ECONOMIC INTELLIGENCE WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00702A000800040004-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 48
• Document Creation Date: December 15, 2016
• Document Release Date: July 28, 2004
• Sequence Number: 4
• Publication Date: September 7, 1978
• Content Type: REPORT

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ECONOMIC INTELLIGENCE WEEKLY REVIEW
7 September 1978
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Italy: Bleak Prospects for Wage Restraint ................................................
The Andreotti government has failed to come up with an effective
Incomes policy, and a recent settlement at Fiat portends a barely
digestible rise In unit labor costs.
Law of Sea Talks: Precedents for Other North-South Discussions? .............
The resumed conference, a drawn-out and frustrating exercise in interna-
tional treatymaking, continues to raise Issues of signal importance to
discussions in other North-South arenas.
OPEC Economic Aid: Flows and Ebbs ................................... ............... 19
Greatly Increased Kuwaiti aid to the Arab confrontation states and
sharply higher Saudi and UAE assistance to favored Arab states in Africa
highlighted last year's record $5.8 billion total, outlays are down 20
percent or more in 1978 because of intermittent cash flow problems In
donor countries.
The Asian Dollar Market: Singapore Gains Edge Over Hong Kong ............ 23
New Hong Kong taxes on offshore banking profits give Singapore an
advantage in the longstanding competition.
Note ................................................................................ ................
USSR Posts Bigger Deficit in Hard Currency Trade.
ER EIWR 78-036
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The comparative calm on the Italian labor scene over the past 18 months masks
dissension within the labor movement over its goals in upcoming national wage
negotiations. Key unions have come out against Communist labor chief Luciano
Lama's call to restrain the growth of labor costs. A recent settlement with Fiat on
working hours and productivity portends further strong growth in real wage rates and
unit labor costs. For its part, the Andreotti government has thus far failed to come up
with an effective incomes policy.
A continuation of this trend will weigh heavily on the economy in the form of
depressed investment, continued high unemployment, and an acceleration of inflation.
Should the Communists fail to deliver on their promise of labor restraint, they will lose
vital leverage in their struggle for greater government power.
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Background
Reflecting the increased muscle of the union movement and the widespread
indexation of wages to the cost of living, real industrial wages in Italy have climbed 60
percent since 1970-- the steepest rise among all developed countries. Even in last
year's relatively weak labor market, industrial workers secured a 27-percent increase
in nominal wages, yielding a remarkable 7-percent rise in real wages. Since cost-of-
livinl adjustments lag prices by three months, real wages also tend to rise when
inflation decelerates as it did in 1977 in response to an austerity program which
boosted taxes and sharply restricted credit. This year real wages are expected to
increase 4 to 5 percent.
Big Seven: Real Industrial Wages
Index: 1970=100
175
Productivity growth, on the other hand, has slowed over the years, and unit labor
costs have skyrocketed. Last year alone, unit labor costs in manufacturing soared 22.0
percent, bringing the average annual increase since 1969 to 16.9 percent.
The labor scene has been comparatively quiet for the past 18 months; a 62-
percent reduction in man-hours lost due to strikes made 1977 the lightest strike year
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Big Seven: Productivity and Unit Labor Costs in Manufacturing
Average Annual Percent Change
Italy
United
States
Japan
West
Germany
France
United
Kingdom
Canada
Production per man-hour
1960.69 ....................
6.6
3.4
10.1
5.9
6.1
4.3
4.4
197077 ....................
Unit labor costs
4.9
2.3
4.8
7.0
4.9
2.2
2.7
1960-69 ....................
3.3
0.9
2.7
2.4
2.5 _
2.3
1.0
1970-77 ....................
16.9
6.0
12.5
6.0
10.0
15.8
8.7
since 1971.. The improvement was primarily due to the fact that only about 1.5 million
industrial workers negotiated their contracts. In second half 1978, however, 38
contracts covering 51/2 million employees (about one-half of Italy's unionized workers)
fall due. Italian unions bargain on two levels. Basic wage increases are negotiated
every three years at the national level between union leaders and industry representa-
tives. Negotiations at the plant level normally occur in the intervening years and cover
productivity targets, working hours, and pay differentials.
Despite repeated promises of moderation in wage and other demands, labor
leaders have been unable to forge an agreement either among themselves or with their
rank and file. Lama's renewed call for moderation early this year has become a
political football. Since his proposals coincided with Communist maneuvering for
formal inclusion in the government, many unionists viewed them as a political ploy
and a betrayal of worker interests. Lama's key proposals include wage restraint,
deferral of wage increases, increased labor mobility, and less resort to strikes. In recent
months he also has proposed that unions endorse limits on severance and seniority pay
and that they seek to raise the retirement age and to increase skill differentials. He has
not, as in the past, suggested tampering with the sacrosanct wage indexation
mechanism, the Scala mobile.
Although most of Lama's initial proposals were adopted last February by the
CCU-the joint body of the three major labor federations-the rank and file has
steadfastly refused to accept them. As a result of worker opposition and interunion
political rivalries, the CCU has yet to agree on specific bargaining goals. In fact, CISL,
the Christian Democratic labor organization, has turned its back on the CCU policy
document and is insisting on more rank and file input. In contrast, the Communists are
pushing for greater centralization of collective bargaining, which the Christian
Democrat and Socialist unionists fear would increase the dominance of the Commu-
nists in the CCU.
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Chances for achieving a union consensus on more moderate labor demands have
been further reduced by the actions of the heavily Communist metalworkers
confederation (FLM), the most influential union in Italy. In June, the FLM
overwhelmingly rejected the CCU policy document and denounced the government's
austerity program. Christian Democrat and Socialist union leaders supported the FLM
stance, leaving Lama as the sole promoter of the moderate line. The FLM also pursued
its hard line in plant level bargaining with Fiat.
The settlement reached between Fiat and the FLM in July after five months of
negotiations could well set the trend for plant-level settlements to be negotiated next
year. Workers in Fiat automotive plants won a paid 30-minute lunch break from their
normal 8-hour work day. Management demanded the reduction in shifts be made up
by overtime, but the FLM refused. In a last ditch compromise, Fiat was granted
"permission" to initiate a night shift of new employees and greater freedom in setting
production schedules. Daily production targets may now be adjusted upward if actual
absenteeism falls below a projected average.
The union's insistence on a third shift as opposed to overtime will be costly for
Fiat because of the large share of fixed costs such as health insurance and Christmas
bonuses in total labor costs. The Turin firm, however, had little choice. Output per
employee in the Italian auto industry already is the lowest in continental Europe;
management felt it could not withstand further cuts in production.
The Fiat settlement: offers little hope that labor costs in Italy will be curbed this
year. The lunch-break fringe benefit amounts in effect to an increase of 6 to 7 percent
in hourly wage, rates quite apart from indexation increases or hikes in base pay that
can be expected wht n the national metalworkers' contract is renegotiated this fall.
Viewed in perspective, the Fiat settlement is a major achievement for labor. The
metalworkers bargained hard for four years, beginning in 1969, to cut the work week
gradually from 44 to 40 hours. In one fell swoop, Fiat workers have secured another
2.5-hour reduction. Other unions doubtless will try to emulate this achievement.
Rome has been trying unsuccessfully for two years to come up with a program to
restrain the growth of wages. The 1978 target was to keep the rise in unit labor costs in
line with increases in other industrial countries, but Rome failed to suggest a means for
achieving this goal. The three-year economic plan (1979-81) to be presented to
parliament this fall cites the need 'to keep real wages constant in 1979. Rome hopes to
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persuade workers to accept a wage increase of $12 or less per month in exchange for
the government's promise to increase investment in southern Italy, to create new
employment opportunities, and to keep the scala mobile intact. Most workers are
compensated for 90 percent or more of the rise in the cost of living.
The unions are skeptical that Rome can carry out its promised job creation plan.
Under discussion is a $2.6 billion crash public works program aimed at creating 75,000
new jobs within the first eight months and a total of 300,000 to 600,000 positions
within three years. Details of the plan have not emerged, and government statements
on the number of positions to be created vary widely. The unions are waiting for
evidence that the new plan will not suffer the fate of the much-touted Youth
Employment Program enacted in the spring of 1977. Of the nearly 650,000 youths
who registered for the estimated 600,000 jobs to be created, only about 9,000 were
employed last year.
One of the few steps actually taken to reduce labor costs-the so-called
fiscalization of social costs-will partially lose its effectiveness over the long run.
Expected to reduce the total wage bill this year by an estimated $1.4 billion, or 5
percent, the measure shifted the burden of some social security costs from employers
to the government and raised the value-added tax (VAT) to cover the outlay. The
increase in the VAT, however, eventually will feed back into the scala mobile,
resulting in further wage increases. The unions have staunchly resisted government
attempts to exclude increases in the VAT from the wage escalator.
Chances are practically nil that organized labor will allow any changes in the
wage index mechanism.
The government has repeatedly been rebuffed in attempts to reduce the
frequency in cost-of-living adjustments from a quarterly to a semi-annual basis.
Attempts to remove items from the basket of goods used in calculating the scala
mobile have been equally unsuccessful. Due to stiff union opposition, a recently
proposed bill to halt automatic cost-of-living increases in seniority or overtime pay is
unlikely to gain Senate approval.
Outlook
The impact on economic growth of continued rapid increases in labor costs is
sobering for these reasons:
? As labor costs continue to eat into profits, investment will remain low. Real
industrial investment in Italy is currently below the 1970 level.
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? High wage scales also will limit industrial employment, driving more
workers into the extralegal labor market where they receive lower pay and
none of the social insurance or other benefits accruing to workers in
unionized firms.
? The inflation rate, which was cut by nearly two-thirds between fourth
quarter 1976 and first quarter 1978, picked up in June to an annual rate of
15.4 percent. Further wage increases along with the enormous increase in
the public sector deficit this year will increase inflationary pressure.
Relentlessly rising labor costs pose a dilemma for both major political parties. The
ruling Christian Democrats and their constituent labor federation are at odds with
each other. As the Christian Democrat government presses for labor restraint, CISL is
garnering worker support by endorsing stiff labor demands. The Communists are
placed in an even more delicate position. With Lama finding his promise of labor
moderation increasingly more difficult to fulfill, the Communist Party risks losing an
important bargaining chip in its play for greater involvement in government. At the
same time, the party risks losing valuable voter support by alienating union members
with its unpopular call for labor moderation.
LAW OF SEA TALKS: PRECEDENTS FOR OTHER NORTH-SOUTH DISCUSSIONS?
The seventh session of the marathon UN Conference on Law of the Sea (LOS)
resumed on 21 August in New York, with the session scheduled to end on 15
September. Of itself a drawn-out and frustrating exercise in international treaty-
making, the LOS Conference continues to raise issues that are of signal importance in
other North-South arenas. This is particularly the case with the principal remaining
controversy, the creation of an International Seabed Authority, which is viewed by
some as a prototype for LDC-dominated international economic agencies. Other
common issues include technology transfer, foreign private investment, and the
allocation of aid.
Prospects for a treaty any time before 1980 are bleak, but pressures for more
rapid progress are growing. The developed countries seek confirmation of earlier
negotiating gains through conclusion of a comprehensive agreement. The LDCs,
already piqued by US Congressional consideration of a separate piece of seabed
legislation, feel under particular stress to show results in this area of the discussions.
Resolution of elements of the seabed dispute-embodied in some current working
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drafts-could provide important talking points for upcoming North-South meetings on
the Common Fund and a code of technology transfer. Because of a growing
recognition of the complexity of conference issues and treaty approval processes,
failure to resolve LOS differences would not necessarily result in a general scaling up
of North-South confrontations.
Four years and six substantive sessions have brought marked progress toward a
final text on most of the numerous and interwoven issues raised at the LOS
Conference. The road to consensus among 150-odd countries has been smoothest
where a few directly interested states have focused debates and pressured drafters
toward balanced compromises. This process has helped gain basic agreement on
matters such as navigational safeguards, offshore zones, fisheries, marine pollution,
and dispute settlement.
The mechanics for administering use of the deep seabed remain the thorniest
issue at the conference.* While encompassing few issues of immediate concern to most
states, the seabed debate draws wide interest as a focus for demands of developing
countries for a New International Economic Order. The root question is the extent to
which an International Seabed Authority will be permitted to regulate ocean-floor
mining. Industrialized countries frame their views around the interests of private
mining enterprises, which are technically capable of harvesting mineral-rich nodules
from the sea floor on a commercial scale within the next 10 years. They seek security
from arbitrary acts of the Authority, costly or constraining conditions on access, or
damaging changes in seabed provisions at a future review conference. The Group of
77 (G-77), on the other hand, is campaigning for controls that assure their political
dominance of seabed affairs and would tend to restrict national or private returns
from seabed investment. According to their scheme, state-owned or private firms
would be required to subsidize seabed mining by the Enterprise-as the operating arm
of the Authority would be known-and possibly also by developing countries.
The main element of progress in this area is an agreement in principle to allow
concurrent development of the seabed by the Enterprise and other miners. Though far
from resolving details, this agreement is manifest in a new preliminary draft on the
basic conditions to govern seabed exploitation. Related to this accommodation is an
understanding that the Enterprise will have to be subsidized by some or all nations and
by private mining firms.
"Other major outstanding issues include delimitation of the continental margin, international revenue-sharing on the
margin, and access of landlocked and otherwise disadvantaged states to the fisheries of neighboring coastal states.
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Substantial disagreement remains, however, on the scope, financing, and internal
organization of the Authority. Numbers bandied about at this stage include resource
transfers totaling from under $500 million to $1.5 billion. Suggested operating
procedures include the now--familiar. LDC gambit of unweighted voting, a notion
unacceptable to most developed countries, which would probably foot most of the bill
for the Authority. Leaving aside these contentious issues for the moment, the current
round is focusing on the Enterprise-especially competitive advantages it could enjoy
over other mining enterprises--and other ground not covered last spring.
Despite substantial differences between the developed countries and the LDCs,
we cannot rule out the possibility that cracks in the G-77 will facilitate further LOS
progress. As the key issues become sharper and large-scale seabed mining likelier,
important national concerns may prevail over group bargaining positions that until
now have dominated the drafting process:
? Many LDCs---spearheaded by upper-tier countries such as Brazil and
Mexico-seek a treaty pledge to transfer advanced technology to developing
countries as a spur to their mining operations and as a matter of precedent.
? Other LDCs_-led by African. countries like Algeria and Tanzania-are
pressing more strongly for G-77 control of a powerful Authority and for at
least a symbolic part in operations of the Enterprise.
? A quietly determined group--including LDC mineral exporters such as
Chile and Peru- -mainly seek protection from sea-based competition.
? Some countries-essentially logrolling on seabed issues thus far-may
defect if they see the prospect of gains on more vital concerns such as the
acceptance of archipelagic rights or guaranteed overland access to the sea.
Broader Implications of the Seabed Issues
The significance of the seabed issues goes well beyond the LOS Conference. In
particular, the structure and. operation of an Authority will no doubt serve as an LDC
negotiating model for other international institutions administering real resources.
Meanwhile, as compromises are drafted in efforts to reach overall agreement,
principles gaining support at the conference could find broader application. Seabed
issues are, in fact, linked to a number of G-77 ideological aspirations:
Regulating developing country relations with multinational corpora-
tions. Proposed arrangements between the Authority and private investors to
give them access to the seabeds are based on longstanding G-77 interest in
the regulation of multinational firms. G-77 proposals for revenue-sharing
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arrangements, accounting rules, and conditions on licensing aim at blunting
the competitive edge of miners and siphoning off a large share of the returns
from seabed investment. Provisions in these areas may affect the future
negotiations of a Code of Conduct for Transnational Corporations (now
under study) or help justify stringent controls by governments on foreign
direct investment on their own soil.
Transfer of Technology. Requirements that have appeared in the seabed
negotiating texts (including the current working draft) would mark, as some
LDCs have noted, the first example in an international treaty of a strong
obligation to transfer proprietary technology. The persistence of such a
provision is explained by widespread support among moderate and ad-
vanced as well as militant LDCs for technology transfer proposals. Devel-
oped countries will again balk at mandatory transfer provisions at this
session. Should the LDC arguments in the working draft prevail, they would
constitute an important precedent at international negotiations for a transfer
code and at the UN Conference on Science and Technology for Develop-
ment (scheduled for the fall of 1979).
Securing a bigger bloc voice in international financial and economic
institutions. Developing countries seek unweighted or minimally weighted
voting and broad regulatory powers for the Authority's governing bodies.
This parallels G-77 bids for similar systems in the proposed Common Fund,
the International Fund for Agricultural Development, and other multilateral
bodies. The list of serious targets could grow if more world institutions are
chartered for functional or technical purposes or the LDCs sense imminent
success in the LOS setting.
Bolstering resource flows from rich to poor countries. A revenue-
sharing regime for the seabed (already agreed in principle) alerts LDCs to
the possibility of sharing in rents for other scarce resources or services
consumed by industrial countries. These might include, for instance, portions
of the radio spectrum, whose allocation will be taken up at the World
Administrative Radio Conference next year.
improving LDC commodity terms of trade by restricting world
mineral output. Production ceilings for seabed minerals, supported by
Canada and being considered by the United States, coincide with the
interests of G-77 producers in "stabilizing" prices and revenues on com-
modity exports. With or without a treaty, these may help justify compensa-
tion for losses due to seabed or other competitive production and would
bolster G-'77 arguments on the need for a Common Fund.
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Contention over the important seabed provisions will probably remain sharp at
this and possible future sessions right up to any drafting of a final text. The degree to
which elements of these disputes will spill over into other North-South contexts
depends on several factors, including:
? Overall stage of progress toward a final agreement. Although legally all
negotiating texts are nonbinding, principles embodied in the texts will
become more persuasive (and more useful as bargaining chips) as the draft
moves toward completion. Even if the negotiations are broken off, most
countries have large stakes in compromises that are already set-sometimes
in national legislation-and probably will have difficulty repudiating the
whole negotiating effort or integral parts of it.
? The stage of progress toward agreement on each issue. Some issues, such as
voting in the Authority, at their present unresolved stage may only help set
patterns for G-77 rhetoric outside the LOS Conference. Other issues, such as
the current technology transfer provisions, have been explored far enough at
the Conference to heighten LDC expectations in other North-South
discussions.
? LDC unity on each issue. On most seabed issues, official statements of the
LDCs have been remarkably uniform. On some issues, again including
voting, there has been sporadic dissension within the G-77. To the extent that
intra-LDC compromises have been difficult, the G-77 will probably be
cautious in raising related!. issues at other North-South meetings.
? Resistance by developed countries. Strong reaction by economically con-
servative elements in the governments (such as finance ministries and
legislatures) of developed countries may follow concessions on the seabed
regime at the conference. Following the lead of the United States, other
developed countries may consider legislation to protect their seabed interests.
While this probably will not preclude LDC follow-up demands and may
elicit charges of bad faith, it could also help discourage moderate developing
countries from confrontational tactics in other multilateral settings.
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OPEC ECONOMIC AID: FLOWS AND EBBS
Net disbursements of Official Development Assistance (ODA) * by OPEC
member countries surged to a record $5.8 billion in 1977 and then began to slide in
:1978. Greatly increased Kuwaiti aid to the Arab confrontation states through both the
Gulf Organization for the Development of Egypt (GODE) and renewed Rabat
payments, together with sharply higher Saudi and UAE assistance to favored Arab
states in Africa, raised the 1977 OPEC economic aid total to more than 15 percent
above the previous 1975 peak. As a result, OPEC contributed an unprecedented 30
percent of all aid transferred to non-OPEC LDCs and multilateral aid institutions in
1977. The retrenchment in OPEC aid outlays in 1978-20 percent or more-is
attributable mainly to intermittent cash flow problems in the donor countries.
Three-Donor Program
Saudi Arabia, Kuwait, and the United Arab Emirates clearly emerged during
1977 as the three dominant OPEC aid donors, together responsible for about 85
percent of the ODA total. This triad of Arab Gulf states-pursuing parallel foreign
policy goals, often in support of conservative or moderate Islamic governments-have
Disbursement of Official Development Assistance, by OPEC Donor
Saudi Arabia .................................................................. 2>fifi0 2,330
Kuwait ............................................................................ 1,-110 440
UAE ................................................................................ 480 820
Iran .................................................................................. - ;185 _ 725
Libya ............... 150 120
Iraq ....... ........ .................. ....... ........................ ..... ........ _. . 1.45 175
Qatar 125 150
Other .............................................................................. 105 110
Total gross .................................................................. 5.560 4,870
Repayments' .................................................................. 100 50
Total net .................................................................... $,760 4,820
' Repayments were made predominantly to Kuwait and secondarily to Iran.
coordinated their aid activities through a combination of consortium and co-financing
arrangements. Most other OPEC donors have trimmed their outlays due to actual or
perceived financial difficulties. Iran, particularly, cut its tranfers last year, to one-half
the 1976 total and stopped almost all new commitments.
* Official Development Assistance, as defined by the OECD Development Assistance Committee, must (a) be given by
governments or government-sponsored institutions, (b) contain grant elements of at least 25 percent, and (c) directly
enhance economic development or welfare.
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Libya, frequently working at cross purposes with Riyadh in its foreign policy
objectives, increased its economic aid in 1977. While the Saudis poured money into
North Yemen, Somalia, and Mauritania, Libya provided financial succor to radical
opponents of Saudi policies, such as South Yemen, Ethiopia, and Algeria.
Bilateral Programs Stressed
OPEC countries provided 85 percent of their aid bilaterally in 1977. These direct
bilateral transfers-which the governments have long considered a more effective
foreign policy tool than other aid forms-rose to $5 billion in 1977, from $4 billion the
year before. The transfers included (a) more than $700 million in payments to
Mauritania, Morocco, and Somalia, compared with $200 million in 1976; (b) the
revival of Rabat payments, suspended in 1976, to a level of nearly $800 million; and
(c) the restoration of Kuwaiti Government soft-term loans to Egypt, through the newly
created GODE. In addition, the combined net project aid disbursements of the Saudi
Development Fund, the Kuwait Fund for Arab Economic Development, and the Abu
Dhabi Fund for Arab Economic Development, purportedly given without political
consideration, rose from about $350 million in 1976 to more than $500 million in 1977.
As in the past, nonproject assistance weighed heavily in the OPEC bilateral total.
Even though the major OPEC donors have paid increasing homage to the merits of
project aid, the pressing needs of major clients for immediate financial support have
repeatedly caused donors to defer long-term project assistance. Furthermore, budget
support and direct balance-of-payments assistance-flexible and quickly disbursable
forms of aid-have both proven invaluable to the foreign political goals of OPEC
donors. Even GODE aid, established initially by the Arab Gulf states for coordinating
and administering project assistance to Egypt, was ultimately used to bail Cairo out
from its 1977 balance-of-payments crisis. In all, nonproject aid has accounted for more
than three-fourths of OPEC bilateral ODA, compared with the less than 50-percent
share long characteristic of ODA from industrialized countries.
OPEC economic assistance continued to be less concessional in nature than aid
from industrialized countries. In 1977, for example, 45 percent of OPEC bilateral
ODA transfers was grant aid compared with about 70 percent of transfers from
industrialized countries.
Stable Multilateral Program
OPEC contributions to multilateral aid institutions in 1977 held at the 1976 level,
just under $800 million. The OPEC Special Fund, which received about one-fourth of
the contributions, became the most dynamic and widely used of the OPEC
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multilateral institutions. With a total pledged capital of $1.6 billion, by the end of
1977 the Special Fund had: (a) committed $339 million of direct project and balance-
of-payments assistance to 60 non-OPEC LDCs around the world, (b) pledged $435
million to the International Fund for Agricultural Development (IFAD), and (c) begun
consideration of a major contribution to the Common Fund, proposed by UNCTAD as
a key feature of the Integrated Program for Commodities. OPEC countries also
contributed large sums to the Islamic Development Bank, the newest and largest of the
OPEC multilateral organizations, and the Arab Bank for Economic Development in
Africa (ABEDA). OPEC states upped ABEDA's capital early last year as a concession
to African states which sought more Arab assistance.
Mainly Arab Beneficiaries
Again in 1977, OPEC countries concentrated their bilateral ODA assistance on
Arab and other Moslem recipients, with 83 percent destined for the former and an
additional 8 percent to the latter. The Arab confrontation states again absorbed the
bulk of the total, Egypt and Syria alone taking 45 percent.
Disbursements of OPEC Bilateral Official Development Assistance,
by Leading Recipients
Egypt ...............................................................................
1,590
1,100
Syria ................................................................................
.695
540
Oman ...............................................................................
.310
110
Morocco ..........................................................................
,320
35
Jordan ............................................................................
.290
475
India ................................................................................ .
.275
495
Somalia ..........................................................................
.230
45
North Yemen ................................................................
2t5
140
Mauritania ......................................................................
.ISO
115
Lebanon ..........................................................................
20
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India has main ame
a special place as a favored aid client o ran s, largely reflecting Tehran's drive to
strengthen its economic ties with the non-Arab countries of middle Asia.
OPEC bilateral assistance to the especially disadvantaged groups of LDCs
remained comparatively small in 1977. The listing below shows the share of each of
three groups usually classified as disadvantaged but which to some extent are
duplicative. India and Pakistan are excluded from the first but included in the second
and third groups:
7 September 1978 SECRET
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? Least Developed Countries (LLDCs) received $856 million, or 17 percent
of OPEC bilateral ODA.
? Most Seriously Affected (MSA) countries, other than Egypt, received
$1,461 million, or 29 percent of the total.
? Non-OPEC, non-Communist LDCs with $265 or less annual per capita
income received $1,235 million, or 24 percent of the total.
Preliminary information indicates that OPEC transfers of official development
assistance will fall at least 20 percent in 1978. We expect only the two radical
countries of Libya and Iraq to surpass their 1977 aid performances. The conservative
Arab Gulf states are cutting back their programs in 1978. Although these states
continue to receive enormous sums from oil sales and have large foreign assets, some
are encountering intermittent cash shortages because of a combination of poor
budgeting, reduced oil sales, high imports, international inflation, and the declining
value of the dollar. We also expect Iran's role as a major donor to continue to wane.
Tehran's 1978 transfers will probably fall again, as last year, by as much as one-half.
Because of their dependence on the Gulf donors, the confrontation states will be
most severely affected. For example., disbursements through GODE to Egypt will
decline sharply in 1978 as a result of the Gulf states' decision in July not to replenish
GODE's nearly exhausted capital. Also, the annual Rabat payments due the confronta-
tion states are moving far more slowly than a year ago, with less than $250 million in
payments noted in first half 1978, compared with nearly $800 million for all of 1977
(most of which occurred in the first half of the year).
Those non-OPEC LDCs that appear to be receiving more OPEC bilateral aid this
year than in 1977 are predominantly leftist-those with ties to the radical donor states.
Already, Libya has transferred large amounts of assistance to Ethiopia, and South
Yemen has received sizable aid from Iraq. Libya pledged major support to South
Yemen in the aftermath of the decision by other more moderate Arab states to impose
an economic boycott on Aden. Iraq also has transferred substantial amounts of ODA to
Guinea and Congo.
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THE ASIAN DOLLAR MARKET: SINGAPORE GAINS
EDGE OVER HONG KONG
New Hong Kong taxes on offshore banking profits will give an edge to Singapore
in the longstanding competition for leadership in the Asian dollar market. The tax bill
approved by the Hong Kong Legislative Council last month will impair Hong Kong's
reputation as a tax haven.
The Asian Dollar Market
The Asian dollar market-which started in Singapore in 1968-deals in foreign
currencies deposited in the various banking insitutions of the major Asian Pacific
financial centers. The main depositors are multinational and regional corporations,
government bodies, Asian central banks, and foreign banks; about 90 percent of the
deposits are in US dollars. The borrowers are made up of regional corporations,
development banks, central banks, commercial banks, and export-oriented firms.
The Asian dollar market is basically a segment of the Eurodollar market centered
in London. It has a strong growth potential because of the rising capital requirements
of the Asian Pacific LDCs. Time-zone differences give the market the advantage of
being open when the London market is closed.
Relative Advantages of Hong Kong and Singapore
Hong Kong and Singapore both have excellent transportation and telecommuni-
cations networks, legal institutions substantially based on English law, and effective
banking-support systems-particularly accounting, legal, and printing services. While
Hong Kong international banking is subject to minimal government control, Singapore
has developed as an international banking center through a combination of strict
government supervision and generous government incentives.
Under existing tax provisions:
? Singapore has a 10-percent tax on offshore banking profits but no tax on
interest earned on bank deposits by nonresidents.
? Hong Kong has a 15-percent withholding tax on interest earned on bank
7 September 1978 SECRET
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Hong Kong and Singapore:
Syndicated Loons to Asian LDCs, January to June 1978
lorrower Country of Borrower Million US $
Hong Kong Syndication)
January
Korea Line Corp .. ....................................................... South Korea 2.5
China Airlines Ltd. ................ ..._........_...................... Taiwan 48
Chinese Petroleum ~ orp. .................................. . Taiwan 28
February
Philippine Long Distance Telephone Co. ............ Philippines 105
March
Government of Malaysia....... .... _ ................................... Malaysia 400
San Miguel Corp........................................................... Philippines 130
April
Malaysian International Shippirnf; Corp. Malaysia 140
Mareopper Mining Corp. .._ .................._.................,.. Philippines 34
Central Bank of the Philippines ...................... ..._......... Philippines 100
Pohang Iron and Stvel Co. ......... _ ................................. South Korea 100
Korean Airlines Co- ..... ........ ......................................... South Korea 53
Korea Development: Bank
Korea Exchange Ba+:+k .... .......... ..._................... .............. South Korea 400
Taiwan Power Co....................................................... Taiwan 190
May
Lakeview Industria' Corp. ..... .._........ ......................... Philippines 7
June
Hankuk Glass Indurstry Co., Ltd, - .............................. South Korea 32
Singapore Syndications
March
Republic of Indonesia ............._...................... .............. Indonesia 500'
April
Golden Eagle Indou ;ia .......... ............................... ...... Indonesia 75'
Siam Cement Co ... .................................................... Thailand 50
May
Mobil Oil Indonesia _.... .... ..... _...... ............................. Indonesia 300'
'Joint Singapore - New York syndication.
deposits by nonresidents, but, up to last month, has had no tax on offshore
banking profits.
Singapore's tax structure has made it the largest depository of Asian dollars with $23
billion in March 1978, compared with perhaps $13 billion for Hong Kong. On the
other hand, Hong Kong syndicated more than one-half of the 50 major Asian dollar
loans processed in 1977, against Singapore's 10-percent share.
Hong Kong Tax Legislation
The Hong Kong budget for April 1978-March 1979 called for a 17-percent tax on
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offshore banking profits without any relief from the 15-percent tax on deposit interest
income. Under this proposal, which was enacted on 16 August, Hong Kong has higher
taxes than Singapore on both Asian dollar deposits and Asian dollar offshore banking
profits.
Recent Actions in Singapore
In a drive to strengthen its international banking position, Singapore has so far
this year:
? Relaunched a market for US dollar-denominated certificates of deposit
(CI)s) after an earlier failure in 1970. US dollar CDs help to attract longer
term deposits; Hong Kong does not have a US dollar CD market.
? Extended the list of types of Asian dollar operations subject to the
concessionary 10-percent profits tax.
? Removed all foreign exchange controls thus matching Hong Kong in this
regard.
Other Competitors
Singapore will not necessarily gain all of the Asian dollar banking business that
will be lost by Hong Kong as a result of the new tax legislation. The larger
international banks with several foreign branches can syndicate loans in other
countries while employing deposits held in Singapore. Bahrain in the Persian Gulf has
also become increasingly attractive as a financial center because of the absence of
withholding taxes and exchange controls and its potential for attracting Arab dollar
deposits. The Philippines, despite its concessionary 5-percent tax on offshore banking
profits, is not yet regarded as a serious contender.
USSR Posts Bigger Deficit in Hard Currency Trade
The USSR registered a $3 billion hard currency trade deficit in first half 1978 as
sizable purchases of grain pushed hard currency imports to a record level. After
declining steadily last year, nongrain imports are also on the rise; this suggesting
Moscow is satisfied that it has regained control over its balance of payments and is
7 September 1978 SECRET
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USSR: Hard Currency Imports, by Quarter
Billion US $
4.1
III IV I II
1978
willing to allow for a moderate expansion of nongrain imports. A hard currency trade
deficit on the order of $4 billion now seems probable for the whole year. Imports
should fall from their January-June level of $8.8 billion, as imports of grain and
equipment decline in the second half. Exports should rise above the $5.8 billion of the
first half because of seasonal factors.
25X1
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 W nn For Release 2004/07/29: CIA-RDP80T00702A000800040004-5
Assessment
Center
Economic Indicators
Weekly Review
7 September 1978
ER EI 78-036
7 September 1978
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 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
This publication is prepared for the use of U.S. Government
officials. The format. coverage and contents of the publication are
designed to meet the specific requirements of those users. U.S.
Government officials may obtain additional copies of this document
directly or through liaison channels from the Central Intelligence
Agency.
Non-U.S. Government users may obtain this along with similar
CIA publications on a subscription basis by addressing inquiries to:
Document Expediting (DOCEX) Project
Exchange and Gift Division
Library of Congress
Washington, D.C. 20540
Non-U.S. Government users not interested in the DOCEX
Project subscription service may purchase reproductions of specific
publications on an. individual basis from:
Photoduplication Service
Library of Congress
Washington, D.C. 20540
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 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
1. The Economic Indicators Weekly Review provides up-to-date information
on changes in the domestic and external economic activities of the major non-
Communist developed countries. To the extent possible, the Economic Indicators
Weekly Review is updated from press ticker and Embassy reporting, so that the
results are made available to the reader weeks-or sometimes months-before receipt
of official statistical publications. US data are provided by US government agencies.
2. Source notes for the Economic Indicators Weekly Review are revised every
few months. The most recent date of publication of source notes is 16 February 1978.
Comments and queries regarding the Economic Indicators Weekly Review are
welcomed.
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 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
BIG SIX FOREIGN COUNTIRIES COMPOSITE INDICATORS
Industrial Production
140
130
INDEX: 1970=100, seasonally adjusted
Semilogarithmic Scale
Unemployment Rate Percent
3
Note: Excluding data for Italy.
, ..oo-vim
;i Five
JAN APR JUL OCT J N APR JUL OCT JAN APR 1U,_ OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1973 Appro1yV For Release 180-4 07/29 : CIA-19Prg0T00702A099 99040004-5 1978
'il llncluding Japan, West Germany, France, the United Kingdom, Italy, and Canaria. A-2
 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
Consumer Price Inflation
Trade Balance
JAN APR JUL OCT
1973
Percent, seasonally adjusted, annual rate
Percent Change
LATEST
from Previous
MONTH
Month
Industrial
Production
Big Six
JUN 78
0.2
United States
RUN 78
0.5
Consumer Prices
Big Six
JUN 78
0.6
United States
JUN 78
0.9
AVERAGE ANNUAL
GROWTH RATE SINCE
1 Year 3 Months
1970 Earlier Earlier
2.8 2.5 2.0
3.8 4.9 12.8
9.2 8.2 7.2
6.7 7.4 10.7
f,.5
Billion US $, f.o.b., sea ~tnalW adjusted
JAN APR JUL OCT JAN'- APR JUL OCT
1977 1978
3 Months
LATEST MONTH 1 Year Earlier Earlier
Unemployment Rate
Pig Five MAY 78 4.4
United States MAY 78 5.1
TEST MILLION CUMULATIVE (MILLION US $)
MONTH US $ 1978 1977.. Change
Trade Balance
ig Six JUN 78 6,521 28,447 13,580. 14,767
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2Average for latest 3 months compared with average for previous 3 months, seasonally adjusted at annual rate.
A-3
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INDUSTRIAL PRODUCTION INDEX: 1970=100, seasonally adjusted
,United States
Semilogarithmic Scale
Japan
140
West Germany
France
140
~rR JUL U~i 'H"Approved for I 'ale see 200476'7/29: CIA-RDMTO'6'7 A00060004M4 s JUL OCT
1973 1974 1975 1976 1977 1978
A-4
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United Kingdom
Italy
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1973 1974 1975 1976 1977 1978
Percent
Change
AVERAGE ANNUAL
GROWTH RATE SINCE
Percent
Change
from
AVERAGE ANNUAL
GROWTH RATE SINCE
LATEST
from
Previous
1 Year
3 Months
LATEST
Previous
1 Year
Months
MONTH
Month
1970
Earlier
Earlierl
MONTH
Month
1970
Earlier
Earllerl
United States
JUL 78
0.5
.;.8
4.0
10.3
11niteil Kingdom
l!N 78
1.4
I5
Japan
JUL78
0.7
4.0
8.7
5.6
Jtlaly..
tUN 78
-1.0
1 1
West Germany
JUN 78
0.9
1.9
0
-4.5
:GAng0a_
It1N 78
0.5
z
France
JUN 78
-0.8
z.9
-1.6
1.0
I
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lAverage for latest 3 months compared with average for previous 3 months.
A-5
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UNEMPLOYMENT RATE
United States
Japan
West Germany
2
1973 1974 1975 1976 1977 1978
JAN APR JUL OCT JAN APR JUL OCT
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United Kingdom
Italy (quarterly)
. Data for earlier periods thus are not comparable.
er 1977.
labor force survey based on new definitions of economic activity sharply raised the official estimate of Italian unemployment in first quart
Italian data are not seasonally adjusted.
Canada
APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1974 1975 1976 1977 1978
THOUSANDS OF PERSONS UNEMPLOYED
LATEST MONTH
1 Year
Earlier
3 Months
Earlier
United States
AUG 78
5,968
6,821
6,149
United Kingdom
t
:AUG 78
1,392
Japan
MAY 78
1,270
1,140
1,160
e
Ito' Y#
II 78
1,455
West Germany
JUL 78
991
1,049
990
Car~ada
IUL 78
927
France
JUL 78
1,241
1.140
1,087
NOTE: Data are seasonally adjusted. Unemployment rates for France are estimated. The rates shown for Japan and Canada are
roughly comparable to US rates. For 1975-78, the rates for France and the United Kingdom should be increased by 5 percent and
15 percent respectively, and those for West Germany decreased by 20 percent to be roughly comparable with US rates. Beginning in
1977, Italian rates should be decreased by 50 percent to be roughly comparable to US rates.
1 Year 3 Months
Earlier -.arlier
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CONSUMER PRICE INFLATION
United States
Japan
West Germany
10
5
15
10 ----
Percent, seasonally adjusted,
annual rate1
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1973 1974 1975 1976 1977 1978
'Three-month average compared with previous three months.
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A-8
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United kingdom
1 35
30
J
-15
-10
2.9
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
LATEST
MONTH
Percent
Change
from
Previous
Month
Japan
JUN 78
0.3
West Germany
JUN 78
0.1
France
JUL 78 i
1.2
1975 1976 1977 1978
GROWTH RATE SINCE
1970 1 Year 3 Months
Earlier Earlier2
9.8 3.5 6.1 1 Italy-
5.2 2.4 2.2
9.1 9.3 12.1
Cr#rsda
Change GROWTH RATE SINCE
from
LATEST Previous 1970 1 Year 3 Months
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A-9
 pprov~or Releas 2OO
GNP'
RETAIL SALES '
Constant Market Prices
Constant Prices
Average
Average
An w.31 Growth Rare Since
Annual Growth Rate Since
Percent Change -...-.
Percent Change
-
Latest from Previous 1 Year
Previous
Latest
from Previous
1 Year
3 Months
Quarter
Quarter 1970 Eager
Quarter
Month
Month
1970
Earlier
Eager'
United States 78 11
1.8 3.2 4.0
7.4
United States
May 78
-0.9
3.1
1.9
5.5
Japan 78 I
2.4 5.5 5.7
10.0
Japan
Apr 78
4.0
9.9
4.3
24.8
West Germany 78 1
0.1 2.4 1.1
0.4
West Germany
May 78
-0.8
2.3
0
-5.3
France 78 I
1.8 4.1 1.4
7.4
France
Jan 78
9.9
0
1.0
10.5
United Kingdom 77 IV
-0.5 1.6 -1.1
-1.9
United Kingdom
Jul 78
1.7
1.4
5.4
9.0
Italy 78 1
2.0 1.9 -6.2
8.2
Italy
Mar 78
3.6
3.2
5.5
21.1
Canada 78 I
0.7 4.7 2.8
2.7
Canada
Jun 78
1.4
4.1
4.5
2.2
' $eosonnly adjusted.
alusted-
r Average for latest 3
months compared with average for previous 3 months.
FIXED INVESTMENT '
WAGES IN MANUFACTURING'
Nonresidential; constant
prices
Average
Annual Growth Rate Since
Average
Percent Change
Annual Growth Rcte
Since
Latest
from Previous
1 Year
3 Months
Percent Change - -- --
----
Period
Period
1970
Earlier
Earlier'
Latest
from Previous 1 Year
Previous
Quarter
Quarter 19.10 Earlier
Quarter
United States
Jun 78
0.5
7.6
7.6
7.2
United States 78 II
3.6 3.0 7.4
15.1
Japan
Apr 78
0.3
16.1
8.2
10.3
Japan 78 1
0.9 3.1 -0.4
3.6
West Germany
78 I
0.9
8.9
4.3
3.9
West Germany 78 I
-0.5 0.7 1.6
-2.1
France
77 IV
3.1
14.1
12.0
12.9
France 77 IV
0.8 4.0 4.7
3.3
United Kingdom
May 78
0.5
16.4
20.6
54.9
United Kingdom 78 1
1.3 '.6 9.7
5.2
Italy
May 78
3.5
20.4
15.5
13.6
Italy 78 1
2.3 1.1 -19.6
9.4
Canada
May 78
0.9
10.9
7.1
6.2
Canada 78 1
-3.7 1 4.8 1 -12.7
-14.1
s Hourly earnings (seasonally adjusted)
for the united States, Japan, and Canada;
hourly wage
Seasomilly adjusted-
rams for others. West German and French data refer
to the beg
inning of the quarter.
' Average for latest 3
months compared with that for previous
3 months.
MONEY MARKET RATES
Percent
Rate of Interest
1 Year
3 Months
1 Month
Representative rates
Latest Dote
Earlier
Earlier
Earlier
United States
Commercial paper
Aug 23 7.85
5.89
{
7.19
7.88
Japan
Call money
Aug 25 4.50
5.75
4.12
4.62
West Germany
Interbank loans (3 months)
Aug 23 3.61
4.06
3.62
3.76
France
Call money
Aug 25 7.00
8.25
7.88
7.25
United Kingdom
Sterling interbank loans (3 months)
Aug 23 9.36
6.60
9.14
10.40
Canada
Finance paper
Aug 23 8.90
7.47
8.13
8.27
Eurodollars
Three-month deposits
Aug 23 8.66
6.36
8.02
8.50
ftmov
ed For e3-,--WO
 EXPORT PRICE Xpproved For Release 2004/07/29
C&pW%T&W02A000800040004-5
us $
National Currency
Average
Average
Annual Growth Rate Since
Annual Growth Rate Since
Percent Charge
Percent Change
--- _
Latest from Previous
1 Year
3 Months
Latest from Previous
I Year 1 Misndn
Month Month
1970
Earlier
Earlier
Month Month
1970 Earlier Earlier
United States
May 78 0.4
9.4
5.0
8.3
United States May 78 0.4
9.4 5.0 8.3
Japan
Jul 78 1.2
11.7
27.0
39.1
Japan Jul 78 -5.8
3.8 -4.3 --8.8
West Germany
Jun 78 1.7
11.5
12.9
-4.0
West Germany Jun 78 0.7
3.9 -0.1 4.9
France
Apr 78 3.4
12.1
17.9
36.2
France Apr 78 0.9
9.4 8.9 21.0
United Kingdom
Jul 78 3.7
11.8
20.4
23.8
United Kingdom Jul 78 0.5
15.1 9.4 11.3
Italy
Apr 78 -0.6
10.9
9.6
6.7
Italy Apr 78 -0.6
15.4 5.7 - 1.6
Canada
May 78 1.8
8.4
0.3
3.8
Canada May 78 -0.2
9.3 7.0 -6.0
IMPORT PRICES
OFFICIAL RESERVES
National Currency
Average
Bison US S
Annual
Growth Rate Since
Latest Month
Percent Charge
1 Year 3 Msu,t n
Latest from Previous
1 Year
3 Months
End of Bilnon US $
Jun 1970 Earlier Earlier
Month Month
1970
Earlier
Earlier
United States Jun 78 18.9
14.5 19.2 19.2
United States
May 78 -0.3
12.8
5.4
6.8
Japan Jul 78 29.3
4.1 17.6 27.5
Japan
Jul 78 -6.6
5.8
-20.9
-22.7
West Germany Jun 78 40.7
8.8 34.3 42.2
West Germany
Jun 78 -1.6
3.0
-5.9
-12.5
France Apr 78 10.6
4.4 10.0 0.1
France
Apr 78 -2.2
9.3
0.2
- 1.6
United Kingdom May 78 17.3
2.8 10.0 21.4
United Kingdom
Jul 78 0.1
17.4
1.8
8.2
Italy Jun 78 13.2
4.7 9.7 10.6
Italy
Apr 78 -0.7
18.9
4.7
-8.3
Canada Jul 78 4.6
9.1 5.0 4.6
Canada
Apr 78 0
8.5
11.1
-5.3
CURRENT ACCOUNT BALANCE '
BASIC BALANCE'
Current Account and Long-Term Capital Transactions
Cumulative (Minion us s)
Cumulative (Million US s)
Latest
Period Million US $
1978
1977
Change
Latest
Period Million US $
1978 1977 Change
United States'
78 1 -6,954 -
6,954 -
4,158
-2,796
United States No longer published'
Japan
Jul 78 2,050
10,879
4,630
6,249
Japan Jul 78 650
6,231 3,513 2,718
West Germany
Jul 78 - 1,700
2,015
1,406
609
West Germany Jun 78 265
2,801 -1,1651 3,966
France
78 I 0
0
- 2
2
France 78 1 -1
- 1 -21 1
United Kingdom
78 1 -803
-803
-896
94
United Kingdom 78 1 - 326
-326 543 - 869
I
Italy
77 III 2,390 N.A.
N.A.
N.A.
77 111 2,520
Italy
NA. N.A.
N.A.
Canada
78 1 - 1,273 - 1,273 - 1,484
212
Canada 78 I -668
-668 584 84
' converted to US donors at the current market rates of exchange.
Converted to US dollars at the cvrent market rates of exchange.
' As raonenerideed by the Advisory Committee on the
Presentation of Balance of Payrnents
Seosonany adjusted.
Statistics, this Department of Commerce no longer publishes a basic balance
TRADE-WEIGHTED EXCHANGE
RATES '
EXCHANGE R
ATES
Spot Rate
As of 18 Aug 78
Percent C
hange from
Perce
nt Change from
As of 18 Aug 78
US $
1 year
3 Months
1 Year
3 Months
Per Unit 19 Mar 73
Earlier
Earlier
11 Aug 78
19 Mar 73 Earlier
Earlier I 1 Aug 78
Japan (yen)
0.0054 41.34
43.14
21.72
0.47
United States -4.49 -10-10
-6.11 -0.13
West Germany
0.5038 42.27
17.30
6.82
-0.91
Jean 44.81 38.30
19.27 0.38
(Deutsche mark)
West Germany 30.28 3.95
-0.14 - 1.24
France (franc)
0.2318 5.18
13.87
8.07
-0.34
France -7.76 -0.09
1.16 -0.35
United Kingdom
1.9850 - 19.34
14.22
9.55
1.07
United Kingdom -27.92 2.75
2.88 0.34
(pound sterling)
Italy -42.58 -6.52
-1.61 0.58
Italy (lira)
0.0012 --31.92
6.45
5.06
0.42
Canada -13.58 -9.17
-4.18 - 0.34
Canada (dollar)
0.8783 - 1 1.97
-5.44
-1.92
-0.22
'Weighting is based on eoch listed country's trade wi
th 16 other industrialized Wrrdtries to
Approved For Release 2004/07/29
CII FDPrB'0'1h00"2A0b1780b0%ZVmM_ the nraior `wren`"`
 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
Big Other Com-
World Seven OECD OPEC munist Other
UNITED STATE;
1975 .........................
107.65
46.94
16.25
10.77
3.37
29.82
1976 ............. ..... ......
115.01
51.30
17.68
12.57
3.64
29.44
1977 .........................
120.17
53.92
18.53
14.02
2.72
30.98
1978 .........................
1st Qtr ...............
30.94
13:65
4.60
3.76
1.00
7.93
Apr .....................
12.06
5.40
1.68
1.38
0.42
3.17
JAPAN
1975 .........................
55.73
16.56
6.07
8.42
5.16
15.87
1976 .........................
67.32
22.61
8.59
9.27
4.93
17.84
1977 .........................
81.11
28.02
9.73
12.03
5.32
26.01
1978
1st Qtr ...............
22.11
7.83
2.39
3.35
1.32
7.22
Apr .....................
7.89
2.80
0.80
1.19
0.57
2.53
WEST GERMANY
1975 ........................
91.70
28.33
36.44
6.78
8.81
11.05
1976 .........................
103.63
33.44
41.86
8.25
8.72
11.04
1977 .......... ..............
119.28
39.01
48.00
10.78
8.59
12.90
1978
1st Qtr
FRA NCE
1975 ........................
52.87
20.00
15.50
4.90
3.13
8.61
1976._ .....................
57.05
22.49
16.15
5.08
3.23
8.75
1977 .........................
65.00
25.90
18.19
5.97
3.00
11.94
1978
1st Qtr ..............
18.49
7.66
5.07
1.57
0.66
3.53
Apr ....................
6.74
2.82
1.90
0.56
0.28
1.18
UNITED KINGDOM
1975 ........................
44.03
12.55
16.59
4.55
1.56
8.64
1976 ........................
46.12
14.03
17.53
5.13
1.39
7.92
1977 ........................
57.44
16.99
22.56
6.78
1.63
9.48
1978
1st Qtr ..............
16.86
5.09
6.27
2.03
0.55
2.92
Apr ....................
5.75
1.73
2.19
0.74
0.18
0.91
ITALY
1975 .........................
34.82
15.61
7.86
3.72
2.46
4.67
1976 ........................
36.96
17.41
8.69
4.23
2.18
3.96
1977 .......... .. ............
45.04
20.92
10.20
5.85
2.45
5.62
1978
1st Qtr
CANADA
1975 ......_ .................
33.84
26.30
1.73
0.71
1.20
2.00
1976 .........................
40.18
32.01
2.03
0.81
1.25
2.09
1977 .........................
42.98
34.77
2.13
0.94
1.06
4.08
1978
1st Qtr ..............
10.75
8.78
0.55
0.23
0.22
0.97
Apr .....................
4.20
3.44
0.16
0.08
0.07
0.45
Source: International
Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
Developed Countries: Direction of Trade
Imports from (c.i.f.)
Big Other Com-
World Seven OECD OPEC munist Other
UNITED STATES
1975 .......................... 103.42
1976 .......................... 129.57
1977 .......................... 156.70
1978
1st Qtr ................ 43.14
Apr ...................... 15.42
JAPAN
1975 .......................... 57.85
1976 .......................... 64.89
1977 .......................... 71.33
1978
1st Qtr ................
Apr .....................
WEST GERMANY
1975 .......................... 76.28
1976 .......................... 89.68
1977 .......................... 102.63
1978
1st Qtr ................ 28.24
FRANCE
49.81 8.83 18.70 0.98 25.08
60.39 9.75 27.17 1.16 31.09
70.48 11.08 35.45 1.22 38.47
20.39 3.51 8.15 0.47 10.62
7.54 1.27 2.73 0.18 3.70
16.93 6.08 19.40 3.36 12.05
17.58 7.78 21.88 2.91 14.72
18.87 7.93 24.33 3.41 16.79
5.04 2.06 6.46 0.87 3.89
1.64 0.74 2.01 0.36 1.53
27.09 27.78 8.24 4.87 8.21
31.28 32.64 9.73 5.93 10.01
3638 37.37 10.12 6.14 12.62
18.32
6.28
1975 .......................... 53.99 23.04 14.33 9.43 1.94 5.21
1976 .......................... 64.38 27.81 16.93 11.36 2.24 6.01
1977 .......................... 70.50 30.28 18.24 11.82 2.46 7.70
1978
1st Qtr ................ 19.76
Apr ...................... 6.79
UNITED KINGDOM
1975 .......................... 53.35
1976 .......................... 55.56
1977 .......................... 63.29
1978
1st Qtr ................ 18.87
Apr ...................... 5.67
ITALY
1975 .......................... 38.36
1976 .......................... 43.42
1977 .......................... 47.56
1978
1st Qtr ................ 11.26
CANADA
1975 .......................... 38.59
1976 .......................... 43.05
1977 .......................... 44.67
1978
1st Qtr ................ 10.80
Apr ...................... 4.61
8.58 5.40 3.05 0.64 2.09
3.02 1.84 1.00 0.23 0.70
18.47 18.52 6.91 1.68 7.67
19.66 18.81 7.29 2.08 7.65
24.02 21.34 6.31 2.40 9.22
7.44 6.68 1.80 0.55 2.40
2.27 2.04 0.39 0.16 0.81
17.32 6.75 7.85 2.09 4.34
19.35 8.04 8.12 2.65 5.24
20.80 8.67 9.03 .2.80 6.26
29.78 1.70 3.43 0.32 2.02
33.55 1.82 3.48 0.38 2.56
35.67 1.77 3.05 0.33 3.85
8.60 0.44 0.77 0.08 0.91
3.84 0.18 0.03 0.19 0.37
' Source: International Monetary Fund, Direction of Trade.
Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
FOREIGN TRADE BILLION LIS $, f.o.b., seasonally adjusted
United States
14.0
12.0
10.0
West Germany
10.0
8.0
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A-14
 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
United Kingdom
6.0
5.0
4.0
JUN 78 6.316 37,327 31,159 19.8%
R 915 37180 32.828 133% Balance 100 147 -1,670 1,817
Itoly
1 Cenai
I
OCT JAN APR JUL OCT
1978
5,770
38,169
31,289
>'2 U9%
6,055
39,807
34,595
15.1 %
Balance
-284
-1,639
-3,306
1,668
4
412
750
24
2'. .545
- 4y%
JUN 78
,
3,517
,
22,832
22,136
3.11%
Balance
895
1,918
-591
-
2,508
MAY 78
3,621
18,983
1 7.436
H9`h
33,401
17,447
16,713
_ 4.4%
219
1,536
722
814
JUL 78
Balance
56.673
46,615
10,058
18.9%
18.8%
1,910
West Germany JUN 78
Balance
Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
A-15
 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
FOREIGN TRADE PRICES IN US $1
United States INDEX: JAN 1975 =100
Japan
West Germany
1 11
-11 JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
l oved For R&I@aTse 2004/07/239QIS-RDP80T00fOW008000400 448
lExport and import plots are based on five-month weighted moving averages.
A-16
 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
Italy
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
197Approved F eleease 2004/d77~2IP CIA-RDP8da902A000800Agg0$$ 4-5.
 Approved ELECTED2DEVELOPING $COUNTRIESo4ooo4-5
MONEY SUPPLY'
INDUSTRIAL
PRODUCTION '
Average
Average
Annual Growth Rate Since
Annual
Growth Rat,
Since
Percent Change
-
-- ---- -
Percent Change --- __
---------
--------
Latest
from Previous
I Year
3 Months
Latest
from Previous
1 Year
3 Months
Month
Month
1970
Earlier
Earlier '
Period
Period 1970
Earlier
Earlier '
Brazil
Mar 78
2.7
36.4
43.3
34.7
India
Mar 78
1.1 4.9
0.8
17.8
India
Feb 78
-0.6
13.7
16.0
20.4
South Korea
Jun 78
-1.2 22.5
20.1
26.5
Iran
Mar 78
9.9
29.3
22.5
51.7
Mexico
Apr 78
13.1 6.7
14.1
8.6
South Korea
May 78
1.3
31.2
30.7
23.7
Nigeria
78 I
6.8 11.0
0.2
29.9
Mexico
May 78
3.9
20.8
33.0
24.9
Taiwan
Apr 78
1.5 15.3
17.4 I
- 2.0
Nigeria
Dec 77
-5.2
35.4
38.1
34.0
Taiwan
Mar 78
5.3
25.2
31.0
24.3
' Seasonally adjusted
.
=Aver for latest
ape
3 months compared
with average fa Previous 3 moon
s.
Thailand
Jan 78
2.7
13.2
13.7
21.5
' Seasonally adjusted
.
'Average for latest
3 months compared with average for previous 3 month,.
CONSUMER
PRICES
WHOLESALE
PRICES
Average
Annual Growth Rate Since
Average
Percent Change
--
Annual Growth
Rate Since
Latest
from Previous
1 Year
Percent Change
------
Month
Month
1970
Earlier
Latest
from Previous
I Year
Month
Month
1970
Earlier
Brazil
Jun 78
4.1
28.3
38.0
India
Mar 78
0.3
7.5
2.9
Brazil
May 78
3.4
28.4
34.5
Iran
May 78
-0.4
12.4
12.0
India
May 78
0.6
8.0
-2.8
South Korea
Jul 78
1.4
14.6
14.7
Iran
May 78
0.4
11.0
10.9
Mexico
Jun 78
1.4
15.0
17.3
South Korea
Jul 78
0.4
15.8
11.7
Nigeria
Dec 77
3.2
16.6
31.0
Mexico
Jun 78
1.3
16.6
16.8
Taiwan
Apr 78
1.8
10.1
7.6
Taiwan
Mar 78
1.1
8.2
1.2
Thailand
Apr 78
1.0
8.6
8.8
Thailand
Jan 78
-0.2
9.5
6.4
EXPORT PRICES
OFFICIAL RESERVES
us $
Average
Million US $
Annual Growth Rah Since
Latent Month
Percent Change
1 Year
3 Months
Latest
from Previous
I year
End of
Million US $ Jun 1970
Earlier
Earlier
Month
Month
1970
Earlier
Brazil
Feb 78
6,733
1,013
5,878
5,994
Brazil
Feb 78
0.4
14.0
1.5
India
Apr 78
6,064
1,006
4,134
5,411
India
Mar 77
-0.9
9.6
17.9
Iran
Jun 78
12,068
208
11,025
12,483
Iran
Jun 78
0
30.8
0
South Korea
May 78
4,101
602
3,519
4,376
South Korea
78 I
0.7
8.7
7.7
Mexico
Mar 78
1,766
695
1,422
1,723
Nigeria
May 76
-0.1
27.3
12.3
Nigeria
Jun 78
2,387
148
4,663
3,906
Taiwan
Mar 78
-0.7
11.2
3.8
Taiwan
Mar 78
1,433
531
1,349
1447
Thailand
Dec 76
2.0
13.3
13.1
Thailand
Jun 78
2,161
978
2,017
2,161
Approved For Release 2004/07/29'Ait A-RDP80T00702A000800040004-5
 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
Latest 3 Months
Percent Change Iron
May 78 Exports
84.8
-3.7
4,743
4,979
-4.7%
May 78 Imports
26.6
1.4
5,110
4,939
3.5%
May 78 Balance
-367
40
-407
Feb 78 Exports
4.0
12.3
912
917
-0.4%
Feb 78 Imports
-39.6
- 0.2
845
916
-7.7%
Feb 78 Balance
67
1
66
Iran
Apr 78 Exports
-34.0
-8.2
7,615
8,012
-4.9%
Mar 78 Imports
105.8
14.2
3,694
3,235
14.2%
Mar 78 Balance
1,991
2,795
-804
South Korea
May 78 Exports
14.2
29.3
4,651
3,630
28.1%
May 78 Imports
64.3
25.1
4,994
3,905
27.9%
May 78 Balance
-343
-275
- 68
Mexico
May 78 Exports
-2.2
6.5
2,037
1,773
14.9%
May 78 Imports
11.6
25.7
2,340
1,868
25.3%
May 78 Balance
-304
- 95
-209
Nigeria
Apr 78 Exports
-55.4
-29.9
1,143
1,597
-28.4%
Aug 77 Imports
56.1
80.1
2,535
1,640
54.6%
Aug 77 Balance
716
979
-263
Taiwan
Apr 78 Exports
-27.6
32.3
3,365
2,543
32.3%
Apr 78 Imports
- 14.5
20.4
2,869
2,338
22.7%
Apr 78 Balance
496
205
291
Thailand
Apr 78 Exports
27.0
3.2
1,277
1,221
4.6%
Apr 78 Imports
-6.5
14.3
1,449
1,251
15.8%
Apr 78 Balance
-172
- 30
- 141
Approved For Release 2004/07/2 :l lA-RDP80T00702A000800040004-5
 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
AGRICULTURAL PRICES MONTHLY AVERAGE CASH PRICE
WHEAT CORN
7 5 $ PER BUSHEL $ PER METRIC TON
5 $ PER BUSHEL
Kansas City No. 2 Hard Winter
1-30 AUG 0 1974 1975 1976 1977 1975 0 0
RICE
37.5 $ PER HUNDRED WEIGHT
No. 2 Medium Grain, 4% Brokens,
f.o.b. mills, Houston, Texas
21 AUG 1 7.00
30 AUG 7.32
23 AUG 7.00
JUL 78 6.45
AUG 77 6.93
1-30 AUG II
COFFEE
Other Milds Arabicas, ex-dock New York
30 AUG 153.33
23 AUG 148.17
JUL 78 135.80
AUG 77 199.40
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 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
SOYBEANS
S PER BUSHEL
500 400
1,000
1974 1975
SOYBEAN OIL/PALM OIL
0.5 $ PER POUND $ PER METRIC TON
SOYBEAN OIL
Crude, Tank Cars, f.o.b. Decatur
30 AUG 0.2857
23 AUG 0.2744
JUL 78 0.2577
AUG 77 0.2113
1974 1975
FOOD INDEX
1970=100
-- 800 400
Crude, Bulk, c.i.f. US Ports
30 AUG 0.2900
23 AUG 0.2900
JUL 78 0.3120
AUG 77 0.5336
1-30 AUG II
0
100
1976 1977
1978
120
BEEF
0 PER POUND
AUSTRALIA
UNITED STATES
Boneless Beef,
f.o.b., New York
Wholesale Steer Beef,
Midwest Markets
26 AUG 80.70
95.68
1-24 AUG
1-26 AUG II
1974 1975 1976 1977 1978
30 AUG
166.00
350
23 AUG
167.50
JUL 78
171.18
300
AUG 77
140.58
1-30 AUG 11
1976 1977 1978
1-22 AUG fi
1976 1977 57715 08_?8
NOTE: The food index is compiled by the Economist for 16 food commodities
which enter international trade. Commodities are weighted by
3-year moving averages of imports into industrialized co~,inirfes
Approved For Release 2004/07/29 : 9114-RDP80T00702A000800040004-5
 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
INDUSTRIAL MATERIALS PRICES MONTHLY AVERAGE CASH PRICE
COPPER WIRE BAR
140 0 PER POUND
40 1974
1-30 AUG 1l
1977 1978
LME is
30 AUG 28.0 3:1.0
23 AUG 28.0 3:.0
JUL 78 26.5 31.0
AUG 77 23.8 3 1.0
S PER METRIC TON LEAD
450 PER POUND
LME
30 AUG 30.1
23 AUG 29.3
JUL 78 26.4
AUG 77 24.9
us
33.0
33.0
.11.0
s1.0
800
1-30 AUG II
1974 1975 1976 1977 1978 200
2,500 35
1,000
350
/'" 500
250
1-30 AUG )L
1974 1975 1976 1977 1978
STEEL SCRAP
150 $ PER LONG TON
30 AUG 64 a 68 1;
23 AUG 65.u
JUL 78 60.0 E.E
AUG 77 52. T 63.9
1-28 AUG II
1977 1:978
100
1974 1975
$ PER METRIC TON
E,39 . 2, 14,000
1-30 AUG
1977 1978
1-30 AUG 11
1977 1978
Approved For Release 2004/07/2N9 CCIA-RDP80T00702A000800040004-5
-22
PLATINUM
$ PER METRIC TON150 250 $ PER TROY OUNCE
 Approved For Release 2004/07/29 : CIA-RDP80T00702A000800040004-5
ALUMINUM
Major US Producer
E per pound
55.00
53.00
53.00
47.09
US STEEL
Composite
$ per long ton
419.31
387.54
357.08
327.00
IRON ORE
Non-Bessemer Old Range
$ per long ton
22.55
21.43
21.43
20.05
CHROME ORE
Russian, Metallurgical Grade
$ per metric ton
NA
NA
150.00
150.00
CHROME ORE
S. Africa, Chemical Grade
$ per long ton
56.00
56.00
58.50
42.00
FERROCHROME
US Producer, 66-70 Percent
t per pound
42.00
41.00
42.39
44.55
NICKEL
Composite US Producer
$ per pound
2.07
2.06
2.41
2.20
MANGANESE ORE
48 Percent Mn
$ per long ton
67.20
72.24
72.00
72.00
TUNGSTEN ORE
Contained Metal
$ per metric ton
17,781.00
19,048.00
21,111.00
5,325.00
MERCURY
New York
$ per 76 pound flask
156.00
162.32
116.30
110.00
SILVER
LME Cash
t per troy ounce
542.55
496.44
447.09
425.81
GOLD
202.70
178.16
144.95
109.65
RUBBER
60 y PER POUND
INDUSTRIAL MATERIALS INDEX
300
250
100 1974 1975
1-22 AUG II
1976 1977 1978
LUMBER INDEX6
iApproximates world market price frequently used by major
world producers and traders, although only small quantities of
these metals are actually traded on the LME.
2Producers' price, covers most primary metals sold in the U S.
3As of 1 Dec 75, US tin price quoted is "Tin NY lb composite."
4Quoted on New York market.
5S-type styrene, US export price.
6 This index is compiled by using the average of 13 types of lumber whose
prices are regarded as bellwethers of US lumber construction costs.
7Composite price for Chicago, Philadelphia, and Pittsburgh.
NOTE: The industrial materials index is compiled by the Economist for 19 raw
materials which enter International trade. Commodities are weighted by
3-year moving averages of imports into industrialized countries.
Approved For Release 2004/07/29 :AC,fit-RDP80T00702A000800040004-5