INTERNATIONAL ECONOMIC & ENERGY WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP97-00771R000707070001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 31
• Document Creation Date: December 22, 2016
• Document Release Date: September 22, 2010
• Sequence Number: 1
• Publication Date: July 6, 1984
• Content Type: REPORT

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Directorate of
Intelligence
Weekly
International
Economic & Energy
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DI IEEW 84-027
6 July 1984
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International
Economic & Energy
Weekly
6 July 1984
Synopsis
Perspective-Ar entina: Pressures For and Against Reaching an
IMF Accord
Briefs Energy
International Finance
Global and Regional Developments
National Developments
13 / Egypt: Oil and the Balance of Payments
19 / Population and Labor Force Consequences of the Iran-Iraq War
23 )YdrQd Rice Market: Buffeting the LDCs
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Comments and queries regarding this publication are welcome. They may be
Directorate of Intelligence, telephone 25X1
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6 July 1984
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International
Economic & Energy
Weekly
Synopsis
There are several indications that the Argentine Government recognizes the
importance of achieving an IMF accord, but negotiations will be rocky, and
certain factors could threaten an agreement.
Oil revenues are expected to decline substantially by the .end of the decade,
requiring Egypt to find alternative revenue to fund its large current account
deficits or institute austerity measures that would risk domestic instability.
1 Perspective-Argentina: Pressures For and Against Reaching an IMF Accord
.13 Egypt: Oil and the Balance of Payments
19 Population and Labor Force Consequences of the Iran-Iraq War
The Iran-Iraq war should not place demographic constraints on postwar
recovery as did the heavy manpower losses in Europe after World War I.F__~ 25X1
foreign rice, keeping world' prices low.
Global rice reserves that were accumulated to record levels in the late 1970s
have fallen to the lowest level in eight years. At the same time, LDC rice im-
porters, lacking foreign exchange, have been forced to curtail purchases of
23 World Rice Market: Buffeting the LDCs
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6 July 1984
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International
Economic & Energy
Weekly [-
6 July 1984
Perspective Argentina: Pressures For and Against Reaching an IMF Accord
The agreement reached between the Argentine Government and foreign
bankers to clear arrearages through 2 April once again demonstrates pressures
on the parties to avoid confrontation and negotiate what they probably
perceive as a less costly solution to the debt problem. The bankers contributed
$125 million toward payment of the remaining $350 million in overdue interest
without an IMF agreement in place. For its part, Argentina drew down $225
million in reserves and pledged to continue Fund negotiations.
We expect Buenos Aires to maintain its tough negotiating posture with
bankers and the Fund. Nonetheless, the government will be under considerable
financial pressure to reach an IMF agreement this quarter. It must pay $900
million in interest payments over the.next three months in addition to $400
million to repay short-term loans made by Latin American governments and
US banks as part of a 30 March agreement on overdue interest payments. An
IMF-supported adjustment program would pave the way for negotiations with
bankers on rescheduling $10-12 billion of its $43 billion debt and arranging
$3-4 billion in new credits.
We see several indications that the. government recognizes the importance of
achieving an IMF accord. For example, the
government is willing to accept a further reduction in the budget-deficit and a
sharper devaluation. Wage policy remains a contentious issue because the
government promised to increase real wages by 6 to 8 percent this year. Even
on this issue, however, press reports indicate that the government is discussing
various alternatives, including smaller increases to high wage earners and
holding some increases in escrow.
At the same time, negotiations will be rocky, and we are wary about Buenos
Aires's ability to clear roadblocks quickly. The government's hardline public
statements regarding a Fund-supported. adjustment program constrain the
government's bargaining position and could stall the talks. Moreover, as first
coordinating secretary for the Latin debtors' consultative group formed at
Cartagena, Argentina will want to be able to demonstrate that it has shifted
the emphasis of adjustment programs to more growth-oriented policies. We
expect Buenos Aires will continue to exhibit a schizophrenic negotiating
posture as it attempts to win concessions through radical demands while
remaining cautious about disrupting the current debt negotiating process.
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Although Alfonsin seems to be moving toward an agreement, certain factors
could threaten an accord. Further rises in interest rates will complicate
discussions, and if, as some market analysts predict, the US prime rate were to
rise by two percentage points in the coming months, we believe negotiations
could be abandoned. Both domestic and regional political pressures would
build for Argentina to achieve an unconventional debt agreement with the
banks and to involve the industrial countries in a more comprehensive solution
to the debt problem. In addition, it is not clear that Alfonsin will be able to get
labor to go along with some of the wage compromises being considered.
Alfonsin has thus far been unsuccessful in winning the cooperation. of labor
and has yet to demonstrate the will to face down labor in the event of a direct
confrontation, over a Fund provision. Although the Argentine legislature does
not have the authority to amend or veto a Fund agreement, Peronist
congressmen could frustrate compliance with its provisions through the
budgetary process.
In a worst case, Alfonsin might decide that the political risks to his
government would be greater if he adopted an IMF-supported program than if
negotiations with the Fund and subsequently with the banks collapsed. In
reaching his decision, he could point to some $1.3-1.5 billion in reserves, a
trade surplus that could reach $4 billion this year, and near self-sufficiency in
.oil and food. Moreover, by August he should have some notion about the size
of next year's wheat crop and be able to make some projections regarding
future export earnings.
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6 July 1984
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pot Oil Market
Trends
Energy
17.5 million b/d in the third quarter to prevent further price deterioration.
Indications that oil stocks in the second quarter increased more rapidly than
most industry analysts had anticipated has forced spot crude oil prices steadily
downward in recent weeks. Arab Light crude is selling at $27.65 per barrel-
$1.35 below its official price-while Brent and Bonny Light crudes are quoted 25X1
at $28.25 and $28.75 per barrel, $1.75 and $1.25 below their official prices, re-
spectively. Spot crude oil and product prices are now at their lowest level so far
this year. We expect this price weakness to discourage OPEC from increasing
production quotas at the upcoming meeting. Indeed, some analysts believe that 25X1
OPEC members will be forced to restrain production to the current ceiling of
USSR's Export Western engineers have told the US Embassy in Moscow that compressor
/Pipeline Construction station construction on the Soviet gas export pipeline is plagued with poor
Problems management and damage to expensive imported equipment, including exten-
sive pilferage of parts. As a result, the project may not be completed until the
end of 1986. The Minister of Gas Industry has dismissed at least two regional
project managers, and Council of Ministers Deputy Chairman Dymshits
apparently is now overseeing the project.
other pipelines from Urengoy. 25X1
The delays and mishandling of equipment are typical of Soviet construction 25X1
projects. The engineers' observations support earlier estimates that, even
without the US embargo, completion of compressor stations would take until
late 1986. The delays annoy Western contractors and embarrass the Soviets,
but they will not prevent deliveries of required quantities of gas. The Soviets
can make limited use of the export pipeline and, if necessary, use one of the
Iranian Oil Export The Dutch have offered Tehran use of storage facilities in Rotterdam, and
ontingency Planning Iran also has decided to buy five oil tankers to shuttle crude from Khark to lo-
cations outside the Persian Gulf.
These latest
contingency plans underscore Tehran's concern about the impact of further
Iraqi attacks on Iranian oil exports. Even at current export levels, Iran could
lose up to $1 billion this year because of price discounts.
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Turks To Buy A joint Turkish-Soviet economic commission has agreed on a pipeline to bring
oviet Gas Soviet natural gas to Turkey. The pipeline will have an initial capacity of 2 bil-
lion cubic meters, rising later to 5 bcm. talks
about the purchase of natural gas will get under way in Moscow in late July or
early August, and the project is expected to be completed in 1987.
Aside from providing Moscow with potential earnings of around $650 million
annually, Soviet gas sales to Turkey could effectively block access to the 25X1
European gas market by potential suppliers in the Middle East, where 45
percent of world non-Communist gas reserves are located. Markets in Turkey
and Greece are key steppingstones for suppliers in the Middle East to enter the
larger West European market; Middle Eastern suppliers will need to sell gas in
transit to minimize the cost of delivery. By attempting to expand sales of its
own to potential customers in Turkey or Greece, Moscow no doubt hopes to
minimize future competition from Middle Eastern suppliers. Iran eventually,
abandoned consideration of a gas export project to Turkey and Western
Europe following the signing of the joint protocol between Turkey and the
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Australia Opens Major A 500-mile pipeline linking Jackson oilfields in southwestern Queensland with
Oil $ipeline refineries in Moonie and Brisbane recently went into operation. The 55,000-
b/d pipeline is currently carrying a- flow of about 10,000 b/d, which should in-
crease to 25,000 b/d by 1985. The presence of the pipeline has spurred 25X1
extensive oil and gas exploration in this remote area, with current activity
almost equaling all cumulative exploration prior to 1984. Several new oil and
gas discoveries have been made, and studies are under way to determine how
best to exploit gas finds. Although future exploration may be slowed by the
newly imposed federal tax on recently developed oilfields-a move strongly
opposed by many oil companies-drilling activity in 1984 is likely to reach
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Guy na's Search
to 1P
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6 July 1984
July
Guyana's President Burnham last week announced the results of his June visits
to Bulgaria and the PRC, claiming that Sofia will extend more than $100
million in development aid. The PRC, however, has made it clear it will not
provide any new economic aid. Georgetown is ineligible for IMF loans until it
pays off its arrears to the Fund. This has stymied efforts to obtain aid from
traditional Western donors. Even if Bulgarian project aid materializes, it will
not ease Guyana's immediate foreign exchange shortage. According to the US
Embassy, cash holdings of the Cenral Bank were only $180,000 in mid-June,
and there is little prospect for improvement until sugar exports begin in late
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Sovie Grain Purchases
may buy 2-3 million.tons in this round of purchases for
Economic Talks
B een USSR and
Iran End
Global and Regional Developments
The USSR bought at least 300,000 but perhaps as much as 1 million metric
tons of US wheat on 27 and 28 June for late summer shipment. The Soviet
traders are described as having "a definite appetite" for US wheat, and C
shipment by September. If the Soviets did indeed buy 1 million tons, it would 25X1
bring purchases for the October 1983-September 1984 year under the US-
Soviet long-term agreement to 11.8 million tons. This would be above the 9-
million-ton minimum under the agreement but well below the 22 million tons
the Soviets are allowed to buy this year without prior consultation. Earlier this
month Soviet export officials claimed to be basing import needs on a Soviet
grain harvest of about 180 million tons. Although production could fall to this
level, continuation of the recent favorable. weather would permit a crop as high
as 200 million tons. The recent Soviet purchasing may reflect Soviet anxieties
about their domestic crop, availability of grain on the market, and the effect of
The Soviet Deputy Minister for Power and Electrification-the first Soviet
official to visit Iran since April 1983-left Tehran last week after several days
of talks. Iranian media noted that the two sides signed a memorandum calling
for the completion of power stations at Ahvaz and Esfahan under contracts with
the Soviets and the construction 'of a dam on the Aras River, which forms part 25X1
of the Soviet-Iranian border. Soviet media, on the other hand, noted that such
an agreement was submitted by the Soviets for study. The Iranians portrayed
the visit in a positive light, but Soviet media barely mentioned it.0 25X1
The content of the talks was less important than the fact that the visit took
place. The two sides evidently are attempting to resolve at least some of their
differences on the Ahvaz power plant.
It is not clear whether the agreement on the
Aras River dam is a new accord or an elaboration on existing agreements.
National Developments
Developed Countries
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ajor French
Business Fail
Rice hortage
Ma Harm Tokyo's
Filcal Plans
through subcontractors.
negotiate a rescue package. The government refused to aid the company unless
shareholders provided additional funds. The government wanted to save
Creusot, a leader in technology and exports, but refused to reverse the "self-re-
liance" doctrine it has been preaching for the last year. The firm has been in
financial trouble for several years, in part because of its steel operations. Its
subsidiaries and branches in nuclear engineering, high-speed trains, subway
equipment, and military equipment should be able to continue operation.
Creusot employs 30,000 workers directly and perhaps 100,000 indirectly
The possibility of a small rice shortage caused by bad weather and the
contamination of 200,000 metric tons of rice may enable farmers to scuttle a
government plan to reduce rice acreage. Farmers-already opposed to the
government plan-were incensed when Tokyo recently arranged to import
South Korean rice but failed to modify its rice acreage reductions. The
government would like to reduce the huge subsidies it pays to farmers. Japan
in the past has had an oversupply of rice, but stocks have been sharply reduced.
Although any shortfall probably would represent no more than 1 percent of
total rice consumption, rice and food security are emotionally charged issues,
and the current situation has received front-page coverage for almost a month.
Canada Raises Ceiling
on F reign.Bank Assets
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6 July 1984
Creusot-Loire, France's largest heavy engineering firm, has been placed in
ure receivership following a failure by the government and shareholders to
corporate lending sector-mostly dealing with medium-sized companies.
Parliament enacted legislation last week doubling the share of the Canadian
banking industry that can be held by foreign banking subsidiaries. Foreign
banks were first allowed to operate in Canada in 1981, but their combined as-
sets have been limited to 8 percent of the country's total banking assets. They
quickly reached the 8-percent ceiling in part because the domestic industry has
grown very slowly. Under the new bill, the ceiling will be raised to 16 percent,
and Ottawa hopes that, in return, the foreign banks will lend more money to
small businesses. Foreign banks have concentrated their efforts thus far on the
Most domestic banks support the new legislation. although a few of the smaller
banks which specialize in lending to medium-sized companies fear they may be
hurt. The five largest banks are not worried about increased domestic
competition because of their international activities. They had hoped, however,
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South African
Financing of
Corn Imports
that the bill would require reciprocal treatment for Canadian banks operating
in other countries-many of which have restrictions greater than those of
Canada. The foreign banks had hoped for an elimination of limits on their as-
sets, but Ottawa considers domestic control of the banking industry vital to the
national interest and was unwilling to lift restrictions entirely.
Pretoria has decided to use foreign exchange reserves and gold-swap arrange-
ments to finance approximately $800 million of corn imports over the next
United States.
averaged 7.2 million tons. According to the US Embassy and other reporting,
Pretoria plans to continue making the bulk of its grain purchases from the
10 million tons a year to 2.7 million tons this year; annual consumption has
successive years of drought have reduced corn production from an average of
Austr, lia Unveils New Australia's Minister for Industry and Commerce has proposed a program to
Ajrio PPolicy streamline the country's automobile industry and reduce costs. Major features
Lebanese Economic
Losses Tallied
of the proposal include:
? Easing tariffs and quotas on automobile imports.
? Consolidating the number of producers from five to three and car models
from 13 to six.
? Lowering local content requirements from 85 percent to 70 percent by 1987.
Australia's five domestic manufacturers-Ford, General Motors-Holden,
Toyota,. Nissan, and Mitsubishi-together produce about 400,000 vehicles per
year. Short production runs, coupled with high fixed manufacturing costs,
result in high prices.
JWe believe the new poli-
cy, if adopted, will not appreciably lower costs for several years.
Less Developed Countries
factional militias and further emigration.
Lebanon's economy has suffered at least $1 billion in lost trade and domestic
commerce since the Israeli invasion in 1982, according to the US Embassy in
Beirut. The influx of low-cost Israeli goods, in particular, has undercut
agricultural production in southern Lebanon. Export receipts-down by 49
percent last year-have failed to rebound because Saudi Arabia and Iraq
maintain trade restrictions to prevent importing Israeli-origin goods. Almost
half of the labor force has been totally or partially idled. The US Embassy re-
ports that unemployed workers until now have relied on savings and family ties
to tide them over, but these resources are being rapidly exhausted. Popular
disillusionment with the government's inability to restore order is growing.
This probably will prompt increased enlistments for pay in the various
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ecord Indian
Harvest Dampens
Import Demand
domestic prices may force New Delhi to purchase rice.
We estimate India's 1983/84 (July/June) foodgrain production at 150 million
metric tons, 16 percent more than the previous, drought-troubled season. The
bumper crop resulted from above-average rainfall,' increased government
procurement prices, and higher fertilizer subsidies. Increased domestic pro-
curement by the government as well as imports of 3.3 million tons have pushed
stocks to a near-record 21 million tons. A key factor determining India's future
foodgrain imports will be government stocks, which supply the country's vast
public distribution system. Large wheat stocks probably will eliminate wheat
imports in the 1984/85 crop year, but low government rice stocks and buoyant
Pakistan's Election The budget for the fiscal year that started on 1 July is the most conservative of
Budget the martial law period. To avoid a large deficit, the Pakistanis are projecting
at the expense of education, health care, and economic development projects.
expenditures to grow by only 11 percent, compared with more than 20 percent
in the previous two years. Revenues are projected to grow by almost 13
percent, with government-proposed price increases for energy products, ciga-
rettes, and beverages. The Zia government anticipates calling elections later
this year, and the budget is intended to be as noncontroversial as possible.
Islamabad has again avoided introducing any serious tax reform that would be
politically unpopular. Moreover, we believe that the government will not fully
implement the proposed price increases-the US Consulate in Karachi reports
there already is grumbling in the city over possible price hikes. Instead,
development expenditures probably will be cut below the budgeted level as has
occurred the past'two years. The government's spending and tax policies have
worked to moderate inflation and to avoid alienating consumers but have come
Sudan Stops New Sudan's central,bank governor unexpectedly has decreed Islamic principles to
the banking system despite earlier promises that Islamization would be partial
and gradual. According to US Embassy reporting, non-Islamic banks in Sudan
have been ordered to convert to Islamic principles for all new business. One
section in the new Civil Procedures Act specifies that "any condition included
in a contract entailing additional benefit over the amount loaned will be null
and void," according to Embassy reporting. Instructions on how the process is
to work, however, have not been issued, and bankers have been advised that
Sudanese Islamization will not be based on the Pakistani and Saudi models. In
these countries, interest payments have been replaced by profit-sharing and
management fees.
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6 July 1984
The revamping of the banking system is another example of President
Nimeiri's determination to forge ahead with his brand of Islamization,
apparently without consideration of the consequences. Uncertainty about the
direction of the domestic banking system and fear of Islamic punishment has
prompted bankers to reduce significantly domestic banking activity, although
it is unlikely that the new rules will interfere with Sudan's international
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financial relations. While most foreign bankers operating in Sudan-including
a US branch-will probably take a wait-and-see attitude until further
clarification is made, these latest actions will curb transactions and could lead
some foreign banks to reconsider their operations:
So tets Renew
chnical Agreement
With United States
The Soviets decided this week to renew unconditionally the 10-year bilateral
agreement on economic, industrial, and technical cooperation. In a diplomatic
note delivered barely 24 hours before the accord was due to expire, the USSR
agreed to an extension through 28 June 1994 without reference to its previous25X1
demands. These demands were for Aeroflot's recertification in the United
States, easing restrictions on Soviet merchant ships, and immediate resump-
tion of the Joint Commercial Commission. Moscow's decision to renew at the
last minute probably indicates that it does not want to jeopardize any further
the access the Soviets have to US technology, especially the acquisition of
offshore oil-drilling equipment and know-how. 25X1
USSR Provides New Yugoslavia's official press reports that the USSR has granted Yugoslavia a
{ Prject Credit to $180 million credit to finish expanding the financially troubled Smederovo
ugoslavia steel mill complex in Serbia. Serbia has been trying to complete the expansion
. Shortages
project.
for years but has been unable to secure international financing. The credit may
be intended as a reminder of the USSR's importance to Yugoslavia. It may
also be a goodwill gesture toward the dominant, historically eastward-leaning
Serbs and thus be resented by other republics, which are being forced to close
some of their enterprises. Smederovo's sales currently cover only plant-
operating costs, and the Serbian economy is burdened with repayment of an
estimated $2.8 billion in hard currency debt for past capital investment in the
Romanian Meat Romanian officials are concerned that shortfalls in meat production this spring
could spur worker discontent and diminish hard currency earnings.
A below-average grain harvest last year and continued low levels 25X1
of feed imports probably account for most of the decline in meat production.
Little near-term relief is likely-a prolonged drought last fall and excessively
wet weather this spring presage a mediocre harvest at best. A consequent
reduction in'livestock numbers ultimately would hurt sales of meat to the West
for hard currency and barter with the USSR for oil. In addition, a severe
shortage in meat supplies-a major factor in the worker unrest of 1980-81-
would further depress worker morale. 0 25X1
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Egypt: Oil and the
Balance of Payments
We expect oil revenues to decline substantially by
the end of the decade, requiring Egypt to find
alternative revenue sources to fund its large current
account deficits or institute austerity measures that
would risk domestic instability. Over the next two
years, crude oil production will increase by over
200,000 barrels per day-approaching 1 million
barrels per day in 1986. These increases in produc-
tion, however, will be largely used to satisfy rapidly
rising domestic consumption, which is stimulated
by heavily subsidized domestic energy prices. Even
with some expected moderation in the rate of
increase in domestic consumption and greater do-
mestic use of natural gas, the amount of oil avail-
able for export will shrink considerably by 1990
unless there are large new finds. Lower oil export
earnings could cause the Egyptian Government to
rethink its relationship with key aid donors, espe-
cially the United States, if it perceives that those
donors are not meeting its financial needs. Cairo
could pursue more vigorously full reintegration into
the Arab fold. Such a move could have negative
implications for US-Egyptian bilateral relations
because the other Arab states might insist that
Egypt distance itself somewhat from the United
States as a prerequisite for aid.
The Importance of Oil
The oil industry remains a leading sector of the
Egyptian economy despite the downturn in the
world oil market and the resulting reduction in
revenues. Petroleum accounted for almost two-
thirds of Egypt's commodity exports and over 20
percent of total foreign exchange earnings in 1983.
Moreover, earnings transferred from the
government-owned Egyptian General Petroleum
Corporation (EGPC) and income taxes on petro-
leum companies generated 16 percent of govern-
ment revenues in fiscal year (FY) 1982/83.2 These
revenues, plus Suez Canal tolls and remittances
from expatriate workers, have enabled the govern-
ment to fund expensive but politically necessary
subsidies and. development projects.
Recent Performance of the Oil Sector
Egyptian oil production has risen over 20 percent
since 1981. It averaged about 720,000 barrels per
day (b/d) last year, a record. The increase was
largely the result of sophisticated secondary recov-
ery techniques in the larger offshore oilfields and
the bringing into production of several new discov-
eries. Even though domestic consumption has in-
creased 10 to 13 percent in each of the last few
years, the volume of Egypt's exports has risen
slightly-about 23,000 b/d in the two-year peri-
od-to about 210,000 b/d last year. (Oil exported
by Egypt's production-sharing partners in repay-
ment for exploration, development, and operating
costs is not included in Egyptian oil export and
earnings data.)
We believe revenues fell to $2.2 billion last year
after peaking at an estimated $2.8 billion in 1981.'
This occurred despite increases in production and
government attempts to capitalize on oil market 25X1
changes with frequent price adjustments. Prices for
Egyptian oil declined from an average of close to
' The exact amount of Egyptian oil revenues is difficult to deter-
mine.
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rem
Estimated.
Billion US $ Egypt: Near-Term Production Thousand bld
Targets
$32 per barrel in 1982 to about $28 in 1983. The
drop in oil earnings, however, was offset by in-
creases in officially reported worker remittances,
and we estimate Egypt's current account deficit
declined from $2.4 billion in 1982 to $2.2 billion in
1983.
The rapid rise in domestic consumption continued
to be a major factor in the export picture. The
increases-averaging 13 percent annually in 1982
and 1983-have resulted from rapid economic
growth, a shift toward more energy-intensive in-
vestment, and government policies that,
hold domestic energy prices to
about one-sixth of international levels. Moreover,
Egypt has not been able to fully benefit from
potential natural gas production because of inade-
quate gas production and distribution facilities.
Gas reserves-estimates vary from 720 million to
1.8 billion barrels of oil equivalent (boe)-are not
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6 July 1984
Average
Production,
Incremental Production
1983
1984
1985
1986
GUPCO
530
Petrobel/IEOC
140
SUCO
30
Other
20
790 to
815
860 to
?945 .
955 to
1,080
sufficient to support the development of export
The Outlook for 1984 and Beyond
We.estimate,
production this year probably will average between
790,000 and 815,000 b/d. As a result, Cairo's oil
earnings will increase only marginally-to about
$2.3 billion-unless fighting in the Persian Gulf
sparks a sharp runup in oil prices. Domestic con-
sumption will continue to rise at a pace probably
approximating last year's 13 percent. Any econom-
ic policy reforms designed to limit consumption
probably will not be enacted before the end of the
year. Cairo avoided major increases in consumer
prices before the parliamentary elections in May
and probably will take no action until after the
formal convening of the new People's Assembly in
October or November.
We believe that Egypt's current proved crude oil
reserves are at least 3 billion barrels. Output will
probably increase steadily in 1985 and 1986. This
judgment is based on current reserve estimates and
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Egypt: Major Companies' Production Forecasts
GUPCO. Company officials forecast that their
production will increase to over 600,000 b/d during
1984, largely as a result of production increases at
existing fields and some smaller new fields being
brought onstream, according to Embassy sources.
According to press interviews with company offi-
cials, by 1986 GUPCO output should be close to
700,000 b/d as a result of production from two new
blocks in the Gulf of Suez. GUPCO has closed
some smaller fields that it plans to bring on line in
1986. These fields are to be used largely to offset
expected production declines from older fields.
Petrobel/IEOC. The Petrobel consortium current-
ly produces about 140,000 b/d, largely from its
Bala'im offshore fields. Petrobel hopes to complete
construction of a water-injection plant in 1985.
The company expects total production in 1986 to
reach 160,000 to 200,000 b/d, according to Embas-
sy reporting.
SUCO. According to company discussions with
Embassy. officers, SUCO plans to raise production
from its Ras Budran field to 60,000 to 70,000 b/d
by the end of this year after gas-lift and water-
injection facilities are installed. SUCO representa-
tives report that the Zeit Bay concession, which
would be SUCO's largest producing area, is also
on schedule and must begin producing by March
1985 to satisfy the company's contract with EGPC.
Production facilities there are being designed to
accommodate 100,000 b/d, but it is too early to
predict how the reservoir will behave and whether
the production goal will be met.
on the need for operating companies to meet explo-
ration and production deadlines specified in their
contracts with EGPC. The increases will be largely
accomplished by three operating companies-
GUPCO (Amoco), Petrobel/IEOC (ENI), and
SUCO (Deminex, BP, Shell). These three have
made more than two-thirds of the new discoveries
Outlook for Domestic Consumption
We believe that Egyptian demand for energy will
remain at an artificially high level because of
energy subsidies. Demand will drop significantly in
the longer run only with serious reforms in energy
management. Cairo is under pressure from the
IMF and World Bank to reduce explicit and hidden
oil subsidies-estimated by the Bank to be about
$3-4 billion in 1983-and to raise domestic fuel
prices to world market levels. Although the Bank
had earlier insisted that prices reach world levels in
five years, both the Bank and the Fund now seem
willing to accept a 10-year adjustment program
because of the extent of the pricing gap. Cairo
appears to accept the idea of price adjustments, and
its need for continued outside assistance probably
will cause it to enact some reforms beginning in
1985. We believe, however, that political consider-
ations will deter the government from adopting 25X1
reforms as extensive as the Fund and Bank are
advocating.
Planned increases in the production and usage of
Egypt's natural gas reserves will strongly influence
the pace of domestic oil consumption. The Egyptian
Government, with some funding from the World
Bank, is encouraging growth in household and
industrial use of gas. According to press reports,
the government plans to increase gas production
and use from the current 80,000 b/doe to 114,000
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b/doe by 1985. Further increases to 194,000 b/doe
are planned by 1990. These increases, if realized,
would restrain somewhat the fast pace of domestic
Development of nuclear power as a substitute for
thermal power generation is more problematic.
Cairo's plan to finance part of its nuclear power
program by setting aside excess oil revenues has
been stymied by the slump in oil prices. Although
some money might have been set aside in 1980 and
1981 before oil revenues started to fall, we believe
it unlikely that further contributions have been
made or that the size of the "Alternative Energy
Fund" will support planned nuclear development.
The Egyptian nuclear power plan calls for an
expenditure of $2 billion for the first two of eight
planned facilities. The plan depends heavily on
outside trade and development credits. Although
the first two reactors are supposed to be operational
by late 1989 or 1990, this is unlikely because
financing has not been secured. The home govern-
ments of interested companies in France, West
Germany, and Italy are withholding credits be-
cause they doubt Egypt's ability to repay. The US
Export-Import Bank turned down a financing pro-
posal by two US companies last August
We believe the Egyptian Government will find it
hard to reduce domestic oil consumption in the near
term even with increases in domestic prices and use
of natural gas. At best, we foresee a decline in the
annual growth of consumption to about 8 percent in
1985 and possibly 5 percent in 1988.
Export and Revenue Scenarios
We believe that Egyptian oil production will peak
at about 950,000 b/d in 1986, provided company
projections and our assumptions about pricing are
close to the mark. Egypt would earn peak annual
revenues of about $3 billion at that level of produc-
tion. This level is not sustainable, however, without
substantial new finds or sharply increased prices.
According to Embassy reporting, foreign oil com-
pany interest in exploration has leveled off in the
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6 July 1984
Oil Price Assumptions
The current outlook for international oil prices
bodes ill for Egyptian oil earnings. Our energy
projections assume declining real oil prices to 1985
and flat or moderately increasing real oil prices to
1990. These assumptions could be overturned by a
major supply disruption resulting from escalation
of hostilities in the Gulf Conversely, a cease-fire
between Iran and Iraq or a surge in production by
another major supplier, such as Nigeria, would
further dampen the outlook for prices.
Egypt: Alternate Oil-Sector Scenarios,
High and Low Projections, 1984-90
High production
Low production
Consumption"
" Assumes growth in domestic oil consumption slows to 8 percent per
year in 1985 because of government disincentives and increased gas usage;
and further to 5 percent per year in 1988. Failure to achieve these
consumption cuts will result in lower export levels.
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Egypt: Oil Revenues, 1984-90 Projections
I I I I I I
0 1984 85 86 87 88 89 90
past two years. New finds are unlikely to be made
and exploited, therefore, before the end of the
decade. Our judgment is that export revenues will
fall well below $1 billion by the end of the decade,
given probable production slowdowns and our as-
sumptions about domestic consumption growth.
Under the more optimistic production scenario of
nearly 1.1 million b/d for 1986, revenues would
peak that year but would still fall substantially by
1990. Assuming that the Egyptian Government did
not let higher production hinder oil conservation
efforts, revenues would peak at just over $4 billion
in 1986 and probably fall thereafter. Earnings in
1990 would probably be a little over $1 billion. The
fall in revenues to about half of current levels
would deal a major blow to Egypt's foreign pay-
ments position and the government budget, even
under this optimistic scenario. Unless new sources
of earnings-such as more worker remittances or
nonoil exports-were found or imports were drasti-
cally cut, current account deficits in excess of $4
billion annually could occur at the end of the
decade.
Implications
There are few alternatives to aid if, as we expect,
oil revenues decline substantially. Higher Suez
Canal earnings or worker remittances are unlikely
to replace falling oil revenues. Canal earnings will
be constrained by capacity even if oil trade picks up
because plans to expand the Canal to accommodate
larger ships have been put on hold. Officially
recorded worker remittances may rise somewhat if
exchange rates are aligned to capture funds that
are now remitted through the parallel exchange
market and are not available to the Central Bank.
This would be a one-time increase, however, and
economic conditions in the Gulf states do not augur
well for rising remittances.
For the United States. A widening financial gap
would cause Cairo to press its aid donors-especial-
ly the United States-even harder to increase aid
or provide debt relief. There is already widespread
criticism within Egypt that debt repayments to the
United States are putting undue strain on Egyptian
finances and that project aid is serving only the
USAID bureaucracy and private contractors. This
perception would be reinforced if, as expected,
petroleum revenues decline at the same time that
repayments on military debts to the United States
are rising. Should Washington refuse to give more
aid or grant debt relief, Cairo would probably
conclude that it had no choice but to explore
additional aid options.
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 A whole range of US strategic interests could be
negatively affected if Cairo seeks aid from other
donors, particularly Saudi Arabia and other Per-
sian Gulf states. The quest for Arab aid could
cause Cairo to consider distancing itself from the
United States. A press for full reintegration into
the Arab fold could also undermine Egyptian sup-
port for future US Middle East peace initiatives.
and could have negative implications for Egyptian-
Israeli relations, although these have already
cooled as Egypt has developed its unofficial ties
with the moderate Arab states.
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Secret
Population and Labor Force
Consequences of
the Iran-Iraq War
We believe the Iran-Iraq war will not place demo-
graphic constraints on postwar recovery as did the
heavy manpower losses in World War I Europe.
Military mobilization, the departure of foreign
workers and war casualties are only slightly post-
poning the day when both the Iranian and Iraqi
regimes must cope with high levels of youth unem-
ployment. The number of young men in their teens
and early twenties, however, will continue to in-
crease rapidly in both countries, given their earlier
high annual rates-2.8 to 3.2 percent-of popula-
tion growth.
Growing Military Forces
Military conscripts and volunteers have temporar-
ily removed large numbers of men, mostly youth,
from the labor force. In Iran we estimate that
roughly 7 percent of the 9.8 million eligible males
15 to 49 are in military and. paramilitary organiza-
tions. In Iraq the share is roughly 20 percent of the
3.3 million eligible males.
Immigration/Emigration
The war has had an uneven effect on immigration
and emigration for Iran and Iraq that in turn
influences labor force size. In Iran, war-related
international population movements have been in-
consequential. Roughly 15,000 Shias of Iranian
descent who were expelled by Iraq have been
isolated by Iranian authorities who view them as
potential Iraqi sympathizers. According to Iranian
press reports, the number of expatriates in Iran (a
few thousand) has remained unchanged during the
course of the war.
In Iraq, about one-third of the 1.5 million foreign
workers present in 1982 (including about 1.3 mil-
lion Egyptians, according to US Interest Section
reports) have departed. Burgeoning oil revenues
before the war encouraged Iraq to undertake ambi-
tious economic development projects that required
the help of foreign workers. These projects were
continued during the early days of the war. As a
result of economic constraints and fighting around
Al Basrah, however, as many as one-half of the
250,000 Asian expatriate workers and 30 percent of
the Egyptians were gone by early 1984, according
to the US Interest Section. According to US
officials, the exodus and Iraq's military manpower
needs have resulted in domestic labor force short-
falls that have been partly filled by Iraqi women.
An expanded war and depressed economy would
further accelerate the foreign workers' departure.
War-Related Deaths. Western correspondents cov-
ering the Iran-Iraq war have incorrectly drawn
parallels with the extent of battlefield losses in
World War I. According to our calculations, both
Iranian and Iraqi military casualties, as a percent-
age of total national population, fall far short of the
losses suffered by combatants in World War I.
Confirmed military deaths to date in the Iran-Iraq
war represent a loss of approximately 200,000 or
0.5 percent of Iran's and 70,000 or 0.6 percent of
Iraq's population at the outset of the- war. Even our
high-range estimates for military deaths show only
a 1.6-percent loss for Iran and a 1.7-percent loss for
Iraq. Among the frontline countries in World War
I, France lost 3.3 percent of its. prewar population
to military deaths; Germany lost 3.0 percent; and
Austria-Hungary, 2.1 percent.
Civilian deaths and displacements caused by the
Iran-Iraq war have also been light compared with
Europe's experience in World War I. We estimate
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Iran: Population Pyramid Illustrating
Estimated Demographic Impact of
the Iran-Iraq War in 1985
Legend
? Estimated Iranian population by age and sex
in 1985
Confirmed military losses
? High estimate for military losses and 10 percent
of births postponed.
75+
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
2 1
4 Male
I 2
Female -
Iraq: Population Pyramid Illustrating
Estimated Demographic Impact of
the Iran-Iraq War in 1985
Legend
? Estimated Iraqi population by age and sex
in 1985
Confirmed military losses
High-estimate for military losses and 10 percent
of births postponed '
75+
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
oil
SIR
MINE
NINE
3 2 1 0 1 2 3 4
4 Male Female -
civilian deaths from the Iran-Iraq war at about
60,000-mostly Iranians. The recent UN-spon-
sored agreement to curtail attacks on civilian tar-
gets suggests that both Iran and Iraq may continue
to limit civilian losses. The initial Iraqi invasion
created at least 1.5 million Iranian refugees, and
most refugees still are unable to return home or
resume productive employment. Iraqi civilians have
suffered few population displacements. Only a few
thousand Iraqi civilians have moved from small
villages in the sparsely settled area south of Al
Basrah.
In Europe (excluding the Soviet Union) there were
5 million civilian deaths during World War I
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6 July 1984
attributed directly to the war. For example, civilian
deaths in Belgium exceeded by two-and-a-half
times the number of military casualties. Combined
civilian losses and military deaths totaled 5.4 per-
cent of Belgium's pre-World-War-I population.
Nonetheless, military casualties in the Iran-Iraq
war are concentrated among males in their teens
and early twenties, which will leave a permanent
mark on the age and sex structure of each country's
population. In Iran, approximately 5 percent of the
3.8 million males between 15 and 24 have died
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during the four years of fighting, according to our
estimates based on a variety of sources. In Iraq,
deaths to young men represent roughly 6 percent of
the 1.3 million in the same age group. In contrast,
France and Germany during World War I lost
approximately 20 percent of their 20- to 24-year-
Births Postponed. We believe that war mobiliza-
tion to date has not disrupted expected birth rates
to any significant extent in either Iran or Iraq.
Away from the battlefront, we expect that tradi-
tional patterns of early marriage and childbearing
have continued undisturbed by the war. Military
personnel on both sides are granted frequent leave.
Iranian young women are exhorted to marry
wounded veterans, and war widows on both sides
are encouraged to remarry promptly, according to
press reports.
High levels of fertility in both countries (an average
of six live births per woman of reproductive age,
according to UN estimates) ensure that the popula-
tions of both countries will continue to grow rapidly
in spite of the war deaths. Despite the war, Iran's
population is growing at an estimated 3.0 percent
annually and will increase by 6.0 million people
between 1980 and 1985. Iraq's population is grow-
ing at an estimated 3.2 percent annually and will
increase by 2.3 million during the same period.
In contrast to the continuation of rapid population
growth in Iran and Iraq, Europe's population in
1920 was only about what it had been at the outset
of World War I in 1914-319 million-because
births during the war only offset mortality losses. A
decline in European birth rates that had begun
before the war accelerated sharply during the war.
Military mobilization caused marriages and births
to be postponed. The postponed births by war's end
totaled an estimated 10.8 million-a population
loss considerably larger than the 6.6 million mili-
tary dead. This drop in fertility between 1914 and
1919 resulted in newborn age groups one-third to
one-half the size they would have been had there
The Effect of Higher Losses and Lower Birth Rates
Postwar statistics may show that birth rates did
decline and that war deaths were higher than those
confirmed to date. If we take our high-range
estimates for battlefield 25X1
and civilian deaths and assume that military mobi- 25X1
lization and disruptions to civilian life have caused
a 10-percent drop in the number of births since the
war began, total population losses for Iran and Iraq
run between 3.6 and. 3.7 percent of their prewar
population during the 1980-85 period. Iran's war-
related population loss, for example, would be
1,381,000. Slightly less than half of the total
(660,000) would be deaths to young males, thus
permanent losses to the labor force. Iran would also
have 721,000 fewer children under five in 1985. A
similar 10-percent drop in the number of births for
Iraq would represent a war-related population loss
by 1985 of 262,000 children under five. This loss,
combined with high-range estimates for deaths
(225,000), would yield a total Iraqi war-related
population loss of about 487,000. (3.7 percent of the
prewar population) for the 1980-85 period.
The Demographic Outlook
We calculate that both countries will be able to
sustain their current casualty rates and maintain
current military recruiting patterns without en-
countering any population resource limits. Rapid
rates of population growth over the past 15 to 20
years guarantee that both countries will have grow-
ing teenage male populations throughout the
1980s-despite deaths on the battlefield. In Iran,
the number of 15- to 17-year-old males will in-
crease by about 550,000 per year in the second half
of the 1980s; in Iraq, the number will increase by
about 180,000 per year.
We do not believe that the war will place demo-
graphic constraints on postwar recovery as did the
heavy manpower losses of World War I. If the war
settles into a war of attrition for the rest of the
decade, the populations of both Iran and Iraq will
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Alternative Population Growth Consequences of the
Iran-Iraq War
51.0
50.6
48.1
46.4
-Confirmed military.
and war-related
civilian deaths to
1985 continued as a
war of attrition to
1990
High estimates for
military deaths and
a 10 percent loss
of births
Losses comparable
to France's in
World War I
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grow only slightly less rapidly than if there were no
war. Iran's population in 1990, for example, would
be roughly 50.6 million, or only 400,000 less than
expected. Labor surpluses rather than shortages are
likely to confront the Iranian regime in the late
1980s. For Iraq, the war-of-attrition scenario will
result in a 1990 population of about 18.0 million, or
150,000 less than expected under a no-war scenar-
io.
An Alternative Scenario:
World War I Revisited
Even if, over the next several years, fighting be-
tween Iran and Iraq escalates dramatically to the
levels of World War I, we calculate that continuing
Iranian and Iraqi high rates of natural increase will
enable them to cope with population losses. In Iran
and Iraq losses on the scale of World War I would
require:
? Additional military deaths six times those now
confirmed dead, or twice the current highest
estimates for military losses.
? Additional civilian war-related deaths eight times
higher than experienced to date.
? Postponed births representing population losses of
20 percent of the expected under-five 1990 popu-
lation.
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Even under this high casualty and fertility loss
scenario, Iran's population will still grow at the rate
of 1.5 percent annually and Iraq's at 1.9 percent
annually-both near the world's overall 1.8-percent
annual growth rate. For both countries, the casual-
ties would be concentrated among young males,
thereby resulting in potential labor force shortages
in this age group. A lower number of births would
reduce the number of children under five years of
age in 1990, again guaranteeing probable shortfalls
when this group moves into the labor force:
? For Iran, military deaths would total 1.2 million
for the five-year period, and war-related civilian
deaths and declines in fertility would cause a
population loss of about 3.3 million.
? For Iraq, military deaths would total approxi-
mately 450,000, and civilian deaths and fertility
declines would create a total population loss of
approximately 1.2 million.
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World Rice Market;
Buffeting the LDCs
Global rice reserves that were accumulated to
record levels in the late 1970s have fallen to the
lowest level in eight years. At the same time, LDC
rice importers, lacking foreign exchange, have been
forced to curtail' purchases of foreign rice, keeping
world prices low. Some LDC governments are
facing urban populations angry at interruptions in
the rice supply and at rapidly rising. local prices.
We believe localized rice shortages and high do-
mestic prices have the potential to touch off civil
disorders. For exporters, reduced demand has stiff-
ened competition and depressed earnings.
Evolving Market Trends
The advent of the "Green Revolution" in the mid-
1960s permitted sharply increased rice output and
rapidly rising consumption levels. According to
USDA estimates, production outpaced consump-
tion until the late 1970s. As a consequence, global
stocks grew to three times the level of the early
1960s and provided a safety net in case of major
crop failures. These trends were halted in the late
1970s when production gains tapered off and con-
sumer demand continued to grow, spurred by rapid
population growth and rising incomes. To meet
demand, global stocks have been drawn down to
levels we consider precarious.
World Rice Stocks, 1970-84a
a Ending stocks on a milled basis: stock data are based on an aggregate of
different market years and should,not be construed as representing world
stock levels at a fixed point in time. Stock data are not available for all
-countries and exclude the USSR, China, North Korea, and all parts of
Eastern Europe.
The outlook for the present year is for another
record crop, but further stock reductions. Produc- fall to 5.4 percent, the lowest level since 1973.
tion is forecast to reach 302.8 million metric tons Moreover, preliminary projections for the next
(milled basis) in the marketing year ending 31 July marketing year suggest a further drop in stocks of
about 16.3 million tons, 41 percent below the peak LDC Importer Problems
in 1978-79. The stocks-to-consumption ratio will
1984, while consumption will be slightly higher at nearly a million tons.
303.2 million tons. According to USDA forecasts,
rice stocks in non-Communist countries will dip to
Developing country importers are encountering se-
rious problems because of foreign exchange short-
ages and their pursuit of economic adjustment
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programs. Many of these countries-Brazil, Libe-
ria, and Senegal, for example-have been unable to
maintain per capita consumption levels. Faced with
rice shortages and budget strains, many countries
chose to raise politically sensitive rice prices:
? The political impact of a doubling of rice prices
over the past two months in Sierra Leone is
arousing concern in the government. According
to Embassy reporting, intense public discussion
and grumbling have focused on the retail price of
rice.
? In Burundi, the price of rice, an important food
for the salaried population, has risen by 50 to 60
percent in recent months, according to Embassy
reporting. So far the most visible result of rising
staple costs has been'rising crime, but the Embas-
sy believes a continuation of the trend could.cause
growing political unrest.
? In Somalia, where shortages of foreign exchange
have constricted commercial imports, the price of
rice rose 120 percent between December and
March, according to Embassy reporting.
? In Ghana, the price of rice increased 250 percent
in December. Embassy reporting indicates that
widespread opposition to price increases in basic
commodities, such as rice, has begun to surface,
particularly among workers and other supporters
of the Rawlings regime.
In the past, developing country importers were able
to turn to foreign supplies to cover shortfalls in
domestic rice production. Most no longer have this
option. During the 1970s, rice imports by develop-
ing countries rose an average of 4 percent annually,
according to USDA, and peaked in 1981 at more
than 9 million tons. LDC rice imports plummeted
in 1982 to 6.4 million tons as many countries cut
back all imports sharply. Rice imports recovered
slightly in 1983 but are expected to drop again in
1984 by about 3 percent, according to USDA
estimates, despite rice export prices that are sharp-
ly lower.
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Exporter Problems
Lower demand is having feedback effects on the
world's major rice exporters as sales decline, prices
weaken, and earnings drop. According to USDA
projections, total rice exports will be the lowest in
six years. To drum up sales, some rice exporters
have moved to below-market credit terms and other
inducements such as barter and countertrade ar-
rangements to encourage foreign sales. Some are
selling domestic rice reserves in an effort to gener-
ate foreign exchange:
? Thailand, the world's largest rice exporter and
historically a cash seller, is now extending credit
on liberal terms and cutting prices. In June,
Bangladesh bought 325,000 tons at $30 per ton
below the posted.price, at least part of which was
on one- to two-year credit at 11.5-percent
interest.
? According to Embassy reporting and USDA esti-
mates, domestic rice reserves in both Thailand
and Burma have been sold abroad in the last
year.
Despite the drive to push exports, revenues from
foreign rice sales have sagged. Prices remain weak
because of low effective demand. According to
USDA statistics, Thai rice earnings were down
slightly in 1983 from the already depressed level of
1982, even.though export. volume last year was 20
percent above 1981 levels. The 1983 rice earnings
of Burma and Pakistan, although up from 1982,
failed to recover to 1981 levels despite a large
increase in sales volume. Preliminary Embassy
reporting indicates that both Pakistan and Burma
face further declines in earnings.
Outlook and Implications
The world rice situation is likely to remain a source
of concern in the Third World. In the near term,
the production situation depends crucially on
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World Rice Prices, 1970-84a
increases.
I I I I I I I I
.0 1970 72 74 76 78 80 82 84
United States
as of April 1984b
Thailand
as of April 1984
a Based on monthly averages.
b Milled, Zenith No. 2 medium-grain miller-to-distributor, f.o.b.
New Orleans.
White milled 5% broken, f.o.b. Bangkok.
weather patterns. Approximately 90 percent of the
world's rice crop is produced in Asia; only about
half of the Asian acreage is irrigated.. Thus, the
balance between world rice supplies and demand
hinges on the amount and timeliness of rain
brought by the southwest monsoon that is now
advancing across Asia. Although early reports indi-
cate that the monsoon began on time in late May
across much of southern'Asia, bringing heavy rain
to southern India and Burma, and is now progress-
ing northward in a 'timely fashion, consistent rains
in the coming months will be critical. A significant
crop shortfall in one or two important producing
countries-such as China, India, Indonesia, or
Thailand-could send shock waves through the
marketplace. Should this occur, world stocks could
be insufficient to offset the shortage. Alternatively,
even with record world production, little stock
rebuilding would occur because of consumption
In the longer run, demographic factors point to a
steady increase in rice demand, not only through-
out Africa but in the rapidly growing urban popula-
tion centers of Asia and Latin America. World rice
producers, however, have already absorbed most of
the production benefits brought by the Green Revo-
lution. Additional productivity gains may be diffi-
cult to achieve and could prove very expensive. At
the same time, present government policies, if
continued, will lead to increased instability in the
rice market:
? Government policies common to most African
states have discouraged domestic production of
staple foods by keeping prices low to subsidize
urban consumers.
? Government policies aimed at achieving rice self-
sufficiency by major rice consumers such as
India, Indonesia, and South Korea have added
further volatility to the market. These countries
are self-sufficient only in years when rainfall is
adequate to take full advantage of the benefits of
high-yield seeds and large applications of fertiliz-
er; in off years, they are large and unpredictable
buyers.
Localized rice shortages in the Third World and
high domestic prices have the potential to touch off
violent civil disorders. Public demonstrations
against disruptions in rice supplies in Nigeria and
Bolivia and food riots in Tunisia and the Domini-
can Republic earlier this year underscore the dan-
gers of raising food prices. We believe the likeli-
hood of rice-related disorders is greatest in
Sub-Saharan Africa. In this region a convergence
of forces-extended drought, rice and other grain
shortages, austerity programs, tribal factionalism,
and leftist influences-has increased the potential
for disruptions.
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Secret
Selected Debt-Troubled Countries: Foreign Debt and Economic Growth
Medium- and Long-Term Foreign Debt
Billion US $
Eastern
Europeb
0 1978 79 80 81 82 83 84c
a Argentina, Brazil, Chile, Mexico, and Venezuela.
GNP Growth
Index: 1978=100
b Bulgaria, Czechoslovakia, East Germany, Hungary, Poland, Romania, and Yugoslavia.
c Projected.
Selected Debt-Troubled Countries: Trade Adjustment
Eastern Europe a
Billion US $
LDCsb
Billion US $
Imports
30
i
0 1978 79 80 81 82 83
0. 1978 79 80 81 82 83
a Bulgaria, Czechoslovakia, East Germany, Hungary, Poland, Romania, and Yugoslavia.
b Argentina, Brazil, Chile, Mexico, and Venezuela.
Secret
6 July 1984
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Secret
Secret
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