cuba may help Burnham weather criticism from within his
party that he is "selling out" to the US. Moreover,
Burnham believes that the strategy of social and economic
development adopted by Cuba includes some features ap-
plicabZe to Guyana's situation.
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the next year or so, Burnham is likely to stick to a
pragmatic line on North-South relations, so long as he
sees some hope of greater assistance to the LDCs from
the industrial nations and he believes this approach will
lead to special attention by the latter to Guyana's prob-
lems. Were he to conclude, however, that there was to
be no profit to Guyana from a pragmatic approach, he
would be tempted to adopt a more radical line in LDC
caucuses.
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