ECONOMIC INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500150021-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 18
• Document Creation Date: December 22, 2016
• Document Release Date: September 29, 2009
• Sequence Number: 21
• Publication Date: May 8, 1974
• Content Type: REPORT

Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
Secret
Economic Intelligence Weekly
Secret
CIA No. 8033/74
8 May 1974
N2 163
Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
Arab Investment Pattern Poses Problem for Recycling Oil Revenues Con-
tinuing reliance on the Eurodollar market impedes financial relief for poorer
nations.
World Sugar Market Tightens Dramatically Booming demand drives price
to 5O year high.
Pa ge
Problems Arise as US-Cnina Trade Expands Rapidly growing commercial
relations are showing signs of strain. 3
Argentina: Auto Makers Face Increasing Pressures Export quotas will
result in industry shakeup. 4
Venezuela: Reassertion of Nationalism US iron ore interests may be hard
hit. 5
Bad Weather Threatens East European and Soviet Crops Shortfalls in 1974
grain harvest may lead to sizable imports in FY 1975. 6
Italy's Import Restrictions: Rationale, Implications, and Reactions Rome's
decision caught the world off guard. 7
Indians Reject Dupont Proposal 11
France D;,monstrates Telephone Technology to the USSR 11
Syria Seeks US Transport Aircraft 1 I
Sri Lanka Solicits Additional Aid 11
Sapir Plugs Israeli Bonds 12
Summaries of Recent Publications
Comparative Indicators
Recent Data Concerning Internal and External
Economic Activities
The oil situation is now being covered mainly in
International Oil Developments, published each
Thursday morning.
Not e Comments and queries regarding this publication are welcomed.
1
Secret
Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
Secret
ECONOMIC INTELLIGENCE WEEKLY
Articles
ARAB INVESTMENT PATTERN POSES PROBLEM
FOR RECYCLING OIL REVENUES
Continuing Arab reliance on the Eurodollar market is impeding the recycling
of oil producers' surpluses to Co11SUllling countries that most need the money.
Financing difficulties are becoming apparent in LDCs and even a few developed
Countries - notably Italy.
As oil revenues have flooded in, Arab investments have continued to be
concentrated in private Eurodollar assets. Private dollar holdings, primarily bank
deposits in London, make up a larger share of Arab investments now than at the
end of 1973. Holdings of European public issues and of private assets denominated
in European currencies remain small. Oil producers remain unwilling to place their
funds directly in non-Islamic developing Countries. Arab discussions with the World
Bank Group and the IMF are only now beginning to lead to a substantial channeling
of funds to these institutions.
The flow of surplus funds into the Eurodollar market is generally adequate
to finance the oil-induced deficits of consuming nations. Countries that are credit
worthy are easily obtaining the necessary financing through direct and indirect
government borrowing. France, for example, has already obtained sufficient
Eurodollar financing to offset much of its oil payments deficit for 1974. Many
developing countries, however, cannot borrow in the Eurodollar market because
of their bleak economic outlook and poor credit standing; their needs increasingly
will have to be handled elsewhere.
Sonic developed countries with especially large current account deficits - most
prominently, Italy - are also having difficulty obtaining adequate financing in the
Eurodollar market. Despite the high interest rate Rome offered - three-quarters
of a percent above the London interbank rate - the placing of its recent $1.2
billion Eurodollar loan encountered problems. The loan took much longer to arrange
than normal, and the co-managers of the effort had to take up a larger share than
anticipated because many smaller banks were unwilling to participate.
This experience was a factor in 4taly's recent introduction of an import deposit
scheme, which should moderate the growth of imports and bring in more foreign
capital. Even so, Rome will have to seek further loans from private or (more likely)
Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875R001500150021-3
example -- may also be forced to follow Italy's example.
oft_cial sources this year to finance continuing payments deficits. In the meantime,
it may impose further trade restraints while allowing the lira to depreciate.
Unless new sources of financing outside the market are found, other developed
countries with especially large current account deficits - the United Kingdom, for 25X1
WORLD SUGAR MARKET TIGHTENS DRAMATICALLY
Booming demand has intensified pressure on world sugar prices despite
increased production. The free market price, now more than double the December
1973 level, stands at a 50-year high of 24 cents a pound, f.o.b. Caribbean ports.
Prices probably will average close to this level during the next several months.
World production in the crop year ending in August is expected to reach
81 million tons, up 5`/o from last year's 77 million. The USSR, Cuba, and Brazil
probably will account for two-thirds of the gain. Aided by increased acreage and
greater us'. of fertilizer, Cuba's crop seems likely to reach 6 million tons, compared
with 5-1/2 million in the previous crop year. Brazil, which is edging out Cuba
as the leading sugar exporter on the world market, has raised output 1 million
tons by increasing the harvested area. Most other exporting countries, fearing a
large drop in world prices following the end of International Sugar Agreement
export quotas last year, have not increased acreage appreciably.
Demand for sugar in 1974 has been strong because of growing consumption
and widespread speculation. Consumption is expected to keep pace with
production, showing a 51/o gain compared with an average of 2-1/2% in 1971-73. A
major factor in the upward pressure on prices is the extremely low level of world
stocks. Below-normal stocks probably will keep the average price from dropping
much below the present level during the next several months.
The tight world market situation has exerted strong pressure on the price
paid by the United States. Although partially insulated from the world market
because of a preferential sugar agreement, the US price has climbed sharply in
recent months to 20 cents a pound, f.o.b. Caribbean ports. Normal commitments
for sugar deliveries to the United States have not been threatened. The tight world
market situation nevertheless is restricting the growth of US supplies during the
second quarter, when US demand approaches its seasonal peak
2
Secret
Approved For Release 2009/09/29: CIA-RDP85T00875R001500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
PROBLEMS ARISE AS US-CHINA TRADE EXPANDS
First quarter US-China trade reached $365 million, almost 30`%, higher than in
the fourth quarter of last year. Nonetheless, commercial relations between the two
Countries show signs of strain.
The United Statcs sold $345
million worth of goods to China in
the first quarter, with agricultural
products accounting for 80'/,. Im-
ports were only $20 million. US
trade with China should jump from
$750 million last year to more than
$1 billion in 1974; the US trade
surplus probably will surpass last
year's $625 million.
Although early returns point
to another record, year, problems
are arising:
US Exports and Imports
First Quarter 1974
Exports Imports-
Total 343.5 20.2
Cotton 93.6 ....
Corn 67.4 ....
Soybeans 61.9 ....
Aircraft and parts 42.4 ....
Wheat 40.8 ....
Scrap 11.5 ....
Tallow 4.5 ....
Tobacco 2.7 ....
Other 18.7 ....
? China has refused delivery of at least three cargoes of wheat allegedly
infected with TCK, a relatively harmless wheat smut. Peking has
agreed to receive a team of grain company officials to discuss the
problem but has insisted that no US government officials be included
in the delegation.
? The Chinese have not yet issued visas for personnel of the American
Consulate General in Hong Kong to attend the Spring Canton Trade
Fair, which runs from 15 April to 15 May. Last fall, US Consulate
officials were promptly issued visas for the fair.
? A visit by the China Council for Promotion of International Trade
(CC1-!T), expected in the first half of this year, has been Postponed
without explanation. The trip is to be a reciprocal visit for the visit
made last year by the National Council for US-China Trade
(NCUSCT), a private organization of major American corporations.
0 This month the Chinese refused to allow the vice-president of
NCUSCT to go on from the Canton Fair to visit CCPIT members
in Peking. A Chinese spokesman claimed that the trip was not
possible because a CCPIT vice-president was ill. He went on to add
that "we have many sick vice-presidents", implying that the trip
was completely out of the question.
3
Secret
Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
The reasons for recent snags in Sino-US commercial relations are not clear.
Peking may be signaling its impatience with the lack of further progress in
norm..lizing political relations. Alternatively, internal pressures related to the current
ideological campaign could be contributing to the cooling of commercial relations
at official and semi-official levels. At the working level, the Chinese are continuing
to treat American businessmen warmly. Canton Fair officials have made special
efforts to assure Americans that China's attitude remains unchanged.
New Argentine export promotion policies, if implemented, will radically
transform the domestic automotive industry. The industry now includes seven
manufacturers producing for an internal market capable of absorbing only 200,000
to 250,000 vehicles per year. Three are US subsidiaries with investments totaling
more than $300 million.
The Peronist government has
set up stiff export targets, calling
Argeatina: Automotive Production
by Manufacturer
for a rise in exports from
3,300
1973
units in 1973 to 33,000 in
1974
and upward to 220,000 in
1978.
Companies that meet their annual
export quotas will be permitted to
expand domestic sales by 8% annu-
ally. Those failing to meet the
quota will be compelled to cut
domestic sales proportionally.
Because of small-scale produc-
tion and tariff protection, Argen-
tina's industry has production costs
at least 20% higher than its nearest
competitor. Sales to Chile and
other Latin American markets have
been possible only because of gen-
erous credit terms arranged on a
Units
Percent
of Total
Total
293,7551
106
Fiat-Concord
66,648
23
Ford
62,374
21
IKA-Renault
46,128
16
General Motors
29,681
'-0
Safrar (Peugeot)
29,102
10
Chrysler
27,671
9
Citroen
17,489
6
Other (trucks only)
14,662
5
government-to-government basis. Currently, US auto makers in Argentina-under a
waiver granted by Washington--are closing a $75 million deal with Cuba for 20,500
autos and trucks; the sales fall under a $1.2 billion credit extended by Buenos Aires
to Havana. Unless similar terms are offered other potential buyers in Latin America
4
Secret
Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
Secret
or the Communist countries, Argentine auto makers will have little chance of
meeting the new export targets.
VENEZUELA: REASSERTION OF NATIONALISM
In a recent economic policy address, President Perez reasserted his intention
to expand national control over the Venezuelan economy. At stake is US private
investment -- excluding petroleum -- exceeding $1 billion. Perez called for
? nationalization of foreign iron ore concessions;
? sale within three years to Venezuelan nationals of at least 80% of
all shares in firms engaged in internal distribution of goods and
services;
? renegotiation of contracts for two new aluminum plants - involving
US and Japanese investment -- to give Venezuela the controlling
interest; and
? revision of a gold mining contract with a German consortium to
give Venezuela control.
The greatest impact on US interests will stem from the decision to advance
recovery of the iron ore concessions. The industry is dominated by US Steel and
Bethlehem Steel, whose concessions run until the year 2000. Venezuela supplies
about 33% of US iron ore imports (an estimated 13 million tons in 1973) and
11% of US consumption. US Steel also owns briquette and ore enrichment plants
with an annual capacity of I million tons.
In his address, Perez requested authority from Venezuela's Congress to take
action on his proposals. Nevertheless, abrupt action against the companies is not
likely. Studies first will have to be undertaken to determine the future structure
of the industry and the role, if any, to be given to the companies.
5
Secret
Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875R001500150021-3
Nationalization of the iron ore concessions will intensify Venezuelan efforts
to promote cooperation among iron ore exporting countries along OPEC lines. A
group of exporting countries - the Caracas Club -- met in Geneva in Mar,;h to
discuss pricing, transport, production, and trade. Venezuela is a member of a
working group set up to examine joint pricing policy and to. plan for the next
full meeting, which may consider permanent institutional arrangements:
Cooperation on pricing will be difficult because of the large number of exporting
countries 25X1
BAD WEATHER THREATENS EAST EUROPEAN
AND SOVIET CROPS
Grain crops are off to a bad start in Communist Europe this year. Unless
weather conditions improve soon, Eastern Europe and the Soviet Union will have
to buy heavily on the world grain market in FY 1975.
Eastern Europe Hit by Drought
Despite token April showers in Hungary, Poland, and Romania, Eastern Europe
remains in the grip of a drought. Some harvest shortfalls are now unavoidable,
and severe damage to crops will result if May is also dry. April precipitation was
from 66% below normal in Poland to 26% in Bulgaria. Soil moisture at the end
of April ranged from 44% below normal in Hungary to 17% in Poland.
Time is running out in the southern countries - Bulgaria, Romania, and
Hungary. Winter wheat has entered a growth stage requiring greater moisture, while
late spring-planted crops such as sugar beets and sunflowers are germinating poorly.
Corn, a major feed crop, is now being planted; low soil moisture makes germination
uncertain. Pastures and forage crops have already been damaged. Without good
rains in May, yields of winter grains - wheat, rye, and barley ?- will be sharply
reduced. Replanting of some spring crops may be necessary.
In the northern countries -- Czechoslovakia, East Germany, and Poland --
winter gains suffered no more than average winterkill. But the wheat and rye
must have good rains before the end of May to sustain development. A mid-April
freeze in Czechoslovakia forced some replanting of vegetables and sugar beets.
Sowing Delayed in USSR
Cold, rain, and snow moved into the European USSR in early April, when
the sowing campaign was scheduled to shift into high gear. By the end of April,
only 25% of the planned area had been sown, compared with 40% at the same
time in 1972 and .1973. The RSFSR has been particularly hard hit by the bad
6
Secret
Approved For Release 2009/09/29: CIA-RDP85T00875R001500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
weather. The area sown was clown by more than half from the level at the end
of April last year. April sowing conditions in Bryansk Oblast were described as
the worst in 30 years.
A timely spring sowing campaign was needed this year to help offset a higher
than average loss of f iil-sown crops.
Deputy Minister of Agriculture Kuznetsov estimated that more 25X1
than the average 3 million to 5 million hectares of the 35 million Sown in the
fall would require resowing this spring; however, he expected reseeding to be less
than 10 million hectares. In the same conversation, Kuznetsov implied that the
Soviet Union would be interested in purchasing US grain even after a bumper crop
if the price were right.
Rise in Grain Imports Likely
Unless the drought is broken this month, Eastern Europe's import requirements
for FY 1975 could rise to more than 10 million tons, the highest level ill several
years. The hard-hit southern region would be a net importer of grain rather than
a net exporter of 2 million tons as in FY 1974. The livestock feed base in Eastern
Europe almost certainly will not be large enough to maintain livestock numbers
and productivity at last year's level.
In the USSR the sowing problems encountered in April indicate that the
1974 goal of 206 million tons of grain will not be reached. Whether output will
fall far enough to trigger major purchases in the West largely depends on the weather
during the next 2-3 weeks and the regime's ability to speed up the sowing rate.
ITALY'S IMPORT RESTRICTIONS:
RATIONALE, IMPLICATIONS, AND REACTIONS
Rome's decision last week to restrict imports caught the world off guard even
though remedial action obviously was needed. The measure requires importers to
deposit 50% of the value of their foreign purchases in a non-interest-bearing account
for six months. This step has three partly conflicting aims: to cut the trade deficit,
to fight inflation by reducing the money supply, and to induce capital inflows
from foreign suppliers intent on retaining their share in the Italian market.
Italy's economic performance so far this year has been worse than forecast
on several counts. The trade deficit through April hit $4 billion - three-fourths
of the entire 1973 deficit. The cost of living rose at a 29% annual rate in the
7
Secret
Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
Secret
Selected Italian Economic Indicators
Percentage
Change over
Comparable Period
One Year Earlier
1973
Money
Supply
Consumer
Prices
Exports
(f.o.b.)
Imports
(c.i.f.)
Trade
Balance
1st half
19.2
9.9
1,5911
2,0281
-4371
2nd half
23.1
11.6
2,1121
2,6031
-4911
1974
January
N.A.
13 .2
1,768
2,526
-758
February
N.A.
14.3
2,036
3,132
-1,096
March
N.A.
16.0
N.A.
N.A.
-942
April
N.A.
N.A.
N.A.
N.A.
-1,224
Preliminary List of Major Italian Imports Subject to Prior Deposits
Market Sharesi
(Percent of Total)
1973 Imports
Total
West
United
United
Oil seeds and fruits
(Million US S)
352
EC
14
France
13
Germany
1
Kingdom
Negl.
States
57
Japan
Negl.
Coffee
222
19
Ncgl.
Negl.
Negl.
Negl.
Negl.
Live animals
1,000
56
26
24
Negl.
1
Negi.
Fresh and frozen meats
1,252
58
10
7
Ncgl.
Negl.
Negl.
Cheeses
239
75
29
38
Neg!.
Negl.
Ncgl.
Selected non-electric
machinery
1,043
73
14
43
8
12
1
Telecommunications
255
54
3
40
3
11
4
Electric generating
equipment
Typewriters and
calculators
452
68
17
34
12
18
3
Automobiles and parts
1,448
98
40
38
3
6
Negl.
Electric lamps
241
70
11
30
6
18
1
Clothing
120
64
39
15
3
2
3
8
Secret
Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
first quarter. Despite heavy borrowing al,;?oad, foreign currency reserves have been
dropping at a rate unacceptable to P.onle and worrisome to its creditors. Since
January, the Bank of Italy has spent $4 billion in exchange market interventions
to support the lira.
The Rumor government apparently found other possible ronwdies for its
formidable economic problems even less palatable. It feared a sharp lira devaluation
that would intensify an already record-breaking inflation while promising only a
delayed improvement in the trade balance. It avoided import surcharges or quotas
deemed more costly to relations with its EC partners. Because of strong Socialist
opposition, the center-left coalition government also resisted harsher monetary and
fiscal curbs that would nip Italy's economic recovery in the bud. It chose a
compromise it hoped would be the least objectionable alternative at home and
abroad.
Provided the required financing can be found, the prior deposit scheme is
likely to have only a small direct impact on trade flows. Its carrying charges equal
about a 3% surcharge on affected imports, thus boosting prices of foreign goods
only a small amount. To the extent that importers obtain funds for their blocked
deposits in the credit-tight domestic market, the secondary effects from reduced
overall demand will sharpen the impact. Rome estimates - almost certainly on
the high side - that imports could be as much as 8%, or $2-I/2 billion, lower
than they otherwise would have been. Where foreign suppliers are willing to provide
the addition::; financing required, imports will not be reduced but the payments
deficit will be cut.
In the event of a drop in imports, other EC members - particularly West
Germany and France -- would suffer the most. Prior import charges apply to about
h if of Italy's imports, including livestock products, automobiles, and machinery
items, all of which loom large in intra-EC trade. Because corn, wheat, and various
industrial raw materials have been exempted, US sales will be less affected.
The domestic impact of the prior deposit system also will depend largely on
the manner in which increased credit requirements are met. If local resources
are tapped primarily, the Rumor government hopes to effect a 4% reduction in
money supply. This major blocking of funds would put further pressure on
short-term interest rates - already at 13% and above - and add to the
contractionary impact of higher import prices for oil and other goods with low
demand elasticities.
Rome apparently hopes that its new restrictions will curb speculative uses
of credit without jeopardizing industrial recovery. Given recent moves to reduce
domestic liquidity, however, production is likely to suffer as well. The government's
freedom to offer selective credit relief is lin::ted by terms of the $ 1.2 billion standby
credit from the IMF - negotiation of which acted as a catalyst in the downfall
of the fourth Rumor government two months ago.
Secret 8 May 1974
Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
Despite Rome's effort to portray its action more as a deflationary step than
a competitive balance-of-payments measure, foreign reactions have been mostly
negative.
? French officials claim the action signifies a temporary withdrawal
of Italy from the lC.
? Former German Chancellor Willy Brandt characterized the move as
"extremely dangerous," noting that it sets a bad example that other
countries will be tempted to follow. Bonn fears that Italy's resort
to emergency trade limitations, which are allowed under the Treaty
of Rome, will be of longer duration than earlier cases involving
France atnd West Germany.
? Danish officials also have been sympathetic with Rome's plight but
are worried that restrictive import measures will spread.
? The EC Commission apparently has adopted a low-keyed approach
to the problem while seeking Rome's agreement on a deadline for
removing the restrictions.
Emergency EC sessions are considering possible multilateral solutions to the
Italian problem. Community members almost certainly will be willing to liberalize
terms of outstanding credits, particularly if Italy agrees to limit the impact of
its actions on intra-EC trade flows. Their willingness to provide additional help
from national coffers, however, will be tempered by fears regarding their own future
financial requirements.
Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
Indians Reject Dupont Proposal
Dupont's proposal -- sobmitted to New Delhi last December -- to provide $3.3
million worth of technology in exchange for 40'/v equity in a new agricultural
chemicals plant has been turned down. Despite widespread shortages of chemicals,
Indian officials rejected the bid claiming that indigenous technology and productive
capacity are adequate for expansion of output. Imports of chemical fertilizers alone
may amomnt to $500 million this year. (UNCLASSIFIED)
France Demonstrates Telephone Technology to the USSR
The French firm, Compagnie Generale d'Electricite. (CGE) is building a
5,000-line facility in the USSR to demonstrate its 13-10 electronic telephone
switching system. CGE hopes to persuade the USSR to buy a turnkey plant, which
can produce enough central office equipment annually to handle one million
subscribers. The F- 10 represents near state-of-the-art in Western telephone switching
and would boost Soviet telephone switching technology, now 10 to 20 years behind
the West. CGE seems to have the jump on ITT, which has been negotiating for
several years with the USSR for the sale of electronic switching systems.
Syria Seeks US Transport Aircraft
Syria wants to buy four C-130 cargo aircraft from Lockheed, valued at $40
million-$45 million. To avoid a 24-month delay in deliveries, Syria has suggested
that Saudi Arabia relinquish its place on Lockheed's production schedule for C- 130s.
Syria has used Saudi C-130s in the past and has preferred them to Soviet and
French aircraft. This would be Syria's first known purchase of US aircraft since.
1955. Damascus also is negotiating with Lockheed, as well as McDonnell Douglas,
for wide-bodied commercial aircraft.
Sri Lanka is hoping that Western donors -- including the United States -- will
provide substantial new aid at next week's consortium meeting in Paris. Costly
grain purchases and much higher oil prices will increase imports 75% in 1974 while
exports are expected to grow by only 25'i%%. Unless non-food imports are sharply
reduced, the rade deficit will soar to $260 million. Aid already in the pipeline,
the Soviet flour credit, last week's IMF stand-by credit, and exchange drawdowns
can finance only about half the deficit, leaving $130 million still to be covered.
11
Secret
Approved For Release 2009/09/29: CIA-RDP85T00875RO01500150021-3
 Approved For Release 2009/09/29: CIA-RDP85T00875R001500150021-3
Sapir Plugs Israeli Bonds
Israeli Finance Minister Sapir has resumeu his role as major fund raiser with
a brief trip to Europe to plug sales of independence and development bonds.
Excluding official US assistance, these bonds are the leading source cif foreign
financing for what promises to be a record trade deficit. Bond sales apparently
have lagged in recent weeks after a good start earlier in the year - sales topped
$200 million in the first quarter of the year. The political crisis in Jerusalem in
early April forced Minister Sapir to cancel scheduled trips to both the United States
and Europe to promote Israeli bonds. The $1 billion in sales targeted this year --
nearly double the amount raised in 1973 -- will require an unprecedented effort
among World Jewry.
The Economic Situation io South Vietnam, April 1974
(CIA ER IR 74-11, April 1974,
This monthly discusses: (1) continuing shrinkage of South Vietnam's foreign
exchange reserves; (2) government moves to counter a rumored run on the banking
system; (3) improvement in the government's rice stock position; (4) developments
in non-US aid; and (5) reduced competitiveness of South Vietnamese exports.
The Less Developed Countries Face the Oil Price Problem
(CIA ER IM 74-3, May 1974,
The sharp increase in oil prices will boost the LDC's oil bill by about $8.5
billion in 1974, a loss in real income equal to 2%/--3% of their GNP. Reserve
drawdowns and increased borrowing can cushion the adjustment during 1974; in
the long run, the LDCs will have to curtail imports, stimulate exports, and hope
for lower oil prices. The United States and other developed nations are likely to
be pressed for more financial assistance, food aid, commodity agreements, and debt
relief.
Impact of Increased Oil Prices on Eastern Europe
(CIA ER IR 74-10, May 1974
Eastern Europe has not yet felt the full impact of higher oil prices because
trade agreements with the USSR run through 1975. After 1975 the Soviets will
raise prices and probably will supply a lesser share of Eastern Europe's requirements.
By 1980, oil imports will cost nearly $8 billion, compared with $2 billion if early
1973 prices had prevailed. To pay this bill, Eastern Europe will have to boost
exports, negotiate credits from the USSR and barter arrangements with the West,
invest more heavily in Soviet resources, and perhaps trim hard currency imports.
Even with Soviet and Western assista ice, most East European countries will not
be able to avoid severe strains on their balances of payments and on their domestic
economies in 1976-80.
12
Secret
Approved For Release 2009/09/29: CIA-RDP85T00875R001500150021-3
 Approved
United Kingdom
Italy
Canada
INTERNAL ECONOMIC INDICATORS
Percent Change
Latest from Previous
Quarter Quarter 1970
74 1 -1.4 4.0
73 IV 1.4 8.3
73 IV -0.1 3.1
73 III 0.9 5.6
73 III 1.3 3.9
73 I 0.9 3.1
73 IV 2.8 6.1
United States
Japan
West Germany
Franco
United Kingdom
Italy
Canada
RETAIL SALES*
Current Prices
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Percent Change
Latest tram Previous
Month Month
Mar 74
Met J4
Jan 74
Fob 74
Jan 74
Mar 74
Feb 74
-0.4
-0.7
-0.6
-0.5
-6.4
-2.1
1.2
Percent Changi
Latest from Previous
Month Month
Mar 74 1 2.0 I
Nov 73
Dec 73
Jan 74
Jan 74
Oct 73
Jan 74
3.4
0.5
-2.7
-1.3
0.6
2.9
1970
4.4
7.8
3.2
6.6
0.1
3.9
6.7
Average Annual
Growth Rnte Since
1 Year
Earlier
0.4
7.0
3.4
0.1
6.0
5.2
7.2
Previous
Quarter
- 5.0
5.8
- 0.3
3.8
5.2
3.4
11.6
Average Annual
Growth Rate Since
1 Year
Earlier
0
5.7
0.6
4.1
-6.6
13.3
4.5
3 Months
Earlier"
-7.9
-8b
-4.3
2.0
-17.0
-2.8
8.7
Average Annual
Growth Rate Since
1970
10.5
14.6
7.8
7.0
11.5
16.2
11.2
1 Year
Earlier
4.8
27.4
5.8
16.3
13.1
29.1
12.9
3 Months
Earlier"
5.5
32.0
7.6
29.2
16.9
56.7
15.9
WHOLESALE PRICES
Industrial
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Average Annual
Growth Rate Since
Percent Change
Latest from Previous I Year
Month Month 1970 Father
Mar 74 2.9 8.1 19.6
Mar 74 0.7 11.2 35.4
Feb 74 2.3 8.5 11.9
Mar 74 4.9 12.8 33.4
Mar74 3.1 10.0 18.7
Nov 73 1.3 8.6 21.2
Jnn 74 3.3 9.4 19.0
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
United States
Japan
West Germany
France
United Kingdom
Canada
Euro-Dollars
8 May 1974
Representclive Rates
Prime finance paper
Call money
Interbank loans (3111ilonths)
Call money
Local authority deposits
Finance paper
Three-month deposits
Office of Economic Research/CIA
1 Year
Earlier
6.75
5.50
NA.
7.62
7.28
5.75
8.63
3 Months
Earlier
7.88
12.00
13.00
15.00
15.81
8.88
10.13
Percent Change
Latest train Previous
Month Month 1970
Mar 74 1.1 5.8
Mar 74 0.7 10.9
Feb 74 0.9 6.3
Mar 74 1.2 7.5
Mar 74 0.9 9.0
Mar 74 2.8 9.0
Mar 74 1.0 6.0
Percent Change
Latest from Previous
Month Month
Mar 74
Dec 73
Jan 74
Jan 74
Mar 74
Oct 73
Feb 74
0.8
0
0.1
1.1
-0.2
1.6
0
3 Months
Earlier
30.7
48.2
20.5
72.7
41.3
17.8
27.8
Average Annual
Growth Rate Since
I Year
Earlier
10.3
24.0
7.0
12.2
13.6
18.0
10.4
3 Months
Earlier
14.0
39.4
10.2
18.0
19.8
28.6
11.7
Overage Annual
Grow;! It le Since
1970
6.8
17.5
8.9
13.2
8.8
20.7
13.0
1 Year
Earlier
6.5
16.7
0.6
12.3
2.7
23.0
11.6
3 Months
Earlier
5.7
14.7
9.8
18.7
0.5
21.4
13.3
I Month
Earlier
8.50
12.00
10.38
11.88 *Seasonally adjusted.
16.00. ?fAverlpa to.- latest 3 months compared
a38
Approved For Release 2009/09/29: CIA-RDP85TOO875RO01500150021-3
tiNF?
Constant Markut Prices
United States
Japan