ECONOMIC INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500140040-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: December 21, 2016
• Document Release Date: October 29, 2008
• Sequence Number: 40
• Publication Date: November 15, 1973
• Content Type: REPORT

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Economic Intelligence meekly
State Dept. review
completed
Secret
CIA No. 7828/73
15 November 1973
Copy No. N ?_ 18 4
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S11;(;RE'1'
Arab Dollars in the United States
Major US Plant Sales to China
Westinghouse-Soviet Bid on US Hydroelectric
Project Still Alive
Peru Extends Ban on Anchovy Fishing
Multilateral Trade Negotiations Still Stalled
World Beef Outlook Prospects are bright for increased production
and lower prices.
Increased Arab Oil Dependence Restricts EC Options Willi scant
domestic energy resources, the EC faces severe economic dislocations
should Arab cutbacks continue.
Short-Term Outlook for Arab Oil Revenues Arab oil revenues will
reach a record in the first,quarter of 1974.
New Foreign Loans for Chile Chile's prospects improve with the
promise of more than $600 million in foreign credits and the
institution of strict measures to control domestic economic
l:roblems.
Comparative Indicators
Recent Data Concerning Domestic and External
Economic Activity
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S I I,(_; t' 1s' I'
ECONOMIC INTELLIGENCE WEEKLY
Notes
Arab Dollars in the United States
Arab financial assets in the United States have increased since the
outbreak of the Middle East war. Rumors of a large dollar outflow probably
stem from current transfers of' dollars from US banks to Europe fo-
redeposit and conversion. These transfers reflect normal commercial activity,
mainly by Saudi Arabia.
Major US Plant Sales to China
As of I November, China had purchased eight ammonia plants, worth
$205 million, from the United States. These sales make this country the
third largest supplier of complete factories to China this year, following
Japan with sales of $442 million and France with $390 million.
Westinghouse-Soviet Bid on US Hydroelectric Project
Still Alive
Westinghouse and Soviet officials are escorting Rock Island Darn
representatives on a tour of a Leningrad turbine plant and several Soviet
hydroelectric powerplants, hoping to convince the project officials that the
USSR can produce and deliver quality turbines. All bids on the project,
located on the Columbia River, were canceled recently, including those
submittced by Westinghouse and Energomasheksport. The low price of the
Soviet turbines accounted for the difference of almost 25%, between the
Westinghouse-Soviet bid of $36.1 million and the next lowest bid, submitted
by Allis-Chalmers. Project officials apparently are concerned with the ability
and willingness of the Soviets to meet delivery dates. Bidding will be
reopened today.
Peru Extends Ban on. Anchovy Fishing
Peru has extended the ban on anchovy fishing until next April and
has suspended new sales of fishmeal and fish oil. Thus, world shortages
of high protein animal feed and a strong demand for, US 'soybeans will
continue. No more than 30% of pre-October export commitments will be
honored from Peru's already small stocks.
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SHIRE''
Multilateral Trade Negotiations Still Stalled
France continues to rebuff attempts by other member states and the
EC Commission to compromise with Washington over the treatment of'
agriculture in negotiations. As a result, the EC Commission will ask that
the tentatively scheduled 19 November mccting of the Trade Negotiating
Committee be postponed. The French have privately indicated a willingness
to participate in US-EC-Japanese discussions to end the impasse but insist
that the problem of agricultural trade be discussed apart from other topics.
EC Commission Vice President Soames, however, is opposed to an early
tripartite meeting because of deep division within the EC itself. He believes
that more time is necessary to resolve intro-EC differences, and feels that,
in any case, postponement of US trade legislation makes early movement
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S 1',CC It li'I'
Sharply higher beef output primarily in the United States, Latin America,
Australia, and New Zealand can
unprecedented rise in beef
prices has led to a large,
worldwide increase in cattle
herds. Fi om 1970 through
September 1973, wholesale
beef prices increased nearly
100% in the United Kingdom,
60% in the EC of Six, and
about 45% in the United
States. US output could rise
by as much as 30% during
1974-76 without cutting into
herd size, and output in
Australia and New Zealand
could jump by 50%.
Demand for beef, buoyed
by sharply rising incomes in
major consuming areas, is
expected to continue to grow
rapidly but not as fast as
production. The result should
be a softening of world beef
prices over the next two years.
The extent of the fall in beef
prices will depend largely on
supplies of animal feed.
be expected over the next few years. An
WHOLESALE BEEF PRICES
IN IMPORTING COUNTRIES
0l I I_ 1 1 I _I
73
I.-Sep
'Choice bullocks and heifers of Bs/plum, Netherlands. West Germany.
Italy. and France. Weighted average based on country consumption
of beef.
"Dressed choice steer beef. carcass lot basis. New York.
"'Bullocks and heifers, Liverpool, roughly equivalent to good.
A 'sharp increase in US beef output would contribute to a favorable shift in
the US trade balance in beef over the next few years. European protectionist
policies will hinder US exports in that area, but shipments of high-grade beef to
Japan should increase rapidly.
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S1%C.IZET
TOTAL BEEF DEMAND AND SUPPLY
OF MAJOR CONSUMERS*
0L I I I - I 1
1988 07 88 09 70 71 72 73 74
'United States, Japan, and Western Europe. Ellimeled Prejeeled Prei4.ed
56!125 ro-n
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SIIX"RE'I'
Increased Arab Oil Dependence Restricts EC Options
The Vice Presideet of, the EC Commission has stated that uo joint
policy on oil-sharing is in prospect, despite the difficulties caused by the
Arab embargo against the Netherlands.
During the Suez crisis, and to a lesser extent in 1967, Europe could
count on spare crude capacity in the United States and the Caribbean to
assist them. This time not only is there little or no non-Arab spare capacity,
but the EC faces the prospect of competition with the United States and
other nations for its non-Arab supplies. If the Arab states, which now
provide some 42`!, of the EC's energy supply, continue their progressive
cutback policy, EC supplies of Arab oil by next March probably will be
at least 407, below levels planned on by the Community. Total EC oil
supplies will be lowered by about 28% and total energy supplies by at
least 17'/x. If fairly drastic conservation measures arc taken and stocks are
drawn down, however, most EC members will be able to get through the
winter without major dislocations. After that, even though peak winter fuel
demand will subside, the impact on industry will affect output, employment,
and exports seriously throughout the Community.
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SI'I CIZE'J'
Sources of EC Energy
Domestic 79.0 48.4 37.2
Coal 74.6 38.8 21.0
Natural gas 1.3 3.2 10.7
Crude oil 1.8 2.1 1.3
Hydro/nuclear 1.3 4.3 4.2
Imported 21.0 51.6 62.8
Coal 0.4 2.7 2.2
Crude oil
Arab oil 13.8
Other 6.8
34.8
14.1
42.1
18.5
Energy Sources of EC Countries, 1972
Domestic
Ireland
23
United We
Kingdom Germ
51 47
st
any
France Bene
31
lux
52
Italy
24
Coal I
21
38 34
14
10
2
Natural gast
9 8
7
40
12
Crude oil
....
Negl. 3
1
2
1
Hydro/nuclear
2
4 2
9 Ne
gl.
9
Imported
77
49 53
69
48
76
Coal
8
1 2
3
2
5
Crude oil
Arab oil
50
33 36
51
29
49
Other
19
15 15
15
17
22
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S1~;(IRII'I'
Shorl-Term Outlook for Arab Oil Revenues
Arab oil revenues will reach a record $4.3 billion in the first quarter
of . 1974, even if the proposed production cutbacks of' 5% each
continue. While output during the first 3 months of 1974 will be only
two-thirds that of the comparable 1973 period, revenues will be up $1.8
billion, or some 70'jo greater than last year.
The several price increases during the year more than doubled
government reven?tes per barrel in most cases. The October price increases
a1onr will easily compensate for lost production. Arab oil revenues for 1973
are expected to increase 54%, and oil exports will average I million b/d
Saudi
Abu
Arabia Kuwait Qatar
Iraqi Dhabi Algeria Libya Total
1972 3,107 1,657 255
575 551 700 1,598 8,443
1973 (est.) 5,480 1,940 420
860 990 980 2,340 13,010
1973 1st qtr. 1,030 420 90
180 200 180 430 2,530
19741st qtr. (est.) 1,600 640 120
520 .00 300 860 4,340
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,SIIX 11IZis'I'
New Foreign Loans for Chile
Chile's foreign exchange position has improved dramatically as a result
of new foreign borrowing. US and Canadian banks recently issued loans
totaling some $171 million and have another $75 millier: under
consideration. Brazil and Argentina also have promised credits of $442
million.
With debts of $3.8 billion and feud imports alone exceeding $700
million for this year, Chile has been seeking assistance vigorously from all
quarters. While a $90 million standby credit from the IMF is considered
a good possibility, European countries continue to balk at helping the new
government.
The acquisition of the new credits and recent harsh measures to curb
inflation will help bring Chile's economic problems under control. Several
international financial organizations will be reviewing the situation and the
junta's recovery and stv bilization programs during the next two months.
In January the Paris Club meets to consider renegotiating Chile's external
debt. Meanwhile, Santiago is attempting to speed the recovery of agriculture
and copper production in an effort to improve the balance-of-payments
outlook by the end of next year.
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DOMESTIC ECONOMIC INDICATORS
GNP"
WHOLESALE PRICES
Constant Market Prices Average Annual
Growth Halo Since
Industrial
Avaratte Annual
Growth Rate Silica
Percent Changi
Latest from Previous I Year Previous
Ulterior Quarter 1910 Earlier Guenter
Parcel Chnngn
Latest from Previous 1 Year 3 Months
Merrill Merrill 1970 Earlier Earlier
United States
73 111
0.0
5.0
5.7
3.7
United States
Oct
73
1.2
5.1
9.1
0.0
Japan
73 II
1.4
9.1
13.0
5.9
Japan
Oct
73
2.0
0.1
20.3
20.3
West Germany
73 II
-2.3
3.0
0.2
-0.8
Wosl Germany
Sep
73
-D,1
4.7
0.0
1.0
France
73 11
0.7
0.2
8.7
2.0
France
Aug 73
1.0
7.1
16.2
20.5
United Kingdom
73 II
0.7
4.0
9.5
2.7
United Kingdom
Sop 73
1.1
7.3
7.0
13.5
Italy
73 I
0.8
3.1
5.2
3.4
Italy
At
73
1.2
8.4
19.4
27.2
Canada
73 11
0.9
0.1
8.8
3.7
Canada
Sep
73
-0.7
10.0
24.0
45.0
Average Annual
Growth Ilato Since
Average Annual
Growth Role Silica
Percent Changi
Latest train Previous I Year 3 Months
Month Month 1970 Earlier Earlier ??
Percent Chongo
latest train Previous 1 Year 3 Months
Month Month 1970 Earlier Earlier
United States
Sap 73
0.6
6.0
10.2
11.4
Unit
ed States
Sep 13
0.3
4.9
7.4
9.7
Japan
Sep 73
0.4
8.9
16.9
0.0
Jap
an
Sep 73
2.9
8.2
14.6
19.5
West Germany
Aug 73
5.9
4.0
8.5
-5.9
Wes
t German
y
Sep 73
0.3
5.8
6.4
0.8
France
Aug 73
0
7.7
10.4
9.9
Fran
ce
Sep 73
0.9
0.4
7.9
9.7
United Kingdom
Aug 73
0.7
3.7
8.2
0
Unit
ed Kingdo
m
Sep 73
0.9
8.4
9.3
0.0
Italy
Aug 73
2.0
3.6
13.5
25.3
Italy
Aug 73
0.0
7.2
11.7
8.5
Canada
Aug 73
-3.1
5.6
8.0
1.0
Cana
da
Sep 73
0.0
5.5
8.5
11.7
RETAIL SALES"
Current Prices Average Annual
Average Annual
Growth Rate Since
Growth Rate Since
Percent Changi
Latest Tram Previous I Year 3 Months
Month Month 1970 Earlier Earlier-
Percent change
Latest from Previous 1 Year 3 Months
Month Month 1970 Earlier Earlier
United States
Oct 73
2.1
11.5
10.9
8.7
Unit
ed States
Oct 73
0.4
7.1
5.0
1.9
Japan
Jun 73
2.1
12.5
22.6
14.3
Japa
n
Aug 73
1.0
17.8
28.3
5.7
West Germany
Aug 73
4.2
9.0
4.2
1.2
W,s
t German
y
Aug /3
-2.4
8.5
1.7
-12.7
France
Jun 73
3.4
0.4
7.2
5.5
Fran
ce
Apr 73
2.6
13.3
14.1
2.6
United Kingdom
Aug 73
0.7
11.1
12.1
14.8
Unit
ed Kingdo
m
Sep 73
-2.1
10.8
8.5
9.9
Italy
May 73
2.3
11.3
20.4
22.3
Italy
Apr 73
2.8
20.4
19.1
13.7
Canada
Sep 73
-0.3
10.0
13.0
5.8
Cana
da
Sep 73
0
13.5
14.4
13.0
1 Year 3 Months 1 Month
Representative Rates Latest Date Earlier Earlier Earlier
United States
Prime finance paper
9 Nov
7.75
5.13
8.50
8.25
Japan
Call money
2 Nov
8.75
4.38
7.50
8.75
West Germany
Interbank loans (3 Months)
9 Nov
14.00
8.12
14.75
14.50
France
Call money
2 Nov
11
25
8.75
8.75
11.13
United Kingdom
Local authority deposits
9 Nov
.
12.19
4.74
12.75
14.44
'Seasonally adjusted.
-Average for latest 3 months compared
Canada
Finance paper
9 Nov
9.00
5.25
7.88
8.75
with average for previous 3 months.
Euro-Dollars
Three-month deposits
9 Nov
9.19
5.75
11.56
10.25
15 Nov 73
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EXTERNAL ECONOMIC INDICATORS
EXPORTS"
f.o.b.
United States
Japan
West Germany
Franco
United Kingdom
Italy
Canada
IMPORTS'
Million US S Percent
Million US $ 1973 1972 Change
Sop 73 0,448 50,010 35,009 41.1
Sep 73 3,140 25,747 20,185 27,0
Sep 13 0,208 40,809 34,034 43.6
Sep 73 3,241 20,742 19,205 39.2
Sep 73 2,584 21,220 16,738 26.0
Aug 73 1,090 13,409 11,809 13.4
Aug 73 1,902 15,855 12,917 22,8
f.o.b.
Million US $ Percent
Million US $ 1973 1972 Change
United States
Sop 73
5,575
50,456
40,679
24.0
Japan
Sep 73
2,781
22,250
13,523
64.5
West Germany
Sep 73
4,435
37,245
27,805
33.9
France
Sep 73
3,001
25,090
18,436
39.3
United Kingdom
Sop 73
3,018
24,429
17,941
36.2
Italy
Aug 73
2,317
15,074
10,996
37.1
Canada
Aug 73
1,514
14,882
12,203
22.0
TRADE BALANCE"
I.o.b./f,u.b.
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Sop 73
Sep 73
Sep 73
Sep 73
Sep 73
Aug 73
Aug 73
873
359
1,032
240
-434
-427
-12
154
3.490
11,624
1,052
-3,204
-1,584
974
BASIC BALANCE""
Current and Long-Term-Capital Transactions
1972
-4,810
8,861
6,228
769
-1,203
903
714
Change
4,964
-3,185
5,396
284
- 2.001
-2,488
260
EXPORT PRICES
us$
United Slates
Japan
West Germany
France
United Kingdom
Italy
Canada
EXPORT PRICES
National Currency
United States
Japan
West Germany
Franca
United Kingdom
Italy
Canada
IMPORT PRICES
National Currency
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Latest
Month
Sop 73
Aug 73
Aug 73
Jun 73
Sep 73
Jun 73
Jul 73
Latest
Month
Sep 73
Aug 73
Aug 73
Jun 73
Sep 73
Jun 73
Jul 73
Avenue Annual
Growth Haig Since
Percent Changii
train Preview I Year 3 Months
Merrill 1970 Earlier Earlier
-0.9
7.9
20.0
22.0
2.8
12.9
24.8
38.3
-2.7
16.0
32.3
70.2
9.2
15.5
33.7
51.5
-1.8
9,6
12.8
-8.1
2.9
9.2
12.9
22.1
2.7
6,2
13.1
12.0
Average Annual
Growth note sll,,:,,
Percent Change
train Previous
I Year 3 Months
Month
1970 Earlier Earlier
-0.9
7.9
20.0
22.0
3.1
2.8
9.9
39.5
- 1.9
0.9
-0.8
-4.4
3.8
5.0
13.1
14.0
0.5
9.1
12.8
15.5
2.5
8.6
13.1
28.9
2.8
5.1
14.8
11.8
Percent Change
Latest from Previous
Month Month 1970
Sep 73
Aug 73
Aug 73
Jun 73
Sep 73
Jun 73
Jun 73
-0.8
3.4
1.1
0.6
5.5
4.8
1.1
10.0
2.7
-0.2
3.1
14.8
10.8
4.8
EXCHANGE RATES Spot Rate
As of 9 Nov 73
Average Annual
Growth Hate Since
I Year
Earlier
18.7
14.7
2.6
5.6
41.5
24.8
10.8
3 Months
Earlier
12.7
29.0
-9.1
7.3
85.2
54.4
13.4
Latest Period Cumulative (Million US S)
Million US $ 1973 1972 Change
US S
Per Unit Dec 00
United States'
7311
-800
-1,700
-5,700
4,000
Japan(Yero
0.0038
31.79
Japan
Aug 73
-770
-5.926
1,257
-7,183
West Germany (Martsche
0.3885
54.53
West Germany
Jul 73
138
1,805
3,593
-1,988
France (Franc)
0
2290
13
42
France
7311
17
-559
-202
-357
(Pound
United Kingdom sterling)
.
2.4005
.
-13.98
United Kingdom
7311
-261
-1,348
-830
-717
Italy (Ural
0.0017
6.75
Italy
72 IV
800
NA.
2,983
NA.
Canada (Dollar)
1.0020
8.83
Canada 731
1
-272
-272
-117
-155
As of 9 Nov 73
1 Year 3 Months
End of Billion US S Jun 1570 Earlier Earlier
Dec 66
United States
Sep 73
14.0
16.3
13.2
14.0
United States
-17.22
Japan
Oct 73
14.0
4.1
17.8
15.2
Japan
19.87
West Germany
Aug 73
37.9
8.8
24.6
32.2
West Germany
28.12
France
Sep 73
9.9
4.4
10.0
10.2
France
-10.91
United Kingdom
Oct 73
6.8
2.8
5.9
8.8
United Kingdom
-34.28
Italy
Sep 73
6.5
4.7
8.4
8.0
Italy
-16.49
Canada
Oct 73
5.8
4.3
8.2
5.8
Canada
5.25
'Seasonally odryoted,
"Converted into US dollars at current market rates of exchange.
lbFdOvl
10 Doc
1971
11.98
25.20
18.30
-7.87
-0.64
0.42
19 Mar
1973
-4.39
9.71
3.90
-2.46
-3.45
0.43
18 Dec
1971
-7.79
0.00
11.28
2.26
-20.15
-15.31
-1.31
19 Mar
1973
-1.07
-5.97
6.28
-0.17
- 5.78
-8.49
0.33
2 Nov
1973
-0.03
-4.94
-2.55
- 1.38
-2.40
-0.24
2 Nov
1973
1.27
0.85
-2.81
0.39
0.50
0.44
0.17
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