ECONOMIC INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500140018-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: December 20, 2016
• Document Release Date: March 20, 2006
• Sequence Number: 18
• Publication Date: June 14, 1973
• Content Type: REPORT

 Approved For Release 2006/04/19 : bA-RDP85T008 5R0 1500140018-8
6 : le:..r-Wv
Secret
Economic Intelligence Weekly
Secret
CIA No. 7531/73
14 June 1973
Copy No.
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US Commercial Aircraft Sales to the Middle East and South Asia
EC Extends Generalized Preferences to Romania
Monetary Developments
Scramble for Oil Supplies Continues Producing countries are
receiving high prices for oil coning under their control.
Soviet Spring Sowing Campaign Successful The spring grain area is
5% larger than last year.
No Quick Recovery for Peru's Fishmeal Exports Normal deliveries
are at least one year away.
World Rice Supplies at Low Ebb Shortages will farther aggravate
prices for substitute grains.
Summary of a Recent Publication
Comparative Indicators
Recent Data Concerning Domestic and External
Economic Activity
Note: Comments and queries on the contents of this ubli cation are welcomed. They may be directed
to
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SECRET
ECONOMIC INTELLIGENCE WEEKLY
US Commercial Aircraft Sales to the Middle East and South Asia
US firms landed all of the $205 million in commercial aircraft orders
placed during the first five months of 1973 by countries in the region
extending from Libya to India. Moreover, substantial orders are pending
from Iran and are possible from other countries. In 1972 the United States
accounted for $219 million worth, or slightly more than half, of the
commercial aircraft purchased by these countries. The remaining sales were
made by the USSR and West European countries.
EC Extends Generalized Preferences to Romania
The EC has decided to extend generalized tariff preferences to
Romania. Among Communist countries, only Yugoslavia has previously won
this treatment. Paris, which had delayed the move since early 1972, finally
withdrew its opposition in recognition of Bucharest's courage in defying
Moscow and dealing directly with the Community. In developing specific
terms for Romania, the EC Commission probably will exclude from
preferential treatment several key exports - such as textiles, shoes, and
iron and steel -- that are deemed sensitive.
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Monetary Developments
International currency markets generally have been quiet the past week,
with the dollar moving in a narrow range and the gold price dropping
slightly. The mark remains strong and is now at the top of the European
joint float band. The independently floating lira, on the other hand,
continues to depreciate rapidly because of domestic political and economic
problems; it has fallen by about 4% against the dollar since 1 June. I
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Scramble for Oil Supplies Continues
Producing countries are finding a ready market for the oil coming under
their control. Saudi Arabia and Abu Dhabi have already sold much of their
entitlements through 1975, under the recently ratified Participation
Agreement for the Persian Gulf's Arab states. Iran has sold most of its
government-owned oil through 1975. Iraq has committed the total output
from the nationalized Kirkuk and North Rumaila fields through 1975, and
even Libya has found markets, primarily Communist countries, for some
of the "hot" oil coming from the expropriated Sarir field. Governme;ut
oil sales this year total 3 million barrels per day, or about 9% of world
petroleum trade.
Prices for government oil have far surpassed prevailing market prices
and the buy-back prices paid by producing companies for oil that countries
had decided not to sell on the world market. In April, Saudi Arabia offered
its participation share of light crude at $2.55 a barrel, 50 cents above the
estimated market price charged by the major oil companies and 41 cents
above the company buy-back price. Abu Dhabi oil sold for $2.50 in
February, compared with a company selling price of $2.04 and a buy-back
price of $2.23.
Strong demand for government-controlled oil has been generated
primarily by small private firms and the national companies of a few less
developed countries seeking assured supplies outside the traditional channels.
Independent American and Japanese oil companies and Petrobras, the
Brazilian state oil company, have been particularly active in bidding for
government oil. In view of the independent companies' willingness to pay
such high prices for government oil, the major oil companies are considering
raising prices to their own subsidiaries.
The heady experience of the last five months will encourage the oil
countries to claim a much larger part of their participation share eventually.
The Participation Agreement provides that oil-producing countries must
decide four years in advance how much of their oil they will sell themselves.
Unsure of the market, the oil-producing states opted initially to take only
a minimum share through 1976 (10% in 1973, climbing to 30% in 1976).
Furthermore, the wide discrepancy between market and buy-back prices
raises the risk that oil-producing states will seek an early renegotiation of
buy-back terms. (UNCLASSIFIED)
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Soviet Spring Sowing Campaign Successful
More than 95% of the area planned for spring crops. in the USSR
reportedly had been seeded by 4 June, overcoming last fall's substantial
shortfall in the sowing of winter grains. It seems likely that the total spring
grain area will be about 104 million hectares - 5 million more than last
year and 6 million more than the average in 1966-71.
Sowing plans were also met for sugar beets and sunflowers. Declining
production of beet sugar and sunflower seeds in the last four years recently
forced the USSR to pay hard currency for refined sugar and vegetable oil
substitutes. The area devoted to sugar beets and sunflowers has not increased
appreciably, however, so the agricultural planners are depending on a sharp
rise in yields to meet the higher 1973 production targets.
Good weather contributed to the success of the sowing campaign.
Spring was 10 to 20 days early in the western part of the country, but
some cold wet weather in Siberia pushed planting there toward the end
of the optimum period. More rain fell in April and May than in any of
the last 15 years except 1970, a record crop year. Heavy rains in the
Ukraine and the North Caucasus may be a problem for tb~t approaching
harvest of winter grains. The Soviet press reports that "in many areas cereal
crops have been flattened by rains, and great skill and ability will be required
from the machine operators to harvest them without any wastage."
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No Quick Recovery for Peru's Fishmeal Exports
Despite the return of excellent anchovy spawning conditions, Peru's
fishmeal exports will be far below normal for at least another year. Lima
officials report that the disruptive warm current has finally receded, water
temperatures have returned to normal, and plankton levels are high. The
1973 anchovy catch will, however, not exceed 30% of normal, and fishmeal
exports will be down sharply from last year's low levels. Full-scale operations
are not expected to resume until late next year.
Because anchovy schools have been severely depleted by two. poor
spawning years and overfishing in early 1972, the government probably will
limit the catch to at most 3 million tons in 1973 and 7 million to 8 million
tons in 1974. Fishmeal output is likely to drop this year to little more
than oni-half of the depressed 1972 level. Peruvian officials expect 1973
fishmeal exports to total only 300,000 tons - about one-fifth of deliveries
in 1972, when sales commitments were partly met through stock drawdowns.
Output should recover to about three-fourths of normal in 1974, with much
of `he increase occurring late in the year because fish spawned in the
upcoming season will require nearly 12 months to mature.
Peru normally accounts for about 60% of world fishmeal exports, and
its fishing problems have caused prices to jump from $150 to more than
$500 per ton. Reduced fishmeal shipments in the face of rising world
demand for high-protein animal feed have brought skyrocketing soybean
prices and higher meat production costs. Although the anchovies' return
eventually will help ease this pressure, substantial price relief in the interim
depends mainl on the US soybean harvest this fall.
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World Rice Supplies at Low Ebb
Thailand's Premier this week banned further export commitments for
rice until at least August, a move that will increase world rice prices -
already at record levels. World stocks have dwindled, and only sporadic
sales have been registered in recent months.
? Thailand had already ceased quoting prices for high-quality
white rice (5% brokens) in early March, when its quoted
price was $205 per ton, compared with $131 a year earlier,
and export volume was sharply reduced. Subsequently, on
23 April it offered low-quality rice (25% brokens) at more
than double last year's price.
? In early June the US Government had received ;;ids for
only 14,000 tons of a total of 25,000 tons that it had
offered to buy in April at a maximum price of $297 per
ton for shipment to South Vietnam.
? A number of rice-consuming countries are looking
unsuccessfully in the world market for rice to import on
an emergency basis.
? The US harvest - norma,ly the earliest fall harvest of any
country - is being delayed and trimmed down by heavy
rains. Rice acreage allotments for 1973 were increased by
20%, and the total harvest probably will exceed last year's
by about 12%. Nonetheless, the late harvest and lack of
carryover stocks will hold down exports during the
remainder of 1973. For 1973 as a whole, US rice exports
are expected to fall below last year's 2 million tons.
World rice exports in 1973 are now estimated at about 6112. million
tons, compared with 8 million tons in 1972. The decline is traceable
principally to last year's deficient monsoon rainfall and the subsequent poor
rice harvests in Thailand, Burma, and other exporting countries. Rice
importing countries are turning increasingly to wheat and coarse grains as
substitutes, further aggravating the rising price trends for those commodities.
(UNCLASSIFIED)
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Publication of Interest
East Asia's Textile Exports: A Year Under New Restraints
(CIA ER IM 73-47, June 73,
Textile restraints negotiated in late 1971 with East Asian countries
have successfully limited shipments to the United States. US import volume
from East Asia fell by 10% in 1972, but import value continued to rise
because of product upgrading and price increases. Despite the restraint
program, the East Asian textile industries prospered by diversifying export
markets and charging higher prices. Further penetration of non-US markets
probably will be hampered by proliferating restraints.
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UNCLASSIFIED
GNII (At Constant Market Prices), Quarter 1910-100
114.6
Japan
173
I
126.7
107,1
113.0
107.7
107,5
117.4
1970-100
United States
Apr
7
3 116.7
Apr
73
12G.0
West Germany
Mar
73
111.8
France
Apr
73
119.4
United Kingdom
Mar
73
109.7
Italy
n
E
73
101.0
b
73
119.0
RETAIL SALES'
1910-100
United States
May
73
137.2
Japan
Jan
73
131.3
West Germany
Mar
73
126,7
France
Feb
73
114.0
United Kingdom
Feb
73
112.3
Jan
73
122,0
Dec
72
124.4
WHOLESALE PRICES
United States
May
I
73
Japan
May
73
111.2
113.5
France
Mar
7'.
116.4
United Kingdom
May 73
118.2
Italy
Mar 73
120.3
Canada
Mar 73
118.9
CONSUMER PRICES 1910- I DO
United States
Apr 73
112.4
Japan
Apr 73
120.7
Wesi Germany
May 73
118.7
Franc.
Apr 73
117.2
Unites; Kingdom
Apr 73
126.0
Italy
Apr 73
120.0
Canada
May 73
MONEY SUPPLY' 1910- I00
United States
May 73
123.9
Japan
Feb 73
156.5
West Germany
Mar 73
139.5
France
Mar 73
138.4
United Kingdom
Apr 73
138.5
Italy
Nov 72
155.3
Canada
May 73
145.7
Seasonally adjusted
COMPARATIVE INDICATORS
Percent Change a(Anr.'nl
Rate From Porloo,
9.8
12.6
13,6
United States
18.1
11.2
1.0
Japan
7.3
9.6
-23.5
West Germany
7.9
-6.0
-26,7
France
8.2
12.9
16.2
United Kingdom
0
-14.4
-37,3
Italy
10.2
13.7
26.1
Canada
11.8
14.7
19.0
OFFICIAL RESERVES
United States
18.4
35.9
57.8
Japan
5.9
14.2
-50.6
West Germany
7.0
18.8
67.6
France
9.7
12.3
25.4
United Kingdom
11.9
3.3
-64.5
Italy
9.7 9.9
-6.5
Canada
12.4
14,1
11.4
TRADE BALANCE'
United States (10 b./I.1 b.)
6.0
9.4
7.1
Japan (fob /Icb.)
11.0
lb.2
16.8
West Germany 0[c Veil.)
3.3
0
12
7
France h.o.b.llob.)
13.7
32,6
.
21,1
UIt itedKin gdomU.ob./Inb.)
Italy(1
/c
0b
i
l
)
12.3
27.3
31,1
.
.
.
.
.
5.1
9.7
Canada(lublfob)
EXCHANGE RATES (Soul Rate)
9.4
23.4
25.3
Japan (yen)
7.8
8.3
16.9
West Germany (Deutsch Mark)
6.7
6.C
8.6
France (Franc)
9.2
13.2
25.4
United Kingdom (Pound Sterling)
10.4
13.7
12.8
Italy (lira)
7.3
8.8
9.3
Canada (Dollar)
12.3
30.6
59.0
United States
31.0
15.8
Japan
9.9
-3.4
10.0
West Germany
1.5,1
19.3
29.0
France
10.7
23.2
26.4
United Kingdom
8.F
-0.1
-21.7
Italy
Canada
Latest Data
IMPORT PRICES (National Currency)
United States Mar 73
Japan Apr 73
West Germany Apr 73
France Dec 72
United Kingdom Apr 73
Italy Dec 72
Canada Dec 72
EXPORT PRICES (National Currency)
Apr 73
Apr 73
i.or 73
Dec 72
Apr 73
Dec 72
Dec 72
rind or
Apr 73
May 73
Apr 73
May 73
May 73
Apr 73
May 73
Apr 73
Apr 73
Apr 73
pr 73
Apr 73
pr 73
pr 73
8 Jun 2.574;;
1973 .0017
1.0016
Mc 66
-18,15
24.38
As of 26.38
8 Jun -8.25
1973 -26.26
-19.24
4.58
an-Apr
-637
-2,250
an-Apr
2,164
2,961
an-Apr
3,121
2,0.,7
an-Apr
533
294
an-Apr
-9t w?
-4 34
an-Apr
-1,40.1
-70
an-Apr
569
292
Percent Chaaar Prom
180,071 19 Mar 73 1 Jun73
16.45
-0.58
0.08
22,91
7.71
2.01
18,48
5.85
0.91
-1.19
4.61
0.10
-3.37
-6.10
-3.76
0.38
0.39
-0.15
Fnrc,nt Chains. From
18 nec 71 19 Mar 73
-8.67 -1.91
10,38 -1.68
9.68 4.71
4.8'7 2.43
-12.49 1.74
-18.06 -11 .22
-1,95 -0.29
Percent Change at Annual
Rate From Period
Index
or Amount
12 Months 3 Months I Month
Earlier Carrier Earlier
1910.100
119.7
7.8
10.5
-1.8
105.8
11.7
-4.1
-7.6
111,8
13.8
11.4
23.6
112,0
0.2
17.0
151.9
131.3
22.9
36,9
32.6
114.0
4.9
11.5
11.2
106,8
4.4
6.6
15.8
1970-too
116.5
10.0
19.0
17.3
101.3
3.9
7.4
18.2
113.5
7.0
11.0
9.5
110.9
0.5
18.5
74.0
125.9
9.6
15.4
23.7
108.0
0.9
3.8
0
105.1
5.1
10.3
12.6
Billion US S
14.4
-2.8
-6.6
0.5
15.9
-1.0
-52.7
-50.8
32.0
61.6
263.4
49.2
11.0
29.2
12.3
-44.2
6.7
-14.8
68.1
219.0
6,4
-2.6
52.9
34.5
-6.6
8.9
1977 1972
196
415
1,008
254
-111
-420
236
US 5 Per Unit
.0038
.3914
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