TFR 7 – OPEC, the Trilateral World, and the Developing Countries: New Arrangements for Cooperation, 1976-1980

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In its report entitled "A Turning Point in North-South Economic Relations" the Trilateral Commission Task Force on Relations with Developing Countries proposed a special effort of cooperation between the Trilateral world and the OPEC countries to meet the emergency needs in 1974-75 of some thirty low-income countries of the "Fourth World" who have been particularly hard hit by skyrocketing costs of oil, food, fertilizer and industrial goods. It also outlined some basic concepts that might provide a framework for cooperation between developed and developing countries in the period beyond the short-term emergency. The task force promised to present a specific program to strengthen the multilateral development system in a second report to be issued in the spring of 1975.

To meet the emergency needs of the "Fourth World" in 1974-75, our first report envisaged an emergency program of $3 billion in extra concessions[ aid, one-half from the Trilateral world, one-half from the OPEC countries. In the months since our report was issued, the proposed Trilateral-OPEC negotiation to produce this shared effort of collaboration has not occurred. Nevertheless, the United Nations has made some progress with its emergency program, launched by the General Assembly at the special session of March-April 1974, to help the most severely affected developing countries. OPEC and Trilateral countries have separately promised substantial increases in their bilateral financial aid programs in response to the UN's appeal, and the United States has announced a significant increase in its food aid. Moreover, medium-term loans from the new "oil facility" of the International Monetary Fund are being made available to some of the most severely affected countries to tide them over their immediate difficulties. One way or another, it appears that the "Fourth World" will manage to get through the 1974-75 period without an economic disaster.

Attention must now be directed to the problem of North-South cooperation in development beyond the emergency period. This problem is much more formidable than that of devising short-term solutions. In his address to the annual meeting of the Board of Governors of the World Bank group on September 30, 1974, Robert S. McNamara estimated that unless ways are found to increase the present level of Official Development Assistance (ODA)1 in terms of real purchasing power rather than just in money terms the billion people in countries with average incomes under $200 per capita are likely to face a decline in their standard of living amounting to 0.4% per capita per year between now and 1980. To make possible a 2.1 % annual growth in their per capita GNP a modest rate of growth by any standard would require an increase in ODA, in terms of 1973 dollars, from $9.4 billion in 1973 to $13.5 billion in 1980, an increase of about $4 billion. Taking account of anticipated inflation and the further deterioration in the world economy since McNamara's address which has aggravated even more the problems of the low-income countries, an increase in ODA by $6 billion a year for the years 1976-80 at then-existing prices is the very minimum that seems to be required. (McNamara's detailed estimates on ODA requirements are set out in Annex 1.)

The case for supplying that additional $6 billion per year of ODA for the one billion people in the low-income countries is based on the considerations set forth in the first report of our task force. As we noted there, the Trilateral countries need the developing countries as sources of raw materials, as export markets and, most important of all, as constructive partners in the building of a satisfactory world economic and political order. The world's interrelated crises of population growth, environmental deterioration, mass poverty, mounting unemployment, growing social and political instability, proliferating nuclear and conventional weapons, and escalating terrorism and international conflict cannot be solved without attention to the needs and priorities of the developing as well as the developed world.

There will be increasing pressures to "write off" some of the low-income developing countries in the Indian subcontinent and Africa if the economic and political crises deepen in the Trilateral world. But it is doubtful if the people of the Trilateral countries would find such a policy to be either morally acceptable or politically realistic if the moment ever came to carry it out. In terms of the long-term interest of the Trilateral world, it would prove ultimately self-destructive.

To these considerations there can now be added another very practical argument. In a time of stagnant growth and rising unemployment, it is clearly in the interest of the Trilateral countries to move funds from OPEC countries which cannot spend them on Trilateral country exports to other developing countries who will. To the extent that aid contributions from the Trilateral world bring forth additional aid contributions from the OPEC countries, they have a multiplier effect on exports, employment and income, also helping the balance of payments. Indeed, we need to think in terms of a second type of "Trilateralism" by which OPEC countries transfer a portion of their liquid balances in the Trilateral world into long-term loans to the LDCS, who in turn spend the proceeds on Trilateral country exports.

Assuming this case for increasing ODA is sound, two central questions remain to be addressed: First, where is the extra $6 billion a year to come from? Second, what changes in the structure of multilateral development institutions seem to be required?

Authors

Richard N. Gardner, Professor of Law and International Organization, Columbia University, New York
Saburo Okita, President, Overseas Economic Cooperation Fund, Tokyo
B.J. Udink, Former Minister for Aid to Developing Countries, The Netherlands

Table of Contents

I. Introduction

II. The Financing Problem

III. The Restructuring Problem

IV. Other Questions

Annexes

  • Topics: Economics, Energy, Multilateral Cooperation
  • Region:  North America, Europe, Middle East, Africa, Pacific Asia
  • Publisher:  The Trilateral Commission
  • Publication Date:  © 1975
  • ISBN:  0-930503-55-4
  • Pages:  32
  • Complete Text: Click here to download
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