INTERNATIONAL ECONOMIC & ENERGY WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88-00798R000100070007-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 46
• Document Creation Date: December 22, 2016
• Document Release Date: September 30, 2010
• Sequence Number: 7
• Publication Date: May 10, 1985
• Content Type: REPORT

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Directorate of
Intelligence
International
Economic & Energy
Weekly
DI IEEW 85-019
10 May 1985
832
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International
Economic & Energy Weekly
10 May 1985
iii Synopsis
1 Perspective-IMF Conditionality: Compliance and Political Fallout
OGI
3 Sudan: The New Regime's Economic Dilemma
NESA
7 The Caribbean: Coping With Prolonged Austerity
ALA
13 Zimbabwe: Delaying Tough Economic Choices
ALA
17 Saudi Arabia: Expatriate Laborers There To Stay
NESA
21 Briefs Energy
International Finance
Global and Regional Developments
National Developments
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Comments and queries re arding this publication are welcome. They may be
directed to Directorate of Intelligence,
Secret
10 May 1985
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Synopsis
International
Economic & Energy Weekly
1 Perspective-IMF Conditionality: Compliance and Political Fallout
In our judgment, the financial community's primary demand on LDC debtors
this year has shifted from simple adoption of an IMF standby agreement to
vigorous compliance with economic performance targets. This greater empha-
sis on compliance, however, could lead to greater levels of political unrest in
the short term.
3 Sudan: The New Regime's Economic Dilemma
Sudan's new regime is faced with the need to revitalize the economy while im-
plementing rigorous austerity and reaching agreement with the IMF on
arrears. Recent statements by the new leadership suggest, however, the regime
will move very slowly toward introducing further reforms.
7 The Caribbean: Coping With Prolonged Austerity
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A significant improvement in the Caribbean area's deep-seated economic
slump is unlikely any time soon. Growing frustration with falling standards of
living also could give opposition groups-as well as Moscow and its surro-
gates-new opportunities to broaden their influence. In these circumstances,
pleas for US aid are increasingly likely.
13 Zimbabwe: Delaying Tough Economic Choices
Harare faces several difficult choices between policies needed to sustain the
economic recovery and a commitment to redistribute national wealth. Prime
Minister Mugabe appears determined to impose his vision of African social-
ism, but probably is realistic enough to backtrack temporarily to secure a new
IMF agreement and to shore up Zimbabwe's finances.
17 Saudi Arabia: Expatriate Laborers There To Stay
The economic downturn as a result of declining oil revenues is causing a shift
in the composition and sectoral employment of foreign workers, but Riyadh's
efforts to limit the number of expatriates in the country have met with only
limited success. Saudi Arabia will continue to rely on expatriates for about
half its work force into the next decade because their presence is essential to
the country's economic growth and productivity.
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International
Economic & Energy Weekly
10 May 1985
Perspective IMF Conditionality: Compliance and Political Fallout
In our judgment, the financial community's primary demand on LDC debtors
this year has shifted from simple adoption of an IMF standby agreement to
vigorous compliance with economic performance targets. Nearly 90 percent of
IMF drawings-compared with only about 75 percent in 1983-are now tied
to strong economic policy conditions, and we believe the IMF is monitoring
debtors' economic adjustment efforts with closer scrutiny and greater resolve.
Moreover, compliance with IMF conditionality-the key to obtaining official
reschedulings and new money commitments from banks-is becoming an
increasingly important factor in pledges of bilateral and multilateral assistance
as well. In light of a seemingly endless string of missed performance targets,
the Fund must exact some degree of economic adjustment from debtors if it is
to maintain its credibility with the banking community.
The IMF is in the delicate position of trying to maintain the cooperation of
both debtors and creditors to ensure an orderly international adjustment
process. This greater emphasis on compliance, however, could lead to greater
levels of political unrest in the short term. Conditionality by the Fund and for-
eign creditors is often resented by domestic groups-performance targets
typically involve a decline in living standards through cuts in subsidies and
other government spending-and can serve as a rallying point for opponents of
the government. Demonstrations and strikes have been commonplace in
countries such as Jamaica and the Dominican Republic, where a halfhearted
commitment to adjustment has resulted in little or no economic improvement.
This year Argentina and the Philippines could face similar problems as their
governments strive to qualify for needed debt restructuring.
Over the longer term, we believe the linkage between economic compliance
and political stability hinges heavily on the ability of the government to
implement and adhere to a comprehensive adjustment program. If such a
program can produce tangible economic benefits, serious political unrest often
can be avoided. For many LDC debtors, however, austerity measures will be
watered down in the face of domestic opposition. Few economic benefits will be
realized, and, as the difficulties of austerity drag on, the potential for unrest
heightens. Countries that choose to postpone austerity measures risk the loss of
needed IMF funding and debt relief and leave themselves open to worsening
economic conditions. This would lengthen the adjustment process and increase
the likelihood of more serious and prolonged political instability.
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Sudan: The New Regime's
Economic Dilemma
Sudan's interim government faces a staggering
array of economic problems-the legacy of years of
mismanagement and, more recently, drought and
civil war. While attempting to cope with depleted
stocks of food, fuel, and spare parts and an econo-
my that has been at a virtual standstill since the
April coup, Khartoum's new leadership must also
begin implementing rigorous economic austerity
and reach agreement with the IMF over its arrears.
The recent end to a yearlong partial freeze on
foreign financial assistance is providing desperately
needed foreign exchange but will not resolve the
regime's economic problems, even in the short
term. To revive the moribund economy, Khartoum
will also need to modify debilitating foreign ex-
change rules and export practices as well as instill
private-sector confidence in its economic policies.
Recent statements by the new leadership suggest,
however, the regime will move very slowly toward
introducing further reforms and will, instead con-
centrate its efforts initially on governmental reor-
ganization. A noticeable bias against the IMF
among civilian policymakers may also present
problems in dealing with the arrearages issue and
could even lead to circumventing previously
agreed-upon reforms
The new government is giving highest priority to
the reestablishment of adequate food and fuel
stocks, particularly in the Khartoum area. Al-
though the Sudanese economy has had chronic
shortages, the supply disruptions in the three
months preceding the coup were unusually severe.
The Nimeiri regime's outlawing last February of
the private, or free, foreign exchange market con-
tributed to the shortages. Traditionally, this market
has served as the major conduit of remittances
from Sudanese working abroad.. It also provided
financing for most nongovernment imports.
Current account
balance
-769
-566
-647
-565
Trade balance
-943
-656
-653
-650
Exports
573
732
675
600
Cotton
175
344
310
250
Imports
1,516
1,388
1,328
1,250
174
90
6
85
Remittances
415
380
350
300
Other (including
-241
-290
-344
-215
interest payments)
a Fiscal year data beginning I July of the stated year.
b Estimated.
c Projected.
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The government reportedly is making some prog-
ress in easing supply disruptions. Drought-related
famine remains serious in much of rural Sudan, but
we do not view this issue as a serious threat to the
regime's stability. Sudanese Government officials 25X1
claim there is sufficient flour and wheat available
or in shipment to satisfy requirements through
July.
Resumption of foreign financial assistance has been
instrumental in alleviating some shortages. Saudi
Arabia's timely delivery of 100,000 tons of petro-
leum beginning in April, together with an addition-
al $50 million in Saudi balance-of-payments sup=
port and $67 million in US assistance, has
temporarily eased public-sector foreign exchange
constraints. In recent weeks the long lines at filling
stations in Khartoum have begun to dissipate, and
the government has eased its draconian gasoline
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Sudan: External Debt
Service Obligations in 1985
regime agreed in March to adopt most of the
reforms suggested by the IMF. These included:
1984
Arrears
Obligations
Falling Due
in 1985
Total
234
1,251
1,485
55
168
223
Bilateral creditors
67
627
694
Commercial banks
0
342
342
rationing system. The new government's adherence
to the Petroleum Facility-a financing mechanism
sponsored by the United States and Saudi Arabia
and designed to reduce the cost and regularize the
delivery of oil imports-should reduce the likeli-
hood of crippling .energy shortages in the future.
Despite improvements in the supply situation, we
believe it is essential to quickly reintroduce a legal,
private foreign exchange market. Even if the new
regime establishes and maintains an attractive offi-
cial rate for foreign exchange, the private market
will likely remain the most efficient mechanism-
and the one most trusted by Sudanese abroad-for
converting remittances, which provide one-third of
Sudan's foreign exchange earnings.F____1
The new government's relationship with the IMF
will be tested as compliance with IMF-supported
reforms and the payment of arrearages conflict
with the regime's desire. to ease economic hard-
ships. Problems with the Fund began in 1984, when
a standby agreement was suspended as a result of
Khartoum's failure to make repayments on sched-
ule. The confrontation with the IMF also led to
suspension of IBRD Consultative Group and Paris
Club reschedulings and, most important, a major
slowdown in disbursements of financial assistance
from most major donors. As a result, the Nimeiri
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10 May 1985
? A 48-percent official devaluation and adoption of
a floating bank rate of exchange.
? Adjustment of domestic prices to reflect the new
official exchange rate including a 66-percent
increase in gasoline prices and a 33-percent in-
crease in the price of bread.
endorsed Khartoum's policies, with the proviso
that all arrearages be settled by the end of 1985.
This qualified endorsement set the stage for a
? Substantial tax increases and budgetary cuts.
Following adoption of these measures, the IMF
resumption of foreign assistance.
The major elements of the reform package are
intact, although the new regime has maintained the
rollback in bread, cooking oil, and soap prices made
in the final hours before Nimeiri's fall. The chair-
man of the Transitional Military Council has pub-
licly stated that the economic austerity program
would be kept in place. Nevertheless, there is
reason to doubt the willingness of the new economic
players to maintain the austerity program and
repay arrearages. The civilian interim Prime Min-
ister has publicly stated that Sudan's relationship
with the IMF would be "closely scrutinized." The
Finance Minister characterized the former govern-
ment as "the stooge of the IMF" and warned the
US Ambassador that pressure by the IMF and
other donors would be a mistake. Although formal
rejection of the austerity program is unlikely, the
new government may drag its feet and not adjust
prices sufficiently to reflect changes in exchange
rates and inflation. It could also interfere with
commercial bank regulation of the floating rate of
exchange or refuse to adopt budgetary restraints
previously agreed upon.
Repayment of arrears to the IMF will remain the
most intractable- problem. By the end of May,
Sudan will probably still owe $133.5 million to the
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IMF. The Sudanese are highly unlikely. to meet
these obligations without significantly increased
financial aid. To use assistance currently allocated
for balance-of-payments support to meet IMF pay-
ments would diminish the already tenuous pros-
pects for economic recovery. The Fund's flexibility
on rescheduling is severely limited by' its own
statutes, which prohibit any new program for a
member currently in arrears. Nevertheless, the
IMF's forbearance on repayments, at least until the
new regime is better able to cope with the issue,
may prove critical in how Khartoum ultimately
handles the arrearages problem.
Export Reforms Required
We believe additional reforms are needed to sustain
economic recovery. One area particularly in need of
change is cotton sales, which generate nearly half
of Sudan's export earnings but have been badly
depressed in recent years by the confusion and
corruption surrounding the marketing of the cotton
crop. The loss of earnings through such practices,
as well as sheer waste, (600,000 bales of cotton
from last year's crop remain rotting in warehouses)
is a major contributor to Sudan's current financial
difficulties. A marketing arrangement, similar to
the petroleum facility, would probably satisfy inter-
national cotton dealers and boost export earnings.
Finally, export disincentives would have to be
eliminated. Current policies stipulate that 100 per-
cent of export earnings be deposited in the Bank of
Sudan and exchanged at the relatively unfavorable
official rate. This rule has caused the government
to lose significant hard currency earnings as dealers
have either withheld supplies of exportable goods,
awaiting changes in the law, or smuggled them out
of the country
Economic Prospects: The Political, Dimension
Sudanese economic prospects beyond the next six
months hinge to a large extent on settlement of the
insurgency in the south. Resolution of this conflict
would permit exploitation of oil resources that
would ease substantially the foreign exchange
shortages, and completion of the Jonglei canal
project that would increase the water available for
agriculture. Currently, both projects are suspended
because of security threats to the Western firms
involved.
The ideological preferences of the new government
leaders present further uncertainties. Although Is-
lamization of the banking system appears momen-
tarily to have lost its appeal, a resurgence of
Islamic legislation could further sour investor con-
fidence. Another factor is the new leadership's
perceptions about the role of government. Many of
the economic reforms enacted or contemplated
require a willingness to limit government controls
and to allow greater freedom for private-sector
initiatives. Unfortunately, despite privatization
rhetoric, the mind-set of most Sudanese leaders,
military and civilian alike, is probably more at-
tuned to greater central control of the economy.
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705051(A01932)4-85
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The Caribbean: Coping With
Prolonged Austerity
A significant improvement in the Caribbean area's
deep-seated economic slump is unlikely any time
soon. A number of Caribbean governments have
evinced in recent years a more rational approach to
economic decision making, but backsliding on
needed economic adjustments is likely as national
decisionmakers try to juggle the competing de-
mands of influential interest groups. Sporadic pro-
tests like those in the Dominican Republic, Jamai-
ca, and Haiti over the past year are likely to recur
there and possibly to emerge elsewhere. Growing
frustration with falling standards of living also
could give opposition groups-as well as Moscow
and its surrogates-new opportunities to broaden
their influence. In these circumstances, pleas for
US aid are increasingly likely.
The Caribbean area has posted no economic growth
since 1981. This is largely because the region's
main exports-bauxite, alumina, and agricultural
commodities-have been hurt by low world prices
and growing competition from alternate suppliers.
Caribbean oil refineries and transshipment termi-
nals also have lost business primarily because of
excess US refining capacity. Moreover, tourist
earnings have picked up only slightly. Although the
region's $7 billion external debt is minuscule by
Latin American standards, debt servicing has be-
come ever more burdensome for many Caribbean
countries. Unlike in earlier periods of economic
stress, the region's wealthier economies have been
unable to buoy the poorer ones by serving as local
markets, aid donors, and magnets for jobseekers.
The Caribbean: Real Prices,, of Major Exports,
1974-84
Dollars per barrel
Cents per pound
Bananas
I I I Sugar
0 0 1974-79 80 81 82 83 84
Haiti-where 80 percent of the region's population
lives-turned to the IMF for help. US Embassy
reporting shows that these countries have improved
tax collection, trimmed and redirected the bloated
public sector toward more productive investments,
raised interest rates to encourage domestic savings,
and stimulated the search for foreign investment.
Nevertheless, the failure of potential international
commercial lenders to respond adequately to the
IMF lead has undermined economic revitalization.
Other countries in the region have cast about for
different solutions, probably hoping to avoid imple-
Individual country's reactions to these trends have
been mixed. Jamaica, the Dominican Republic, and
menting harsher austerity measures.
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The Caribbean: Weighted Average Real GDP
Growth and Inflation, 1974-84'
The Caribbean: GDP by Major
Contributor, 1981
Tobago
a Excludes smallest islands for which data are incomplete.
b GDP growth in 1983 and 1984 was zero.
With or without IMF-supported programs, pro-
tracted austerity has cost several Caribbean gov-
ernments a good deal of political capital. Public
discontent over austerity has triggered violent pro-
tests in Jamaica and the Dominican Republic and
has driven support for their leaders to record lows.
The pervasive stagnation has further undermined
the government-to-government cooperation needed
for areawide economic solutions.
We see little or no improvement in the region's
economic conditions over the next several years:
? World demand for Caribbean bauxite and its
derivatives will continue to deteriorate in the face
of such low-cost substitutes as ceramics and
plastics.
? Demand for Caribbean sugar, coffee, and ba-
nanas will remain weak because of a world
oversupply, and, in the case of coffee, better
quality available from other producers.
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10 May 1985
? The depressed world oil market will encourage
US firms to close unprofitable Caribbean oil
operations.
? Any gains from tourism will be unevenly distrib-
uted and unlikely to match the boom levels of the
early 1970s.
Against this backdrop, the process of economic
adjustment will not be easy.. Long-term measures-
such as moving away from traditional exports,
raising domestic interest rates, cutting consumer
subsidies, and streamlining bureaucracies-will
compound domestic hardships over the short run.
Moreover, there are no guarantees that such aus-
terity measures would revitalize the region's econo-
mies. Although long-term growth-generating poli-
cies would help attract financing and technical
expertise, especially under the Caribbean Basin
Initiative (CBI), recovery hinges on finding new
markets abroad.
Considering these uncertainties, we believe that the
immediate costs of adjustments will lead national
decisionmakers to back away from these needed
reforms. Popular resistance to tougher austerity
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measures in a number of Caribbean countries only
underscores this concern. At best, we believe gov-
ernments already under various stages of IMF
adjustment programs will try to maintain reform
efforts wherever possible; nonetheless, they, and
those countries without IMF programs, are unlike-
ly to institute strong new policy measures.
Even if there are temporary problems, we doubt
that Jamaica, the Dominican Republic, and Haiti
will abandon IMF-supported programs altogether.
In our opinion, their leaders understand that no
single Caribbean economy is large enough or diver-
sified enough to spur economic recovery alone, and
that, without a workable IMF program, other
international lenders would be unlikely to offer
more than token help.
Unaccustomed to hard times, the oil-dependent
economies of The Bahamas, Trinidad and Tobago,
and the Netherlands Antilles will continue to delay
slashing imports and government spending because
they are unwilling to risk the political backlash.
Barring an unexpected pickup in the world oil
market, such foot-dragging will eventually require
even more onerous adjustments.
Other countries face intractable problems. We
believe the leaders of Suriname and Guyana will
continue to resist efforts to revamp their economies
to avoid jeopardizing the perquisites of the military
and other key interest groups, thereby precluding
IMF accords. In Grenada, the government will
have to deal quickly with the island's 30-percent
unemployment rate and deteriorated infrastructure
that is discouraging investors. Other smaller econo-
mies such as St. Christopher and Nevis, and St.
Vincent and The Grenadines, even with successful
policy reforms, are not viable without indefinite
infusions of aid.
The political climate will make economic policy
changes more difficult in the coming months. In
addition to setting back adjustments, bickering
among ruling party leaders, alienation of key inter-
est groups, and the growing influence of opposition
parties could touch off disruptive incidents in sever-
al countries. Differences among governing elites
over economic policy, in the extreme, could turn
economic crises into political ones. This is largely
because the highly personalistic nature of Caribbe-
an politics has resulted in fragile intraparty cohe-
sion. Consequently, we expect most elites, in chart- 25X1
ing economic strategy, to take directly into account
the need to preserve party harmony even if it means
undercutting sound economic policies.
Meanwhile, continued economic woes are likely to
cause important interest groups, particularly orga-
nized labor, to step up resistance to belt-tightening.
Recent sporadic strikes and demonstrations in the
major Caribbean countries underscore labor's reac-
tion to policies perceived as detrimental to its 25X1
interests. Moreover, support from the middle class
and the business community appears to be flagging
as these groups become increasingly frustrated with
the fall in living standard
Opposition parties, although tarred in a number of
countries by their poor economic policies when they
were in power, are likely to gain as dissatisfaction
over austerity grows. Moderate parties, especially 25X1
those in the English-speaking Caribbean, appear
best positioned to take advantage of mounting
popular discontent. Leftist parties are struggling to
expand their popular appeal, but so far only the
leftist-dominated coalition in Dominica appears
capable of mounting a strong challenge in coming
elections
Coping With Threats
We believe that growing economic problems will
increase the chances for violence, especially if
decisionmakers inadequately prepare public sup- 25X1
port for austerity measures. The ability of Caribbe-
an security forces to handle domestic unrest, how-
ever, varies widely. Although security forces
throughout the region probably can control sporad-
ic disturbances, widespread violence could quickly
overwhelm military capabilities even in larger
countries.
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Over the years, the United States, the principal
economic actor in the region, has assumed an ever
larger role as former European colonial powers have
attempted to reduce their economic support to the
region:
? The United States is the Caribbean's largest trad-
ing partner. In 1983 the United States bought more
than 80 percent of total Caribbean exports to the
West, purchasing the lion's share offoodstuffs
(including coffee, cocoa, and sugar), manufactures
(including chemicals, light machinery, and consum-
er goods), raw materials (especially metals), and
petroleum products. The United States also provid-
ed more than 50 percent of Caribbean imports from
the West, primarily raw materials and fuel.
? Net US direct investment totaled about $2 billion
in 1983. Most US equity is centered in the petro-
leum and bauxite and alumina industries and is
dominated by several large US corporations- Tex-
aco, Exxon, Reynolds Metals, and Alcoa, among
others.
? US commercial bank exposure stood at $3.5 billion
at the end of 1983, including US balances at
offshore banking centers in The Bahamas, Bermu-
da, British Virgin Islands, and the Netherlands
Antilles. Even excluding these balances, the United
States still accounted for more than 35 percent of
commercial bank loan balances in the region.
? Of the $485 million in OECD commitments of
official development aid to the region in 1982, the
latest year for which complete data are available,
the United States accounted for 55 percent of the
total. Washington contributed more than 80 percent
of aid committed to the Dominican Republic, 72
percent to Jamaica,. and 48 percent to Haiti. More-
over, the United States, as a major contributor to
the IMF, the World Bank, and the Inter-American
Development Bank, also has been a significant
source of multilateral support.
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10 May 1985
The situation presents some potential for exploita-
tion by Moscow and its allies. In addition to
providing funds, training, and political guidance to
a wide variety of leftist groups, Cuba and the
USSR are trying to strengthen ties with the leftist-
leaning regimes of Guyana and Suriname. They
apparently view Guyana as the best available hope
for rebuilding their position in the area in the wake
of the Grenada debacle. Reflecting their narrowed
political options and realization of labor's strong
clout in the region, the Soviets and Cubans are
stepping up efforts to improve ties with trade
unionists. They also are trying to improve relations
with some pro-Western countries through trade
and cultural contacts.
As part of Libyan leader Qadhafi's broad efforts to
undermine US influence, Tripoli is pursuing a more
active campaign in the Caribbean. Unlike the
Cubans and Soviets, Libya is trying to prod leftists,
particularly in the French Antilles, into more con-
frontational tactics. Tripoli's leverage over most
Caribbean leftists appears limited, however, and we
believe leftists will continue to resist radical tactics
because of their concern over public rejection and,
in some cases, fear of government retaliation.
The Caribbean area's grim economic prospects and
the pressures such conditions are putting on region-
al governments portend increased pleas for help
from Washington. We believe many area leaders
who back the CBI-particularly Jamaica's Prime
Minister Seaga-will be watching its progress as a
barometer of the US commitment to the region. In
addition to increasingly urgent requests for conces-
sional economic aid, additional bauxite purchases,
and increased security assistance, we judge that
Caribbean governments will ask Washington to
take a larger hand in prodding the IMF, aid
donors, and commercial banks to make new fund-
ing available and to deter any substantial US
disinvestment in the region.
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As economic troubles in the region persist, illegal
migration to the United States is likely to pick up,
especially from Haiti. Narcotics-related activities
also will increase and spread to new areas. In these
circumstances, we believe tensions between Wash-
ington and many Caribbean nations will increase
even though their governments generally will re-
main pro-US.
In the unlikely event that the region's economic
difficulties lead to widespread political instability,
the chances for the emergence of leftist regimes
opposed to Washington and its policies would grow.
US and other foreign-owned firms might become
targets for nationalization, and the Soviets and
their surrogates would have new bases for regional
adventurism. The failure of the small English-
speaking islands to form a quick-reaction security
force raises the chances that Washington might be
called on to help prevent another leftist takeover.
11 Secret
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Zimbabwe: Delaying Tough
Economic Choices
Despite the lingering effects of its recent drought,
Zimbabwe probably will register about 3 percent
real growth in 1985 following three years of declin-
ing GDP. Economic optimism has grown with the
return of normal rainfall, although Harare still
faces several difficult choices between policies
needed to sustain the economic recovery and a
commitment to redistribute national wealth. Prime
Minister Mugabe appears determined to impose his
vision of African socialism, but probably is realistic
enough to backtrack temporarily to secure a new
IMF agreement and to shore up Zimbabwe's fi-
nances. In any case, he is likely to delay tough
economic choices until after the national elections
scheduled for this June.
Socialism in Theory and Practice
Three years of declining GDP have led Mugabe to
move cautiously on his socialist program, but his
past efforts have added to Zimbabwe's economic
strains. After becoming prime minister in 1980,
Mugabe publicly committed his government to a
massive resettlement program-which now calls for
moving 162,000 black peasant families onto under-
utilized land by the end of 1985. At the same time,
Zimbabwe has maintained a favorable economic
environment for commercial farming. The govern-
ment has improved infrastructure and incentives
for small-scale, mainly black farmers without dam-
aging those available to large white-owned com-
mercial farms. Producer prices have been raised
substantially; the price of corn, for example, more
than doubled. Mugabe also pledged an increased
government role in the economy, promising greatly
expanded educational opportunities, health care,
and other social services for blacks. The number of
primary school students has doubled since
independence, and low-income families now receive
free health care. Firms must operate under regula-
tions that limit their ability to fire workers, set
their prices, and control their access to foreign
Zimbabwe's exports are broadly based, with no 25X1
single commodity accounting for more than one-
At independence in 1980, Zimbabwe inherited both
considerable economic potential and the problems
typical of developing nations. The country pos-
sesses significant mineral wealth-including
chrome, asbestos, copper, gold, and coal-and a
robust agricultural sector that exports beef, corn,
cotton, and tobacco, and, in years of normal
rainfall, meets domestic needs for nearly all food
crops. As Rhodesia, the country diversified manu-
facturing and food production under the impetus of
UN sanctions that partially isolated it from inter-
national trade from 1965 to 1979. As a result,
fifth of export earnings in a typical year.
Rhodesian agricultural policies and institutions,
however, favored the interests of the country's
5,000 to 6,000 white commercial farmers-who
produced three-fourths of the farm output-over
the nearly 700,000 black farmers. As a result, 25X1
Zimbabwe's black rural sector is largely undevel-
oped at a time when the country's population is
growing at a rapid 3 -Percent annual rate.
exchange. New parastatals have been established
for oil procurement and minerals marketing, and
the government has purchased controlling interest
in several major mining, banking, and pharmaceu-
tical firms. The management of these companies 25X1
has been left in private hands, however, and Zim-
babwe has avoided outright nationalization or ma-
jor encroachments on private property.
This ambitious agenda received an initial boost
from the lifting of economic sanctions and an influx
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Zimbabawe: Selected Economic Indicators, 198044-
F-1
of foreign loans and aid, and real annual GDP
growth rates exceeded 10 percent in 1980 and
1981. More recently, however, drought and higher
costs for agricultural inputs, coupled with low
world prices for Zimbabwe's mineral exports, have
Moreover, public spending has grown rapidly-
from 35 percent of GDP in 1980 to about 45
percent today-and heavy borrowing has pushed
the ratio of debt service to export earnings to over
30 percent. Socialist rhetoric by Mugabe and other
government officials also has been costly, accelerat-
ing the exodus of white managers, skilled workers,
and commercial farmers, a major drain of technical
expertise. Finally, the rapid growth of budget defi-
cits and the suspension of dividend and profit
remittances in 1984 to conserve scarce foreign
exchange led to the collapse last year of Zimbab-
we's most recent IMF standby agreement.
Foreign Exchange Allocated to
Industry
Zimbabwe: Agricultural Export Million US $
Earnings, 1980-84
Total
386 547
463
419 472
Tobacco
179 309
248
224 280
Cotton
89 87
68
73 94
Meat
21 7
6
11 39
Sugar
74 80
69
52 41
Coffee
11 14
19
19 18
Corn
12 50
53
40 0
Percent of
total exports
27 39
36
37 39
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Secret
-0.64
-0.71
-0.46
-0.05
-0.07
-0.15
0.09
-0.20
1.41
1.28
1.14
-1.20
1.48
1.43
1.05
-1.00
Short-term capital
0.38
0.18
0.05
Long-term capital
0.11
0.42
0.20
NA
Errors and omissions
0.08
0.09
0.03
NA
Mugabe faces competing demands of laying the
groundwork for a sustained economic recovery and
making progress toward socialism. Zimbabwe must
first secure additional foreign exchange to.ensure
sustained growth. Foreign exchange allocations to
industry-slashed by half between 1981 and
1983-probably.have to be restored to enable firms
to secure inputs and replace aging machinery.
the IMF repeatedly
has told Harare that, to secure a new standby
agreement, it must cut spending on health, educa-
tion, and defense.
New foreign investment would facilitate more rap-
id export growth, but the suspension of dividend
and profit remittances last year-although reduc-
ing Zimbabwe's current account deficit-has fur-
ther damaged investor confidence. Although we
believe that the IMF will push Harare to rescind
this suspension, securing new foreign investment
probably will require clear guarantees on profit
repatriation and nationalization. Moreover, Zimba-
bwe needs to reduce the regulatory burden to
improve the investment climate.
We believe Harare also must reassure its commer-
cial farmers that their position is secure in the face
of government proposals for restructuring the agri-
cultural sector. The US Embassy reports that a
new land acquisition bill reducing property rights
probably will come before Parliament this summer.
Commercial farmers are concerned over recent
efforts to nationalize grain milling and over govern-
ment attempts to speed the lagging resettlement
program, which to date has moved only about
35,000 families.
Zimbabwe is scheduled to hold elections in June,
and until then nearly all major economic decisions
will be put on hold. Mugabe and his party, in our
judgment, are determined to consolidate their polit-
ical.position by obtaining a sweeping electoral
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victory that can be portrayed as a popular mandate
advancing its goal of creating a one-party state. As 25X1
the elections approach, the government has tried to
moderate its radical image,
25X1
to appeal to the rural popu ace an
business community. A component of this cam-
paign strategy has been to deemphasize the impor-
tance of socialism and the one-party state,
Zimbabwe's economy should rebound this year
largely on the strength of better agricultural per-
formance and a renewal of IMF funding. Improved
corn yields because of better weather are expected
to provide a surplus for export of 200,000 to
500,000 tons, compared with imports of more than
250,000 tons for 1984. We expect Harare to reach
accommodation with the IMF after the elections by
agreeing to cut social spending and resume the
remittance of dividends and profits.
Zimbabwe's long-term economic prospects are
somewhat cloudier. We believe that Mugabe re-
mains committed to transforming Zimbabwe into
an egalitarian society dominated by his party and
that his moderation has been largely tactical. The
architect of Zimbabwe's pragmatic economic poli-
cies, Finance Minister Chidzero, reportedly may
leave his government post-mainly for personal
reasons-after the elections. The loss of Chidzero
could prove a major setback for proponents of
gradual reform and a victory for more radical
elements of the government, including the Prime
Minister himself.
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Secret
Saudi Arabia: Expatriate Laborers
There To Stay
Riyadh's efforts to limit the number of expatriates
in the country have met with only limited success.
The economic downturn as a result of declining oil
revenues is causing a shift in the composition and
sectoral employment of foreign workers, but their
number is still high. Many Saudis worry that the
3.5 million foreigners employed in their country
threaten their Islamic society. Nonetheless, Saudi
Arabia will continue to rely on expatriates for
about half its work force into the next decade
because their presence is essential to the country's
economic growth and productivity.
A More and More Expatriates
The large demand for labor generated by spectacu-
lar economic growth during the 1970s has contin-
ued to overwhelm Saudi Arabia's indigenous labor
supply. The Saudi labor force at best can fill only
half of the current positions in the Kingdom, and
most Saudis lack the requisite training for many of
the newly created jobs. Riyadh, therefore, depends
on foreign workers to supply the labor needed for
the large infrastructure projects and for the petro-
leum, construction, services, manufacturing, and
professional and managerial sectors.
The heavy influx of foreign workers has been a
mixed blessing. According to the Embassy, many
Saudis resent the behavior of expatriates and see
them as contaminating Saudi culture and society.
Islamic fundamentalists have expressed concern
that foreigners, especially non-Muslims, threaten
the Islamic foundation of the state. Moreover, the
Saudi Government has been concerned about the
expatriate community's potential for subversion.
Pressures on Foreign Workers
Riyadh has responded to these concerns by adopt-
ing Saudi-ization measures. The government termi-
nated the contracts of 10 percent of all expatriate
employees working for the government in January
1984. Work permits for foreign workers became
more difficult to obtain and were transferable only
after payment of an exhorbitant sum. Last January
the government began enforcing a largely ignored
1969 law that required the Ministry of Labor to
certify that no Saudi national was available before
a job could be offered to a foreigner. In addition,
enforcement of strict social and religious restric-
tions has increased.
Despite these efforts and the economic slowdown
caused by declining oil revenues, the total number
of foreign workers has not dropped, and, in fact,
has continued to rise, albeit at a slower rate.
According to US Embassy estimates, expatriates
comprised more than 70 percent of the work force
at the end of 1984, compared with 67 percent in
1982. The increase in expatriate laborers arises
from the continued growth of the Saudi economy,
which, although estimated at only 4.3 percent last
year-less than the 1980 rate-still requires an
inflow of new workers. Much of the recent growth
of the foreign labor force has been in unskilled and
semiskilled workers from North Yemen, Bangla-
desh, Sudan, Indonesia, and Sri Lanka. These poor
countries provide a ready supply of workers willing 25X1
to perform jobs considered beneath the average
Saudi.
At the same time, the Saudis have not been able to
reduce significantly the number of expatriates who
hold skilled jobs, such as Westerners in technical
and managerial positions, Pakistani units in the
military, or Egyptians in teaching jobs. Although
the number of highly educated Saudis is growing-
nearly 75,000 Saudis now are studying in the
Kingdom's seven universities and abroad-there 25X1
are still severe shortages, and most newly educated
Saudis lack the practical experience to replace
seasoned professionals. The economic slump, how-
ever, has hurt some expatriate communities. As
large infrastructure projects were completed, scaled
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Saudi Arabia: Foreign Labor,
1975 and 1980-84a
back, or postponed, the demand for foreign workers
in the construction sector-which had employed 58
percent of all expatriate laborers-has declined.
In some cases, workers displaced in one sector have
moved into another. The decline in the number of
Filipinos in the construction sector, for example,
has been partially offset by an increase in their
numbers in the operations and maintenance, manu-
facturing, and service sectors. The Saudi drive
toward self-sufficiency in agriculture also has en-
couraged some displaced foreigners to seek work as
farm laborers.
Impact on the Sending Countries
Changing Saudi labor requirements are having an
uneven impact on the labor exporting countries. In
addition to cutbacks in projects requiring foreign
workers, Riyadh is attempting to replace workers
Secret
10 May 1985
Saudi Arabia:
Current Account, 1982-84
Imports, f.o.b.
Services and private transfers
Freight and insurance, net
Investment income
Worker remittances
Other service payments, net
Grants
Current account
Official foreign assets at yearend b
a Estimated.
b Excludes loans to Iraq.
33.8
7.2
4.3
72.8
45.2
39.3
72.6
44.8
38.4
0.2
0.4
0.9
39.0
38.0
35.0
-21.0
-21.3
-16.7
-7.0
-6.8
-6.3
16.0
14.5
12.9
-5.0
-5.0
-4.7
-25.0
-24.0
-18.6
-5.3
-2.0
-2.0
7.5
-16.1
-14.4
135.0
120.0
105.0
from countries with higher wage scales with work-
ers from lower-wage' countries:
? Pakistani workers have been hit hard. Although
as many as 500,000 Pakistani workers remain in
Saudi Arabia, in 1984 nearly 70,000 Pakistani
workers left Saudi Arabia and another 10,000
may have left already this year. Also, many
Pakistanis who remained had to renegotiate con-
tracts for lower wages and benefits.
? Saudi Arabia has been the largest overseas mar-
ket for South Korean construction firms during
the past decade. Because of recent cutbacks in
construction projects, the US Embassy in Riyadh
projects that Korean workers, who numbered
140,000 in 1983 are expected to decline to 60,000
by 1986.
? Even skilled US workers in the oil sector have
been affected. The trend is to replace US workers
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Secret
Thousand
Persons
Share of Total
Expatriate Labor
Force (percent)
Total
3,500
100
Yemen Arab Republic
800
24
Pakistan
500
14
Egypt
428
12
Philippines
400
11
India
230
7
Sudan
158
5
Turkey
130
4
Jordanb
120
3
South Korea
104
3
Thailand
100
3
Syria
90
3
Bangladesh
50
1
Somalia
50
1
Indonesia
47
1
Lebanon
47
1
Sri Lanka
45
1
Ethiopia
45
1
United States
42
1
United Kingdom
25
1
Other
89
3
a Estimated.
b Including Palestinians.
with British and other Western personnel who are
willing to work for lower pay, travel without
families, and have lower transportation costs.
According to the US Consulate in Dhahran, the
number of US workers and dependents in the
Eastern Province fell by 5,000 in 1983-84.
Bangladesh, Sri Lanka, and India-generally
lower-wage countries-have benefited:
+ The number of Bangladeshi workers going to
Saudi Arabia increased from about 6,500 in 1979
to over 15,000 per year for the first half of 1984.
Worker remittances from all Bangladeshi abroad
were $592 million in FY 1983/84.
? The US Embassy in Colombo believes the num-
ber of Sri Lankan workers going to Saudi Arabia
considerably exceeds the official estimate of
25,000 per year. Worker remittances from all Sri
Lankans abroad were $290 million in 1983 and
were second only to tea as a source of foreign
exchange.
? India, despite limited success recently in winning
construction and building maintenance contracts,
still had 230,000 workers in Saudi Arabia in
1984. The numbers are small relative to the total
Indian labor force but worker remittances are
important for a few regions and provide New
Delhi substantial foreign exchange earnings.
Although worker remittances provide an important
source of foreign exchange earnings and employ-
ment for many LDCs, the impact of returning
workers from Saudi Arabia has probably been
limited thus far. Pakistan, for example, has blamed
declining worker remittances as the major factor in
the scrapping of its five-year plan and the subse-
quent lower projection of economic growth. Saudi
losses undoubtedly contributed but domestic bank-
ing and exchange rate policies and the strength of
the dollar also hurt total remittances. The effect of
returnees on domestic unemployment in these
countries is also muted because the numbers are
small compared with the total work force. More-
over, the returnees typically have accumulated
savings that ameliorate their economic and social
problems.
In the near term, declining oil revenues and
Riyadh's continuing efforts toward Saudi-ization
will merely serve to hold down the size of the
expatriate labor force. Nevertheless, Saudi Arabia
will continue to rely on large numbers of foreign
workers to support the country's recently achieved
high standard of living. For 1985 most expatriate
job losses will result from the completion or cancel-
lation of construction projects.
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Although the Fourth Five-Year Plan (1985-89)
includes a. commitment to reduce expatriate work-
ers by more than half a million, we judge Riyadh
realizes it cannot meet this goal. Saudi-ization
cannot proceed as quickly as Riyadh would like
because productivity would suffer in those institu-
tions-such as the government and ARAMCO-
where newly educated Saudis seek work. Moreover,
there simply will not be enough Saudis completing
degrees in higher education to fill the demand for
technical, professional, and managerial positions.
The long-term prospects for Saudi-ization are
somewhat better. Nearly 60 percent of the Saudi
population is under 16, and many will be seeking
jobs in the decade. In addition, Riyadh's efforts to
develop education opportunities will eventually
reap benefits. Although efforts to encourage private
industry to use more capital-intensive methods of
production have had limited success to date, such
capital-intensive industries as petrochemicals or
refineries hold some promise of reducing the de-
mand for foreign labor.
Saudi Arabia will continue to be vigilant for evi-
dence of subversive threats by the expatriate com-
munity. Of most concern are the 100,000 Palestin-
ians, and Muslim fundamentalists-especially
Shia-from other countries. Still, the Embassy
believes there is no effective cooperation between
expatriate workers and domestic dissidents, and
expatriates acting alone appear unable to threaten
the regime. Moreover, Riyadh maintains a vast
surveillance network, large and well-armed security
forces, and elaborate controls on the activities and
living arrangements of foreigners. In addition, ex-
patriates know that their well-paid lobs in Saudi
Arabia depend on good behavior.
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Secret
Energy
Venezuela Fears US Proposals by US refiners for US'limits on oil imports are raising fears in
Oil import Venezuela about protectionism and starting talk of retaliation. Venezuela is
Restrictions the second-largest supplier of oil to the United States, and, according to the
US Embassy, there is growing concern in Caracas over the potential of higher
US tariffs and quotas to cut its oil revenue-80 percent of product exports go
to the United States. The Lusinchi administration, already upset by the
prospect of quotas and countervailing duties on steel, believes that any
restrictions on oil products would harm its ability to repay debt and finance
capital goods imports.
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Syrian Oil A Syrian delegation will travel to Iran soon to try to work out a new oil agree-
Developments ment to replace the one that ended last month. Iran probably will again
provide 20,000 b/d of free oil and 120,000 b/d at discounted prices. The
negotiations are likely to be difficult because of Syrian delays in paying for last
year's oil. In addition, Syria is scheduled to start paying $20 million per month
on 31 May for postponed oil debts from the 1983-84 contract. To ease their fi-
nancial problems, the Syrians are trying to have the free oil shipped
immediately, but the Iranians insist that the agreement first be approved by
their Consultive Assembly where it will probably face problems.
Domestically, Syria recently signed an agreement forming a joint-venture, Al
Furat Petroleum, that will be responsible for production at the newly
discovered Thayyem field. Syria will hold 51 percent of the company, with its
foreign partners-Shell USA, Shell International, and Deminex-holding the
remainder. This opens the way for the construction of a pipeline from the field
and commercial oil sales.
International Finance
Chilean Interest Chile is continuing to pay interest on its foreign debt, even as payments
Moratorium Looms pressures mount and talks on debt renegotiation remain stalled. A near halt to
new credit and a 25-percent decline in the first-quarter trade surplus have
forced Santiago to draw down reserves. The US Embassy reports that debt
talks are deadlocked because Chilean demands for $1 billion in new lending
far exceed the $700 million that bankers are willing to provide. Should
negotiations remain deadlocked through the summer, Chile will face an
increasingly serious cash shortage, and the estimated $1.4 billion reserve
cushion will soon be exhausted. Santiago may react by reducing or stopping
interest payments. If a moratorium is imposed, it is not likely to be prolonged
because the bankers will probably reach a compromise with Santiago.
Mauritanian Nouackchott easily reached agreement with Paris Club members to reschedule
Debt Relief nearly $75 million in arrears and debt service obligations payable through
March 1985. Repayment is spread over nine and eight years, respectively, with
four years' grace. Paris Club members, however, hold less than one-fifth of
outstanding arrears-the bulk is owed to Arab states. Eight of these countries
also have agreed to extend terms similar to the the Paris Club package. This
relief provides sorely needed breathing room to the financially strapped Taya
regime that faces bleak economic prospects again this year.
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Secret
Global and Regional Developments
EC The EC is inviting West European and foreign firms, including US companies,
Telecommunications to participate in the preliminary phase of its RACE program-Research and
Venture Development in Advanced Communications Technologies for Europe. RACE
is a 10-year $400 million joint government-industry program to help integrate
West European telecommunications systems into one network and to advance
telecommunications technology. The preliminary phase-which the EC Coun-
cil is expected to approve in June-will last two years and cost approximately
$30 million, with half the funding coming from the EC and half from private
industry. EC leaders fear that fragmented West European markets in
telecommunications and weakness in microelectronics and computers put them
at a disadvantage in telecommunications technology.
Moroccan-French Morocco's serious cereal shortfall has been relieved by the sale of about 1.2
Grain Dealings million metric tons of French wheat. Over 650,000 tons is already scheduled
for delivery with the balance available after 1 August. Moreover, Paris has
pledged to seek EC approval to sell as much as 150,000 tons of additional
wheat to Morocco. These contracts, if fully utilized, will cover Morocco's
wheat import requirement for 1985 and restore Paris as Morocco's primary
grain supplier. The French probably view this as an investment in the future of
the region and a means of recovering ground lost to the United States since
Mitterrand's election. Hassan, on the other hand, has defused a potentially
disruptive grain problem while emphasizing to Washington and the Moroccan
public that he still has reliable friends abroad.
New Steel Techonology South Africa's largest steel company, ISCOR Ltd., has announced plans for a
Nears Commercial Use 300,000-metric-ton-per-year direct iron smelting plant with startup scheduled
in 1987-88-the first commercial use of this innovative steel-making technol-
ogy. The plant will use the KR process developed by Korf Engineering of West
Germany and tested since 1982 at its pilot plant in Kehl. According to press
reports, the KR unit will be installed at ISCOR's Pretoria works as the first
step in replacing the mill's old coke ovens and blast furnaces. We estimate the
cost of the planned KR smelter at $60-70 million, about half the cost of
comparable blast-furnace-coke oven capacity. Moreover, the new process could
cut operating costs 10 to 15 percent below those of a state-of-the-art blast
furnace and coking plant. In addition to the ISCOR deal, Korf and its
Austrian parent, Voest-Alpine, are negotiating on KR units with steel
companies in India, Turkey, East Germany, and the United States.
National Developments
Developed Countries
UK Cabinet Energy Secretary Peter Walker's public criticism last week of Prime Minister
Shuffle Likely Thatcher's economic policies probably will lead to a Cabinet reshuffle. Walker
blamed the Tory government for the slide in the pound, high unemployment,
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and a lag in developing high technology. He also accused Thatcher of stifling
the economic recovery with "uninspired expectations about economic growth."
Walker is the only Tory liberal remaining in the Cabinet and has been
considered a candidate to succeed Thatcher as party leader. His accusations
may prompt Thatcher to ask for his resignation. The Prime Minister
reportedly has been considering a Cabinet shuffle for some time, and she may
use Walker's departure as a pretext within the next few weeks. In any event, a
Cabinet reorganization by the end of the year appears a virtual certainty.
Spain and Portugal As part of their accession arrangements with the EC, Spain and Portugal have
To Reduce Bilateral settled on terms for reducing trade barriers-and increasing fishing restric-
Trade Restrictions tions-during the transition to EC membership. Lisbon won Madrid's agree-
ment to mutually lower tariffs on manufactured goods over a seven-year period
and to open up agricultural trade over a 10-year period according to the same
formulas that will govern trade with the Community. The result will be to
shield Portugal's backward farm sector from Spanish produce and provide
Portuguese exporters greater access to Spain's highly protected market.
Nonetheless, Spain probably will widen its trade surplus with Portugal because
the Spanish agricultural and industrial sectors are generally more competitive.
Some of Portugal's most important exports-textiles, cork, tomato paste, and
petrochemicals-will be restrained by quotas. Lisbon will permit Spain only
111 fishing licenses in its 12- to 200-mile fishing zone and 10 licenses within
the 12-mile limit annually during the first 10 years-a previous agreement,
which Lisbon had unilaterally suspended, licensed about 200 Spanish fishing
Canadian Banking The Mulroney government last month presented a parliamentary discussion
Deregulation Proposed paper on the deregulation of Canadian financial institutions, which aims at
increasing competition in financial services. Under the proposed regulations,
nonbank financial institutions could set up new banks by first creating special,
federally regulated holding companies. Canadian-owned holding companies
would be allowed to acquire up to 100-percent ownership in the new banks,
while foreign holding companies and other invertors would be subject to a
10-percent limit. Some operations of firms controlled by a holding company
could be merged, but each firm would have to remain a separate entity. The
new rules would raise solvency requirements, ban self-dealing, and increase the
power of regulatory agencies. The government probably will press for enact-
ment of the proposals in September.
Less Developed Countries
Mexican Financial Increasing external payments problems are undercutting Mexico's implemen-
Troubles Mount tation of its IMF economic program and dimming prospects for self-sustaining
growth. Mexico's trade surplus dropped by nearly half-to $1.5 billion in
Secret 24
10 May 1985
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Secret
Brazil's
Economic Team
1984 capital flight totaled only $3 billion.
January and February 1985-compared with the corresponding 1984 period.
This reflects the overvalued peso and soft oil market that cut exports 14
percent and a rebounding economy that boosted imports 43 percent. Capital
flight accelerated early in the year, contributing to a $2 billion drop in
international reserves, according to the Mexican financial press. For all of
provide much new money.
Mexico has promised the IMF it will limit domestic spending and foreign
borrowing this year. The government's continued use of stimulative economic
policies, however, indicates that 1985 will be another year of high budget
deficits and inflation. President de la Madrid probably will not change these
policies until at least after the July elections. For example, we believe he will
postpone official devaluation until then. Deteriorating external accounts
probably will force Mexico City to seek new credits beyond its 1985 net
external borrowing limit of $1 billion, even though bankers appear reluctant to
expects tough negotiations with the Fund over monetary, public deficit, and
infighting will increase over economic priorities. Finance Minister Dornelles,
Neves's closest adviser, advocates bringing down inflation through cutting the
public-sector deficit. He has already ordered a 10-percent reduction in public
spending and a freeze on state bank lending. The US Embassy reports these
measures have contributed to increased infighting between Dornelles and
Planning Minister Sayad, whose influence has increased under Sarney. Sayad
appears more willing to subordinate inflation fighting to more expansionary
policies and social spending. Meanwhile, Central Bank President Lemgruber,
also a proponent of austerity, will continue to push for an IMF program, but he
Guatemala's Next The government has invited business and labor to participate in creating an al-
Attempt at Austerity ternative to the stabilization package recently withdrawn after coup rumors
and strong private-sector opposition. The US Embassy reports that Central
Bank officials believe the government will agree to cuts in spending to build
private support for tax increases and tighter monetary policies. Government
foreign exchange flows are inadequate to cover both debt service and essential
imports, and petroleum shortages are likely by the end of May. Meanwhile,
the US Embassy reports Guatemala's currency depreciated by nearly 35
percent in April. A new stabilization package is not likely to contain tax
increases sufficient to correct the government's finances, but any narrowing of
the deficit would improve the prospects for the civilian government scheduled
25 Secret
10 May 1985
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to take office next January. A tax increase also would facilitate negotiations
with the IMF and pave the way for badly needed economic assistance from in-
ternational lenders and donors. In any event, Guatemala is likely to push for
more US financial assistance.
Tensions Over Tunisian The government of President Bourguiba, plagued by a series of strikes during
Economic Problems the past month, is trying to avert further unrest but probably will not be able
to alleviate the underlying causes. Although Tunisia's largest union postponed
a general strike planned for this week to avoid jeopardizing wage negotiations,
the US Embassy reports that many members resent previous concessions their
leaders made to the government and would prefer to strike. The government
arrested some union activists last week as a general warning to those who had
planned to participate in the strike. Although significant concessions on wages
would result in unacceptable budgetary deficits, Tunis might try to limit the
strains by cutting back on extra food traditionally imported'iduring the month
of Ramadan, which begins on 22 May, and then increasing prices this summer.
Ramadan is usually quiet, but price increases would probably cause new
tensions.
Moroccan Devaluation The Moroccan dirham has lost about 8.2 percent of its value against the US
in Process dollar over the past two weeks. This slide marks Rabat's attempt to realign the
currency more closely with those of its major trade partners and to help ensure
IMF approval of a new standby loan scheduled for mid-June. The devalua-
tion-a word not used by the government-is being accomplished by reducing
the weight of the US dollar in the currency basket used by the Bank of
Morocco to set its daily exchange rate. This process probably will continue
until the IMF suggested 12-percent adjustment is made. Rabat has strongly
resisted devaluation on the grounds that the cost of food imports will rise
sharply while the impact on exports will be small. Nevertheless, the need to ac-
commodate the IMF and show progress on economic stabilization before
upcoming debt rescheduling talks with international creditors forced Moroc-
co's hand. The more troubling issue of reducing expensive food subsidies,
however, has yet to be addressed.
Moroccan-Libyan Morocco's nine-month-old union with Libya gives every sign of moving
Union on Track forward. Trade figures show a 200-percent increase in Moroccan exports to
Libya last year and Moroccan officials project that trade between the two
states probably will double again this year._______________________________
for the first time two Libyan aircraft recently were allowed to use Moroccan
airports with at least one aircraft transiting to Suriname.
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10 May 1985
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will continue to support the union as long as it effectively offsets Algeria's re-
gional influence, Libya refrains from supplying the Polisario, and Qadhafi can
tout the union as a foreign policy success in his dealings with other Arab and
African states.
Ghana Adheres to Ghana's recently announced 1985 budget substantially maintains the policies
IMF Program of its tough IMF-backed economic recovery program. The budget's .provisions
include a 6-percent devaluation, an increase in petroleum prices, and a budget
deficit target of 2 percent of GDP. Resistance from radical leftists within the
Rawlings government-who fiercely oppose the IMF guidelines-limited the
size of the projected devaluation. Western economists view the outcome of
Ghana's two-year-old IMF agreement as an important test case for
IMF-sponsored reform in West Africa.
Troubles in Algiers Riots in the Casbah, the ghetto area of Algiers, are the most recent and violent
expression of discontent over living standards in Algeria, according to the US
Embassy. The collapse of an old building, killing at least one person, ignited
protests against government foot-dragging on housing and other social ser-
vices. Riot police moved quickly to put a lid on disturbances, and the
government announced plans to relocate up to 10,000 people by July. The
rapid pace of the government's response underscores concern over unemploy-
ment, urban overcrowding, and the spartan living standards of most Algerians.
The suspicion that Islamic fundamentalist groups or Libyan-inspired agitators
used legitimate housing complaints to advance their cause is of even greater
concern. The large number arrested and government's plans to swiftly
prosecute the ringleaders are intended to counter perceptions of weakness.
Indonesian Economic Indonesia's 1984 economic performance was much stronger than expected,
Performance according to the US Embassy. The economy grew 6.5 25X1
percent-compared with the 5 percent previously estimated by most observ-
ers-largely as a result of a 50-percent increase in LNG output and a record
rice crop of 25.8 million metric tons. Indonesia trimmed the current account
deficit to $2.9 billion-from $4.2 billion in 1983-largely by cutting imports
and expanding nonoil exports; manufactured exports rose 15 percent. The
government is projecting a current account deficit of $3.4 billion this year as
imports rise faster than exports; protectionist barriers in key markets have
already slowed the growth of Indonesia's plywood and textile exports from the
rapid pace of the past two years. Economic growth probably will slow to about
4 percent as the oil market remains soft and agricultural growth slackens after
two boom years. 25X1
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French Auto Maker Citroen is talking to Hanoi about reopening its former automobile assembly
Considering Investment plant in Ho Chi Minh City, The company last
in Vietnam month requested information on the con itio oof the plant and on Hanoi's
receptivity to French investment. Citroen left Vietnam in the late 1970s when
it was unable to come to terms with Hanoi on a joint venture. Citroen's request
may be in response to Hanoi's recent favorable statements on foreign
investment as well as to a French Government policy encouraging private
investment in Indochina. A decision to return to Vietnam would probably
require substantial economic concessions from Hanoi, however, as Citroen is
investigating the establishment of plants in a number of countries, including
China, that show more economic promise.
Secret 28
10 May 1985
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Iq
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Directorate of
Intelligence
Economic & Energy
Indicators
DI EEI 85-010
10 May 1985
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 Sanitized Copy Approved for Release 2011/03/03: CIA-RDP88-00798R000100070007-9
This publication is prepared for the use of US Government
officials, and the format, coverage, and content are designed to
meet their specific requirements. US Government officials may
obtain additional copies of this document directly or through
liaison channels from the Central Intelligence Agency.
Requesters outside the US Government may obtain subscriptions to
CIA publications similar to this one by addressing inquiries to:
Document Expediting (DOCEX) Project
Exchange and Gift Division
Library of Congress
Washington, D.C. 20540
or: National Technical Information Service
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Requesters outside the US Government not interested in subscription
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Comments and queries on this paper may be directed to the DOCEX
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Economic & Energy
Indicators
Page
Industrial Production
Gross National Product
Consumer Prices
Money Supply
Unemployment Rate
Foreign Trade
Current Account Balance
Export Prices in US $
Import Prices in US $
Exchange Rate Trends
Money Market Rates
Agricultural Prices
Industrial Materials Prices
Energy
World Crude Oil Production, Excluding Natural Gas Liquids 8
Big Seven: Inland Oil Consumption 9
Big Seven: Crude Oil Imports 9
OPEC: Crude Oil Official Sales Price 10
OPEC: Average Crude Oil Official Sales Price (Chart) 11
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Industrial Production
United States
2.6
-8.1
6.4
10.7
Japan
1.0
0.4
3.5
11.1
West Germany
-2.3
-3.2
0.4
3.2
France
-2.6
-1.5
1.1
2.6
United Kingdom
-3.9
2.0
3.3
0.9
Italy
-1.6
-3.1
-3.2
3.1
Canada
0.5
-10.0
5.7
8.7
Percent change from previous period
seasonally adjusted at an annual rate
United States
2.5
-2.1
3.7
6.8
7.1
1.6
4.2
1.4
Japan
4.1
3.3
3.1
5.7
7.6
2.6
9.6
West Germany
-0.2
-1.1
1.3
2.6
-7.7
9.0
5.8
France
0.2
2.0
0.7
1.6
1.7
3.0
-0.3
United Kingdom
-0.9
1.4
3.4
1.6
-5.7
-1.3
12.2
Italy
0.2
-0.4
-1.2
2.6
2.7
4.6
-2.3
Canada
3.3
-4.4
3.3
4.7
3.2
6.6
2.3
0
3.0
-2.2
3.7
-7.7
-2.0
9.4
-21.4
12.5
-1.2
-24.1
-17.1
74.0
8.5
20.2
-2.3
6.5
-37.9
158.1
6.8
-8.7
-2.3
11.6
5.5
-9.5
3.4
-6.9
1.1
Percent change from previous period
seasonally adjusted at an annual rate
Annual
2d Qtr 3d Qtr 4th Qtr 1st Qtr
Percent change from previous period
seasonally adjusted at an annual rate
United States
10.3
6.2
3.2
4.3
3.3
2.3
4.2
5.8
Japan
4.9
2.6
1.8
2.3
2.3
4.9
-4.3
-0.1
West Germany
6.
5.3
3.6
2.4
3.8
4.3
5.3
5.8
2.4
France
13.3
12.0
9.5
7.7
5.6
5.1
5.7
7.1
United Kingdom
11.9
8.6
4.6
5.0
7.0
7.4
8.9
14.0
Italy
19.3
16.4
14.9
10.6
10.2
10.0
10.7
10.9
12.7
Canada
12.5
10.8
5.8
4.3
5.5
6.0
5.3
1.9
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Money Supply, M-1 a
Percent change from previous period
seasonally adjusted at an annual rate
a Based on amounts in national currency units.
b Including M1-A and Ml-B.
Japan
2.2
2.4
2.7
2.7
2.5
2.4
2.6
2.6
West Germany
5.6
7.7
9.2
9.1
10.4
10.6
10.5
10.0
9.3
France
7.6
8.6
8.5
9.6
9.9
9.9
9.9
10.0
10.2
United Kingdom
10.0
11.6
12.3
12.6
13.0
12.9
13.0
13.0
13.1
a Unemployment rates for France are estimated.
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Foreign Trade a
United States b
Exports
233:5
212.3
200.7
217.6
55.7
19.4
17.9
18.4
Imports
261.0
244.0
258.2
325.6
84.4
28.3
28.0
28.1
Balance
-27.5
-31.6
-57.5
-107.9
-28.7
-8.9
-10.1
-9.7
Japan
Exports
149.6
138.3
145.5
168.2
40.1
14.1
13.2
12.8
Imports
129.5
119.7
114.1
124.0
28.7
9.6
9.7
9.4
Balance
20.1
18.6
31.5
44.2
11.5
4.6
3.5
3.4
West Germany
Exports
175.4
176.4
169.4
172.0
40.7
14.2
13.6
13.0
Imports c
163.4
155.3
152.9
153.1
36.3
12.8
11.9
11.5
Balance
11.9
21.1
16.6
18.8
4.5
1:5
1.7
1.5
France
Exports
106.3
96.4
95.1
97.5
22.5
7.1
7.6
7.9
Imports
115.6
110.5
101.0
100.3
23.6
7.5
8.2
8.0
Balance
-9.3
-14.0
-5.9
-2.8
-1.1
-0.4
-0.6.
-0.1
United Kingdom
Exports
102.5
97.1
91.8
93.8
22.6
7.4
7.6
7.7
Imports
94.6
93.0
92.7
99.5
24.0
7.5
7.9
8.7
Balance
7.9
4.1
-0.8
-5.7
-1.4
-0.1
-0.3
-1.0
Italy
Exports
75.4
74.0
72.7
73.6
5.7
6.1
Imports
91.2
86.8
80.7
84.4
6.9
7.3
Balance
-15.9
-12.8
-7.9
-10.7
-1.2
-1.1
Canada
Exports
70.5
68.5
73.7
86.8
7.3
7.1
Imports
64.4
54.1
59.3
70.8
6.2
5.9
Balance
6.1
14.4
14.4
16.1
1.0
1.2
a Seasonally adjusted.
b Imports are customs values.
c Imports are c.i.f.
Japan
4.8
6.9
20.8
35.0
6.8
0.8
2.5
3.5
West Germany
-6.8
3.5
4.1
5.9
1.1
-0.2
0.6
0.8
United Kingdom
15.3
9.8
4.3
0
0
0.4
0.1
-0.5
a Seasonally adjusted; converted to US dollars at current market
rates of exchange.
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Export Prices in US $
Percent change from previous period
at an annual rate
Annual
3d Qtr
4th Qtr
Jan
Feb
Mar
United States
9.2
1.5
1.0
1.4
-2.2
-3.7
-2.0
-4.4
Japan
5.5
-6.4
-2.4
0.2
-14.9
-4.7
-14.8
-8.2
West Germany
-14.9
-2.8
-3.2
-7.1
-23.0
-12.8
-17.8
-33.9
4.1
France
-12.0
-5.5
-5.0
-21.6
-9.7
United Kingdom
NA
-7.3
-5.9
-4.8
-17.2
-16.0
-34.0
-11.2
68.6
Italy
-7.8
-3.2
-5.8
-17.8
Canada
3.9
-2.0
-1.2
-3.7
-5.2
-6.3
8.5
-24.1
Percent change from previous period
at an annual rate
Annual
3d Qtr
4th Qtr
Jan
Feb
Mar
United States
5.3
-2.0
-3.7
-1.7
3.6
-2.9
-21.1
4.4
Japan
3.6
-7.3
-5.1
-2.8
-5.2
-8.4
-28.9
4.9
West Germany
-8.6
-4.7
-5.2
-4.8
-22.5
-11.1
-11.4
-24.4
19.4
France
-7.8
-7.2
-7.0
-22.9
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Exchange Rate Trends
Percent change from previous period
at an annual rate
West Germany
-2.1
7.0
5.8
1.0
-5.1
5.7
Italy
-9.2
-5.1
-1.6
-3.1
9.4
-10.6
Canada
0.3
0.2
2.3
-2.3
8.5
-13.4
Dollar Cost of Foreign Currency
Japan
2.7
-12.8
4.5
-19.6 __
-33.5'
-32.5
9.6
25.5
West Germany
-24.6
-7.2
-5.2
-11.5
-28.0
-26.3
-58.7
-0.8
54.2
France
-28.7
-20.8
-15.9
-14.7
-26.7
-26.1
-54.7
-1.0
55.4
United Kingdom
-13.2
-13.4
-13.3
-11.9
-28.6
-28.9
-28.9
41.1
212.0
Italy
-32.8
-18.8
-12.3
-15.6
-30.3
-25.0
-66.8
-29.4
46.4
Money Market Rates
United States
90-day certificates of
deposit, secondary market
Japan
loans and discounts
(2 months)
7.79
7.23
NA
6.66
6.55
6.56
6.55
6.54
West Germany
interbank loans
(3 months)
12.19
8.82
5.78
5.96
6.12
5.84
6.17
6.35
5.98
France
interbank money market
(3 months)
United Kingdom
sterling interbank loans
(3 months)
13.85
12.24
10.12
9.91
12.97
11.74
13.56
13.63
12.67
Italy
Milan interbank loans
(3 months)
Canada
finance paper (3 months)
18.46
14.48
9.53
11.30
10.59
9.83
10.59
11.35
Eurodollars
3-month deposits
16.87
13.25
9.69
10.86
9.04
8.58
9.19
9.43
8.85
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1st Qtr
Feb
Mar
Apr
Australia
(Boneless beef,
f.o.b., US Ports)
125.2
112.1
108.4
110.7
101.1
100.2
102.4
100.0
90.2
United States
(Wholesale steer beef,
midwest markets)
104.3
100.0
101.4
97.6
100.9
96.6
97.4
92.4
94.3
Cocoa
(? per pound)
113.5
89.8
74.3
92.1
106.2
99.2
100
98.9
101.6
Coffee
($ per pound)
Corn
(US #3 yellow,
c.i.f. Rotterdam
$ per metric ton)
Cotton
(Memphis middling
1 1/16 inch, $ per pound)
0.8219
0.7243
0.6073
0.6873
0.6849
0.6062
0.5959
0.6154
0.6241
Palm Oil
(United Kingdom 5% bulk,
c.i.f., $ per metric ton)
US
(No. 2, milled,
4% c.i.f. Rotterdam)
598
632
481
514
514
496
496
496
496
Thai SWR
(100% grade B
c.i.f. Rotterdam)
522
573
362
339
310
254'
256
250
241
Soybeans
(US #2 yellow,
c.i.f. Rotterdam
$ per metric ton)
Soybean Oil
(Dutch, f.o.b. ex-mil.
$ per metric ton)
Soybean Meal
(US, c.i.f. Rotterdam
$ per metric ton)
257
252
219
238
197
157
152
152
155
Sugar
(World raw cane, f.o.b.
Caribbean Ports, spot
prices 0/lb.)
29.03
16.93
8.42
8.49
5.18
3.69
3.65
178
3.37
Tea
Average Auction (London)
(US ? per pound)
101.4
91.0
89.9
105.2
156.6
126.9
127.3
110.4
103.0
Wheat
(US #2. DNS
Rotterdam c.i.f.
$ per metric ton)
209
210
187
183
182
177
182
168
170
Food Index a
(1975=100)
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Industrial Materials Prices
81.0
81.0
81.0
81.0
81.0
80.8
57.4
44.9
65.1
56.8
49.2
50.0
49.5
49.8
Chrome Ore
(South Africa chemical
grade, $ per metric ton)
55.0
53.0
50.9
50.0
50.0
49.9
50.0
50.0
50.0
Copper a (bar, 0 per pound)
98.7
79.0
67.1
72.0
62.4
62.1
63.5
62.2
66.6
Gold ($ per troy ounce)
612.1
460.0
375.5
424.4
360.0
300.0
302.1
295.3
326.7
Lead a (0 per pound)
41.1
32.9
24.7
19.2
20.0
17.2
17.2
15.7
17.3
Manganese Ore
(48% Mn, $ per long ton)
78.5
82.1
79.9
73.3
69.8
69.6
69.8
69.4
68.4
Nickel ($ per pound)
Cathode major producer
3.5
3.5
3.2
3.2
3.2
3.2
3.2
3.2
3.2
LME Cash
3.0
2.7
2.2
2.1,
2.2 .
2.2
2.2
2.3
2.4
Metals week,
New York dealers' price
Rubber (0 per pound)
Synthetic b
Natural c
73.8
56.8
45.4
56.2
49.6
42.0
42.0
42.0
42.0
Silver ($ per troy ounce)
20.7
10.5
7.9
11.4
8.1
5.9
6.1
5.7
6.4
Steel Scrap d ($ per long ton)
91.2
92.0
63.1
73.2
86.4
83.7
82.0
86.8
NA
Tine (? per pound)
761.3
641.4
581.6
590.9
556.6
501.1
499.0
499.7
533.3
Tungsten Ore
(contained metal,
$ per metric ton)
18,219
18,097
13,426
10,177
10,243
11,515
11,568
12,025
11,792
US Steel
(finished steel, composite,
$ per long ton)
Lumber index a
(1975=100)
167
159
140
Industrial Materials Index r
184
166
142
(1975=100)
. Approximates world market price frequently used by major world
producers and traders, although only small quantities of these
metals are actually traded on the LME.
b S-type styrene, US export price.
F Quoted on New York market.
Average of No. 1 heavy melting steel scrap and No. 2 bundles
delivered to consumers at Pittsburgh, Philadelphia, and Chicago.
This index is compiled by using the average of 11 types of lumber
whose prices are regarded as bellwethers of US lumber construction
costs.
rThe industrial materials index is compiled by The Economist for
18 raw materials which enter international trade. Commodities are
weighted by 3-year moving averages of imports into industrialized
countries.
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World Crude Oil Production
Excluding Natural Gas Liquids
'1985
Annual
3d Qtr
4th Qtr
Jan
Feb
World
59,463
55,827
53,014
52,588
53,827
53,195
53,661
Non-Communist countries
45,243
'41,602
38,810
38,228
39,257
38,711
38,952
Developed countries
12,859
12,886
13,276
13,864
14,302
14,216
14,618
United States
8,597
8,572
8,658
8,680
8,735
8,776 .
8,807
8,737
8,911
Canada
1,424
1,285
1,270
1,356
1,411
1,397
1,448
United Kingdom
1,619
'1,811
2,094
2,299
2,535
2,451
2,646
2,815
Norway
528
501
518
614
700
681
764
695
Other
691
717
736
915
921
911
953
1,014
Non-OPEC LDCs
5,443
6,036
6,633
6,823
7,515
7,565
7,704
7,179
Mexico
1,936
2,321
2,746
2,666
2,746
2,724
2,723
2,644
Egypt
595
598
665
689
827
833
890
890
Other
2,912
3,117
3,222
3,468
3,942
4,008
4,091
3,645
OPEC
26,941
22,680
18,901
17,541
17,440
16,930
16,630
14,846
16,391
Algeria
1,020
803
701
699
638
650
633
600
600
Ecuador
204
211
211
236
253
261
253
260
270
Gabon
175
151
154
157
152
157
150
150
150
Indonesia
1,576
1,604
1,324
1,385
1,466
1,400
1,411
1,160
1,190
Iran
1,662
1,381
2,282
2,492
2,187
2,002
2,299
1,400
2,100
Iraq
2,514
993
972
922
1,203
1,249
1,233
1,250
1,250
Kuwait b
1,389
947
663
881
912
933
834
900
900
Libya
1,830
1,137
1,183
1,076
1,073
1,027
1,000
1,000
1,000
Neutral Zone c
544 '
370
317
390
410
386
380
420
450
Nigeria
2,058 ,
. 1,445
1,298
1,241
1,393
1,232
1,600
1,400
1,700
Qatar
471
405
328
295
399
440
317
345
290
Saudi Arabia b
9,631
9,625
6,327
4,867
4,444
4,338
3,699
3,300
3,800
UAE
1,702
1,500
1,248
1,119
1,097
1,012
1,056
1,106
1,106
Venezuela
2,165
2,108
1,893
1,781
1,813
1,843
1,765
1,555
1,585
Communist countries
14,220
14,225
14,204
14,360
14,570
14,484
14,709
14,210
USSR
11,700
11,790
11,750
11,820
11,870
11,864
12,067
11,400
China
2,113
2,024
2,044
2,120
2,280
2,200
2,222
2,390
Other
407
411
410
420
420
420
420
420
a Preliminary.
b Excluding Neutral Zone production, which is shown separately.
c Production is shared equally between Saudi Arabia and Kuwait.
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Big Seven: Inland Oil Consumption
Thousand b/d
United States a
17,006 16,058 15,296
15,184
15,708
15,631
15,602
15,353
16;142
15,975
15,909
Japan
4,674 4,444 4,204
4,193
4,349
3,880
4,373
5,029
West Germany
2,356 2,120 2,024
2,009
2,012
1,902
2,076
1,856
2,162
France
1,965 1,744 1,632
1,594
1,531
1,587
1,530
1,577
2,024
1,738
United Kingdom
1,422 1,325 . 1,345
1,290
1,621
1,835
1,996
1,870
1,903
Italy b
1,602 1,705 1,618
1,594
1,513
1,502
1,560
1,558
1,763
Canada
1,730 1,617, 1,454
1,354
1,348
1,410
1,423
1,311
1,363
e Including bunkers, refinery fuel, and losses.
b Principal products only prior to 1981.
United States
5,220
4,406
3,488
3,329
3,402
3,751
3,552
3,126
2,700
2,126
2,670
Japan
4,373
3,919
3,657
3,567
3,664
3,405
3,489
3,722
3,194
4,053
West Germany
1,953
1,591
1,451
1,307
1,335
1,060
1,366
1,328
1,360
France
2,182
1,804
1,596
1,429
1,395
1,346
1,325
1,502
1,494
United Kingdom
893
736
565
456
482
506
478
486
489
Italy
1,860
1,816
1,710
1,532
1,416
Canada
557
521
334
247
244
187
235
285
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OPEC: Crude Oil Official Sales. Price e
Algeria
42? API 0.10% sulfur
19.65
37.59
39.58
35.79
31.30
30.50
30.15
30.50
30.50
29.50
Ecuador
280 API 0.93% sulfur
22.41
34.42
34.50
32.96
27.59
27.50
26.82
27.50
26.50
26.50
Gabon
29? API 1.26 % sulfur
18.20
31.09
34.83
34.00
29.82
29.00
28.35
29.00
28.00
28.00
Indonesia
350 API 0.09% sulfur
18.35
30.55
35.00
34.92
29.95
29.53
28.88
29.53
28.53
28.53
Light
34? API 1.35% sulfur
19.45
34.54
36.60
31.05
28.61
28.00
28.38
29.11
28.05
28.05
Heavy
31 ? API 1.60% sulfur
18.49
33.60
35.57
29.15
27.44
27.10
27.41
27.55
27.35
27.35
Iraq c
35? API 1.95% sulfur
18.56
30.30
36.66
34.86
30.32
29.43
28.78
29.43
28.43
28.43
Kuwait
310 API 2.50% sulfur
18.48
29.84
35.08
32.30
27.68
27.30
27.30
27.30
27.30
27.30
Libya
40? API 0.22% sulfur
21.16
36.07
40.08
35.69
30.91
30.40
30.40
30.40
30.40
30.40
Nigeria
34? API 0.16% sulfur
20.86
35.50
38.48
35.64
30.22
29.12
28.24
27.90
28.37
28.37
Qatar
40? API 1.17% sulfur
19.72
31.76
37.12
34.56
29.95
29.49
28.48
29.24
28.10
28.10
Berri
39? API 1.16% sulfur
19.33
30.19
34.04
34.68
29.96
29.52
28.48
29.27
28.11
28.11
Light
34? API 1.70% sulfur
17.26
28.67
32.50
34.00
29.46
29.00
28.32
29.00
28.00
28.00
Medium
310 API 2.40% sulfur
16.79
28.12
31.84
32.40
27.86
27.40
27.48
(27.65
27.40
27.40
Heavy
27? API 2.85% sulfur
16.41
27.67
31.13
31.00
26.46
26.00
26.50
26.50
26.50
26.50
UAE
39? API 0.75% sulfur
19.81
31.57
36.42
34.74
30.38
29.56
28.52
29.31
28.15
28.15
Venezuela
26? API 1.52% sulfur
17.22
28.44
32.88
32.88
28.69
27.88
27.69
27.88
27.60
27.60
? F.o.b. prices set by the government for-direct sales and, in most
cases, for the producing company buy-back oil.
b Weighted by the volume of production.
? Beginning in 1981 the price of Kirkuk (Mediterranean) is used in
calculating the OPEC average official sales price. .
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OPEC: Average Crude Oil Sales Price
11.29 11.02 11.77 12.88 12.93
1-1 r --I
3.39
34.50 33.63
n ~ o
Uo
U
1
1985
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