ECONOMIC INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500140036-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 21, 2016
• Document Release Date: November 5, 2008
• Sequence Number: 36
• Publication Date: October 18, 1973
• Content Type: REPORT

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CIA-RDP85TOO875RO01 50014
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Secret
LO~att C 0 V.
Economic Intelligence meekly
State Dept. review
completed
Secret
CIA No. 7824/73
18 October 1973
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SI1,(11RF,'I'
Venezuela's Ability to Raise Oil Output
Multilateral Trade Negotiations Set to Begin
South Vietnam's Rice Situation Improve!;
pct
Oil Deliveries and the War The OA1'EC meeting may result in
further reductions in oil deliveries.
Persian Gulf Oil Producers Demand 70% Hike in Prices Crude oil
prices to the West are certain to increase substantially as a result of
OPEC's demands on Western oil companies.
USSR Likely to Resume Sugar Exports Next Year The record
output in prospect should permit the first significant exports since
1971.
Comparative Indicators
Recent Data Concerning Domestic and External
Economic Activity
Note: Comments and queries on the cuntents cf this publication are welcomed.
i
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SV(11izI1"'I'
ECONOMIC INTELLIGENCE WEEKLY
Notes
Venezuela's Ability to Raise Oil Output
The Minister of Mines and Petroleum stated last week that Venezuela
would not increase oil production every if shortages resulted from the Middle
East crisis. Oil production already is close to capacity, and Caracas has
established conservation standards that rule out much expansion; of current
output. Another Venezuelan, however, told a US official that the
government might relax its restrictions temporarily if, for example. the oil
companies ,.ag.-eed to increase investment in secondary recovery facilities.
He indicated that production might be raised as much as 200,000 b/d, or
6'1'-.
Multilateral Trade Negotiations Set to Begin
The Nixon Round of multilateral trade negotiations will get under way
on 24 October, when the GATT's Trade Negotiations Committee (TNC)
meets in Geneva. Since neither the United States nor the European
Community has a negotiating mandate, the first TNC meeting will be
concerned only with procedural matters. Among these will be the question
cf forming a separate TNC subcommittee for agriculture. The United States
opposes the move because it does not want agricultural trade to be
considered separately from industrial trade. Concerned about potential
erosion of the Common Agricultural Policy, the Community - particu-
larly France - will insist on such a subcommittee.
South Vietnam's Rice Situation Improves
Unusually high increases in rice shipments from the Delta have eased
fears of a severe crisis later this year. It now appears that during September.
about 65,000 tons of rice moved out of the Delta into government stocks,
nearly double the historical average for that month. If delivery rates from
the Delta during October-December are maintained at normal levels,
government stocks will probably be sufficient to avert a rice crisis during
the next several months.
SECRET 18 October 1973
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7bN1
61na.rp?
Oonl7n-
rrud c~
ToW
7btal
Paull
AIM
Al-
Other
Vrno-
Info
Hi-
'i_
tln
!A !rtt
7Tnb
Arebin
OhMI
Rivnlt
Irm
t ft6
9_In
Mnb
1r_n
to=te
mnln
EJM
f!thrra
tnitnl Stator
11,300
10,900
6,700
1,900
600
150
150
50
350
150
150
400
2,000
250
1,100
550
405
\ of co,orp-
tfcn
100
63.0
36,4
9.2
3.5
0.9
0.9
0.3
2
0.9
0.9
2.3
11.6
1.4
6.4
3.2
2.3
,,.41orn ,-T,
15,500
400
16,000 L/
11,300
1,150
600
1,750
1,300
1,700
750
050
1,900
500
N.J0.
0
1.250
1,050
I of Ct'n.op-
LiCn
100
2.6
103
77.9
70,1
3.9
11.3
0.4
11.0
4.0
5.5
12.3
3.2
47791.
0
0.1
6.0
Jnf'M
5,400
34,471.
5,400
2,300
1,250
400
650
50
Nryl.
0
50
2,050
341.72.
900
0
Nn11.
150
I of 0". .
tion
100
410411.
100
47.6
21.7
5.6
12.0
0.9
Ikyl.
0
0.9
38.0
00.71.
16.7
0
11e411 ,
2.0
Cnlvdn
1,750
1,050
900
150
50
50
04,471.
tlt?)1.
50
0
171.
150
450
0
0
100
50
\ of Coro4T.
Lion
100
IC6
51.4
9.6
2.9
2,9
NNI.
'Mql.
2.9
0
31.30,
0.6
25.7
0
0
5.7
2.9
lot'4bt71
31y50
117150
26 _00
1ILM
6,75a
1,100
2.550
3,400
2IDO
900
I OSf
y00
7150
1_y150
1100
L200
1 6?J
\ of WntuT,-
tlon
100
12.9
71.6
36 1
15.6
7.0
6,4
3,5
5.3
2.2
2.6
11,7
7,4
7.9
2.6
4.0
4.1
Ctrntu,10, Arty 0,647
9,300
500
490
tbgl.
34.'g1.
0
200
100
50
50
100
0
0
0
0
0
\ of Cu-Tr
tion
100
94.4
5.1
4,1
Ntgl
"1.
0
2.0
1.0
5.5
0.5
1.0
0
0
0
0
0
O'J+an
7,200
34,550
4,900
2,650
1,750
50
550
300
0
150
50
1,100
450
100
0
100
300
\ of tbnnuTa
Linn
101
460
60.1
39.6
24.1
0.7
7,6
4.2
0
2.1
0.7
15.3
6.2
1.1
0
1.4
4.2
IMAL
SI.9CQ
57.gog
34,w^
Ll ~_4Q
a. Tebin allrrato. lrlorta on diront ud inllrcot b b , 1.6., firm 1.. Lento f= taiort raflmr109 OOO trend to .0.740 of 60100,, me -U..,- erc e
3c-uly nv a for 1973 e,d throoforo dif1Or frru io!nt in tlrm tnt0atc?:. 167 .x071+1., 55 4Tuvca.o on Arab o11 1- i.?-a1 t`uc41 t`a ym o t.1 i{
.ta.?!y 7 mllllut b/d In 06710,77.
b, :.U- Lbrga', oil irrorta 0x0701 mn+^ptlan beee0en it. 0Nnrta .,betantial ti-Litim of oil 00taldn ITaol+.
o, trclulm 00 ?tdnntlon of notorol q09 Ilquide of 1,7 millla, b/d.
I of mmor4p-
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Sl',CRE'I'
the
Ara pro acing countiies willuce production not less than 5`l a month
until an Israeli withdrawal is completed and the "legal rights" of the
Palestinians are restored. Such production cuts would have little inlniediate
effect, but could cause considerable economic dislocation in Europe and
Japan by mid-winter. The cutback is also likely to make it extremely
difficult for the United States to import critically needed heating oil frolll
European refineries.
Arab production in September was about 20.5 million b/d. A simple
5% decline in exports on the September base would be about I million
b/d per month. The monthly reduction would impact on the United States,
Western Europe, Canada, and Japan as shown in the tabulation, assuming
each were to be affected uniformly by 5% reductions in Arab source
imports. This shortfall would not be felt for a few week because of stocks
in consuming countries. However, after 6 months the drop in imports would
be equivalent to about 20% of consumption is Western Europe, but only
about 3`% in the United States.
Monthly Import
Decline (b/d)
Percent of Consumn-
tion in the First Month
United States
80,000
0.5
Western E'iropc
565,000
3.6
J apall
115.000
2.1
Canada
7,500
0.4
The war has already interrupted some Middle Eastern oil shipments
to Europe. All of the pipeline terminals in the eastern Mediterranean have
been closed. The Syrian terminals have been damaged, and high insurance
rates have made it unprofitable for most tankers to load in Lebanon and
Israel, although a few French tankers are still loading at the Tripoli,
Lebanon, terminal. Closure of these ports has cut off delivery of some
2 million b/d, equal to 13% of Western Europe's oil consumption. Most
of this oil has been going to France, italy, Spain, and Austria. Although
liftin*s of Libyan oil have increased moderately since the beginning of the
war, Tripoli is imposing some restrictions on its destination. For example,
tankers headed for Greece have been refused oil on the assumption that
it could serve to fuel the US Sixth Fleet.
Western Europe continues to receive normal deliveries of 950,000 b/d
from the USSR and Eastern Europe. For various reasons. deliveries to the
Communist countries from the Middle East and North Africa gradually have
fallen to about three-fifths of the 580,000 b/d planned for 1973. This
reduction may force some diversion of Soviet shipments from Western to
Eastern Europe. Sweden, Italy, and West Germany Would be most affected.
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The Persian Gulf members of the Organization of Petroleum Exporting
Countries (OPEC) have presented Western oil companies with a "take it
or leave it" demand for a 70% increase in posted prices for crude oil.
Negotiations between OPEC and Western oil companies on the price issue
became deadlocked last week when the producers asked for a I00`/, increase
and the companies offered 15%/,. The companies have little leverage in the
current sellers' market and will be hard put to resist the demand. OPEC's
position has been strengthened by the crisis atmosphere of' the current
Arab-Israeli hostilities.
OPEC is demanding an increase in the posted price of' the average
Persian Gulf' crude oil from about $3 per barrel to more than $5. This
jump woad raise the oil companies' taxes from about $1.75 per barrel
to $3.05. As a result, the landed cost of Persian Gulf' crude oil in the
United States would rise by some 35%.
The Persian Gulf countries, which account for about two-thirds of'
world oil exports, would increase their revenues by about $10 billion next
year if the demand is achieved. Since other OPEC members are certain
to raise their prices to reflect the Persian Gulf' increase, the worldwide
revenue increase would be about $15 billion. Skyrocketing oil revenues
would accelerate the foreign asset accumulation problems of several Persian
Gulf countries. The 1974 oil revenues of Saudi Arabia, Abu Dhabi, Qatar.
and Kuwait - a'1 of' which have limited capital absorptive capacities --
would approach the amounts recently being estimated for 1980.
The oil import bills of' the United States, Western Europe. and Japan
would bear the brunt of the increase. The increased cost in 1974 probably
would be about $3 billion for the United States, nearly $8 billion for Western
Europe, and almost $3 billion for Japan. Some of' the increase. however,
would return to the industrialized countries through sales of' goods and
services and company profit repatriations.
4
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USSR Likely to Resume Sugar Exports Next Year
Favorable weather and improved incentives for Soviet beet growers
are expected to bring the largest harvest since 1968. The harvest may yield
90 million tons, up almost 201/f% from 1972. The refined sugar from the
crop should amount. to a record 9.6 million tons to 9.7 million tons when
processing is completed in late winter. The Soviets probably will he able
to market some sugar abroad and also rebuild stocks drawn down during
the several years of poor harvests.
The USSR traditionally has bought raw cane sugar from Cuba and
sold refined sugar. Poor crops in recent years in both the USSR and Cuba
forced the Soviets to reduce sugar exports from about one million tons
annually in 1970-71 to negligible amounts in 1972-73. At the same time
the USSR had to purchase sugar on the free market, for delivery in 1972-73,
at an estimated cost of more than ?2u0 million. These purchases contributed
to the sharp increase i?- the world price from an average of 4-1/2? per
pound in 1971 to its current level of almost 100 per pound.
The sugar from this fall's beet crop will almost cover domestic need
of somewhat more than 10 million tons in the 1973/74 consumption year.
Moscow will also have available in estimated 1-1/2 million tons of sugar
refined from Cuban cane. It, therefore, should have about one million tons
of refined sugar for export ana stock replenishment. Although Soviet
exports would exert downward pressufe on the world price, it probably
will remain high enough to make ; ales attractive.
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DOMESTIC ECONOMIC INDICATORS
GNP"
Average Annual
Constant Market l'ricns
Growth (tale Since
WHOLESALE PRICES
Average Annual
Ioduslriat
Grnwlh (tale Silica
--------
Percent Change
Percent Clmngn--
bloat fruit I'rov,uus I Year Ptnvinus
latest [film Previous I Year :1 Mnnlhs
Ilumtar Ouartar 19711 Earlier Donator
Month Merrill 19711 1111 flat Initial
United Slates
73 II
0.0
5.1
0.3
2.3
United States
Sep 73
11.5
4.9
7.9
3.8
Japan
73 11
1.4
9.1
13.0
5.9
Japan
Sop 73
1.0
5.7
18.7
20.0
West Germany
73 11
-2.3
3.0
0.2
-8.8
West Germany
Sop 73
- 0.1
4.7
0.0
1.0
France
73 1
3.3
6.1
5,1
13.8
France
Aug 73
1.0
7.1
16.2
20.5
United Kingdom
7311
0.7
4.6
9.5
2.7
United Kingdom
Sep 73
1.1
7.3
7.0
13.5
Italy
73 1
0.8
3.1
5.2
3A
Italy
Jun 73
2.3
7.5
16.2
23.2
Canada
7311
0.9
0.1
6.8
3.7
Canada
Jul 73
2.9
0.3
19.2
25.5
Average Annual
Growth Hale Since
Percent Chmrgn
Latest
[Fair] Previous I Year 3 hleruhs Latest
Manlh
Month 1970 Earlier Earlier ?? Merrill
United States
Aug 73
1 0.4 1
6.0
19.6
9.4 United States
Aug 73
Japan
Aug 73
1.1
8.9
11.2
8.4 Japan
Jul 73
West Germany
Jul 73
. 4.5
2.2
5.0
-3.7 IN'6n Cs.many
Aug 73
France
Aug 73
0
7.7
10.4
9.9 Franca
Aug 73
United Kingdom
Aug 73
0.7
3.7
8.2
0 United Kingdom
Aug 73
Italy
Jun 73
- 1.0
2.9
10.2
20.5 Italy
Jul 73
Canada
Jul 73
0.1
6.9
10.7
7.1 Canada
Sop 73
RETAIL SALES'
Current Prices
Average Annual
Growth Rate Since
Latest
Percent Change
front Previous I Year 3 Months Latest
Month
Month 1970 Earlier Earlier- Month
United States
Sep 73
-0.9
105
10.7
9.5 United States
Sep 73
Japan
Jun 73
2.1
12.5
22.8
14.3 Japan
Jul 73
West Germany
Aug 73
4.2
9.0
4.2
1.2 West Germany
Jul 73
France
Jun 73
3.4
6.4
7.2
5.5 France
Apr 73
United Kingdom
Jul 73
2.2
11.2
12.2
0 United Kingdom
Jul 73
Italy
Feb 73
9.0
11.5
18.8
14.6 Italy
Apr 73
Canada
Jul 73
3.4
11.3
13.7
1.5 Canada
Aug 73
Average Annual
Growth Rate Since
Pullout Change
from Previous I Year 3 Months
Month 19711 Earlier Earlier
1.8
4.9
7.5
11.4
0.7
7.3
11.9
11.0
-0.1
5.8
7.2
2.5
0.7
6.3
7.6
9.4
0.3
8.4
8.9
5.0
0.6
7.2
11.8
12.6
0.P
5.5
8.5
1'1.7
Percent Change
from Previous 1 Year 3 Months
Month 1970 Earlier Earlier ?'
-03
7.2
5.3
5.5
-0.6
17.9
32.4
12.7
- 1.7
9.6
4.8
-13.9
2.6
13.3
14.1
2.6
?.3
12.2
13.0
13.6
2.8
20.4
19.1
13.7
1.5
13.9
15.5
14.6
I Year 3 Months 1 Month
Representative Rates Latest Date Earlier Earlier Earlier
United States
Prime finance paper
Oct 12
8.25
5.13
8.13
9.00
Japan
Call money
Oct 5
8.75
4.25
7.25
8.50
West Germany
Interbank Ioansl3Monthsl
Oct 12
14.50
6.88
14.25
14.25
France
Canada
Call money
Local authority deposits
Finance paper
Oct 12
Oct 12
Oct 12
11.13
14.44
8.75
5.00
4.88
5.25
8.63
6.38
7.50
9.12
'Seasonally adjusted.
13.83
''Aver'age for latest 3 months compared
8.63 with average for previous 3 months.
Three-month deposits
Oct 12
10.25
6.00
9.75
11.44
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 EXPORTS"
I ab.
EXTERNAL ECONOMIC INDICATORS
Latest M0111111
Million US S
United States
Aug 73
6,004
Japan
Sap 73
1126
West Germany
Ault 13
0,11114
France
Sop 73
3,241
Unitod Kingdom
Sup 73
2,5114
Italy
Jun 73
1,937
Canada
Jul 13
2,f)15
IMPORTS"
f.a.b.
United States
Japan
West Germany
Franco
United Kingdom
Italy
Canada
Latest Month
---- - '---
Million U3 S
Aug 73 6,020
Sap 73 2,725
Aug 73 4.794
Sup 73 3.11111
Sup 73 3.010
Jun 73 2,212
Jul 73 1,949
TRADE BALANCE"
f.o.b./f.o.b.
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Million US S
Aug 73 -16
Sep 73 402
Aug 73 1,690
Sep 73 241)
Sep 73 -434
Jun 73 -275
Jul 73 126
BASIC BALANCE"
Cunuiluhvu
i'an:nnl
1973 11112 Change
EXPORT PRICES
;ISS
44,162
31,692
39.3
United States
25,151f
211,1115
7111
Japan
42,002
311,1130
41.2
West Germany
20.742
19,2115
39.2
France
71,22(1
10,736
20.11
Unified Kingdom
9,47!)
0,1100
0.!1
Italy
13,910
11,252
23.7
Canada
EXPORT PRICES
Cumulative
National Currency
Million US S Percent
1973 1912 Change
44.801
36,074
24.4
United States
22.154
13,523
638
Japan
32,810
24,626
33.7
West Germany
25,690
10,436
39 3
France
74,429
17,941
30.7
United Kingdom
10.720
8,092
32 5
Italy
12,977
10,616
22.2
Canada
IMPORT PRICES
National Currency
1973 1972 Change
-719
--4.302
3,663
United States
3,604
6.661
-3.057
Japan
9.192
5.540
4.252
West Germany
1,052
769
284
France
- 3,204
1,203
2.001
United Kingd3nl
-1.241
776
-2.017
Italy
941
635
305
Canada
EXCHANGE RATES
Current and Long-Term-Capital Transactions
Latest Period Cumulative (Million US S)
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
73 II
Aug 13
Jul 73
73 I
73 I
72 IV
73 I
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Million US S 1973 1972
I -800 I -1,7001 -5.100
-710
136
-576
-995
800
-272
- 5.926
1.605
- 576
- 995
NA.
-272
End at Billion US S Jun 1970
Aug 73 14.0 16.3
Sep 73 14.8 4.1
Aug 73 37.9 8.8
Aug 73 9.9 4.4
Sep 73 6.8 2.8
Jun 73 6.0 4.7
Sep 73 5.5 4.3
1.257
3.593
-524
-446
2.983
-117
Change
4,000
- 7,183
- 1,988
-52
-549
NA.
-155
I Year
Earlier
13.1
16.5
24.6
10.0
6.1
6.4
6.2
3 Maaths
Earlier
14.0
15.2
32.2
10.3
7.0
6.3
6.0
I E "ucz 13
As of 12 Oct 13
Japan(Yen)
West Germany (Marlklche
France (Franc) (Pound
United kingdom sterhngl
Italy heal
Canada (Dollar)
Amato Annual
Gnrvtlt slate Since
Percent Chougo `
Lot "It bull) I'tuvieus I Yell[ 3 Madhs
Month Munth 10711 Luther [other
All 13
3,9
114
225
35 1
Jul 13
4:1
17 11
73 Ii
41111
Jul 73
12.1
17 1
:141
I 116
Jun 73
!12
1
3:11
!11
Aug 13
00
1
123
I1
Apr 13
11.9
11.7
!18
74 1
Jun 73
-011
5 5
1114
1111
Average Annual
Growth Ilolu Since
---------------
Percent Change----
Latest from Previous
I Year 3 Months
Munlh Morrill
111711 Earlier Ember
Aug
13
3.9
8.4
22.5
351
Jul
13
4.2
2.2
8 5
:1111
Jul
73
3.1
16
117
51
Jun
73
3.8
5.6
13.1
14.6
Aug 73
2.0
9.2
108
1110
Apr
13
2.0
5.7
104
28.8
Jun
73
- (1.5
4.2
12.0
118
Average Annual
Growth note Since
Percent Chanlle-
Latest 1)0111 Previous
Month Month 1910
Ault 731 2.1 1 10.6
Jul 13
Jul 73
Jun 73
Aug 73
Apr 73
Jun 73
1.9
- 1.9
0,0
4.0
3.3
11
Steel Rate
Us S
Per Unit
0.0038
0.4153
0.2372
2.4263
0.0018
0.9970
TRADE-WEIGHTED EXCHANGE
As of 12 Oct 73
Dec GG
36.03
65 59
17 48
-1:1.05
111.56
P09
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
0.6
05
31
13.3
8.5
4.8
I Year
Earlier
206
80
20
56
34.1
16.7
10.6
3 Months
[elite
192
123
-92
73
426
49.2
134
10 Dec
1971
15 58
34.16
2 0.47
-6.88
2.91
-0 118
19 Mar
1973
--131
17 57
1.62
1.41
0
007
u Oil
1913
-013
046
0.68
055
n
0.40
RATES'
Percent Change ham
Dec 66
-19.40
22.40
32.20
- 11.58
- 36.08
-16.99
4.05
18 Dec
1971
-9.63
8.41
15.11
1.65
2177
15.78
- 2.49
19 Mar
1973
3.04
-3.64
10.06
-0.78
- 7.31
-8.94
-0.83
5 Oct
191:1
031
-026
o 119
0,28
031
-0.42
(133
""Weighting is based on each listed rydntry's trade with 16 other industrialized
countries to reflect 'he competitive Impact of exchange-rate variations
among the major currencies.
Approved For Release 2008/11/05: CIA-RDP85T00875RO01500140036-8