LCD POSITIONS ON THE COMMON FUND

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00702A000500070011-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 16, 2016
• Document Release Date: September 20, 2004
• Sequence Number: 11
• Publication Date: November 1, 1978
• Content Type: IS

ILLEGIB
Appro
Approved For Release 2004/10/28 : CIA-RDP80T00702A00050007001 f 4l'
 25X1 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
Next 1 Page(s) In Document Exempt
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
LDC Positions on the Common Fund
Central Intelligence Agency
National Foreign Assessment Center
The atmosphere for completing a major inter-
national agreement on a Common Fund designed
primarily to stabilize the prices of key LDC
commodity exports has changed appreciably
since the last open negotiations collapsed in
November 1977. Energetic behind-the-scenes di-
plomacy by the UNCTAD (UN Conference on
Trade and Development) Secretariat and the
announcement at the Bonn summit of clear
favorable intent on the part of developed coun-
tries have already wrapped this month's sched-
uled resumption of North-South talks in an aura
of expectancy.
Thus, there is a broad sense-most notable
among the interested LDCs and the Europe-
ans-that agreement may be imminent on sev-
eral major aspects of the Common Fund. None-
theless, there has been an absence of substantial
change in negotiating positions since 1977, and
the diversity among LDCs with respect to na-
tional interests, articulated positions, and basic
understanding of scope and objectives persists as
a formidable complicating factor to any
agreement.
? Although a core of about a dozen of the 34
countries reviewed in this study is willing to
stonewall any substantial drift from the
original G-77 package, the rest hold views on
separate issues that range from willingness to
negotiate, through essential disinterest, to
flat opposition to the G-77 demands.
? A few countries-Argentina, Brazil, and
Saudi Arabia, for example-have no interest
Key Judgments
in creating a Common Fund and have, until
now, appeared to work on the assumption
that the United States and other developed
countries would shoulder the responsibility of
killing the whole package at no political cost
to them.
? As in other areas of the North-South dia-
logue, there is a fundamental lack of under-
standing of key issues and preparation of
delegations for the Geneva meetings, particu-
larly among the poorer LDCs for whom key
features of the Common Fund were ostensi-
bly designed.
Beneath this diversity of national situations is
a broad recognition that the aspects of the
discussion dealing with increased resource trans-
fers to-and within-the Third World are at the
heart of most LDCs' concern.
? Although opinions on creating a so-called
second window (to support the development
of LDC commodity production and market-
ing) are likely to provide the corridor gossip
at this month's meetings, the greatest funda-
mental differences among the G-77 member-
ship have to do with the financial resources
and structure of the Common Fund.
? Of least concern to individual LDCs at the
moment are arrangements for voting and for
managing the Common Fund once it is estab-
lished. (Some LDCs are, however, anxious
lest any related provisions crimp the author-
ity of existing international commodity
agreements.)
iii
SECRET
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
While none of this suggests that the LDCs are
generally unconcerned with voting or their role in
directing the international economic system,
there can be little doubt that they have-for the
moment-locked their attention on the attain-
ment of another channel for access to developed-
country financial support.
No matter how one evaluates the economic
interests of individual developing countries or the
merits of the Common Fund itself, ample
allowance must be made for the point that the
LDCs attach great importance to the symbolism
of a new international institution and will main-
tain bloc solidarity to this end. Some LDCs-
Algeria, India, Nigeria, Venezuela, for exam-
ple-will support the original G-77 position sim-
ply because it enhances their prestige at little or
no immediate cost. A few-some large Latin
American and OPEC LDCs-will swallow unsa-
vory features of the original package to elicit
support from G-77 members in other arenas of
the North-South dialogue. And a large number
will go along with most any G-77 stance without
ever having really understood or considered the
significance of the new institution.
Nevertheless, many economists, businessmen,
development advisers, and commodity specialists
in both the North and the South strongly doubt
that a Common Fund of the scale suggested
could achieve the stated stabilization objectives.
They question whether the supposed benefits to
LDCs' balance of payments could not be
achieved more efficiently through , existing
mechanisms. Beyond this, they are concerned
that the new mechanism will do little to meet the
real needs of the LDCs, will add somewhat to
global inflation, and may (in some instances)
transfer resources from the poor to the rich.
If there is considerable risk that the touted
economic benefits of the Common Fund will turn
out to be substantially less than billed, there is
still greater risk that an ineffectual agreement or
a lame institution will have an adverse effect on
North-South political relations. Those LDCs
that see themselves having to accept a bad bet-
among them such important US trading partners
as Brazil, South Korea, Taiwan, Singapore,
Saudi Arabia, and Kuwait-will be even less
enchanted should the negotiated Common Fund
falter and thereby elicit demands for still greater
financial support and institutional scope. Their
natural opponents-those LDCs already geared
up to effect major changes in the existing inter-
national order-will likely become still more
aggressive if the Common Fund turns out to be
weak because of a shortage of capital. Finally,
even those regularly referred to as moderates will
be irate and likely to charge cynicism if they feel
a treaty has been negotiated by developed-coun-
try executives only to be batted down by
legislatures.
iv
SECRET
25X1
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
LDC Positions on the Common Fund
THE COMMON FUND DIALOGUE
Discussions on a Common Fund, under way in
one form or another since early 1976, have taken
on greater seriousness and direction since the
related UNCTAD discussions in Geneva during
November and December 1977. A formidable
list of unresolved technical issues notwithstand-
ing, both developed and developing countries
have expressed a stronger political commitment
to the attainment of one form or another of such
a fund. An especially important benchmark in
this new direction was the Bonn Economic Sum-
mit, at which leaders from developed countries
pledged "to pursue actively the negotiations on a
Common Fund to a successful conclusion."
Since, the developing countries' caucus-the
Group of 77-leadership has actively lobbied for
more rapid progress, and a resumption of negoti-
ations is now scheduled for 14-27 November,
again in Geneva. In anticipation of that meeting,
the following discussion and country data sheets
are intended to provide interested policymakers
and negotiators with an up-to-date appraisal of
stances and differences among key LDCs.
Recent History of Discussions
Although the lineage of LDC proposals for
international support of commodity prices can be
traced back at least to the 1955 Bandung Con-
ference, developed-country interest in this topic
stems mainly from the OPEC (Organization of
Petroleum Exporting Countries) oil price in-
creases and related concern for the prospects of
cartelization in nonoil commodities. A rash of
articles from business and academic journals
during 1973-75 raised the specter of producer
leverage in markets for a variety of strategic
materials. Because of their long experience with
international commodity marketing, most of the
developed countries were queasy about intruding
into this field and dubious of LDC proposals for
a complex organization to stabilize prices in 10
or more primary products. Initially, the United
States, Japan, West Germany, and the United
Kingdom were the most wary; the United States,
in particular, stressed that its presence at inter-
national meetings on this topic signified nothing
more than a willingness to hear arguments. The
continental European countries-especially the
Scandinavian countries and the Netherlands,
which are usually more receptive to G-77 propos-
als-were willing to consider negotiating toward
a Common Fund.
In various CIEC-` and UNCTAD-sponsored
meetings that took place in. 1976 and 1977,
substantial differences in the shape or purpose of
a Common Fund emerged from the developed-
country and LDC proposals and counterpropos-
als. Going into the November 1977 meeting, the
developed countries generally favored a Common
Fund built up from (and funded by) functioning
international commodity agreements. The G-77
leaders stressed the need for prior, direct financ-
ing of a Common Fund whose functions would
include:
? The financing of buffer stocks under existing
international commodity agreements and the
encouragement of new agreements (the "first
window").
? The financing of "other measures"-in addi-
tion to stabilization-such as economic diver-
sification, market promotion, commodity re-
search and development, and productivity
improvements (the "second window").
25X1
25X1
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
The November 1977 meeting was suspended at
the initiative of the G-77 when the developed
countries would not agree to the LDC demands.
A statement issued by the G-77 then left open
the possibility of resuming the talks at a later
date. To place the burden of failure on the
developed countries, the G-77 noted that it would
not sit down again until the other side showed the
necessary "political will" for progress in the
negotiations.
Since the November 1977 session, there has
emerged a clearer and stronger political consen-
sus among the developed countries and between
them and the G-77 leadership that there should
be a Common Fund. The final communique of
the Commonwealth ministerial meeting in April
1978 reflected a degree of compromise on the
part of Australia,' New Zealand, Canada, and
the United Kingdom toward considering direct
government contributions and a second window.
This was taken by the LDCs as an important
policy shift on the part of some developed coun-
tries and a signal to increase pressure on the
United States, West Germany, and Japan to
reconsider their positions. The Bonn summit in
July and talks between the United States and the
Association of Southeast Asian Nations
(ASEAN) in Washington in August gave further
impetus to the LDC belief that the developed
countries were showing more flexibility and were
ready to return to the negotiating table.
Current G-77 Stance: Key Issues and Actors
To date, the G-77 has not softened its official
positions on the Common Fund put forth at last
year's suspended conference, despite vigorous
activity by the UNCTAD Secretariat and key
LDC officials to win backing for various compro-
mise proposals. Bolstered by what they perceive
as disunity among the developed countries, hard-
liners-such as Tanzania, Libya, and Venezu-
ela-have been successful in demanding that
there be no alteration of the official G-77 posi-
tion and in stressing the continued importance of
group solidarity.
2 Australia had already shifted closer to the G-77 position prior
to the Commonwealth meeting.
This veneer of G-77 solidarity cloaks consider-
able churning and reevaluation. LDCs hold dis-
parate views on each of the three major discus-
sion areas-financial resources and capital
structure, the second window, and voting and
organization (see table 1).
Financial Resources and Capital Structure.
The official G-77 position calls for payments
of mandatory capital subscriptions by partici-
pating countries before any Common Fund oper-
ations begin (the so-called prior, direct financing
stance). Borrowing on capital markets and vol-
untary contributions would supplement this
source of financing. In this way, the Common
Fund could serve as a central source of finance
for both buffer stocking under international
agreements and "other measures" to assist
LDCs in producing and marketing commodities.
The majority of LDCs (in our sample and at
large) supports the concept of prior, direct fi-
nancing, but with important differences in shad-
ing. Among the stalwarts, some-India, Bangla-
desh, and a number of African countries-see in
the Common Fund a chance to create yet an-
other development finance institution and, con-
sequently, support the G-77 approach primarily
to assure a new source of capital for com-
modity development efforts. Others-Tanzania,
Jamaica, Libya, and Peru, for instance-take the
offensive mainly for political reasons, such as
support for the concept of a NIEO interest in
regional or G-77 leadership roles, or for logroll-
ing purposes. This last group is especially influ-
ential in the caucuses and will probably attempt
to provoke confrontation unless a consensus
emerges among other key LDCs to push for
compromise.
The less zealous supporters of direct funding
include two prominent factions. One-composed,
most notably, of the ASEAN countries-lends
support to this aspect of the G-77 formula be-
cause it seeks to augment the funds available to
existing international commodity agreements
(ICAs). This faction hedges with discreet obser-
vations that it could live with some degree of
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
Key Common Fund Issues: Country Attitudes Toward G-77 Positions
Willing to Negotiate Opposes Not Interested
Willing to consider departures Argentina Cuba
from G-77 position Brazil Kuwait
Indonesia Pakistan Chile Singapore
Ivory Coast Philippines Colombia Thailand
Kenya Sri Lanka Iran Yugoslavia
Malaysia Zambia Saudi Arabia
Financial Resources/Structure Algeria
Ghana
Iraq
Jamaica
Libya
Mexico
Peru
Sudan
Tanzania
Venezuela
May be willing to consider
departures if other features
satisfactory
Bangladesh Nigeria
Egypt Zaire
India
Algeria Wants mainly as sop to other Argentina Cuba
Bangladesh LDCs Brazil Ivory Coast
Ghana Indonesia Philippines Chile Kuwait
India Iraq Zambia Colombia Singapore
Jamaica Malaysia Iran Thailand
Libya Seriously interested, but Saudi Arabia Yugoslavia
Mexico could compromise
Nigeria Egypt Pakistan
Peru Kenya Sri Lanka
Sudan
Tanzania
Venezuela
Zaire
Voting and Organization Algeria Probably insist on ICA Iran
Bangladesh autonomy Kuwait
Iraq Argentina Ivory Coast Saudi Arabia
Libya Brazil Kenya Singapore
Mexico Chile Malaysia Thailand
Peru Colombia Philippines
Sudan Cuba Zaire
Tanzania Ghana Zambia
Venezuela Indonesia
Probably skeptical of bloc or
unweighted voting
Argentina Indonesia
Brazil Malaysia
Chile Philippines
Colombia
25X1
Use issues as bargaining
points
Egypt Pakistan
India Sri Lanka
Jamaica Yugoslavia
Nigeria
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
pooling of ICA resources (along the lines of the
developed-country proposals) ' and that, above
all, it is concerned that the authority of the ICAs
not be infringed by any negotiated solutions.
Another faction-many of whose members are
having second thoughts-reportedly presses for
direct financing because it feels that a Common
Fund with its own resources would be catalytic in
the formation of new ICAs. Adherence to this
position has weakened, primarily because the
lack of progress in related commodity discussions
has served to underline the many technical prob-
lems hindering the creation of new ICAs.
A number of wealthier LDCs are flatly un-
comfortable with the G-77 insistence on prior,
direct financing. They prefer some cosmetic ar-
rangement, such as a variation of pooling, that
would cost them less. Generally these are the
countries-Brazil, Saudi Arabia, Argentina, and
Yugoslavia-that would as easily welcome the
demise of the Common Fund notion. As the
negotiations move toward agreement on the ba-
sics, several of these countries will probably work
to dump the more onerous G-77 financing pro-
posals and may be willing to cooperate in this
area with the developed countries.
Some countries-again, largely ASEAN
members-have argued that large-scale volun-
tary funding might facilitiate a compromise in a
direction away from the simple G-77 formula.
Their hope is that large OPEC contributions
(worldwide pledges currently total over $100
million) could plug important gaps in a limited
assessment scheme. Results along this line have
been meager, however, for at least two reasons:
OPEC members are generally evasive on the
nature of their support; and the G-77 has sought
continuing contributions, which amounts to an
aid crowbar that draws opposition even in some
LDC quarters.
With respect to the method of assessment
under direct contributions,' most of the 34 coun-
This ambivalence toward pooling stems both from interest in
reaching quick agreement on the Common Fund and the recogni-
tion that alternative mechanisms, such as a regional STABEX
system or action by the ICAs themselves, can also provide the
desired additional resources for propping up export earnings.
Were the pooling approach invoked, possibilities for assessment
would be determined by financing arrangements in the individual
ICAs.
tries we have surveyed favor country subscrip-
tions based on the clear principle of ability to
pay. For many, the formula would be much like
the one used to determine UN budget assess-
ments. In such a scheme, the developed countries
would provide 70 percent or more of the initial
capital contribution. As for the level of assess-
ments, most G-77 members now seem willing to
accept an initial capital subscription of $500
million, half the original LDC proposal. None-
theless, it seems clear that a still smaller scale
will be needed to reach a compromise with the
industrialized nations.
Yet another financial issue dividing the LDCs
is the allocation of Common Fund resoures be-
tween stabilization efforts and the financing of
commodity development. The countries that have
shown most interest in the voluntary funding
concept would like to see it provide the main base
of support for second window activities. This
would leave resources acquired through subscrip-
tions to be used exclusively for the first window,
thereby strengthening the role of the Common
Fund in stabilization. By contrast, second win-
dow partisans-some African countries and the
South Asians-stand by the original G-77 pro-
posal, which stresses the importance of commod-
ity development. They argue that without some
form of regular and predictable direct financing,
commodity development measures by the Com-
mon Fund would lack a proper base of support.
Second Window
The G-77 position paper calls for the Common
Fund to actively support producers of a broad
range of commodities through measures other
than stabilization-such as product diversifica-
tion, productivity improvement, and market pro-
motion activities. (Historically, some ICAs and
regional production agreements-in rubber and
coffee, for example-have played such roles.)
The political importance of the second window
to several major LDCs should not be underesti-
mated. The Indians, usually well-prepared for
negotiations, advertise it as their brainchild and
will battle vigorously for it. The Tanzanians and
Sudanese, eager for both more project aid and
more influence in the Organization for African
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
Unity, have been especially vehement on the
need for a strong second window controlled by
LDCs. The Jamaicans, who usually field excep-
tionally competent diplomats in North-South
exchanges, have cemented their relations with
the Africans in other parts of the dialogue with
their stand on this issue. Mexico, Peru, and
Venezuela, often represented by aggressive and
influential spokesmen, continue to champion
LDC solidarity on the issue with little risk to
their own interests.
For the faithful followers of these hardliners,
the second window is mainly a vehicle for devel-
opment aid. Moderate African countries-nota-
bly Zambia and Kenya, but probably a large
number of the poorer African countries-seek
improvement in the terms of commodity-related
project assistance and view a second window as a
touchstone of appropriate political commitment
by the developed countries. Some of these LDCs,
however, have become increasingly doubtful that
the second window itself could provide aid flows
at the desired levels and, left to their own
devices, could probably accept a facility limited
to nondevelopmental measures (such as market
promotion) for a few commodities, especially if it
were coupled with increased aid from other
sources.
Although the number of LDCs that are seri-
ously interested in a second window is small, the
possibility of any LDC coalition opposing this
facility is near zero. All the LDCs will hew to the
official G-77 line supporting formation of a
second window, while harboring their own per-
ceptions of suitable scale. In this sense, the
view-held in some Group B circles-that the
question of simply creating a second window has
substantial conflict potential or trade-off value in
other aspects of the negotiations turns out to be a
red herring. What might provoke early dissen-
sion in this area is an initial negotiating figure so
small as to offend an India or so large as to
conjure up a distraction from stabilization objec-
tives to a Malaysia.
Thereafter, the kinds of measures to be imple-
mented and the number of commodities to be
covered pose fertile fields for controversy. Thus
far, the first of these has seen little discussion
since it hinges on resolution of the financial scale
issue. On commodity coverage, however, a large
group of LDCs will press for the inclusion of all
18 of the products in UNCTAD's integrated
program, while a few influential LDCs will
insist-as in earlier G-77 battles over the issue-
on the use of the second window for only four or
so of the commodities covered by ICAs.
ASEAN spokesmen-and others-have sup-
ported a middle position whereby funds could be
used to assist development of commodities cov-
ered by either ICAs or other special arrange-
ments between producers and consumers; even
this middle ground, however, will probably draw
fire from several sides.
Voting and Organization'
The official G-77 position is that the LDCs
must have a majority stake (51 percent) in any
voting mechanisms. This would be assigned
evenly on the basis of an implied minimum
country share. Broad, centralized control of all
parts of the organization first window, second
window, and member commodity agreements-
would be held by the LDCs.
The original G-77 demand for LDC majority
control of the Common Fund is now seriously
supported only by the hardliners, who could
choose to use this issue for stonewalling if they
saw any collapse in other aspects of the dialogue.
Other LDC positions on voting primarily reflect
financial concerns or vested national interests in
existing or possible ICAs.
? A number of second window advocates-
India and Bangladesh are examples-seek
LDC control of any portion of the Common
Fund that allocates aid, but may act along
well-established lines of withdrawing ideo-
logical demands if favorable financial terms
crystallize.
? Some major commodity producers like Ma-
laysia and Indonesia, on the other hand,
would actually oppose broad LDC control as
' These issues are low on the agenda for this month's meeting and
may not even reach the negotiating table.
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
a threat to the concentrated voting strength
they already command through existing com-
modity charters or to favorable relationships
they have developed with consumers in the
commodity organizations.
? Others, such as Zambia and the Ivory Coast,
recognize the importance of cooperation be-
tween commodity producers and consumers
in possible future agreements and would not
welcome the precedent set by a globally
guided commodity institution.
? Conservatives like Brazil and Saudi Arabia
would probably oppose any system of man-
agement that could deprive financial sup-
porters of control over use of their money or
that could link a costly universal subscrip-
tion to a universal system of control.
A common thread among these national positions
on the voting issue is a reluctance to settle on any
system before financial arrangements are
clearer.
The parallel question of how broad a charter to
grant the Fund has always provoked controversy
within the G-77. While some of the less affected
hardliners still pay lipservice to a Common Fund
with broad, ill-defined powers, the majority of
LDCs probably will not vigorously defend this
stance. Influential LDC members of interna-
tional commodity agreements strongly support a
management structure preserving the indepen-
dence of these organizations on a wide range of
internal matters. Nor is consolidated manage-
ment of the first and second window-a related
issue that is still firmly supported on paper-
likely to provoke much G-77 interest so long as
the resolution of the financing issues is satisfac-
tory. In the particular case of a compromise
second window based largely on voluntary fund-
ing, donors will probably insist on separate man-
agement to preserve a measure of control over
the use of their contributions.
LDC Actors and Preparation
In considering the extent to which the national
negotiating teams can actually respond to new
initiatives in these areas; it is critical to grasp
that most are ill-prepared, that their instructions
and latitude vary considerably, and that the
largest element of common concern is an injunc-
tion from home to preserve G-77 unity. Some
few-Algeria, Jamaica, Venezuela, and the Phil-
ippines-are represented in Geneva by personnel
so experienced or senior as to permit fairly rapid
interaction at the conference. Others-Ghana,
India, and Zaire-depend on a much more struc-
tured or centralized management of policies in
this area. And a few-Iraq and Chile-have
given so little consistent thought to the Common
Fund that they will likely avoid any new depar-
tures or will simply associate themselves with the
movements of a particular bloc.
Nor is there necessarily one natural focus for
Common Fund policy formulation or approval in
Third World countries (see table 2). In 13 of the
countries surveyed, the foreign ministries take
the lead and economists or technicians play
limited roles, thereby reflecting the fact that
many LDCs continue to regard this North-South
issue as primarily political. Related decisionmak-
ing occurs at fairly low levels in quite a few
LDCs; only in a handful-Indonesia, Malaysia,
Venezuela, and Zaire, for example-has the
Common Fund captured the attention of senior
policymakers.,
Developed-Country Attitudes
With fully as many substantive issues and
some 20 actors on the developed country side,
there is ample possibility there, as well, for
distinctive national positions. Throughout the
CIEC sessions, the eight countries representing
the developed nations held together fairly tightly
on a unified position, partly because the related
UNCTAD commodity discussions with the
LDCs were only in the initial stages. As a result
of the collapse of last November's Common
Fund dialogue and the politics that have sur-
rounded attempts toget started again, this unity
has tended to weaken.
At this point, most of the developed countries
are edging closer to accepting the key-features of
the Common Fund demanded by the G-77, even
though they have yet to work out agreed posi-
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
Formulation of LDC National Policies on the Common Fund: Principal Players
Senior-Level
Officials Make
Decisionmaking Process
Recommendations
Interministerial
Foreign Ministry
Other Ministry
Not Sufficiently Clear
to Head of State
Groups Make Policy
Makes Most Decisions
Takes the Lead
To Make Judgment
Cuba
Ghana
Algeria
Chile (Mines)
Bangladesh
Jamaica
Indonesia
Argentina
India (Commerce)
Ivory Coast
Sri Lanka
Malaysia
Brazil
Mexico (Commerce)
Libya
Venezuela
Nigeria
Colombia
Saudi Arabia
Thailand
Zaire
Tanzania
Egypt
(Commerce)
Iran
Singapore (Trade)
Iraq
Yugoslavia
Kenya
(Geneva Mission)
Kuwait
Zambia
Pakistan
(Finance/Mines)
Peru
Philippines
Sudan
tions. The United States aside, most now concede
that agreement on limited direct contributions to
the first window and voluntary contributions to a
second window is necessary to ensure the success
of the November 1978 negotiations. Neverthe-
less, they adhere to the notion that the Common
Fund should basically be financed through inter-
national commodity agreements. Differences re-
main on the size and form of direct contributions
and how they should be used, but the Europeans,
especially, believe that these details should be
taken up after the basic elements are agreed
upon with the G-77. The Japanese, still reluctant
to take any stand, have said that even they are
considering what kind of direct contribution to
make to the Common Fund.
The key foreign governments-West Ger-
many, France, Great Britain, and Japan-still
agree on the importance of maintaining devel-
oped country solidarity and are waiting for the
United States to decide on its approach. None-
theless, they believe the developed countries
should consider-as a last fallback position-
symbolic direct contributions to the first window
and voluntary contributions to the second win-
dow. EC Commission officials, in particular,
argue that LDC leaders probably would grasp
the finality of this position and accept it so as to
concentrate at UNCTAD V on North-South
demands of more interest to other members of
the G-77. Others, such as West German Eco-
nomics Ministry representatives, contend that
the G-77 leadership has given little indication
that it would be willing to accept anything less
than mandatory cash contributions to both win-
dows. In any event, European anxiety over the
possibility of being tapped for contributions at
both the November meetings and UNCTAD V
will encourage support for a concerted Group B
approach.
In an odd twist, the developed countries-
except the United States-have achieved general
consensus on the issues of least immediate con-
cern to the LDCs-management and voting pro-
cedures for the Common Fund. Nearly all of the
industrial countries agree that the Fund should
have a three-tier decisionmaking structure con-
sisting of a general assembly, an executive board
elected by the assembly, and a professional man-
agement team appointed by the board. They also
agree that, in order to safeguard developed-
country interests, voting rights should be based
on a multiple system of weighting. This system
would include such criteria as trade shares,
financial input in the Fund or individual commo-
dity agreements, and the number of votes allot-
ted to commodity agreements participating in the
Fund.
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
Forging a common developed-country position
on the Common Fund may be complicated by
West Germany's renewed attempt to gain en-
dorsement for a global export earnings stabiliza-
tion scheme (stabex). Such a scheme would be
similar to the one administered since 1975 by the
EC for more than 50 African, Caribbean, and
Pacific LDCs. Offered more than a year ago as
an alternative to the Common Fund,' the broader
version was studied and essentially shelved by
the International Monetary Fund - World Bank
Joint Development Committee. That group con-
cluded that stabilization of LDC export earnings
could best be handled by expanding the IMF's
Compensatory Financing Facility (CFF). Now,
officials in Bonn's Economics Ministry, who have
consistently opposed the Common Fund and
believe it will never materialize, are urging that a
global stabex be studied in other forums. The
West Germans argue that a stabex would direct-
ly compensate for a reduction in LDC commo-
dity export income, whereas the CFF is geared to
changes in a country's overall balance-of-pay-
ments position and has much stricter repayment
terms. West Germany's EC partners have shown
little interest in a global stabex. The EC has
turned aside requests from the ASEAN coun-
tries to study a stabex system between the EC
25X6 and ASEAN.
Unresolved Issues and Arguments
Some disorder of this sort is, of course, inevitable
in reaching agreement among as broad a cast on
so complex an issue. Similar uncertainties and
confusion attended aspects of the negotiations for
the major international financial institutions, the
ill-fated International Trade Organization, and
the General Agreement on Tariffs and Trade.
Many knotty questions on these organizations
had to wait for senior-level exchanges to provide
breakthroughs. In contrast to these earlier cases,
however, there is still no clear consensus among
technicians that this new organization would fill
a conspicuous gap.
Leading the list of questions is how a Common
Fund would supplement and improve on existing
channels for compensation, insurance, and re-
source transfer. Several existing institutions, for
example, already offer commodity-related bal-
ance-of-payments assistance,' and the newness of
their extended use suggests that the LDCs are
only now beginning to appreciate their utility.
Thus, the oldest-the IMF's Compensatory Fi-
nancing Facility-provided the LDCs $1.2 bil-
lion (in 57 drawings) during 1963-75 but-with
successive loosening of terms-paid out $2.9
billion (70 drawings) from 1976 to mid-1978.
The European Community's STABEX which
was put in place in 1975 primarily to serve
smaller African, Caribbean, and Pacific LDCs,
has already paid out close to $200 million in its
first three years of operation.' Based on the
relatively favorable experience of other LDCs
with this scheme, the ASEAN countries 25X6
i
h
i
e quest
on o a
are pursu
ng t
regional sta ex system funded by Japan and
other major trading partners without any par-
ticular reference to how this would relate to their
interest in the Common Fund.
Even if country differences on the key features
of a Common Fund were patched over, major
underlying questions would still be unresolved.
6 Strictly speaking, of course, the two are not alternatives. The
Common Fund is directed at stabilizing commodity prices; the
stabex system is oriented toward the stabilization of export earn-
ings. Behind the German argument is a widely respected view that
price stabilization only copes with a part of the LDCs' international
payments problems-and that, only inadequately. Other aspects of
this issue are treated in the next section.
'See appendix B.
countries account for only about 6 percent of both Third World
GNP and trade.
25X6
25X1
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
Prior experience with the financing of buffer
stocks-the heart. of the Common Fund com-
modity price stabilization scheme-also raises
serious questions. Specifically,- the IMF Buffer
Stock Financing Facility (BSF) has been avail-
able since 1969 but has seen only limited use
because of problems that would also face the
Common Fund.10 Thus, only a half dozen coun-
tries have tapped this source because:
? Only a few ICAs have existed in the period.
? Still fewer-tin, cocoa, sugar-have even
envisioned buffer stocks.
? Given prevailing market conditions, only
one-tin-has actually required buffer stock-
ing.
There has been no sign that either side in the
Common Fund dialogue is considering liberaliz-
ing or expanding this facility; the experience with
it suggests, however, that it is currently able to
meet some of the needs of the G-77 and could be
expanded or liberalized if more ICAs were
imminent.
In addition to conflicts in the area of stabiliza-
tion, there is potential for problems with the links
between the Common Fund's second window and
other development banking institutions. All sides
recognize that the second window has been de-
signed to provide more liberal credit terms and a
more sympathetic response to commodity-related
development proposals. As compared with exist-
ing international lending institutions, however,
the limited focus of a second window and the
attendant risk that member LDCs could politi-
cize access to funds increase the likelihood of
financing for ill-conceived or economically un-
sound projects. So far, little has been said about
how this risk would be reduced or how second
window projects would be rationalized against
activities of the other development institutions.
Also left open is a Common Fund's relation-
ship to the hapless UNCTAD Integrated Pro-
gram for Commodities (IPC). The IPC commod-
ity discussions have been under way on 18
product areas since 1976, but only for natural
rubber is there a clear prospect of an eventual
commodity agreement with economic teeth. Of
the other commodities not already covered by
agreements, serious talks have focused on only
about six. Even in these cases, discussions have
tended to bog down in technicalities or evolved
into heated standoffs, often eliciting skepticism
from members of both developed and developing
groups.
Underlying this lackluster record is the same
fundamental obstacle that has hindered greater
use of the Buffer Stock Financing Facility: there
is only a very limited interest in the creation of
new international commodity agreements or the
inclusion of existing ones under any interna-
tional institutions. In more than a few instances,
even potential "beneficiaries" of commodity
agreements are themselves loath to enter into the
sorts of relationships an ICA or the Common
Fund would imply for their key export. Chile and
Zambia, for instance, entertain doubts as to the
worth of a copper ICA; Kenya and Tanzania
have balked at the South Asians' tea initiatives;
and Cuba is among several Latin American
countries that would like to keep the Sugar
Agreement unadulterated by membership in any
larger commodity clubs.
Beyond the relationships to existing-or other
potential-institutions, several other factors will
affect the efficiency of the Common Fund in
providing resource transfers to LDCs. One of
these is the fact that major short-run "winners""
from the Common Fund-were it to operate
successfully in several commodities-could in-
clude such developed countries as the United
States, the USSR, Canada, and Australia, each
a substantial producer of at least one of the 10
core commodities (see table 3). This, of course, is
not surprising since about two-thirds of the non-
fuel primary commodities moving in internation-
al trade come from the OECD countries. What it
implies, however, is a rather inefficient resource
transfer mechanism for the Third World so long
as the point of leverage is commodity prices.
10 One constraint on use of the BSF that would not apply to a
Common Fund is the IMF provision that balance-of-payments
difficulties exist as a precondition for support.
" See appendix C for further explanation of the concepts of
"winners" and "losers,"
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
Developed and Communist Countries: Net
Exporters of Core Commodities
(Percent Share of World Exports)
Sugar
Copper (Refined)
Australia
Canada
(13.5)
(5.8)
South Africa
Australia
(3.6)
(1.4)
Cotton
Tin-in-Concentrates
Australia
Australia
(0.2)
(9.0)
USSR
Canada
(15.6)
United States
(20.6)
Sisal
South Africa
(0.7)
Copper (Unrefined)
Canada
(15.6)
Tin Metal
Australia
(1.6)
And finally, the implications for prices consti-
tute a facet of commodity trade issues that has
yet to be adequately explored. Many LDCs, for
example, see the establishment of a Common
Fund as the opening wedge in an effort to
improve their terms of trade by steadily rais-
ing-rather than merely stabilizing-the prices
of their commodity exports. The discussion of
price indexation, dormant for some while except
in the oil context, can be expected to reemerge as
any guidelines are established on the appropriate
longer term "trends" around which to stabilize
individual commodity prices.
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 25X1 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
Next 69 Page(s) In Document Exempt
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
Association of South East Asian Nations (ASEAN): A cooperative organiza-
tion founded in 1967 to promote the economic growth, social progress, and
cultural development of the region. Members are Indonesia, Malaysia, the
Philippines, Singapore, and Thailand.
Buffer Stock Financing Facility (BSF): An IMF credit mechanism designed
to assist member countries by financing their contributions to the com-
modity stockpiles of qualified ICAs. Countries drawing against this facility
must be experiencing balance-of-payments difficulties (presumably trace-
able to cyclically low commodity export prices). As with the CFF and other
IMF credit facilities, they must also pay interest and service charges, and
agree to cooperate with the IMF in finding appropriate longer term
solutions to their balance-of-payments problems.
Central Source Financing: See Prior, direct financing.
Compensatory Financing Facility (CFF): An IMF credit mechanism designed
to assist member countries-particularly producers of primary commodi-
ties-that are experiencing balance-of-payments difficulties caused by
short-term declines in their overall export earnings. In contrast to the EC
STABEX scheme, credit extended under the CFF is subject to service and
interest charges. To draw against this facility, countries must agree to
cooperate with the IMF to find appropriate longer term solutions to their
balance-of-payments problems.
Conference on International Economic Cooperation (CIEC): Largely explora-
tory talks on a number of North-South themes, held periodically from
December 1975 until June 1977. Areas of discussion included questions of
development, finance, raw materials, and energy (the last being the starting
point for the developed countries in calling for the dialogue and the others
having been included as a result of OPEC leverage on behalf of the LDCs).
At individual sessions, some 19 countries represented the developing,
developed, and oil-exporting groups. Widely differing objectives in each
discussion area forestalled concrete results.
Core commodities: A group of 10 primary products that-because of their
importance as LDC exports-are viewed by the UNCTAD Secretariat and
the G-77 as key candidates for new or strengthened international com-
modity agreements. The commodities so named are cocoa, coffee, copper,
cotton, jute, sisal, sugar, rubber, tea, and tin. Within this larger group,
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
some observers refer to the "core six"-cocoa, coffee, copper, rubber,
sugar, and tin--on the basis that the smaller group includes those for which
international commodity agreements exist or seem most likely.
First Window: The main element of the Common Fund structure, aimed
principally at commodity price stabilization through buffer stocking and
commodity sales/purchases.
Group B: The developed nations' UN caucus in the North-South dialogue.
Group of 77 (G-77): The LDCs' UN caucus in the North-South dialogue.
Membership is now over 115 countries.
Group of 33 (G-33): The G-77 working group responsible for coordinating
LDC positions on the Integrated Program for Commodities and the
Common Fund. Its steering group of 12 countries responsible for Common
Fund matters (the G-12) includes Algeria, the Ivory Coast, Nigeria,
Kenya, Bangladesh, India, Indonesia, Malaysia, Argentina, Brazil, Ja-
maica, and Venezuela.
Integrated Program for Commodities (IPC): An UNCTAD program aimed
at expanding and broadening LDC trade, improving and diversifying
productive capacity, and increasing earnings of those basic commodities
that form a large percentage of LDC exports. Elements most actively
pursued by the LDCs include establishment of individual international
commodity agreements and of a Common Fund.
International Commodity Agreement (ICA): A formal arrangement between
major producers and consumers to stabilize the price of an internationally
traded commodity. Mechanisms employed, singly or in combination, may
include: (1) international buffer stock operations (commodity purchases
and sales); (2) coordinated management of national stocks; (3) production
controls; and (4) export quotas.
New International Economic Order (NIEO): A statement of LDC demands
for reform of the international economy; promulgated as a UN resolution
at the Sixth Special Session in 1974. The resolution called for structural
changes in existing international institutions and creation of new institu-
tions (such as the Common Fund) to increase LDC political and economic
power relative to the industrial nations.
Nonaligned Movement (NAM): A movement, started in 1954 by Yugoslavia's
Tito and India's Nehru, to offer small developing states an alternative to
alliance with either the US or USSR. Viewed by the founders as a political
force in the international system, the issues which prompted its creation
(colonialism and the Cold War) have eased. Now consisting of about 86
members, the NAM has increasingly focused on inequities in the interna-
tional economic system.
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
NAM Council of Producers' Associations: A proposed organization of LDC
commodity producers aimed at stabilizing export prices. Promoted by some
NAM members since at least 1975 as a "self-help" alternative to the
Common Fund, the idea has not received widespread LDC support.
Other Measures: See "Second Window."
Pooled financing (or pooling): A Group B proposal for underwriting the costs
of Common Fund stabilization efforts. Under this arrangement the Fund
would draw its capital, as needed, from the pooled resources of functioning
ICAs.
Prior, direct financing: The principal G-77 proposal for raising the financial
capital for a Common Fund. Under such an arrangement, assessments
would be made on member governments and would be paid in before any
Fund operations began. Also known as central source financing.
Second Window: An LDC-inspired feature of the Common Fund design
intended to act in areas beyond buffer stock price stabilization. Its "other
measures" to alleviate a variety of LDC commodity problems include
financing of export diversification, market promotion, research and devel-
opment, expansion of local processing, and infrastructure improvements.
Stabex: A mechanism for stabilizing LDC export earnings from selected
commodities through loans-and, in some cases, grants-from their indus-
trialized trade partners. Under such an arrangement, transfer payments
are made to LDCs when their export earnings from eligible products fall
below agreed reference values; when earnings rise above reference levels,
repayments are in order. In the particular case of the EC STABEX,
transfers to least developed countries (LLDCs) take the form of nonreim-
bursable grants; loans to other LDCs are interest free.
United Nations Conference on Trade and Development (UNCTAD): An
organ of the UN General Assembly with its own permanent secretariat in
Geneva; established in 1964 to promote economic development by improv-
ing the terms of LDC participation in world trade and finance. The next
major conference, UNCTAD V, will be held in Manila in May 1979.
Voluntary Financing: A proposed source of capital for a Common Fund.
According to some Group B nations, voluntary contributions from member
governments could be used to raise the initial capital for a second window
(supplementing pooled financing, which would underwrite only the first
window). For the G-77, contributions for any Common Fund purpose
would be welcomed on a continuing basis, but only to supplement the initial
direct assessments on member governments.
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
The ASEAN stabex proposal-mentioned in
the text of this assessment-is the most recent of
a series of LDC designs directed at damping
shifts in their export earnings and terms of trade.
Like the others-including movements for more
international commodity agreements, demands
for alternate forms of compensatory assistance,
the drive for a Common Fund, and discussions of
the need for indexation-it is pointed at what
they perceive as a key element of their trade,
payments, and growth problems. The inclusion of
the following materials is not intended as an
estimate of the likelihood of success of this
particular demarche, but rather as an illustration
of one of the ways in which this perennial
commodity earnings problem appears and
reappears.
Background
An expression of interest by the five ASEAN
LDCs* in a 25-commodity, $500-million facility
led to serious discussions on a possible stabex at
the Japan-ASEAN summit in August 1977. In
the euphoria of that occasion, Japanese Prime
Minister Fukuda pledged to move forward on
proposals for regional commodity arrangements.
The first such detailed proposal-still the only
substantive document to emerge from the
talks-appeared late in the fall of 1977 and is
under scrutiny by the Japanese. Continuing in-
formal discussions were capped by an "experts"
meeting in Jakarta on 29-30 September of this
year. At the next formal round, scheduled as part
of a Japan-ASEAN conference in December,
Tokyo expects to examine answers to a series of
probing questions it tabled at the September
meeting. Progress at this session is likely to be
slow while both sides weigh worldwide develop-
* The ASEAN LDCs are Indonesia, Malaysia, the Philippines,
Singapore, and Thailand.
ments on the Common Fund and on a variety of
bilateral issues.
Some basic differences persist between Japan
and the ASEAN countries on stabex issues:
Commodity Coverage. The current ASEAN
proposal requires compensation for earnings
shortfalls in each of 17 commodity lines (includ-
ing tin, already covered by a commodity agree-
ment, and practically all of ASEAN's major
exports except rubber). In this the design differs
from the recent West German proposals for
broader systems that would base compensation
on declines in net earnings from a basket of
exports. Japan reportedly is still considering the
latter, much less costly basket approach and
would, in any event, probably insist on narrowing
the set of commodities covered.
Financial Base. Early in the talks, ASEAN
suggested a first round figure of $400 million to
$500 million as the likely cost of its stabex
scheme. Although financial limits apparently
have not been formally discussed, Japan could
seek quotas for each country, as in the CFF, or
for the entire operation for a period of years, as
in the EC STABEX. Alternatively, the financial
base could be narrowed by limited commodity
coverage, stringent threshold provisions, and
hard credit terms. Whatever the arrangement,
Japan will probably not allow the maximum
financial requirements of the stabex scheme to
approach the ASEAN figure.
Terms of Compensation. In the ASEAN de-
sign, earnings shortfalls for exports to Japan
trigger compensation in the form of interest-free,
unconditional loans. These are to be repaid with-
in five years only if improved export conditions in
the affected commodity permit. Japan will prob-
ably insist, however, on no better than conces-
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
sional interest rates and a less open-ended amor-
tization schedule.
Impact and Interests
The stabex talks touch on a variety of econom-
ic and political interests. Malaysia, the Philip-
pines, and Thailand-currently major exporters
of such commodities as timber, rice, cassava,
coconut and palm oils, tin, and copper--see
fairly immediate gains from the proposed ar-
rangement with Japan. Indonesia, whose export
earnings are now derived 70 percent from petro-
leum, faces the propsect of a fairly rapid decline
in that share in the 1980s; accordingly, it favors
a regional stabex as yet another means of even-
ing out its revenues for development. Singapore,
a net importer of most of the commodities pro-
posed for the scheme, would gain less but would
not stand in the way of its regional allies. From
among this cast, Malaysia and Indonesia-both
aspirants for regional political leadership-have
shown the most interest in a stabex.
Still clouding discussions of the ASEAN
stabex is the unresolved status of the Common
Fund. Malaysia, usually the most concerned with
commodity exports, publicly endorses the sta-
bex scheme as complementary to a Common
Fund and will provide the staff support necessary
to pursue both proposals over the next several
months. Indonesia, a strong political force in the
Common Fund talks, will probably go on playing
second to Malaysia in orchestration of the stabex
discussions. The other ASEAN countries have
shown less interest in both institutions; regional
solidarity- such as has moved Thailand to a
more aggressive Common Fund stance as this
year's regional spokesman-will probably sup-
plement economic interests in keeping the indi-
vidual countries lined up behind group positions
on both fronts.
Outlook
Like West German Chancellor Helmut
Schmidt, who has pledged to attend a controver-
sial North-South summit in Jamaica this De-
cember, Prime Minister Fukuda has shown inter-
est in new ways to reaffirm commitment to Third
World and regional goals. Despite the scant
achievements of the ASEAN stabex talks so far,
Fukuda could step in at the eleventh hour to
resolve interministerial differences that now
block agreement. Pressure to move in this direc-
tion will be greatest over the next few months as
both developed and developing countries prepare
for UNCTAD V (1979's most important North-
South event) and try to compensate for any LDC
disappointment from the Common Fund talks.
Japanese acceptance of the ASEAN stabex
scheme would have serious implications for other
facets of the North-South dialogue. Besides giv-
ing a new boost to West German arguments for
substitution of a global stabex for a Common
Fund, it would put heat on the United States (as
another major ASEAN trading partner) to fi-
nance this additional commodity earnings
scheme. Moreover, it would likely stimulate fur-
ther demands from other LDCs not presently
covered by stabex schemes.
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
MEASURING LDC GAINS FROM COMMODITY PRICE STABILIZATION
The concepts of "winners" and "losers" on the
core-six and core-10 commodity packages sur-
face several times in the overview and country
notes. For purposes of country classification, we
have looked solely at net LDC trade positions in
these commodities for 1975 (or the most recent
year for which data are available). (See table 4).
Countries with positive net trade balances for the
core groups were designated "winners"; those
with negative balances, "losers." A complete
evaluation of trade-related gains and losses from
stabilization would require consideration of,
among other things, demand and supply elastic-
ities, the inflationary effects of increased prices
for derivative goods, and the indirect impacts on
income distribution both at home and abroad.
Logically, the scope of such an investigation
would also include some of the industrialized
nations.
Moreover, to predict country stances, the trade
analysis would need to be supplemented by ex-
amination of the divers commodity proposals
themselves and of the broader political and eco-
nomic considerations that determine national
interests in them. Thus, some "losers" may none-
theless support a Common Fund because they
regard it as a cornerstone for an NIEO. Some
nominal "winners," on the other hand, may
choose not to support versions of a fund in which
their share of the costs outweighed the potential
gains from stabilization. And even major "win-
ners" might reasonably refrain from offering
support if they felt they could exert still greater
control over commodity markets apart from par-
ticipation in ICAs or within ICAs not associated
with a Common Fund.
The trade data on which the commodity posi-
tions are based were derived from the UN Food
and Agricultural Organization, Trade Yearbook,
1975; the UN Yearbook of International Trade
Statistics, 1976; the International Tin Council,
Monthly Statistical Bulletin; and the World
Bureau of Metal Statistics, World Metal Statis-
tics. In the accompanying table, the data sets are
grouped to show positions for both the core-6 and
core- 10 groups.
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
Total
Total
Country
Cocoa
Coffee
Copper
Rubber
Sugar
Tin
Core 6
Cotton
Jute
Sisal
Tea Core 10
Algeria
*
-11.6
-16.1
*
-75.3
*
-103.0
-6.8
*
*
-5.4
-115.2
Argentina
-17.2
-53.6
-106.8
-20.8
84.8
*
-113.6
5.6
-1.6
*
18.0
-91.6
Bangladesh
*
*
*
*
*
*
*
-54.0
152.6
*
13.7
112.3
Brazil
220.4
852.0
-326.8
- 32..:8
974.4
24.0
1,711.2
97.6
-6.4
36.8
4.0
1,843.2
Chile
-1.6
-10.4
870.0
*
*
*
858.0
-40.0
*
-0.4
-35.6
782.0
Colombia
-4.0
678.0
*
-7.2
120.0
*
786.8
84.8
*
*
*
871.6
Cuba
*
0.8
-12.3
*
224.6
*
213.1
-27.1
*
*
*
186.0
Egypt
*
-7.5
*
-9.3
-66.2
*
-83.0
513.7
-1.5
*
-32.2
397.0
Ghana
470.0
*
*
*
*
*
470.0
*
-1.6
*
-0.4
468.0
India
-0.8
71.2
-88.0
0.8
62.4
*
45.6
-16.0
-10.4
-1.2
293.2
311.2
Indonesia
2.8
100.0
102.4
362.0
-2.0
99.2
664.4
-88.8
*
*
51.6
627.2
Iran
*
-0.4
-60.0
-12.8
-135.2
*
-208.4
91.2
-2.4
*
-59.2
-178.8
Iraq
*
-1.6
*
-0.8
-103.2
*
-105.6
-22.0
-1.2
-1.2
-53.2
-183.2
Ivory Coast
221.2
286.8
*
8.0
*
*
516.0
16.8
-1.6
-1.6
-0.4
529.2
Jamaica
1.8
3.1
*
*
151.1
-5.7
150.3
*
-1.9
*
*
148.4
Kenya
*
95.2
-2.8
-1.6
-2.4
*
88.4
1.2
-2.4
20.4
62.4
170.0
Kuwait
*
-1.6
*
*
*
*
-1.6
-0.4
*
*
-14.4
-16.4
Libya
*
*
*
*
-97.3
*
-97.3
*
-6.1
*
-25.8
-129.2
Malaysia
12.0
-2.0
*
758.0
-107.2
466.0
1,126.8
-25.6
*
*
-16.8
1,084.4
Mexico
5.6
198.4
41.6
-21.6
95.2
*
319.2
174.0
0.8
0.8
*
493.2
Nigeria
294.0
1.6
*
9.2
*
28.0
332.8
*
-6.4
*
-0.8
325.6
Pakistan
*
*
-18.4
-7.6
*
*
-26.0
155.2
-16.0
-0.4
-151.2
-38.4
Peru
-2.7
34.8
339.3
-4.7
156.0
*
522.7
93.4
*
*
*
616.1
Philippines
-5.6
2.4
-22.4
0.4
580.8
*
555.6
-36.0
*
*
-0.4
519.2
Saudi Arabia
*
-13.5
*
*
-50.1
*
-63.6
*
*
*
-8.2
-71.8
Singapore**
*
14.7
-21.0
241.5
-7.5
*
227.7
-10.4
--12.4
*
*
204.9
Sri Lanka
*
*
*
92.8
*
*
92.8
-11.2
*
*
275.2
356.8
Sudan
*
-7.2
*
-0.4
*
*
-7.6
190.0
*
*
-11.6
170.8
Tanzania
0.8
65.2
*
-0.8
7.2
*
72.4
41.6
*
40.8
11.2
166.0
Thailand
*
-0.8
-18.0
175.2
281.2
106.4
544.0
-44.8
30.4
*
-0.8
528.8
Venezuela
24.8
16:8
-39.2
-15.2
*
*
-12.8
-1.2
*
-0.8
*
-14.8
Yugoslavia
-28.6
-65.7
57.4
-18.7
-94.2
*
-149.8
-121.0
-30.9
*
*
-301.7
Zaire
6.8
66.0
572.0
12.0
*
6.4
663.2
1.2
-1.2
*
2.4
665.6
Zambia
*
0.4
782.0
-L6
*
*
780.8
3.6
*
*
-0.8
783.6
Total
1,199.7
2,311.5
2,032.9
1,504.0
1,997.1
724.3
9,769.5
964.6
78.2
93.2
314.5
11,220.0
*Amount negligible or data inadequate.
**Singapore is not a substantial producer of any of the core commodities. Its positive trade balances for the core-6 and core-10 groups
largely reflect its practice of omitting trade with Indonesia from its customs data and recording reexports of Indonesian rubber as if they
were domestic production.
This memorandum was jointly prepared by the
Office of Economic Research and the Office of
Regional and Political Analysis and coordinated
with the National Intelligence Officer for Politi-
25X1 cal Economy.
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Key LDC's in the Common Fund Dialogue
Arctic Or
Mexico
United States
The Bahamas
Cuba
Dominican
adi Republic
~~- Jamaica
ras
Nidaragua
North
Atlantic
Ocean
reenla ~d
. (Denma kT
Vc_efarRj
Cape Verde, -
ne
The Gambiae0.?
Guinea: iG
Bissau `.
Sierra',/
Leone N
Liberia
France ' tech strl d~uYaS
Romani
)talg w,vugoslaw
ditoaaEo \ 5ah ttNtakno ul1-0
Gt -~ 4b
Turkey
Portu .g~inj c? '~, ~~ eY
.Malta vCypY4
ISIa Leb3ho
roc
Jo an
6lnaria , .~.._
South
Atlantic
Ocean
Ivory
Coast
B/onin
1 (Nigeria
Finland
otswa
7
;Swaziland
ho
loin
omalia'
..~
awl
Afghanistafi
India
Bangla s
Boundary representation is
not necessarily authoritative
Peru Key Common Fund Actor
The Palestine Liberation Organization (P.LO.)
25X1 577751 54
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
 Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7
Secret
Approved For Release 2004/10/28 : CIA-RDP80T00702A000500070011-7