ECONOMIC INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500140043-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 20, 2016
• Document Release Date: March 21, 2006
• Sequence Number: 43
• Publication Date: December 6, 1973
• Content Type: REPORT

 , ? %N O~~t 4' ter- 7
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Secrei
Economic Intelligence Weekly
Secret
CIA No. 7831/73
6 December 1973
Copy N2 185
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Page
Venezuela: Possible Use of Oil as a Trade Lever I
Chile Agrees to IMF Stabilization Program 1
Westinghouse to Build Yugoslavia's First Nuclear Powerplant 2
Partial Financing Obtained for Copper Project in Peru 2
Japan Plans to Buy More 747s 2
Monetary Developments in November The dollar experienced a
rapid, almost uninterrupted appreciation. 3
Worldwide Food Developments 4
LDCs: Growing Debt Service on US Aid payments increasingly are
offsetting new receipts of US aid. 5
Enriched Uranium: Another European Supplier France has
announced its intention of proceeding with a gaseous diffusion
plant.
Publications of Interest
Summary of Recent Publications
Comparative Indicators
Recent Data Concerning Domestic and External
Economic Activity
Note: Comments and queries regarding this publication are welcomed. They may be directed to Mrs.
F- I
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ECONOMIC INTELLIGENCE WEEKLY
Notes
Venezuela: Possible Use of Oil as a Trade Lever
Both major candidates for Venezuela's presidency have endorsed the
use of oil as a lever to assure necessary imports. The issue arose because
Caracas is becoming concerned about looming shortages of industrial raw
materials, particularly in the metallurgical and plastics industries. In
addition, a Venezuelan official has proposed that petroleum be used to
pressure industrialized countries to open their markets to Venezuelan
manufactures.
Chile Agrees to IMF Stabilization Program
The Chilean junta agreed last week to an IMF stabilization program
aimed at bringing the inflation rate down to less than 100% in 1974,
compared with more than 750% this year. The budget deficit is to be
reduced substantially, and wage increases will be limited to 60% in January
to be adjusted later in the year. Gradual devaluation of the banker's
(merchandise) rate and revaluation of the broker's (tourist) rate will
continue until a unified exchange rate is reached in 1974. The
balance-of-payments gap is scheduled to drop from $300 million to $210
milion, which must be financed by new credits. The IMF mission will in
turn recommend that Chile be granted credits of $95 million by the Fund.
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SECRE'T'
Westinghouse to Build Yugoslavia's First
Nuclear Powerplant
Westinghouse signed a letter of intent with two Yugoslav electric
enterprises last week to construct a 615-MW nuclear powerplant at Krsko.
During the past two years the bidding was narrowed to Westinghouse,
General Electric - Anseldo, and Kraftwerke Union of West Germany. The
Yugoslavs delayed the contract award as they negotiated for the best
possible deal. Be.grad preferred Westinghouse technology and finally
succeeded in having two gas turbine powerplants included in the $200
million contract. The Ex-lm Bank made a special concession by agreeing
to finance local costs, as well as the cost of US equipment, for the three
plants. 25X1
Partial Financing Obtained for Copper Project in Peru
The US-owned Southern Peru Copper Corporation has obtained a $200
million loan from 29 US and European banks to help finance the Cuajone
copper mining project in southern Peru. Moderates in the Peruvian
government had feared that the push to expropriate Cerro de Pasco holdings
would prevent foreign financing for this project, which is important to Peru's
export drive. The loan cannot be disbursed until the corporation raises
another $300 million for the project, signs long-term copper sales contracts,
and obtains final approval from Lima. The Cuajone mine will be capable
of producing about 180,000 tons of blister copper a year within three years
of completion.
Japan Plans to Buy More 747s
Japan Air Lines plans to increase its inventory of Boeing 747s from
20 to 84 by 1979. JAL's 747 fleet will be the world's largest and will
account for about three-fourths of its operations. Many of the planes will
fly the new routes planned for the next five years - including those to
Europe and the United States via China, as well as to Latin America and
Africa. (UNCLASSIFIED)
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Articles
MONETARY DEVELOPMENTS IN NOVEMBER
The dollar experienced a rapid, almost uninterrupted apprechtion in
November. It is now at the highest level since May on a trade-weighted
basis.
Among European currencies, the mark, guilder, and Belgian franc
showed the sharpest drop. The first two replaced the Norwegian crown
at the bottom of the European joint float band. The guilder's decline
PERCENT CHANGE SIPCE 2 JANUARY 1973
IN THE VALUE OF THE US DOLLAR
RELATIVE TO SELECTED FOREIGN CURRENCIES
-301-
8 13 20 27 4 11 10 20 1 81 52 22 961 32 02 731 01 72 43 161 42 12 851 C2 02 0 18 23 30 4
APR MAY JUN JUL AUG SEP OCT NOV DEC
reflected the Arab embargo of oil shipments to the Netherlands.
Deterioration in the value of the mark and franc resulted primarily from
heavy German and Belgian dependence on oil supplied through Rotterdam.
The mark's decline continued in the face of an announcement of another
record trade surplus in October.
The Bank of Japan allowed the yen to depreciate from 270 to 280
yen per dollar in November. Pressures on the yen were generated by
predictions of continuing balance-of-payments deficits and fears of economic
disruption resulting from reduced oil imports. Depreciation was limited by
the Bank's dollar sales of about $2.2 billion. These sales required the Bank
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to cash in a sizable part of Japan's holdings of US Treasury bills and to
withdraw special government deposits in commercial banks in order to hold
down reserve losses. The decline in reserve3 for the month amounted to
about $850 million.
Traders speculate that the Big Five agreed in late November to maintain
the dollar at the rate prevailing after last February's devaluation. These
expectations could limit further dollar appreciation.
The gold market was quiet in the first half of the month. On
14 November the two-tier system was ended, permitting central banks to
sell gold on the free market for the first time in five years. The price of
gold quickly dropped more than $10 an ounce, to $90. When central bank
sales failed to materialize, buyers returned to the market, pushing the price
of gold up to its earlier level.
WORLDWIDE FOOD DEVELOPMENTS
World Wheat Supply
The International Wheat Council now estimates world wheat imports
at 65 million tons and export availabilities at 65.5 million to 68 million
tons for 1973/74. A month earlier the Council had estimated that the
balance would be between a 2 million-ton deficit and a 5 million-ton surplus.
The present projection is based on the assumption that stocks of exporting
countries will be drawn down by 7 million tons, with the United States
providing 5 million tons of the total. The Council's estimate of export
availabilities clearly is too high because of Canada's reluctance to draw
down stocks and because EC exports are unlikely to be as large as fore-
cast.
Loadings of Canada's eastbound wheat exports are 1.4 million tons
behind schedule as a result of the summer rail strike and subsequent shortage
of boxcars. Wheat Board efforts to increase shipments through the
St. Lawrence Seaway before the Seaway freezes are being hampered by
the higher priority give.~i crude oil tankers. Although the shortfall (about
10% of 1973/74 export commitments) can be made up next spring with
little difficulty, demand for US wheat exports may be increased during
the interim.
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SECRET
Bangladesh
A bumper rice harvest now under way should boost output to
12-1/2 million tons (milled equivalent) - 20% over last year when drought
reduced yields. To rebuild stocks and increase consumption, the agriculture
minister plans to maintain grain imports in 1974 at about 2.2 million tons.
The tight grain market and Bangladesh's need for concessional terms will
make it difficult for Bangladesh to import this amount.
According to the Chairman of the Soviet grain export organization,
the USSR is unlikely to purchase US soybeans in the near future unless
the price drops substantially. A bumper Soviet oilseed crop this ear
provide sufficient vegetable oil for domestic requirements.
US aid to the less developed countries is being offset increasingly by
their debt service payments. Since 1970, 13 countries have repaid the United
States more than they have received in new aid disbur,ements, and 10 others
lop
Angoh Br,
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M
Donlifficill) Republic
I~doncsia
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have made payments exceeding one-half of new receipts. US aid to the
Middle East and Latin America, in particular, has not kept pace with rising
debt service obligations. Repayments consequently absorbed 75% and 62%,
respectively, of US aid disbursements to those regions in 1971-72.
LDCs owed the United States more than $22 billion at the beginning
of 1973 and have debt service obligations equaling some 35% of new aid
received, compared with a ratio averaging 20% during 1954-72. Debt service
payments are expected to reach nearly $2.5 billion by 1975, more than
half again as much as last year. They will then equal roughly two-thirds
of the new disbursements, if the present level of US aid to the LDCs
continues. 25X1
The recently announced French gaseous diffusion plant could satisfy
more than 15% of projected annual Free World demand for uranium
enrichment services by 1985.
The $1.6 billion facility will be built under the auspices of the
French-led Eurodif organization, a group set up in 1972 to study the
feasibility of such a plant based on French technology. France had
threatened to proceed alone, but Italy, Spain, and Belgium agreed last week
to back the project. Sweden, also a Eurodif member, probably will not.
Although location and financial arrangements have not been set, Paris is
pushing to start the project next month, near its small enrichment facility
at Pierrelatte, with electricity supplied by four nuclear powerplants to be
constructed on site.
The EC Commission and an international group of electric utilities
support the development of European enrichment facilities based on both
Eurodif's gaseous diffusion process and the West German - British - Dutch
(Urenco) centrifuge process, which is scheduled to have demonstration
plants operational by 1976. The EC Commission has recommended a
voluntary "buy European" policy for the products of these facilities, at
least until Europe's enrichment industry is solidly established. Eurodif and
Urenco probably will coordinate their initial programs to avoid an oversupply
during the early 1980s. Even without coordination, supply is unlikely to
outrun demand. Prompted by the oil squeeze, France recently decided to
build only nuclear electric powerplants after 1976. 25X1
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Publications of Interest
(CIA ER IR 73-22, November 1973,
1 --1
Key events in November were (;) continued inflation, (2) further
improvement in the rice situation, (3) announcement of national budget
proposals for 1974, (4) the filling of several important cabinet posts, and
(5) the limited progress made in obtaining increased assistance from non-US
sources.
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 GNP"
Constant Market Prices
-t United States
1 Japan
i West Germany
France
United Kingdom
Italy
A Canada
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United States
:open
West Germany
France
United Kingdom
Italy
Canada
RETAIL SALES'
Current Prices
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Oct 73
Oct 73
Aug 73
Sep 73
Aug 73
Sep 73
Sep 73
Oct 73
Jun 73
Aug 73
Aug 73
Aug 73
May 73
Sep 73
Percem Changi
Latest from Previous
Quarter Quarter
73 111
73 Iii
73 II
73 II
73 II
73 I
73111
Percent Changi
Latest from Previous
Month Month
0.5
1.2
5.9
-4.5
0.7
4.4
1.8
Percent Changi
Latest from Previous
Month Month
2.1
2.1
4.2
-4.3
0.7
2.3
-0,3
Representative Rates
Prime finance paper
Call money
Interbank loans (3 Months)
Call money
Local authority deposits
Finance paper
Three-month deposits
1970
5.0
8.5
3.0
0.2
4.0
3.1
5,7
1910
6.0
9.3
4.0
8.0
3.7
4,9
0.0
1970
11.5
12.5
9.0
3.1
11.1
11.3
10.6
Average Annual
Growth Rote Since
1 Year
Earlier
5.7
10.0
8.2
8.7
9.5
5.2
6.9
Average Annual
Growth Rate Since
1 Year
Earlier
9.3
17.6
8.5
4.9
8.2
19.5
8.3
1 Year
Earlier
10.9
22.6
4.2
1.8
12.1
20.4
13.6
3 Months!
Earlier"
9.5 III[
10.2
United States
Japan
-5.9 West Germany
7.7 France
0
United Kingdom
25.6 Italy
Latest Date
30 Nov 8.00
23 Nov . 9.25
30 Nov 13.00
30 Nov 11.25
30 Nov 15.13
30 Nov 9.13
30 Nov 10.36
1 Year
Earlier
5.12
4.25
8.12
8.88
5.19
5.25
8.06
WHOLESALE PRICES
Industrial
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Canada
Y ~! J* ~S -.n yr Ji4P. ?Y('
3 Months I Month
Earlier Earlier
9.00 7,88
7.50 8.75
13.75 14.25
9.38 11.25 bQ,
14.25 12.91
8.75 9.00
11.44 9.38 rr
Percent Change
Latest from Previous I Year
Month Month 1970 Earlier
Oct 73 0.8 5.0 7.9
Oct 73 0.4 8.1 14.2
Sep 73 0.3 5.8 8.4
Oct 73 1.1 6.6 8.1
Oct 73 2.0 8.9 9.9
Oct 73 0.8 7.3 11.0
Oct 73 0.3 5.4 8.7
Percent Chang-e
Latest from Previous
Month Month
Oct 731 1.2 I
Oct 73
Sap 73
Sep 73
Oct 73
Oct 73
Sep 73
2.0
-0.1
- 0.1
1.7
2.0
-0.7
Percent Change
3 Months )+';? Latest from Previous
arlier?? k Month Month 1970
8.7
,'. United States Oct 73 0.4 7.1
14.3
Japan Aug 73 1.0 17.8
1.2 West Germany Sep 73 1.3 8.7
4.5E France Jul 73 -2.7 11.6
14.8 United Kingdom Oct 73 0.2 10.3
( `...?'
223 Italy Apr 73 2.8 20.4
5.8
r. Canada Oct 73 0.7 13.4
1970
5.1
0.1
4.7
7.0
1.8
8.8
10.0
Average Annual ? t'>k
Growth Rate Since "
I Year 3 Months ?, ;,''
Earlier Earlier
9.1 8.8
20.3 20,3
8.8
l.:r
14.8 14.o
9.1 18.4 P
20.1 15.6 r
24.8 45.0
Average Annual
Growth Rate Since
Average Annual
Growth Rate Since
1 Year
Earlier
5.0
28.3
0.4
5.9
8.9
19.1
138
3 Months
Earlier
12.3
17.9
0.8 tt
11.1'
13.3
8.3
9.0
3 Months
Earlier "[!
1.9 G
5.7
-12.3
13.4
1.4
13.7 [
10.9
 EXPORTS"
f.o.b.
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
IMPORTS`
f.o.b,
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
United States'
Je:pan
West Germany
France
United Kingdom
Italy
Canada
United States
Japan
West Germany
France
United Kingdom
Italy
g
Canada
A j QV d r RBI ase 200 /04A ;9 GIAa R0P85T008TSR00155OO,140043-Ur
Latest Month
Million US $
Million US $ 1973 1977
Oct 73 U.470 57,040 40,187
Out 73 3,223 28,909 22,015
Sep 73 6,208 48,608 34,04
Oct 73 3,378 30,120 21,590
Oct 73 2.459 23,687 18,904
Aug 73 1.890 13,400 11,890
Aug 73 1.854 15,807 12,017
Aug 73
Jul 73
73 II
73 II
72 IV
73 I
"Million US $
Million US $ 1973 1972
Oct 73 5,900 58,350 45,415
Oct 73 3.061 25,312 15,251
Sep 73 4,435 37,245 27,805
Oct 73 3,417 29,108 20,024
Oct 73 3.185 27,015 20,228
Aug 73 2,317 15,074 10,900
Aug 73 1,914 14,800 12,203
TRADE BALANCE`
f.o.bJf.o.b.
Million USS 1973
Oct 73 530 884
Oct 73 161 3,858
Sep 73 1,832 11.624
Oct 73 -38 1,014
Oct 73 -727 -3.928
Aug 73 -427 -1.584
Aug 73 -60 917
BASIC BALANCE"
Current and Long?Term-Capital Transactions
Latest Piriod Cumulative (million US S)
-770
138
17
-281
800
-272
OFFICIAL RESERVES
Latest Month
End of Billion US $ Jun 1910
Oct 73 14.4 18.3
Nov 73 13.2 4.1
Aug 73 37.9 8.8
Oct 73 8.8 4.4
Oct 73 8.8 2.8
Sep 73 6.5 4.7
Oct 73 5.8 4.3
-5,920
1.605
-559
-1.348
NA.
-272
s~rt.hidr? 1 w_r, ~? 7?.Kk-bow .ai
1912
-5,228
7,384
6,228
875
-1,324
903
714
1972
-5,700
1,257
3,593
-202
-630
2.983
-117
Change t-i:
5,912 is '?.
-3,707 f
5.396 F-,
39
-2,604 ;;
-2,488
204 c
Billion US $ r''1sT
- t p,K
1 Year 3 Months ?+"
Earlier Earlier
13.3 14.0i!a~r
18.4 15.1.
24.3 32.2
10.0 10.2
5.9 6.6
8.4 8,0
9.2 5.8
EXPORT PRICES
USS
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
EXPORT PRICES
National Currency
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
IMPORT PRICES
National Currency
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
EXCHANGE RATES spot Rate
As of 30 Nov 73
Japan(Yen)
West Germany (Deutsche
France (Franc) Pa Mark)
United Kingdom (sterling)
Italy (Lira)
Canada (Dollar)
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Percent Changi
Latest from Previous
Month Month
Sep 73
Aug 73
Aug 73
Jul 73
Sep 73
Jun 73
Jul 73
Percent Change
Latest from Previous
Month Month
Sep ?3
Aug 73
Aug 73
Jul 73
Sep 73
Jun 73
Jul 73
US $
Per Unit
0.0036
0.3812
0.2227
2.3438
0.0017
1.0010
-0.9
3.1
-1.9
-2.5
0.5
2.5
2.8
-0.8
3.4
1.1
0.2
5.5
4.6
1.5
Dec 66
-15.79
13.51
28.75
-11.36
-35.10
-17.34
5.86
Percent Change
Latest from Previousr
Month Month 1970
Sep 73 -0.9 7.9
Aug 73 2.9 13.0
Aug 73 -2.7 15.8
Jul 73 0.5 15.3
Sep 73 -1.8 9.8
Jun 73 2.9 9.2
Jul 73 2.7 6.2
1970
7.9
2.0
0.9
4.6
9.1
6.6
5.1
1970
10.0
2.7
-0.2
3.1
14.8
10.8
5.2
It Dec
Dec 8B 1971
29.43 1 9.98
51.63 22.85
10.30 13.10
-16.01 -10.05
3.69 -3.49
8.52 0.32
18 Dec
1971
-8.41
4.70
11.51
1.83
-20.94
-18.16
-0.91
A~!ersge Annual
Growth Rate Since
As of 30 Nov 73
I Year
Earlier
20.0
24.d
32.1
29.1
17.8
12.9
13.1
I Year
Earlier
20.0
9.9
-G.8
6.8
12.8
13.1
14.8
Average Annual
Growth Rate Since
1 Year
Earlier
18.7
14.7
2.8
8.4
41.5
24.8
11.8
19 Mar
1973
-6.10
7.65
1.04
-4.76
-6.21
0.33
3 Months=..
Esrlier
22.0
38.3
70.2
53.2
22.1
12.0 ".',
3 Months'.
Earlier
22.5
39.5
-4.4
0.8
15.5
20.0
11.8
3 Months
Earlier
12.7
29.0
-9.1
0.8
85.2
54.4
17.5
23 Nov t"
1913
0
1.03
0.54
0.01
-0,08
23 Nov
1973
-0.07
0.87
0.25
-0.15
-0.52
-0.10