(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01316A000900030005-4
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 8
• Document Creation Date: December 12, 2016
• Document Release Date: January 10, 2002
• Sequence Number: 5
• Publication Date: January 19, 1978
• Content Type: CABLE

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/39/ CONFIDENTIAL
C 0 N F I D E N I I A L
25
ENDING 14 JANUARY 1478. REQUEST ARTICLE BE PASSED TO AMBASSADOR,
DCM, ECONOMIC SECTION AND OTHER WORKING LEVEL STATE OFFICERS.
F k PARIS: PLEASE PASS TO US MISSION OECD.
PLEASE PASS TO US MISSION TO EC.
PLEASE PASS TO AMBASSADOR VANDEN HEUVEL, STR REP,
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NORTH-SOUTH DIALOGUE: FOCUS SHIFTS TO DEBT BELIEF.
1. LDC PROPOSALS FOR RADICAL MEASURES TO EASE THEIR
FOREIGN DEBT BURDEN WILL BE CENTER STAGE IN THE NORTH-SOUTH
DIALOGUE OVER THE NEXT SEVERAL MONTHS. THE DEBT ISSUE WILL
COVE TO A HEAD AT THE 6-10 MARCH MINISTERIAL MEETING OF THE
UNCTAD TRADE AND DEVELOPMENT BOARD IN GENEVA, MOST WESTERN
AID DONORS--IN PARTICULAR THE UNITED STATES--VIEW THE MEETING
AS A MEANS TO REVIEW THE DEBT SITUATION; MANY LDCS, ON THE
OTHER HAND, SEE IT AS A CHANCE TO NEGOTIATE INCREASES IN
RESOURCE TRANSFERS FROM THE DEVELOPED WORLD. PROSPECTS FOR
A CONVERGENCE OF VIEWS BETWEEN THE DEVELOPED AND THE
DEVELOPING COUNTRIES ARE REMOTE,
2. AGREEMENT AMONG THE LDCS THEMSELVES ON ANY
PARTICULAR PROPOSAL--OTHER THAN THEIR COLLECTIVE MAXIMUM
DEMANDS--WILL BE INHIBITED BY WIDELY DIFFERING INTERESTS IN
VARIOUS FACETS OF DEBT RELIEF. THIS WILL NOT, HOWEVER,
STILL THEIR RHETORIC OR CAUSE ANY EXPLOITABLE SPLIT IN THEIR
UNITY, THE MAIN PROSPECTIVE GAINERS FROM A GENERAL
CANCELLATION OF BILATERAL DEBTS--PARTICULARLY THE SOUTH
ASIAN CDUNTRIES--C4 BE EXPECTED TO WORK BEHIND THE SCENES
TO ERODE UNITY AMONG THE DEVELOPED COUNTRIES IN THE HOPE OF
SECURING NEW CONCESSIONS, IN PARTICULAR, THEY ARE LIKELY
TO PUSH FOR ALL WESTERN DONORS TO FOLLOW THE EXAMPLE OF THE
FOUR COUNTRIES THAT RECENTLY CANCELED SOME BILATERAL DEBTS
FOR THE POOREST LDCa. ~~FF03v0DpFFA~
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ARE DISCUSSED. BILATERAL DEBTS ARE THOSE OWED BY DEVELOPING
COUNTRIES TO GOvERrNM~NT5, MULTILATERAL DEBTS ARE THOSE OWED
TO INTERNATIONAL INSTITUTIONS SUCH AS THE IBRD OR THE ASIAN
DEVELOPMENT BANK BUT EXCLUDING THE IMF. PRIVATE DEBTS; ARE
THOSE OWED TO PRIVATE OR COMMERCIAL LENDERS,)
3. THE IiDETEFMINATE CONCLUSION OF DEBT DISCUSSIONS
AT LAST YEAR'S CONFERENCE OWN INTERNATIONAL ECONOMIC
COOPERATION (CIEC) AND THE STALEMATE OF THE COMMON FUND
NEGOTIATIONS WILL TEND TO HEIGHTEN THE CONCERN OF THE LDCS
(AND A FEvr DEVELOPED COUNTRIES) THAT TANGIBLE BENEFITS
MERGE FROM THE DEBT DISCUSSIONS,
BACKGROUND,
4. GENERALIZED DEBT RELIEF IS A RELATIVE NEWCOMER
TO THE LIST OF THIRD, WORLD ECONOMIC DEMANDS. EVEN 'THOUGH
DEBT AS DISCUSSED AT THE FIRST UNCTAD MEETING IN 1964, IT
WAS SUBSUMED UNDER INVISIBLE TRADE. RIGHT UP TO THE EARLY
19705, THE NOTION OF GENERALIZED RELIEF WAS OVERSHADOWED BY
PROVISIONS FOR CASE-BY-CASE REVIEWS BY CREDITOR CLUBS DRr
FOR INDIA AND PAKISTAN, AID CONSORTIA, THE EXPERIENCE
GAINED FROM HANDLING INDIVIDUAL DEBT PROBLEMS PROVIDED
PRECEDENTS AND GUIDELINES FOR SOME 40 MAJOR RESCHEDULING
EXERCISES THAT TOOK PLACE AFTER THE MID-1950S,
5. THE OIL PRICE INCREASES OF 1973/74 WERE, FROM
THE LDC PERSPECTIVE, INSTRUMENTAL IN ELEVATING DEBT RELIEF
FROM AN APERIODIC PROBLEM TO A CONDITION TO BE "SOLVED"
WITH GENERAL DEVICES! AS A RESULT OF BALLOONING IMPORT BILLS
AND DAMPENING EXPORTS, THE MEDIUM- AND LONG-TERM DEBT OF THE
NON-OPEC LDCS SOARED FROM $70 BILLION TO $75 BILLION AT
YEAREND 1973 TO AN ESTIMATED $160
BILLION AT YEAREND 1?77. ASTRIK
MEANWHILE, MANY OF THE SAME COUNTRIES SOUGHT TO USE THE
ENHANCED OPEC LEVERAGE TO PROMOTE DEBT RELIEF AS A VEHICLE
FOR GREATER RESOURCE TRANSFERS, FOR THEIR PART, THE OPEC
COUNTRIES WERE MORE THAN WILLING TO INCLUDE ON THE AGENDA
A TOPIC THAT STRESSED THE "STRANGLEHOLD" OF THE NORTH OVER
THE SOUTH, THEREBY DEFLECTING CRITICISM OF HIGHER OIL PRICES.
(ASTERISK FOR A DETAILED DISCUSSION OF TRENDS IN THE LDC
DEBT SITUATION, SEE THE 22 DECEMBER 1977 ECONOMIC INTELLIGENCE
WEEKLY REVIEW ARTICLE "NON-OPEC LDCS: PRIVATE CREDITS
ACCOUNI?FOR MASSIVE DEBT INCREASE SINCE 1973,,{{" AND DER'S
FORTHCOMIN REAPpFPVP-I Efolq& se 0 X1130
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AND PROSPECTS,)
6, ACCORDINGLY,, DEBT WAS ONE OF THE LDC ECONOMIC
CONCERNS THAT OPEC COUNTRIES DEMANDED BE ENROLLED AT CIEC AS
A PRECONDITION FOR DISCUSSING THE INTERNATIONAL ENERGY
SITUATION vtiITH THE INDUSTRIAL NATIONS. WHILE THESE DISCUSSIONS
WERE TAKING PLACE IN PARIS, UNCTAD IV (MAY-JUNE 1976) CONVENED
IN NAIROBI. PROGRESS ON THE DEBT RELIEF ISSUE PROVED
IMPOSSIBLE THERE, HOWEVER, AND, IN THE SHORTEST RESOLUTION
OF THE CONFERENCE, THE MATTER WAS REFERRED BACK TO PARIS,
THE 19 LDCS THAT REPRESENTED THE DEVELOPING WORLD AT CIEC
HAD NOT BEEN GIVEN MUCH NEGOTIATING LEEWAY ON DEBT.- AFTER
18 MONTHS OF CONSIDERATION, THE TWO SIDES THUS WERE STILL FAR
APART ON THIS ISSUE WHEN CIEC ENDED IN JUNE 1977,
7. WITH THE FAILURE OF CIEC TO REACH AN AGREEMENT,
DEBT RELIEF JOINED THE COMMON FUND AS A KEY UNRESOLVED ISSUE
IN THE NORTH-SOUTH DIALOGUE, AFTER CIEC, DEBT DISCUSSIONS
AGAIN FELL TO UNCTADI: DEBT RELIEF IS NOW THE MAIN AGENDA
ITEM FOR A SENIOR OFFICIALS' MEETING, 23-27 JANUARY, TO
PREPARE FOR THE MARCH MINISTERIAL SESSION OF THE TRADE AND
DEVELOPMENT BOARD,
LDC DEBT THEOLOGY.
8, OVER THE LAST THREE YEARS, THE LDCS HAVE STRUGGLED
THROUGH THEIR UN CAUCUS--THE GROUP OF 77--TO FIND A SET OF
DEBT PROPOSALS COMFORTABLE FOR ALL MEMBERS. FOUR THEMES HAVE
GUIDED THESE EFFORTS. FIRST IS THE CONTENTION THAT THE SCALE
OF FOREIGN DEBTS IS A PROBLEM COMMON TO ALL DEVELOPING
COUNTRIES BECAUSE ALL HAVE BEEN ADVERSELY AFFECTED BY (A) A
DETERIORATION IN TERMS OF TRADE, (B) INADEQUATE AID FLOWS
FROM THE DEVELOPED COUNTRIES, AND (C) RESTRICTED ACCESS TO
INTERNATIONAL CAPITA, MARKETS, SECONDLY, THE LDCS CONTEND
THAT DONOR COUNTRIES SHOULD PROVIDE SUBSTANTIAL NEW UNTIED
AID FLOWS THROUGH DEBT RELIEF. THIRD IS THE BELIEF THAT
EXISTING CASE-BY-CASE PROCEDURES ARE DEMEANING TO DEVELOPING
COUNTRIES, MAKING THEM APPEAR AS BEGGARS. FINALLY, WHILE
GROUP OF 77 PROPOSALS MAKE ALL LDCS ELIGIBLE FOR DEBT RELIEF
TO HELP ENSURE UNITY, PHRASES LIKE "FOR THOSE INTERESTED
COUNTRIES" HAVE CONSISTENTLY BEEN INSERTED, THIS ALLOWS
INDIVIDUAL COUNTRIES TO DISSOCIATE THEMSELVES FROM GROUP OF
77 PROPOSALS IF THEY FEAR THAT PUBLICITY ABOUT LDC DEMANDS
COULD DAMAGE THEIR INTERNATIONAL CREDIT RATING,
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9. THE DEVELOPED COUNTRIES USUALLY COUNTER GROUP OF 77
PROPOSALS FOR GENERAL SOLUTIONS WITH THE ARGUMENT THAT WHEN
LDC DEBT PROBLEMS ARISE THEY NEED TO FEE REVIEWED IN THE LARGER
CONTEXT OF A COUNTRY'S OVERALL BALANCE OF PAYMENTS AND LONG
TERM DEVELOPMENT NEEDS, ANY RELIEF MEASURES CAN THEN BE
TAILORED TO THE SPECIFIC NEEDS OF THE DEBTOR COUNTRY.
FURTHERMORE, THE DEVELOPED COUNTRIES HAVE ARGUED THAT, WHILE
ADJUSTMENTS COULD BE MADE IN THE CREDITOR CLUB ARRANGEMENTS
TO IMPROVE THEIR OPERATIONS ON A CASE-BY-CASE BASIS (THE
POSITION TAKEN IN THE US/EC PROPOSALS AT CIEC), THEY WERE
UNWILLING TO PROVIDE,GENERALIZED DEBT WRITEOFFS.
10, WITHIN THIS BROAD STANCE, INDIVIDUAL DEVELOPED
COUNTRIES HAVE HELD CONSIDERABLY DIVERGENT VIEWS, THE
SCANDINAVIAN COUNTRIES AND THE DUTCH HAVE FELT THAT WRITEOFFS
OF BILATERAL DEBTS FOR THE POOREST LDCS WOULD BE RELATIVELY
INEXPENSIVE, CONSISTENT WITH THE CURRENT EFFORT TO PROVIDE
GRANTS RATHER THAN LOANS TO THIS GROUP, AND WOULD BE A CLEAR
SIGN OF GOODWILL TOWARD THE THIRD WORLD, INDEED, FOUR
DONORS--SWEDEN, FINLAND, THE NETHERLANDS, AND CANADA--RECENTLY
CANCELED BILATERAL DEBTS TO SOME OF THE POOREST LDCS, THESE
FOUR COUNTRIES TOGETHER HOLD ONE-FIFTH OF THE TOTAL BILATERAL
DEBT OUTSTANDING; THEY CANCELED ONLY PART OF THAT, ABOUT $500
MILLION AT FACE VALUE,
11, MAJOR DONORS--THE UNITED STATES, WEST GERMANY, AND
JAPAN, WITH AN ESTIMATED TWO-THIRDS OF BILATERAL DEBT--
CONTINUE TO RESIST CANCELLATIONS, THEY ARGUE THAT DEBT RELIEF
IS AN INEFFICIENT TONIC FOR BROADER TRADE AND PAYMENTS
PROBLEMS, WHICH REQUIRE MORE DIRECT TREATMENT. AS A RESULT,
POLICYMTAKERS IN WEST GERMANY AND JAPAN RESIST SCHEMES THAT
ENTAIL LARGE TRANSFERS WITHOUT GIVING DONORS SOME VOICE IN
THEIR END USE EVEN SLR, THEY HAVE SOMEWHAT MORE FLEXIBILITY
TO GRANT BILATERAL DEBT RELIEF THAN THE UNITED STATES, WHICH
IS PRECLUDED BY LEGAL CONSTRAINTS AND THE POWERS OF CONGRESS
FROM MAKING EXTENSIVE DEBT WRITEOFFS.
GROUP OF 77 STRATEGY AND PROPOSALS,
12, THE LDCS TEND TO VIEW THE MARCH MINISTERIAL AS A
NEGOTIATING SESSION. MANY BELIEVE THAT HIGH-RANKING
REPRESENTATIVES OF DEVELOPED COUNTRIES WILL HAVE THE POLITICAL
AUTHORITY TO MAKE MAJOR ECONOMIC CONCESSIONS. THERE IS STILL
NO CLEAR EVIDENCE OF WHAT NEW PROPOSALS THE GROUP OF 77 MAY
INTRODUCE AT OR BEFORE THE MARCH MEETING. TO JUDGE FROM PAST
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ACTIVISTS AMONG THE LDCS TO RELY ON THE POLICY STATEMENT OF
THE MANILA DECLARATION, APPROVED BY GROUP OF 77 MINISTERS
IN JANUARY LP76, THE SECTION ON DEBT SOUGHT VARIOUS ACTIONS
ON BOTH BILATERAL AND MULTILATERAL DEBTS AND A RESCHEDULING
OF PRIVATE DEBTS.
BILATERAL DEBT.
13. KITH RFSPECt TO BILATERAL DEBTS, THE MANILA
DECLARATION PROPOSED THAT:
--DEBTS OF (A) LEAST DEVELOPED COUNTRIES (LLDCS)
AND (B) LANDLOCKED AND (C) ISLAND DEVELOPING COUNTRIES
SHOULD BE CANCELED,
--DEBTS OF THE MOST SERIOUSLY AFFECTED COUNTRIES
(MSA.S) SHOULD BE CANCELED OR, AT A MINIMUM, SERVICE PAYMENTS
SHOULD BE WAIVED UNTIL THE COUNTRY IS NO LONGER DESIGNATED
AN MSA BY THE UNITED NATIONS,
--DEBTS OF ALL OTHER LDCS SHOULD BE RESCHEDULED
BY ANY OF SEVERAL MEANS IF THE COUNTRY DESIRES RELIEF,
THE LACK OF SPECIFIC DETAILS NEEDED TO CARRY OUT THESE
PROPOSALS EXEMPLIFIES THE USUAL LDC TACTIC OF SEEKING
AGREEMENT ON PRINCIPLES BEFORE WORRYING ABOUT ANY ASPECT OF
IMPLEMENTATION,
14. THE LDCS BELIEVE THAT PROSPECTS ARE BRIGHTEST FOR
BILATERAL DEBT RELIEF, EVEN THOUGH THEY ARE UNLIKELY TO
ABANDON POSITIONS ON MULTILATERAL AND PRIVATE DEBTS,
BILATERAL DEBT IS THE ONLY FORM OF DEBT DIRECTLY UNDER DONOR
COUNTRY GOVERNMENT CONTROL, THE DISTRIBUTION OF TOTAL DEBT
AMONG LDCS IS SUCH THAT, IF THE BILATERAL DEBTS OF THE LLDCS
AND LANDLOCKED, ISLAND, AND MSA. COUNTRIES WERE CANCELED,
COUNTRIES IN SOUTH ASIA AND AFRICA WOULD RECEIVE FAR AND
AWAY THE MOST NEAR-TERM RELIEF,
15. SEVERAL ANOMALIES ARISE WHEN SPECIFIC COUNTRY
SITUATIONS ARE EXAMINED UNDER THESE PROPOSALS. INDONESIA,
WHICH IS AN OPEC MEMBER, AND SEVERAL CARIBBEAN COUNTRIES
WOULD RECEIVE RELIEF SIMPLY BECAUSE OF THEIR ISLAND STATUS.
ON THE OTHER HAND, PERU AND ZAIRE, BOTH UNDERGOING SERIOUS
BALANCE-OF-PAYMENTS 'ROBLEMSP WOULD NOT AUTOMATICALLY RECEIVE
BILATERAL DEBT RELIEF BECAUSE NEITHER IS INCLUDED IN ANY
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16.. SIMPLY IN TERMS OF DOLLAR AMOUNTS INVOLVED, INDIA
WOULD BE THE OVERWHELMING GAINER WITH ITS ESTIMATED X9.2
BILLION IN OUTSTANDING BILATERAL DEBT. OTHER COUNTRIES WITH
LARGE AMOUNTS OF BILATERAL DEBT, ESTIMATED YEAREND 1977, ARE
PAKISTAN ($4,8 BILLION), EGYPT ($4.5 BILLION), AND BANGLADESH
($1.6 BILLION), NOT SURPRISINGLY, BOTH INDIA AND
PAKISTAN HAVE IDENTIFIED DEBT RELIEF AS THE PREMIER ISSUE IN
THE NORTH-SOUTH DIALOGUE.
MULTILATERAL DEBT,
17. THE MANILA DECLARATION PROPOSED THE MULTILATERAL
DEVELOPMENT INSTITUTIONS SHOULD MATCH OR EXCEED DEBT SERVICE
RECEIPTS WITH NEW FLOWS OF PROGRAM AID, THE INITIAL PROPOSAL
IMPLICITLY MADE ALL LDCS ELIGIBLE FOR THIS FORM OF RELIEF,
IN SUBSEQUENT LDC ARGUMENTS AT CIEC, THE PROPOSAL WAS
SUBSTANTIALLY ALTERED; MULTILATERAL DEVELOPMENT INSTITUTIONS
iERE SIMPLY INVITED 70 COMMIT NEW RESOURCES TO DEVELOPING
COUNTRIES IN RESPONSE TO THEIR NEEDS, SEVERAL LDCS LIKELY
REALIZED THAT THE MANILA PROPOSALS WOULD HAVE LOCKED THE
VARIOUS MULTILATERAL LENDING INSTITUTIONS INTO A PATTERN
OF FUTURE DISBURSEMENTS BASED ON PREVIOUS LOAN VOLUME.
THUS, INDIA ($3.7 BILLION), MEXICO (52.0 BILLION), AND BRAZIL
($1.9 BILLION)--TOGETHER HOLDING ABOUT 38 PERCENT OF
OUTSTANDING NON-OPEC LDC MULTILATERAL DEBT- -WOULD HAVE BEEN
GUARANTEED A SIZABLE FLOW OF FUTURE LOANS. TWO OF THESE
NATIONS, MEXICO AND BRAZIL, HAVE USED PAST LOANS TO SPUR
ECONOMIC GROWTH AND TO TRANSFORM THEMSELVES INTO
SEMI-INDUSTRIALIZED COUNTRIES THAT NO LONGER QUALIFY FOR
SOFT LOANS.
18. THE LDCS PROBABLY WILL NOT EXERT MUCH EFFORT ON
THE MULTILATERAL DEBT ISSUE IN MARCH, PARTLY BECAUSE SERVICE
ON INDIVIDUAL LDC ACCOUNTS RARELY EXCEEDS ONE-THIRD OF
ANNUAL DEBT PAYMENTS; FOR MOST, IT IS BELOW 20 PERCENT.,
ALTHOUGH AT CIEC THE LDCS ABANDONED.THE SPECIFICS OF THE
MANILA DECLARATION, REFERENCES TO THE DECLARATION CONTINUE,
AND IT WOULD NOT BE SURPRISING IF SOME LDC REPRESENTATIVES
INDISCRIMINATELY CALL FOR ACCEPTANCE OF THESE DEMANDS WITHOUT
FULLY REALIZING THE CONSEQUENCES,
PRIVATE DEBT.
19. THE MANILA DECLARATION DEMANDED THAT DEBTS OWED
TO PRIyATE LENDERS BY "INTEREST[D" LDCS SHOULD BE CONSOLIDATED,
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NEv. INTERNATIONAL AID INSTITUTION WOULD BE CREATED TO PROVIDE
THE NECESSARY FUNDS FOR THIS EXERCISE, THE IMPLICATION 15
THAT DEVELOPED COUNTRY GOVERNMENTS WOULD FINANCE THE NEW
INSTITUTION AND THUS TAKE ON THE OBLIGATION OF ASSURING
PAYMENTS TO THE PRIVATE SECTOR ACCORDING TO EXISTING TERMS,
20, THE TERM "INTERESTED" VWAS SPECIFICALLY INCLUDED TO
ALLOW BETTER OFF LDCS TO SUPPORT THE CROUP OF 77 PROPOSAL
WHILE DISSOCIATING THEMSELVES FROM THE IMPLICATION THAT THEY
NEEDED HELP. BRAZIL, MEXICO, URUGUAY, AND CHILE HAVE ALL
TAKEN THIS TACK IN SURSEDUENT PUBLIC STATEMENTS TO ENSURE
THAT THE PROPOSAL DOES NOT TARNISH THEIR COMMERICAL CREDIT
RATINGS, NONETHELESS, IF THE SCHEME WERE ADOPTED, THESE
COUNTRIES--AND EVEN THE OPEC COUNTRIES--WOULD SEEMINGLY BE
ELIGIBLE FOR RELIEF.
21, RELIEF FROM PRIVATE DEBTS POTENTIALLY OFFERS THE
MOST NEAR-TERM BENEFITS TO THE LDCS, LOANS FROM PRIVATE
LENDERS NORMALLY HAVE HIGHER INTEREST RATES AND SHORTER
MATURITY PERIODS THAN LOANS FROM BILATERAL OR MULTILATERAL
SOURCES. ALL BUT A FEW LDCS HAVE MORE THAN ONE-THIRD OF
THEIR DEBT SERVICE PAYMENTS GOING TO SERVICE PRIVATE DEBT,
DESPITE THIS, THE LDCS APPEAR UNLIKELY TO PUSH PRIVATE DEBT
RELIEF PROPOSALS AS HARD AS THOSE FOR BILATERAL RELIEF.
BETTER OFF LDCS REMAIN GUN-SHY. AT THE OTHER END OF THE
SPECTRUM, MANY OF THE POOREST LDCS HAVE--IN TERMS OF DOLLAR
AMOUNTS--LITTLE PRIVATE DEBT. THEY ARE UNLIKELY TO PUSH
HARD FOR GROUP OF 77, PROPOSALS IN THIS AREA BECAUSE IT COULD
CHANNEL DEVELOPED COJNTRY RESOURCES AWAY FROM THE POOREST
LDCS TOWARD THE MORE, PROSPEROUS LDCS.
PROSPECTS,
22. THE DIFFICULTIES OF ORCHESTRATION ON BOTH SIDES
OF DEBT DISCUSSIONS MAKE IT HARD TO FORETELL THE OUTCOME OF
THE MARCH MINISTERIAL. OF COURSE, THE USUAL ACERBIC
LANGUAGE CAN BE EXPECTED FROM SOME LDCS. WE ALSO SUSPECT
THAT MUCH OF THE DIS(USSI.ON WILL TAKE PLACE IN AN ATMOSPHERE
DIVORCED FROM THE REAL WORLD, AS MANY LDC REPRESENTATIVES
LIKELY WILL HAVE NO MORE THAN A CURSORY KNOWLEDGE OF THEIR
COUNTRY'S DEBT SITUATION AND OF THE IMPACT OF SPECIFIC
PROPOSALS ON THEIR ECONOMIES. OVER THE COURSE OF THE
DISCUSSIONS, MANY AFRICAN COUNTRIES COULD COME TO REALIZE
THAT THEY HAVE LITTLE TO GAIN FROM GROUP OF 77 PROPOSALS
BECAUSE CF THEIR LIMITED FOREIGN INDEBTEDNESS, AS IN THE
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HOLD BACK TO PROTECT i THEIR CREDIT RATINGS. THE LDCS
NEVERTHELESS WILL ADHERE TO GROUP TACTICS AND GROUP OF 77
SOLIDARITY; THEY BELIEVE THAT INDUSTRIAL COUNTRIES ARE
UNPREPARED TO SUFFICIENTLY REvvARD DEFECTORS AND THAT BLOC
UNITY I.S THE KEY TO ACHIEVING A NEw INTERNATIONAL ECONOMIC
ORDER.
23. ON THE DEVELOPED COUNTRY SIDE, THE RECENT DEBT
CANCELLATIONS BY FOUR DONOR COUNTRIES STEP UP PRESSURE ON
THE OTHERS, MANY DEVELOPED COUNTRIES ALSO FEEL THAT THE TIME
IS AT HAND TO MAKE SOME CONCESSIONS TO THE LDCS ON AN ISSUE
OF MAJOR IMPORTANCE, LDC DIPLOMATIC MANEUVERING THUS COULD
MAKE IT DIFFICULT TO~MAINTAIN INDUSTRIAL COUNTRY UNITY ON
A POSITION THAT SATISFIES BOTH THE MORE LIBERAL SCANDINAVIANS
AND THE UNITED STATES,
24. ON BALANCE, THE MARCH MEETING--WHICH WILL TREAT
SEVERAL OTHER TOPICS--PROMISES LITTLE OF LASTING VALUE ON
THE DEBT ISSUE, THE WIDELY DIVERGENT POSITIONS ON BOTH
SIDES RULE OUT MAJOR AGREEMENTS. EVEN AN IMPROVEMENT IN THE
RULES FOR HANDLING DEBT CRISES ON A CASE-BY-CASE BASIS, AS
PROPOSED BY THE UNITED STATES AND THE EC AT CIEC, SEEMS
UNLIKELY. DEVELOPING COUNTRIES ARE NOT PUSHING FOR SUCH
MEASURES, AND INDUSTRIAL COUNTRIES APPEAR UNLIKELY TO GRANT
THEM UNILATERALLY. (CONFIDENTIAL)E1,2,3,IMPDET tNNINTEL.>
BRIG & AUTH: NFAC/ASA/D/OER
REL CH,NFAC/CS CL BY 015319,
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