INTERNATIONAL ECONOMIC & ENERGY WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88-00798R000300010005-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 52
• Document Creation Date: December 27, 2016
• Document Release Date: January 11, 2012
• Sequence Number: 5
• Publication Date: January 31, 1986
• Content Type: REPORT

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f~~ \ Directorate of
L
International
Economic & Energy
Weekly
31 January 1986
DI IEEW 86-005
31 January 1986
Copy 700
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Economic & Energy Weekly I 25X1
International
31 January 1986
iii Synopsis
Perspective-Shifting Focus in World Countertrade
USSR-Third World: Potential for Expanded Countertrade
11 Israel: Austerity Takes Hold
The World Rice Surplus: Problems for Asian Producers
21 Briefs Energy
International Finance
Global and Regional Developments
National Developments
directed to Directorate of Intelligence,
Comments and queries regarding this publication are welcome. They may be
i Secret
DI IEEW 86-005
31 January 1986
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International
Economic & Energy Weekly 25X1
Synopsis
1 Perspective-Shifting Focus in World Countertrade
Countertrade transactions over the past year have become increasingly
complex, reflecting the continuing problems of slow world trade growth, high
LDC debt burdens, and growing protectionism.
3 USSR-Third World: Potential for Expanded Countertrade
Faced with depressed markets for raw materials, increasing protectionism in
the developed West, and severe restrictions on their borrowing, many Third
World countries may become increasingly receptive to Soviet trade overtures.
While a major shift in LDC trade from the West is unlikely, the Soviets
probably calculate that, in some cases, the overall political benefits may exceed
the modest commercial gains.
Israel: Austerity Takes Hold
unemployment.
The Israeli economy appears to be responding strongly to the austerity
measures imposed last July. Inflation has abated and the foreign reserve
position has improved, but at the cost of declining real wages and higher
15 The World Rice Surplus: Problems for Asian Producers
storage problems and stepping up competition for export sales.
Excessive rice stocks are depressing rice prices and as a result are cutting
critical foreign exchange earnings for such LDCs as Thailand, Pakistan, and
Burma. The harvest of another bumper crop is under way in Asia, intensifying
Secret
DI IEEW 86-005
31 January /986
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International
Economic & Energy Weekly) 25X1
31 January 1986
Perspective Shifting Focus in World Countertrade
Countertrade transactions over the past year have become increasingly
complex, reflecting the continuing problems of slow world trade growth, high
LDC debt burdens and growing protectionism. Such contracts have shifted
from simple, short-term barter transactions to more complex, counterpurchase
and offset agreements that can last up to 10 years. These contracts increasing-
ly involve products and technology transfer that governments hope will help
stimulate economic development and strengthen military capabilities
In 1985 the most rapid growth in countertrade occurred in military offset deals
between developed countries. Military offsets are usually designed to promote
the purchaser's defense industry capabilities. They range in complexity from
counterpurchase of military goods to joint production or some form of
technology transfer. Financial constraints faced by importing countries have
tightened the world arms market to the point where exporters regularly lose
sales if they fail to offer some form of countertrade. As a result, military
countertrade-dominated by aerospace products, communications, and elec-
tronics-has grown from 47 to 79 percent of total US countertrade during
1980-84, and continues to grow worldwide. These types of transactions may
result in a gradual shift in production of lower technology military hardware
away from the industrialized countries to new military exporters. For example,
Brazil and Egypt have been aggressive exponents of countertrade as well as
growing competitors in the international arms market.
The most frequently countertraded commodity in 1985 was oil. With the
deterioration in the world oil market, OPEC countries-most notably Iran,
Iraq, Nigeria, Libya, and Saudi Arabia-sought to maintain market share and
minimize the decline of the earning power of their oil. Countertrade deals
served to circumvent production quotas and disguise price discounts. Altogeth-
er, countertrade probably accounted for 10 to 20 percent of total OPEC oil
sales last year, according to press reporting
LDCs continue to countertrade primarily to expand exports and limit import
costs in the face of sizable debt burdens and a lack of hard currency. There are
signs that weak markets for traditional exports are causing them to also use
countertrade to boost nontraditional exports. Debtor country import restric-
tions and foreign exchange constraints are creating conditions that encourage
the private sector to seek alternatives to hard currency transactions. Although
governments are increasingly wary of the complications and inefficiencies
inherent in countertrade, for the most part they have not sought to formalize
regulatory policies.
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While more countries became involved in countertrade in 1985, growth in the
volume of countertrade probably slowed as a large number of deals fell
through. Oil countertrade activity dropped dramatically toward the end of
1985 as its widespread use and the breakdown of the OPEC official price
structure negated the advantages for producers. Moreover, falling prices
frequently wiped out the hidden discount by the time importers received the
oil. Exporters' motivations for countertrading oil will probably turn to
maintaining market share and to obtaining technology transfer. Countertrade
remains only a small share of total world trade-estimates vary significantly,
but it probably amounts to about 6 percent at most. Its inherent inefficiencies
and complications probably will continue to limit its use.
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USSR-Third World: Potential
for Expanded Countertrade
Faced with depressed markets for raw materials,
increasing protectionism in the developed West,
and severe restrictions on their borrowing, many
Third World countries may become increasingly
receptive to Soviet trade overtures. Moscow's offers
to barter industrial goods for energy or raw materi-
als appear to be more attractive to some hard-
pressed LDCs. While Soviet goods, in many cases,
are poor substitutes for Western items, barter
would enable these countries to maintain import
levels and conserve scarce hard currency. Likewise,
for the Soviets, such deals provide an outlet for
goods with limited markets in the West and reduce
import costs at a time when hard currency export
earnings are shrinking. Although we expect an
upturn in Soviet LDC countertrade, a major shift
in LDC trade from the West is unlikely. Nonethe-
less, the Soviets probably calculate that, in some
cases, the overall political benefits may exceed the
modest commercial gains.
The USSR has traditionally sought to barter its
technology and equipment for LDC commodities as
a means of both conserving hard currency expendi-
tures and finding outlets for manufactured goods
that cannot compete on Western markets. Trade
under clearing account agreements is balanced in
the aggregate rather than on a case-by-case basis.'
Moscow is selective in its countertrade offers,
however; the USSR seeks to obtain hard currency
whenever possible for arms sales even when the
alternative has been in heretofore marketable goods
such as oil.
' Other types of countertrade include straight barter deals, counter-
purchases (contractually linked sales), buybacks (involving the
provision of equipment for an industrial project with payment made
in the form of the enterprise's output), offsets (involving a license
Soviet interest in countertrade has quite likely
strengthened considerably over the last year. Gen-
eral Secretary Gorbachev needs increased inputs of
technology and equipment, semimanufactures, and
consumer goods to fuel his economic revitalization
program. This demand, however, comes at a time
when hard currency import capacity is being in-
creasingly circumscribed by falling domestic oil
production and a soft oil market. Expanded coun-
tertrade could potentially allow Moscow to con-
serve its hard currency expenditures for those goods
available only from Western industrialized coun-
tries.
In many cases political considerations play a major
role in Soviet economic dealings with the Third
World. Moscow often sees expanded economic rela-
tions as a first step in the development of political
linkages. Moreover, the USSR often takes advan-
tage of its commercial presence to expand intelli-
gence-gathering capabilities and support pro-Soviet
political factions. Such political calculations may
also have grown in recent months as part of the new
regime's desire to reinvigorate what had been an
increasingly stagnant policy regarding much of the
Third World.
Declining Western demand has seriously affected
many LDCs, particularly those dependent on one
or two raw materials for foreign exchange earnings.
The impact is particularly serious given the high
current indebtedness of many of these countries,
which effectively prevents them from covering ex-
port shortfalls with additional borrowing. Produc-
ers of raw materials, such as oil, that face slack
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markets may become even more receptive to Soviet
countertrade arrangements. While LDCs are not
excited over the prospect of having to settle for
second best, Moscow is usually capable of providing
a level of technology and equipment adequate to
meet basic Third World requirements. The ability
to obtain such goods with exports that cannot be
effectively sold in the West is often sufficient to
close the deal.
The willingness to expand commercial contacts
with the USSR is often linked to other factors as
well. Specifically, Third World leaders may see
commercial transactions as a means of maintaining
a positive, albeit low-profile, relationship with Mos-
cow. In some cases, LDCs may wish to increase
commercial contacts with the USSR to gain lever-
age with Western patrons. For example, Imelda
Marcos asserted during a trip to Moscow in early
November that the Philippines should engage in
more barter trade with the USSR, describing such
trade as a countermeasure against industrialized
countries' growing protectionist policies.
Ongoing Negotiations
Asia. A visit by Deputy Prime Minister Ryabov to
Malaysia, Indonesia, and Burma last fall probably
represented an effort to reinvigorate commercial
ties to ASEAN states, and perhaps to allay suspi-
cions of Soviet support for Vietnam. In Malaysia-
where Moscow never has been able to balance its
rubber imports with equipment shipments-Rya-
bov reportedly offered Soviet aid for oil exploration
and drilling, the exploitation of tin, and the estab-
lishment of industrial and power plants. In discus-
sions in Jakarta, Ryabov reached an agreement for
Soviet loans for equipment to increase production
of palm oil, tea, and coffee, with repayment in kind,
according to a reliable source. The Soviet offer to
accept nonoil exports came at a welcome time,
since Indonesia has been trying hard to boost such
exports to offset dwindling petroleum revenues. E:::
Indonesian
officials suspect that these loans may be used to
influence plantation workers, thousands of whom
supported the Communist Party of Indonesia dur-
The Kremlin apparently also has tried to capitalize
on pressure to tighten US textile restrictions. In
recent months, according to Embassy reporting,
Moscow offered to accept about $1 million worth of
shirts produced in Thailand on a countertrade basis
in order to pick up the slack from lower US imports
of garments. Moscow probably believes that Thai
labor protests of US textile restrictions and de-
mands that the government expand trade with the
Soviet Bloc will improve the position of those in the
Thai Government who support closer ties to the
USSR. The Soviets may well make similar offers
for rice if Washington acts against Bangkok on a
pending countervailing duty case involving alleged
rice subsidies.
Latin America. In 1983, the USSR restructured
$200 million in payments on Peru's $1-2 billion
debt scheduled for 1983-85; the Soviets allowed
Lima to cover part of the repayment in goods,
mainly manufactures such as textiles. In 1985,
Moscow agreed to convert the cash repayments due
that year into commodity repayments.
Such deals ensure that Peru makes at least some
repayment, but the Soviets no doubt believe that
they generate good will that will spill over into
political relations,
The Kremlin probably realizes that Peruvi-
aaneaders welcome deliveries to the Soviet market
as a way of reducing unemployment in Peru's hard-
pressed industrial sector; in June 1985, a Soviet
diplomat claimed that the USSR's willingness to
accept Peruvian goods helped the country "to reac-
tivate its textile and shoe industries."
Moscow also has tried to use commercial offers for
political gains in Bolivia. The US Embassy in La
Paz reports that the USSR-a traditional importer
of Bolivian tin-offered to buy all the tin Bolivia
can produce in exchange for purchases of Soviet
machinery. Although La Paz is formally consider-
ing Moscow's offer, the administration that came
into power last August probably would not risk
alienating the IMF and Western creditors by com-
mitting a large share of its hard currency exports to
a barter deal with Moscow. Nonetheless, the USSR
ing the 1950s and 1960s.
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has continued to seek ways to capitalize on the
damage inflicted on the Bolivian economy by the
collapsing tin market. According to Embassy re-
porting, Soviet officials, appearing on local televi-
sion programs, have pointed to tin sales by the US
General Services Administration as a contributor
to Bolivia's crisis, and they used that forum to
reiterate the USSR's barter offer.
A longstanding desire by Soviet economic planners
for stable sources of supply probably best explains
various recent barter deals with Jamaica and Guy-
ana. In 1984, Moscow and Kingston agreed that
Jamaica would deliver 1 million metric tons of
bauxite annually for seven years, balanced largely
by Soviet deliveries of Lada automobiles. This deal,
signed under the Manley administration, may have
to be renegotiated; Jamaicans have so far shown a
clear distaste for the car. Moscow also has a barter
arrangement with Guyana under which it receives
bauxite in return for Soviet-made tractors. Further-
more, in 1985, the USSR concluded a deal to
deliver a TU-154 transport aircraft to Guyana,
with payment partly in bauxite.
Moscow, however, has been unsuccessful in its
attempts to get both Argentina and Brazil to
reduce their respective hard currency bilateral sur-
pluses by boosting their purchases of Soviet mer-
chandise, particularly manufactured goods. The
Soviets have been particularly persistent in trying
to sell Buenos Aires machinery for major projects
such as the grain loading port at Bahia Blanca to
offset Argentina's large, multiyear grain sales.
Middle East. The USSR's largest barter arrange-
ments are with its OPEC arms customers. For
several years, the Kremlin has been accepting
significant volumes of petroleum from Libya, Iraq,
Algeria, Saudi Arabia (acting on behalf of Iraq),
and occasionally Iran, in lieu of cash payments for
arms. Given the financial constraints faced by these
countries, payment in commodities may be prefera-
ble to delayed cash payments. Nonetheless, unless
these countries increase their purchases of Soviet
weapons, the value of these oil barter deals is
unlikely to grow.
With no end in sight to the financial crisis plaguing
LDC debtors, the dim prospects for raw material
markets, and protectionist trends in the West,
Moscow appears to be in a good position to improve
its links to economically pressed Third World
countries. These countries need to find a way to
finance continued technology and equipment im-
ports as well as maintain export outlets. Moscow,
for its part, will be increasingly pressed to find soft
currency sources for goods traditionally purchased
in the West. The Soviets, however, face a number
of severe and longstanding handicaps that are likely
to prevent a major shift in LDC trade shares from
the West.
Soviet goods have a poor reputation for quality and
reliability; to a large extent, their machinery em-
bodies outmoded technology and there are frequent
difficulties with the availability of spare parts and
aftersales servicing. For these reasons, LDCs still
seem to prefer the more up-to-date Western equip-
ment, even at a higher price.
The USSR's reputation for commercial inefficiency
also may frustrate increasing countertrade with the
Third World. Even if LDCs are willing to invest the
extra time and effort required for countertrade, the
difficulties of dealing with Moscow can be particu-
larly daunting. LDCs encounter frequent and
lengthy delays from officials who often lack negoti-
ating authority, and they usually need to deal with
representatives from at least two foreign trade
organizations (one for the import side and one for
the export side). Out of concern over potential
Soviet meddling, Western-leaning LDCs may avoid
orders for large, industrial projects on a compensa-
tion basis in order to avoid a prolonged presence of
large numbers of Soviet technicians.
Nonetheless, the USSR may win a few more
contracts at the expense of Western firms because
of a willingness to accept repayment in kind. US
firms seem particularly averse to countertrade, and
some Soviet commercial successes are likely to
impinge on US interests. The Kremlin will have a
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special advantage if it accepts repayment in those
products, such as textiles and other manufactures,
that face Western import restrictions.
More important, the Soviets probably see such
deals as a way to achieve small, but not insignifi-
cant, political gains. The Kremlin undoubtedly
values highly any commercial gains in key LDCs
that might later translate into more significant
political breakthroughs. The recent approaches to
Indonesia and Thailand are prime examples. Thus
the Soviets probably calculate that, in some cases,
the overall political benefit from countertrade deals
may exceed the modest commercial gains.
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Israel: Austerity
Takes Hold
The Israeli economy appears to be responding
strongly to the austerity measures imposed last
July. Inflation has abated and the foreign reserve
position has improved, but at the cost of declining
real wages and higher unemployment. While public
reaction has been muted, pressures appear to be
building for the government to ease up a bit. Key
economic issues on the agenda in the coming
months-the budget, indexation, and tax reform-
will test the resolve of the National Unity govern-
ment. In addition, should Prime Minister Peres
renege on the power-sharing deal with Likud leader
Shamir, Peres may be tempted to back off on
austerity to woo votes in an early election. F_~
Developments in 1985
The current austerity package has proved more
effective than the National Unity government an-
ticipated. The key elements of the 1 July pro-
gram-new wage and price restraints, a 19-percent
shekel devaluation, and additional deficit-reducing
measures-were designed largely to slow the
monthly inflation rate to about 4 percent and to
offset overspending from the first few months of the
fiscal year. By the end of the year, the program
appeared to have wielded quite an impact:
? The monthly inflation rate slowed markedly,
averaging under 1 percent for the last two months
of the year. The inflation rate for all of 1985
dropped to 184 percent, compared with the record
445 percent recorded in 1984.
? Per capita consumption declined for the second
year, largely because of falling incomes. Real
wages plummeted 18 percent during the second
half of the year compared with the first half.
the private sector, as the bulk of the layoffs
planned for the public sector have yet to be
implemented.
? The slump in domestic economic activity helped
pare the civilian trade deficit by $500 million,
slowing the drain on foreign exchange reserves.
By yearend the infusion of new US aid boosted
reserves from $2.4 billion to a comfortable level
of $3.7 billion
Why the Improvements?
The determination of Prime Minister Peres and the
willingness of the Israeli consumer to shoulder
additional hardships have been instrumental in
helping the government program exceed expecta-
tions. Although Peres initially caved in on some
minor points, he has since stuck with the program
and resisted demands by trade union leaders to ease
up. His task has been made easier by the muted
response of labor's rank and file.
The Israeli public appears to have accepted the
leaner times in exchange for the unaccustomed
stability resulting from slowing inflation. Much less
time is now spent juggling assets or making pur-
chases to hedge against rapid price hikes. In addi-
tion, consumers have postponed buying many dura-
ble goods-especially imported automobiles- and
drawn on relatively high savings to help cope with
lower real wages.
The government also has demonstrated a suprising
ability to hold the line on expenditures. The sharp
slash in subsidies under the July program helped
put the budget back on track, and the government
has since fended off most ministerial requests for
? The unemployment rate climbed to 8 percent by
the last quarter of the year, its highest rate in
nearly two decades. The job losses were largely in
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Israel: Economic Indicators, 1984-85
Note scale changes
Average Monthly Inflation Rate Real Wages
Percent Index: 1980=100
1 100 N
I II III IV I 11
1984 1985
Seasonally adjusted.
Estimated.
III IV 95 1 II 111 IV I II IIIbIVh
1984 1985
additional funds. The fight to reduce the deficit
also has been helped by revenue-enhancing mea-
sures: increased taxes on property and the self-
employed, in particular, contributed to a 10-percent
climb in real tax revenues last year.
The slowdown in domestic economic activity-
especially the sharp drop in real wages-held off
pressures for a further large devaluation of the
shekel. Given the large imported component of
most Israeli goods, shekel devaluations have been
strong contributors to the inflationary spiral. The
shekel-dollar rate held relatively steady over the
latter half of the year, and the dollar's slide vis-a-
vis the currencies of Israel's major European trade
partners boosted Israel's export competitiveness.
The government now confronts the more formida-
ble task of maintaining the current economic
calm while introducing reforms needed to ensure
Export, -
4 Foreign
exchange
reserves
3 \~,/
lIffiT
I 1
1985
____i J I I
0 I 11 111 IV 1 11 III IVh
1984 1985
continued progress. Several key economic issues on
the agenda for the next few months will test the
resolve of the government. They include:
? Reducing the budget deficit. The most immediate
concern is final Knesset passage of the budget for
the 1986 fiscal year beginning 1 April. The
budget proposes to slash the deficit by $600 mil-
lion. Only $200 million, however, represents actu-
al spending cuts-most of the reduction is the
result of increased revenues, largely new user
fees. Some officials are also hoping to proceed
with the sale of a few government businesses.
? Tax reforms. The government hopes to introduce
some reforms at the start of the fiscal year, if not
sooner. The major objective is to reduce marginal
income tax rates-the top rate currently is 60
percent-to boost labor productivity. The govern-
ment anticipates some initial revenue losses, but
hopes to lessen the impact by continuing with its
efforts to improve tax collection.
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? Indexation modifications. Finance Minister Mo-
day already has publicly stated his intention to
"deindex" the Israeli economy. Wages are likely
to be tackled first because the existing indexation
agreement expires at the end of March, and the
government already has had some success in
suspending indexation under its previous wage-
price accords. The leader of Histadrut, the pow-
erful trade union confederation, opposes deindex-
ing wages unless financial assets are unlinked as
well. The government has made some minor
moves on this issue recently, but is proceeding
cautiously)
While some policies to help long-term growth
would be helpful, too hasty a move at this time
would only reignite high inflationary pressures and
lessen the prospects for meaningful structural ad-
justments. Pressures already are building to reflate
the economy. Some wage hikes are currently being
introduced, which, given the lower inflation rate,
will produce real wage growth over the next few
months. Moreover, concerns about the high unem-
ployment rate could prompt the government to
continue foot-dragging on its proposed public-
sector layoffs and possibly bail out some financially
troubled firms in the private sector.
Long-term economic progress also hinges on Per-
es's political strategy. At some point in the next few
months, Peres will probably decide whether to
relinquish his position to Likud leader Shamir next
October as stipulated in the coalition agreement.
Should Peres split the coalition to avoid stepping
down, he might be forced to call for an early
national election.
Historically, economic austerity and elections have
not gone hand in hand, and the current program
would be particularly vulnerable. The latest polls
show Israeli voters about evenly split on whether
the economic plan is succeeding, with the vote
falling along party lines. Peres may be inclined to
stimulate the economy to encourage defections
from Likud ranks and boost Labor's chances of
doing well enough at the polls to form a new
government. A somewhat more vigorous economy
would particularly appeal to the working-class Se-
phardim, who constitute the bedrock of Likud's
support and who have been hurt the most during
the current economic slowdown.
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The World Rice Surplus:
Problems for Asian
Producers
Excessive rice stocks are depressing rice prices and
as a result are cutting critical foreign exchange
earnings for such LDCs as Thailand, Pakistan, and
Burma. In addition, farm subsidies and stockpiling
costs have soared, contributing to mounting budget
deficits in other LDCs, such as India, Indonesia,
and South Korea. The harvest of another bumper
crop is under way in Asia, intensifying storage
problems and stepping up competition for export
sales. A complicating factor for Asian producers
will be the effect of recent legislation making US
rice exports more competitive. This is likely to put
additional downward pressure on world prices and
bring another year of declining earnings for Asian
exporters and lower prices to Asian farmers-
problems that could spill over into the domestic
political arena, particularly in Thailand)
Surpluses Mount
After two years of record crops, world rice stocks
are high, standing at a comfortable 7 percent of
consumption, according to USDA. The major rice
consumers-China, India, Bangladesh, Indone-
sia-have large surpluses. US stocks, cut back
briefly by the 1984 government acreage reduction
program, rebounded to a near-record 2 million
metric tons in 1985. As world stocks have grown,
prices have fallen in real terms to the lowest level in
over 20 years. Thai prices, which serve as the world
benchmark, declined by 6 percent during 1985. US
prices declined slightly but remained nearly double
the world average
and Indonesia, for example, during 1983-85, yields
increased by 17 and 5 percent, respectively, and
rice acreage increased by 8 percent, in response to
government price policy and subsidies on inputs
such as fertilizer, pesticides, and irrigation.
Although production has risen, global import de-
mand has stagnated since 1982. Indonesia, India,
and South Korea-the biggest importers in the
preceding decade-have achieved self-sufficiency.
Slack rice trade and depressed prices have forced
the major exporters-Thailand, Pakistan, China,
Burma, and the United States-to scramble for
sales. While the United States, handicapped by
relatively high prices and shipping costs to big
markets, saw its world market share decline from
21 percent in 1982 to 16 percent in 1985, most
competing exporters were able to sell increased
amounts of rice:
? Thailand boosted sales to markets in Africa, the
Middle East, and Europe formerly dominated by
the United States. The Thai share of world rice
trade rose from 31 percent in 1982 to 37 percent
in 1985.
? In China, government pressure to boost export
revenue has increased the flow of Chinese rice in
world trade-largely shipments of relatively low-
quality rice to Africa and nearby Southeast Asian
markets. China's market share rose from 4 per-
cent in 1982 to 9 percent in 1985.
The global surfeit stems in large part from a surge
in Asian rice production in the last three years,
resulting from exceptionally good weather in com-
bination with augmented government investment in
agriculture. Increased plantings of high-yielding
varieties, expanded use of fertilizers and chemicals,
and investment in irrigation has improved land
productivity, and farmers have reacted to price
incentives by planting more land to rice. In India
? In Pakistan, government marketing efforts in
West Africa and Brazil, as well as trade promo-
tions-including countertrade deals and credits-
in predominantly Muslim Asian countries, such
as Malaysia, are largely responsible for a gain in
trade shares from 7 to 8 percent in 1982-85.
Secret
DI IEEW 86-005
31 January 1986
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Secret
Rice Prices and World Rice
Stocks, 1982-86
Rice Pri ces
US $ per metric ton
0 1982 83 84 85 86
World Rice Stocks as a Share of Consumption c
Percent
a Average monthly price, c.i.f. Rotterdam, for No. 2, milled, 4% bagged.
b Average monthly price, c.i.f. Rotterdam, for SWR 100%, grade B, bagged.
c Stocks are measured as of 31 July, the end of the marketing year.
a Estimated.
e Projected.
World Rice Production Million metric tons
1982-86 a
1982
1983
1984
1985
1986b
Total
412.7
419.5
452.3
468.8
465.2
China
144.0
161.2
168.9
178.3
172.0
India
80.0
70.7
89.7
89.3
90.0
Indonesia
32.8
33.6
35.3
38.0
39.0
Bangladesh
20.5
21.3
21.8
22.0
22.5
Burma
14.1
14.4
14.4
14.8
14.5
Japan
12.8
12.8
13.0
14.8
14.8
Vietnam
12.6
13.8
14.0
13.8
14.0
South Korea
7.1
7.3
7.6
8.0
7.9
Pakistan
5.1
5.2
5.0
5.2
5.1
United States
8.3
7.0
4.5
6.2
6.0
USSR
2.4
2.4
2.7
2.8
2.8
Other
37.9
37.4
39.0
40.2
40.3
a Data for rough rice production during the mar-
keting year ending 31 July of the year stated.
b USDA projections.
In contrast, Burma lost ground in the years 1982-
85 as its market share declined from 6 percent to 4
percent. A major customer was lost when India
achieved self-sufficiency and Burmese official
prices were set too high
The surge in rice production has created a new set
of problems for Asian governments. Despite im-
pressive marketing efforts, export earnings of
LDCs dependent on rice exports for a large part of
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a Calendar years.
b USDA projections.
11,900
12,644
11,555
12,085
3,700
4,528
4,250
4,800
2,300
2,129
1,900
1,800
450
3,055
3,135
11,555
12,085
700
730
750
500
490
500
550
500
530
550
550
700
450
500
500
800
250
250
300
200
government revenues have been stunted by low
prices and weak demand. The fiscal cost of farm
price and input subsidies and storage of surpluses
has soared, contributing to mounting budget defi-
cits. The South Korean grain management
account-which makes up the difference between
the cost of procuring rice from farmers and the
price at which it is sold-regularly runs a deficit of
about $1.5 billion, according to Embassy reports.
The current costs for food and fertilizer subsidies in
India-much going to support rice farmers-will
amount to over $2 billion, a sum nearly equal to the
estimated overall budget deficit. Indonesian
Government revenues, crimped by falling oil prices,
were insufficient this year to procure enough rice to
support domestic floor prices. At the same time,
government stocks, currently costing about
$2.5 billion to finance, according to Embassy re-
ports, are of a quality too low to sell on world
export markets at a price covering the cost of
production.
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Selected Countries: Rice Export Earnings, 1982-85
Million US S
Note scale change
700 1982-84
Average
140 1982-84 85
Average
180 1982-84
Average
Low world rice prices have enabled the govern-
ments of importing countries such as Nigeria,
Liberia, Senegal, and Brazil to keep supplies flow-
ing to urban areas. For example, the Brazilian
Government, concerned about widespread malnu-
trition in the cities as well as in the countryside,
imported 400,000 tons of rice in 1985 to replenish
federally owned stocks sold at low prices to urban
consumers. Anticipating shortfalls as a result of
drought, the government recently announced plans
to increase 1986 imports substantially. Similarly,
countries in West Africa, where maintenance of a
steady supply of high-quality rice to the cities is
often a politicized issue, have been able to simulta-
neously build stocks and keep supplies flowing in
spite of foreign exchange shortages.
1982-84
Average
With another bumper crop now being harvested,
prices are likely to take another steep plunge in
1986. According to Embassy reports, prices
in Bangkok dropped precipitously during the first
week the new US farm bill was in effect, in
anticipation of declining 1986 US prices. Embassy
reporting further indicates that exportable Thai
rice supplies will be at record levels next year,
indicating continued intense competition and down-
ward pressure on Asian prices.
Moreover, US export sales of rice are likely to
accelerate in 1986, as a result of export incentives
mandated by recent US legislation. As of 15 April,
government payments to rice farmers will be in-
dexed to Asian prices, allowing US farmers to sell
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at a profit in world markets. As a result, USDA
now expects the gap between US and Asian prices
to melt away, and customers are expected to return
to US rice, which is generally valued for consistent
quality. F_~
Downward pressure on world rice prices means
another year of declining earnings for Asian gov-
ernments and lower prices to farmers, bringing
increasing political problems for LDC govern-
ments-especially Thailand. The government of
Prime Minister Prem, which has been pressured in
recent months both by the military and by opposi-
tion party coalitions, is particularly concerned
about criticism of his economic policies
Thai officiate
currently on the alert for demonstrations by farm-
ers protesting low rice prices.
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OPEC Production Saudi Arabia reportedly has revised its oil production target downward for
Update January Preliminary data indicate that OPEC 25X1
production in January may fall to about 17-17.5 million b/d-down more than
1 million b/d from December levels-with the Saudis absorbing more than
half of the decline. OPEC production may slip even further in February if
Libyan output drops in the aftermath of US sanctions and Iran makes good on
its threat to drastically cut exports. The decline in Saudi production may
indicate that companies are not taking all the oil to which they are entitled un-
der netback contracts, which link crude oil prices to the spot prices of refined
products. At this point it appears that any drop in Iranian production and
exports-the result of a successful Iraqi attack-will probably be short lived.
Downward price pressure could temporarily abate if other OPEC members
make no major attempt to boost output, but aggressive marketing could cause
prices to tumble further over the next few weeks.F__~ 25X1
Damage to Iranian an Iraqi airstrike on 23 January caused 25X1
Oil Facility extensive damage to Iran's anave oil pumping and manifold station.
Ganaveh is the final pumping station for Iran's principal export terminal on
Khark Island. Sections of new pipeline-part of a loading facility used as an
alternative to Khark Island-were also damaged. 25X1
the day after the attack only one tanker-instead of four- 25X1
was being loaded at Khark Island's T-jetty because of problems relating to the
transfer of crude to the loading facilities. because 25X1
of the slowdown of transshipments from Khark, 20 ships are waiting to load oil
at Sirri Island and that further delays are expected. Damage to Ganaveh will
probably hinder Iran's oil exports for several days or more. The apparent lack
of storage at Sirri will make the impact on Iran's oil exports immediate. I 25X1
Iran Cuts Iran announced Sunday that it intends to stop selling oil on the spot market
Oil Production and to halve oil production in an effort to buoy oil prices. It called on other oil
producers to follow suit, claiming that the industrialized nations and Saudi
Arabia are engaged in a plot to bring down the price of oil.
damage to Iran's Ganaveh manifold from the Iraqi attack on
23 January cut off the flow of oil to the Khark Island terminal. Damage at
Ganaveh, which will take seven to 10 days to repair, has forced at least a
temporary reduction in exports, and the announcement appears to be an
attempt to make the best of a bad situation. Iran is unlikely to reduce exports
Secret
DI IEEW 86-005
31 January 1986
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Secret
voluntarily for more than a couple of weeks after repairs are made. Tehran
probably hopes to rally support for cuts by other producers at the OPEC
special marketing meeting in Vienna next week, but the announcement will not
be persuasive.
Iraq Plans 1986 Iraqi oil production for 1986 is
Oil Production targeted at 2 million b/d, about 300,000 b/d above current production levels.
Increase Of this total production, Baghdad is planning to use netback and spot-market
related prices to increase exports by 250,000 b/d to a total of 1.7 million b/d.
half of Iraqi oil sales will be for cash, 200,000
b/d will go directly to pay creditors, and the remaining 650,000 b/d will be
part of countertrade deals, including 100,000 b/d to the Soviet Union for
military equipment. Baghdad probably cannot reach the 1.7-million-b/d
export target unless shipments through the Iraq-Saudi pipeline reach 600,000
b/d-100,000 b/d more than Riyadh has agreed to. Iraq's pipeline through
Turkey is operating near capacity, and logistic difficulties limit trucked
shipments through Jordan and Turkey.
Libyan Oil Industry Libya is moving ahead with its oil exploration and development program for
Adjustments 1986. despite US economic sanctions, the Sirte Oil
Company will drill six new wells in western Libya and proceed with offshore
work close to the Tunisian border. Sirte has contracts with two US firms for all
seismic work planned for this year. Companies in the United Kingdom or West
Germany are good alternatives, although Romanian or Bulgarian crews could
do the work, The withdrawal of US service companies
probably will not delay other planned oil exploration and development work in
Libya. West European or Eastern Bloc firms, as well as subsidiaries of US
companies, can complete seismic work albeit at some delay or increased cost.
Libyan Patience With Libyan officials have modified their demand for immediate payment from US
US Oil Companies companies for cargoes lifted in December,
During meetings in Vienna last week, Abdullah al-Badri,
chairman of the Libyan National Oil Company (LNOC), did not raise the
issue of default or the consequences of nonpayment and indicated that Tripoli
is prepared to be patient. Libya is still not permitting liftings by US
companies, and LNOC expects a response on payments due by 1 February.
LNOC officials commented privately that they want
to keep US companies in Libya because they are a source of investment and
technical expertise and market about 300,000 b/d of crude-primarily to
European refining subsidiaries. While the Libyans probably can divert US
company sales to the spot market in the short term by offering price discounts,
securing long-term outlets could be more difficult if US companies are forced
Secret
31 January 1986
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Secret
Venezuela Expediting The US Embassy reports that the state oil company, PDVSA, has accelerated
Foreign Oil Ventures its plans to acquire refining and distribution facilities abroad to protect its
market share. According to the Embassy, PDVSA is concerned that Saudi
attempts to force production limits by engineering a temporary decline in
prices may backfire. Caracas fears, instead, an extended period of cutthroat
competition and sharply reduced prices. As a precautionary measure, PDVSA
has expedited agreements on joint-venture deals with two refiners-one in
Sweden and one on the US Gulf Coast-and with a Washington, DC area oil
products distributor. Reportedly, these investments will give PDVSA an
assured outlet for about 200,000 b/d-in addition to exports of 150,000 b/d to
Veba Oel, PDVSA's West German partner. According to the Embassy,
additional deals are under consideration, with PDVSA's ultimate objective
being 600,000 b/d of assured exports to joint ventures. Neither the acquisition
costs nor the sources of financing for these deals have been reported, but the
required outlays are likely to be formidable, further straining hard currency
reserves as oil revenues fall.
Sudanese-Libyan Sudan's increasing dependence on Libyan crude oil has made Khartoum more
Oil Trade vulnerable to Qadhafi's blandishments, according to the US Embassy in
Khartoum. Tripoli already has supplied two-thirds of the initial 300,000-
metric-ton oil commitment free of charge, with the remainder expected to be
shipped by April. Moreover, the Sudanese Minister of Energy has requested
another 300,000-ton allotment to ensure Sudanese cooperation after planned
elections in April, according to the US Embassy. The new oil deal would save
Khartoum an additional $50 million in scarce foreign exchange. Qadhafi
probably will continue his oil diplomacy to strengthen his position in Khar-
toum and reduce US and Egyptian influence.
Soviet-Turkish The visit of Turkish Finance Minister Alptemocin to Moscow on 29-31
Gas Dispute January will focus on a continuing dispute over payment terms for the
proposed sale of Soviet natural gas. Ankara is tentatively slated to begin
receiving 1.5 billion cubic meters of gas via pipeline in 1987 and 5-6 billion cu-
bic meters annually by the 1990s. Although the original 1984 agreement
called for payment in hard currency, the Turks have been trying to obtain a
Soviet commitment to buy enough Turkish goods to offset the cost of the gas.
If the Soviets fail to give a firm countertrade commitment or to compromise on
price, Ankara may postpone contract negotiations indefinitely. The Soviets,
however, have completed arrangements for construction of their portion of the
pipeline and probably are anxious to avoid further delays. Prime Minister Ozal
is likely to pursue the issue during his scheduled visit to Moscow in May.
Progress on Chinese China this week reported its agreement in principle with the foreign companies
Nuclear Contracts supplying equipment and project services for the Guangdong nuclear power
plant. Memorandums of understanding had been signed in December desig-
nating France's Framatome as supplier of two 900-MW nuclear reactors, with
General Electric of Britain providing the turbine generators. Electricite de
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Secret
France is to supervise construction. The $3.5 billion plant will be operated by a
China-Hong Kong joint venture using UK financing, and China will sell some
of its electricity to Hong Kong to cover its share of the costs. China hopes to
have letters of intent-the last stage before signing contracts-signed by 30
April.
Iran Seeks Iran is seeking a $300 million loan with a term of three years or longer with
Foreign Credits which to build a 1,000-MW power plant north of Tehran. We expect Japanese
and other Western banks to provide the funds. In the past, Iran has avoided
foreign loans for development projects because it wanted to be self-sufficient.
Instead, Tehran used oil barter deals and foreign exchange reserves. Readily
accessible foreign reserves, however, are now equivalent to only three months
of imports, and, with oil prices falling, Iran does not want to reduce reserves
further.
Tunisian The steep drop in oil prices will have a chilling effect on Tunisia's shaky
Cash Crunch foreign exchange position and ability to meet debt service payments. Heavy
drawdowns on outstanding credit lines helped boost total foreign exchange
reserves to $250 million at the end of 1985 from a low of only $90 million in
July. Nevertheless, planned budget expenditures early this year probably will
cause reserve levels to tumble again. A $6 per barrel drop in oil prices coupled
with a weak phosphate market could add $100 million to the current account
deficit this year. A shortfall of this magnitude would wipe out much of the
gain from Tunisia's current austerity program and push the debt service ratio
above 25 percent. Tunis probably will have to seek additional foreign lending
this year, but creditors may demand even greater fiscal stringency, which will
strain already tense government relations with labor and consumers.
IMF Cuts Off The IMF this week formally declared Liberia ineligible to use Fund resources
Liberia because of $47.5 million in overdue payments. The arrears had already
triggered suspension of Liberia's standby arrangement in early 1985, and
Monrovia's dim financial prospects almost certainly will prevent any repay-
ment on outstanding IMF debt this year. Most government revenues were
mortgaged through next July in President Doe's political campaign effort to
pay overdue salaries. the govern-
ment may now force public employees to forfeit two months' unpaid salary,
and local businessmen predict that foreign payments problems could lead to
food and fuel shortages next month.
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Secret
Global and Regional Developments
Replacing US
a major UK engineering and construction firm
Companies in Libya
has increased the size of its staff in Libya by 25 workers-mostly pipeline
engineers and technicians
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it expects to add an additional 250 workers in Libya by the end of
25X1
February, essentially replacing the same number of departing US workers.
several West European companies will profit signifi-
25X1
cantly from the withdrawal of their US counterparts from Libya. Despite the
official position of some West European governments, West European equip-
ment and service companies probably will not hesitate long to replace US
companies in Libya. The worldwide recession in the oil industry makes
business and job opportunities there particularly attractive.
Soviet-North Yemeni North Yemeni and Soviet officials met in Moscow this week to discuss the re-
Economic Negotiations payment of North Yemen's debt to the USSR.
Sanaa owed Moscow nearly $700 million at the end of last year and that
payments for the loans, most of which cover military purchases, are scheduled
to begin in June. Last fall Moscow encouraged Sanaa to allow it to participate
in North Yemen's emerging oil industry in return for easier repayment terms.
however, the Soviets two weeks ago dropped this
precondition and expressed a willingness to postpone repayments until Sanaa's
financial situation improves. Rescheduling would slightly improve North
Yemen's financial situation. Moscow is trying to reingratiate itself with Sanaa
following the coup in South Yemen, but is unlikely to drop efforts to secure a
role in North Yemen's oil industry.
National Developments
Developed Countries
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Secret
Japanese Discount The Bank of Japan this week reversed its opposition to a unilateral reduction in
Rate Cut interest rates and cut the discount rate by one-half percentage point to 4.5 per-
cent. The recent strengthening of the yen against the dollar has, according to
the US Embassy, eased the Bank's fear that lower domestic interest rates
would accelerate capital outflows even if US interest rates hold steady. A
modest reduction in Japanese interest rates is unlikely to provide much
economic stimulus, however. Credit is widely available now for the larger
firms, and the problems of the smaller firms stem mainly from reduced foreign
Tokyo Continues I Tokyo has allotted funds
Launch Vehicle for two programs-an engineering test satellite and a module compatible with
Development the US space station. Both would involve the H-2 launch vehicle, which some
Japanese aerospace industry experts expected to be canceled because fiber-
optic technology has diminished demand for heavy communications satellites.
Funding for launch vehicle development reportedly will continue because the
National Space Development Agency wants to reduce dependence on US
manufacturers for aerospace technology, a policy we believe is aimed at
enabling Japan to launch satellites for foreign customers without obtaining US
agreement.
Italian Moves We believe recent Italian efforts to stem speculative pressure against the lira
To Halt Speculation will ultimately fail unless supplemented by additional action to bring down
Against the Lira inflation. The new measures, announced on 16 January, include a ceiling on
bank credit for the next six months, higher interest rates on short-term
treasury bills, and a requirement that 75 percent of export credits be financed
with foreign exchange. The moves at least temporarily reverse Rome's policy
of easing credit and foreign exchange controls, which has helped boost business
activity over the last two years. The Bank of Italy has spent nearly $7.5 billion
since September in defense of the lira. If Rome wants to break the cycle of pe-
riodic devaluations, it will have to address the roots of the lira's weakness-
high domestic inflation caused in part by excessive monetization of the huge
public-sector deficit.
Athens Proposes The Papandreou government has proposed stricter measures to reduce wide-
New Tax Bill spread tax evasion and trim the large budget deficit. Tax evaders could receive
up to five years in jail. Possession of a private plane or pleasure boat will be
considered sufficient proof to put owners in a high tax bracket. In addition, the
bill establishes a minimum annual income equivalent to $3,740 for self-
employed urban businessmen and professionals. The bill may help to boost
revenues somewhat, but it is unlikely to help the government meet its
optimistic target of a 32-percent increase in revenues this year. Papandreou
probably will be forced to cut spending and increase taxes to meet tough EC
conditions for the second tranche of a $1.5 billion balance-of-payments loan to
be drawn in early 1987.
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31 January 1986
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Less Developed Countries
Aftermath of Argentine President Alfonsin's government is unlikely to yield to the demands of the
General Strike Peronist labor groups that staged the 24-hour general strike on 24 January.
The nonviolent strike halted most industrial and commercial activity in the
country, according to the US Embassy. Workers are demanding that the
government reinstate real wages to the levels prevailing before Alfonsin's
austerity program; this would require a 15-percent increase on top of the 5 per-
cent granted this month. They also want the government to introduce a
program to expand the economy and to declare a moratorium on Argentina's
$50 billion debt. Union leaders will meet in February to plan further actions
against the government. Widespread support for the strike indicates that the
political credit Alfonsin earned with his austerity program is eroding, and his
opportunities for making additional tough economic and political reforms are
dwindling rapidly. Whether or not the President introduces the next phase of
his economic programs, strike activity and support for the opposition will
intensify.
El Salvador's Mild The economic program President Duarte announced last week-his first since
Policy Initiatives taking office in June 1984-is unlikely by itself to restore either domestic or
international confidence in the economy. The program sharply increases prices
for industrial and automotive fuels, effectively devalues the colon by 20
percent, freezes most government spending, and restricts nonessential imports.
Taking advantage of rising coffee prices, San Salvador substantially boosted
taxes on coffee exports and scrapped proposals to hike other personal and
business taxes. To blunt consumer reaction, the package froze prices on food
staples, rents, utilities, public transportation, and medicines. At the same time,
Duarte announced stiff penalties for violations of new price and exchange
controls. While labor reaction to the measures has been restrained, most
business leaders have criticized the program for "ignoring investment and
production incentives" and for failing to cut government spending. The
Embassy reports that poor prospects for the ongoing coffee harvest are likely to
undercut hoped-for increases in government revenues. Before creditors renew
loans to San Salvador, we expect they will demand that the government
reverse new economic price and exchange controls and further restrict
government and personal consumption.
Major US Firms Although the announced departure of three well-known US companies from
Depart Costa Rica Costa Rica is unlikely to have major immediate impact on the economy, it re-
flects San Jose's increasing difficulty in attracting and retaining foreign
investment. According to the US Embassy, spokesmen for the Bank of
America and Firestone said corporate policies rather than local business
conditions prompted their decisions to sell out. Union Carbide blames its
pullout on the contraction of regional trade and losses caused by customers
defaulting on payments. With short-term prospects for the recovery of regional
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trade bleak, some of the 100 remaining US-owned firms-many came 15 or 20
years ago to take advantage of the now-moribund Central America Common
Market-are rethinking their choice of location, according to the US Embas-
Grim Saudi The US Embassy reports Riyadh is continuing to draw on Aramco's capital
Budget Outlook fund to cover current spending. A recent $5 billion withdrawal nearly
exhausted the fund, which was more than $10 billion two years ago. Declining
oil revenues-more than one-third below expected levels-leave the Saudi
budget deficit at $15 billion for this fiscal year. Riyadh reportedly has begun
preparing its budget for next year
FRiyadh
probably will borrow on the international market before it cuts important
defense or subsidy programs. It has already curtailed its spending substantially
and will find it difficult to pare future budgets without causing domestic
hardships. Cutbacks will depress the economy further because Saudi Govern-
ment spending is the driving force for economic growth.
Syrian Financial The black-market rate for the Syrian pound fell another 25 percent in the last
Troubles Mount week to 20 pounds to the dollar, according to the US Embassy. Illegal
currency conversions in Syria were halted when authorities arrested a large
number of money changers on 24 and 25 January. Prices have started rising
rapidly on both legal and contraband goods, and some hoarding has been
reported. The fall of the pound and rising prices are causing widespread
concern, even among workers who up till recently have been largely sheltered
by government subsidies and price controls. Bread riots, like those in Cairo and
Tunis in past years, are not likely because of Syria's extensive security
apparatus and the general popularity of President Assad. Criticism is being
focused on Prime Minister Kasm and his cabinet, and Assad may decide to
make some changes in his government, possibly after elections in March. The
Syrians will look for additional aid, primarily financial aid from Saudi Arabia,
but also oil aid.
Lebanese Lebanese Central Bank foreign exchange reserves stood at $1 billion at the end
Balance-of-Payments of 1985, up almost $380 million from their December 1984 level. Given a
Surplus probable current account deficit of slightly more than $1 billion, capital
inflows into Lebanon in 1985 were well in excess of $1 billion. Foreign funding
for the various militias, particularly the PLO, probably account for a large
portion of this inflow. Other inflows probably include black-market exports to
Syria and money repatriated by Lebanese workers returning from the Gulf
states. While 1985 was not too bad a year economically, the recent fighting in
Christian East Beirut and the failure of the Syrian-sponsored Tripartite
agreement has given 1986 a bad start. The Lebanese pound has fallen almost
28 percent in the last two weeks to approximately 23 to the dollar, and capital
flight has undoubtedly increased.
Secret
31 January 1986
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External Economic Nigeria's failure to obtain Western support for a rescheduling of official debt
Pressures on Nigeria and plummeting world oil prices have undercut President Babangida's go-it-
alone economic strategy. The US Embassy reports that Western creditor
nations unanimously refused to enter debt negotiations unless Lagos secures an
IMF agreement. The government probably will be unable to cushion the blow
to the economy from falling oil revenues because of its poor relations with
international creditors and its meager foreign exchange reserves. Economic
decline, which contributed to the fall of the last two governments, may prompt
yet another round of coup plotting by the military.
Food Deficit Expected Lesotho's corn harvest probably will fall short of domestic requirements,
for Lesotho To reduce dependence on South 25X1
Africa, Lesotho halted the spraying of herbicides and insecticides last spring
by South African agricultural consultants. As a result, insect infestation has
sharply reduced corn production and could affect the crop for the next two to
three growing seasons. South Africa, however, is expected to have a corn
surplus this year and is favorably disposed to the new military government that
ousted chief Jonathan last month. The new regime already has pleased
Pretoria by expelling African National Congress guerrillas and harassing
Soviet Bloc embassies. 25X1
Pakistan Announces Last week Pakistan announced a plan to offer shares worth over $100 million
Privatization Plan in six major public-sector firms to private investors. The firms include the
national airline, and government-run fertilizer, gas, and oil facilities. In an
effort to garner foreign exchange, Pakistan is allowing expatriates the first
opportunity to purchase the high-dividend shares. The long-promised program
will help relieve the budget deficit and provide needed capital for public-sector
firms. The government believes the offering will be fully subscribed by May.
We expect Islamabad to sell shares in other government-controlled firms, but
many of these poorly managed, money-losing firms would likely be of limited
interest to prospective investors.
Moscow Warns An article in Pravda on 21 January emphasizes the importance to Hungary of
Budapest economic ties to the USSR. It claims that cooperation with the West does not
on Economic Policy necessarily improve the quality or competitiveness of Hungarian goods. The
article also warns of ideological contamination from the West and expresses
confidence that the Hungarian Communist Party would wage a vigorous
counteroffensive. A piece in Pravda last month by the same authors was more
positive about Hungary's economic policy. Moscow is indicating to the East
Europeans on the eve of the Soviet party congress that the expected
endorsement by the congress of the "diversity" of "socialist" experiences
mentioned in the party's draft program applies mainly to domestic economic
Secret
31 January 1986
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arrangements. In foreign economic policy, CEMA integration and closer
Soviet-East European cooperation will continue to take precedence. While
Budapest is unlikely to curtail economic relations with the West unless pressed
hard by Moscow, Soviet warnings may strengthen the hand of hardliners in
Budapest.
Sino-Soviet China and the Soviet Union last week signed a one-year trade protocol, within
Trade Protocol Signed the framework of the five-year trade agreement signed in July 1985. Under the
protocol, China will provide nonferrous metals, foodstuffs, and light industry
products in exchange for Soviet manufactured goods. Over the past five years,
trade between the two countries has grown rapidly, from $248 million in 1981
to an estimated $1.6 billion in 1985. Despite this rapid growth, it is unlikely
that bilateral Sino-Soviet trade by 1990 will exceed 5 percent of total trade for
either country.
Secret
31 January 1986
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Iq
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Secret
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Directorate of
Intelligence
Economic & Energy
Indicators
31 January 1986
D/ EE/ 86-003
31 January 1986
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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
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Document Expediting (DOCEX) Project
Exchange and Gift Division
Library of Congress
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or: National Technical Information Service
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Comments and queries on this paper may be directed to the DOCEX
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NTIS Office of Customer Services at the above address or by phone
(703-487-4660). Publications are not available to the public from the
Central Intelligence Agency.
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Economic & Energy
Indicators
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
Big Seven: Inland Oil Consumption
Big Seven: Crude Oil Imports
_9
OPEC: Crude Oil Official Sales Price
10
OPEC: Average Crude Oil Official Sales Price (Chart)
1 I
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Industrial Production
United States
Japan __
West Germany
France
United Kingdom
1981 1982 1983 1984 1985
Percent changefrom previous period
seasonally adjusted at an annual ruts'
1st Qtr 2d Qtr 3d Qtr Oct Nov Dec
9.0
2.6 -7.2 5.9 11.6 2.1 L3 2.1 6.5 4.9
1,0 0.4 3.5 11.1 -2.6 11.2 -0.4 12.5 -II.I 7.1
07 11 0
--2.3 --3.2 0.3 2.4 2.5 12.5
2.6 1.5 1 1 2.3 -3.0 4.1 7.3 9.4 30.4 -3.9 2.1 3.9 1.2 11.1 7.5 0.6 0 15.2
-1.6 -3.1 -3.2 3.1 7.4 1.1 2.6-32.9- 31.8
0.5 10.0 5.3 8.8 0.7 4.5 11.4 8.4
Gross National Product
1981 1982 1983 1984 1985
United States 2.5 2.1
Japan 4.1 3.1
West Germany -0.2 -1.0
------ ------ -- -
France 0.2 1.8
------------------ -
United Kingdom -1.4 1.9
Italy 0.2 0.5
Canada 3.3 -4.4
1981 1982 1983 1984 1985
Percent change from previous period
seasonally adjusted at an annual rate
1st Qtr 2d Qtr 3d Qtr 4th Qtr Nov Dec
------- -- -
United states 10.3 6.1 3.2 4.3 3.3 4.2 2.4 4.1
------- ---- - -M 7.0
Japan 4.9 2.6 1.8 2.3 2.4 1.3 2.1 -2.5
1
West Germany 6.0 5.3 3.3 2.4 3.5 2.5 0.1 .
France 13.3 12.0 9.5 7.7 5.7 6.0---4.4--3.1 4.2 4.5
3.1 3.0 4.5 5.9
5.0 7.1
United Kingdom 11.9 8.6 4.6 9.0 6.6 13.7
Italy 19.3 16.4 14.9 10.6 10.0 10.2 7.3 6.7
Canada 12.5 10.8 5.8 4.3 5.1 4.0 3.2 4.4 3.6
Percent changefrom previous period
seasonally adjusted at an annual rate
1st Qtr 2d Qtr 3d Qtr 4th Qtr
3.4 6.6 3.7 l I -3.0- 2.4
3.3 5.0 1.7 5 8 2.6
1.6 2.7 -4.6 5.6 9.2
0.7 1.6 -0.9 3.6 1.2
3.3 2.4 3.0 4.9 -1.1
-0.4 2.6 3.7 3.3 0.8
3.3 5.0 3.6 3.9 6.7
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Money Supply, M-1 I.
Percent change from previous period
seasonally adjusted at an annual rate
1981 1982 1983 1984 1985
- - yir uct Nov Dec
United States b
7.1 6.6 11.2 6.9 10.9 10.6 16.0 1.6 14.2 140
.Japan
3.7 7.1 3.0 2.9 10.2--- -0.2 2.8
-- - ---- -IS.I 7.2
West German
1.1 3.6 10.3 3.3 14 04 8.1 15.3 11.2 43.8
e 12.2 13.9 10.0 7.7 12.3 7.3 9.8 - - - -
United Kingdom NA NA -
13.0 14.7 1.2 32.4 15.4 32.5 34.1 21.2
Italy 11.2 -
11.6 15.2 12.3 18.0 -0.3 11.5
Canada 3.8 0.7 10.2 3.3 2.7 4.0 13.2 20.2 13.9 -4.5 Based on amounts in national currency units.
Including MI-A and MI-B.
Unemployment Rate
1981 1982 1983 1984 1985
1st Qtr 2d Qtr 3d Qtr 4th Qtr Nov Dec
United States
7.5 9.6 9.4 7.4 7.2 7.2 7.0 6.9 - - -.8
- - ---- 6.9 6.8
'Japan 2.2 2.4 2.7 2.7
2:5 2.5 2.6 2.9
West Germany
5.6 7.7 9.2 9.1 - - -
-- - 9.2 9.4 9.4 9.2 9.2 9.1
France ---- ----
-
7.6 8.4 8.6 9.6
10.1 9.9
- -- 10.2 10.5---- 10.5 10.5
---
United Kingdom 10.0 11.6 12.4 12.6 12.9 13.2 13.2 13.1 13.2
- -- -----------
Italv -1-3.1-
8.4 -
9.1
9.9 10.4 10.8 10.2
Canada 7.5 11.1 11.8 11.3 11.1 10.6 10.3 10.2 10.2 10.0
Unemployment rates for France are estimated.
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Foreign Trade a
1st Qtr
2d Qtr
3d Qtr
Nov
Dec
55.7
52.6
52.6
18.0
84.4
86.4
84.5
30.3
-28.7
-33.8
-31.9
-12.3
40.5
42.6
43.6
15.9
28.9
29.5
29.4
9.8
11.6
13.1
14.2
6.1
41.0
43.6
48.7
16.5
36.5
37.2
41.7
14.2
4.6
6.5
7.0
2.3
22.5
24.4
26.1
9.5
9.6
23.6
24.7
26.8
9.6
10.0
-1.1
-0.4
-0.7
0.1
0.4
22.7
25.4
25.5
9.1
9.3
24.1
25.7
26.2
9.3
9.1
-1.4
-0.3
-0.7
-0.2
0.2
17.7
18.2
20.3
6.6
21.6
21.8
21.2
8.2
-3.9
-3.6
-1.0
-1.6
22.0
21.9
21.9
7.3
18.0
18.7
19.6
6.9
4.0
3.2
2.2
0.4
United States b
Exports
233.5
212.3
200.7
217.6
Imports
261.0
244.0
258.2
325.6
Balance
-27.5
-31.6
-57.5
-108.0
Japan
Exports
149.6
138.2
145.5
168.1
Imports
129.5
119.6
114.0
124.1
Balance
20.1
18.6
31.4
44.0
West Germany
Exports
175.4
176.4
169.5
171.8
Imports c
163.4
155.3
152.9
153.1
Balance
11.9
21.1
16.6
18.8
France
Exports
106.3
96.4
95.1
97.5
Imports
115.6
110.5
101.0
100.3
Balance
-9.3
-14.0
-5.9
-2.8
United Kingdom
Exports
102.5
97.1
92.1
93.7
Imports
94.6
93.1
93.7
99.1
Balance
7.9
4.0
-1.6
-5.3
Italy
Exports
75.4
73.9
72.7
73.5
Imports
91.2
86.7
80.6
84.4
Balance
-15.9
-12.8
-7.9
-10.9
Canada
Exports
70.5
68.5
73.7
86.5
Imports
64.4
54.1
59.3
70.6
Balance
6.1
14.4
14.4
15.9
a Seasonally adjusted.
b imports are customs values.
Imports are c.i.f.
-8.1
-46.0
-107.4
West Germany
-6.8
3.3
4.2
6.0
France
-4.7
-12.1
_
-4.9
0.9
United Kingdom
15.3
8.5
4.5
1.6
-8.6
-5.7
0.6
-3.2
a Seasonally adjusted; converted to US dollars at current market
rates of exchange.
Ist Qtr
2d Qtr
3d Qtr
Oct-----Nov Dec
-24.2
-27.7
-30.5
1.7 _
3.1
2.1
-0.7
0.6
0 _
^
____ __
.
^
-2.9
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Export Prices in US $
Percent change Iron, previous period
at an annual rate
United States
Japan
9.2
5.5
1.5
-6.4
-1.0
-2.4
1.4
0.2
1st Qtr
0.3
-1 1.9
2d Qtr
1.9
14.1
3d Qtr
2,5
5.9
Oct Nov Dec
6.4 -0.6
123
0 28
0
West Ge - rma - ny
-- - - -
-14.9
-2.8
-3.2
-7.1
19.0
26.7
~
37.8
.
.
125,3 23
6
France
12.0
-5.5
4.8
-2.9
--14.0
29.2
35.1
.
United Kingdom
Italy
Canada
NA
-7.8
3.9
NA
-3.0
-2.0
-6.2
-4.4
--1.3
-5.1
-5.2
-3.7
16.2
-13.4
0.2
57.1
21.6
--7.0
29.2
19,2
8.1
47.5 16.6 4.4
14.5 3.8
Percent change front previous period
at an annual rate
United Stat
Ist Qtr
2d Qtr
3d Qtr
Oct Nov Dec
es
5.3
-2.0
-3.7
1.7
9.6
0.6
0
0.3 12.3
Japan
W
3.6
-7.4
-5.0
-2.8
-10.9
3.1
2.6
38.5 9.1
est Germany
-8.6
4.7
-5.2
4.8
-14.4
19.6
20.8
78.8 17.7
France
7.8
-7.2
-7.0
-3.8
-12
0
15
7
ITS
nited Kingdom
NA
NA
-5.7
-4.6
.
-15.4
.
46.1
16.4
44.7 0.3 12.1
Italy
1.0
-5.3
-6.6
-3.7
-9.1
23
0
5
5
Canada
8.7
-1.1
-3.3
------------
-0.1
-4.3
.
-2.4
.
9.0
6.1 4.8
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Exchange Rate Trends
Percent change from previous period
at an annual rate
1981
1982
1983 1984 1985
1st Qtr 2d Qtr 3d Qtr
Nov
Dec -
Trade-Weighted
10
5
6
10
8 9.1 26.0 -11.3
5
United States
--
.
.
.
8
9 7
2 0
9
3
-5.7
.
.
10.4 6.
Japan
.
West Germany
-2.1
7.0
5.8 1.0 -0.2 2.1 8.5
France
5.1
6.1
--
4.7 2.1 0.9 4.8 9.9
------ _ ---
nn 1 k 7
dom
ited Kin
U
~.. c i
g
n
Italy
-9.2
-1.6 --3.1--- -1.3 -10.5---9.t
- - -- -- --
3
2
3 -2.l 10.2 4.0
-2
Canada
.
.
Cost of Foreign Currency
Dollar
----- -- -
-- ---- --- -------------
.
Japan
2.7
4.6
0 -19.6 9.9 18.6
45.6
7.2
West Germany
-24.6
21
1
29
France
-20.8
-15.9
-14.7 -26.7 19.6 28.0
.
United Kingdom
-13.2
-13.4
-13.3
28.6 -
------ ---- -------
26
2
8
18
-12
3
15.6 30.3 9.5 15.6
19.0
-_ -
.
Italy
-32.8
.
-
-
.
st7
179
Canada
I.. 1,
-
Money Market Rates
1981
1st Qtr 2d Qtr 3d Qtr
4th Qtr
Dec
United States
16.24
12.49
9.23
10.56
8.76
8.04
7.90
7.93
7.88
90-day certificates of
deposit, secondary market
50
6
Japan
7.79
7.23
NA
6.66
6.55
6.54
.
loans and discounts
(2 months)
81
4
4
80
--
West Germany
12.19
8.82
5.78
5.96
6.12
5.80
4.86
.
.
interbank loans
(3 months)
France
15.47
14.68
12.51
11.74
10.64
10.32
9.81
9.10
8.98
interbank money market
(3 months)
11
71
United Kingdom
13.85
12.24
10.12
9.91
12.98
12.61
11.67
11.60
.
sterling interbank loans
(3 months)
--- - - ------ -
Italy
20.13
20.15
18.16
15.91
15.78
15.12
14.37
14.52
14.71
Milan interbank loans
(3 months)
Canada
18.46
14.48
9.53
11.30
10.59
9.87
9.32
9.10
9.40
finance paper (3 months)
Eurodollars
3-month deposits
16.87
13.25
9.69
10.86
9.04
8.29
8.14
8.15
8.11
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1981 1982 1983 1984
1985
-------------
Bananas
Year
Ist Qtr 2d Qtr
3d Qtr
4th Qtr Dec
214.0
Fresh imported,
217.0
232.0 243.0
FA
110.4
1 11.6
110.9
s,s tiA
(Total world, $ per metric ton)
Beef
(c per pound)
Australia 112.1
(Boneless beef,
f.o.b. US Ports)
United States 100.0
(Wholesale steer beef,
midwest markets)
Cocoa (E per pound) 89.8
Coffee ($
er
ou
d
108.4
101.4
74.3
110.7 101.1
97.6 100.9
92.1 106.2
96.6
90.7
98.7
100.2
96.6
99.2
93.3
81.0
96.4
93.6
80.4
98.4
99.3
96.1
100.8
101.3
102.0
p
p
n
) 1.28
orn
1.40
1.32 1.44
1.43
1.44
1.42
1.33
1.52
I .75
C
150
123
148 150
125
133
133
(US #3 yellow,
118
117
123
c.i.f. Rotterdam, $ per metric ton)
----- ------
ott
on 72.69
(World Cotton Prices, "A"
index, c.i.f. Osaka, US 0/lb.-).--
Palm Oil 571
(United Kingdom 5% bulk,
74.48
445
85.71 63.91
502 730
57.87
501
62.27
610
63.78
606
56.76
417
48.68
369
49.22
390
c.i.f., $ per metric ton)
Rice ($ per metric ton)
US (No. 2, milled, 632
4'7 c.i.f. Rotterdam)
481
514 514
484
496
496
481
465
450
Thai SWR 573
(100'7x grade B
362
339 - - 310
249
254
243
236
263
290
c.i.f. Rotterdam)
Soybeans 288
(US #2 yellow,
244
282 283
225
240
236
213
208
2(2
c.i.f. Rotterdam, $ per metric ton)
Soybean Oil 507
(Dutch, f.o.b. ex-mill,
447
527 727
571
654
658
518
454
470
$ per metric ton)
------- --- Soybean Meal 252
219
238 197
157
7
1
(US. c.i.f. Rotterdam
1
46
15
1 74
178
S per metric ton)
Sugar 16.93
8.42
8.49 5.18
4
04
69
3
1
9
(World raw cane, f.o.b.
.
.
~.
6
4.21
5.30
5.37
Caribbean Ports, spot-prices- ? per pound)
Tea 91.0
Average Auction (London)
89.9
105.2 156.6
90.0
126.9
82.8
72
.3
78.1
75 5
(c per pound)
Wheat 210
(US #2. DNS
187
183 182
169
178
169
154
(75
180
c.i.f. Rotterdam, $ per metric ton)
Food Index,, (1980 100) 88 78 -86 92 81 83
79 76 84 90
The food index is compiled by The Economist for 14 food commodities which enter international trade. Commodities are weighted by 3-
year moving averages of imports into industrialized countries.
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 Declassified in Part - Sanitized Copy Approved for Release 2012/01/11: CIA-RDP88-00798R000300010005-5
Industrial Materials Prices
Aluminum (C per pound)
Major US producer
77.3
76.0 77.7
81.0
LME cash
57.4
44.9 65.1
56.8
Chrome Ore
(South Africa chemical
grade, S per metric ton)
53.0
50.9 50.0
50.0
Copper a (bar, t per pound)
79.0
67.1 72.0
62.4
Gold (S per troy ounce)
460.0
375.5 424.4
360.0
Lead a (t per pound)
32.9
24.7 19.3
20.0
Manganese Ore
(48% Mn, $ per long ton)
82.1
79.9 73.3
69.8
Nickel ($ per pound)
Cathode maior producer
3.5
3.2 3.2
3.2
2.7
2.2 2.1
2.2
Platinum ($ per troy ounce)
Major producer
475.0
475.0475.0
475.0
Metals week,
New York dealers' price
Rubber (Q per pound)
Synthetic b
47.5
45.7 44.0
44.4
Natural c
40.3
56.8
45.4 56.2
49.6
Silver ($ per troy ounce)
5.9
10.5
7.9 11.4
_
8.1
Steel Scrap d (S per long ton)
92.0
63.1 73.2
86.4
Tin a (Q per pound)
641.4
581.6 590.9
556.6
Tungsten Ore
(contained metal,
$ per metric ton)
18,097
13,426 10,177
10,243
US Steel
(finished steel, composite,
S per long ton)
611.6
Lumber Index
(1980=100)
Industrial Materials Index r
85
71 82
76
(1980=100)
a 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.
Quoted on New York market.
d Average of No. I heavy melting steel scrap and No. 2 bundles
delivered to consumers at Pittsburgh, Philadelphia, and Chicago.
Year
1st Qtr 2d Qtr
3d Qtr
4th Qtr Dec
----
81.0
81.0
81.0
81.0
81.0 81.0
47.2
49.3
49.3
45.6
44.6___ 46.7
43.9
49.9
44.7
41.0
40.0 40.0
---
64.2
62.1
67.6
64.5
62.6
63.1
317.2
300.0
319.8
323.2
326.0
_ 325.0
17.7
17.3
17.3
18.3
17 8
- 17.8
68.4
69.7
68.4
68.4
67.2
67.2
3.2
3.2
3.2
3.2
3.2
3.2
2.2
2.2
2.5
2_2
1.9
i?a
475.0
475.0
475.0
475.0
475.0
475.0
74.4
83.7
71.9
72.7
69.2
68.8
NA
501.1
541.3
571.0
NA
NA
10,656
11,515
10,974
10,648
9,488
8,866
617.8
617.8
617.8
617.8
617.8
617.8
]]A
IS2A
ina
e This index is compiled by using the average of I 1 types of lumber
whose prices are regarded as bellwethers of US lumber construction
costs.
The 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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 Declassified in Part - Sanitized Copy Approved for Release 2012/01/11: CIA-RDP88-00798R000300010005-5
World Crude Oil Production
Excluding Natural Gas Liquids
1980 1981 1982 1983 1984 1985-
I st Qtr 2d Qtr 3d Qtr Oct Nov
World -
59,793 56,217 53,514 53,098 54,187 53,462 52,380 52,343 54,682
------ -------
Non-Communist countries 45,243 41,602 38,810 38,228 39,257 38,672 37,610 37,588 39,800
United States
8,597 8,572 8,658 8,680 8,735 8,871 8,972 8,954 8,961 8,901
Norway
OPEC - - -
26,941 22,680 18,901 17,541 17,440 16,235 15,191 15,023 17,044 17,580
Algeria --- -
1,020 803 701 699 638 660 634 616 650 680
Ecuador
- __________204 - 211 211 236 253___274_____2_7l____ 282 280
~ 290
Gabon 1 c -
_ 8 -_ 501 _518 614 700
12,886 13,276 13,864 14,302 14,704 14,617 14 643 14 845
717 736 915
-- -- - - ---- ------- ------
719 728 823 862
921 991 1,001 1,023 1,012
5,443
- - 6,036 6,633 6,823 7,515 7,733 7,802 7
922 7911
------------
,
-
,--------
exico 1,936 2,321 2,746 2,666 2,746 2,711 2,724 2,738 2,749
Egypt 595 598 665 689 827 877 875 890 847
Other
2,912 3,117 3,222 3,468 3,942 4,145 4,203 __ 4,294 4,315
Kuwait b 1,389 947
Libya
Neutral Zone
Nigeria
Qatar
1,466 1,152 1,167 1,203 1,110 1,200
1,662 1,381 2,282 2,492 2,187 2,097 2,299 2,335 2,300 2,200
-
1,576 1,604 1,324 1,385
-------------
2,514
993 972 922 1,203 1,255 1,340 1,482 1,650 1 -
,700
2,058 1,445 1,298 1,241 1,393
1,590 1,351 1,214 1,680 1,760
471 405 328 295 399 292 297 312 300 300
Saudi Arabia b 9,631 9,625 6,327 4,867 4,444 3,659 2,731 2,564 3,700 4,000
UAE 17n') i con 1 'Ino -
, ,870 14,930 14,790 14,770 14,755 14,882
12,030 12,180 12,250 12,330 12,230 11,920 11.870 1I 866 11 Q67
b Excluding Neutral Zone production, which is shown separately.
Production is shared equally between Saudi Arabia and Kuwait.
663 881 912 914 800 800 850 950
1,830 1,137 1,183 1,076 I,Q73 1,051 1,057 933 1,200 1,200
544 370 317 390 410 480 333 306 414 400
Venezuela ,165 2,108 1,893 1,781 1,813 1,538 1,641 1,630 1,555 1,555
Communist countries 14 550 14 615 14 704 14
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 Declassified in Part - Sanitized Copy Approved for Release 2012/01/11: CIA-RDP88-00798R000300010005-5
Big Seven: Inland Oil Consumption
United States a
16,058
15,296
15,184
15,708
4,204
4,193
4,349
West Germany
2,120
2,024
2,009
2,012
France
1,744
1,632
1,594
1,531
United Kingdom
1,325
1,345
1,290
1,624
1,618
1,594
1,513
Canada
1,617
1,454
1,354
1,348
a Including bunkers, refinery fuel, and losses.
b Principal products only prior to 1981.
Big Seven: Crude Oil Imports
1981 1982 1983 1984
United States
4,406
3,488
3,329
3,402
2,545
3,397
3,171
3,340
Japan
3,919
3,657
3,567
3,664
3,777
3,118
3,001
3,529
West Germany
1,591
1,451
1,307
1,335
1,419
1,265
1,233
1,303
1,596
1,429
1,395
1,578
1,212
1,421
1,553
United Kingdom
736
565
456
482
534
518
453
Italy
1,816
1,710
1,532
1,507
1,453
1,328
Canada
521
334
247
244
188
216
Ist Qtr
2d Qtr
3d Qtr
Oct
_Nov
Dec _
15,807
15,452
15,562
14,859
15,865
16,100
4,710
3,577
3,830
3,860
1,993
2,034
2,242
2,230
1,757
1,342
1,310
1,56 4
1 5 71
1,881
1,208
1, 230
1300
1,715
1,276
1,416
1,554
1,644
1,327
1,292
1,367
1985
1st Qtr
2d Qtr
3d Qtr
Oct
Nov
-Dec
3,487 3,593
3,233
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 Declassified in Part - Sanitized Copy Approved for Release 2012/01/11: CIA-RDP88-00798R000300010005-5
OPEC: Crude Oil Official Sales Price
1980
1981
1982
1983
1984
1985
33.63
29.31
28.7 0
Year
28.14
Ist Qtr
28.25
2d Qtr
28.11
3d Qtr
28
13
4th Qtr
28
15
Algeria
44? API 0.10% sulfur
Ecuador
28? API 0.937 sulfur
Gabon
29? API 1.26 % sulfur
31.09
34.50
34.83
35.79
32.96
34.00
31.30
27.59
29.82
30.50
27.50
29.00
29.66
26.41
28.09
30.15
26.82
28.35
29.50
26.50
28.00
.
29.50
26.15
28.00
.
29.50
26.15
28.00
Indonesia
35? API 0.09% sulfur
29.95
29.53
28.62
28.88
28.53
28.53
28.53
Iran
Light
34? API 1.35% sulfur
34.54
36.60
31.05
28.61
28.00
28.13
28.38
28.05
28.05
28.05
Heavy
31 ? API 1.60% sulfur
33.60
35.57
29.15
27.44
27.10
27.37
27.41
27.35
27.35
27.35
Iraq
35? API 1.95% sulfur
Kuwait
31 ? API 2.50% sulfur
35.08
32.30
30.32
27.68
29.43
27.30
28.27
27.30
28.78
27.30
28.43
27.30
28.43
27.30
28.43
27.30
Libya
36
07
40
08
-
- -
- - -
40? API 0.22% sulfur
.
.
35.69
30.91
30.40
30.40
30.40
30.40
30.40
30.40
Nigeria
34? API 0.16% sulfur
35.50
38.48
35.64
30.22
29.12
28.34
28.24
28.37
28.37
28.37
Qatar
37.12
34.56
29.95
29.49
28.48
28.10
28.10
28.10
28.10
28.10
40? API 1.177 sulfur
Saudi Arabia
Berri
39? API 1.16 7 sulfur
Light
34? API 1.70% sulfur
Medium
31 ? API 2.40% sulfur
Heavy - - -
27? API 2.85% sulfur
28.67
28.12
27.67
32.50
31.84
31.13
34.00
32.40
31.00
29.46
27.86
26.46
29.00
27.40
26.00
28.08
27.32
26.25
28.32
27.48
26.50
28.00
27.40
26.50
28.00
27.20
26.00
28.00
27.20
26.00
UAE
39? API 0.75% sulfur
Venezuela
31.57
28.44
36.42
32.88
34.74
32.88
30.38
28.69
29.56
27.88
28.24
27
37
28.52
27
69
28.15
28.15
28.15
26? API 1.52% sulfur
.
.
F.o.b. prices set by the government for direct sales and, in most
cases, for the producing company buy-back oil.
I 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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 Declassified in Part - Sanitized Copy Approved for Release 2012/01/11: CIA-RDP88-00798R000300010005-5
OPEC: Average Crude Oil Sales Price
US S per barrel
11.29 11102 11.77 1288
199 1l1-1
6 6 .6 .6 28.15 28.15 28.15
STAT
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 Declassified in Part - Sanitized Copy Approved for Release 2012/01/11: CIA-RDP88-00798R000300010005-5
Declassified in Part - Sanitized Copy Approved for Release 2012/01/11: CIA-RDP88-00798R000300010005-5