INTERNATIONAL ECONOMIC & ENERGY WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88-00798R000300030006-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 60
• Document Creation Date: December 22, 2016
• Document Release Date: July 19, 2011
• Sequence Number: 6
• Publication Date: February 14, 1986
• Content Type: REPORT

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Directorate of
Intelligence
Weekly
International
Economic & Energy
14 February 1986
Seeret
DI IEEW 86-007
14 February 1986
Copy 6 9 8
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Internation
al
Economic
& Energy Weekly)
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14 February
1986
iii Synopsis
1 Perspective
-Incentives for More Radical Debtor Action
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3 Libya: Econ
omy Under Siege
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7 Indonesia: C
oping With Low Oil Prices
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13 Key LDC D
ebtors: 1985 Trade Performance and Outlook for 1986
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17 USSR-East
ern Europe: New CEMA S&T Program
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21 Romania-U
SSR: Poor Prospects for Trade Growth in 1986-90
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Energy
International Finance
Global and Regional Developments
National Developments
Comments and queries regarding this publication are welcome. They may be
directed to Directorate of Intelligence,
Secret
DI IEEW 86-007
14 February 1986
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International
Economic & Energy Weekly
Synopsis
1 Perspective-Incentives for More Radical Debtor Action
We believe increased incentives exist for Mexico and other major debtors,
separately or as a group, to take radical action to reduce debt service
obligations.
3 Libya: Economy Under Siege
The recent drop in world oil prices and US economic sanctions are the latest
jolts to hit the Libyan economy. The sharp drop in oil prices will leave Tripoli
even less maneuvering room to manage the economy this year.
7 Indonesia: Coping With Low Oil Prices
Despite recent sharp declines in world oil prices, we believe Jakarta will
continue to meet its payment obligations and protect its strong international
credit rating. In our view, Jakarta would have to reorient its development
strategy towards more labor-intensive programs to keep the country's severe
unemployment problem in check.
13 Key LDC Debtors: 1985 Trade Performance and Outlook for 1986
Key LDC debtors recorded a dismal trade performance in 1985. For this year,
we forecast higher export earnings for most non-oil-exporting key debtors, but
oil exporters will continue to suffer from declining petroleum prices.
17 USSR-Eastern Europe: New CEMA S&T Program
The CEMA Complex Program for Scientific and Technical Progress Until the
Year 2000 is a blueprint for cooperation in science and technology to spur eco-
nomic growth throughout the region. The twin goals of technological modern-
ization and self-sufficiency, however, may well turn out to be inherently
contradictory, which will hamper the implementation of the program.F__~ 25X1
21 Romania-USSR: Poor Prospects for Trade Growth in 1986-90
The Romanian-Soviet trade protocol for 1986-90 and the new five-year science
and technology cooperation agreement suggest a significant strengthening of
economic ties between the two countries. There is reason, however, to question
whether trade will reach the levels envisioned.
iii Secret
DI IEEW 86-007
14 February 1986
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Perspective
International
Economic & Energy Weekly
14 February 1986
Incentives for More Radical Debtor Action
or as a group, to take radical action to reduce debt service obligations.
Mexico is fast approaching its position of
August 1982 when it was unable to meet its debt obligations. On that occasion,
quick and cooperative actions by Mexican finance officials, the US Govern-
ment, and commercial creditors averted a major financial or political crisis.
We see substantial differences in the current situation, however, and believe
greatly increased incentives exist for Mexico or other major debtors, separately
marginally at best.
? Investment and savings levels have fallen.
? Per capita incomes have regressed to levels of nearly a decade ago.
For most debtors, the perceived economic benefits of continuing with the
current debt strategy have declined significantly:
? Interest payments have far exceeded funds available under new loans,
making Third World debtors net exporters of capital.
? Total foreign debt has increased, and-despite higher export earnings-
debt-to-export ratios have risen.
? The share of export earnings to pay interest on the debt has declined
nationalist philosophies.
In addition, after three years of austerity, LDC leaders face worrisome
political pressure from both powerful elites and the general public for a change
in economic and debt policies. Last week a crowd-estimated at 50,000 people
by the press-rallied in Mexico City to demand a moratorium on debt
repayments. More significantly, labor czar Fidel Velasquez-who has support-
ed government economic policies-publicly declared that the government
needed to put internal social needs before debt servicing obligations. In
Argentina, a general strike by Peronist labor unions last month was widely
supported and included the demand for a moratorium on debt repayments.
Brazilian President Sarney has reaped considerable political benefit from his
Finance Minister's tough stance in dealing with the IMF on Brazil's current
economic program. Moreover, press reporting indicate the
growing participation in economic policy a ates by LDC officials with more
debt relief.
Finally, we believe the increased political dimension of the debt problem will
make bilateral negotiations between debtors and commercial creditors .more
difficult than in the past. Both sides are not as likely to push for agreement be-
cause they believe the US Government will come to the rescue. Moreover, the
Cartagena group gives Latin debtors an additional mechanism to pressure
Washington to recognize their political and economic problems and to provide
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Secret
We are concerned that, taken together, these factors are leading Third World
leaders to try to obtain immediate political gain and economic benefits by
reducing or suspending interest payments, thereby forcing Washington and
bank creditors to assume a greater share of the costs this time around.
pect de la Madrid may lead an effort at the 27 February meeting of the
Cartagena group to demand an interest payment cap for all Latin American
debtor nations.
In our judgment, more concrete measures designed to effectively reduce the
Third World debt burden will be needed to defuse the potential for more
radical debtor action on interest payments. Even if new loans or rescheduling
agreements are concluded in the coming weeks, Mexican and Argentine
leaders, in particular, probably will experience rising frustration this year in
managing their economies. As a result, we believe that they will be tempted to
link deep-seated economic problems to their debt burden and to what they
perceive as the need for global trade and monetary reform. In such an
environment there may be an opportunity for linking concessions on interest
payments to a commitment by debtor governments to undertake politically
risky structural reforms.
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Libya: Economy
Under Siege
The recent drop in world oil prices and US econom-
ic sanctions are the latest jolts to hit the Libyan
economy. They come at a time of unprecedented
popular discontent over Libyan leader Qadhafi's
misguided economic policies and penchant for cost-
ly foreign adventures. The freeze on Libyan assets
in US banks has deprived Tripoli of access to
approximately $700 million, and closed off an
important channel for revenues from the sale of
Libyan crude. The sharp drop in oil prices-unless
accompanied by an offsetting increase in liftings-
will leave Tripoli even less maneuvering room to
manage the economy this year. A dip in oil prices to
$15 per barrel would confront Qadhafi with an
unmanageable cash shortage unless he makes polit-
ically risky cuts in consumer imports or swallows
his pride and borrows on the international market.
Further reductions in imports almost certainly
would increase the chances that the military will
decide to move against Qadhafi.
Living With Less
Qadhafi's speech last September calling for a
greater public sacrifice underscores growing con-
cern in Tripoli over the poor state of the economy.
Although oil revenues have stabilized at about $11
billion over the past two years, this is down by
almost half from the 1980 level. Unlike previous
speeches extolling revolutionary successes, the Lib-
yan leader urged the people to eat camel meat and
wild game rather than imported lamb and beef.
Qadhafi's uneasiness is supported by recent statis-
tics that suggest real GDP fell 2 percent last year,
the fifth consecutive year of decline. Per capita
GDP is now below the 1977 level and inflation is at
a near-record 15 percent.
Living conditions for the average Libyan continue
to deteriorate.
shelves in most government-operated supermarkets
are empty or poorly stocked except on traditional
holidays. Food lines are longer and more conten-
tious as people search for basic staples. Hoarding
has become a way of life for most and a thriving
black market has evolved, despite numerous at-
tempts to control such activity. Moreover, the
quality of health care and education-hallmarks of
Qadhafi's revolution-has fallen off sharply. While
few starve in Libya, most agree that Qadhafi's
economic policies have failed.
The government budget, foreign workers, and for-
eign contractors have all been casualties of the
revenue squeeze. Development spending was down
by 20 percent, and the administration budget had
to be cut for only the second time since 1969.
Actual spending levels probably are as much as 40
percent lower, however, based on import figures
and press reporting. Moreover,
the expulsion of 150,000 foreign
workers last year was intended to save $1 billion in
worker remittances. To shore up Tripoli's foreign
exchange position, payments to foreign suppliers
were further delayed. The slowdown probably
pushed Libyan commercial arrears to an estimated
$4 billion, straining relations with several of Li-
bya's leading trading partners, including Moscow.
Nevertheless, work on priority development pro-
jects is continuing.
state ministries decided last summer to
ms t ose projects that were more than fifty
percent complete and to cancel or delay others
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under the 1986-90 Plan, 25X1
Exceptions to the decision include 25X1
Qadhafi's priority Great Manmade River project,
an iron mill at Misratah, and an aluminum smelter
at Zuwara. Qadhafi also has attached increased 25X1
importance to agricultural development to limit
dependence on Western food supplies. One benefit
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Libya: Economic Indicators, 1981-86
of the development slowdown has been that it
limited the impact of the expulsion of foreign
workers.
Financial Reserves a
Billion US $
Grain Productionb
Thousand metric tons
1981 82 83 84 85c 86d 0 1981 82 83 84 85c$6d
a End of period; excluding 3.6 million ounces of gold.
b Includes wheat and barley.
Estimated.
d Projected.
Defense spending also has felt the pinch. Military
imports probably fell to $1.7 billion last year from
their peak of almost $3 billion in 1982. Most of this
decline reflects the completion of deliveries under
existing contracts. Other defense-related spending
has remained relatively stable. Qadhafi depends
heavily on the military and security forces to stay
in power and knows that they pose the greatest
threat to his regime. As a result, further cuts in
defense spending are not likely.
Qadhafi's draconian measures to stem the econom-
ic slide have had some positive effects. The sharp
cut in imports and foreign workers, coupled with oil
exports slightly above Libya's OPEC production
quota of 990,000 b/d, probably produced a small
surplus in the current account for the first time
since 1982. These factors and delayed payments to
foreign contractors helped push foreign exchange
reserves to $5.5 billion by yearend-10 months of
imports-from a low of $3.3 billion in January
1985.
The freeze on Libyan financial assets has had the
greatest impact among the various US economic
restrictions imposed last month. Libya lost access
to as much as 13 percent of its foreign exchange
reserves and has had increased trouble in servicing
contract payments-especially to oil companies.
Moreover, Tripoli's attempts to circumvent US
sanctions have met with limited success. Other
Arab states so far have offered little more than
vocal support.
The impact of US sanctions on the oil sector is
small. We estimate that Libya continues to produce
1.1-1.2 million b/d of oil. While most US oil
workers have left Libya, domestic oil workers and
other foreign technicians probably can maintain
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Political Strains of Austerity
For the most part, Qadhafi is a judicious political
calculator. He has often been able to respond
flexibly to his political and economic troubles,
tactically changing course without losing sight of
his revolutionary goals. When he perceives threats
to himself or that his revolution is failing, however,
Qadhafi s usually pragmatic decisionmaking can
falter. We judge that Qadhafi is now in such a
strained period, and flawed decisionmaking could
well compound his economic problems.
Qadhafi has increasingly surrounded himself with
people whom he believes he can trust-relatives,
fellow tribesmen, or young radicals committed to
his ideology.
professional officials in key positions-
particularly the security services-are being re-
placed by young extremists who have grown up
under Qadhafi and are considered ideologically
sound. Qadhafi also has staged rallies in tribal
areas to convince both internal and external oppo-
nents that he continues to enjoy popular support.
For example, this year, for the first time, Qadhafi
celebrated the anniversary of his coup in the
relatively secure city of Sebha. Instead of the
usual displays of military units, he featured pa-
rades of Revolutionary Committee cadre. In our
view, this relects Qadhafi s distrust of the Army's
production and possibly increase it by several hun-
dred thousand barrels per day.
not a problem because stocks are adequate or can
be aquired through non-US suppliers. Moreover,
com-
pletion of other Libyan development programs,
including the Great Manmade River project, will
be largely unaffected because of the substantial
participation of West European and South Korean
firms that can easily replace US firms.
loyalty and was intended to demonstrate to his
adversaries that the Libyan revolution would con-
tinue even if he were personally eliminated.
At the same time there has been increased infight-
ing among senior officials as they prepare them-
selves for any succession struggle.
high-level officers,
including Libya's number-two man, Abd al-Salam
Jallud, are building up their networks of clients
and supporters. In our view, this jockeying for
political position reflects a lack of confidence in
Qadhafi's viability and threatens the unity of the
regime.
Qadhafi's popular base will continue to erode as
long as he responds to the challenges to his regime
by closetting himself with a diminishing circle of
loyal revolutionaries. Qadhafi is almost entirely
dependent on the continued loyalty and competence
of the Revolutionary Committees and the security
services to preserve his position. At present, these
institutions appear capable of protecting him.
Nonetheless, political and economic trends in Lib-
ya are running against Qadhafi, and we assess his
chances of surviving until 1987 as little better than
even.
Soft oil market conditions pose the greatest threat
to the economy and probably the regime. Tripoli
loses $400 million annually for each one dollar
decline in oil prices at the current export volume.
Conversely, every 100,000-b/d drop in oil exports
costs the regime $730 million at the current $20 per
barrel price.
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Libya: Current Account Trends, 1981-86
1981
16.5
13.0
a Projected, assuming average exports of 1.2 million b/d at $20 per
barrel.
b Based on additional reductions in military- and project-related
imports.
A $20 per barrel oil price probably would have
little impact on the economy during the next year if
current export levels can be maintained. Assuming
no change in imports, Tripoli would face a project-
ed current account deficit of roughly $1.5 billion
this year. Such a shortfall could be sustained by
drawing down accessible foreign exchange reserves.
An average price of $15 per barrel would force
Tripoli to make some difficult choices. Tripoli
would face a projected current account deficit of
$3.0-3.5 billion this year, equal to about 70 percent
of available foreign exchange reserves. Hefty im-
port reductions, however, almost certainly would
hit both civilian goods and military equipment as
well as priority projects. Any increased popular
dissatisfaction could generate renewed coup plot-
ting and force Qadhafi to rely even more heavily on
his security forces to remain in power.
A steep drop in oil prices also limits Qadhafi's
ability to purchase support by reordering economic
priorities and channeling the savings into the con-
sumer sector. In response, he could step up oil
production to boost export revenues and purchase
basic commodities to ease mounting tensions over
living standards. An increase of 140,000 b/d in oil
exports at $20 per barrel would boost revenues by
the amount of import reductions last year. Such
volume, however, would be difficult to sustain
under current market conditions without depressing
prices further.
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Indonesia: Coping With
Low Oil Prices
Despite recent sharp declines in world oil prices, we
believe continued fiscal austerity and a competitive
exchange rate policy would enable Jakarta to con-
tinue to meet its payment obligations on its $37
billion foreign debt and protect its strong interna-
tional credit rating. The challenge facing the Soe-
harto regime in the coming years will be finding
policies that will provide politically acceptable rates
of economic growth. In our view, Jakarta would
have to reorient its development strategy toward
more labor-intensive programs to keep the coun-
try's severe unemployment problem in check. Polit-
ical inertia, corruption, and inefficiency, however,
may undermine such a strategy. Under these cir-
cumstances, growing unemployment could be a
spark for more social tension than in recent years,
and force Jakarta to abandon some of the strictures
of foreign debt management that have served it
Our econometric simulations of the Indonesian econ-
omy through 1989 under alternative oil price scenari-
os assume that Jakarta will continue its present
course of debt management through fiscal austerity,
tax policy, financial reform, and competitive ex-
change rate adjustments. We have assumed that the
value of the rupiah against the US dollar is allowed
to depreciate by an average of 7 percent annually
through the end of the decade, and we project a
modest real increase in total capital expenditures
over the period. Moreover, we anticipate 10 percent
annual growth in nonoil exports over the next four
years, and a global economic recovery by mid-to-late
1987.
well thus far.
Recent Developments
deficits. In addition, debt service payments are
estimated to have increased 40 percent since 1982
to almost $6 billion last year, surpassing inflows of
Since 1981, Indonesia's external accounts have
reeled under the pressure of falling oil prices. In
just four years, petroleum receipts have fallen
nearly 25 percent, resulting in $17 billion in cumu-
lative current account deficits. Moreover, under the
weight of austerity, economic growth has declined
from an annual average of 8 percent in 1973-81 to
only 3 to 4 percent during 1982-85, resulting in a
dramatic increase in urban unemployment-unoffi-
cially estimated in excess of 20 percent. Jakarta
remains concerned that the economy will not be
able to grow fast enough to absorb the two million
new entrants to the labor force each year.
Complicating the near-term outlook, Indonesia's
foreign debt obligations have passed the point
where traditional surpluses in merchandise trade
are sufficient to ensure manageable current ac-
count deficits in light of large transfer and service
foreign assistance.
Oil prices are central to Indonesia's economic and
financial prospects and its ability to service its
burgeoning foreign debt-the fifth largest among
developing countries. Oil and natural gas earnings
account for about 75 percent of total exports. In
order to assess the extent of Jakarta's vulnerability
to creditor concerns and to actual strains on its
external accounts, we have examined two possible
oil price scenarios for Indonesian crude-$20 and
$15 per barrel-through the end of the decade. We
assume in each scenario that Jakarta continues the
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Indonesia: External Debt and Debt
Service, 1979-85
External Debt
Billion US $
Medium- and
long-term a
0
Debt Service Payment
Billion US $
I I I I I I
0 1979 80 85,
a Including IMF loans.
b Including short-term trade financing and short-term
policies that have protected its finances so far:
austerity and foreign exchange rate adjustments. In
addition, we have supplemented our analysis with a
probability index of debt rescheduling in an at-
tempt to quantify the chance that Jakarta might
seek to reschedule its foreign debt.'
Best Case Scenario. We believe both Indonesia's
external accounts and its growth potential can be
expected to fare reasonably well under $20 per
barrel oil. At $20 per barrel, real economic growth
would exceed 4 percent annually, with unemploy-
ment at 30 percent in 1987. Indonesia's current
account deficits would rise to approximately $3.5
billion annually through 1989, while the probability
of a debt rescheduling would be 25 percent by
1987, falling to 20 percent by the end of the
decade. By comparison, before Jakarta's last re-
scheduling in 1970, the probability index reached
45 percent.
A Worst Case Scenario. At $15 per barrel, the
economy would be in a very delicate financial
position. The annual current account deficit would
probably exceed $4 billion, pushing the country's
foreign debt to over $50 billion by the end of the
decade. Total debt service payments could rise to
well over $8 billion by 1989.
In our judgment, prudent policymaking still would
enable Jakarta to meet its debt obligations. Al-
though interest payments and principal repayments
would absorb approximately 40 percent of export
earnings, this is well below the 85 percent regis-
tered before Indonesia's last rescheduling episode.
Moreover, we calculate that the probability of a
debt rescheduling will peak at less than 30 percent
by 1987, before moderating to 20 percent by the
The pain of $15 per barrel oil, in our judgment,
would come instead from the fiscal austerity re-
quired to slow imports, which would exact a heavy
borrowing by the central bank and commercial banks to ' Probabilities are estimated using an econometric technique that
finance international reserves. rra..,..- .,....va:,.. ? t : _.. -- :_ .L:- _--_ ____ -_.2_I.
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Indonesia: Impact of Changing Oil
Prices, 1986-89
$20 per barrel
o $15 per barrel
Current Account Deficit
Billion US $
Foreign Debt
Billion US $
Unemployment
Percent
Probability Indexa
Percent
I I I I I I I I
0 1986 87 88 89 0 1986 87 88 89
a This index is a measure of the likelihood that
the Indonesia will reschedule its foreign debt.
toll on the economy. Real economic growth would
stagnate at 3.5 to 4.0 percent annually-far short
of the 5 to 6 percent real growth considered
essential in order to stem the growth of unemploy-
ment. Unemployment could soar as high as 35
percent by 1986-underemployment would also be
extensive-putting serious strains on Indonesia's
social fabric.
Wrestling With Policy Alternatives
From a balance-of-payments perspective, Jakarta
still has some breathing room under any of our oil
scenarios. Government austerity measures already
in place should keep import growth and current
account deficits in check over the near term. More-
over, the country has ready access to foreign pri-
vate credit and the government's financial stockpile
is substantial-foreign exchange reserves totaled
nearly $10 billion at yearend 1985.
Recent actions of the Soeharto government suggest
that Jakarta is prepared to make whatever policy
decisions are necessary to maintain its international
credit standing. Budget cutbacks since 1981, for
example, enabled the government to hold current
account deficits to 3.5 percent of GNP. Moreover,
the trade account has rebounded from a surplus of
only $1 billion in 1983, following the initial declines
in oil prices, to a surplus of $5.5 billion in 1984 and
an estimated surplus of $4.9 billion last year.
Government policy initiatives responsible for this
track record include:
? Policies to promote nonoil exports, such as cur-
rency devaluation, banking deregulation, new
shipping and customs procedures, and tax reform.
? Rephasing of large-scale capital- and import-
intensive development projects.
? Government expenditure cutbacks amounting to
roughly $5 billion since 1981.
For the future, we believe Jakarta's policy options
fall into two broad categories. On the one hand, the
government can continue to stress its capital-inten-
sive import-substitution development strategy.
Such a policy, however, risks continued slow
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Indonesia: Current Account Trends,
1982-85
government's ability to control the economy and
threaten inefficient domestic firms with stiff new
competition from both domestic and foreign inves-
tors. It might also fuel protectionist pressures in
industrial country markets and pit Indonesian ex-
porters against firms in the more advanced develop-
ing countries that have already gained access to
Trade balance
1.9
1.0
5.5
4.9
Merchandise exports (f.o.b.)
19.7
18.7
20.8
18.9
Crude petroleum
12.0
11.9
10.2
9.0
Petroleum products
0.6
1.0
1.3
1.5
Liquified natural gas
2.9
2.6
3.5
4.0
Wood and wood products
0.8
1.1
1.2
1.2
Rubber
0.6
0.8
0.9
1.0
Coffee
0.3
0.4
0.6
0.7
Textiles and garments
0.2
0.3
0.5
0.6
Merchandise imports (f.o.b.)
17.9
17.7
15.3
14.0
Consumer goods
1.2
1.7
0.8
1.0
12.5
11.7
10.5
11.0
2.7
3.1
2.3
2.5
Agricultural
0.8
0.7
0.5
0.6
Industrial
5.8
5.2
5.1
4.9
Capital goods
3.0
2.9
2.6
2.4
Industrial
2.3
2.5
2.0
1.8
0.7
0.4
0.6
0.6
Service balance
-7.4
-7.4
-7.7
-7.9
Service exports
1.5
1.2
1.4
1.5
Service imports
8.9
8.6
9.1
9.4
Interest payments
1.5
1.8
2.6
2.9
Net transfers
0.1
0.1
0.1
0.1
Current account balance
-5.3
-6.3
-2.1
-3.0
growth, rising unemployment, and social unrest. If
this policy is accompanied by increased deficit
spending to create jobs, the result will be higher
foreign borrowing, which would risk Jakarta's
standing with its foreign creditors and further
reduce incentives to cut costs and improve efficien-
cy.
Jakarta's alternative is to bolster its labor-intensive
export-promotion efforts. In the long run, this
would enable the government to ease the unemploy-
ment situation despite falling oil prices. This op-
tion, however, entails costs. It would reduce the
these markets.
All signs from Jakarta suggest more austerity in
the immediate future with little in the way of
structural change. An anticipated 14-percent de-
cline in oil and gas revenues for fiscal 1986,' for
example, led President Soeharto to announced
sharp cuts in the federal budget, while the coun-
try's underlying capital-intensive growth strategy
remains essentially unchanged. The new budget-
$19.4 billion-is an 11-percent decrease over the
previous fiscal year. This is the most austere budget
since the early 1970s and one that includes a cut of
22 percent in development spending-the first such
cut since 1969.
Moving Into the Late 1980s
Indonesia's long-term economic growth and politi-
cal prospects will continue to be hampered by soft
world oil prices. At best, economic growth will
average around 4 percent for the balance of the
decade, resulting in sharp increases in an already
desperate unemployment problem. While this does
not in itself pose a serious threat to the government,
the rising tide of Indonesia's unemployed could
exacerbate existing ethnic tensions. In the past,
Jakarta reacted to rioting and public tensions by
using oil revenues to remedy the symptoms, rather
than the causes, of Indonesia's social ills. The
regime must now come to grips with the shortcom-
ings of an economic policy that has done little to lay
the groundwork for sustained economic growth and
relieve the plight of the country's poor.
Even if basic reforms in economic policy were
enacted, however, tangible results would take years
to materialize. Instead, we believe that Soeharto
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will intensify efforts to expand the country's nonoil
export markets wherever possible-including Chi-
na, the Soviet Union, and the East European
countries. This tactic is likely to meet with very
limited success. In the meantime, increasing rural
landlessness, migration to the cities, rising expecta-
tions, and growing dissatisfaction with poor living
conditions will continue to exert severe strains on
the government's financial and managerial re-
sources. Under these circumstances, growing un-
employment could spark more social tension than
in recent years, and force Jakarta to abandon some
of the strictures of foreign debt management that
have served it well thus far.
If Jakarta does not continue its present develop-
ment policy, we judge the path the government
takes will include measures to deregulate the econ-
omy. Indications of such a shift would include:
? Efforts to encourage private domestic and foreign
investment in order to make up for shortfalls in
public investment funds. Nonoil exports, for ex-
ample, have suffered from domestic protectionist
measures-primarily nontariff barriers such as
import licensing and quota restrictions-designed
to increase local content in selected manufactures
and protect uncompetitive upstream industries.
? Efforts to remove redtape, bureaucratic ineffi-
ciency, and corruption that have squeezed invest-
ment opportunities. Despite public pronounce-
ments to the contrary, we anticipate little near-
term improvement because of latent government
misgivings about an independent private sector,
ethnic resentment of local Chinese business activ-
ity, and nationalistic objections to foreign involve-
ment in domestic economic activity.
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Key LDC Debtors:
1985 Trade Performance and
Outlook for 1986
Key LDC debtors recorded a dismal trade perfor-
mance in 1985. For the group of 12 countries we
examined,' export earnings declined about $8 bil-
lion. Unable or unwilling to draw down reserves or
obtain new credits, many key debtors reduced
imports, limiting the cumulative trade surplus de-
cline to only $1 billion. For this year, we forecast
higher export earnings for most non-oil-exporting
key debtors, but oil exporters will continue to suffer
from declining petroleum prices. For several key
debtors, lower exports and higher debt service
requirements will squeeze import growth. As a
result, we believe it increasingly likely that other
countries will follow the lead of Nigeria and Peru
and unilaterally limit debt service payments.
? South Korea's export revenue growth was the
smallest in almost 30 years and a sharp reversal
from the 20-percent gain recorded in 1984. The
major factors were lower economic growth in
major export markets (such as the United States
and Japan), falling export prices, and increased
protectionism.
Exports fell in the other eight debtors, in some
cases dramatically:
? Philippine sales of sugar and coconut products
dropped, while exports of nontraditional items
such as electronic goods showed little change.
Lack of a coherent export promotion program
also hindered foreign sales.
Lower Export Growth
Key debtor exports declined last year, the result of
past unfavorable exchange rate movements, sag-
ging commodity prices, and slower economic
growth in developed countries. We estimate export
earnings dropped 5 percent, or approximately $8
billion, a dramatic reversal from the 7-percent
increase in 1984.
Among individual debtors, exports increased in
only four of the 12 countries we examined:
? Colombian exports of coal and petroleum dou-
bled, and gains were reported for cotton, rice,
manufactures, and other minerals.
? Nigeria sharply boosted oil export volume in the
first and fourth quarters of last year, offsetting
declining petroleum prices.
? Argentine grain exports reached record levels,
despite sharply lower prices. Nontraditional ex-
ports also showed gains, and sales of petroleum
doubled to about $600 million.
' The countries are Argentina, Brazil, Chile, Colombia, Indonesia,
Malaysia, Mexico, Nigeria, Peru, the Philippines, South Korea,
? For Venezuela, lower oil prices and export volume
reduced earnings by nearly $2 billion. Nonoil
exports registered a sizable percentage gain, but
they still account for less than 10 percent of total
export earnings.
? Mexican export losses were primarily in petro-
leum and petroleum products. Nonoil exports also
declined as a result of lower economic growth in
developed countries-especially the United
States-and falling export prices.
Imports Forced Down Again
In response to the loss of export revenue, most key
debtors were forced to cut imports last year. For
the group as a whole, we estimate imports dropped
6 percent, the fourth annual decline in a row:
? Colombian efforts to improve the trade balance
led to deep cuts in imports of electrical machin-
ery, transport equipment, and grain.
Secret
DI /EEW 86-007
14 February 1986
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Secret
Key LDC Debtors: Trade Performance, 1984-85
1984 1985 a Change 1984
(percent)
a Estimated.
b 1985 estimate based on data through October.
c 1985 estimate based on data through August.
Billion US $
(except where noted)
1985 a Change 1984 1985 a Change
(percent)
? Chile used a variety of import controls-such as
reference pricing and higher tariffs-to reduce
imports last year. Imports from major OECD
countries fell 27 percent, with the largest declines
in food and manufactured goods.
? The Philippine import drop reflected continuing
sharp declines in real GNP. Manufactures im-
ports from major developed countries fell nearly
20 percent, with smaller declines in foodstuffs
and raw materials.
? Peru sliced imports of industrial inputs and capi-
tal goods. In addition, spending for luxury items
was halved. Trade with the United States and
Canada fell sharply, while imports from France
and the United Kingdom increased.
? South Korean imports showed the first decline
since 1982-as a result of lower real GNP
growth. Imports of food and raw materials fell
sharply, while purchases of fuels and manufac-
tured goods increased.
Mexico, the major exception, recorded the only
import gain among the group, with purchases up 20
percent in 1985 under the stimulus of increased
preelection public-sector spending. Imports of man-
ufactured goods (especially machinery, transport
equipment, and consumer goods) rose 20 percent,
and raw materials imports were up 16 percent. This
import surge contributed to a $4 billion drop in
Mexican foreign exchange reserves; we believe net
reserves now total around $2 billion, less than two
months' import coverage.
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Secret
Key LDC Debtors: Export and
Import Trends, 1975-85
Key LDC Debtors:
Outlook for 1986 Export Growth
Sharply Higher No Lower Sharply
Higher Change Lower
0 1975
Efforts To Boost Trade Surpluses
Most key debtors increased their surpluses last year
to finance their debt service payments and main-
tain creditworthiness. Colombia, Nigeria, and
South Korea recorded gains in excess of $1 billion.
The glaring exception was Mexico. According to
our estimates, the Mexican trade surplus last year
was down 35 percent from 1984. The loss sharply
increased the current account deficit, jeopardized
the multiyear debt rescheduling agreement signed
last year, and raised new fears over the country's
ability to service its $100 billion debt. As a result,
Mexico may be forced to seek as much as $9 billion
in new lending this year, far more than previously
anticipated.
We forecast higher export earnings for most non-
oil-exporting debtors in 1986. The drop in the US
dollar, continued economic growth in developed
countries, and the expected firming of commodity
export prices will be contributing factors:
? The outlook appears especially bright for Colom-
bia; earnings from coffee exports may rise as
much as $1 billion this year, and sales of coal are
also expected to surge.
? Brazil will also benefit from the higher coffee
prices it will receive on sales from inventories.
On the other hand, major oil-exporting countries,
especially those with few nonoil exports, will con-
tinue to suffer from falling petroleum prices. If the
recent drop in oil prices is sustained, and world
prices average $20 per barrel:
? Mexico-already reeling from last year's export
decline-would be especially hard hit, experienc-
ing a $3.7 billion drop in oil earnings. Nonoil
export growth in these key debtors almost cer-
tainly will not be strong enough to make up for
the expected loss of oil export revenue.
? Nigeria would suffer a $3.6 billion loss in oil
revenues.
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Secret
$3.3 billion.
Oil exporters face bleak import prospects next year.
However, we believe these LDCs will not try to
compensate for lost export revenues by further
squeezing imports. In most nonoil exporters, stron-
ger export growth should provide some additional
import capacity to support government priorities
for economic growth, but the impact will be limited
by higher scheduled debt service payments. Under
these circumstances, several key debtors are likely
to seek further debt rescheduling, or new loans
from creditors. If sufficient financial relief is not
forthcoming, additional countries may follow the
lead of Nigeria and Peru and limit debt service
payments to a fraction of exports.
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USSR-Eastern Europe:
New CEMA S&T Program
The CEMA Complex Program for Scientific and
Technical Progress Until the Year 2000 is a blue-
print for cooperation in science and technology to
spur economic growth throughout the region. Its
principal goal is to close the gap vis-a-vis Western
science and technology by the end of the century
through greater economic integration. CEMA re-
gards the new program as the most significant
initiative since the 1971 program for cooperation
and the development of socialist integration. Mos-
cow's long-term objective is to tie East European
economies more closely to the Soviet system and
make them more responsive to Soviet needs. At the
same time it is designed to reduce CEMA's depen-
dence on Western technology and, in particular, to
eliminate Western leverage through economic
sanctions and embargoes. The twin goals of techno-
logical modernization and self-sufficiency, howev-
er, may well turn out to be inherently contradic-
tory. This is likely to lead to serious discord among
the members, which, in turn, will hamper the
implementation of the program.
with them, and biotechnology. The specific goals in
each of the five areas reflect the desire of the
CEMA countries to be at the frontier in each field
and equal to the West in the year 2000.
The program consists of 92 tasks or problems. The
goal is to solve half of these problems within three
years by producing new equipment and applying
new technologies. To help meet this ambitious
timetable, 67 new agreements are to be concluded
among members and over 80 existing agreements
are to be extended by June 1986.
Three secondary multilateral accords also an-
nounced at the December meeting include an
agreement on the creation and introduction of
computer-aided design (CAD), another on the de-
velopment and production of a unified fiber-optic
information communications system, and the estab-
lishment of Interrobot. Six (unnamed) CEMA
countries are slated to participate in Interrobot,
which will coordinate research in advanced robots
and production of robots and related components.
Scope of the Program
The new push for scientific-technical cooperation
was launched at the June 1984 CEMA Summit in
Moscow, where the leaders agreed to prepare a 15-
to 20-year multilateral program as the basis for a
coordinated-"and in some cases, unified"-sci-
ence and technology policy in CEMA. While work
on the program began before General Secretary
Gorbachev took office, he was probably instrumen-
tal in pushing the draft plan to completion last
year. The program was originally to be completed
by the end of 1984, but was not formally adopted
until a special meeting of CEMA premiers in
Moscow last December.
Implementation: News Forms of Cooperation
CEMA's earlier effort at specialization and inte-
gration foundered largely because, of an inability to
provide incentives or authority to carry through on
plans. As a result, CEMA's programs generally
have been undermined by inattention and failure to
cooperate at lower levels. The new program shows a
determination to avoid repetition of these past
errors; the most interesting and novel aspects are
the provisions to implement it. There is a strong
effort to directly involve lower levels-enterprises,
research institutes, and design bureaus-and to
assign them responsibility for meeting the targets.
The Complex Program identifies five major areas
of development: electronics, automation, nuclear
power, new materials and technologies associated
Secret
DI 1EEW 86-007
14 February 1986
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Secret
The Technical Targets
The announcement of the S& T program was ac-
companied by a list of several goals presumably
a portion of the 92 tasks. Most of the goals are
described only in general terms, but the few that
were specified are extremely ambitious. In addi-
tion, many of the goals have significant military
In electronics, the overall goal is the mass intro-
duction of advanced electronics throughout
CEMA. The program calls for the production of a
supercomputer capable of 10 billion operations per
second, which is roughly 20 times the speed of the
West's fastest computer, the use of artificial intel-
ligence to streamline management, an integrated
digital information communications system, a
high-speed fiber-optic communication system, and
as newgeneration of satellite communications.
The basic objectives in the area of new materials
include cooperation to widely introduce, primarily
in industry, new types of materials that are dura-
ble and resistant to corrosion, radiation, and heat.
The priority tasks include the development of a
ceramic internal-combustion engine and a ceramic
gas turbine engine, improvement of continuous
casting technology, and creation and introduction
of new plastics and composite materials.
A few days before the CEMA Council approved
the S&T program, Moscow established 16 Inter-
branch Scientific and Technical Complexes
(MNTK) to coordinate Soviet research in key areas
such as lasers, robotics, fiber optics, personal com-
puters, polymers, and biotechnology. In general,
each MNTK will have as its nucleus an academic
or industrial ministry institute and will coordinate
all of the work in its area throughout the USSR.
Resources are to be ensured by the State Commit-
tee on Material and Technical Supply. Once new
technologies developed by the complexes are
deemed ready, the State Planning Committee will
select the enterprises to apply the technologies on a
In the area of automation, the CEMA countries
want to automate their economies through wide-
spread use of flexible manufacturing systems, com-
puter-aided design (CAD), and computer-aided
manufacture (CAM). They plan to use high-accu-
racy electronic sensors and measuring instruments
for quality control. Industrial robots, including
those with artificial vision and the ability to
understand spoken commands, also are to be intro-
The aims of CEMA in nuclear power development
include creation of district nuclear heat and elec-
tricity supplies for civilian and industrial use
(including long-distance-25 kilometer-transport
of heat). Other goals include development of equip-
ment for fast breeder reactors and multipurpose
high-temperature (for increased efficiency) nuclear
power engineering installations and implementa-
tion of research on controlled nuclear fusion.
Bioengineering tasks are directed toward medicine
and agriculture and include new medicines, syn-
thetic proteins, development of microbiological
agents to protect plants against diseases and pests,
bacterial fertilizers and plant hormones, and new
high-yield crop varieties resistant to adverse envi-
MNTKs are also expected to oversee the coordina-
tion and execution throughout CEMA of R&D in
the five priority areas. Details are sketchy, but
presumably each Soviet MNTK will work with
counterpart research organizations in each of the
other CEMA countries to complete the assigned
tasks. Statements by CEMA officials indicate that
many of the MNTKs' partners in Eastern Europe
The leading role of the MNTKs appears to assure
Soviet dominance of the CEMA S&T program and
these fledgling organizations also bear great re-
sponsibility for the success of the program. The US
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Secret
Embassy in Moscow notes many uncertainties
about how the MNTKs will relate to the rest of the
Soviet scientific community, especially the Acade-
my of Sciences and the State Committee for Sci-
ence and Technology.
The program stresses the importance of direct links
thoughout CEMA between production and re-
search organizations at all levels. Joint Science and
Production Associations, also referred to as trusts,
will include both R&D institutes and production
enterprises. The new multilateral Interrobot ap-
pears to be the first undertaking that encompasses
both a design bureau and full production. Accord-
ing to the Polish press, there are proposals for
additional joint enterprises in the chemical and
light industries, and in agriculture. Joint scientific-
research institutes, also called international collec-
tives of scientists, will be bridges between research-
ers in CEMA. We do not know whether any of
these have yet been established.
Finally, bilateral coordination of economic plans-
the traditional method of implementing CEMA
programs-will be an important tool. In an inter-
view, Guriy Marchuk, chairman of the Soviet State
Committee on Science and Technology, pointedly
said that bilateral interests of the CEMA countries
will play a significant role in the Complex Pro-
gram.
Commitment of resources for the program will be
the responsibility of the participating countries,
although credits from the two CEMA banks, the
International Investment Bank and the Interna-
tional Bank for Economic Cooperation, have been
suggested.
Eastern Europe's Participation
East European responses to the Complex Program,
which was primarily generated by the Soviets, were
guardedly positive. While the East Europeans seem
genuinely interested in the benefits that would
come from fulfillment of the program, their enthu-
siasm is tempered by their own problems and
interests:
? Premier Stoph said East Germany will participate
in all five areas and will develop direct ties to
enterprises in other CEMA countries. Stoph re-
ported that tasks resulting from the Complex
Program are being incorporated into East Berlin's
annual and five-year plans and that party and
government will take the necessary short-term
measures to meet commitments. He noted that
industrial combines in East Germany already
have responsibility for the whole production pro-
cess from R&D through sales.
? Poland embraced the Complex Program as the
answer to the technological threat from the West
and Japan. Warsaw will participate in all five
areas, and expects to develop exports of drugs,
mining equipment, and electronics. At the
CEMA meeting, Polish Premier Messner implied
that Poland was waiting for instructions from the
Soviets on where to concentrate before complet-
ing Poland's 1986-90 S&T plan. Warsaw already
had increased research and development funding
30 percent above what was called for in the draft
plan for R&D to 1990.
? Hungary also will participate in all five major
areas and 70 to 80 percent of the tasks of the
program. In electronics, Budapest will participate
in the development of two new central processor
computer units and new software. In bioengineer-
ing, their contribution will be in agro-industry
and pharmaceuticals.
? Statements by Czechoslovak Premier Strougal
indicated that Prague wishes to participate across
the board in the Complex Program, and will be
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active in 50 to 75 percent of the programs. He
emphasized that participating countries must ful-
fill their commitments.
? Bulgaria is likely to have a major-but not
dominant-role in robotics,
many
countries are vying for leading roles in the
CEMA robotics program.
? The Romanian response was cooler than that of
the other CEMA countries. At the party's Politi-
cal Executive Committee meeting in December,
President Ceausescu complained that plan coor-
dination for 1986-90 did not meet the goals of the
1984 CEMA Summit and that CEMA had failed
to establish production specialization and produc-
tion coordination. He later asserted that CEMA
had failed to meet the commitments to solve the
energy and raw materials problems, and stated
that Bucharest will focus its resources on these
problems before it addresses such topics as robot-
ics.
History offers much reason for skepticism about
the success of the latest Soviet-inspired drive for
integration of the Bloc economies. Past efforts,
launched with similar vigor and rhetoric, have
achieved, at best, mixed results. Earlier programs
succumbed to the ability of some of the East
Europeans-and perhaps the Soviets-to duck
their commitments in favor of pursuing trade with
the West and other economic and political goals.
The programs lacked the institutional authority to
compel participation and the incentives to encour-
age it.
The East European countries still may present
several obstacles to the new program. They will be
strapped to commit large amounts of resources to
CEMA S&T because of prospects for slow econom-
ic growth, debts to the West, and large investments
in Soviet energy projects. The more technologically
advanced countries-Hungary and East Germany,
for example-will have less to gain from sharing
their technology and may be reluctant to contrib-
ute. The success of the program will depend largely
on the willingness of scientists and engineers in
each country to share their knowledge and tech-
niques with the rest of CEMA.
Nonetheless, this initiative may yield better results.
The emphasis on implementation indicates the So-
viets have correctly diagnosed some of the flaws in
earlier programs, although only time will tell
whether the new organizations and mechanisms
will be the appropriate remedy. It is also possible
that the East Europeans will be more willing and
active participants than in the past. The prospect of
technological advance appeals to them, and trade
with the West probably is no longer considered by
some as the path to prosperity. Finally, in Gorba-
chev the East Europeans face for the first time in
many years a tough and vigorous Soviet leader who
clearly expects his allies to toe the line-and who
has nut his own stamp on CEMA's new initiative.
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Romania-USSR:
Poor Prospects for
Trade Growth in 1986-90
The Romanian-Soviet trade protocol for 1986-90 Soviet-East European Trade,
and the new five-year science and technology coop- 1977-84
eration agreement suggest a significant strengthen-
ing of economic ties between the two countries.
Trade is to increase by at least 70 percent over the index: 1977=100
1981-85 level, the fastest planned growth rate for Soviet Imports
Soviet trade with any East European country.
There is reason, however, to question whether trade 225 o 225
will reach the levels envisioned. About one-third of
the projected growth is based on highly unrealistic
the remaining growth is to come from joint devel-
opment projects, many of which are likely to
progress slowly. Moreover, the implementing con-
tracts for most areas under the two agreements
nian trade for the next several years will be ham-
pered by the same constraints that have inhibited
bilateral trade in recent years-the USSR's insis-
tence on balanced trade and its refusal to grant
concessionary terms, and Romania's inability to
deliver the type and quality of goods required.
Background
Since the late 1970s, foreign debt problems and
domestic economic decline have led Romania to
seek increased trade with the USSR, despite Bu-
charest's longstanding concern to avoid economic
dependence. Romania's primary objective has been
to obtain increased deliveries of energy and raw
materials in return for goods difficult to sell in the
West. Romania's eagerness, however, has not been
matched by Soviet responsiveness. The USSR's
insistence on balanced trade and its refusal to grant
concessionary terms have inhibited significant
growth in trade with Romania. Of the 40,000 b/d
of oil agreed upon for 1984, and the 68,000 b/d for
1985, Romania received little more than half large-
ly because of its inability-or unwillingness-to
supply the type and quality of goods required in
return. Romanian trade in real terms with the
USSR since 1980 has grown less than that of any
I I I I I I I I I I I I I I 1 1
75 1977 80 84 75 1977 80 84
a Includes East European CEMA countries
except Romania.
Secret
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Secret
other East European CEMA country, with the
exception of Poland. The substantial increase in the
Soviet share of Romanian trade was primarily due
to cutbacks in Bucharest's trade with the non-
Communist world. Although preliminary data indi-
cates trade in real terms with the USSR picked up
by about 10 percent in 1985, it still fell considera-
bly short of target.
The new five-year trade agreement envisions total
trade of 30-35 billion rubles,' an increase of 70 to
100 percent over the level achieved in 1981-85. The
big-ticket items include:
? Soviet deliveries of 100,000 b/d of oil annually in
return for agricultural products-mostly meat-
and some industrial machinery.
? Approximately 15-20 billion cubic meters of So-
viet gas in 1987-90 in return for assistance in
building the Progress pipeline; the agreement to
begin deliveries in 1987 (instead of 1989 as for
the other East European CEMA countries) may
be a concession to Romanian energy needs.
? Romanian deliveries of machinery and equipment
valued at 6-6.5 billion rubles ($7.4-8.0 billion)-
including increased deliveries of oil drilling equip-
ment and agricultural machinery-and Soviet
deliveries of machinery valued at 4.5 billion
rubles ($5.5 billion).
The plan also allows the Soviets to make use of the
unutilized 40 percent of steel production capacity
in Romania-the Soviets are to provide the re-
quired energy and raw materials. Technical cooper-
ation will include continuing Romanian construc-
tion of KA- 126 helicopters and IL- 114 two-engine
medium-range aircraft for the Soviets. The Roma-
nians are scheduled to deliver several tankers and
cargo vessels annually, and will be partially com-
pensated by Soviet assistance in modernizing their
shipyards.
The extent of Romanian participation in CEMA
science and technology cooperation is unclear, but
the Romanians probably are most interested in the
nuclear energy aspect of the program. The imple-
mentation of the 1982 agreement to construct a
Soviet-designed 3,000-MW nuclear power plant in
northern Romania may begin this year. The project
presumably falls under the CEMA science and
technology agreement signed in Moscow in
December.
Although the agreement's provisions for Romanian
construction of the IL-114, Soviet utilization of
Romanian steel plants, and cooperation on the
Pribuzhiye nuclear plant in the Ukraine are mutu-
ally advantageous, terms for the other deals out-
lined for 1986-90 do not match Romanian needs or
abilities to pay:
? The Soviet commodity most desired by the Ro-
manians-crude oil-is the item Moscow will be
most reluctant to supply. Falling Soviet oil pro-
duction and decreasing world oil prices, which
have cut the USSR's hard currency oil earnings,
have stiffened Moscow's resolve to obtain full
compensation for its oil exports to Romania.
Pique at Romania's practice of refining Soviet oil
and reexporting products for hard currency has
also played a role. As a result, the Soviets are
insisting on hard currency goods, primarily meat,
with the balance in high-quality industrial ma-
chinery. The faltering Romanian agricultural
sector is not likely to produce the food deliveries
needed to obtain the full 100,000 b/d of oil
offered.
? The Soviets are demanding that, in the 1986-90
period, the Romanians provide machinery and
other goods of equal quality to items supplied by
the Soviets. Romanian industry, plagued by
shortages and inferior inputs, is unlikely to supply
all the high-quality machinery Moscow is seek-
ing. Bucharest may be reluctant to divert goods
now exported to the West to meet its goal of
eliminating its hard currency debts.
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Romania-USSR:
Joint Development Projects
Project
Romanian
Contribution
Completed 1977-
79
1.5 billion cubic meters of natural gas
per year, 1979-90
Sovetabad natural gas field and
pipeline
Construction and equipment
Under way in
1984, to be com-
pleted in 1990
300 million cubic meters of natural gas
per year
Yamburg (Progress) natural gas
pipeline
Construction and equipment, assis-
tance in exploration of Soviet oilfields,
financing
1989-90
5 billion cubic meters of natural gas
per year, 1987-90
Krivoi Rog iron ore enrichment
plant
Construction
Asbestos plant in Kiembai,
Siberia
Construction
Ongoing
30,000 metric tons of asbestos deliv-
ered annually until 1990
Usti Ilim cellulose and paper
plant
Construction
NA
50,000 tons of cellulose per year until
1990
Ongoing
50,000 tons of ferroalloys per year
until 1990
Pribuzhiye atomic power plant
Construction work, installation
of reactors
1982-90
Electric power through the year 2004;
first installment of 1.5 million kwh
delivered in 1985
USSR-Turkey gas pipeline
from USSR through Romania
and Bulgaria
Construction of 200 kilometers
through Romania
Begun in 1985,
scheduled for
completion in
1988
Transit fees
Moldova 3,000-MW nuclear
power plant
Romania to provide construction mate-
rials and labor; USSR to supply tech-
nology and equipment
IL-114 two-engine medium-
range aircraft
50 to 60 annually
? The terms for Romanian participation in the
Progress pipeline are not settled. Although Ro-
mania was originally scheduled to construct a
segment of the 4,600-kilometer line, providing
machinery, pipe, and labor, Bucharest has indi-
cated that it will not be able to completely meet
this commitment and will substitute assistance in
the exploration of Soviet oilfields.
? The Moldava nuclear power plant project could
be delayed or even scuttled because the Soviets
will probably require hard currency goods in
payment for much of their contribution.
Because of Bucharest's uncooperative behavior in
the international arena-which has frequently em-
barrassed and annoyed Moscow-the USSR is
unwilling to provide economic assistance, especially
when it is attempting to reduce the level of econom-
ic support to Eastern Europe. Romanian irritation
surfaced in late December when Ceausescu criti-
cized CEMA for not responding to Romanian
energy and raw material needs. He stated that the
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Secret
coordinated 1986-90 plans for CEMA members did
not reflect the objectives set forth at the CEMA
Summit in 1984, and called for implementation of
existing technology before turning to the high-
technology programs being pushed by the Soviets.
He reportedly repeated these ideas to the Soviet
delegation that came to Bucharest to sign the
science and technology agreement.
Soviet-Romanian trade-particularly Romania's
dependence on Soviet oil and gas-will increase
over the next several years, but will not reach the
level of the other East European countries. Soviet
oil deliveries are unlikely to reach the 100,000 b/d
envisioned under the new five-year accords, but,
even if they do, Soviet oil would account for
somewhat less than 20 percent of total Romanian
oil supply. Most other East European countries
receive at least 75 percent of their oil supply from
the USSR. Similarly, even if annual Soviet gas
deliveries reach the 7-billion-cubic-meter level, this
amount would represent only 15 to 20 percent of
Romania's total supply, in sharp contrast to the 35-
to 40-percent dependency of most other East Euro-
pean countries. Furthermore, given the recent de-
clines in the price of oil in world markets, the
Romanians might turn to the spot market if they
perceive Soviet terms to be too onerous.
Moscow's insistence on quid pro quo trade arrange-
ments suggests that the USSR is not interested in
trying to buy greater foreign policy compliance
from Romania. The Soviets do not appear to regard
Ceausescu's behavior as a sufficient threat to their
interests to warrant expending substantial sums to
try to rein him in. They probably realize it would
be a nearly impossible feat to carry off. Now is
likely to drop thereafter.
probably the most propitious time to make the
attempt, however. After 1988, Romania's financial
squeeze will lessen, giving it greater flexibility to
rebuild trade levels with the West. Moreover, many
of the joint cooperation projects with the USSR are
scheduled to be completed after 1990, and unless
new projects are entered into late in the decade or
existing projects are extended, trade levels are
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Energy
OPEC Production OPEC crude oil output averaged 17.3 million b/d in January, a 1.1-million-
Update b/d decrease from December levels. Weak oil demand caused Saudi produc-
tion to drop about 600,000 b/d, which may indicate that companies are not
picking up all the oil they are entitled to under netback contracts. Nigeria and
Libya also had trouble marketing their oil.
a Estimated.
b Amount in parentheses excludes production from the Neutral
Zone, whose output is divided between Saudi Arabia and Kuwait
and included in their country quotas; the Neutral Zone has no
production quota of its own.
Secret
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Spot Oil Price Following several weeks of precipitous decline, the drop in spot oil prices has
Developments slowed since the beginning of February. North Sea and US crude prices-
fluctuating in the $16.50 and $18.00 per barrel range for the past two weeks-
now sell at 30 percent-or over $8 per barrel-below early January levels.
Low spot prices are pulling official prices down. Mexico, Venezuela, and Egypt
have all announced price cuts of as much as $4 per barrel in attempts to keep
their crudes competitive. We estimate the early February average world price
is about $22 per barrel in contrast to the 1985 average price of $27. Marketing
and pricing problems have reduced liftings in several producing countries as
consumers hold off purchasing in anticipation of further price drops. Signifi-
cant output reductions, however, do not appear imminent.
New Iranian work is nearing completion on the pipelines
Export Terminal connecting Ganaveh to a new oil terminal about 22 kilometers offshore. By
late January one construction barge had finished laying over 90 percent of one
submerged pipeline, and another barge had completed 80 percent of a second.
single-point buoy moorings were being towed to
the terminal locations at that time. After the pipeline is complete, installation
and testing of the mooring may take an additional six to eight weeks. The new
offshore facility will expand export capacity by approximately 1.5-2.0 million
b/d and enable Iran to shift export operations in the event of further damage
to Khark Island. Nevertheless, the new export facilities are well within range
of the Iraqi Air Force.
China Stabilizing China last week said it will not increase its oil exports in 1986, claiming to sup-
Oil Exports port OPEC efforts to stabilize world oil prices. China's exports of crude rose
85 percent over the last two years and in 1985 provided an estimated $5.6 bil-
lion-one-fifth of China's foreign exchange earnings. Beijing has voiced
support for price stabilization efforts in the past but has continued to increase
sales and undercut OPEC prices. Although China will try to use its announce-
ment for political mileage, other factors-including China's limited ability to
increase production and control domestic consumption, and its need for foreign
exchange-are more likely to influence its marketing and pricing.
Increased Soviet The recently signed trade protocol between the USSR and Yugoslavia for
Energy Deliveries 1986-90 provides for higher annual base-level deliveries of Soviet gas,
to Yugoslavia electricity, and oil than the amounts set in the protocol for 1981-85. Annual
deliveries of gas will rise from 3 billion to 5 billion cubic meters, oil from
90,000 b/d to 110,000 b/d, and electricity exports will total 3.5 billion
kilowatt-hours over the five years. Differences between Belgrade and Moscow
over the level of energy deliveries and the composition and amount of Yugoslav
exports had delayed the signing of the trade agreement for several months.
Although Yugoslavia's heavy dependence on Soviet energy will continue, the
actual increases will be much less than comparisons of the two protocols
suggest. Gas deliveries in 1984-85 were already on the order of 4 billion cubic
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a practice the Soviets insist will end under the new agreement.
meters annually. Moreover, in recent years Moscow regularly granted
Belgrade's requests for additional oil amounting to about 20,000 b/d annually,
Mexico Divided President de la Madrid's cabinet, meeting in emergency sessions, has failed to
on Debt Strategy
Last week powerful labor
leader Fidel Velazquez reversed his earlier position that debt payments should
be met and some 50,000 marched in Mexico City to demand a debt
moratorium. Because de la Madrid probably lacks the political will to ask
Mexicans to make more sacrifices, it is increasingly likely that, unless
substantial new lending or concessions are forthcoming, he will tell creditors
his country cannot honor its obligations.
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Global and Regional Developments
Extension of EC The EC Commission has extended its system of import surveillance on certain
Import Surveillance Japanese products through 31 December 1986. Originally instituted in 1983 to
on Japanese Goods limit Japanese penetration in certain "sensitive" areas, the list now includes
machine tools, stereo equipment, color televisions, cathode ray tubes, motorcy-
cles, light commercial vehicles, and forklift trucks. Dropped from the list were
VCRs-whose tariff was boosted from 8 to 14 percent in January-and quartz
watches. The extension of the system signals continuing EC annoyance with
Japanese trade policy. EC Commission President Delors recently visited Tokyo
to press again for increased imports from Community members. Tokyo,
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however, has refused, agreeing only to the formation of a more amorphous
"surveillance group" to monitor potential EC-Japanese trade frictions. We
expect continued EC pressure on the Japanese to reduce their persistent trade
surplus with the Community.
New Soviet Economic I50 Soviets arriving by March for a four-year,
Support for Nicaragua $90 million irrigation project. This boosts the number of Soviet civilians
working in Nicaragua to about 350. Nicaraguan officials had announced
unspecified new Soviet agricultural aid last December. The Soviets have
reportedly agreed to provide all materials and technicians needed to develop
36,000 hectares near Managua for cotton and grains. An official report
indicates that this project is the first phase of the Sandinistas' 20-year, $2
billion Pacific Coast agricultural development plan-a plan largely based on
work done for Somoza by USAID and the US Bureau of Reclamation in the
1970s.
Closer Argentina and Cuba completed negotiations on commercial air service last
Argentine-Cuban month, according to Embassy reporting. The two-year agreement provides for
Commercial Ties one flight each week between Buenos Aires and. Havana, alternately flown by
Aerolineas Argentinas and Cubana Airlines. Moreover, the two countries
recently signed a maritime transport accord. Havana pushed for the transpor-
tation agreements primarily to assist its ailing maritime industry and boost its
fledgling tourist business. Buenos Aires benefits handsomely from its current
lopsided trade with Cuba, which purchases agricultural products, electric
cables, trucks, auto parts, and other manufactures, but has no market in
Argentina for its main export, sugar. Spurred by trade credits worth $200
million per year for 1984-86, Argentina's trade surplus with Cuba more than
doubled over the past two years to $275-300 million in 1985,
Buenos Aires probably believes the transportation agree-
ments will enhance trade relations with Havana, without significantly lowering
the surplus.
Soviet Trade A Soviet economic delegation recently was in Khartoum to discuss trade and
Overtures to Sudan the possible resumption of joint economic projects, but the two sides apparently
did not conclude any agreements. The Soviet Embassy in Khartoum is seeking
to increase bilateral trade and,
Moscow is interested in a "cotton-for-petrol" barter deal. The Soviets want to
encourage Sudan's nonalignment and are interested in improving relations,
which had deteriorated since the early 1970s. The Kremlin may be willing to
make a barter deal to play on Sudan's dissatisfaction with its Western
creditors. If Moscow were to supply crude oil, it probably would transfer oil
from the Middle East rather than from Soviet stocks. It would have to export
gasoline or petroleum products from its own supplies, however, and could offer
only small quantities.
Secret
14 February 1986
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National Developments
Developed Countries
Canadian Difficulty The Canadian Wheat Board may approach Ottawa for additional subsidies to
in Disposing of promote sales of its surplus feed wheat stocks. The Board has been pushing to
Feed Wheat dispose of up to 2 million metric tons of feed wheat by midsummer, and has
thus far sold 30 to 40 percent of its goal-most likely to nations in the Pacific
Basin. Other potential purchasers, however, are using the global abundance of
feed wheat to drive a harder bargain. Mexico and Brazil, for example, have
told the Wheat Board they would like to participate in the US Export
Enhancement Program rather than purchase grain at current Canadian prices.
The Board has apparently reversed an earlier position and financed the
Mexican deal at below-market interest rates.
British Labor Party The opposition Labor Party, in anticipation of the next election, is developing
Emphasizes Industrial an economic policy strategy aimed at Prime Minister Thatcher's free-market-
Renewal oriented policies. Labor's main criticism is that Britain is being turned into a
service economy of low-paying jobs and the Tory policies are inadequate to
prepare the economy to compete in world markets as North Sea oil production
declines through the end of the decade. Labor will propose new investment and
technology to revitalize manufacturing-both high-technology and traditional
industries, such as steel and coal. Party plans call for a National Investment
Bank (NIB) to provide long-term financing for small innovative firms and
mature industries that are facing increasing international competition. Labor's
goal is to create 1 million jobs in two years, through increased direct
government spending and the NIB.
West German Wage The opening salvos in this spring's wage round have already been fired, but
Round Under Way both management and labor appear prepared for compromise. The wage
increase demanded by the giant metalworkers union-the pacesetter for the
rest of organized labor-is 6.0 to 7.5 percent, while construction workers are
asking for 5.8 percent. Both unions, however, probably will settle for pay hikes
in the 3.5- to 4.5-percent range. The public employees already have settled for
a 3.5-percent gain. Increases in this range would represent a real wage gain of
about 1.5 to 2.5 percent, and would not seriously impair export competitive-
ness-assuming that productivity growth maintains the 2.5-percent average of
recent years. Several smaller unions are seeking cuts in the workweek, but the
metalworkers will wait until after their next congress in October to pursue
their 35-hour-week goal.
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Secret
Ireland's Dublin's 1986 budget, announced in late January, reaffirms the priority given
Tight Budget to reducing the deficit while counting on faster world growth to balance the
Policy Continues dampening effects on the domestic economy. Higher-than-expected spending
has thwarted the government's deficit reduction goals in past years, and we be-
lieve the government will again fall short this year. Government policy calls for
cuts of about $69 million in capital expenditures to bring the fiscal 1986 deficit
from 8.2 percent to 7.4 percent of GNP. The revenue proposals feature a
reduction in the highest tax rate from 60 to 58 percent and the abolition of a
1-percent income levy. To replace lost revenues, the VAT will be raised by 2
percentage points to 25 percent, life insurance interest will be taxed, and a
withholding tax on bank deposits will be introduced. Dublin was reluctant to
impose more austere measures that would slow growth and add to the
18-percent unemployment rate. The government is concerned about the impact
of persistent high deficits on Ireland's $12 billion foreign debt, but calculates
that lower international interest rates and a declining dollar will lower the
foreign debt burden.
Turkish Push for Prime Minister Ozal is taking steps to revive the issue of EC membership, long
Entry Into EC dormant because of Community concern about the economic costs of adding
another developing Mediterranean economy and reservations about the
strength of democratic institutions in Turkey.
pected to push for British support for quick Turkish entry when he visits
London on 17-20 February. The Turks probably would be willing to put
membership-which the EC committed itself to in the association agreement
of 1964-on the back burner in return for some EC concessions. The Turks are
particularly interested in obtaining the release of $540 million in EC aid-
frozen after the 1980 military takeover in Turkey-and in the lifting of EC
quotas on Turkish textiles. Ozal also may hope to use the prospect of eventual
EC membership to maintain domestic support for his economic liberalization
program, which requires painful sacrifices to enable Turkey to compete with
its prospective EC partners.
Secret
14 February 1986
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Israeli Labor Unrest The Israeli labor scene is heating up after six months of relative calm. A two-
on the Upswing hour public-sector warning strike on 4 February and the ongoing sit-in
demonstration by workers at the government-owned Israeli Shipyards indicate
that labor's patience with the current economic austerity program is wearing
thin. Labor unrest is likely to intensify over the next couple of months as
negotiations on new public- and private-sector wage agreements begin and the
Knesset votes on the budget for the fiscal year beginning 1 April. Labor
leaders-already under fire for their passive behavior over the past eight
months-will be under considerable pressure from workers to extract conces-
sions from the government. A compromise that can maintain the government's
commitment to austerity and also mollify the workers will be difficult to
achieve.
Less Developed Countries
Argentine Economic President Alfonsin's latest economic reform measures, announced last week,
Package Unveiled are likely to facilitate growth without inflation. He has pledged to sell six
state-owned companies to the private sector, including the country's largest
steel plant and two leading petrochemical concerns. In addition, he plans
export programs based on tax credits for industrial exports and a land tax that
will allow Argentina to reduce duties on agricultural exports. Demands by
labor and the Peronists for a moratorium on foreign debt payments have been
rejected. While most Argentines and foreign creditors will applaud moves to
trim the public sector, labor will oppose,the initiative-because of the scarcity
of domestic capital, only foreign companies probably can afford to buy the
inefficient state enterprises. The reforms, however, will not resolve Buenos
Aires's dispute with the IMF over the budget deficit this fiscal year, which has
delayed disbursements of new money originally slated for last December.
Surge in Brazilian Official announcements indicate Brazil will buy 1.7 million metric tons of rice
Rice Purchases at a cost of more than $400 million this year-more than eight times the
average yearly amount imported during 1980-85. Purchases will be used to
boost food supplies, keep food prices down in the wake of this year's drought-
reduced corn crop, and build government stocks. Unusually large Brazilian
purchases this year are likely to bolster sagging world rice prices somewhat
and improve US sales prospects later in the year when US rice prices become
more competitive as a result of recent legislation designed to spur farm
exports. Brazil, for example, purchased about 250,000 tons of Asian rice in
January at about half the cost of US rice of similar quality, according to
USDA estimates.
31 Secret
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Secret
Ecuador Faces President Febres-Cordero is deeply troubled by the sudden plunge in oil prices.
Sliding Oil Foreign Minister Teran told the US Embassy that the President fears that the
Revenues resulting recession and foreign payments problems endanger his experiment
with free market economics and threaten to undo recently signed accords with
international lenders. The Foreign Minister voiced concern that recession
would strengthen domestic critics of the President's close relations with
Washington and the IMF, and could result in a sweeping defeat for the
President's coalition in June's congressional elections. Although Teran was
clearly trying to "worst case" Ecuador's plight, the US Embassy estimates
that real GDP growth this year is likely to fall far short of the government's
3.7-percent target-a target based on oil at $23 per barrel. Continuation of the
current $19 per barrel price would result in no economic growth this year, but
debt service would be manageable. Oil at $15 per barrel, however, would result
in a 3-percent decline in GDP, and the payments gap
would meager foreign exchange reserves, necessitating new borrowing.
Impact of the The drought afflicting South America's southern region has had a disastrous
Paraguayan Drought impact on Paraguay's agriculturally based economy. The US Embassy
estimates that the country's GDP could decline by as much as 8 percent this
year, with the agricultural sector contracting at least 20 percent. Soybean and
cotton crops, which alone account for 80 percent of export earnings, are down
39 and 42 percent, respectively. Low world prices for these commodities will
add to the impact on export revenues. In addition, Asuncion's vastly overval-
ued exchange rate has further lowered farm prices for exporters. If world
prices do not recover and the guarani remains overvalued, export revenues-
$312 million in 1985-will probably not reach $200 million this year. This will
probably result in a significant drawdown in foreign reserves and worsening
international payments arrearages, which may force Asuncion to seek an
agreement with the IMF and reschedule its debt with creditor banks.
Tunisian Oil Crisis The oil price plunge comes as a severe shock to Tunisia's economy, which faces
growing austerity and a mounting debt service burden. The US Embassy
estimates that $20 per barrel oil will increase the budget deficit by 10 percent,
Secret
14 February 1986
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trim 2 percentage points off GDP growth, and increase the current account
deficit by $50-100 million. A $15 per barrel price would almost double the im-
pact. Moreover, prospects are increasingly bleak for 25X1
new commercial oil discoveries to help offset the declining oil prices. The
regime's economic options are equally troubling. Further budget cuts will
affect the ruling party's patronage structure and erode popular confidence in
the regime's economic policies. Additional foreign borrowing almost certainly
would be at higher rates than previously obtained and would push Tunisia
closer to a politically troubling IMF stablization program. 25X1
South Yemen: Composition of GDP
Agriculture 13 %
(including fishing)
Industry 14%
(including refining)
Economic Impact of the Although the heavy fighting in Aden has damaged many residential and
South Yemeni Coup government buildings the warring factions 25X1
avoided Aden's key economic facilities, including port facilities and electric
power plants. The status of the 15,000-b/d refinery has not been determined.
no damage to the facility, but 225X1
alternate buyers for crude originally destined for
Aden e of the reportedly heavy damage suffered by the refinery. If the 25X1
refinery was hit, its operations probably will be halted only temporarily. The
death toll is likely to prove more serious. 15,000 dead, a 25X1
huge loss for a country of 2.2 million people. South Yemen's small educated
class suffered disproportionately and probably were specific targets. Personnel
will be hard to replace in an economy already short of skilled manpower.F__1
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The new government has set up a committee to develop short- and long-term
plans for restoration. Although the already-limited economy probably will
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continue to function, South Yemen has only $200 million in financial reserves
33 Secret
14 February 1986
Iran is seeking
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and will have to seek aid from the USSR and the Persian Gulf states. To retain
their favored position, the Soviets probably will be the major donor. Moscow
may also press for greater access to South Yemeni facilities and offer
additional military and economic advisers.
Tunisian Labor and Government efforts to restrict activities of Tunisia's powerful labor and
Student Troubles student movements could spark widespread violence between now and elections
this fall. Proposed cuts in student subsidies and university enrollment, and
government efforts to limit political activities on campus have led to numerous
incidents of violence since school reopened on 8 January. Further episodes
could occur if students become aware of government efforts to impede
registration by voting-age youth for national elections this fall,
Moreover, hard-line union members are closing
ranks behind government-deposed labor boss Habib Achour for another
confrontation over wages and union freedom. Coupled with the sharp decline
in oil prices, the labor and student demands will tax the regime's ability to
keep the lid on rising popular disgruntlement.
Indians Protest The continuing outcry following the 1 February price increases for key staples
Price Hikes underscores the difficulty Prime Minster Gandhi faces in his effort to
modernize India's economy. More than 3,500 demonstrators have been
arrested or detained in New Delhi in the last two weeks, and a general strike
was called by the leftist ruling party in the state of West Bengal on 11
February. Rice and wheat prices are to increase 6 to 11 percent, fertilizer.8 to
10 percent, and busfares in New Delhi 100 to 150 percent. Growing public re-
sistance, combined with opposition within the ruling Congress Party, prompted
a 5 February partial rollback for petroleum prices, initially raised 6 to 20
percent. These price hikes will fuel criticism that Gandhi's economic policies
favor the rich and the middle class. Without these additional revenues
designed to trim a serious budget deficit projected for the next fiscal year,
Gandhi will be unable to implement the tax reforms and incentives intended to
promote industrial modernization and foreign technology.
Taiwan Pushing the Taiwanese officials have designated auto manufacturing as a strategic indus-
Auto Sector try and have implemented a wide range of policies to stimulate this sector. This
is part of a larger government plan to hasten the transformation of Taiwan's
exports from labor-intensive goods to capital intensive. Targets for auto
exports include first Canada and then later the United States. Taiwan
automakers are turning to foreign firms, especially the Japanese, to gain from
their expertise and position themselves for future access to the export market.
The Japanese are actively seeking equity participation in Taiwan's auto
industry to soften the effects of the strengthening yen, to circumvent
restrictions on Japanese autos, and to concentrate domestic production on the
higher margin luxury market. US auto manufacturers are also actively
researching equity participation in Taiwan's auto industry. Should Taiwan
succeed in becoming a major auto exporter, the US-Taiwan trade gap-
already a $3 billion surplus in Taiwan's favor-likely will widen.
Secret
14 February 1986
25X1
25X1
25X1
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Secret
Brazil's Troubled Despite President Sarney's early pledge to reinvigorate Brazil's private sector,
Private Sector government policies are discouraging private capital expansion. According to
the US Embassy, both domestic and foreign industrialists in Brazil are cutting
back plans for investment in spite of very high capacity utilization rates. They
cite a deteriorating cash flow position that stems from high real interest rates
caused by continued large-scale government borrowing, increased corporate
taxation, and widespread price controls. Businessmen also fear that the recent
acceleration of inflation will prompt the government to impose even more
rigorous price controls, reinforcing the profit squeeze. We believe that, unless
the government alters its current policies, a stalled industrial recovery, in
tandem with the drought impact on agricultural output, will result in a major
decline in Brazil's GDP growth this year.
Polish Worker Growing worker dissatisfaction over longstanding economic problems may
Discontent make First Secretary Jaruzelski more open to criticism from his party
opponents in the campaign before the party congress this June. Party officials
in three provinces recently reported that workers are increasingly unhappy
about the rising cost of living and low wages. The government raised prices in
December on a small number of consumer items without much advance notice,
provoking rumors that more "surprise" hikes are in the works. Some workers
have been upset over efforts by local factory directors to more closely link
wages and productivity. The regime recently tried to appear responsive to
worker concerns by backing away from earlier plans to extend the workweek,
keeping the current system of work-free Saturdays. The regime's efforts,
however, are unlikely to mollify the workers. Jaruzelski may hope that his
resignation from the premiership and the appointment of new senior economic
officials in November will divert blame from him for Poland's economic
difficulties. He is likely to be disappointed.
China's According to the People's Bank of China, China's foreign exchange reserves
Foreign Exchange rose $1.7 billion in the third quarter of 1985 following a 12-month decline. De-
Reserves Puzzle spite Beijing's claims that tightened controls on foreign exchange and trade
were responsible for the turnaround, imports of both raw industrial materials 25X1
and consumer goods remained at record or near-record levels through the third
quarter, widening the trade deficit by $2.8 billion.
however, the increase in reserves reflects a shift in accounting 25X1
methods to include relatively liquid assets-such as US Treasury notes-in
Beijing's definition of official reserves. Moreover, if a large portion of China's
foreign exchange reserves is held in nondollar currencies, the strengthening of
these currencies against the dollar may also have been a factor. Unless Beijing
can substantially dampen imports, the growth of reserves-which now total
$12.6 billion-will be shortlived. 25X1
35 Secret
14 February 1986
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Secret
China To Increase Beijing late last year agreed to increase sales of tungsten to the Soviet Union in
Tungsten Sales 1986. Although details on the volume of trade are unavailable, China has been
to the USSR a major Soviet supplier of tungsten materials for years. No agreement between
the two was ever reached on the level of 1985 Chinese deliveries. As a result,
China, the world's leading producer, sold its low-priced tungsten ores and
products on the international market, provoking criticism from other produc-
ing countries for causing a decline in prices.
Secret 36
14 February 1986
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Iq
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Directorate of
Intelligence
Economic & Energy
Indicators
DI EE186-004
14 February 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
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liaison channels from the Central Intelligence Agency.
Requesters outside the US Government may obtain subscriptions to
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Central Intelligence Agency.
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Consumer Prices
Money Supply
Unemployment Rate
Foreign Trade
Economic & Energy
Indicators
Industrial Production
Gross National Product
Current Account Balance
Export Prices in US $
Import Prices in US $
Exchange Rate Trends
Money Market Rates
Agricultural Prices
Industrial Materials Prices
World Crude Oil Production, Excluding Natural Gas Liquids
Big Seven: Inland Oil Consumption
Big Seven: Crude Oil Imports
OPEC: Crude Oil Official Sales Price
OPEC: Average Crude Oil Official Sales Price _(Chart)
9
9
10
11
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Percent change front previous period
seasonally adjusted at an annual rare
United States
.Japan
West Germany
France
United Kingdom
Italy
Canada
2.6
1.0
-2.3
-2.6
-3.9
-1.6
0.5
7.2 5.9
0.4 3.5
-3.2 0.3
- 1.5 1.1
2.1 3.9
3.1 -3.2
-10.0 5.3
11. 6
11.1
2.4
2.3
1.2
3.1
8.8
United States
2.5
-2.1
3.4
Japan
4.1
3.1
3.3
West Germany
-0.2
France
0.2
1 . 8
0.7
United Kingdom
-I.4
1.9
3.3
Italy
0.2
-0.5
-0.4
Canada
3.3
-4.4
3.3
United States
10.3
6.2
3.2
Japan
4.9
2.6
1.8
West Germany
6.0
5.3
3.3
France
13.3
12.0
9.5
United Kingdom
11.9
8.6
4.6
Italy
19.3
16.4
14.9
Canada
12.5
10.8
5.8
Ist Qtr
2d Qtr
3d Qtr
Oct
Nov
Dec
2.1
1.3
2.1
6.5
7.0
9.0
-2.6
11.2
-0.4
12.5
11.1
7.1
-2.4
12.2
0.8
21.8
1 1.9
3.0
4.1
7.3
9.4
30.4
1 l.1
7.5
0.6
0
15.2
7.4
1.1
-2.6
32.9
31.8
0.7
4.5
10.4
10.2
10.1
Percent change front previous period
.seasonally adjusted at an annual rate
6.6
5.0
1 . 6
2.4
2.6
5.0
4.3
2.3
2.4
7.7
5.0
10.6
4.3
Ist Qtr
3.7
1.7
-0.9
3.0
3.7
3.6
2d Qtr
1.1
5.8
3.6
4.9
3.3
3.9
3d Qtr
3.0
2.6
I
1.1
0.8
6.7
4th Qtr
2.4
Percent change front previous period
seasonalh adjusted at an annual rote
Year
3d Qtr
4th Qtr
.Ian
3.5
2.4
4.1
2.0
2.1
2.2
1.9
2.2
0.1
1.0
0.6
5.8
4.4
3.1
6.1
3.1
3.0
8.6
7.3
6.7
4.0
3.2
4.4
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Percent changefrorn previous period
seasonally adjusted at an annual rate
United States b
7.1
6.6
1 1.2
6.9
Japan
3.7
7.1
3.0
2.9
West Germany
1.1
3.6
10.3
3.3
France
12.2
13.9
10.0
8.1
United Kingdom
NA
NA
13.0
14.7
Italy
11.2
11.6
15.1
12.3
Canada
3.8
0.7
10.2
3.3
Ist Qtr
2d Qtr
3d Qtr
4th Qtr
Nov
Dec
10.9
10.6
16.0
9.1
14.2
14.0
10.4
-0.3
2.9
0.9
8.4
23.0
1.4
-0.4
8.1
14.6
-11.2
43.8
12.9
7.3
13.7
1.2
32.4
15.4
25.1
34.1
21.2
18.0
-0.3
11.5
3.8
3.5
13.3
15.1
13.5
6.9
Based on amounts in national currency units.
b Including MI-A and MI-B.
United States
7.5
9.6 9.4
7.4
Japan
2.2
2.4 2.7
2.7
West Germany
5.6
7.7 9.2
9.1
France
7.6
8.4 8.6
9.6
United Kingdom
10.0
11.6---- 12.4
12.6
Italy
8.4
9.1 9.9
10.4
Canada
7.5
11.1 11.9
11.3
Year 2d Qtr 3d Qtr 4th Qtr Dec Jan
7.1 7.2 7.0 6.9 6.8 6.6
2.6 2.5 2.6 2.8 2.9
9.3 9.4 9.4 9.2 9.1 9.0
10.2 9.9 10.2 10.5 10.5 10.5
13.1 13.1 13.2 13.2 13.2 13.2
10.2 10.6
10.5 10.5 10.3 10.2 10.0 9.8
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Foreign Trade a
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
171.9
Imports
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
72.8
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
1st Qtr
2d Qtr
3d Qtr
4th Qtr
Dec
55.7
84.4
-28.7
52.6
86.4
-33.8
52.6
84.5
-31.9
52.4
90.8
-38.4
17.0
32.9
-15.9
40.5
28.9
11.6
42.6
29.5
13.1
43.6
29.4
14.4
47.3
30.3
17.0
15.8
9.9
5.9
41.1
43.3
48.8
51.0
17.4
36.4
37.2
41.7
43.6
14.6
4.6
6.2
7.1
7.4 _
2.8
22.5
24.4
26.1
28.8
9.6
23.6
24.7
26.8
29.2
10.0
-1.1
-0.4
-0.7
-0.4
-0.4
22.7
25.4
25.5
27.3
9.3
24.1
25.7
26.2
27.3
9.1
-1.4
-0.3
-0.711.
0
0.2
17.7
18.2
20.3
21.6
21.8
21.2
-3.9
-3.6
-1.0
22.0
21.9
21.9
18.0
18.7
19.6
4.0
3.2
2.2
Seasonally adjusted.
b Imports are customs values.
Imports are c.i.f.
United States 6.3 -8.1 -46.0 -107.4
Japan 4.8 6.9 20.8 35.0
West Germany -6.8 3.3 4.2 6.0
France
United Kingdom 15.3 8.5 4.5 1.6
Italy -8.6 -5.7 0.6 -3.2
Canada -5.0 2.1 1.4 1.9
1st Qtr
2d Qtr
3d Qtr
4th Qtr
Nov
Dec
-24.2
-27.7
-30.5
6.8
13.3
13.1
16.1
4.5
6.8
1.7
3.1
2.1
6.9
1.9
2.7
-0.5
1.8
1.6
2.0
0.4
1.0
-2.9
0.5
0
-1.1
,, Seasonally adjusted; converted to US dollars at current market
rates of exchange.
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 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP88-00798R000300030006-2
Percent chuneelrorn precious period
at an annual rate
l nited Statcs
11pan
\ cst ( icrmmm
France
Cnited Kingdom
Italy
Canada
9.2
5.5
14.9
12.0
Nn
7.8
3.9
1.5
6.4
2.8
5.5
3.0
2.0
1.0
2.4
3.2
4.8
6.2
4.4
1.3
1.4
0.2
7.1
2.9
5.1
5.2
3.7
t.nitcd States
5.3
2.0
3.7
1.7
.h pan
3.6
7.4
5.0
2.8
kk est Germany
8.6
4.7
5.2
4.8
France
7.8
7.2
7.0
3.8
united Kingdom
4
N
5.7
4.6
Italy
1.0
5.3
6.6
3.7
(anada
8.7
1.1
3.3
0.1
Ist Qtr
2d Qtr
3d Qtr
Oct
Nov
Dcc
0.3
1.9
2.5
6.4
tl.6
-11.9
14.1
5.9
123.0
28.0
18.8
26.8
37.5
124.9
23.5
50.9
14.3
28.3
35.7
80.6
10.9
16.2
57.1
29.2
47.5
16.6
4.4
13.4
21.6
19.2
0.2
-7.0
8.1
14.5
3.8
Percent change Iron prciiouc period
tit rut annual role
Ist Qtr
2d Qtr
3d Qtr
Oct
Noe
Dcc
9.6
0.6
0
0.3
12.3
10.9
3.1
2.6
38.5
9.1
13.2
19.5
19.4
82.3
15.9
31.1
12.5
15.1
18.6
1192
31._'
15.4
46.1
16.4
44.7
0.3
12.1
-9.1
23.0
5.5
4.3
2.4
9.0
6.1
4.8
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 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP88-00798R000300030006-2
Exchange Rate Trends
Trade-Weighted
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Dollar Cost of Foreign Currency
Japan
West Germany
France
United Kingdom
Italy
Canada
United States
90-day certificates of
deposit, secondary market
Japan
loans and discounts
(2 months)
West Germany
interbank loans
(3 months)
France
interbank money market
(3 months)
United Kingdom
sterling interbank loans
(3 months)
Italy
Milan interbank loans
(3 months)
Canada
9.40
finance paper (3 months)
Eurodollars
3-month deposits
10.5 10.6 5.8 9.1 26.0 -11.3 14.9
9.3 --5.7 10.4 6.2 0.9 7.8 11.1
-2.1 7.0 5.8 1.0 -0.2 2.1 8.5
5.1 -6.1 --4.7 2.1 0.9 4.8 9.9
2.5 2.1 -5.0 2.5 -10.5 39.9 16.7
-9.2 5.1 -1.6 -3.1 1.3 -10.5 9.7
0.3 0.2 2.3 2.3 2.1 10.2 4.0
2.7 -12.9
-24.6 -7.2
-28.7 -20.8
-13.2 -13.4
-32.8 -18.8
-2.5 -2.9
4.6 0 -19.6 9.9 18.6 45.6 7.2
-5.2 --11.5 -28.0 19.0 27.8 20.6 34.1
-15.9 14.7 26.7 19.6 28.0 21.1 29.5
13.3 -11.9 -28.6 59.9 44.5 17.6 3.5
12.3 -15.6 -30.3 9.5 15.6 19.0 26.2
0.1 -5.1 -10.5 5.0 2.7 8.7 17.9
Year 1st Qtr 2d Qtr 3d Qtr 4th Qtr
16.24 12.49 9.23 10.56 8.16 8.76 8.04 7.90 7.93
Percent change Iron, previous period
at an annual rate
12.19 8.82 5.78 5.96 5.40 6.12 5.80 4.86 4.81
15.47 14.68 12.51 11.74 9.97 10.64 10.32 9.81 9.10
13.85 12.24 10.12 9.91 12.21 12.98 12.61 1 1.67 1 1.60
20.13 20.15 18.16 15.91 14.95 15.78 15.12 14.37 14.52
18.46 14.48 9.53 11.30 9.71 10.59 9.87 9.32 9.10
16.87 -13.25 9.69 10.86 8.41 9.04 8.29 8.14 8.15
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 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP88-00798R000300030006-2
Bananas
Fresh imported,
(Total world, $ per metric ton)
Beef (0 per pound)
Australia
(Boneless beef,
f.o.b. US Ports)
United States
101.4
97.6
(Wholesale steer beef,
midwest markets)
Cocoa (o per pound)
89.8
74.3
92.1
Coffee ($ per pound)
1.28
1.40
1.32
Corn
150
123
148
(US #3 yellow,
c.i.f. Rotterdam, $ per metric ton)
Cotton
(World Cotton Prices, "A"
index, c.i.f. Osaka, US 0/lb.)
Palm Oil
571
445
502
(United Kingdom 5% bulk,
c.i.f., $ per metric ton)
Rice (S per metric ton)
US (No. 2, milled,
632
4% c.i.f. Rotterdam)
Thai SWR
573
(100% grade B
c.i.f. Rotterdam)
Soybeans
(US #2 yellow,
c.i.f. Rotterdam, $ per metric ton)
Soybean Oil
(Dutch, f.o.b. ex-mill,
$ per metric ton)
Soybean Meal
(US, c.i.f. Rotterdam
$ per metric ton)
Sugar
(World raw cane, f.o.b.
100.9
90.7
96.6
81.0
80.4
96.1
95.3
106.2
98.7
99.2
96.4
98.4
100.8
1.60
1.44
1.43
1.44
1.42
1.33
1.52
2.06
150
125
133
133
118
117
119
730
501
610
606
417
369
367
252
Caribbean Ports, spot prices ? per pound)
Tea 91.0
Average Auction (London)
(c per pound)
Wheat
(US #2. DNS
c.i.f. Rotterdam, $ per metric ton)
Food Index a (1980=100) 88
a 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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Aluminum (c per pound)
Major US producer
57.4
44.9
65.1
56.8
Chrome Ore
(South Africa chemical
grade, $ per metric ton)
Copper a (bar, ? per pound)
79.0
67.1
72.0
62.4
Gold ($ per troy ounce)
460.0
375.5
424.4
360.0
Lead (c 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 major producer
3.5
3.2
3.2
3.2
2.7
2.2
2.1
2.2
Major producer
475.0
475.0
475.0
475.0
Metals week,
New York dealers' price
446.0
326.7
422.6
358.2
47.5
45.7
44.0
44.4
45.4
56.2
Silver ($ per troy ounce)
10.5
7.9
11.4
8.1
Steel Scrap d ($ per long ton)
92.0
63.1
73.2
86.4
Tin's (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,
$ per long ton)
Zinc , (? per pound)
38.4
33.7
34.7
41.5
Lumber Index
95
84
114
105
Industrial Materials Index
85
71
82
76
(1980 =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.
Quoted on New York market.
Li Average of No. I heavy melting steel scrap and No. 2 bundles
delivered to consumers at Pittsburgh, Philadelphia, and Chicago.
Year I st Qtr 2d Qtr 3d Qtr 4th Qtr Jan
47.2 49.3 49.3 45.6 44.6 50.6
64.2 62.1 67.6 64.5 62.6 64.2
317.2 300.0 319.8 323.2 326.0 343.1
17.7 17.3 17.3 18.3 17.8 16.7
68.4 69.7 68.4 68.4 67.2 67.2
3 2_
2.2
3.2 3.2 3.2 3.2 3.2
2.2 2.5 2:2 1.9 1.8
475.0 475.0 475.0 475.0 475.0 475.0
291.0 269.3 275.4 294.0 325.5 362.6
44.1 46.6 45.7 42.4 41.7
42.0 41.5 42.4 41.8
\A
40.0
6.1 5.9 6.3 6.1 6.1 NA
74.4 83.7 71.9 72.7 69.2 NA
543.2 501.1 541.3 571.0 559.4 NA
10,656 11,515 I G,974 10,648 9,488 8,588
35.4 40.0 39.5 33.4 28 6 29.4
NA 100 107 103 NA \A
This index is compiled by using the average of I I types of lumber
whose prices are regarded as bellwethers of US lumber construction
costs.
I 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.
Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP88-00798R000300030006-2
 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP88-00798R000300030006-2
World Crude Oil Production
Excluding Natural Gas Liquids
Ist 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
Developed countries
12,859
12,886
13.276
13,864
14,302
14,704
14,617
14.643
14,845
United States
8,597
8,572
8,658
8,680
8,735
8,871
8,972
8,954
8.961
8,901
Canada
1,424
1,285
1.270
1,356
1,411
1,463
1,445
1,444
1.450
United Kingdom
1,619
1.811
2,094
2,299
2,535
2,660
2,471
2,399
2,560
Norway
528
501
518
614
700
719
728
823
862
Other
691
717
736
915
921
991
1,001
1,023
1.012
Non-OPEC LDCs
5,443
6,036
6.633
6,823
7.515
7,733
7,802
7,922
7,911
Mexico
1,936
2,321
2,746
2,666
2,746
2,711
2,724
2.738
2,749
2.679
Egypt
595
598
665
689
827
877
875
890
847
her
2,912
3,1 17
3,222
3,468
3.942
4.145
4,203
4,294
4,315
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
271
282
280
290
Gabon
175
151
154
157
152
150
150
153
160
160
Indonesia
1,576
1.604
1,324
1,385
1.466
1,152
1,167
1.203
1,110
1,200
Iran
1,662
1,381
2,282
2,492
2,187
2,097
2,299
2,335
2,300
2,200
Iraq
2,514
993
972
922
1,203
1.255
1,340
1,482
1,650
1,700
Kuwait
1,389
947
663
881
912
914
800
800
850
950
Libya
1,830
1,137
1,183
1,076
1,073
1.051
1,057
933
1,200
1.200
Neutral Zone
544
370
317
390
410
480
333
306
414
400
Nigeria
2,058
1,445
1,298
1,241
1,393
1,590
1,351
1,214
1,680
1,760
Qatar
471
405
328
295
399
292
297
312
300
300
Saudi Arabian
9,631
9,625
6,327
4,867
4,444
3,659
2,731
2.564
3,700
4,000
UAE
1,702
1.500
1,248
1,119
1,097
1,123
1,120
1,193
1,195
1,185
Venezuela
2,165
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
14,870
14,930
14,790
14,770
14,755
14,882
USSR
12,030
12,180
12,250
12,330
12,230
11,920
11,870
11,866
11,962
China
2,113
2,024
2,044
2.120
2,280
2,450
2,480
2,474
2,500
2,500
Other
407
411
410
420
420
420
420
415
420
420
Preliminary.
Excluding Neutral Zone production, which is shown separately.
Production is shared equally between Saudi Arabia and Kuwait.
Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP88-00798R000300030006-2
 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP88-00798R000300030006-2
Big Seven: Inland Oil Consumption
I st Qtr 2d Qtr 3d Qtr 4th Qtr Nov Dec
Cnited States 16,058 15,296 15,184 15,708 15,807 15,452 15,562 15,457 15.41 1 16,100
Japan 4,444 4,204 4,193 4,349 4,710 3,577 3,833
\Vest Gcrmanv 2,120 2,024 2,009 2.012 1,993 2,034 2.242-
1 rance 1,744 1,632 1,594 1,531 1,755 1,342 1,310 1,550 1,596 1.504
L nited Kingdom 1,325 1,345 1,290 1,624 1,881 1.208 1,230
Italy h 1,705 1,618 1,594 1,513 1,718 1.281 1,417 1,644
Canada 1,617 1,454 1,354 1,348 1,327 1,285 1,367
Including bunkers, refinery fuel, and losses.
Principal products only prior to 1981.
Big Seven: Crude Oil Imports
1st Qtr 2d Qtr 3d Qtr 4th Qtr Nov Dcc
tsited States 4,406 3,488 3,329 3,402 2,545 3,397 3,171 3,662 4.053 3,593
Japan 3,919 3,657 3,567 3,664 3,777 3,118 3,001 3.233
West Gcrmam 1,591 1,451 1,307 1,335 1,419 1,260 1.248
France 1,804 1,596 1,429 1,395 1,578 1,212 1,421 1
I united Kingdom 736 565 456 482 534 518 453
Italc 1,816 1,710 1,532 1,507 1,453 1.328 1.166
Canada 521 334 247 244 188 216 162
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 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP88-00798R000300030006-2
OPEC: Crude Oil Official Sales Price
Year
1st Qtr
2d Qtr
3d Qtr
4th Qtr
OPEC average h
30.87
34.50
33.63
?9.31
28.70
28.14
28.25
28.11
28.13
28.15
Algeria
44? API 0.10%, sulfur
37.59
39.58
35.79
31.30
30.50
29.66
30.15
29.50
29.50
29.50
Ecuador
28? API 0.93% sulfur
34.42
34.50
32.96
27.59
27.50
26.41
26.82
26.50
26.15
26.15
Gabon
29? API 1.26 %, sulfur
31.09
34.83
34.00
29.82
29.00
28.09
28.35
28.00
28.00
28.00
Indonesia
35? API 0.09% sulfur
Iran
30.55
35.00
34.92
29.95
29.53
28.62
28.88
28.53
28.53
28.53
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
30.30
36.66
34.86
30.32
29.43
28.27
28.78
28.43
28.43
28.43
Kuwait
31 ? API 2.50% sulfur
29.84
35.08
32.30
27.68
27.30
27.30
27.30
27.30
27.30
27.30
Libya
40? API 0.22% sulfur
36.07
40.08
35.69
30.91
30.40
30.40
30.40
30.40
30.40
30.40
Nigeria
34? API 0.16%, sulfur
40? API 1.17% sulfur
Saudi Arabia
35.50
38.48
35.64
30.22
29.12
28.34
28.24
28.37
28.37
28.37
Berri
39? API 1.16% sulfur
30.19
34.04
34.68
29.96
29.52
28.20
28.48
28.1 I
28.1 I
28.1 I
Light
34? API 1.70% sulfur
28.67
32.50
34.00
29.46
29.00
28.08
28.32
28.00
28.00
28.00
Medium
31 ? API 2.40% sulfur
28.12
31.84
32.40
27.86
27.40
27.32
27.48
27.40
27.20
27.20
Heavy
27? API 2.85% sulfur
27.67
31.13
31.00
26.46
26.00
26.25
26.50
26.50
26.00
26.00
UAE
39? API 0.75% sulfur
31.57
36.42
34.74
30.38
29.56
28.24
28.52
28.15
28.15
28.15
Venezuela
26? API 1.52% sulfur
28.44
32.88
32.88
28.69
27.88
27.37
27.69
27.60
27.10
27.10
F.o.b. prices set by the government for direct sales and, in most
cases, for the producing company buy-back oil.
1, Weighted by the volume of production.
Beginning in 1981 the price of Kirkuk (Mediterranean) is used in
calculating the OPEC average official sales price.
Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP88-00798R000300030006-2
 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP88-00798R000300030006-2
OPEC: Average Crude Oil Sales Price
11 29 11.02 11.77 12.88 12.93
3.39
1973 74 75 76 77 78 79
STAT
Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP88-00798R000300030006-2
 Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP88-00798R000300030006-2
Declassified in Part - Sanitized Copy Approved for Release 2012/01/09: CIA-RDP88-00798R000300030006-2